Subsidiary Guarantors | 9 Months Ended |
Sep. 30, 2014 |
Subsidiary Guarantors [Abstract] | ' |
Subsidiary Guarantors | ' |
SUBSIDIARY GUARANTORS |
Performance of the Company's obligations under the senior notes, including any repurchase obligations resulting from a change of control, is fully and 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"). See Note 13: Debt. The guarantees rank equally with all other unsecured and unsubordinated indebtedness of the Subsidiary Guarantors and are subject to customary release provisions contingent on changes in ownership and restricted status. The Subsidiary Guarantors are each directly or indirectly 100% owned by HII. |
Set forth below are the unaudited condensed consolidating statements of operations and comprehensive income for the three and nine months ended September 30, 2014 and 2013, unaudited condensed consolidating statements of financial position as of September 30, 2014, and December 31, 2013, and the unaudited condensed consolidating statements of cash flows for the nine months ended September 30, 2014 and 2013, for HII, its aggregated subsidiary guarantors and its aggregated non-guarantor subsidiaries. The Subsidiary Guarantors' net cash funding with HII has been corrected from its previous classification as net cash provided by (used in) financing activities to net cash provided by (used in) investing activities in the prior year unaudited condensed consolidating statements of cash flows. |
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CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME |
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| | Three Months Ended September 30, 2014 |
($ in millions) | | Huntington Ingalls Industries, Inc. | | Subsidiary Guarantors | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Sales and service revenues | | | | | | | | | | |
Product sales | | $ | — | | | $ | 1,385 | | | $ | — | | | $ | — | | | $ | 1,385 | |
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Service revenues | | — | | | 311 | | | 26 | | | (5 | ) | | 332 | |
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Total sales and service revenues | | — | | | 1,696 | | | 26 | | | (5 | ) | | 1,717 | |
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Cost of sales and service revenues | | | | | | | | | | |
Cost of product sales | | — | | | 1,086 | | | — | | | — | | | 1,086 | |
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Cost of service revenues | | — | | | 262 | | | 21 | | | (5 | ) | | 278 | |
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Income (loss) from operating investments, net | | — | | | 7 | | | — | | | — | | | 7 | |
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General and administrative expenses | | — | | | 187 | | | 2 | | | — | | | 189 | |
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Operating income (loss) | | — | | | 168 | | | 3 | | | — | | | 171 | |
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Interest expense | | (26 | ) | | (1 | ) | | — | | | — | | | (27 | ) |
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Equity in earnings (loss) of subsidiaries | | 113 | | | — | | | — | | | (113 | ) | | — | |
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Earnings (loss) before income taxes | | 87 | | | 167 | | | 3 | | | (113 | ) | | 144 | |
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Federal income taxes | | (9 | ) | | 57 | | | — | | | — | | | 48 | |
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Net earnings (loss) | | $ | 96 | | | $ | 110 | | | $ | 3 | | | $ | (113 | ) | | $ | 96 | |
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Other comprehensive income (loss), net of tax | | 3 | | | 3 | | | — | | | (3 | ) | | 3 | |
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Comprehensive income (loss) | | $ | 99 | | | $ | 113 | | | $ | 3 | | | $ | (116 | ) | | $ | 99 | |
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| | Three Months Ended September 30, 2013 |
($ in millions) | | Huntington Ingalls Industries, Inc. | | Subsidiary Guarantors | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Sales and service revenues | | | | | | | | | | |
Product sales | | $ | — | | | $ | 1,394 | | | $ | — | | | $ | — | | | $ | 1,394 | |
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Service revenues | | — | | | 243 | | | 6 | | | (6 | ) | | 243 | |
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Total sales and service revenues | | — | | | 1,637 | | | 6 | | | (6 | ) | | 1,637 | |
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Cost of sales and service revenues | | | | | | | | | | |
Cost of product sales | | — | | | 1,123 | | | — | | | — | | | 1,123 | |
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Cost of service revenues | | — | | | 210 | | | 6 | | | (6 | ) | | 210 | |
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Income (loss) from operating investments, net | | — | | | 9 | | | — | | | — | | | 9 | |
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General and administrative expenses | | — | | | 186 | | | — | | | — | | | 186 | |
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Operating income (loss) | | — | | | 127 | | | — | | | — | | | 127 | |
