Cover Page
Cover Page | 6 Months Ended |
Jun. 30, 2022 | |
Cover [Abstract] | |
Document Type | S-4/A |
Entity Registrant Name | Leonardo DRS, Inc. |
Entity Incorporation, State or Country Code | DE |
Entity Primary SIC Number | 3812 |
Entity Tax Identification Number | 13-2632319 |
Entity Address, Address Line One | 2345 Crystal Drive |
Entity Address, Address Line Two | Suite 1000 |
Entity Address, City or Town | Arlington |
Entity Address, State or Province | VA |
Entity Address, Postal Zip Code | 22202 |
City Area Code | 703 |
Local Phone Number | 416-8000 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Central Index Key | 0001833756 |
Amendment Flag | false |
Consolidated Statements of Earn
Consolidated Statements of Earnings (Unaudited) - 10-Q - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | |||||||
Total revenues | $ 627 | $ 658 | $ 1,239 | $ 1,339 | $ 2,879 | $ 2,778 | $ 2,714 |
Cost of revenues: | |||||||
Total cost of revenues | (500) | (531) | (978) | (1,076) | (2,332) | (2,284) | (2,255) |
Gross profit | 127 | 127 | 261 | 263 | 547 | 494 | 459 |
General and administrative expenses | (84) | (73) | (160) | (152) | (293) | (283) | (277) |
Amortization of intangibles | (2) | (2) | (4) | (4) | (9) | (9) | (9) |
Other operating expenses, net | 1 | (1) | 1 | (5) | (9) | (21) | (10) |
Operating earnings | 42 | 51 | 98 | 102 | 236 | 181 | 163 |
Interest expense | (10) | (9) | (18) | (18) | (35) | (64) | (65) |
Other, net | 0 | 1 | 0 | 0 | (1) | (5) | (3) |
Earnings before taxes | 32 | 43 | 80 | 84 | 200 | 112 | 95 |
Income tax provision | 7 | 11 | 19 | 23 | 46 | 27 | 20 |
Net earnings | $ 25 | $ 32 | $ 61 | $ 61 | $ 154 | $ 85 | $ 75 |
Net earnings per share from common stock: | |||||||
Basic earnings per share (in dollars per share) | $ 0.17 | $ 0.22 | $ 0.42 | $ 0.42 | $ 1.06 | $ 0.59 | $ 0.52 |
Diluted earnings per share (in dollars per share) | $ 0.17 | $ 0.22 | $ 0.42 | $ 0.42 | $ 1.06 | $ 0.59 | $ 0.52 |
Products | |||||||
Revenues: | |||||||
Total revenues | $ 549 | $ 562 | $ 1,090 | $ 1,132 | $ 2,505 | $ 2,412 | $ 2,220 |
Cost of revenues: | |||||||
Total cost of revenues | (445) | (470) | (867) | (930) | (2,067) | (2,000) | (1,904) |
Services | |||||||
Revenues: | |||||||
Total revenues | 78 | 96 | 149 | 207 | 374 | 366 | 494 |
Cost of revenues: | |||||||
Total cost of revenues | $ (55) | $ (61) | $ (111) | $ (146) | $ (265) | $ (284) | $ (351) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - 10-Q - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 25 | $ 32 | $ 61 | $ 61 |
Other comprehensive income (loss): | ||||
Foreign currency translation gain, net of income taxes | (1) | 3 | 0 | 3 |
Gain from pension settlements | 0 | 0 | 3 | 0 |
Net unrecognized gain (loss) on postretirement obligations, net of income taxes | (1) | 10 | 1 | 9 |
Other comprehensive income (loss), net of income tax | (2) | 13 | 4 | 12 |
Total comprehensive income | $ 23 | $ 45 | $ 65 | $ 73 |
Consolidated Balance Sheets -10
Consolidated Balance Sheets -10-Q - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 69 | $ 240 |
Accounts receivable, net | 125 | 156 |
Contract assets | 874 | 743 |
Inventories | 249 | 205 |
Related party note receivable | 0 | 0 |
Prepaid expenses | 17 | 23 |
Other current assets | 29 | 22 |
Held for sale | 174 | 0 |
Total current assets | 1,537 | 1,389 |
Noncurrent assets: | ||
Property, plant and equipment, net | 363 | 364 |
Intangible assets, net | 47 | 52 |
Goodwill | 952 | 1,071 |
Deferred tax assets | 46 | 56 |
Other noncurrent assets | 98 | 137 |
Total noncurrent assets | 1,506 | 1,680 |
Total assets | 3,043 | 3,069 |
Current liabilities: | ||
Short-term borrowings and current portion of long-term debt | 140 | 41 |
Accounts payable | 291 | 479 |
Contract liabilities | 156 | 174 |
Other current liabilities | 279 | 295 |
Held for sale | 45 | 0 |
Total current liabilities | 911 | 989 |
Noncurrent liabilities: | ||
Long-term debt | 350 | 352 |
Pension and other postretirement benefit plan liabilities | 54 | 61 |
Other noncurrent liabilities | 70 | 74 |
Total noncurrent liabilities | 474 | 487 |
Shareholder's equity: | ||
Preferred stock, $0.01 par value: 10,000,000 shares authorized; none issued | 0 | 0 |
Common stock, $0.01 par value: 300,000,000 shares authorized; 145,000,000 shares issued and outstanding | 1 | 1 |
Additional paid-in capital | 4,633 | 4,633 |
Accumulated deficit | (2,922) | (2,983) |
Accumulated other comprehensive loss | (54) | (58) |
Total shareholder's equity | 1,658 | 1,593 |
Total liabilities and shareholder's equity | $ 3,043 | $ 3,069 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - 10-Q - $ / shares | Jun. 30, 2022 | Jun. 21, 2022 | Dec. 31, 2021 | Feb. 28, 2021 | Jan. 31, 2021 | Dec. 31, 2020 |
Shareholder's equity: | ||||||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |||
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 | |||
Preferred stock, issued (in shares) | 0 | 0 | 0 | |||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||
Common stock, authorized (in shares) | 300,000,000 | 300,000,000 | 300,000,000 | |||
Common stock, issued (in shares) | 145,000,000 | 145,000,000 | 145,000,000 | |||
Common stock, outstanding (in shares) | 145,000,000 | 145,000,000 | 145,000,000 | 100 | 145,000,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - 10-Q - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Operating activities | |||||
Net earnings | $ 61 | $ 61 | $ 154 | $ 85 | $ 75 |
Adjustments to reconcile net earnings to net cash used in operating activities: | |||||
Depreciation and amortization | 31 | 28 | 58 | 53 | 51 |
Deferred income taxes | 14 | 23 | 46 | 22 | 17 |
Other | 0 | (1) | 0 | 3 | 3 |
Changes in assets and liabilities: | |||||
Accounts receivable | 24 | (3) | (54) | (35) | 9 |
Contract assets | (131) | (82) | (71) | 65 | (166) |
Inventories | (47) | (10) | 42 | (38) | (36) |
Prepaid expenses | (3) | 13 | 10 | (14) | (2) |
Other current assets | (7) | (8) | 12 | 3 | 3 |
Other noncurrent assets | 22 | 10 | 19 | 22 | 19 |
Defined benefit obligations | (3) | (6) | (13) | (9) | (1) |
Other current liabilities | (9) | 5 | 28 | 30 | (11) |
Other noncurrent liabilities | (17) | (13) | (36) | (14) | (16) |
Accounts payable | (165) | (172) | 1 | (58) | 156 |
Contract liabilities | (12) | (30) | (3) | 2 | 61 |
Net cash used in operating activities | (242) | (185) | 178 | 125 | 157 |
Investing activities | |||||
Capital expenditures | (22) | (29) | (60) | (56) | (55) |
Repayments received (net of advances) on related party note receivable | 0 | 115 | 115 | (15) | (100) |
Investment in unconsolidated affiliate | 0 | (2) | (2) | (4) | 0 |
Net cash (used by) provided by investing activities | (22) | 84 | 39 | (70) | (151) |
Financing activities | |||||
Net (decrease) increase in third party borrowings (maturities of 90 days or less) | (17) | (16) | (18) | (11) | 16 |
Repayment of related party debt | (335) | (475) | (950) | (1,170) | (895) |
Borrowings from related parties | 445 | 625 | 930 | 1,105 | 880 |
Other | 0 | (2) | 0 | (4) | (2) |
Net cash provided by financing activities | 93 | 132 | (38) | (80) | (1) |
Effect of exchange rate changes on cash and cash equivalents | 0 | (1) | 0 | 1 | 1 |
Net (decrease) increase in cash and cash equivalents | (171) | 30 | 179 | (24) | 6 |
Cash and cash equivalents at beginning of year | 240 | 61 | 61 | 85 | 79 |
Cash and cash equivalents at end of period | $ 69 | $ 91 | $ 240 | $ 61 | $ 85 |
Consolidated Statements of Shar
Consolidated Statements of Shareholder's Equity (Unaudited) - 10-Q - USD ($) $ in Millions | Total | Common stock | Additional paid- in capital | Accumulated other comprehensive loss | Accumulated deficit |
Balance at beginning of period at Dec. 31, 2018 | $ 956 | $ 1 | $ 4,333 | $ (81) | $ (3,297) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Total comprehensive income (loss) | 63 | (12) | 75 | ||
Balance at end of period at Dec. 31, 2019 | 1,019 | 1 | 4,333 | (93) | (3,222) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Total comprehensive income (loss) | 108 | 23 | 85 | ||
Balance at end of period at Dec. 31, 2020 | 1,427 | 1 | 4,633 | (70) | (3,137) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Total comprehensive income (loss) | 73 | 12 | 61 | ||
Balance at end of period at Jun. 30, 2021 | 1,500 | 1 | 4,633 | (58) | (3,076) |
Balance at beginning of period at Dec. 31, 2020 | 1,427 | 1 | 4,633 | (70) | (3,137) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Total comprehensive income (loss) | 166 | 12 | 154 | ||
Balance at end of period at Dec. 31, 2021 | 1,593 | 1 | 4,633 | (58) | (2,983) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Total comprehensive income (loss) | 65 | 4 | 61 | ||
Balance at end of period at Jun. 30, 2022 | $ 1,658 | $ 1 | $ 4,633 | $ (54) | $ (2,922) |
Consolidated Statements of Ea_2
Consolidated Statements of Earnings - 10-K - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | |||||||
Total revenues | $ 627 | $ 658 | $ 1,239 | $ 1,339 | $ 2,879 | $ 2,778 | $ 2,714 |
Cost of revenues: | |||||||
Total cost of revenues | (500) | (531) | (978) | (1,076) | (2,332) | (2,284) | (2,255) |
Gross profit | 127 | 127 | 261 | 263 | 547 | 494 | 459 |
General and administrative expenses | (84) | (73) | (160) | (152) | (293) | (283) | (277) |
Amortization of intangibles | (2) | (2) | (4) | (4) | (9) | (9) | (9) |
Other operating expenses, net | 1 | (1) | 1 | (5) | (9) | (21) | (10) |
Operating earnings | 42 | 51 | 98 | 102 | 236 | 181 | 163 |
Interest expense | (10) | (9) | (18) | (18) | (35) | (64) | (65) |
Other, net | 0 | 1 | 0 | 0 | (1) | (5) | (3) |
Earnings before taxes | 32 | 43 | 80 | 84 | 200 | 112 | 95 |
Income tax provision | 7 | 11 | 19 | 23 | 46 | 27 | 20 |
Net earnings | $ 25 | $ 32 | $ 61 | $ 61 | $ 154 | $ 85 | $ 75 |
Net earnings per share from common stock: | |||||||
Basic earnings per share (in dollars per share) | $ 0.17 | $ 0.22 | $ 0.42 | $ 0.42 | $ 1.06 | $ 0.59 | $ 0.52 |
Diluted earnings per share (in dollars per share) | $ 0.17 | $ 0.22 | $ 0.42 | $ 0.42 | $ 1.06 | $ 0.59 | $ 0.52 |
Products | |||||||
Revenues: | |||||||
Total revenues | $ 549 | $ 562 | $ 1,090 | $ 1,132 | $ 2,505 | $ 2,412 | $ 2,220 |
Cost of revenues: | |||||||
Total cost of revenues | (445) | (470) | (867) | (930) | (2,067) | (2,000) | (1,904) |
Services | |||||||
Revenues: | |||||||
Total revenues | 78 | 96 | 149 | 207 | 374 | 366 | 494 |
Cost of revenues: | |||||||
Total cost of revenues | $ (55) | $ (61) | $ (111) | $ (146) | $ (265) | $ (284) | $ (351) |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income - 10-K - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Net earnings | $ 154 | $ 85 | $ 75 |
Other comprehensive income (loss): | |||
Foreign currency translation gain, net of income taxes | 2 | 1 | 3 |
Net unrecognized gain (loss) on postretirement obligations, net of income taxes | 10 | 22 | (15) |
Other comprehensive income (loss), net of income tax | 12 | 23 | (12) |
Total comprehensive income | $ 166 | $ 108 | $ 63 |
Consolidated Balance Sheets - 1
Consolidated Balance Sheets - 10-K - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||||||
