Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 28, 2014 | |
Document Documentand Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Trading Symbol | 'XLS | ' |
Entity Registrant Name | 'Exelis Inc. | ' |
Entity Central Index Key | '0001524471 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 186,749,096 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Statement [Abstract] | ' | ' | ' | ' |
Product revenue | $503 | $498 | $1,506 | $1,515 |
Service revenue | 565 | 643 | 1,724 | 2,062 |
Total revenue | 1,068 | 1,141 | 3,230 | 3,577 |
Cost of product revenue | 356 | 354 | 1,088 | 1,091 |
Cost of service revenue | 477 | 537 | 1,456 | 1,708 |
Selling, general and administrative expenses | 117 | 100 | 344 | 337 |
Research and development expenses | 18 | 11 | 43 | 39 |
Restructuring and asset impairment charges | 4 | 6 | 11 | 68 |
Operating income | 96 | 133 | 288 | 334 |
Interest expense, net | 9 | 10 | 27 | 28 |
Other (income) expense, net | -1 | 3 | -5 | 2 |
Income from continuing operations before income tax expense | 88 | 120 | 266 | 304 |
Income tax expense | 36 | 40 | 101 | 102 |
Net income | $52 | $80 | $165 | $202 |
Basic | ' | ' | ' | ' |
Net income (in dollars per share) | $0.28 | $0.42 | $0.87 | $1.07 |
Diluted | ' | ' | ' | ' |
Net income (in dollars per share) | $0.27 | $0.41 | $0.85 | $1.06 |
Weighted average common shares outstanding - basic (in shares) | 188.4 | 188.5 | 189 | 188.3 |
Weighted average common shares outstanding - diluted (in shares) | 193.2 | 192.8 | 193.9 | 191 |
Cash dividends declared per common share (in dollars per share) | $0.10 | $0.10 | $0.31 | $0.31 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net income | $52 | $80 | $165 | $202 |
Other comprehensive income (loss), net of tax | ' | ' | ' | ' |
Net foreign currency translation adjustments | -9 | 9 | -5 | -3 |
Defined benefit plans | ' | ' | ' | ' |
Net actuarial gain arising during the period | 0 | 0 | 0 | 116 |
Amortization of net actuarial loss included in net periodic benefit cost | 25 | 17 | 52 | 53 |
Amortization of prior service cost included in net periodic benefit cost | 0 | 0 | 1 | 1 |
Other comprehensive income (loss), net of tax | 16 | 26 | 48 | 167 |
Total comprehensive income | $68 | $106 | $213 | $369 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Current assets | ' | ' |
Cash and cash equivalents | $524 | $469 |
Receivables, net | 939 | 939 |
Inventories, net | 258 | 246 |
Deferred tax asset | 44 | 16 |
Other current assets | 42 | 70 |
Total current assets | 1,807 | 1,740 |
Plant, property and equipment, net | 452 | 498 |
Goodwill | 2,195 | 2,184 |
Other intangible assets, net | 157 | 167 |
Deferred tax asset | 186 | 216 |
Other non-current assets | 120 | 79 |
Total non-current assets | 3,110 | 3,144 |
Total assets | 4,917 | 4,884 |
Current liabilities | ' | ' |
Accounts payable | 311 | 367 |
Advance payments and billings in excess of costs | 266 | 301 |
Compensation and other employee benefits | 183 | 216 |
Other accrued liabilities | 173 | 160 |
Total current liabilities | 933 | 1,044 |
Defined benefit plans | 1,259 | 1,407 |
Long-term debt | 778 | 649 |
Deferred tax liability | 3 | 2 |
Other non-current liabilities | 155 | 130 |
Total non-current liabilities | 2,195 | 2,188 |
Total liabilities | 3,128 | 3,232 |
Commitments and contingencies (Note 15) | ' | ' |
Shareholders’ equity | ' | ' |
Common stock | 2 | 2 |
Additional paid-in capital | 2,660 | 2,623 |
Treasury stock | -69 | -16 |
Retained earnings | 580 | 475 |
Accumulated other comprehensive loss | -1,384 | -1,432 |
Total shareholders’ equity | 1,789 | 1,652 |
Total liabilities and shareholders’ equity | $4,917 | $4,884 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Operating activities | ' | ' |
Net income | $165 | $202 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 88 | 85 |
Stock-based compensation | 21 | 25 |
Restructuring and asset impairment charges | 11 | 68 |
Payments for restructuring | -23 | -42 |
Defined benefit plans expense | 48 | 69 |
Defined benefit plans payments | -134 | -136 |
Change in assets and liabilities | ' | ' |
Change in receivables | 1 | -22 |
Change in inventories | -10 | -4 |
Change in other assets | 9 | -5 |
Change in accounts payable | -56 | -93 |
Change in advance payments and billings in excess of costs | -35 | 13 |
Change in deferred taxes | -14 | 31 |
Change in other liabilities | 2 | -73 |
Other, net | -2 | 0 |
Net cash provided by operating activities | 71 | 118 |
Investing activities | ' | ' |
Capital expenditures | -37 | -57 |
Proceeds from the sale of assets | 4 | 9 |
Acquisitions, net of cash acquired | -22 | -16 |
Other, net | -1 | 0 |
Net cash used in investing activities | -56 | -64 |
Financing activities | ' | ' |
Proceeds from the issuance of debt | 140 | 0 |
Payment of debt Issuance costs | -4 | 0 |
Dividends paid | -60 | -39 |
Common stock repurchased | -53 | -5 |
Proceeds from the exercise of stock options | 17 | 11 |
Other, net | 2 | -2 |
Net cash provided by (used in) financing activities | 42 | -35 |
Exchange rate effects on cash and cash equivalents | -2 | -2 |
Net change in cash and cash equivalents | 55 | 17 |
Cash and cash equivalents – beginning of year | 469 | 292 |
Cash and cash equivalents – end of period | $524 | $309 |
Background_Basis_of_Presentati
Background, Basis of Presentation and Use of Estimates | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Background, Basis of Presentation and Use of Estimates | ' |
BACKGROUND, BASIS OF PRESENTATION AND USE OF ESTIMATES | |
Background | |
Exelis Inc. (“Exelis” or the “Company”) is a diversified aerospace, defense, information and services company that leverages a greater than 50-year legacy of deep customer knowledge and technical expertise to deliver affordable mission-critical solutions in the areas of imaging and analysis, electronic warfare, air traffic solutions, positioning and navigation, communications and information systems, logistics, and technical services to military, government and commercial customers in the United States and globally. We are focused on strategic growth in the areas of: critical networks; intelligence, surveillance, reconnaissance (ISR) and analytics; electronic warfare; and composite aerostructures. The Company's customers include the U.S. Department of Defense (DoD) and its prime contractors, U.S. Government intelligence agencies, the National Aeronautics and Space Administration (NASA), the Federal Aviation Administration (FAA), allied foreign governments and domestic and foreign commercial customers. As a prime contractor, subcontractor, or preferred supplier, Exelis participates in many high priority defense and civil government programs in the United States and internationally. Exelis conducts most of its business with the U.S. Government, principally the DoD. | |
References in these notes to “Exelis”, “we,” “us,” “our,” “the Company” and “our Company” refer to Exelis Inc. and its subsidiaries, unless the context otherwise requires. | |
Basis of Presentation | |
The unaudited Condensed Consolidated Financial Statements included in this Form 10-Q have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and, in the opinion of management, reflect all adjustments (which include normal recurring adjustments) necessary for a fair presentation of the Company's financial position, results of operations, and cash flows for the periods presented. Certain information and note disclosures normally included in financial statements prepared annually in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such SEC rules. These financial statements should be read in conjunction with the audited Consolidated and Combined Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2013. We believe that the disclosures included in this Form 10-Q are adequate to make the information presented not misleading. | |
Our quarterly financial periods end on the Friday closest to the last day of the calendar quarter, except for the last quarterly period of the fiscal year, which ends on December 31st. For ease of presentation, the quarterly financial statements included herein are described as ending on the last day of the calendar quarter. The results reported in these financial statements are not necessarily indicative of results that may be expected for the entire year. | |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, revenue recognition, income taxes, contingency accruals and valuation allowances, fair value measurements, impairment of goodwill and other intangible assets, postretirement obligations and certain contingent liabilities. Actual results could differ from these estimates. | |
During the performance of long-term sales contracts, estimated final contract prices and costs are reviewed periodically and revisions are made as required and recorded in income in the period in which they are determined. Changes in estimated revenue, cost of revenue and the related effect to operating income are recognized using a cumulative catch-up adjustment which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a contract’s percent complete. For the three and nine months ended September 30, 2014, net favorable cumulative catch-up adjustments related to prior periods increased operating income by approximately $6 and $6, respectively, and diluted earnings per share by approximately $0.02 and $0.02, respectively. For the three and nine months ended September 30, 2013, net favorable cumulative catch-up adjustments related to prior periods increased operating income by approximately $16 and $83, respectively, and diluted earnings per share by approximately $0.06 and $0.29, respectively. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2014 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ' |
Recent Accounting Pronouncements | ' |
RECENT ACCOUNTING PRONOUNCEMENTS | |
Pronouncements Not Yet Adopted | |
In May 2014, the Financial Accounting Standards Board (FASB) issued final guidance on revenue recognition, which provides a single, comprehensive revenue recognition model for all contracts with customers, aimed at improving comparability within industries, across industries, and across capital markets. The new guidance contains principles, including a five step approach, that an entity will apply to determine the measurement and timing of revenue recognition that will require an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also requires additional disclosures intended to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and the related cash flows. Adoption of this guidance could affect the measurement and timing of revenue recognition on our contracts. The guidance is effective for the first interim period within annual reporting periods beginning after December 15, 2016, and can be applied retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with the cumulative effect of initial application of the guidance recognized in retained earnings on the date of initial adoption (simplified transition method). Early adoption is not permitted. We are currently evaluating the methods of adoption and the potential impact of this guidance on our financial position, results of operations and cash flows. | |
The FASB recently issued final guidance aimed at reducing the frequency of disposals reported as discontinued operations by raising the threshold for a disposal to qualify as a discontinued operation, focusing on strategic shifts that have or will have a major effect on an entity's operations and financial results. The guidance expands the disclosures for discontinued operations, but does not change the presentation requirements for discontinued operations in the income statement. The guidance is effective prospectively for annual periods beginning on or after December 15, 2014, with early adoption permitted, and would only apply to disposals completed subsequent to adoption. We will adopt this guidance on January 1, 2015. | |
Other new pronouncements issued but not effective until after September 30, 2014 are not expected to have a material impact on our financial position, results of operations or cash flows. |