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Interest expense | | (26 | ) | | (2 | ) | | — | | | — | | | (28 | ) |
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Equity in earnings (loss) of subsidiaries | | 87 | | | — | | | — | | | (87 | ) | | — | |
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Earnings (loss) before income taxes | | 61 | | | 125 | | | — | | | (87 | ) | | 99 | |
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Federal income taxes | | (8 | ) | | 38 | | | — | | | — | | | 30 | |
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Net earnings (loss) | | $ | 69 | | | $ | 87 | | | $ | — | | | $ | (87 | ) | | $ | 69 | |
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Other comprehensive income (loss), net of tax | | 18 | | | 18 | | | — | | | (18 | ) | | 18 | |
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Comprehensive income (loss) | | $ | 87 | | | $ | 105 | | | $ | — | | | $ | (105 | ) | | $ | 87 | |
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CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME |
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| | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2014 |
($ in millions) | | Huntington Ingalls Industries, Inc. | | Subsidiary Guarantors | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Sales and service revenues | | | | | | | | | | |
Product sales | | $ | — | | | $ | 4,150 | | | $ | — | | | $ | — | | | $ | 4,150 | |
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Service revenues | | — | | | 854 | | | 41 | | | (15 | ) | | 880 | |
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Total sales and service revenues | | — | | | 5,004 | | | 41 | | | (15 | ) | | 5,030 | |
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Cost of sales and service revenues | | | | | | | | | | |
Cost of product sales | | — | | | 3,277 | | | — | | | — | | | 3,277 | |
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Cost of service revenues | | — | | | 723 | | | 35 | | | (15 | ) | | 743 | |
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Income (loss) from operating investments, net | | — | | | 10 | | | — | | | — | | | 10 | |
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General and administrative expenses | | — | | | 507 | | | 2 | | | — | | | 509 | |
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Operating income (loss) | | — | | | 507 | | | 4 | | | — | | | 511 | |
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Interest expense | | (78 | ) | | (5 | ) | | — | | | — | | | (83 | ) |
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Equity in earnings (loss) of subsidiaries | | 338 | | | — | | | — | | | (338 | ) | | — | |
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Earnings (loss) before income taxes | | 260 | | | 502 | | | 4 | | | (338 | ) | | 428 | |
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Federal income taxes | | (26 | ) | | 168 | | | — | | | — | | | 142 | |
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Net earnings (loss) | | $ | 286 | | | $ | 334 | | | $ | 4 | | | $ | (338 | ) | | $ | 286 | |
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Other comprehensive income (loss), net of tax | | 15 | | | 15 | | | — | | | (15 | ) | | 15 | |
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Comprehensive income (loss) | | $ | 301 | | | $ | 349 | | | $ | 4 | | | $ | (353 | ) | | $ | 301 | |
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| | Nine Months Ended September 30, 2013 |
($ in millions) | | Huntington Ingalls Industries, Inc. | | Subsidiary Guarantors | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Sales and service revenues | | | | | | | | | | |
Product sales | | $ | — | | | $ | 4,138 | | | $ | — | | | $ | — | | | $ | 4,138 | |
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Service revenues | | — | | | 744 | | | 17 | | | (17 | ) | | 744 | |
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Total sales and service revenues | | — | | | 4,882 | | | 17 | | | (17 | ) | | 4,882 | |
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Cost of sales and service revenues | | | | | | | | | | |
Cost of product sales | | — | | | 3,366 | | | — | | | — | | | 3,366 | |
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Cost of service revenues | | — | | | 650 | | | 17 | | | (17 | ) | | 650 | |
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Income (loss) from operating investments, net | | — | | | 13 | | | — | | | — | | | 13 | |
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General and administrative expenses | | — | | | 541 | | | — | | | — | | | 541 | |
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Operating income (loss) | | — | | | 338 | | | — | | | — | | | 338 | |
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Interest expense | | (81 | ) | | (6 | ) | | — | | | — | | | (87 | ) |
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Equity in earnings (loss) of subsidiaries | | 225 | | | — | | | — | | | (225 | ) | | — | |
|
Earnings (loss) before income taxes | | 144 | | | 332 | | | — | | | (225 | ) | | 251 | |
