NOC
#Hi, <UNK>.
No problem, <UNK>.
I would say I don't think the profile of the CapEx for 2016 is surprising to us.
We fully expected that we would have the facilities in the early half of the year and we have been executing on that, as <UNK> mentioned.
We have a couple of other major projects that are working their way through the system and we fully expected that some of that would be second-half loaded so we see a higher level of CapEx on the non-facilities side of things in the second half of the year.
And we fully expect to be within the range of $800 million to $1 billion.
In terms of the future CapEx requirements, I think what we have talked about is we expect to stay elevated from our historical amounts, if you look back a number of years, for a few more years.
And what we are seeing today, I don't see any significant change in our previous expectation as to where we are today on that outlook, so I think we would continue to say, not necessarily the number of facility actions in front of us as we saw the first half of this, but we do see as we grow the business and we are investing for the future profitable growth that we see in front of us, we will see an elevated level for a few more years, but no change from where we been in terms of the longer-term outlook.
Hello, <UNK>.
Let me start on the margin side on 9, 10, and then I'll turn it over to <UNK> on the blueprint for sustainability.
And I can comment briefly on blueprint for affordability, as I was a bit involved in that when I was in my previous role at the AS sector.
In terms of F-35 margin, I would say, yes, in fact, that the margin rates we are realizing on that program are not what we expect at this level of maturity.
We're talking about LRIPs 9 and 10 moving into full-rate production and we would expect that the margin would be a bit higher than where it is today.
That being said, the negotiation of each lot is only the first step in that process and you've got to perform in order to realize the margin.
We have been able to work hard with Lockheed Martin to get to an MOU on 9 and 10 for AS and we were previously there on the other sectors and now it's a matter of performing and delivering the margin that we expect out of that program.
From a BFA perspective, we did invest along with BAE and Lockheed Martin in the BFA through, I guess that was ---+ it was in 2012, 2013 time frame and I would say we have been making good progress on that working with the industry team and the government through that process.
Any other questions on BFA, I'd refer you to Lockheed Martin for any other comment.
To comment broadly on the blueprint investments because just the tone of your question, I think perhaps conveyed a little bit of a negative view on them that I think is inaccurate.
These investments, they are team investments that are focused on helping our customer get cost out, and as we do that, they have inherent in them a return mechanism for the Company so this is not sort of a sideswipe or some way of reducing our margin or something.
This is an overt decision by the industry team to come together to work on ways to actually get the cost, the unit costs in the case of the BFA's and the sustainment cost in terms of the BFS, to get the cost structure into a place where our customers can afford more of the capability.
So from an industry perspective, we're only doing this because we see a benefit to the program and ultimately an economic benefit to those who are participants in the program.
And it's win-win because the government, our customers, get an economic benefit from these investments as well and have worked very closely with us in both structuring the investment strategies and programs and on ensuring that there is a good return mechanism.
So we see them as very positive mechanisms, very supportive of the program objectives.
And I think it has been a really good reflection on the partnership approach that we have together across the Companies on F-35 that we're able to make something innovative like this work so well.
I'm very proud of these blueprint initiatives.
I think they are a very good thing.
So what's neat about the blueprint process ---+ and you're right, of course we're always working together to figure out ways of taking the cost down.
It really does create a really good team environment with the customer because in some of these areas they have to make decisions to do things a little bit differently.
It's a very good way of crystallizing a very effective joint process with not only the partners, but the customer to benefit the program.
So I think it's a good idea and I'm glad to see us moving forward with AS.
There is probably as much variability across sustainment programs as there is the number of sustainment programs.
There are a lot of different models that are utilized by different customers, depending on how much work the government itself wants to do.
How much they want to contract out the nature of the economic relationships they want to create.
It's a marketplace with a lot of different business models.
And I think that's appropriate because we have many different types of systems at different stages of their life cycle with different levels of technology, different desires for modernization, so it's a very interesting and dynamic marketplace.
Robin, we're going to cut it off at this point in time, so I'm going to turn it over to <UNK> for final comments
Thanks, <UNK>.
Let me just wrap up by thanking our team again for developing an approach over these last number of years that has allowed us to consistently deliver solid results.
I think this quarter was another good demonstration of the team's focus and commitment on performance.
But also the team is doing such a great job in positioning us so well for not only the remainder of this year but for the longer term, and for working closely with our customers to satisfy their needs as we go forward.
So thanks everyone for joining us on the call today and also thanks for your continuing interest in our Company.