Spinoff_of_Vectrus
Spin-off of Vectrus | 9 Months Ended |
Sep. 30, 2014 | |
Restructuring and Related Activities [Abstract] | ' |
Spin-off of Vectrus | ' |
SPIN-OFF OF VECTRUS | |
On the first day of our fiscal fourth quarter, September 27, 2014, the Company completed the previously announced spin-off of part of its military and government services business ("Vectrus, Inc." or "Vectrus", formerly referred to as Mission Systems) through a pro rata distribution to the Company's shareholders of one share (in whole shares) of Vectrus common stock for every 18 shares (in whole shares) of the Company's common stock held by such shareholders on September 18, 2014 (the "Record Date"), or approximately 10.5 shares of Vectrus common stock. Immediately after the spin-off, the Company did not beneficially own any shares of Vectrus common stock. Additionally, on September 26, 2014, Vectrus incurred debt and made a net cash distribution of $136 to a subsidiary of Exelis in connection with the spin-off. This cash distribution is subject to a working capital adjustment. The spin-off has been structured to qualify as a tax-free transaction to Exelis and its shareholders for U.S. Federal income tax purposes, except to the extent shareholders receive cash in lieu of fractional shares. Vectrus began trading as an independent, publicly traded company on the New York Stock Exchange on September 29, 2014. | |
The spin-off was completed pursuant to various agreements between the Company and Vectrus executed on September 25, 2014 that govern the ongoing relationships between the companies after the spin-off and provided mechanisms for an orderly transition, including the transfer of assets and assumption of liabilities at spin-off and the allocation of employee benefits, income taxes, and certain other liabilities and obligations attributable to periods prior to the spin-off. The executed agreements include the Distribution Agreement, Employee Matters Agreement, Tax Matters Agreement, Master Transition Services Agreement and certain agreements relating to intellectual property. | |
Vectrus is part of the Company’s Information and Technical Services segment and included the following major program areas: Infrastructure Asset Management; Logistics and Supply Chain Management; and Information Technology and Network Communication Services. As the spin-off was completed subsequent to the end of the Company's quarterly financial reporting period on the last Friday of the calendar quarter (September 26, 2014), this Form 10-Q includes Vectrus' financial results as part of our continuing operations. Vectrus' financial results prior to the spin-off will be reported as discontinued operations beginning in our Annual Report on Form 10-K for the year ended December 31, 2014. |
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||
Earnings Per Share | ' | |||||||||||
EARNINGS PER SHARE | ||||||||||||
The following table sets forth the reconciliation of basic and diluted weighted average shares outstanding for our earnings per share calculations: | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
Weighted average common shares outstanding | 188.4 | 188.5 | 189 | 188.1 | ||||||||
Add: Weighted average restricted stock awards outstanding(a) | — | — | — | 0.2 | ||||||||
Basic weighted average common shares outstanding | 188.4 | 188.5 | 189 | 188.3 | ||||||||
Add: Dilutive impact of stock options | 2.7 | 2.2 | 2.8 | 0.9 | ||||||||
Add: Dilutive impact of restricted stock units | 2.1 | 2.1 | 2.1 | 1.8 | ||||||||
Diluted weighted average common shares outstanding | 193.2 | 192.8 | 193.9 | 191 | ||||||||
(a) | Restricted stock awards containing rights to non-forfeitable dividends which participate in undistributed earnings with common shareholders are considered participating securities for purposes of computing earnings per share. | |||||||||||
For the three and nine months ended September 30, 2014, we excluded from our diluted share calculation 0.6 and 0.4 shares, respectively, related to stock options and zero and less than 0.1 shares, respectively, related to restricted stock units, and for the three and nine months ended September 30, 2013, we excluded 0.1 and 2.6 shares, respectively, related to stock options and zero and less than 0.1 shares, respectively, related to restricted stock units, as their effect would have been antidilutive. |
Shareholders_Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2014 | |
Equity [Abstract] | ' |
Shareholders' Equity | ' |
SHAREHOLDERS’ EQUITY | |
Capital Stock | |
Authorized capital was comprised of 750 shares of common stock ($0.01 par value per share) and 50 shares of preferred stock (no par value per share) on September 30, 2014 and December 31, 2013. There were 192.5 and 190.4 shares of common stock issued at September 30, 2014 and December 31, 2013, respectively, and 188.5 and 189.4 shares of common stock outstanding at September 30, 2014 and December 31, 2013, respectively. No preferred stock was issued and outstanding at September 30, 2014 and December 31, 2013. | |
During the nine months ended September 30, 2014, we repurchased a total of 2.9 shares of our common stock under our share repurchase program for $53, and as of September 30, 2014 the Company had remaining authorization of $31 for future share repurchases through December 31, 2015. | |
Dividends | |
On August 12, 2014, our Board of Directors declared a cash dividend of $0.10 per share, payable on October 1, 2014 to shareholders of record on August 29, 2014. During the nine months ended September 30, 2014, we declared three quarterly cash dividends totaling $60 or $0.31 per share. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Loss | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
Equity [Abstract] | ' | ||||||||||
Accumulated Other Comprehensive Loss | ' | ||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | |||||||||||
The following table presents changes in accumulated other comprehensive loss, net of tax, by component, for the nine months ended September 30, 2014: | |||||||||||
Net Foreign Currency Translation Adjustments | Unamortized Defined Benefit Plan Costs | Accumulated Other Comprehensive Loss | |||||||||
Balance at January 1, 2014 | $ | 16 | $ | (1,448 | ) | $ | (1,432 | ) | |||
Other comprehensive income (loss) before reclassifications | (5 | ) | — | (5 | ) | ||||||
Amounts reclassified from accumulated other comprehensive loss | — | 53 | (a) | 53 | |||||||
Other comprehensive income (loss), net of tax | (5 | ) | 53 | 48 | |||||||
Balance at September 30, 2014 | $ | 11 | $ | (1,395 | ) | $ | (1,384 | ) | |||
(a) This accumulated other comprehensive loss component primarily relates to the amortization of net actuarial loss. For the three and nine months ended September 30, 2014, the amortization of net actuarial loss was $25 (net of tax of $(2)) and $52 (net of tax of $15), respectively, which are included in the computation of net periodic benefit cost (Note 12). | |||||||||||
Unamortized defined benefit plan costs consist primarily of net actuarial loss totaling $1,391 and $1,443, net of tax, as of September 30, 2014 and December 31, 2013, respectively. Net actuarial gains or losses principally arise from gains or losses on plan assets due to variations in the fair market value of the underlying assets and changes in the benefit obligation due to changes in actuarial assumptions. | |||||||||||
Unamortized defined benefit plan costs included in accumulated other comprehensive loss in the unaudited Condensed Consolidated Balance Sheets were reduced by taxes of $919 and $934 as of September 30, 2014 and December 31, 2013, respectively. The changes in defined benefit plan costs included in other comprehensive income (loss) in the unaudited Condensed Consolidated Statements of Comprehensive Income were reduced by taxes of $(2) and $15 for the three and nine months ended September 30, 2014, respectively, and $11 and $111 for the three and nine months ended September 30, 2013, respectively. |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
INCOME TAXES | |
Effective Tax Rate | |
Our quarterly income tax expense is measured using an estimated annual effective income tax rate, adjusted for discrete items within the period. The comparison of effective income tax rates between periods is significantly affected by discrete items recognized during the periods, the level and mix of earnings by tax jurisdiction and permanent differences. | |
For the three months ended September 30, 2014, the Company recorded an income tax provision of $36 or 40.9% of income from continuing operations before income tax expense as compared to $40 or 33.3% during the same prior year period. For the nine months ended September 30, 2014, the Company recorded an income tax provision of $101 or 38.0% of income from continuing operations before income tax expense as compared to $102 or 33.6% during the same prior year period. The effective income tax rate varies from the federal statutory rate of 35% primarily due to the unfavorable impact of state taxes offset by the favorable impact from the U.S. manufacturing deduction. The effective income tax rate for the three and nine months ended September 30, 2014 included the unfavorable impact of discrete items primarily related to tax credit adjustments. The effective income tax rate for the nine months ended September 30, 2013 also included the favorable impact of a discrete item related to the renewal of the 2012 federal research and development tax credit. | |
Uncertain Tax Positions | |
As of September 30, 2014 and December 31, 2013, unrecognized tax benefits were $40 and $0, respectively. Unrecognized tax benefits are primarily related to the timing of certain income and deductions and could partially impact income tax expense when settled. We anticipate that these unrecognized tax benefits will not significantly decrease within the next twelve months. |
Receivables_Net
Receivables, Net | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Receivables [Abstract] | ' | |||||||
Receivables, Net | ' | |||||||
RECEIVABLES, NET | ||||||||
Receivables, net were comprised of the following: | ||||||||
September 30, 2014 | December 31, 2013 | |||||||
Billed receivables | $ | 388 | $ | 395 | ||||
Unbilled contract receivables | 545 | 537 | ||||||
Other | 9 | 11 | ||||||
Receivables, gross | 942 | 943 | ||||||
Allowance for doubtful accounts | (3 | ) | (4 | ) | ||||
Receivables, net | $ | 939 | $ | 939 | ||||
Total billed receivables due from the U.S. Government, either directly or as a subcontractor with the U.S. Government, were $287 and $314 at September 30, 2014 and December 31, 2013, respectively. Because the Company’s billed receivables are primarily with the U.S. Government, the Company does not have a material credit risk exposure. | ||||||||
Unbilled contract receivables represent revenue recognized on long-term sales contracts in excess of amounts billed as of the balance sheet date. We expect to bill and collect substantially all of the September 30, 2014 unbilled contract receivables during the next twelve months as scheduled performance milestones are completed or units are delivered. |
Inventories_Net
Inventories, Net | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Inventories, Net | ' | |||||||
INVENTORIES, NET | ||||||||
Inventories, net were comprised of the following: | ||||||||
September 30, 2014 | December 31, 2013 | |||||||
Production costs of contracts in process | $ | 222 | $ | 217 | ||||
Less progress payments | (24 | ) | (27 | ) | ||||
Production costs of contracts in process, net | 198 | 190 | ||||||
Product inventory | 60 | 56 | ||||||
Inventories, net | $ | 258 | $ | 246 | ||||
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets, Net | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||||||||||
Goodwill and Other Intangible Assets, Net | ' | |||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | ||||||||||||||||||||||||
Goodwill | ||||||||||||||||||||||||