Cash and cash equivalents | $ 69 | $ 240 | $ 61 | |||
Accounts receivable, net | 125 | 156 | 102 | |||
Contract assets | 874 | 743 | 672 | |||
Inventories | 249 | 205 | 247 | |||
Related party note receivable | 0 | 0 | 115 | |||
Prepaid expenses | 17 | 23 | 33 | |||
Other current assets | 29 | 22 | 33 | |||
Total current assets | 1,537 | 1,389 | 1,263 | |||
Noncurrent assets: | ||||||
Property, plant and equipment, net | 363 | 364 | 355 | |||
Intangible assets, net | 47 | 52 | 60 | |||
Goodwill | 952 | 1,071 | 1,057 | $ 1,057 | ||
Deferred tax assets | 46 | 56 | 87 | |||
Other noncurrent assets | 98 | 137 | 134 | |||
Total noncurrent assets | 1,506 | 1,680 | 1,693 | |||
Total assets | 3,043 | 3,069 | 2,956 | |||
Current liabilities: | ||||||
Short-term borrowings and current portion of long-term debt | 140 | 41 | 53 | |||
Accounts payable | 291 | 479 | 478 | |||
Contract liabilities | 156 | 174 | 177 | |||
Other current liabilities | 279 | 295 | 267 | |||
Total current liabilities | 911 | 989 | 975 | |||
Noncurrent liabilities: | ||||||
Long-term debt | 350 | 352 | 374 | |||
Pension and other postretirement benefit plan liabilities | 54 | 61 | 88 | |||
Other noncurrent liabilities | 70 | 74 | 92 | |||
Total noncurrent liabilities | 474 | 487 | 554 | |||
Shareholder's equity: | ||||||
Preferred stock, $0.01 par value: 10,000,000 shares authorized; none issued | 0 | 0 | 0 | |||
Common stock, $0.01 par value: 300,000,000 shares authorized; 145,000,000 shares issued and outstanding | 1 | 1 | 1 | |||
Additional paid-in capital | 4,633 | 4,633 | 4,633 | |||
Accumulated deficit | (2,922) | (2,983) | (3,137) | |||
Accumulated other comprehensive loss | (54) | (58) | (70) | |||
Total shareholder's equity | 1,658 | 1,593 | $ 1,500 | 1,427 | $ 1,019 | $ 956 |
Total liabilities and shareholder's equity | $ 3,043 | $ 3,069 | $ 2,956 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Parenthetical) - 10-K - $ / shares | Jun. 30, 2022 | Jun. 21, 2022 | Dec. 31, 2021 | Feb. 28, 2021 | Jan. 31, 2021 | Dec. 31, 2020 |
Shareholder's equity: | ||||||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |||
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 | |||
Preferred stock, issued (in shares) | 0 | 0 | 0 | |||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||
Common stock, authorized (in shares) | 300,000,000 | 300,000,000 | 300,000,000 | |||
Common stock, issued (in shares) | 145,000,000 | 145,000,000 | 145,000,000 | |||
Common stock, outstanding (in shares) | 145,000,000 | 145,000,000 | 145,000,000 | 100 | 145,000,000 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows - 10-K - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Operating activities | |||
Net earnings | $ 154 | $ 85 | $ 75 |
Adjustments to reconcile net earnings to net cash used in operating activities: | |||
Depreciation and amortization | 58 | 53 | 51 |
Deferred income taxes | 31 | 30 | 12 |
Other | 0 | 3 | 3 |
Changes in assets and liabilities: | |||
Accounts receivable | (54) | (35) | 9 |
Contract assets | (71) | 65 | (166) |
Inventories | 42 | (38) | (36) |
Prepaid expenses | 10 | (14) | (2) |
Other current assets | 12 | 3 | 3 |
Other noncurrent assets | 19 | 22 | 19 |
Defined benefit obligations | (13) | (9) | (1) |
Other current liabilities | 28 | 30 | (11) |
Other noncurrent liabilities | (36) | (14) | (16) |
Accounts payable | 1 | (58) | 156 |
Contract liabilities | (3) | 2 | 61 |
Net cash used in operating activities | 178 | 125 | 157 |
Investing activities | |||
Capital expenditures | (60) | (56) | (55) |
Business acquisitions, net of cash acquired | (14) | 0 | (4) |
Proceeds from sales of assets | 0 | 5 | 8 |
Repayments received (net of advances) on related party note receivable | 115 | (15) | (100) |
Cost method investment | (2) | (4) | 0 |
Net cash (used by) provided by investing activities | 39 | (70) | (151) |
Financing activities | |||
Net (decrease) increase in third party borrowings (maturities of 90 days or less) | (18) | (11) | 16 |
Repayment of related party debt | (950) | (1,170) | (895) |
Borrowings from related parties | 930 | 1,105 | 880 |
Other | 0 | (4) | (2) |
Net cash provided by financing activities | (38) | (80) | (1) |
Effect of exchange rate changes on cash and cash equivalents | 0 | 1 | 1 |
Net (decrease) increase in cash and cash equivalents | 179 | (24) | 6 |
Cash and cash equivalents at beginning of year | 61 | 85 | 79 |
Cash and cash equivalents at end of period | 240 | 61 | 85 |
Supplemental disclosure of non-cash investing and financing activities | |||
Forgiveness of related party debt | 0 | 300 | 0 |
Additions of property plant and equipment and long-term debt for a build-to-suit lease | $ 0 | $ 49 | $ 0 |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholder's Equity - 10-K - USD ($) $ in Millions | Total | Common stock | Additional paid- in capital | Accumulated other comprehensive loss | Accumulated deficit |
Balance at beginning of period at Dec. 31, 2018 | $ 956 | $ 1 | $ 4,333 | $ (81) | $ (3,297) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Total comprehensive income (loss) | 63 | (12) | 75 | ||
Balance at end of period at Dec. 31, 2019 | 1,019 | 1 | 4,333 | (93) | (3,222) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Total comprehensive income (loss) | 108 | 23 | 85 | ||
Forgiveness of related party debt | 300 | 300 | |||
Balance at end of period at Dec. 31, 2020 | 1,427 | 1 | 4,633 | (70) | (3,137) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Total comprehensive income (loss) | 73 | 12 | 61 | ||
Balance at end of period at Jun. 30, 2021 | 1,500 | 1 | 4,633 | (58) | (3,076) |
Balance at beginning of period at Dec. 31, 2020 | 1,427 | 1 | 4,633 | (70) | (3,137) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Total comprehensive income (loss) | 166 | 12 | 154 | ||
Balance at end of period at Dec. 31, 2021 | 1,593 | 1 | 4,633 | (58) | (2,983) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Total comprehensive income (loss) | 65 | 4 | 61 | ||
Balance at end of period at Jun. 30, 2022 | $ 1,658 | $ 1 | $ 4,633 | $ (54) | $ (2,922) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Summary of Significant Accounting Policies | Organization Leonardo DRS, Inc., together with its wholly owned subsidiaries (hereinafter, “DRS,” “the Company,” “us,” “our,” or “we”) is a supplier of defense electronics products, systems and military support services. The Company is controlled by Leonardo S.p.A (hereinafter, “Leonardo S.p.A.,” or “the Parent”), an Italian multi-national aerospace, defense and security company headquartered in Rome, Italy, through its direct sole ownership of Leonardo US Holding, Inc. (“US Holding”). US Holding is the direct and sole shareholder of the Company. DRS is a provider of defense products and technologies that are used across land, air, sea, space and cyber domains. Our diverse array of defense systems and solutions are offered to all branches of the U.S. military, major aerospace and defense prime contractors, government intelligence agencies, international military customers and industrial markets for deployment on a wide range of military platforms. We focus our capabilities in areas of critical importance to the U.S. military, such as sensing, electronic warfare (“EW”), network computing and communications, force protection and electrical power conversion and propulsion. These capabilities directly align with our two reportable segments: Advanced Sensing and Computing and Integrated Mission Systems. The U.S. Department of Defense (“DoD”) is our largest customer and accounts for approximately 78% and 82% of our total revenues as an end-user for the second quarter and first six months of 2022, respectively, and 85% for the second quarter and first six months of 2021. Specific international commercial market opportunities exist within these segments and make up approximately 22% and 18% of our total revenues for the second quarter and first six months of 2022, respectively, and 15% for the second quarter and first half of 2021. Our two reportable segments reflect the way performance is assessed and resources are allocated by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). Advanced Sensing and Computing (“ASC”) The ASC segment provides sensing and computing systems and subsystem solutions to the U.S. military and allied nations focused on solving the most complex threat dynamics facing our service men and women today. We provide world class sensing products in all warfighting domains along with the computation systems to provide situational understanding. Our technologies and products are deployed on nearly all military platforms across land, sea, air, cyberspace, and space on individual soldiers, ground vehicles, ships, aircraft, and satellites. We have market leading capabilities in electro-optic and infrared imaging, advanced lasers, electronic warfare and cyber, communications, and computing in these domains. Integrated Mission Systems (“IMS”) The IMS segment provides critical force protection, platform integration, transportation and logistics and power conversion and propulsion systems to the U.S. military and its allies. Our force protection systems provide much needed protection for our service members and military assets from evolving and proliferating threats and include advanced solutions for counter-unmanned aerial systems, short-range air defense systems and active protection systems on ground vehicles. Additionally, we provide power conversion and propulsion systems for the U.S. Navy’s top priority shipbuilding programs, building on our legacy of providing power components and systems for nearly all naval combat vessels for three decades, positioning us to continue as a leading provider of electrical ship propulsion systems and components for the U.S. Navy and its allies. Other The Company separately presents the unallocable costs associated with corporate functions and certain non-operating subsidiaries of the Company as Corporate & Eliminations. See Note 15 : Segment Information for further information regarding our business segments. B. Basis of presentation The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of DRS, its wholly owned subsidiaries and its controlling interests. Interests in joint ventures that are controlled by the Company, or for which the Company is otherwise deemed to be the primary beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts significant influence, the Company applies the equity method of accounting. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation. Interim Financial Statements . The unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These rules and regulations permit some of the information and footnote disclosures included in financial statements prepared in accordance with U.S. GAAP to be condensed or omitted. These unaudited Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements as of and for the year ended December 31, 2021 filed as Exhibit 99.1 to the Current Report on Form 8-K filed on August 2, 2022. C. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant of these estimates and assumptions relate to the recognition of contract revenues and estimated costs to complete contracts in process, recoverability of reported amounts of goodwill, long-lived assets and intangible assets, valuation of pensions and other postretirement benefits, the valuation of deferred tax assets and liabilities and the valuation of unrecognized tax benefits. Actual results could differ from these estimates. D. Revenue Recognition Our revenues consist of sales of products (tangible goods) and sales of services to customers. We recognize the majority of our revenue from contracts with customers using an over time, cost-to-cost method of accounting. On certain other contracts, primarily time and material (“T&M”) and cost-plus contracts, revenue is recognized using the right-to-invoice practical expedient as we are contractually able to bill our customer based on control transferred to the customer. See Note 2 . Revenue from Contracts with Customers for additional information regarding revenue recognition. E. Cost of Revenues Cost of revenues includes materials, labor and overhead costs incurred in the manufacturing, design, and provision of products and services sold in the period as well as warranty costs. Material costs include raw materials, purchased components and sub-assemblies, outside processing and inbound freight costs. Labor and overhead costs consist of direct and indirect manufacturing costs, including wages and fringe benefits, operating supplies, depreciation and amortization, occupancy costs, and purchasing, receiving and inspection costs. F. Research and Development Expenses We conduct research and development (“R&D”) activities using our own funds (referred to as company-funded R&D or independent research and development (“IR&D”)) and under contractual arrangements with our customers (referred to as customer-funded R&D) to enhance existing products and services and to develop future products, solutions, and technologies. R&D costs include basic research, applied research, concept formulation studies, design, development, and related test activities. IR&D costs are allocated to customer contracts as part of the general and administrative overhead costs and generally recoverable on our customer contracts with the U.S. Government. Customer-funded R&D costs are charged directly to the related customer contract. Substantially all R&D costs are charged to cost of revenues as incurred. G. Foreign Currency Significant transactions in foreign currencies are translated into U.S. dollars at the approximate prevailing rate at the time of the transaction. Foreign exchange transaction gains and losses in the second quarter and first six months of 2022 and 2021 were immaterial to the Company's results of operations. The operations of the Company's foreign subsidiaries are translated from the local (functional) currencies into U.S. dollars using weighted average rates of exchange during each monthly period. The rates of exchange at each balance sheet date are used for translating certain balance sheet accounts and gains or losses resulting from these translation adjustments are included in the accompanying Consolidated Balance Sheets as a component of other comprehensive earnings. H. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits with banks or other short-term, highly liquid investments with original maturities of three months or less. I. Accounts Receivable Accounts receivable consist of amounts billed and currently due from customers. We maintain an allowance recorded in the Allowance for Credit Losses account that is estimated and recorded utilizing relevant information about past events, including historical experience, current conditions and a reasonable and supportable forecast that affects the collectability of the related financial asset. See Note 3 : Accounts Receivable for additional information regarding accounts receivable. J. Inventories Inventories are recorded at the lower of cost (determined by either actual, weighted average or first-in, first-out methods) or net realizable value, and include direct production costs as well as indirect costs, such as factory overhead. The net realizable value is calculated as the expected sales price in the course of normal operations net of estimated costs to finish and sell the goods. See Note 4 : Inventories for additional information regarding inventories. K. Property, Plant and Equipment Property, plant and equipment is carried at cost less accumulated depreciation. Depreciation is calculated on the straight-line method. The estimated useful lives of plant, machinery and equipment and building and building improvements generally range from 3 to 10 years and 15 to 40 years, respectively. Leasehold improvements are amortized over the shorter of the estimated useful life of the improvements or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the Consolidated Balance Sheets, and the net gain or loss is included in the determination of net earnings. Maintenance and repairs are charged to operations as incurred and renewals and improvements are capitalized. See Note 5 : Property, Plant and Equipment for additional information regarding property, plant and equipment. L. Goodwill Goodwill is assigned to reporting units and is reviewed for impairment at the reporting unit level on an annual basis, or whenever changes in circumstances indicate that the carrying amount may not be recoverable. A reporting unit is an operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by the segment manager. Two or more components of an operating segment may be aggregated and deemed a single reporting unit if the components have similar economic characteristics. Based upon the aggregation criteria the Company concluded it had seven reporting units at both June 30, 2022 and December 31, 2021. The annual impairment test is conducted as of December 31. The Company did not identify any triggering events during the six months ended June 30, 2022 or June 30, 2021. See Note 7 : Goodwill for additional information regarding goodwill. M. Long-Lived Assets and Acquired Identifiable Intangible Assets Identifiable intangible assets represent assets acquired as part of the Company's business acquisitions and include customer and program/contract-related assets. The values assigned to acquired identifiable intangible assets are determined as of the date of acquisition based on estimates and judgments regarding expectations for the estimated future after-tax cash flows from those assets over their lives, including the probability of expected future contract renewals and revenues, all of which are discounted to present value. The Company assesses the recoverability of the carrying value of its long-lived assets and intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable. If there are any indicators of impairment present, the Company then evaluates the recoverability of the potentially impaired long-lived assets and acquired identifiable intangible assets based upon expectations of undiscounted net cash flows from such assets. If the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset or asset group, a loss is recognized for the difference between the estimated fair value and the carrying amount of the assets. Assets to be disposed of, including those of discontinued operations, are reported at the lower of the carrying amount or fair value, less the costs to sell. See Note 5 : Property, Plant and Equipment and Note 8 : Intangible Assets for additional information regarding long-lived assets and intangible assets. N. Derivative Financial Instruments The Company does not use derivative financial instruments for trading purposes. All derivative instruments are carried on the Consolidated Balance Sheets as either assets or liabilities at fair value. The classification of gains and losses resulting from changes in the fair values of derivatives depends on the intended use of the derivative and its resultant designation. The Company had no significant derivative or hedging instruments for the periods presented. O. Pension and Other Postretirement Benefits The obligations for the Company's pension plans and postretirement benefit plans and the related annual costs of employee benefits are calculated based on several long-term assumptions, including discount rates for participant benefit liabilities, rates of return on plan assets, expected annual rates of salary increases for employee participants in the case of pension plans and expected annual increases in the costs of medical and other health care benefits in the case of postretirement benefit plans. These long-term assumptions are subject to revision based on changes in interest rates, financial market conditions, expected versus actual returns on plan assets, participant mortality rates and other actuarial assumptions, including future rates of salary increases, benefit formulas and levels, and rates of increase in the costs of benefits. Changes in these assumptions, if significant, can materially affect the amount of annual net periodic benefit costs recognized in the Company's results of operations from one year to the next, the liabilities for the pension plans and postretirement benefit plans and the Company's annual cash requirements to fund these plans. See Note 11: Pension and Other Postretirement Benefits for further information regarding our pension and postretirement plans. P. Income Taxes We and US Holding have entered into a Tax Allocation Agreement (“Tax Allocation Agreement”), dated as of November 16, 2020, with members of an affiliated group, as defined in Section 1504(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Tax Code”), members of one or more consolidated, combined, unitary or similar state tax groups and additional parties who are part of an “expanded affiliated group” for certain tax purposes. The agreement provides for the method of computing and allocating the consolidated U.S. federal tax liability of the affiliated group among its members and of allocating any state group tax liabilities among the state members for the taxable year ending December 31, 2020 and each subsequent year in which the parties are members of a group (whether federal or state). The agreement also provides for reimbursement of US Holding and/or DRS for payment of such tax liabilities, for compensation of any member for use of its “net operating loss” or “tax credits” in arriving at such tax liabilities and the allocation and payment of any refund arising from a carryback of net operating losses or tax credits from subsequent taxable years. Under the agreement, the parties have agreed to calculate and allocate their respective tax liabilities and other tax attributes for taxable years beginning with the first consolidated taxable year that included DRS (i.e., the taxable year ended December 31, 2008) as if the agreement was then in effect. We calculate the provision for incomes taxes during interim periods by applying an estimate of our annual effective tax rate for the full year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items). The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Income taxes as presented attribute deferred income taxes of US Holding to DRS in a manner that is systematic, rational and consistent with the asset and liability method and the governing Tax Allocation Agreement which allocates the tax liability amongst the entities, including DRS. