Seth Seifman: Apologies to be deep in the weeds on the taxes, but kind of what I got left here now. And so I just wanted to ask you, Dave, just to understand that a little better and your interpretation of this. If I look at what Lockheed paid in 174 payments last year, it was like 38%, 39% of their IRAD and you guys paid like 75% of your IRAD. So it would seem like that’s a very different interpretation. And it would seem like there — the guidance is consistent with the idea that IRAD is kind of the basis of what’s subject to Section 174. And so maybe if you can provide — I know we spoke about this, but just a little bit more color on what’s different about your business.
David Keffer: So I appreciate the question, Seth. I know it’s been a common line of discussion for us, and it’s an interesting topic. I would say this probably isn’t the time or the place for us to assess differences in our own interpretation of guidance from peers. We’re not familiar with the interpretations of our peers. When it comes to our own view of Section 174, it is broader than IRAD and includes a portion of our contract-driven R&D as well. With that said, as I mentioned, we’ll continue to assess potential future guidance, even following on and clarifying guidance provided in September. And we’re open to different interpretations based on different guidance we may get in the future. But importantly, as I mentioned, a difference in contract type interpretation is not nearly as impactful for us as others have said it is for them.
And so I think, in aggregate, this should be less of a focus. That interpretation difference should be less of a focus for the Street going forward than it has been for us in the recent past. And the important point to take away is that our cash tax forecast hasn’t changed in any meaningful way and remains a tailwind for us. It’s a small piece of the much more important puzzle that is really strong free cash flow growth opportunity for us over these next five years, leading to a lot of optionality as it relates to capital deployment. And I think that’s the more important headline.
Operator: And our final question comes from David Strauss with Barclays. You may proceed.
David Strauss: Wanted to ask specifically on B-21 and your guidance for — it sounds like 10% margins at AS next year. Are you assuming, Kathy, any incremental inflation [indiscernible] on B-21 in that?
Kathy Warden: So we look at the EAC, and it has a number of factors incorporated into our expectations performance, our expectations for the contract terms. And so all of that is factored into what goes into the expectations that I laid out for B-21. And as we’ve consistently said through the year, we are planning at a zero profitability. But we have to perform and we are working hard to ensure that, that plan is what we achieve.
David Strauss: Okay. And apologies, Dave, I got to go back to Section 174. Just to level set us, are you — in your free cash flow forecast this year, are you still assuming $700 million impact from Section 174 and stepping down roughly 20% from there next year?
David Keffer: No, I appreciate the clarifying question. We have stepped down about 20% below our prior estimates for the impacts of the annual effect of Section 174, and we’ve detailed that further in our 10-Q in terms of the impacts on 2022, 2023 and beyond based on the numbers that we’ve calculated with the benefit of actual cost to apply as we have formulated our 2022 tax return. So it’s a bit lower than that. As I mentioned, that’s offset by a couple of factors moving in the other direction, which in aggregate, leads to no change in our cash tax forecast for this year or the next couple of years. So no change to that element of the free cash flow guidance.
Kathy Warden: Thanks, David. So quickly before concluding the call, I just want to take a moment to acknowledge our team and thank them for their contributions to our company and our customers. And in particular, I want to thank our General Counsel Sheila Cheston, who is retiring after 13 years with the company. Sheila has been instrumental in instilling a culture of strong ethics and she has provided outstanding counsel for the company and been a trusted partner to the Board and to me and the leadership team. Kathy Simpson is our new General Counsel. She is also a valued member of our team. She’s been with us for many years, and she brings a wealth of broad-based legal and strategic expertise to the role. So we’re thrilled to have her.
And I also want to congratulate Rob Fleming, our new Space System Sector President and thank Tom Wilson for his leadership in guiding the space business for the last several years during a period of just tremendous growth. Tom is now taking a new role with the company who’s going to help us expand our business development capabilities across the entire enterprise. And Rob has extensive experience running complex businesses during his 18 years with our company. He most notably and recently led the Strategic Space Systems division, which is the largest segment of our space sector, and I think what you see from our team is that the depth and strength of our team allows us to make these internal transitions very smoothly. I’m looking forward to working them and them meeting you in future years.
So thank you for joining the call today, and we look forward to speaking with you again on our fourth quarter call in January.
Operator: Thank you. Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation.