As of September 30, 2014 and December 31, 2013, goodwill was $2,195 and $2,184, respectively. As of September 30, 2014 and December 31, 2013, goodwill for our C4ISR Electronics and Systems segment was $1,808 and $1,800, respectively, and goodwill for our Information and Technical Services segment was $387 and $384, respectively. | ||||||||||||||||||||||||
During the third quarter of 2014, the Company acquired Barco Orthogon GmbH for an aggregate purchase price of approximately $18, net of cash acquired, resulting in an increase in goodwill of $8 and other intangible assets of $6. The operating results of the business are reported in the Information and Technical Services segment from the date of acquisition. The assets, liabilities and results of operations for the acquired business were not material to the Company. | ||||||||||||||||||||||||
Other Intangible Assets, Net | ||||||||||||||||||||||||
Information regarding our other intangible assets was as follows: | ||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | |||||||||||||||||||
Carrying | Amortization | Intangibles | Carrying | Amortization | Intangibles | |||||||||||||||||||
Amount | Amount | |||||||||||||||||||||||
Customer and distributor relationships | $ | 526 | $ | (388 | ) | $ | 138 | $ | 525 | $ | (371 | ) | $ | 154 | ||||||||||
Proprietary technology | 36 | (22 | ) | 14 | 30 | (22 | ) | 8 | ||||||||||||||||
Trademarks, patents and other | 10 | (5 | ) | 5 | 9 | (4 | ) | 5 | ||||||||||||||||
Total other intangible assets | $ | 572 | $ | (415 | ) | $ | 157 | $ | 564 | $ | (397 | ) | $ | 167 | ||||||||||
Amortization expense related to other intangible assets for the three and nine months ended September 30, 2014 was $6 and $18, respectively, and $7 and $20 for the three and nine months ended September 30, 2013, respectively. | ||||||||||||||||||||||||
Estimated amortization expense for the remaining three months of 2014 and each of the five succeeding years and thereafter is as follows: | ||||||||||||||||||||||||
Remaining 2014 | $ | 6 | ||||||||||||||||||||||
2015 | 22 | |||||||||||||||||||||||
2016 | 20 | |||||||||||||||||||||||
2017 | 18 | |||||||||||||||||||||||
2018 | 15 | |||||||||||||||||||||||
2019 and thereafter | 76 | |||||||||||||||||||||||
Total | $ | 157 | ||||||||||||||||||||||
Debt
Debt | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||||||
Debt | ' | ||||||||||||||||||
DEBT | |||||||||||||||||||
Debt consisted of the following: | |||||||||||||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||||
Current portion of Vectrus term loan | $ | 11 | $ | — | |||||||||||||||
Total short-term debt | 11 | — | |||||||||||||||||
Long-term debt | 779 | 650 | |||||||||||||||||
Unamortized debt discounts | (1 | ) | (1 | ) | |||||||||||||||
Total long-term debt | 778 | 649 | |||||||||||||||||
Total debt | $ | 789 | $ | 649 | |||||||||||||||
The following table provides a summary of interest rates, carrying values and estimated fair values of outstanding long-term debt: | |||||||||||||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||||
Interest rate | Carrying | Fair | Carrying | Fair | |||||||||||||||
Value | Value | Value | Value | ||||||||||||||||
Long-term debt | |||||||||||||||||||
Senior notes due 2016 | 4.25 | % | $ | 250 | $ | 263 | $ | 250 | $ | 263 | |||||||||
Senior notes due 2021 | 5.55 | % | 400 | 425 | 400 | 404 | |||||||||||||
Vectrus term loan | 2.99 | % | 140 | 140 | — | — | |||||||||||||
Total | $ | 790 | $ | 828 | $ | 650 | $ | 667 | |||||||||||
The fair value of our notes was determined using prices in secondary markets for identical and similar securities (Level 2 inputs) obtained from external pricing sources. The fair value of the Vectrus term loan approximates the carrying value due to the Vectrus term loan's floating interest rate and due to the short duration between the execution of the Vectrus term loan agreement and the balance sheet date. | |||||||||||||||||||
Commercial Paper | |||||||||||||||||||
The Company's commercial paper program is fully supported by available borrowing capacity under our Credit Facility. As of September 30, 2014 and December 31, 2013, there was no commercial paper outstanding under our commercial paper program. | |||||||||||||||||||
Credit Facility | |||||||||||||||||||
The Company has a competitive advance and revolving credit facility agreement (“Credit Facility”) with a consortium of lenders, which is available for working capital, capital expenditures and other general corporate purposes. The Credit Facility provides for a four year maturity, expiring October 25, 2015, with a one year extension option upon satisfaction of certain conditions, and comprises an aggregate principal amount of up to $600 of revolving loans, competitive advances and letters of credit with a face amount up to $100. Borrowings under the Credit Facility bear interest at rates based, at our option, on a Eurodollar rate or an alternate base rate, as defined in the Credit Facility. As of September 30, 2014 and December 31, 2013, there were no borrowings or letters of credit outstanding under the Credit Facility. | |||||||||||||||||||
The Credit Facility contains customary affirmative and negative covenants that, among other things, limit or restrict our ability to: incur additional debt or issue guarantees of indebtedness; create liens; enter into certain sale and lease-back transactions; merge or consolidate with another person; sell, transfer, lease or otherwise dispose of assets; liquidate or dissolve; and enter into restrictive covenants. Additionally, the Credit Facility requires us not to permit the ratio of combined total indebtedness to combined EBITDA (leverage ratio) to exceed 3.50 to 1.00 at any time. | |||||||||||||||||||
Senior Notes | |||||||||||||||||||
The Company has outstanding long-term debt consisting of $250 aggregate principal amount of 4.25% senior notes due October 1, 2016 and $400 aggregate principal amount of 5.55% senior notes due October 1, 2021 (together the “Notes”). As of September 30, 2014 and December 31, 2013, accrued interest payable on the Notes, included in other accrued liabilities, was $16 and $8, respectively, and is payable on April 1 and October 1 of each year. | |||||||||||||||||||
The Notes have covenants that restrict our ability to, subject to exceptions, incur indebtedness secured by liens or engage in sale and leaseback transactions. The Notes also have customary events of default, including, but not limited to, non-payment of principal and interest, and certain events of bankruptcy, insolvency or reorganization of the Company. Under the terms of the Notes, we have the option to redeem the Notes prior to maturity, and we will be required to make an offer to purchase the Notes if a change of control triggering event (as defined in the Notes indenture) occurs. | |||||||||||||||||||
Vectrus Debt | |||||||||||||||||||
In connection with the spin-off of Vectrus, on September 17, 2014, Vectrus, a wholly-owned subsidiary of the Company, entered into a Credit Agreement with a consortium of lenders, including JP Morgan Chase Bank, N.A. as administrative agent. The Credit Agreement includes a five-year senior secured revolving credit facility ("Revolving Facility") and five-year senior secured term loan ("Term Loan"). The Revolving Facility is available for Vectrus' working capital, capital expenditures and other general corporate purposes. Vectrus used the net proceeds from the Term Loan to pay a net cash distribution to a subsidiary of Exelis on September 26, 2014. The Revolving Facility and Term Loan will remain with Vectrus subsequent to the spin-off. | |||||||||||||||||||
The Revolving Facility is comprised of an aggregate principal amount of up to $75 of revolving loans, up to $35 of which can be used for the issuance of letters of credit, and expires on September 17, 2019. As of September 30, 2014, there were no borrowings or letters of credit outstanding under the Revolving Facility. | |||||||||||||||||||
The Term Loan consists of an aggregate principal amount of $140 of debt borrowed on September 26, 2014 and is repayable in quarterly installments, with the first installment due December 31, 2014. The quarterly Term Loan repayments are 1.88% of the aggregate principal amount per quarter during year one, 2.50% during each of years two and three, 3.75% during year four, and 14.38% during year five, with the final quarterly installment due September 17, 2019. Voluntary prepayments of principal are allowed without penalty and annual mandatory prepayments are required if there is excess cash flow, as defined in the Credit Agreement. | |||||||||||||||||||
Borrowings under the Revolving Facility and Term Loan bear interest at rates, at Vectrus' option, based on an alternate base rate or an adjusted LIBO rate, plus an applicable rate dependent on the total leverage ratio of Vectrus, as defined in the Credit Agreement. Interest is payable, at a minimum, quarterly. All borrowings under the Credit Agreement are secured by a first-priority lien on substantially all tangible and intangible assets of Vectrus. | |||||||||||||||||||
The Credit Agreement contains affirmative and negative covenants that, among other things, restrict Vectrus' ability to, subject to exceptions, create liens and encumbrances; incur additional indebtedness; merge, dissolve, liquidate or consolidate; make acquisitions, investments, advances or loans; dispose of or transfer assets; pay dividends or make other payments in respect of capital stock; amend certain material governance or debt documents; redeem or repurchase capital stock or prepay, redeem or repurchase certain debt; engage in certain transactions with affiliates; enter into certain speculative hedging arrangements; and enter into certain restrictive agreements. The Credit Agreement also requires Vectrus to maintain a ratio of consolidated EBITDA to consolidated interest expense, net of cash interest income, of greater than or equal to 4.50 to 1.00 and a ratio of consolidated indebtedness to consolidated EBITDA (leverage ratio) of less than or equal to 3.50 to 1.00 from December 31, 2014 through June 30, 2015; 3.00 to 1.00 from July 1, 2015 through December 31, 2015; and 2.75 to 1.00 from January 1, 2016 and thereafter. | |||||||||||||||||||
The Credit Agreement contains customary events of default, including, but not limited to, nonpayment of principal and interest; violation of covenants; failure to pay certain judgments; certain events of bankruptcy and insolvency; certain materially adverse ERISA events; and a change in control. If an event of default occurs, remedies include, but are not limited to, the right of lenders to request immediate payment of all or part of the outstanding principal and interest and termination of future commitments to extend credit under the Revolving Facility. |
Postretirement_Benefit_Plans
Postretirement Benefit Plans | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ' | |||||||||||||||||||||||
Postretirement Benefit Plans | ' | |||||||||||||||||||||||
POSTRETIREMENT BENEFIT PLANS | ||||||||||||||||||||||||
The following tables provide the components of net periodic benefit cost for our defined benefit plans, including defined benefit pension plans and other postretirement defined benefit plans: | ||||||||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Pension | Other | Total | Pension | Other | Total | |||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||||||
Net periodic benefit cost | ||||||||||||||||||||||||
Service cost | $ | 15 | $ | — | $ | 15 | $ | 16 | $ | — | $ | 16 | ||||||||||||
Interest cost | 62 | 5 | 67 | 60 | 5 | 65 | ||||||||||||||||||
Expected return on plan assets | (86 | ) | (5 | ) | (91 | ) | (83 | ) | (5 | ) | (88 | ) | ||||||||||||
Amortization of net actuarial loss | 22 | 1 | 23 | 25 | 3 | 28 | ||||||||||||||||||
Amortization of prior service cost | — | — | — | — | — | — | ||||||||||||||||||
Total net periodic benefit cost | $ | 13 | $ | 1 | $ | 14 | $ | 18 | $ | 3 | $ | 21 | ||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Pension | Other | Total | Pension | Other | Total | |||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||||||
Net periodic benefit cost | ||||||||||||||||||||||||