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Federal income taxes | | (26 | ) | | 107 | | | — | | | — | | | 81 | |
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Net earnings (loss) | | $ | 170 | | | $ | 225 | | | $ | — | | | $ | (225 | ) | | $ | 170 | |
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Other comprehensive income (loss), net of tax | | 148 | | | 148 | | | — | | | (148 | ) | | 148 | |
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Comprehensive income (loss) | | $ | 318 | | | $ | 373 | | | $ | — | | | $ | (373 | ) | | $ | 318 | |
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CONDENSED CONSOLIDATING STATEMENTS OF FINANCIAL POSITION |
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| | | | | | | | | | | | | | | | | | | | |
| | September 30, 2014 |
($ in millions) | | Huntington Ingalls Industries, Inc. | | Subsidiary Guarantors | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Assets | | | | | | | | | | |
Current Assets | | | | | | | | | | |
Cash and cash equivalents | | $ | 760 | | | $ | 3 | | | $ | 6 | | | $ | — | | | $ | 769 | |
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Accounts receivable, net | | — | | | 1,127 | | | 17 | | | — | | | 1,144 | |
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Inventoried costs, net | | — | | | 272 | | | — | | | — | | | 272 | |
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Deferred income taxes | | — | | | 167 | | | — | | | — | | | 167 | |
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Prepaid expenses and other current assets | | — | | | 28 | | | 9 | | | (9 | ) | | 28 | |
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Total current assets | | 760 | | | 1,597 | | | 32 | | | (9 | ) | | 2,380 | |
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Property, plant, and equipment, net | | — | | | 1,850 | | | 2 | | | — | | | 1,852 | |
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Goodwill | | — | | | 1,086 | | | — | | | — | | | 1,086 | |
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Other purchased intangibles, net | | — | | | 551 | | | — | | | — | | | 551 | |
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Pension plan asset | | — | | | 129 | | | — | | | — | | | 129 | |
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Miscellaneous other assets | | 27 | | | 100 | | | — | | | — | | | 127 | |
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Investment in subsidiaries | | 3,630 | | | — | | | — | | | (3,630 | ) | | — | |
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Intercompany receivables | | — | | | 1,121 | | | — | | | (1,121 | ) | | — | |
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Total assets | | $ | 4,417 | | | $ | 6,434 | | | $ | 34 | | | $ | (4,760 | ) | | $ | 6,125 | |
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Liabilities and Stockholders' Equity | | | | | | | | | | |
Current Liabilities | | | | | | | | | | |
Trade accounts payable | | $ | — | | | $ | 263 | | | $ | 5 | | | $ | — | | | $ | 268 | |
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Accrued employees’ compensation | | — | | | 224 | | | 2 | | | — | | | 226 | |
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Current portion of long-term debt | | 93 | | | — | | | — | | | — | | | 93 | |
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Current portion of postretirement plan liabilities | | — | | | 139 | | | — | | | — | | | 139 | |
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Current portion of workers’ compensation liabilities | | — | | | 233 | | | — | | | — | | | 233 | |
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Advance payments and billings in excess of revenues | | — | | | 53 | | | — | | | — | | | 53 | |
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Other current liabilities | | 4 | | | 218 | | | 9 | | | (9 | ) | | 222 | |
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Total current liabilities | | 97 | | | 1,130 | | | 16 | | | (9 | ) | | 1,234 | |
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Long-term debt | | 1,545 | | | 105 | | | — | | | — | | | 1,650 | |
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Pension plan liabilities | | — | | | 452 | | | — | | | — | | | 452 | |
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Other postretirement plan liabilities | | — | | | 486 | | | — | | | — | | | 486 | |
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Workers’ compensation liabilities | | — | | | 424 | | | — | | | — | | | 424 | |
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Deferred tax liabilities | | — | | | 118 | | | — | | | — | | | 118 | |
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Other long-term liabilities | | — | | | 99 | | | — | | | — | | | 99 | |
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Intercompany liabilities | | 1,113 | | | — | | | 8 | | | (1,121 | ) | | — | |
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Total liabilities | | 2,755 | | | 2,814 | | | 24 | | | (1,130 | ) | | 4,463 | |
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Stockholders’ equity | | 1,662 | | | 3,620 | | | 10 | | | (3,630 | ) | | 1,662 | |
