Performance of the Company’s obligations under the senior notes, including any repurchase obligations resulting from a change of control, is unconditionally guaranteed, jointly and severally, on an unsecured basis, by each of HII’s existing and future domestic restricted subsidiaries that guarantees debt under the Credit Facility (the “Subsidiary Guarantors”).
The guarantees rank equally with all other unsecured and unsubordinated indebtedness of the guarantors.
The Subsidiary Guarantors are each directly or indirectly 100% owned by HII.
There are no significant restrictions on the ability of HII or any Subsidiary Guarantor to obtain funds from their respective subsidiaries by dividend or loan.
Mississippi Economic Development Revenue Bonds—As of December 31, 2011 and 2010, the Company had $83.7 million outstanding from the issuance of Industrial Revenue Bonds issued by the Mississippi Business Finance Corporation.
These bonds accrue interest at a fixed rate of 7.81% per annum (payable semi-annually) and mature in 2024.
While repayment of principal and interest is guaranteed by Northrop Grumman Systems Corporation, HII has agreed to indemnify Northrop Grumman Systems Corporation for any losses related to the guaranty.
In accordance with the terms of the bonds, the proceeds have been used to finance the construction, reconstruction, and renovation of the Company’s interest in certain ship manufacturing and repair facilities, or portions thereof, located in the state of Mississippi.
Gulf Opportunity Zone Industrial Development Revenue Bonds—As of December 31, 2011 and 2010, the Company had $21.6 million outstanding from the issuance of Gulf Opportunity Zone Industrial Development Revenue Bonds (“GO Zone IRBs”) issued by the Mississippi Business Finance Corporation.
The GO Zone IRBs were initially issued in a principal amount of $200 million, and in November 2010, in connection with the anticipated spin-off, HII purchased $178 million of the bonds using the proceeds from a $178 million intercompany loan from Northrop Grumman.
See Note 20: Related Party Transactions and Former Parent Company Equity.
The remaining bonds accrue interest at a fixed rate of 4.55% per annum (payable semi-annually), and mature in 2028.
In accordance with the terms of the bonds, the proceeds have been used to finance the construction, reconstruction, and renovation of the Company’s interest in certain ship manufacturing and repair facilities, or portions thereof, located in the state of Mississippi.
The estimated fair value of the Company’s total long-term debt, including current portions, at December 31, 2011 and 2010, was $1,864 million and $128 million, respectively.
The fair value of the total long-term debt was calculated based on recent trades for most of the Company’s debt instruments or based on interest rates prevailing on debt with substantially similar risks, terms and maturities.
The aggregate amounts of principal payments due on long-term debt for each of the next five years and thereafter are:
## Table 0 ##
14.
INVESTIGATIONS, CLAIMS, AND LITIGATION The Company is involved in legal proceedings before various courts and administrative agencies, and is periodically subject to government examinations, inquiries and investigations.
Pursuant to FASB Accounting Standard Codification 450 Contingencies, the Company has accrued for losses associated with investigations, claims and litigation when, and to the extent that, loss amounts related to the investigations, claims and litigation are probable and can be reasonably estimated.
The actual losses that might be incurred to resolve such investigations, claims and litigation may be higher or lower than the amounts accrued.
For matters where a material loss is probable or reasonably possible and the amount of loss cannot be reasonably estimated, but the Company is able to reasonably estimate a range of possible losses, such estimated range is required to be disclosed in these notes.
This estimated range would be based on information currently available to the Company and would involve elements of judgment and significant uncertainties.
This estimated range of possible loss would not represent the Company’s maximum possible loss exposure.
For matters as to which the Company is not able to reasonably estimate a possible loss or range of loss, the Company is required to indicate the reasons why it is unable to estimate the possible loss or range of loss.
For matters not specifically described in these notes, the Company does not believe, based on information currently available to it, that it is reasonably possible that the liabilities, if any, arising from
Former Parent’s Equity in Unit Transactions between HII and Northrop Grumman prior to the spin-off have been included in the consolidated financial statements and were effectively settled for cash at the time the transaction was recorded.