Service cost | $ | 47 | $ | 1 | $ | 48 | $ | 54 | $ | 1 | $ | 55 | ||||||||||||
Interest cost | 188 | 15 | 203 | 180 | 14 | 194 | ||||||||||||||||||
Expected return on plan assets | (256 | ) | (16 | ) | (272 | ) | (254 | ) | (16 | ) | (270 | ) | ||||||||||||
Amortization of net actuarial loss | 64 | 3 | 67 | 79 | 9 | 88 | ||||||||||||||||||
Amortization of prior service cost | 1 | — | 1 | 2 | — | 2 | ||||||||||||||||||
Net periodic benefit cost | 44 | 3 | 47 | 61 | 8 | 69 | ||||||||||||||||||
Effect of curtailments | 1 | — | 1 | — | — | — | ||||||||||||||||||
Total net periodic benefit cost | $ | 45 | $ | 3 | $ | 48 | $ | 61 | $ | 8 | $ | 69 | ||||||||||||
We contributed $123 and $114 to our qualified defined benefit pension plans during the nine months ended September 30, 2014 and 2013, respectively. We currently anticipate making additional contributions to our qualified defined benefit pension plans in the range of $10 to $20 during the remainder of 2014. |
StockBased_Compensation
Stock-Based Compensation | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
Stock-Based Compensation | ' | |||||||||||||||
STOCK-BASED COMPENSATION | ||||||||||||||||
The Company maintains an equity incentive plan to govern awards granted to Exelis employees and directors, including awards of non-qualified stock options (NQOs), restricted stock units (RSUs), total shareholder return (TSR) awards, and other awards. | ||||||||||||||||
The following table provides the impact of stock-based compensation in our unaudited Condensed Consolidated Statements of Operations: | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, 2014 | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Compensation cost for equity-based awards | $ | 5 | $ | 7 | $ | 18 | $ | 20 | ||||||||
Compensation cost for liability-based awards | 2 | 2 | 3 | 5 | ||||||||||||
Total compensation costs, pre-tax | $ | 7 | $ | 9 | $ | 21 | $ | 25 | ||||||||
Future tax benefit | $ | 3 | $ | 3 | $ | 8 | $ | 8 | ||||||||
At September 30, 2014, total unrecognized compensation costs related to equity-based awards and liability-based awards were $15 and $3, respectively, which are expected to be recognized ratably over a weighted-average period of 2.0 years and 1.9 years, respectively. | ||||||||||||||||
The following table provides a summary of the activities for NQOs and RSUs for the nine months ended September 30, 2014: | ||||||||||||||||
Stock Options | Restricted Stock Units | |||||||||||||||
Shares | Weighted- Average | Shares | Weighted- Average Grant | |||||||||||||
Exercise Price Per Share | Date Fair Value Per Share | |||||||||||||||
Outstanding at January 1, 2014 | 11.46 | $ | 11.13 | 3.48 | $ | 11.48 | ||||||||||
Granted | 0.57 | 20.82 | 0.72 | 20.52 | ||||||||||||
Exercised | (1.51 | ) | 10.85 | — | — | |||||||||||
Vested | — | — | (0.81 | ) | 12.64 | |||||||||||
Forfeited, canceled or expired | (0.08 | ) | 10.95 | (0.06 | ) | 12.16 | ||||||||||
Outstanding at September 30, 2014 | 10.44 | $ | 11.7 | 3.33 | $ | 13.15 | ||||||||||
During the nine months ended September 30, 2014, we granted long-term incentive awards to employees consisting of 0.6 NQOs and 0.7 RSUs with respective weighted average grant date fair values per share of $5.12 and $20.52. The NQOs vest annually in three equal installments and have a ten-year expiration period. The RSUs vest annually in three equal installments. We also granted TSR awards with an aggregate target value of $5 that are cash settled at the end of a three-year performance period. The fair value of the NQOs was estimated on the date of grant using the Black-Scholes model. The fair value of the RSUs was determined based on the closing price of Exelis common stock on the date of grant. The fair value of the TSR awards were measured based on the Company’s performance relative to the performance of the S&P 1500 Aerospace and Defense index. Depending on the Company’s performance during the three-year performance period, payment can range from 0% to 200% of the target value. | ||||||||||||||||
The following table details the weighted average assumptions utilized in determining the fair value of the NQOs granted during the first nine months of 2014. | ||||||||||||||||
Dividend yield | 1.98 | % | ||||||||||||||
Expected volatility | 26.8 | % | ||||||||||||||
Expected life (in years) | 7 | |||||||||||||||
Risk-free rates | 2.2 | % | ||||||||||||||
Weighted-average grant date fair value per share | $ | 5.12 | ||||||||||||||
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
RELATED PARTY TRANSACTIONS | |
Separation Agreements | |
On October 31, 2011, ITT Corporation ("ITT") completed the spin-off (the “ITT Spin-off”) of Exelis and Exelis began operating as a stand-alone publicly traded corporation. Prior to the ITT Spin-off, Exelis operated as the Defense and Information Solutions Segment of ITT. | |
In order to govern certain ongoing relationships between Exelis and ITT following the ITT Spin-off and to provide mechanisms for an orderly transition, on October 25, 2011, Exelis, ITT, and Xylem Inc. executed the various agreements that govern the ongoing relationships between and among the three companies after the ITT Spin-off and provided for the allocation of employee benefits, income taxes, and certain other liabilities and obligations attributable to periods prior to the ITT Spin-off. The executed agreements include the Distribution Agreement, Benefits and Compensation Matters Agreement, Tax Matters Agreement, several real estate matters agreements, and Master Transition Services Agreement. Certain intercompany work orders and/or informal intercompany commercial arrangements were converted into third-party contracts based on ITT’s standard terms and conditions. | |
The Distribution Agreement provides for certain indemnifications and cross-indemnifications among Exelis, ITT and Xylem Inc. The indemnifications address a variety of subjects, including indemnification by ITT of Exelis in respect of certain asserted and unasserted asbestos or silica liability claims. | |
Services provided to and received from ITT and Xylem Inc. under the separation agreements were generally provided at cost and were substantially completed by the end of 2013. At September 30, 2014 and December 31, 2013, total payables due from Exelis to ITT and Xylem Inc. were $9 and $9, respectively, and total receivables due to Exelis from ITT and Xylem Inc. were $7 and $7, respectively. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||||||
Commitments and Contingencies | ' | |||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
General | ||||||||
From time to time, we are involved in legal proceedings that are incidental to the operation of our businesses. Some of these proceedings seek remedies relating to environmental matters, personal injury claims, employment and pension matters, and commercial or contractual disputes, sometimes related to acquisitions or divestitures. | ||||||||
Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including our assessment of the merits of the particular claim, we do not expect that any asserted or unasserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on our cash flow, results of operations, or financial condition. | ||||||||
Environmental | ||||||||
In the ordinary course of business, we are subject to federal, state, local, and foreign environmental laws and regulations. We are responsible, or are alleged to be responsible, for ongoing environmental investigation and remediation of multiple sites. These sites are in various stages of investigation and/or remediation and in many of these proceedings our liability is considered de minimis. We have received notification from the U.S. Environmental Protection Agency (EPA), and from other governmental agencies, that a number of sites formerly or currently owned and/or operated by Exelis, and other properties or water supplies that may be or have been impacted from those operations, contain disposed or recycled materials or wastes and require environmental investigation and/or remediation. These sites include instances where we have been identified as a potentially responsible party under federal and state environmental laws and regulations. | ||||||||
Accruals for environmental matters are recorded on a site by site basis when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies available to us. Our accrued liabilities for these environmental matters represent our best estimates related to the investigation and remediation of environmental media such as water, soil, soil vapor, air and structures, as well as related legal fees. These estimates, and related accruals, are reviewed quarterly and updated for progress of investigation and remediation efforts and changes in facts and legal circumstances. Liabilities for these environmental expenditures are recorded on an undiscounted basis. | ||||||||
It is difficult to estimate the final costs of investigation and remediation due to various factors, including incomplete information regarding particular sites and other potentially responsible parties, uncertainty regarding the extent of investigation or remediation and our share, if any, of liability for such conditions, the selection of alternative remedial approaches, and changes in environmental standards and regulatory requirements. We have estimated and accrued $26 and $26 as of September 30, 2014 and December 31, 2013, respectively, for environmental matters. We believe the total amount accrued is appropriate based on existing facts and circumstances. | ||||||||
The following table illustrates the range of estimated loss and number of active sites for these environmental matters: | ||||||||
September 30, 2014 (a) | December 31, 2013 | |||||||
Low-end range | $ | 23 | $ | 23 | ||||
High-end range | $ | 69 | $ | 44 | ||||
Number of active environmental investigations and remediation sites | 46 | 24 | ||||||
(a) | In June 2014, the Company received notice from the Department of Justice, Environment and Natural Resources Division, that it may be potentially responsible for contribution to the environmental investigation and remediation of multiple locations in Alaska. Pending further information, we have increased the number of active sites and the high-end range of estimated loss based on our historical costs for similar matters. | |||||||
On April 11, 2014, the EPA issued a proposed plan for remedial alternatives to address the cleanup of the lower eight mile stretch of the Passaic River. The EPA estimates the cost for the alternatives will range from $0.4 billion to $3.2 billion. The EPA’s preferred alternative would involve dredging the river bank to bank and installing an engineered cap at an estimated cost of $1.7 billion. The EPA is currently evaluating all the input from a public comment period that ended in August 2014 before it makes its final record of decision, which is expected in 2015. Therefore, the ultimate remedial approach and associated costs and the parties who will participate in funding the remediation and their respective allocations have not been determined. The Company has found no evidence that it contributed any of the primary contaminants of concern to the Passaic River. We will vigorously defend our self in this matter and we believe our ultimate costs will not be material. | ||||||||
U.S. Government Contracts, Investigations and Claims | ||||||||
The Company has U.S. Government contracts that are funded incrementally on a year-to-year basis. Changes in government policies, priorities or funding levels through agency or program budget reductions by the U.S. Congress or executive agencies could have a material adverse effect on the Company’s cash flow, financial condition or results of operations. Furthermore, contracts with the U.S. Government may be terminated or suspended by the U.S. Government at any time, with or without cause. Such contract suspensions or terminations could result in un-reimbursable expenses or charges or otherwise adversely affect the Company’s cash flow, financial condition or results of operations. | ||||||||
