Question-and-Answer Session
Operator
(Operator Instructions) Your first call comes from Howard Rubel – Jefferies & Company.
Howard Rubel Jefferies & Company
David, could you talk about where you are in terms of the order cycle for Taurus, and then I have one followup question.
David Thompson
As J. R. mentioned, our primary nearterm focus for the Taurus II program is the operational program that NASA calls commercial resupply services, or CRS, that will follow the COTS demonstration mission to supply the space station with cargo during the period from 2011 to at least 2015 and probably for a good bit longer than that.
We anticipate that NASA will make one or more contract awards under the CRS program sometime in December. If we are successful in our proposal on that opportunity, we would anticipate generating roughly two or three Taurus launches per year in support of space station cargo launches beginning in 2011.
Beyond that anchor customer potential for Taurus II, we are also in discussions with NASA for the future use of Taurus II in science and robotic exploration missions beyond earth as well as with various departments and agencies in the Defense Department concerning their use of this new mediumclass vehicle.
Putting all this together, we continue to view our addressable market over the first five years following Taurus II's introduction in late 2010 as being between seven and nine total launches per year. It's our objective to capture 50% to 60% of that market, working out to some four to five launches per year once we reach a steady state in the 2012 and beyond period.
Howard Rubel Jefferies & Company
To follow on a question to Garrett, could you help me a little bit understand some of the puts and takes in both your cash flow outlook and your guidance. My guess is that part of what you have done is you have factored in lower interest income for the balance of the year and into next year. Then, second, you're setting kind of a low hurdle for free cash flow in the fourth quarter around onethird of what you did in the third. Could you explain the difference there?
Garrett Pierce
You're right, we have factored in a low rate of return on our cash balances reflecting the current interest rate environment that we're in. The fourth quarter, really, is just timing difference of progress payment, milestones that were received under some major contracts. We think we put together what we believe is a conservative, realistic estimate, but it has nothing to do with the cash flows per se, it's the timing of benchmark payments, milestone payments on some major contracts.
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