The net effect of the settlement of these transactions is reflected as Former Parent’s Equity in Unit in the consolidated statements of position.21.
UNAUDITED SELECTED QUARTERLY DATA Unaudited quarterly financial results for the years ended December 31, 2011 and 2010, are set forth in the following tables:
## Table 1 ##
Year Ended December 31, 2010
## Table 2 ##
(1) In the third quarter of 2011, HII recorded a $300 million goodwill impairment charge, which was adjusted in the fourth quarter of 2011 to $290 million based on the final impairment analysis.
(2) In the second quarter of 2010, Northrop Grumman announced plans to consolidate HII’s Ingalls operations by winding down its operations at the Avondale, Louisiana facility in 2013 after completing LPD-17 San Antonio-class ships currently under construction there.
As a result of this decision, the Company recognized a $113 million pre-tax charge to operating income for the contracts under construction at Avondale.
(3) In the third quarter of 2010, HII determined that costs to complete post-delivery work on LHD-8 USS Makin Island exceeded original estimates resulting in a charge of $30 million.
Also in the third quarter, the Company realized $24 million in unfavorable performance adjustments on LPD-24 Arlington, which was more than offset by $31 million in milestone incentives on the total LPD-22 through LPD-25 contract.22.
SUBSIDIARY GUARANTORS Performance of the Company’s obligations under the senior notes, including any repurchase obligations resulting from a change of control, is unconditionally guaranteed, jointly and severally, on an unsecured basis, by each of HII’s existing and future domestic restricted subsidiaries that guarantees debt under the Credit Facility (the “Subsidiary Guarantors”).
The guarantees rank equally with all other unsecured and unsubordinated indebtedness of the Subsidiary Guarantors.
The Subsidiary Guarantors are each directly or indirectly 100% owned by HII.
Prior to the spin-off of HII from Northrop Grumman, Northrop Grumman conducted an internal reorganization, effective on March 30, 2011, that resulted in the Company’s current organizational structure, which consists of HII as direct or indirect parent of all of the Subsidiary Guarantors.
Prior to this internal reorganization, HII had no independent assets or operations and no subsidiaries.
Accordingly, for all periods ended prior to March 30, 2011, the consolidated financial information of the Company is attributable entirely to the Subsidiary Guarantors.
Cost of Sales and Service Revenues Cost of sales and service revenues, general and administrative expenses, and goodwill impairment charges were as follows:
## Table 3 ##
Cost of Sales and Service Revenues 2011—Cost of product sales in 2011 decreased by $248 million, or 5%, as compared to 2010.
The decrease was primarily driven by the lower sales volume in 2011 described above and a pre-tax charge of $113 million recognized in 2010 resulting from our decision to wind down shipbuilding operations at our Avondale facility in 2013.
See Note 4: Avondale Wind Down in Item 8.
Cost of product sales as a percentage of product sales declined in 2011 compared to 2010 primarily as a result of the non-recurring $113 million pre-tax charge recognized in 2010 in our Ingalls segment for the wind down of shipbuilding operations at our Avondale facility.
Cost of service revenues decreased $13 million, or 2%, from 2010 primarily as a result of the lower sales volume described above.
The modest increase in cost of service revenues as a percentage of service revenues is the result of normal year-to-year variances in contract mix.2010—Cost of product sales increased $627 million, or 14%, from 2009 primarily as a result of the higher sales volume previously described.
Cost of product sales as a percentage of product sales declined slightly year over year principally as a result of lower unfavorable margin adjustments in our Ingalls segment in 2010 relative to 2009.
Cost of service revenues decreased $257 million, or 25%, from 2009 primarily as a result of the lower sales volume described above.
The modest increase in cost of service revenues as a percentage of service revenues is the result of normal year-to-year variances in contract mix.
General and Administrative Expenses In accordance with industry practice and the regulations that govern the cost accounting requirements for government contracts, most general and administrative expenses are considered allowable and allocable costs on government contracts.