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Total liabilities and stockholders’ equity | | $ | 4,417 | | | $ | 6,434 | | | $ | 34 | | | $ | (4,760 | ) | | $ | 6,125 | |
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CONDENSED CONSOLIDATING STATEMENTS OF FINANCIAL POSITION |
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| | | | | | | | | | | | | | | | | | | | |
| | December 31, 2013 |
($ in millions) | | Huntington Ingalls Industries, Inc. | | Subsidiary Guarantors | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Assets | | | | | | | | | | |
Current Assets | | | | | | | | | | |
Cash and cash equivalents | | $ | 1,042 | | | $ | — | | | $ | 1 | | | $ | — | | | $ | 1,043 | |
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Accounts receivable, net | | — | | | 1,123 | | | — | | | — | | | 1,123 | |
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Inventoried costs, net | | — | | | 311 | | | — | | | — | | | 311 | |
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Deferred income taxes | | — | | | 170 | | | — | | | — | | | 170 | |
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Prepaid expenses and other current assets | | — | | | 30 | | | 5 | | | (6 | ) | | 29 | |
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Total current assets | | 1,042 | | | 1,634 | | | 6 | | | (6 | ) | | 2,676 | |
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Property, plant, and equipment, net | | — | | | 1,897 | | | — | | | — | | | 1,897 | |
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Goodwill | | — | | | 881 | | | — | | | — | | | 881 | |
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Other purchased intangibles, net | | — | | | 528 | | | — | | | — | | | 528 | |
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Pension plan asset | | — | | | 124 | | | — | | | — | | | 124 | |
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Miscellaneous other assets | | 35 | | | 84 | | | — | | | — | | | 119 | |
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Investment in subsidiaries | | 3,295 | | | — | | | — | | | (3,295 | ) | | — | |
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Intercompany receivables | | — | | | 1,152 | | | — | | | (1,152 | ) | | — | |
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Total assets | | $ | 4,372 | | | $ | 6,300 | | | $ | 6 | | | $ | (4,453 | ) | | $ | 6,225 | |
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Liabilities and Stockholders' Equity | | | | | | | | | | |
Current Liabilities | | | | | | | | | | |
Trade accounts payable | | $ | — | | | $ | 337 | | | $ | — | | | $ | — | | | $ | 337 | |
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Accrued employees’ compensation | | — | | | 230 | | | — | | | — | | | 230 | |
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Current portion of long-term debt | | 79 | | | — | | | — | | | — | | | 79 | |
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Current portion of postretirement plan liabilities | | — | | | 139 | | | — | | | — | | | 139 | |
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Current portion of workers’ compensation liabilities | | — | | | 230 | | | — | | | — | | | 230 | |
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Advance payments and billings in excess of revenues | | — | | | 115 | | | — | | | — | | | 115 | |
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Other current liabilities | | 25 | | | 237 | | | 6 | | | (6 | ) | | 262 | |
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Total current liabilities | | 104 | | | 1,288 | | | 6 | | | (6 | ) | | 1,392 | |
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Long-term debt | | 1,595 | | | 105 | | | — | | | — | | | 1,700 | |
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Pension plan liabilities | | — | | | 529 | | | — | | | — | | | 529 | |
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Other postretirement plan liabilities | | — | | | 477 | | | — | | | — | | | 477 | |
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Workers’ compensation liabilities | | — | | | 419 | | | — | | | — | | | 419 | |
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Deferred tax liabilities | | — | | | 83 | | | — | | | — | | | 83 | |
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Other long-term liabilities | | — | | | 104 | | | — | | | — | | | 104 | |
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Intercompany liabilities | | 1,152 | | | — | | | — | | | (1,152 | ) | | — | |
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Total liabilities | | 2,851 | | | 3,005 | | | 6 | | | (1,158 | ) | | 4,704 | |
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Stockholders’ equity | | 1,521 | | | 3,295 | | | — | | | (3,295 | ) | | 1,521 | |
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Total liabilities and stockholders’ equity | | $ | 4,372 | | | $ | 6,300 | | | $ | 6 | | | $ | (4,453 | ) | | $ | 6,225 | |
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CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS |
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| | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2014 |