Departments and agencies of the U.S. Government have the authority to investigate various transactions and operations of the Company, and the results of such investigations may lead to administrative, civil or criminal proceedings, the ultimate outcome of which could be fines, penalties, repayments or compensatory or treble damages. U.S. Government regulations provide that certain findings against a contractor may lead to suspension or debarment from future U.S. Government contracts or the loss of export privileges for a company or an operating division or subdivision. Suspension or debarment could have a material adverse effect on the Company because of its reliance on U.S. Government contracts. | ||||||||
U.S. Government agencies, including the Defense Contract Audit Agency (DCAA) and others, routinely audit and review a contractor’s performance on government contracts, indirect rates and pricing practices, and compliance with applicable contracting and procurement laws, regulations and standards. Accordingly, costs billed or billable to the U.S. Government customers are subject to potential adjustment upon audit by such agencies. They also review the adequacy of the contractor’s compliance with government standards for its accounting and management internal control systems, including: control environment and accounting systems, general information technology systems, budget and planning systems, purchasing systems, material management systems, compensation systems, labor systems, indirect and other direct costs systems, billing systems and estimating systems. Audits currently underway include the Company’s control environment and accounting, billing, and indirect and other direct cost systems, as well as reviews of the Company’s compliance with certain U.S. Government Cost Accounting Standards. | ||||||||
From time to time, U.S. Government customers advise the Company of claims and penalties concerning certain potential disallowed costs. When such findings are presented, Exelis and the U.S. Government representatives engage in discussions to enable Exelis to evaluate the merits of these claims as well as to assess the amounts being claimed. Where appropriate, provisions are made to reflect the expected exposure to the matters raised by the U.S. Government representatives and such provisions are reviewed on a quarterly basis for sufficiency based on the most recent information available. | ||||||||
Indemnifications | ||||||||
As part of the ITT Spin-off, Exelis, ITT and Xylem Inc. indemnify one another with respect to such parties’ assumed or retained liabilities under the Distribution Agreement and breaches of the Distribution Agreement or related ITT Spin-off agreements. Exelis expects ITT and Xylem Inc. to fully perform under the terms of the Distribution Agreement and therefore we have not recorded a liability for matters for which we are indemnified. In addition, we are not aware of any claims or other circumstances that would give rise to material payments to ITT or Xylem Inc. under the indemnity that we provide to them. | ||||||||
Letters of Credit | ||||||||
In the ordinary course of business, we use standby letters of credit, guarantees issued by commercial banks and surety bonds issued by insurance companies, as well as self-guarantees, principally to guarantee our performance on certain contracts and to support our self-insured workers’ compensation plans. At September 30, 2014, there was an aggregate of approximately $91 in surety bonds, guarantees and stand-by letters of credit outstanding. | ||||||||
Rabbi Trust | ||||||||
The Company maintains a grantor trust (“Rabbi Trust”) for the purpose of assisting the Company with the payment of certain nonqualified deferred compensation obligations in the event of a change in control of the Company. The Company is obligated to contribute an amount equal to 110 percent of the Company’s obligations under eight nonqualified deferred compensation plans at the time of an “Acceleration Event,” as defined in such plans and the Rabbi Trust. |
Segment_Information
Segment Information | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||||||||||
Segment Information | ' | |||||||||||||||||||||||
SEGMENT INFORMATION | ||||||||||||||||||||||||
The Company’s segments are reported on the same basis used internally for evaluating performance and for allocating resources. We operate in two segments: Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) Electronics and Systems, and Information and Technical Services. Assets of the business segments exclude general corporate assets, which principally consist of cash, deferred tax assets, certain plant, property, and equipment, and certain other assets. | ||||||||||||||||||||||||
C4ISR Electronics and Systems | ||||||||||||||||||||||||
This segment provides engineered systems and solutions, including: ISR systems; integrated electronic warfare systems; radar and sonar systems; electronic attack and release systems; communications solutions; space systems; and composite aerostructures, for government and commercial customers around the world. | ||||||||||||||||||||||||
Information and Technical Services | ||||||||||||||||||||||||
This segment provides a broad range of service solutions, including: systems integration; network design and development; air traffic management; cyber; intelligence; operations; sustainment; advanced engineering; logistics; and space launch and range-support, for a wide variety of U.S. military and U.S. Government customers. | ||||||||||||||||||||||||
Segment financial results were as follows: | ||||||||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Product | Service | Total | Product | Service | Total | |||||||||||||||||||
Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | |||||||||||||||||||
C4ISR Electronics and Systems | $ | 503 | $ | — | $ | 503 | $ | 498 | $ | — | $ | 498 | ||||||||||||
Information and Technical Services | — | 565 | 565 | — | 643 | 643 | ||||||||||||||||||
Total | $ | 503 | $ | 565 | $ | 1,068 | $ | 498 | $ | 643 | $ | 1,141 | ||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Product | Service | Total | Product | Service | Total | |||||||||||||||||||
Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | |||||||||||||||||||
C4ISR Electronics and Systems | $ | 1,506 | $ | — | $ | 1,506 | $ | 1,515 | $ | — | $ | 1,515 | ||||||||||||
Information and Technical Services | — | 1,724 | 1,724 | — | 2,062 | 2,062 | ||||||||||||||||||
Total | $ | 1,506 | $ | 1,724 | $ | 3,230 | $ | 1,515 | $ | 2,062 | $ | 3,577 | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Operating Income | ||||||||||||||||||||||||
C4ISR Electronics and Systems | $ | 59 | $ | 69 | $ | 162 | $ | 128 | ||||||||||||||||
Information and Technical Services | 37 | 64 | 126 | 206 | ||||||||||||||||||||
Total Operating Income | $ | 96 | $ | 133 | $ | 288 | $ | 334 | ||||||||||||||||
Operating Margin | ||||||||||||||||||||||||
C4ISR Electronics and Systems | 11.7 | % | 13.9 | % | 10.8 | % | 8.4 | % | ||||||||||||||||
Information and Technical Services | 6.5 | % | 10 | % | 7.3 | % | 10 | % | ||||||||||||||||
Total Operating Margin | 9 | % | 11.7 | % | 8.9 | % | 9.3 | % | ||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
C4ISR Electronics and Systems | $ | 3,027 | $ | 3,031 | ||||||||||||||||||||
Information and Technical Services | 1,115 | 1,097 | ||||||||||||||||||||||
Segments total | 4,142 | 4,128 | ||||||||||||||||||||||
Corporate and Other | 775 | 756 | ||||||||||||||||||||||
Total Assets | $ | 4,917 | $ | 4,884 | ||||||||||||||||||||
Background_Basis_of_Presentati1
Background, Basis of Presentation and Use of Estimates (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The unaudited Condensed Consolidated Financial Statements included in this Form 10-Q have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and, in the opinion of management, reflect all adjustments (which include normal recurring adjustments) necessary for a fair presentation of the Company's financial position, results of operations, and cash flows for the periods presented. Certain information and note disclosures normally included in financial statements prepared annually in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such SEC rules. These financial statements should be read in conjunction with the audited Consolidated and Combined Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2013. We believe that the disclosures included in this Form 10-Q are adequate to make the information presented not misleading. | |
Our quarterly financial periods end on the Friday closest to the last day of the calendar quarter, except for the last quarterly period of the fiscal year, which ends on December 31st. For ease of presentation, the quarterly financial statements included herein are described as ending on the last day of the calendar quarter. The results reported in these financial statements are not necessarily indicative of results that may be expected for the entire year. | |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, revenue recognition, income taxes, contingency accruals and valuation allowances, fair value measurements, impairment of goodwill and other intangible assets, postretirement obligations and certain contingent liabilities. Actual results could differ from these estimates. | |
During the performance of long-term sales contracts, estimated final contract prices and costs are reviewed periodically and revisions are made as required and recorded in income in the period in which they are determined. Changes in estimated revenue, cost of revenue and the related effect to operating income are recognized using a cumulative catch-up adjustment which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a contract’s percent complete. |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||
Reconciliation of Basic and Diluted Earnings (Loss) Per Share | ' | |||||||||||
The following table sets forth the reconciliation of basic and diluted weighted average shares outstanding for our earnings per share calculations: | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
Weighted average common shares outstanding | 188.4 | 188.5 | 189 | 188.1 | ||||||||
Add: Weighted average restricted stock awards outstanding(a) | — | — | — | 0.2 | ||||||||
Basic weighted average common shares outstanding | 188.4 | 188.5 | 189 | 188.3 | ||||||||
Add: Dilutive impact of stock options | 2.7 | 2.2 | 2.8 | 0.9 | ||||||||
Add: Dilutive impact of restricted stock units | 2.1 | 2.1 | 2.1 | 1.8 | ||||||||
Diluted weighted average common shares outstanding | 193.2 | 192.8 | 193.9 | 191 | ||||||||
(a) | Restricted stock awards containing rights to non-forfeitable dividends which participate in undistributed earnings with common shareholders are considered participating securities for purposes of computing earnings per share. |
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
Equity [Abstract] | ' | ||||||||||
Components of Accumulated Other Comprehensive Loss | ' | ||||||||||
The following table presents changes in accumulated other comprehensive loss, net of tax, by component, for the nine months ended September 30, 2014: | |||||||||||
Net Foreign Currency Translation Adjustments | Unamortized Defined Benefit Plan Costs | Accumulated Other Comprehensive Loss | |||||||||
Balance at January 1, 2014 | $ | 16 | $ | (1,448 | ) | $ | (1,432 | ) | |||
Other comprehensive income (loss) before reclassifications | (5 | ) | — | (5 | ) | ||||||
Amounts reclassified from accumulated other comprehensive loss | — | 53 | (a) | 53 | |||||||
Other comprehensive income (loss), net of tax | (5 | ) | 53 | 48 | |||||||
Balance at September 30, 2014 | $ | 11 | $ | (1,395 | ) | $ | (1,384 | ) | |||
(a) This accumulated other comprehensive loss component primarily relates to the amortization of net actuarial loss. For the three and nine months ended September 30, 2014, the amortization of net actuarial loss was $25 (net of tax of $(2)) and $52 (net of tax of $15), respectively, which are included in the computation of net periodic benefit cost (Note 12). |
Receivables_Net_Tables