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of DRS’ assets and liabilities and are adjusted for changes in tax rates and tax laws when such changes are enacted. In general, the taxable income of DRS is included in the consolidated U.S. federal and state tax returns of US Holding. Where applicable, US Holding’s current portion of U.S. federal income taxes payable were offset against DRS’ net operating loss carryforwards in the period the related tax expense was recorded. Consequently, our net operating loss carryforwards are deemed to have been settled with US Holding in each year in an amount commensurate with the carrying value of the tax effected net operating loss utilized. If management determines that some portion or all of a deferred tax asset is not “more likely than not” to be realized, a valuation allowance is recorded as a component of the income tax provision to reduce the deferred tax asset to the amounts expected to be realized. In determining whether the Company’s deferred tax assets are realizable, management considers all evidence, both positive and negative, including the history of financial reporting earnings, existing taxable temporary differences and their projected reversals, as well as projected future income and tax planning strategies. We believe it is more likely than not that we will generate sufficient taxable income in future periods to realize our deferred tax assets, subject to the valuation allowances recognized. The Company assesses its tax positions for all periods open to examination by tax authorities based on the latest available information. Those positions are evaluated to determine whether they will more likely than not be sustained upon examination by the relevant taxing authorities. Liabilities for unrecognized tax benefits are measured based on the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. These unrecognized tax benefits are recorded as a component of income tax expense. Interest and penalties related to unrecognized tax benefits are not material. See Note 9 : Income Taxes for additional information regarding income taxes. Q. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during each period. The computation of diluted EPS includes the dilutive effect of outstanding stock-based compensation awards, only in periods in which such effect would have been dilutive for the period. In February 2021, the Company completed a forward stock split of 1,450,000 - for- 1 share of common stock. The consolidated financial statements have been adjusted to reflect the forward stock split for all periods presented. There were 100 shares and 145 million basic and diluted common shares outstanding before and after the forward stock split, respectively, for all periods presented. R. Fair Value Measurements Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant on the measurement date. We are required to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value, and to utilize a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three hierarchical levels used to measure fair value are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are directly or indirectly observable. Level 3 — Significant inputs to the valuation model are unobservable. In certain instances, fair value is determined through information obtained from third parties using the latest available market data. In obtaining such data from third parties, we have evaluated the methodologies used to develop the estimate of fair value in order to assess whether such valuations are representative of fair value. The Company categorizes plan assets for disclosure purposes in accordance with this fair value hierarchy. Certain plan investments are measured at fair value using the net asset value (“NAV”) per share (or its equivalent) practical expedient and are therefore not categorized as Level 1, 2, or 3. NAV is defined as the total value of the fund divided by the number of the fund’s shares outstanding. See Note 12: Pension and Other Postretirement Benefits for further information regarding our pension and postretirement plans. S. Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities. Financial instruments are reported in the Consolidated Balance Sheets at carrying value, which other than the 7.5% Term loan due November 30, 2023, approximate fair value. See Note 11: Debt for further information regarding our debt. T. Acquisitions, Investments and Variable Interest Entities Acquisitions Our consolidated financial statements include the operations of acquired businesses from the date of acquisition. We account for acquired businesses using the acquisition method of accounting, which requires that any assets acquired and liabilities assumed be measured at their respective fair values on the acquisition date. The accounting for business combinations requires the Company to make significant judgments and estimates. Any excess of the fair value of consideration transferred over the assigned values of the net assets acquired is recognized as goodwill. As previously announced, on June 21, 2022, we entered into the Agreement and Plan of Merger, dated as of June 21, 2022 (the “merger agreement”), by and among the Company, RADA Electronic Industries Ltd (“RADA”) and Blackstart Ltd, a company organized under the laws of the State of Israel and a wholly owned subsidiary of DRS (“Merger Sub”). Upon the terms and subject to the conditions of the merger agreement, and in accordance with the Companies Law, 5759-1999, of the State of Israel, at the effective time of the merger contemplated by the merger agreement (the “merger”), Merger Sub will be merged with and into RADA, with RADA as the surviving company of the merger and thereby becoming a wholly owned subsidiary of DRS. At the effective time of the merger (the “effective time”), each ordinary share of RADA, par value New Israeli Shekel 0.03 per share (“RADA shares”), issued and outstanding immediately prior to the effective time will be converted into and become exchangeable for one share of common stock of DRS, par value $0.01 per share (“DRS common stock”). Immediately prior to the effective time, the shares of DRS common stock held by US Holding, the current sole stockholder of DRS, will be split (rounded up to the nearest whole share), as necessary, such that, immediately following the effective time and the issuance of the shares of DRS common stock to holders of RADA shares and the treatment of options to purchase RADA shares: (A) US Holding will hold 80.5% of the issued and outstanding shares of DRS common stock on a fully diluted basis (with US Holding’s ownership percentage including 50% of any awards or other equity interests that DRS may issue pursuant to entitlements under any grants of certain one-time special awards of restricted stock units (the “One-Time Awards”) and the foregoing percentage calculation excluding any awards or other equity interests that DRS may issue pursuant to entitlements under the DRS’s long term incentive plan and 50% of any awards or other equity interests that DRS may issue pursuant to entitlements in connection with any grants of One-Time Awards, and such foregoing percentage will assume a reference price for RADA options equal to the volume-weighted average price of the RADA shares on the NASDAQ for the ten trading days immediately prior to the closing date); and (B) the holders of RADA shares, RADA vested options and RADA unvested options (or DRS options issued pursuant to the provisions of the merger agreement) will hold or have entitlements to 19.5% of the issued and outstanding shares of DRS common stock on a fully diluted basis (the foregoing percentage calculation excluding any awards or other equity interests that DRS may issue pursuant to entitlements under the DRS long-term incentive plan or the issuance of any One-Time Awards). Each of DRS’s and RADA’s obligation to consummate the merger is subject to the satisfaction or waiver of a number of conditions specified in the merger agreement. The merger is expected to close in the fourth quarter of 2022. On August 3, 2022, we filed a registration statement on Form S-4 with the SEC for the shares of DRS common stock to be issued in the merger, which has not yet been declared effective by the SEC. Investments Investments where we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other noncurrent assets on our Consolidated Balance Sheets. Significant influence typically exists if we have a 20% to 50% ownership interest in the investee. Under this method of accounting, our share of the net earnings or losses of the investee is included in operating profit in other income, net on our Consolidated Statements of Earnings since the activities of the investee are closely aligned with the operations of the business segment holding the investment. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is therefore recorded during the current period. The Company’s cost method investment consists of an investment in a private company in which we do not have the ability to exercise significant influence over its operating and financial activities. Management evaluates this investment for possible impairment quarterly. Variable Interest Entities The Company occasionally forms joint ventures and/or enters into arrangements with special purpose limited liability companies for the purpose of bidding and executing on specific projects. The Company analyzes each such arrangement to determine whether it represents a variable interest entity (“VIE”). If the arrangement is determined to be a VIE, the Company assesses whether it is the primary beneficiary of the VIE and if it is, consequently required to consolidate the VIE. The Company did not have any investment in VIEs for the periods presented. Divestitures / Held for Sale On March 21, 2022, the Company entered into a definitive agreement to sell its Global Enterprise Solutions (“GES”) business to SES Government Solutions, Inc., a wholly-owned subsidiary of SES S.A., for $450 million in cash. The transaction was completed on August 1, 2022 and resulted in proceeds of $427 million. We are in the process of finalizing the accounting for the transaction and will report the gain on the transaction in the third quarter. GES, which was part of the ASC segment, provides commercial satellite communications to the U.S. Government and delivers satellite communications and security solutions to customers worldwide. SES S.A. has guaranteed the payment of the purchase price and performance of all other obligations of SES Government Solutions, Inc. under the agreement. As of June 30, 2022, the assets and liabilities