($ in millions) | | Huntington Ingalls Industries, Inc. | | Subsidiary Guarantors | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net cash provided by (used in) operating activities | | $ | (65 | ) | | $ | 380 | | | $ | (1 | ) | | $ | — | | | $ | 314 | |
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Investing Activities | | | | | | | | | | |
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Additions to property, plant, and equipment | | — | | | (91 | ) | | — | | | — | | | (91 | ) |
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Acquisitions of businesses, net of cash received | | — | | | (275 | ) | | 3 | | | — | | | (272 | ) |
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Net funding from (to) parent | | — | | | 36 | | | 3 | | | (39 | ) | | — | |
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Net cash provided by (used in) investing activities | | — | | | (330 | ) | | 6 | | | (39 | ) | | (363 | ) |
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Financing Activities | | | | | | | | | | |
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Repayment of long-term debt | | (36 | ) | | — | | | — | | | — | | | (36 | ) |
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Dividends paid | | (30 | ) | | — | | | — | | | — | | | (30 | ) |
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Repurchases of common stock | | (112 | ) | | — | | | — | | | — | | | (112 | ) |
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Employee taxes on certain share-based payment arrangements | | — | | | (64 | ) | | — | | | — | | | (64 | ) |
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Proceeds from stock option exercises | | — | | | 2 | | | — | | | — | | | 2 | |
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Excess tax benefit related to stock-based compensation | | — | | | 15 | | | — | | | — | | | 15 | |
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Net funding from (to) subsidiary | | (39 | ) | | — | | | — | | | 39 | | | — | |
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Net cash provided by (used in) financing activities | | (217 | ) | | (47 | ) | | — | | | 39 | | | (225 | ) |
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Change in cash and cash equivalents | | (282 | ) | | 3 | | | 5 | | | — | | | (274 | ) |
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Cash and cash equivalents, beginning of period | | 1,042 | | | — | | | 1 | | | — | | | 1,043 | |
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Cash and cash equivalents, end of period | | $ | 760 | | | $ | 3 | | | $ | 6 | | | $ | — | | | $ | 769 | |
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| | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2013 |
($ in millions) | | Huntington Ingalls Industries, Inc. | | Subsidiary Guarantors | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net cash provided by (used in) operating activities | | $ | (73 | ) | | $ | 17 | | | $ | — | | | $ | — | | | $ | (56 | ) |
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Investing Activities | | | | | | | | | | |
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Additions to property, plant, and equipment | | — | | | (85 | ) | | — | | | — | | | (85 | ) |
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Proceeds from insurance settlement | | — | | | 58 | | | — | | | — | | | 58 | |
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Net funding from (to) parent | | — | | | 5 | | | — | | | (5 | ) | | — | |
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Net cash provided by (used in) investing activities | | — | | | (22 | ) | | — | | | (5 | ) | | (27 | ) |
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Financing Activities | | | | | | | | | | |
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Repayment of long-term debt | | (22 | ) | | — | | | — | | | — | | | (22 | ) |
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Dividends paid | | (15 | ) | | — | | | — | | | — | | | (15 | ) |
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Repurchases of common stock | | (53 | ) | | — | | | — | | | — | | | (53 | ) |
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Proceeds from stock option exercises | | 6 | | | — | | | — | | | — | | | 6 | |
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Excess tax benefit related to stock-based compensation | | — | | | 5 | | | — | | | — | | | 5 | |
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Net funding from (to) subsidiary | | (5 | ) | | — | | | — | | | 5 | | | — | |
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Net cash provided by (used in) financing activities | | (89 | ) | | 5 | | | — | | | 5 | | | (79 | ) |
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Change in cash and cash equivalents | | (162 | ) | | — | | | — | | | — | | | (162 | ) |
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Cash and cash equivalents, beginning of period | | 1,056 | | | — | | | 1 | | | — | | | 1,057 | |
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Cash and cash equivalents, end of period | | $ | 894 | | | $ | — | | | $ | 1 | | | $ | — | | | $ | 895 | |
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