Receivables, Net (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Receivables [Abstract] | ' | |||||||
Schedule of Receivables, Net | ' | |||||||
Receivables, net were comprised of the following: | ||||||||
September 30, 2014 | December 31, 2013 | |||||||
Billed receivables | $ | 388 | $ | 395 | ||||
Unbilled contract receivables | 545 | 537 | ||||||
Other | 9 | 11 | ||||||
Receivables, gross | 942 | 943 | ||||||
Allowance for doubtful accounts | (3 | ) | (4 | ) | ||||
Receivables, net | $ | 939 | $ | 939 | ||||
Inventories_Net_Tables
Inventories, Net (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Schedule of Inventories, Net | ' | |||||||
Inventories, net were comprised of the following: | ||||||||
September 30, 2014 | December 31, 2013 | |||||||
Production costs of contracts in process | $ | 222 | $ | 217 | ||||
Less progress payments | (24 | ) | (27 | ) | ||||
Production costs of contracts in process, net | 198 | 190 | ||||||
Product inventory | 60 | 56 | ||||||
Inventories, net | $ | 258 | $ | 246 | ||||
Goodwill_and_Other_Intangible_1
Goodwill and Other Intangible Assets, Net (Tables) | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||||||||||
Other Intangible Assets, Net | ' | |||||||||||||||||||||||
Information regarding our other intangible assets was as follows: | ||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | |||||||||||||||||||
Carrying | Amortization | Intangibles | Carrying | Amortization | Intangibles | |||||||||||||||||||
Amount | Amount | |||||||||||||||||||||||
Customer and distributor relationships | $ | 526 | $ | (388 | ) | $ | 138 | $ | 525 | $ | (371 | ) | $ | 154 | ||||||||||
Proprietary technology | 36 | (22 | ) | 14 | 30 | (22 | ) | 8 | ||||||||||||||||
Trademarks, patents and other | 10 | (5 | ) | 5 | 9 | (4 | ) | 5 | ||||||||||||||||
Total other intangible assets | $ | 572 | $ | (415 | ) | $ | 157 | $ | 564 | $ | (397 | ) | $ | 167 | ||||||||||
Estimated Amortization Expense | ' | |||||||||||||||||||||||
Estimated amortization expense for the remaining three months of 2014 and each of the five succeeding years and thereafter is as follows: | ||||||||||||||||||||||||
Remaining 2014 | $ | 6 | ||||||||||||||||||||||
2015 | 22 | |||||||||||||||||||||||
2016 | 20 | |||||||||||||||||||||||
2017 | 18 | |||||||||||||||||||||||
2018 | 15 | |||||||||||||||||||||||
2019 and thereafter | 76 | |||||||||||||||||||||||
Total | $ | 157 | ||||||||||||||||||||||
Debt_Tables
Debt (Tables) | 9 Months Ended | ||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||||||
Schedule of Debt | ' | ||||||||||||||||||
Debt consisted of the following: | |||||||||||||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||||
Current portion of Vectrus term loan | $ | 11 | $ | — | |||||||||||||||
Total short-term debt | 11 | — | |||||||||||||||||
Long-term debt | 779 | 650 | |||||||||||||||||
Unamortized debt discounts | (1 | ) | (1 | ) | |||||||||||||||
Total long-term debt | 778 | 649 | |||||||||||||||||
Total debt | $ | 789 | $ | 649 | |||||||||||||||
Schedule of Carrying Values and Estimated Fair Values of Long-Term Debt | ' | ||||||||||||||||||
The following table provides a summary of interest rates, carrying values and estimated fair values of outstanding long-term debt: | |||||||||||||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||||
Interest rate | Carrying | Fair | Carrying | Fair | |||||||||||||||
Value | Value | Value | Value | ||||||||||||||||
Long-term debt | |||||||||||||||||||
Senior notes due 2016 | 4.25 | % | $ | 250 | $ | 263 | $ | 250 | $ | 263 | |||||||||
Senior notes due 2021 | 5.55 | % | 400 | 425 | 400 | 404 | |||||||||||||
Vectrus term loan | 2.99 | % | 140 | 140 | — | — | |||||||||||||
Total | $ | 790 | $ | 828 | $ | 650 | $ | 667 | |||||||||||
Postretirement_Benefit_Plans_T
Postretirement Benefit Plans (Tables) | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ' | |||||||||||||||||||||||
Components of Net Periodic Benefit Cost | ' | |||||||||||||||||||||||
The following tables provide the components of net periodic benefit cost for our defined benefit plans, including defined benefit pension plans and other postretirement defined benefit plans: | ||||||||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Pension | Other | Total | Pension | Other | Total | |||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||||||
Net periodic benefit cost | ||||||||||||||||||||||||
Service cost | $ | 15 | $ | — | $ | 15 | $ | 16 | $ | — | $ | 16 | ||||||||||||
Interest cost | 62 | 5 | 67 | 60 | 5 | 65 | ||||||||||||||||||
Expected return on plan assets | (86 | ) | (5 | ) | (91 | ) | (83 | ) | (5 | ) | (88 | ) | ||||||||||||
Amortization of net actuarial loss | 22 | 1 | 23 | 25 | 3 | 28 | ||||||||||||||||||
Amortization of prior service cost | — | — | — | — | — | — | ||||||||||||||||||
Total net periodic benefit cost | $ | 13 | $ | 1 | $ | 14 | $ | 18 | $ | 3 | $ | 21 | ||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Pension | Other | Total | Pension | Other | Total | |||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||||||
Net periodic benefit cost | ||||||||||||||||||||||||
Service cost | $ | 47 | $ | 1 | $ | 48 | $ | 54 | $ | 1 | $ | 55 | ||||||||||||
Interest cost | 188 | 15 | 203 | 180 | 14 | 194 | ||||||||||||||||||
Expected return on plan assets | (256 | ) | (16 | ) | (272 | ) | (254 | ) | (16 | ) | (270 | ) | ||||||||||||
Amortization of net actuarial loss | 64 | 3 | 67 | 79 | 9 | 88 | ||||||||||||||||||
Amortization of prior service cost | 1 | — | 1 | 2 | — | 2 | ||||||||||||||||||
Net periodic benefit cost | 44 | 3 | 47 | 61 | 8 | 69 | ||||||||||||||||||
Effect of curtailments | 1 | — | 1 | — | — | — | ||||||||||||||||||
Total net periodic benefit cost | $ | 45 | $ | 3 | $ | 48 | $ | 61 | $ | 8 | $ | 69 | ||||||||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
Schedule of Compensation Costs | ' | |||||||||||||||
The following table provides the impact of stock-based compensation in our unaudited Condensed Consolidated Statements of Operations: | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, 2014 | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Compensation cost for equity-based awards | $ | 5 | $ | 7 | $ | 18 | $ | 20 | ||||||||
Compensation cost for liability-based awards | 2 | 2 | 3 | 5 | ||||||||||||
Total compensation costs, pre-tax | $ | 7 | $ | 9 | $ | 21 | $ | 25 | ||||||||
Future tax benefit | $ | 3 | $ | 3 | $ | 8 | $ | 8 | ||||||||
Schedule of Stock Option Activity and Restricted Stock Activity | ' | |||||||||||||||
The following table provides a summary of the activities for NQOs and RSUs for the nine months ended September 30, 2014: | ||||||||||||||||
Stock Options | Restricted Stock Units | |||||||||||||||
Shares | Weighted- Average | Shares | Weighted- Average Grant | |||||||||||||
Exercise Price Per Share | Date Fair Value Per Share | |||||||||||||||
Outstanding at January 1, 2014 | 11.46 | $ | 11.13 | 3.48 | $ | 11.48 | ||||||||||
Granted | 0.57 | 20.82 | 0.72 | 20.52 | ||||||||||||
Exercised | (1.51 | ) | 10.85 | — | — | |||||||||||
Vested | — | — | (0.81 | ) | 12.64 | |||||||||||
Forfeited, canceled or expired | (0.08 | ) | 10.95 | (0.06 | ) | 12.16 | ||||||||||
Outstanding at September 30, 2014 | 10.44 | $ | 11.7 | 3.33 | $ | 13.15 | ||||||||||
Schedule of Weighted Average Assumptions | ' | |||||||||||||||
The following table details the weighted average assumptions utilized in determining the fair value of the NQOs granted during the first nine months of 2014. | ||||||||||||||||
Dividend yield | 1.98 | % | ||||||||||||||
Expected volatility | 26.8 | % | ||||||||||||||
Expected life (in years) | 7 | |||||||||||||||
Risk-free rates | 2.2 | % | ||||||||||||||
Weighted-average grant date fair value per share | $ | 5.12 | ||||||||||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | |||||||
Schedule of Range of Estimated Loss and Number of Active Sites | ' | |||||||
The following table illustrates the range of estimated loss and number of active sites for these environmental matters: | ||||||||
September 30, 2014 (a) | December 31, 2013 | |||||||
Low-end range | $ | 23 | $ | 23 | ||||
High-end range | $ | 69 | $ | 44 | ||||
Number of active environmental investigations and remediation sites | 46 | 24 | ||||||
(a) | In June 2014, the Company received notice from the Department of Justice, Environment and Natural Resources Division, that it may be potentially responsible for contribution to the environmental investigation and remediation of multiple locations in Alaska. Pending further information, we have increased the number of active sites and the high-end range of estimated loss based on our historical costs for similar matters. |
Segment_Information_Tables
Segment Information (Tables) | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||||||||||
Summary of Segment Revenue | ' | |||||||||||||||||||||||
Segment financial results were as follows: | ||||||||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Product | Service | Total | Product | Service | Total | |||||||||||||||||||
Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | |||||||||||||||||||
C4ISR Electronics and Systems | $ | 503 | $ | — | $ | 503 | $ | 498 | $ | — | $ | 498 | ||||||||||||
Information and Technical Services | — | 565 | 565 | — | 643 | 643 | ||||||||||||||||||
Total | $ | 503 | $ | 565 | $ | 1,068 | $ | 498 | $ | 643 | $ | 1,141 | ||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Product | Service | Total | Product | Service | Total | |||||||||||||||||||
Revenue | Revenue | Revenue | Revenue | Revenue | Revenue | |||||||||||||||||||
C4ISR Electronics and Systems | $ | 1,506 | $ | — | $ | 1,506 | $ | 1,515 | $ | — | $ | 1,515 | ||||||||||||
Information and Technical Services | — | 1,724 | 1,724 | — | 2,062 | 2,062 | ||||||||||||||||||
Total | $ | 1,506 | $ | 1,724 | $ | 3,230 | $ | 1,515 | $ | 2,062 | $ | 3,577 | ||||||||||||
Summary of Segment Operating Income and Operating Margin | ' | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Operating Income | ||||||||||||||||||||||||
C4ISR Electronics and Systems | $ | 59 | $ | 69 | $ | 162 | $ | 128 | ||||||||||||||||
Information and Technical Services | 37 | 64 | 126 | 206 | ||||||||||||||||||||
Total Operating Income | $ | 96 | $ | 133 | $ | 288 | $ | 334 | ||||||||||||||||
Operating Margin | ||||||||||||||||||||||||
C4ISR Electronics and Systems | 11.7 | % | 13.9 | % | 10.8 | % | 8.4 | % | ||||||||||||||||
Information and Technical Services | 6.5 | % | 10 | % | 7.3 | % | 10 | % | ||||||||||||||||
Total Operating Margin | 9 | % | 11.7 | % | 8.9 | % | 9.3 | % | ||||||||||||||||
Summary of Segment Reporting Assets | ' | |||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
C4ISR Electronics and Systems | $ | 3,027 | $ | 3,031 | ||||||||||||||||||||
Information and Technical Services | 1,115 | 1,097 | ||||||||||||||||||||||
Segments total | 4,142 | 4,128 | ||||||||||||||||||||||
Corporate and Other | 775 | 756 | ||||||||||||||||||||||
Total Assets | $ | 4,917 | $ | 4,884 | ||||||||||||||||||||
Background_Basis_of_Presentati2
Background, Basis of Presentation and Use of Estimates - Additional Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ' | ' | ' |
Increase in operating income due to cumulative catch up adjustments | $6 | $16 | $6 | $83 |
Increase in diluted earnings per share due to cumulative catch-up adjustments (in dollars per share) | $0.02 | $0.06 | $0.02 | $0.29 |
Spinoff_of_Vectrus_Narrative_D
Spin-off of Vectrus (Narrative) (Details) (Vectrus, Spinoff, USD $) | 0 Months Ended | ||
In Millions, unless otherwise specified | Sep. 26, 2014 | Sep. 18, 2014 | Sep. 18, 2014 |
Vectrus | Spinoff | ' | ' | ' |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' |
Ratio of pro rata distribution of common stock held by shareholders on record date | ' | ' | 0.056 |
Number of shares Vectrus common stock | ' | 10.5 | ' |
Net cash distribution amount | $136 | ' | ' |
Earnings_Per_Share_Reconciliat
Earnings Per Share - Reconciliation of Basic and Diluted Weighted Average Shares Outstanding for Earnings Per Share (Details) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Weighted Average Number of Shares Outstanding Reconciliation [Line Items] | ' | ' | ' | ' | ||||
