OA
#Okay.
Yes, good points.
Let's see.
At this point, Orbital ATK and two other companies are involved in what the Air Force calls next-generation launch vehicle program.
And under the structure of the current program, the Air Force is contributing about two-thirds of the total near-term investment and Orbital ATK and presumably the other companies are contributing about one-third.
We are so far performing very well and, from everything I can tell, the Air Force likes what we are doing and where we are headed.
With regard to this go/no-go decision at the end of this year or early next year, the Air Force will have to decide on its part whether our family of vehicles is the right one or one of several that they would like to back for the long-term.
And we will need to decide whether the investment case is sufficiently compelling to proceed.
And as part of all this, we would anticipate that one-third, two-third ---+ one-third on the Company side, two-thirds on the Air Force side ---+ and investment mix would likely continue.
But on the Air Force side, there would also be an early block purchase of some of the vehicles that we would be developing.
So we are working hard on it.
It's at this point in our planning for 2017 and 2018.
We assume it's ago.
If not, well in 2018 then we would maybe throttle back on our investment.
We definitely would throttle back on our investment.
But for the time being we are assuming it's ago.
And we are very excited about it and committed to moving forward if it makes sense for the Air Force and also if it makes good business sense for us.
It is and it's called the vision 2022.
And there's a tale on the 2022 so it actually goes into 2023.
So that math works
It's delivery time versus order.
Okay.
Thanks, <UNK>.
Sure.
Well the pressure is in the space systems group is the geosatellite business, quite frankly.
And as CRS2 gets more revenue, as we've done on CRS1, we are conservative on the initial margin that we recognize.
So those two have had an impact on that.
We also have CAS cost which impact the flight systems in particular in the other three units.
Actually, I think the margins for the defense group are reasonable, quite frankly, and flight systems would be down also because of the mix on CRS going forward.
So those are the principal things that impact the guidance we've given you.
In fact, I would just add there, <UNK>, with regard to flight systems, as Eric mentioned earlier, the FAS/CAS adjustment, which is a significant positive at the corporate level, has more of a burden applied, particularly in the flight system segment.
That's where the headwind on segment margins really is the strongest.
Let me just add to that, <UNK>, that the cumulative catches that we've experienced in prior years have been substantial.
They will be less so as we are going forward.
At least that's our forecast right now and that's built into this forecast.
And needless to say, that impacts flight systems and space systems in spades.
We're pretty close to the bottom.
Yes.
Okay.
Thanks, <UNK>.
Hi there, <UNK>.
Also, a lot of work ---+ a lot of that's with Raytheon but also a fair amount of work on the Hellfire missile which is being consumed in record quantities in the Middle East now.
And a lot of that is with Lockheed.
No, the defense ---+ well there is some of that in the first couple months of the year.
But the real big contributors so far this year have been in, first, large-caliber ammunition, tank ammunition, where we won a major new program that's going to go for a long time and be a very good business for us and then more recently a series of medium-caliber gun systems, or cannons as we call them, with a variety of international customers.
So I do expect we will continue to see a good strength this year really across all of the defense areas.
A little bit of a mixed story in small-cal but, beyond that, very consistently positive outlook in the rest of defence.
Okay, <UNK>.
Thank you.
I think at this point we will probably be sustained at about the 2017 level for another year or so driven by the growth investments.
But over say a three year interval, you can pick almost any three year interval, I think free cash flow will total at levels that are quite good.
So there may be some year-to-year ---+ some years will be a little stronger, some a little weaker, but I think the outlook here through the end of the decade is for very strong free cash flow.
So we will have to wait and see, particularly with regard to the launch vehicle initiative.
As I said before, we are assuming it goes forward and that has an effect on 2018.
We will have to wait and see what happens there.
There's a very small amount in our plan ---+ very small ---+ less than $10 million.
From a new order standpoint, we are already seeing customer orders but it's hard particularly if it's bundled with a gun system, as the early ones probably have been and will continue to be.
It's hard to compress that cycle ---+ that delivery cycle down to squeeze it into this year.
So we are expecting a very small amount this year but a more meaningful amount next year and with good growth over each of the following years through the end of the decade.
Okay.
Very good.
Okay.
With that, I think we will bring the call to a close for today.
Thank you for joining us and we look forward to speaking with you again when we report our first quarter 2017 financial results.
This concludes today's call.
Thank you.