These costs are allocated to contracts in progress on a systematic basis and contract performance factors include this cost component as an element of cost.2011—General and administrative expenses in 2011 decreased $39 million, or 6%, from 2010.
The decrease was due principally to a lower FAS/CAS Adjustment.
See FAS/CAS Adjustment below.2010—General and administrative expenses in 2010 increased to $663 million from $639 million in 2009 primarily as a result of higher cost allocations for Northrop Grumman management and support services.
The Northrop Grumman management and support services expense in 2010 increased to $115 million from $82 million in 2009.
The increase in management and support services allocations reflects higher employee compensation expenses in 2010 and the impact of the final allocation of prior year overheads.
As a percentage of total sales and service revenues, these costs decreased year over year due principally to the higher sales volume in 2010.
Goodwill Impairment As previously discussed in Critical Accounting Policies, Estimates and Judgments in Item 7, we perform impairment tests for goodwill as of November 30 each year, or when evidence of potential impairment exists.
We record a charge to operations when we determine that an impairment has occurred.
Except for long-term debt, the carrying amounts of the Company’s other financial instruments are measured at fair value or approximate fair value due to the short-term nature of these instruments.
Asset Retirement Obligations—The Company records all known asset retirement obligations within other current liabilities for which the liability’s fair value can be reasonably estimated, including certain asbestos removal, asset decommissioning and contractual lease restoration obligations.
The changes in the asset retirement obligation carrying amounts during 2011, 2010 and 2009 were as follows:
## Table 4 ##
The Company also has known conditional asset retirement obligations related to assets currently in use, such as certain asbestos remediation and asset decommissioning activities to be performed in the future, that were not reasonably estimable as of December 31, 2011 and 2010, due to insufficient information about the timing and method of settlement of the obligation.
Accordingly, the fair value of these obligations has not been recorded in the consolidated financial statements.
Environmental remediation and/or asset decommissioning of the relevant facilities may be required when the Company ceases to utilize these facilities.
In addition, there may be conditional environmental asset retirement obligations that the Company has not yet discovered.
Income Taxes—Income tax expense and other income tax related information contained in the financial statements for periods before the spin-off are presented as if the Company filed its own tax returns on a stand-alone basis, while similar information for periods after the spin-off reflect the Company’s positions to be filed in its own tax returns in the future.
Income tax expense and other related information are based on the prevailing statutory rates for U. S.  federal income taxes and the composite state income tax rate for the Company for each period presented.
State and local income and franchise tax provisions are allocable to contracts in process and, accordingly, are included in general and administrative expenses.
Deferred income taxes are recorded when revenues and expenses are recognized in different periods for financial statement purposes than for tax return purposes.
Deferred tax asset or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect.
Determinations of the expected realizability of deferred tax assets and the need for any valuation allowances against these deferred tax assets were evaluated based upon the stand-alone tax attributes of the Company, and an $18 million valuation allowance was deemed necessary as of December 31, 2011.
No valuation allowance was deemed necessary as of December 31, 2010.
Uncertain tax positions meeting the more-likely-than-not recognition threshold, based on the merits of the position, are recognized in the financial statements.
We recognize the amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority.
If a tax position does not meet the minimum statutory threshold to avoid payment of penalties, we recognize an expense for the amount of the penalty in the period the tax position is claimed or expected to be claimed in our tax return.
Penalties, if probable and reasonably estimable, are recognized as a component of income tax expense.
We also recognize accrued interest related to uncertain tax positions in income tax expense.
The timing and amount of accrued interest is determined by the applicable tax law associated with an underpayment of income taxes.
See Note 12: Income Taxes.
Under existing GAAP, changes in accruals associated with uncertainties are recorded in earnings in the period they are determined.
HII expects to incur higher costs to complete ships currently under construction in Avondale due to anticipated reductions in productivity.
As a result, in the second quarter of 2010, the Company increased the estimates to complete LPD-23 and LPD-25 by approximately $210 million.
The Company recognized a $113 million pre-tax charge to operating income for these contracts in the second quarter of 2010.