related to GES were reported on the Consolidated Balance Sheets as Held for Sale. In February 2022, the Company’s Board of Directors approved the strategic initiative to divest of the Company’s interest in Advanced Acoustic Concepts (“AAC”). On April 19, 2022, we entered into a definitive sales agreement to divest our share of our equity investment in AAC for $56 million to Thales Defense & Security, Inc., the minority partner in the joint venture. The transaction was completed on July 8, 2022 and resulted in proceeds of $56 million. We are in the process of finalizing the accounting for the transaction and will report the gain on the transaction in the third quarter. As of June 30, 2022, the Investment was reported as Held for Sale. The proceeds generated from the GES and AAC divestitures resulted in a $396 million dividend to Leonardo US Holdings, our sole shareholder. The $396 million represents the proceeds generated net of our costs to sell and estimated tax obligations. The dividend was issued on August 5, 2022 | Summary of Significant Accounting Policies A. Organization Leonardo DRS, Inc., together with its wholly owned subsidiaries (hereinafter, “DRS”, “the Company”, “us”, “our”, or “we”) is a supplier of defense electronics products, systems and military support services. The Company is controlled by Leonardo S.p.A (hereinafter, “Leonardo S.p.A.”, “the Parent”), an Italian multi-national aerospace, defense and security company headquartered in Rome, Italy, through its direct sole ownership of Leonardo US Holding, Inc. (“US Holding”). US Holding is the direct and sole shareholder of the Company. DRS is a provider of defense products and technologies that are used across land, air, sea, space and cyber domains. Our diverse array of defense systems and solutions are offered to all branches of the U.S. military, major aerospace and defense prime contractors, government intelligence agencies, international military customers and industrial markets for deployment on a wide range of military platforms. We focus our capabilities in areas of critical importance to the U.S. military, such as sensing, electronic warfare (“EW”), network computing and communications, force protection and electrical power conversion and propulsion. These capabilities directly align with our two reportable segments: Advanced Sensing and Computing and Integrated Mission Systems. The U.S. Department of Defense (“DoD”) is our largest customer and accounts for approximately 86% and 84% of our total revenues as an end-user for the years ended December 31, 2021 and 2020, respectively. Specific international and commercial market opportunities exist within these segments and comprise approximately 14% and 16% of our total revenues for the years ended December 31, 2021 and 2020. Our two reportable segments reflect the way performance is assessed and resources are allocated by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). Advanced Sensing and Computing (“ASC”) The ASC segment provides sensing and computing systems and subsystem solutions to the U.S. military and allied nations focused on solving the most complex threat dynamics facing our service men and women today. We provide world class sensing products in all warfighting domains along with the computation systems to provide situational understanding. Our technologies and products are deployed on nearly all military platforms across land, sea, air, cyberspace, and space on individual soldiers, ground vehicles, ships, aircraft, and satellites. We have market leading capabilities in electro-optic and infrared imaging, advanced lasers, electronic warfare and cyber, communications, and computing in these domains. Integrated Mission Systems (“IMS”) The IMS segment provides critical force protection, platform integration, transportation and logistics and power conversion and propulsion systems to the U.S. military and its allies. Our force protection systems provide much needed protection for our service members and military assets from evolving and proliferating threats and include advanced solutions for counter-unmanned aerial systems, short-range air defense systems and active protection systems on ground vehicles. Additionally, we provide power conversion and propulsion systems for the U.S. Navy’s top priority shipbuilding programs, building on our legacy of providing power components and systems for nearly all naval combat vessels for three decades, positioning us to continue as a leading provider of electrical ship propulsion systems and components for the U.S. Navy and its allies. Other The Company separately presents the unallocable costs associated with corporate functions and certain non-operating subsidiaries of the Company as Corporate & Eliminations. See Note 17 : Segment Information for further information regarding our business segments. B. Basis of presentation The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of DRS, its wholly owned subsidiaries and its controlling interests. Interests in joint ventures that are controlled by the Company, or for which the Company is otherwise deemed to be the primary beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts significant influence, the Company applies the equity method of accounting. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation. C. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant of these estimates and assumptions relate to the recognition of contract revenues and estimated costs to complete contracts in process, recoverability of reported amounts of goodwill, long-lived assets and intangible assets, valuation of pensions and other postretirement benefits, the valuation of deferred tax assets and liabilities and the valuation of unrecognized tax benefits. Actual results could differ from these estimates. D. Revenue Recognition Our revenues consist of sales of products (tangible goods) and sales of services to customers. We recognize the majority of our revenue from contracts with customers using an over time, cost-to-cost method of accounting. On certain other contracts, primarily time and material (“T&M”) and cost-plus contracts, revenue is recognized using the right-to-invoice practical expedient as we are contractually able to bill our customer based on control transferred to the customer. See Note 2 : Revenue from Contracts with Customers for additional information regarding revenue recognition. E. Cost of Revenues Cost of revenues includes materials, labor and overhead costs incurred in the manufacturing, design, and provision of products and services sold in the period as well as warranty costs. Material costs include raw materials, purchased components and sub-assemblies, outside processing and inbound freight costs. Labor and overhead costs consist of direct and indirect manufacturing costs, including wages and fringe benefits, operating supplies, depreciation and amortization, occupancy costs, and purchasing, receiving and inspection costs. F. Research and Development Expenses We conduct research and development (“R&D”) activities using our own funds (referred to as company-funded R&D or independent research and development (“IR&D”)) and under contractual arrangements with our customers (referred to as customer-funded R&D) to enhance existing products and services and to develop future technologies. R&D costs include basic research, applied research, concept formulation studies, design, development, and related test activities. IR&D costs are allocated to customer contracts as part of the general and administrative overhead costs and generally recoverable on our customer contracts with the U.S. Government. Customer-funded R&D costs are charged directly to the related customer contract. Substantially all R&D costs are charged to cost of revenues as incurred. Company-funded R&D costs charged to cost of revenues totaled $48 million, $41 million and $31 million in 2021, 2020 and 2019, respectively. G. Foreign Currency Significant transactions in foreign currencies are translated into U.S. dollars at the approximate prevailing rate at the time of the transaction. Foreign exchange transaction gains and losses in 2021, 2020 and 2019 were immaterial to the Company's results of operations. The operations of the Company's foreign subsidiaries are translated from the local (functional) currencies into U.S. dollars using weighted average rates of exchange during each monthly period. The rates of exchange at each balance sheet date are used for translating certain balance sheet accounts and gains or losses resulting from these translation adjustments are included in the accompanying Consolidated Balance Sheet as a component of other comprehensive income. H. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits with banks or other short-term, highly liquid investments with original maturities of three months or less. I. Accounts Receivable Accounts receivable consist of amounts billed and currently due from customers. When events or conditions indicate that amounts outstanding from customers may become uncollectible, an allowance is estimated and recorded. See Note 3 : Accounts Receivable for additional information regarding accounts receivable. J. Inventories Inventories are recorded at the lower of cost (determined by either actual, weighted average or first-in, first-out methods) or net realizable value, and include direct production costs as well as indirect costs, such as factory overhead. The net realizable value is calculated as the expected sales price in the course of normal operations net of estimated costs to finish and sell the goods. See Note 4 : Inventories for additional information regarding inventories. K. Property, Plant and Equipment Property, plant and equipment is carried at cost less accumulated depreciation. Depreciation is calculated on the straight-line method. The estimated useful lives of plant, machinery and equipment and building and building improvements generally range from 3 to 10 years and 15 to 40 years, respectively. Leasehold improvements are amortized over the shorter of the estimated useful life of the improvements or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the Consolidated Balance Sheet, and the net gain or loss is included in the determination of net earnings. Maintenance and repairs are charged to operations as incurred and renewals and improvements are capitalized. See Note 5 : Property, Plant and Equipment for additional information regarding property, plant and equipment. L. Goodwill Goodwill represents the excess purchase price paid to acquire a business over the fair value of net assets acquired. Goodwill is assigned to reporting units and is reviewed for impairment at the reporting unit level on an annual basis, or whenever changes in circumstances indicate that the carrying amount may not be recoverable. A reporting unit is an operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by the segment manager. Two or more components of an operating segment may be aggregated and deemed a single reporting unit if the components