Weighted average common shares outstanding (in shares) | 188.4 | 188.5 | 189 | 188.1 | ||||
Add: Weighted average restricted stock awards outstanding (in shares) | 0 | [1] | 0 | [1] | 0 | [1] | 0.2 | [1] |
Basic weighted average common shares outstanding (in shares) | 188.4 | 188.5 | 189 | 188.3 | ||||
Diluted weighted average common shares outstanding (in shares) | 193.2 | 192.8 | 193.9 | 191 | ||||
Stock Options | ' | ' | ' | ' | ||||
Weighted Average Number of Shares Outstanding Reconciliation [Line Items] | ' | ' | ' | ' | ||||
Add: Dilutive impact of share-based payment arrangements (in shares) | 2.7 | 2.2 | 2.8 | 0.9 | ||||
Restricted Stock Units (RSUs) | ' | ' | ' | ' | ||||
Weighted Average Number of Shares Outstanding Reconciliation [Line Items] | ' | ' | ' | ' | ||||
Add: Dilutive impact of share-based payment arrangements (in shares) | 2.1 | 2.1 | 2.1 | 1.8 | ||||
[1] | Restricted stock awards containing rights to non-forfeitable dividends which participate in undistributed earnings with common shareholders are considered participating securities for purposes of computing earnings per share. |
Earnings_Per_Share_Additional_
Earnings Per Share - Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Stock Options | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive shares excluded (in shares) | 600,000 | 100,000 | 400,000 | 2,600,000 |
Restricted Stock Units (RSUs) | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive shares excluded (in shares) | 0 | 0 | 100,000 | 100,000 |
Shareholders_Equity_Additional
Shareholders' Equity - Additional Information (Details) (USD $) | 9 Months Ended | ||
Sep. 30, 2014 | Aug. 12, 2014 | Dec. 31, 2013 | |
Quarterly_Dividend | |||
Equity [Abstract] | ' | ' | ' |
Common stock, shares authorized | 750,000,000 | ' | 750,000,000 |
Common stock, par value (in dollars per share) | $0.01 | ' | $0.01 |
Preferred stock, shares authorized | 50,000,000 | ' | 50,000,000 |
Preferred stock, par value (in dollars per share) | $0 | ' | $0 |
Common stock, shares issued | 192,500,000 | ' | 190,400,000 |
Common stock. shares outstanding | 188,500,000 | ' | 189,400,000 |
Preferred stock, shares issued | 0 | ' | 0 |
Preferred stock, shares outstanding | 0 | ' | 0 |
Share repurchase program, number of shares repurchased during period | 2,900,000 | ' | ' |
Share repurchase program, value of shares repurchased during period | $53,000,000 | ' | ' |
Share repurchase program, remaining authorized amount | 31,000,000 | ' | ' |
Cash dividends payable (in dollars per share) | $0.31 | $0.10 | ' |
Number of quarterly cash dividends declared during the period | 3 | ' | ' |
Total dividends declared | $60,000,000 | ' | ' |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Loss - Schedule of Activity in Accumulated Other Comprehensive Income (Loss) During Period (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | |
Balance at beginning of period | ' | ' | ($1,432) | ' | |
Other comprehensive income (loss) before reclassifications | ' | ' | -5 | ' | |
Amounts reclassified from accumulated other comprehensive loss | ' | ' | 53 | ' | |
Other comprehensive income (loss), net of tax | ' | ' | 48 | ' | |
Balance at end of period | -1,384 | ' | -1,384 | ' | |
Amortization of actuarial loss included in net periodic benefit cost, net of tax | 25 | 17 | 52 | 53 | |
Amortization of actuarial loss included in net periodic benefit cost, tax | -2 | ' | 15 | ' | |
Net Foreign Currency Translation Adjustments | ' | ' | ' | ' | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | |
Balance at beginning of period | ' | ' | 16 | ' | |
Other comprehensive income (loss) before reclassifications | ' | ' | -5 | ' | |
Amounts reclassified from accumulated other comprehensive loss | ' | ' | 0 | ' | |
Other comprehensive income (loss), net of tax | ' | ' | -5 | ' | |
Balance at end of period | 11 | ' | 11 | ' | |
Unamortized Defined Benefit Plan Costs | ' | ' | ' | ' | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | |
Balance at beginning of period | ' | ' | -1,448 | ' | |
Other comprehensive income (loss) before reclassifications | ' | ' | 0 | ' | |
Amounts reclassified from accumulated other comprehensive loss | ' | ' | 53 | [1] | ' |
Other comprehensive income (loss), net of tax | ' | ' | 53 | ' | |
Balance at end of period | ($1,395) | ' | ($1,395) | ' | |
[1] | This accumulated other comprehensive loss component primarily relates to the amortization of net actuarial loss. For the three and nine months ended September 30, 2014, the amortization of net actuarial loss was $25 (net of tax of $(2)) and $52 (net of tax of $15), respectively, which are included in the computation of net periodic benefit cost (Note 12). |
Accumulated_Other_Comprehensiv3
Accumulated Other Comprehensive Loss - Additional Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Equity [Abstract] | ' | ' | ' | ' | ' |
Net actuarial loss, net of tax included in unamortized defined benefit plan costs | $1,391 | ' | $1,391 | ' | $1,443 |
Unamortized defined benefit costs included in accumulated other comprehensive loss, tax | 919 | ' | 919 | ' | 934 |
Changes in defined benefit plan cost included in other comprehensive income, tax | ($2) | $11 | $15 | $111 | ' |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' | ' |
Income tax provision | $36 | $40 | $101 | $102 | ' |
Percentage of provision for income tax | 40.90% | 33.30% | 38.00% | 33.60% | ' |
Federal statutory income tax rate | ' | ' | 35.00% | ' | ' |
Unrecognized tax benefits | $40 | ' | $40 | ' | $0 |
Receivables_Net_Schedule_of_Re
Receivables, Net - Schedule of Receivables, Net (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Receivables [Abstract] | ' | ' |
Billed receivables | $388 | $395 |
Unbilled contract receivables | 545 | 537 |
Other | 9 | 11 |
Receivables, gross | 942 | 943 |
Allowance for doubtful accounts | -3 | -4 |
Receivables, net | $939 | $939 |
Receivables_Net_Additional_Inf
Receivables, Net - Additional Information (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Billed receivables due, total | $388 | $395 |
Government | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Billed receivables due, total | $287 | $314 |
Inventories_Net_Schedule_of_In
Inventories, Net - Schedule of Inventories, Net (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ' | ' |
Production costs of contracts in process | $222 | $217 |
Less progress payments | -24 | -27 |
Production costs of contracts in process, net | 198 | 190 |
Product inventory | 60 | 56 |
Inventories, net | $258 | $246 |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets, Net - Schedule of Other Intangible Assets (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | $572 | $564 |
Accumulated Amortization | -415 | -397 |
Net Intangibles | 157 | 167 |
Customer and distributor relationships | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | 526 | 525 |
Accumulated Amortization | -388 | -371 |
Net Intangibles | 138 | 154 |
Proprietary technology | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | 36 | 30 |
Accumulated Amortization | -22 | -22 |
Net Intangibles | 14 | 8 |
Trademarks, patents and other | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | 10 | 9 |
Accumulated Amortization | -5 | -4 |
Net Intangibles | $5 | $5 |
Goodwill_and_Other_Intangible_3
Goodwill and Other Intangible Assets, Net - Estimated Amortization Expense (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
Remaining 2014 | $6 | ' |
2015 | 22 | ' |
2016 | 20 | ' |
2017 | 18 | ' |
2018 | 15 | ' |
2019 and thereafter | 76 | ' |
Net Intangibles | $157 | $167 |
Goodwill_and_Other_Intangible_4
Goodwill and Other Intangible Assets, Net - Additional Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Goodwill [Line Items] | ' | ' | ' | ' | ' |
Goodwill | $2,195 | ' | $2,195 | ' | $2,184 |
Aggregate purchase price, net of cash acquired | 18 | ' | 22 | 16 | ' |
Increase to goodwill | 8 | ' | ' | ' | ' |
Increase to other intangible assets | 6 | ' | ' | ' | ' |
Amortization expense related to other intangible assets | 6 | 7 | 18 | 20 | ' |
C4ISR Electronics and Systems | ' | ' | ' | ' | ' |
Goodwill [Line Items] | ' | ' | ' | ' | ' |
Goodwill | 1,808 | ' | 1,808 | ' | 1,800 |
Information and Technical Services | ' | ' | ' | ' | ' |
Goodwill [Line Items] | ' | ' | ' | ' | ' |
Goodwill | $387 | ' | $387 | ' | $384 |
Debt_Summary_of_Debt_Details
Debt - Summary of Debt (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Debt Instrument [Line Items] | ' | ' |
Total short-term debt | $11 | $0 |
Long-term debt | 779 | 650 |
Unamortized debt discounts | -1 | -1 |
Total long-term debt | 778 | 649 |
Total debt | 789 | 649 |
Term Loan | Vectrus term loan | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Total short-term debt | $11 | $0 |
Debt_Summary_of_LongTerm_Debt_
Debt - Summary of Long-Term Debt (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Debt Instrument [Line Items] | ' | ' |
Carrying Value | $790 | $650 |
Fair Value | 828 | 667 |
Senior Notes | Senior notes due 2016 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Interest rate | 4.25% | ' |
Carrying Value | 250 | 250 |
Fair Value | 263 | 263 |
Senior Notes | Senior notes due 2021 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Interest rate | 5.55% | ' |
Carrying Value | 400 | 400 |
Fair Value | 425 | 404 |
Term Loan | Vectrus term loan | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Interest rate | 2.99% | ' |
Carrying Value | 140 | 0 |
Fair Value | $140 | $0 |
Debt_Additional_Information_De
Debt - Additional Information (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 17, 2014 | Sep. 17, 2014 | Sep. 30, 2014 | Sep. 17, 2014 | Sep. 17, 2014 | Sep. 26, 2014 | Sep. 17, 2014 | Sep. 17, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 |
Revolving Credit Facility | Revolving Credit Facility | Revolving Credit Facility | Letter of Credit | Letter of Credit | Secured Term Loan | Secured Term Loan | Secured Term Loan | Secured Term Loan | Senior Notes | Senior Notes | Senior Notes | Senior Notes | Senior Notes | Senior Notes | Line of Credit | Line of Credit | Line of Credit | Line of Credit | Line of Credit | |||
Revolving Facility | Revolving Facility | Revolving Facility | Revolving Facility | Revolving Facility | Vectrus | Term Loan | Term Loan | Term Loan | Senior notes due 2016 | Senior notes due 2016 | Senior notes due 2021 | Senior notes due 2021 | Revolving Credit Facility | Revolving Credit Facility | Letter of Credit | Letter of Credit | ||||||
Vectrus | Vectrus | JP Morgan Chase Bank, N.A. | Vectrus | Vectrus | Spinoff | Vectrus | Vectrus | JP Morgan Chase Bank, N.A. | ||||||||||||||
Spinoff | Spinoff | Vectrus | Spinoff | Spinoff | Spinoff | Spinoff | Vectrus | |||||||||||||||
Spinoff | Spinoff | |||||||||||||||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maturity period | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | '4 years | ' | ' | ' | ' |
Credit facility, expiration date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25-Oct-15 | ' | ' | ' | ' |
Credit facility, extension period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '1 year | ' | ' | ' | ' |
Credit facility, current borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $600,000,000 | ' | $100,000,000 | ' |
Credit facility, amount outstanding | ' | ' | 0 | ' | ' | 0 | ' | ' | 140,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | 0 | 0 |
Ratio of total indebtedness to combined EBITDA | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.5 | ' | ' | ' | ' |
Long-term debt | 790,000,000 | 650,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 250,000,000 | 250,000,000 | 400,000,000 | 400,000,000 | ' | ' | ' | ' | ' |
Interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4.25% | ' | 5.55% | ' | ' | ' | ' | ' | ' |