HII is exploring alternative uses of the Avondale facility, including alternative opportunities for the workforce.
In connection with and as a result of the decision to wind down shipbuilding operations at the Avondale, Louisiana facility, the Company began incurring and paying related employee severance and incentive compensation liabilities and expenditures, asset retirement obligation liabilities that became reasonably estimable, and amounts owed for not meeting certain requirements under its cooperative endeavor agreement with the State of Louisiana.
The Company anticipates that it will incur substantial other restructuring and facilities shutdown related costs, including, but not limited to, severance expense, relocation expense, and asset write-downs related to the Avondale facilities.
These costs are expected to be allowable expenses under government accounting standards and thus should be recoverable in future years’ overhead costs.
These future costs could approximate $271 million, based on management’s current estimate.
Such costs should be recoverable under existing flexibly priced contracts or future negotiated contracts in accordance with Federal Acquisition Regulation (“FAR”) provisions relating to the treatment of restructuring and shutdown related costs.
The Company is currently in discussions with the U. S.  Navy regarding its cost submission to support the recoverability of these costs under the FAR and applicable contracts, and this submission is subject to review and acceptance by the U. S.  Navy.
The Defense Contract Audit Agency (“DCAA”), a DoD agency, prepared an initial audit report on the Company’s cost proposal for restructuring and shutdown related costs of $310 million, which stated that the proposal was not adequately supported for the DCAA to reach a conclusion and questioned approximately $25 million, or 8%, of the costs submitted by the Company.
Accordingly, the DCAA did not accept the proposal as submitted.
The Company has submitted a revised proposal to address the concerns of the DCAA and to reflect a revised estimated total cost of $271 million.
Should the Company’s revised proposal be challenged by the U. S.  Navy, the Company would likely pursue prescribed dispute resolution alternatives to resolve the challenge.
That process, however, would create uncertainty as to the timing and eventual allowability of the costs related to the wind down of the Avondale facility.
Ultimately, the Company anticipates these discussions with the U. S.  Navy will result in an agreement that is substantially in accordance with management’s cost recovery expectations.
Accordingly, HII has treated these costs as allowable costs in determining the earnings performance on its contracts in process.
The actual restructuring expenses related to the wind down may be greater than the Company’s current estimate, and any inability to recover such costs could result in a material effect on the Company’s consolidated financial position, results of operations or cash flows.
The Company also evaluated the effect that the wind down of the Avondale facilities might have on the benefit plans in which HII employees participate.
HII determined that the potential impact of a curtailment in these plans was not material to its consolidated financial position, results of operations or cash flows.
The table below summarizes the Company’s liability for restructuring and shutdown related costs associated with winding down the Avondale facility.
As of December 31, 2011 and 2010, these costs are comprised primarily of employee severance and retention and incentive bonuses.
These amounts were capitalized in inventoried costs, and will be recognized as expenses in cost of product sales beginning in 2014.

