Also in their remarks today, Mike and Barb will refer to certain non-GAAP measures, including free cash flow, segment operating income, adjusted segment operating income, adjusted segment operating margin, adjusted operating income, adjusted operating margin, and adjusted diluted EPS in the fourth quarter and full-year 2011. Full-year 2011 adjusted figures exclude the $290 million non-cash goodwill impairment charge. Fourth quarter 2011 adjusted figures exclude a $10 million reversal of a portion of the impairment charge taken in the third quarter 2011. Reconciliations of these metrics to the comparable GAAP measures are included in the appendix of our earnings presentation that is posted on our website.We plan to address the posted presentation slides during the call to supplement our comments. Please access our website at www.huntingtoningalls.com and click on the Investor Relations link to view the presentation as well as our earnings release. With that, I’d like to turn the call over to Mike. Mike Petters Thanks, Andy. Good morning everyone and thanks for joining us on today’s call. I am pleased to report Huntington Ingalls Industries’ results for the fourth quarter and full-year 2011. Today we reported fourth quarter sales of $1.74 billion, flat over the same period last year, and full-year sales of $6.6 billion, down about 2% from last year. If you recall, in the third quarter we booked an estimated $300 million goodwill impairment charge that was driven by adverse equity market conditions. After completing the appropriate goodwill impairment test, the final impairment charge was $290 million. Because of the change in the goodwill impairment, reported fourth quarter EPS was $1.39 and reported full-year EPS was a loss of $1.93. Barb will have more detail on the goodwill impairment during her remarks. Now excluding the impact of the impairment, fourth quarter total operating margin was 6.6%, up from 6.0% last year, and diluted earnings per share was $1.19 for the quarter, down from $1.29 in 2010. For the full year, again excluding the impact of the impairment, operating margin was 6.1% compared with 3.7% last year, and diluted earnings per share was $3.97 for the year, up from $2.77 in 2010. Total backlog at the end of the quarter was $16.3 billion compared with $17.3 billion last year.
Free cash flow for the fourth quarter and the full year came in very strong. During the fourth quarter, we generated just under $400 million in free cash flow and we ended the year with $915 million of cash.Now I’d like to walk through some of the highlights of our individual ship programs, starting with Ingalls. For the DDG 51’s, we began fabrication work on DDG 113 and will soon begin construction of DDG 114, the second ship in the DDG 51 restart. We expect the next block buy of DDG 51’s later this year, a contract that could be for as many as nine ships split between us and General Dynamics. We are aggressively preparing for the next round of awards and are confident that we will be competitive. On the LPD program, we delivered LPD 22 San Diego in December and our customer, the U.S. Navy, said this ship was the best LPD delivered to date. We expect LPD’s 23 and 24 to go to sea trials later this summer and delivery of the two ships by the end of the year. LPD 25 is progressing well and should launch later this year, although significant risk remains since it is the last ship to be completed at Avondale. We’ve also begun construction of LDP 26 and we are working under a long-lead material contract for LPD 27, and expect to finalize a construction contract for LPD 27 in the near future. Read the rest of this transcript for free on seekingalpha.com