have similar economic characteristics. Based upon the aggregation criteria the Company concluded it had seven reporting units at both December 31, 2021 and 2020. The annual impairment test is typically performed after completion of the Company's annual financial operating plan, which occurs as of December 31. The Company uses quantitative assessments and qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the optional qualitative assessment is performed (Step 0) and the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, an additional quantitative fair value test (Step 1) is performed. When performing the Step 1 goodwill impairment test, we compare the fair values of each of our reporting units to their respective carrying values. In order to compute the fair value of our reporting units, we primarily use the income approach based on the discounted cash flows that each reporting unit expects to generate in the future, consistent with our operating plans. Determining the fair value of our reporting units requires significant judgments, including the timing and amount of future cash flows, long-term growth rates, determination of the weighted-average cost of capital and terminal value assumptions. If, based on the quantitative fair value test, the Company concludes that the carrying value of the reporting unit exceeds its fair value, the Company will recognize a goodwill impairment loss in an amount equal to that excess. The Company completed impairment tests as of December 31, 2021, 2020 and 2019 and no adjustment to the carrying value of goodwill was deemed to be necessary. See Note 7 : Goodwill for additional information regarding goodwill. M. Long-Lived Assets and Acquired Identifiable Intangible Assets Identifiable intangible assets represent assets acquired as part of the Company's business acquisitions and include customer and program/contract-related assets. The values assigned to acquired identifiable intangible assets are determined as of the date of acquisition based on estimates and judgments regarding expectations for the estimated future after-tax cash flows from those assets over their lives, including the probability of expected future contract renewals and revenues, all of which are discounted to present value. The Company assesses the recoverability of the carrying value of its long-lived assets and intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable. If there are any indicators of impairment present, the Company then evaluates the recoverability of the potentially impaired long-lived assets and acquired identifiable intangible assets based upon expectations of undiscounted net cash flows from such assets. If the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset or asset group, a loss is recognized for the difference between the estimated fair value and the carrying amount of the assets. Assets to be disposed of, including those of discontinued operations, are reported at the lower of the carrying amount or fair value, less the costs to sell. See Note 5 : Property, Plant and Equipment and Note 8 : Intangible Assets for additional information regarding long-lived assets and intangible assets. N. Derivative Financial Instruments The Company does not use derivative financial instruments for trading purposes. All derivative instruments are carried on the Consolidated Balance Sheet as either assets or liabilities at fair value. The classification of gains and losses resulting from changes in the fair values of derivatives depends on the intended use of the derivative and its resultant designation. The Company had no significant derivative or hedging instruments during the years ended December 31, 2021, 2020 or 2019. O. Pension and Other Postretirement Benefits The obligations for the Company's pension plans and postretirement benefit plans and the related annual costs of employee benefits are calculated based on several long-term assumptions, including discount rates for employee benefit liabilities, rates of return on plan assets, expected annual rates of salary increases for employee participants in the case of pension plans and expected annual increases in the costs of medical and other health care benefits in the case of postretirement benefit plans. These long-term assumptions are subject to revision based on changes in interest rates, financial market conditions, expected versus actual returns on plan assets, participant mortality rates and other actuarial assumptions, including future rates of salary increases, benefit formulas and levels, and rates of increase in the costs of benefits. Changes in these assumptions, if significant, can materially affect the amount of annual net periodic benefit costs recognized in the Company's results of operations from one year to the next, the liabilities for the pension plans and postretirement benefit plans and the Company's annual cash requirements to fund these plans. See Note 12. Pension and Other Postretirement Benefits for further information regarding our pension and postretirement plans. P. Income Taxes We and US Holding have entered into a Tax Allocation Agreement (“Tax Allocation Agreement”), dated as of November 16, 2020, with members of an affiliated group, as defined in Section 1504(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Tax Code”), members of one or more consolidated, combined, unitary or similar state tax groups and additional parties who are part of an “expanded affiliated group” for certain tax purposes. The agreement provides for the method of computing and allocating the consolidated U.S. federal tax liability of the affiliated group among its members and of allocating any state group tax liabilities among the state members for the taxable year ending December 31, 2021 and each subsequent year in which the parties are members of a group (whether federal or state). The agreement also provides for reimbursement of US Holding and/or DRS for payment of such tax liabilities, for compensation of any member for use of its “net operating loss” or “tax credits” in arriving at such tax liabilities and the allocation and payment of any refund arising from a carryback of net operating losses or tax credits from subsequent taxable years. Under the agreement, the parties have agreed to calculate and allocate their respective tax liabilities and other tax attributes for taxable years beginning with the first consolidated taxable year that included DRS (i.e., the taxable year ended December 31, 2008) as if the agreement was then in effect. The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Income taxes as presented attribute deferred income taxes of US Holding to DRS in a manner that is systematic, rational and consistent with the asset and liability method and the governing Tax Allocation Agreement which allocates the tax liability amongst the entities, including DRS. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of DRS’s assets and liabilities and are adjusted for changes in tax rates and tax laws when such changes are enacted. In general, the taxable income of DRS is included in the consolidated U.S. federal and state tax returns of US Holding. Where applicable, US Holding’s current portion of U.S. federal income taxes payable were offset against DRS’s net operating loss carryforwards in the period the related tax expense was recorded. Consequently, our net operating loss carryforwards are deemed to have been settled with US Holding in each year in an amount commensurate with the carrying value of the tax effected net operating loss utilized. If management determines that some portion or all of a deferred tax asset is not “more likely than not” to be realized, a valuation allowance is recorded as a component of the income tax provision to reduce the deferred tax asset to the amounts expected to be realized. In determining whether the Company’s deferred tax assets are realizable, management considers all evidence, both positive and negative, including the history of financial reporting earnings, existing taxable temporary differences and their projected reversals, as well as projected future income and tax planning strategies. We believe it is more likely than not that we will generate sufficient taxable income in future periods to realize our deferred tax assets, subject to the valuation allowances recognized. The Company assesses its tax positions for all periods open to examination by tax authorities based on the latest available information. Those positions are evaluated to determine whether they will more likely than not be sustained upon examination by the relevant taxing authorities. Liabilities for unrecognized tax benefits are measured based on the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. These unrecognized tax benefits are recorded as a component of income tax expense. Interest and penalties related to unrecognized tax benefits are not material. See Note 10 : Income Taxes for additional information regarding income taxes. Q. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during each period. The computation of diluted EPS includes the dilutive effect of outstanding stock-based compensation awards, only in periods in which such effect would have been dilutive for the period. In February 2021, the Company completed a forward stock split of 1-for-1,450,000 shares of common stock. The consolidated financial statements have been retroactively adjusted as necessary to reflect the forward stock split for all periods presented. There were 100 shares and 145.00 million basic and diluted common shares outstanding before and after the forward stock split, respectively, for all periods presented. R. Fair Value Measurements Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant on the measurement date. We are required to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value, and to utilize a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three hierarchical levels used to measure fair value are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are directly or indirectly observable. Level 3 — Significant inputs to the valuation model are unobservable. In certain instances, fair value is determined through information obtained from third parties using the latest available market data. In obtaining such data from third parties, we have evaluated the methodologies used to develop the estimate of fair value in order to assess whether such valuations are representative of fair value. The Company categorizes plan assets for disclosure purposes in accordance with this fair value hierarchy. Certain plan investments are measured at fair value using the net asset value (“NAV”) per share (or its equivalent) practical expedient and are therefore not categorized as Level 1, 2, or 3. NAV is defined as the total value of the fund divided by the number of the fund’s shares outstanding. See Note 12: Pension and Other Postretirement Benefits for further information regarding our pension and postretirement plans. S. Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities. Financial instruments are reported in the Consolidated Balance Sheet at carrying value, which other than the 7.5% Term loan due November 30, 2023, approximate fair value. See Note 11: Debt for further information regarding our debt. T. Acquisitions, Investments, Variable Interest Entities and Divestitures Acquisitions Our consolidated financial statements include the operations of acquired businesses from the date of acquisition. We account for acquired businesses using the acquisition method of accounting, which requires that any assets acquired and liabilities assumed be measured at their respective fair values on the acquisition date. The accounting for business combinations requires the Company to make significant judgments and estimates. Any excess of the fair value of consideration transferred over the assigned values of the net assets acquired is recognized as goodwill. During the third quarter of 2021 the Company acquired substantially all the assets of Ascendant Engineering Solutions (AES), an advanced gimbal producer located in Austin, TX. The purchase closed on July 28, 2021 for a purchase price of $11 million with an additional $5 million payable upon the achievement of certain financial and operational targets. AES designs, develops and manufactures high-performance, stabilized, multi-sensor gimbal systems for the growing market of Group 1, 2 and 3 unmanned aerial systems (UAS) serving several branches of the DoD. The company is focused on gimbal payload opportunities in strategic U.S. government programs including those intended to counter current and next-generation anti-access and area-denial systems. We believe this acquisition enables the integration of our own Electro-Optical and Infrared systems with the gimbals of AES and is a strategic investment, offering an integrated solution for our customers in the market for lightweight military platforms including small unmanned aerial systems. The acquisition has been accounted for as a business combination and has been integrated into our Advanced Sensing and Computing segment. Investments Investments where we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other noncurrent assets on our Consolidated Balance Sheet. Significant influence typically exists if we have a 20% to 50% ownership interest in the investee. Under this method of accounting, our share of the net earnings or losses of the investee is included in operating profit in other income, net on our Consolidated Statements of Earnings (Loss) since the activities of the investee are closely aligned with the operations of the business segment holding the investment. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is therefore recorded during the current period. See Note 13: Equity Method Investments for further information regarding our equity method investments. The Company’s cost method investment consists of an investment in a private company in which we do not have the ability to exercise significant influence over its operating and financial activities. Management evaluates this investment for possible impairment quarterly. Variable Interest Entities The Company occasionally forms joint ventures and/or enters into arrangements with special purpose limited liability companies for the purpose of bidding and executing on specific projects. The Company analyzes each such arrangement to determine whether it represents a variable interest entity (“VIE”). If the arrangement is determined to be a VIE, the Company assesses whether it is the primary beneficiary of the VIE and if it is, consequently required to consolidate the VIE. The Company did not have any investment in VIEs as of December 31, 2021 or 2020. U. New Accounting Pronouncements Recently Adopted Accounting Pronouncements Changes to Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans . Specifically, the amendment removes disclosure requirements for amounts classified in accumulated other comprehensive income expected to be recognized over the next year and the effects of a one-percentage-point change in the assumed health care cost trend rate on service cost, interest cost and the benefit obligation for postretirement benefits. The amendment also requires additional disclosure around weighted-average interest crediting rates for cash balance plans, a narrative description of the reasons for significant gains and losses, and an explanation of any other significant changes in the benefit obligation or plan assets. The adoption of the standard as of January 1, 2021 did not have a material impact on our consolidated financial statements. Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes which removes certain exceptions to the general principles in Topic 740 for: recognizing deferred taxes for investments, performing intra-period allocations and calculating taxes in interim periods. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The standard is effective for fiscal years beginning after December 15, 2020. The adoption of the standard as of January 1, 2021 did not have a material impact on our consolidated financial statements. Accounting Guidance Issued but Not Yet Adopted as of December 31, 2021: Government Assistance In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance which requires certain disclosures to be included with respect to the types of assistance, the accounting for the assistance as well as the effect on the financial statements of the assistance. The purposes of the ASU is to increase transparency and eliminate disparity of accounting for and reporting of the receipt of government assistance. The standard is effective for fiscal periods beginning after December 15, 2021. The Company does not expect the adoption to have a material impact on our disclosures. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Revenue from Contracts with Customers | Revenue from Contracts with Customers The Company recognizes revenue for each separately identifiable performance obligation in a contract representing an obligation to transfer a distinct good or service to a customer. In most cases, goods and services provided under the Company’s contracts are accounted for as single performance obligations due to the complex and integrated nature of our products and services. These contracts generally require significant integration of a group of goods and/or services to deliver a combined output. In some contracts, the Company provides multiple distinct goods or services to a customer. In those cases, the Company accounts for the distinct contract deliverables as separate performance obligations and allocates the transaction price to each performance obligation based on its relative standalone selling price, which is generally estimated using cost plus a reasonable margin. We classify revenues as products or services on our Consolidated Statements of Earnings based on the predominant attributes of the performance obligations. While the Company provides warranties on certain contracts, we typically do not provide for services beyond standard assurances and therefore do not consider warranties to be separate performance obligations. Typically we enter into three types of contracts: fixed-price contracts, cost-plus contracts and T&M contracts (cost-plus contracts and T&M contracts are aggregated below as flexibly priced contracts). The majority of our total revenues are derived from fixed-price contracts; refer to the revenue disaggregation disclosures that follow. For fixed-price contracts, customers agree to pay a fixed amount, negotiated in advanced for a specified scope of work. For cost-plus contracts typically we are reimbursed for allowable or otherwise defined total costs (defined as cost of revenues plus allowable general and administrative expenses) incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. T&M contracts provide for reimbursement of labor hours expended at a contractual fixed labor rate per hour, plus the actual costs of material and other direct non-labor costs. The fixed labor rates on T&M contracts include amounts for the cost of direct labor, indirect contract costs and profit. Estimating the transaction price for an arrangement requires judgment and is based on expected results which are determined using the Company’s historical data. We estimate that the revenue that we expect to be entitled to receive from a customer to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Revenue from contracts with customers is recognized when the performance obligations are satisfied through the transfer of control over the good or service to the customer, which may occur either over time or at a point in time. Revenues for the majority of our contracts are measured as determined by the ratio of cumulative costs incurred to date to estimated total contract costs at completion (the "cost-to-cost method"). We believe this is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of our work and transfer of control to our customers. Due to the long-term nature of many of our contracts, developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. After establishing the estimated total cost at completion, we follow a standard Estimate at Completion (“EAC”) process in which we review the progress and performance on our ongoing contracts at least quarterly. Adjustments to original estimates for a contract's revenue, estimated costs at completion and estimated profit or loss often are required as work progresses under a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change and are also required if contract modifications occur. When adjustments in estimated total costs at completion or in estimated total transaction price are determined, the related impact on revenue and operating income are recognized using the cumulative catch-up method, which recognizes in the current period the cumulative effect of such adjustments for all prior periods. Any anticipated losses on these contracts are fully recognized in the period in which the losses become evident. EAC adjustments had the following impacts to revenue for the periods presented: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenue $ (10) $ (8) $ (11) $ (9) Total % of Revenue 1.6 % 1.3 % 0.9 % 0.7 % The impacts noted above are attributed primarily to changes in our firm-fixed-price type programs. They consist of changes in the designs required to achieve contractual specifications for fixed priced development programs and inflationary impacts on certain naval production programs that resulted in a change in the programs’ estimate and related profitability. The reduction to revenue for the three- and six-month periods ended June 30, 2022 and June 30, 2021 was attributed primarily to certain cost impacts on surface ship programs within our IMS segment and inflationary pressures on naval programs within our ASC segment. Conversely, if the requirements for the recognition of contracts over time are not met, revenue is recognized at a point in time when control transfers to the customer, which is generally upon transfer of title. In such cases, the production