Accrued interest payable, included in other accrued liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 16,000,000 | 8,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate principal amount under Facility | ' | ' | ' | $75,000,000 | ' | ' | $35,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of repayments of aggregate principal amount per quarter during year one | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.88% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of repayments of aggregate principal amount per quarter during year two | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of repayments of aggregate principal amount per quarter during year three | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of repayments of aggregate principal amount per quarter during year four | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of repayments of aggregate principal amount per quarter during year five | ' | ' | ' | ' | ' | ' | ' | ' | ' | 14.38% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ratio of consolidated EBITDA to consolidated interest expense | ' | ' | ' | ' | ' | ' | ' | 4.5 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Leverage ratio from December 31, 2014 through June 30, 2015 | ' | ' | ' | ' | ' | ' | ' | 3.5 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Leverage ratio from July 1, 2015 through December 31, 2015 | ' | ' | ' | ' | ' | ' | ' | 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Leverage ratio from January 1, 2016 and thereafter | ' | ' | ' | ' | ' | ' | ' | 2.75 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Postretirement_Benefit_Plans_N
Postretirement Benefit Plans - Net Periodic Benefit Cost (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Defined Benefit Plan Disclosure [Line Items] | ' | ' | ' | ' |
Service cost | $15 | $16 | $48 | $55 |
Interest cost | 67 | 65 | 203 | 194 |
Expected return on plan assets | -91 | -88 | -272 | -270 |
Amortization of net actuarial loss | 23 | 28 | 67 | 88 |
Amortization of prior service cost | 0 | 0 | 1 | 2 |
Net periodic benefit cost | ' | ' | 47 | 69 |
Effect of curtailments | ' | ' | 1 | 0 |
Total net periodic benefit cost | 14 | 21 | 48 | 69 |
Pension | ' | ' | ' | ' |
Defined Benefit Plan Disclosure [Line Items] | ' | ' | ' | ' |
Service cost | 15 | 16 | 47 | 54 |
Interest cost | 62 | 60 | 188 | 180 |
Expected return on plan assets | -86 | -83 | -256 | -254 |
Amortization of net actuarial loss | 22 | 25 | 64 | 79 |
Amortization of prior service cost | 0 | 0 | 1 | 2 |
Net periodic benefit cost | ' | ' | 44 | 61 |
Effect of curtailments | ' | ' | 1 | 0 |
Total net periodic benefit cost | 13 | 18 | 45 | 61 |
Other Benefits | ' | ' | ' | ' |
Defined Benefit Plan Disclosure [Line Items] | ' | ' | ' | ' |
Service cost | 0 | 0 | 1 | 1 |
Interest cost | 5 | 5 | 15 | 14 |
Expected return on plan assets | -5 | -5 | -16 | -16 |
Amortization of net actuarial loss | 1 | 3 | 3 | 9 |
Amortization of prior service cost | 0 | 0 | 0 | 0 |
Net periodic benefit cost | ' | ' | 3 | 8 |
Effect of curtailments | ' | ' | 0 | 0 |
Total net periodic benefit cost | $1 | $3 | $3 | $8 |
Postretirement_Benefit_Plans_A
Postretirement Benefit Plans - Additional Information (Details) (Pension, USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Defined Benefit Plan Disclosure [Line Items] | ' | ' |
Defined benefit plan, contributions by employer | $123 | $114 |
Minimum | ' | ' |
Defined Benefit Plan Disclosure [Line Items] | ' | ' |
Defined benefit plan, estimated future employer contributions in remaining fiscal year | 10 | ' |
Maximum | ' | ' |
Defined Benefit Plan Disclosure [Line Items] | ' | ' |
Defined benefit plan, estimated future employer contributions in remaining fiscal year | $20 | ' |
StockBased_Compensation_Schedu
Stock-Based Compensation - Schedule of Compensation Costs (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Compensation cost for awards | $7 | $9 | $21 | $25 |
Future tax benefit | 3 | 3 | 8 | 8 |
Compensation cost for equity-based awards | ' | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Compensation cost for awards | 5 | 7 | 18 | 20 |
Compensation cost for liability-based awards | ' | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Compensation cost for awards | $2 | $2 | $3 | $5 |
StockBased_Compensation_Summar
Stock-Based Compensation - Summary of Non-Qualified Stock Options and Restricted Stock Activity (Details) (USD $) | 9 Months Ended |
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2014 |
Stock Options | ' |
Stock Options, Outstanding [Roll Forward] | ' |
Outstanding at beginning of period | 11.46 |
Granted | 0.57 |
Exercised | -1.51 |
Forfeited, canceled or expired | -0.08 |
Outstanding at end of period | 10.44 |
Stock Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ' |
Outstanding at beginning of period | $11.13 |
Granted | $20.82 |
Exercised | $10.85 |
Forfeited, canceled or expired | $10.95 |
Outstanding at end of period | $11.70 |
Restricted Stock Units | ' |
Restricted Stock (including RSUs), Outstanding [Roll Forward] | ' |
Outstanding at beginning of period | 3.48 |
Granted | 0.72 |
Vested | -0.81 |
Forfeited, canceled or expired | -0.06 |
Outstanding at end of period | 3.33 |
Restricted Stock (including RSUs), Outstanding, Weighted Average Exercise Price [Roll Forward] | ' |
Outstanding at beginning of period | $11.48 |
Granted | $20.52 |
Vested | $12.64 |
Forfeited, canceled or expired | $12.16 |
Outstanding at end of period | $13.15 |
StockBased_Compensation_Weight
Stock-Based Compensation - Weighted Average Assumptions (Details) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ' |
Dividend yield | 1.98% |
Expected volatility | 26.80% |
Expected life (in years) | '7 years |
Risk-free rates | 2.20% |
Weighted-average grant date fair value per share | $5.12 |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Information (Details) (USD $) | 9 Months Ended |
In Millions, except Per Share data, unless otherwise specified | Sep. 30, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Weighted average grant date fair value, options (in dollars per share) | $5.12 |
Non-Qualified Stock Options (NQOs) | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Granted long-term incentives to employees, options | 0.57 |
Weighted average grant date fair value, options (in dollars per share) | $5.12 |
Award vesting period | '3 years |
Award expiration period | '10 years |
Restricted Stock Units (RSUs) | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Granted long-term incentives to employees, equity instruments other than options | 0.7 |
Weighted average grant date fair value, equity instruments other than options (in dollars per share) | $20.52 |
Total Shareholder Return Awards (TSRs) | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Award vesting period | '3 years |
Aggregate target value of award, settled in cash | $5 |
Total Shareholder Return Awards (TSRs) | Minimum | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Estimated cash settlement, percentage of target award | 0.00% |
Total Shareholder Return Awards (TSRs) | Maximum | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Estimated cash settlement, percentage of target award | 200.00% |
Compensation cost for equity-based awards | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Total unrecognized compensation costs | 15 |
Unrecognized compensation costs, weighted average period for recognition | '2 years |
Compensation cost for liability-based awards | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Total unrecognized compensation costs | $3 |
Unrecognized compensation costs, weighted average period for recognition | '1 year 10 months 12 days |
Related_Party_Transactions_Add
Related Party Transactions - Additional Information (Details) (Xylem And ITT, USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Xylem And ITT | ' | ' |
Related Party Transaction [Line Items] | ' | ' |
Total payables due from Exelis to related parties | $9 | $9 |
Total receivables due to Exelis to related parties | $7 | $7 |
Commitments_and_Contingencies_1
Commitments and Contingencies - Range of Estimated Loss Environmental Matters (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | |
In Millions, unless otherwise specified | site | site | |
Range of Estimated Loss and Number of Active Sites for Environmental Matters: | ' | ' | |
Low-end range | $23 | [1] | $23 |
High-end range | $69 | [1] | $44 |
Number of active environmental investigations and remediation sites | 46 | [1] | 24 |
[1] | In June 2014, the Company received notice from the Department of Justice, Environment and Natural Resources Division, that it may be potentially responsible for contribution to the environmental investigation and remediation of multiple locations in Alaska. Pending further information, we have increased the number of active sites and the high-end range of estimated loss based on our historical costs for similar matters. |
Commitments_and_Contingencies_2
Commitments and Contingencies - Additional Information (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Apr. 11, 2014 |
Rabbi Trust | Environmental Protection Agency Propose Plan for Remedial Alternatives | |||
plan | Lower Eight Mile Stretch of Passaic River | |||
Commitments and Contingencies [Line Items] | ' | ' | ' | ' |
Estimated and accrued environmental matters | $26,000,000 | $26,000,000 | ' | ' |
EPA estimated cost for remedial alternatives, low estimate | ' | ' | ' | 400,000,000 |
EPA estimated cost for remedial alternatives, high estimate | ' | ' | ' | 3,200,000,000 |
EPA's preferred remedial alternative estimated cost | ' | ' | ' | 1,700,000,000 |
Aggregate amount of surety bonds, guarantees, and stand-by letters of credit | $91,000,000 | ' | ' | ' |
Deferred compensation, employer contribution requirement, percentage | ' | ' | 110.00% | ' |
Deferred compensation, number of plans | ' | ' | 8 | ' |
Segment_Information_Segment_Re
Segment Information - Segment Revenue (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Segment Reporting, Revenue Reconciling Item [Line Items] | ' | ' | ' | ' |
Product revenue | $503 | $498 | $1,506 | $1,515 |
Service revenue | 565 | 643 | 1,724 | 2,062 |
Total revenue | 1,068 | 1,141 | 3,230 | 3,577 |
C4ISR Electronics and Systems | ' | ' | ' | ' |
Segment Reporting, Revenue Reconciling Item [Line Items] | ' | ' | ' | ' |
Product revenue | 503 | 498 | 1,506 | 1,515 |
Service revenue | 0 | 0 | 0 | 0 |
Total revenue | 503 | 498 | 1,506 | 1,515 |
Information and Technical Services | ' | ' | ' | ' |
Segment Reporting, Revenue Reconciling Item [Line Items] | ' | ' | ' | ' |
Product revenue | 0 | 0 | 0 | 0 |
Service revenue | 565 | 643 | 1,724 | 2,062 |
Total revenue | $565 | $643 | $1,724 | $2,062 |
Segment_Information_Segment_Op
Segment Information - Segment Operating Margins (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ' | ' | ' | ' |
Operating Income | $96 | $133 | $288 | $334 |
Operating Margin | 9.00% | 11.70% | 8.90% | 9.30% |
C4ISR Electronics and Systems | ' | ' | ' | ' |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ' | ' | ' | ' |
Operating Income | 59 | 69 | 162 | 128 |
Operating Margin | 11.70% | 13.90% | 10.80% | 8.40% |
Information and Technical Services | ' | ' | ' | ' |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ' | ' | ' | ' |
Operating Income | $37 | $64 | $126 | $206 |
Operating Margin | 6.50% | 10.00% | 7.30% | 10.00% |
Segment_Information_Segment_As
Segment Information - Segment Assets (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ' | ' |
Total Assets | $4,917 | $4,884 |
Operating Segments | ' | ' |
Segment Reporting, Asset Reconciling Item [Line Items] | ' | ' |
Total Assets | 4,142 | 4,128 |
Operating Segments | C4ISR Electronics and Systems | ' | ' |
Segment Reporting, Asset Reconciling Item [Line Items] | ' | ' |
Total Assets | 3,027 | 3,031 |
Operating Segments | Information and Technical Services | ' | ' |
Segment Reporting, Asset Reconciling Item [Line Items] | ' | ' |
Total Assets | 1,115 | 1,097 |
Corporate, Non-Segment | Corporate and Other | ' | ' |
Segment Reporting, Asset Reconciling Item [Line Items] | ' | ' |
Total Assets | $775 | $756 |
Segment_Information_Additional
Segment Information - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2014 | |
Segment | |
Segment Reporting [Abstract] | ' |
Number of operating segments | 2 |