<table><tr><td>2012</td><td>$29</td></tr><tr><td>2013</td><td>50</td></tr><tr><td>2014</td><td>79</td></tr><tr><td>2015</td><td>108</td></tr><tr><td>2016</td><td>288</td></tr><tr><td>Thereafter</td><td>1,305</td></tr><tr><td>Total long-term debt</td><td>$1,859</td></tr></table>
<table><tr><td></td><td colspan="4"> Year Ended December 31, 2011</td></tr><tr><td> ($ in millions, except per share amounts)</td><td> 1st Qtr</td><td> 2nd Qtr</td><td>3rd Qtr -1</td><td> 4th Qtr -1</td></tr><tr><td>Sales and service revenues</td><td>$1,684</td><td>$1,563</td><td>$1,593</td><td>$1,735</td></tr><tr><td>Operating income (loss)</td><td>85</td><td>91</td><td>-190</td><td>124</td></tr><tr><td>Earnings (loss) before income taxes</td><td>70</td><td>61</td><td>-220</td><td>95</td></tr><tr><td>Net earnings (loss)</td><td>45</td><td>40</td><td>-248</td><td>69</td></tr><tr><td>Net earnings (loss) attributable to HII</td><td>45</td><td>40</td><td>-248</td><td>69</td></tr><tr><td>Basic earnings (loss) per share</td><td>$0.92</td><td>$0.81</td><td>-$5.07</td><td>$1.41</td></tr><tr><td>Diluted earnings (loss) per share</td><td>$0.92</td><td>$0.80</td><td>-$5.07</td><td>$1.39</td></tr></table>
<table><tr><td></td><td colspan="4"> Year Ended December 31, 2010</td></tr><tr><td> ($ in millions, except per share amounts)</td><td> 1st Qtr</td><td>2nd Qtr -2</td><td> 3rd Qtr -3</td><td> 4th Qtr</td></tr><tr><td>Sales and service revenues</td><td>$1,712</td><td>$1,610</td><td>$1,665</td><td>$1,736</td></tr><tr><td>Operating income (loss)</td><td>87</td><td>-20</td><td>77</td><td>104</td></tr><tr><td>Earnings (loss) before income taxes</td><td>77</td><td>-30</td><td>67</td><td>92</td></tr><tr><td>Net earnings (loss)</td><td>41</td><td>-11</td><td>42</td><td>63</td></tr><tr><td>Net earnings (loss) attributable to HII</td><td>41</td><td>-11</td><td>42</td><td>63</td></tr><tr><td>Basic earnings (loss) per share</td><td>$0.85</td><td>-$0.23</td><td>$0.86</td><td>$1.29</td></tr><tr><td>Diluted earnings (loss) per share</td><td>$0.85</td><td>-$0.23</td><td>$0.86</td><td>$1.29</td></tr></table>
<table><tr><td></td><td colspan="3"> Year Ended December 31</td><td></td></tr><tr><td> ($ in millions)</td><td>2011</td><td>2010</td><td> 2009</td><td></td></tr><tr><td>Cost of product sales</td><td>$4,794</td><td>$5,042</td><td>$4,415</td><td></td></tr><tr><td><i>% of product sales</i></td><td>84.5%</td><td>87.0%</td><td>87.5</td><td><i>%</i></td></tr><tr><td>Cost of service revenues</td><td>757</td><td>770</td><td>1,027</td><td></td></tr><tr><td><i>% of service revenues</i></td><td>84.2%</td><td>83.2%</td><td>82.4</td><td><i>%</i></td></tr><tr><td>General and administrative expenses</td><td>624</td><td>663</td><td>639</td><td></td></tr><tr><td><i>% of total sales and service revenues</i></td><td>9.5%</td><td>9.9%</td><td>10.2</td><td><i>%</i></td></tr><tr><td>Goodwill impairment</td><td>290</td><td>0</td><td>0</td><td></td></tr><tr><td>Cost of sales and service revenues</td><td>$6,465</td><td>$6,475</td><td>$6,081</td><td></td></tr></table>
<table><tr><td>($ in millions)</td><td>Asset Retirement Obligations</td></tr><tr><td>Balance at January 1, 2009</td><td>$3</td></tr><tr><td>Accretion expense</td><td>0</td></tr><tr><td>Payment of asset retirement obligation</td><td>0</td></tr><tr><td>Balance at December 31, 2009</td><td>3</td></tr><tr><td>Obligation relating to the future retirement of a facility</td><td>17</td></tr><tr><td>Accretion expense</td><td>0</td></tr><tr><td>Payment of asset retirement obligation</td><td>0</td></tr><tr><td>Balance at December 31, 2010</td><td>20</td></tr><tr><td>Obligation relating to the future retirement of a facility</td><td>5</td></tr><tr><td>Accretion expense</td><td>0</td></tr><tr><td>Payment of asset retirement obligation</td><td>0</td></tr><tr><td>Balance at December 31, 2011</td><td>$25</td></tr></table>

Question: how is the cash flow statement from financing activities affected by the change in the balance of the long-term debt from 2010 to 2011?
Answer: 1736