that is in progress and costs that will be recognized at a future point in time are reported within "inventories". Costs to obtain a contract are incremental direct costs incurred to obtain a contract with a customer, including sales commissions and dealer fees, and are capitalized if material. Costs to fulfill a contract include costs directly related to a contract or specific anticipated contract (e.g., certain design costs) that generate or enhance our ability to satisfy our performance obligations under these contracts. These costs are capitalized to the extent they are expected to be recovered from the associated contract. Contract Assets and Liabilities The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities. (Dollars in millions) June 30, 2022 December 31, 2021 Contract assets $ 874 $ 743 Contract liabilities 156 174 Net contract assets $ 718 $ 569 Revenue recognized in the three-and six-month periods ended June 30, 2022 that was included in the contract liability balance at the beginning of each period was $33 million and $107 million, respectively. Revenue recognized in the three- and six-month periods ended June 30, 2021 that was included in the contract liability balance at the beginning of each period was $20 million and $89 million, respectively. The change in the balances of the Company’s contract assets and liabilities primarily results from timing differences between revenue recognition and customer billings and/or payments. Contract assets related to amounts withheld by customers until contract completion are not considered a significant financing component of our contracts because the intent is to protect the customers from our failure to satisfactorily complete our performance obligations. Payments received from customers in advance of revenue recognition (contract liabilities) are not considered a significant financing component of our contracts because they are utilized to pay for contract costs within a one-year period or are requested by us to ensure the customers meet their payment obligations. Value of Remaining Performance Obligations The value of remaining performance obligations, which we also refer to as total backlog, includes the following components: • Funded - Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previo usl y recognized on these contracts. • Unfunded - Unfunded backlog represents the revenue value of firm orders for products and services under existing contracts for which funding has not yet been appropriated less funding previously recognized on these contracts. The following table summarizes the value of our total backlog as of June 30, 2022, incorporating both funded and unfunded components: Backlog: June 30, 2022 (Dollars in millions) Total Backlog $ 3,051 We expect to recognize approximately 39% of our June 30, 2022 backlog as revenue over the next six months, with the remainder to be recognized thereafter. Disaggregation of Revenue ASC : ASC revenue is primarily derived from U.S. government development and production contracts and is generally recognized over time using the cost-to-cost method. We disaggregate ASC revenue by geographical region, customer relationship and contract type. We believe these categories best depict how the nature, amount, timing and uncertainty of ASC revenue and cash flows are affected by economic factors: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenue by Geographical Region United States $ 367 $ 457 $ 739 $ 901 International 74 28 96 63 Intersegment Sales 3 4 5 7 Total $ 444 $ 489 $ 840 $ 971 Revenue by Customer Relationship Prime contractor $ 216 $ 279 $ 448 $ 555 Subcontractor 225 206 387 409 Intersegment Sales 3 4 5 7 Total $ 444 $ 489 $ 840 $ 971 Revenue by Contract Type Firm Fixed Price $ 394 $ 419 $ 736 $ 845 Flexibly Priced (1) 47 66 99 119 Intersegment Sales 3 4 5 7 Total $ 444 $ 489 $ 840 $ 971 ________________ (1) Includes revenue derived from time-and-materials contracts. IMS : IMS revenue is primarily derived from U.S. government development and production contracts and is generally recognized over time using the cost-to-cost method. We disaggregate IMS revenue by geographical region, customer relationship and contract type We believe these categories best depict how the nature, amount, timing and uncertainty of IMS revenue and cash flows are affected by economic factors: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenue by Geographical Region United States $ 178 $ 160 $ 390 $ 349 International 8 14 14 26 Intersegment Sales 1 — 1 — Total $ 187 $ 174 $ 405 $ 375 Revenue by Customer Relationship Prime contractor $ 36 $ 42 $ 69 $ 86 Subcontractor 150 132 335 289 Intersegment Sales 1 — 1 — Total $ 187 $ 174 $ 405 $ 375 Revenue by Contract Type Firm Fixed Price $ 154 $ 146 $ 347 $ 316 Flexibly Priced (1) 32 28 57 59 Intersegment Sales 1 — 1 — Total $ 187 $ 174 $ 405 $ 375 ________________ (1) Includes revenue derived from time-and-materials contracts. | Revenue from Contracts with Customers The Company recognizes revenue for each separately identifiable performance obligation in a contract representing an obligation to transfer a distinct good or service to a customer. In most cases, goods and services provided under the Company’s contracts are accounted for as single performance obligations due to the complex and integrated nature of our products and services. These contracts generally require significant integration of a group of goods and/or services to deliver a combined output. In some contracts, the Company provides multiple distinct goods or services to a customer. In those cases, the Company accounts for the distinct contract deliverables as separate performance obligations and allocates the transaction price to each performance obligation based on its relative standalone selling price, which is generally estimated using cost plus a reasonable margin. We classify revenues as products or services on our Consolidated Statements of Earnings based on the predominant attributes of the performance obligations. While the Company provides warranties on certain contracts, we typically do not provide for services beyond standard assurances and therefore do not consider warranties to be separate performance obligations. Typically we enter into three types of contracts: fixed-price contracts, cost-plus contracts and T&M contracts (cost-plus contracts and T&M contracts are aggregated below as flexibly priced contracts). The majority of our total revenues are derived from fixed-price contracts; refer to the revenue disaggregation disclosures that follow. For fixed-price contracts, customers agree to pay a fixed amount, negotiated in advanced for a specified scope of work. For cost-plus contracts typically we are reimbursed for allowable or otherwise defined total costs (defined as cost of revenues plus allowable general and administrative expenses) incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. T&M contracts provide for reimbursement of labor hours expended at a contractual fixed labor rate per hour, plus the actual costs of material and other direct non-labor costs. The fixed labor rates on T&M contracts include amounts for the cost of direct labor, indirect contract costs and profit. Estimating the transaction price for an arrangement requires judgment and is based on expected results which are determined using the Company’s historical data. We estimate that the revenue that we expect to be entitled to receive from a customer to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Revenue from contracts with customers is recognized when the performance obligations are satisfied through the transfer of control over the good or service to the customer, which may occur either over time or at a point in time. Revenues for the majority of our contracts are measured as determined by the ratio of cumulative costs incurred to date to estimated total contract costs at completion (the "cost-to-cost method"). We believe this is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of our work and transfer of control to our customers. Due to the long-term nature of many of our contracts, developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. After establishing the estimated total cost at completion, we follow a standard Estimate at Completion (“EAC”) process in which we review the progress and performance on our ongoing contracts at least quarterly. Adjustments to original estimates for a contract's revenue, estimated costs at completion and estimated profit or loss often are required as work progresses under a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change and are also required if contract modifications occur. When adjustments in estimated total costs at completion or in estimated total transaction price are determined, the related impact on revenue and operating income are recognized using the cumulative catch-up method, which recognizes in the current period the cumulative effect of such adjustments for all prior periods. Any anticipated losses on these contracts are fully recognized in the period in which the losses become evident. EAC adjustments had the following impacts to revenue for the periods presented: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Revenue $ (34) $ (77) $ (55) Total % of Revenue 1 % 3 % 2 % The impacts noted above are attributed primarily to changes in our firm-fixed-price development type programs. As changes happen in the design required to achieve contractual specifications, those changes often result in the programs’ estimate and related profitability. The reductions to revenue for the years ended December 31, 2021, 2020 and 2019 were related to certain masted surveillance and submarine electric propulsion programs within our IMS segment, solider sensing programs within our ASC segment and adjustments to the measurement of variable consideration related to certain requests for equitable adjustment with the U.S. Navy also within our ASC segment. Conversely, if the requirements for the recognition of contracts over time are not met, revenue is recognized at a point in time when control transfers to the customer, which is generally upon transfer of title. In such cases, the production that is in progress and costs that will be recognized at a future point in time are reported within "inventories". Costs to obtain a contract are incremental direct costs incurred to obtain a contract with a customer, including sales commissions and dealer fees, and are capitalized if material. Costs to fulfill a contract include costs directly related to a contract or specific anticipated contract (e.g., certain design costs) that generate or enhance our ability to satisfy our performance obligations under these contracts. These costs are capitalized to the extent they are expected to be recovered from the associated contract. Contract Assets and Liabilities The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities. Year Ended December 31, (Dollars in millions) 2021 2020 Contract assets $ 743 $ 672 Contract liabilities 174 177 Net contract assets $ 569 $ 495 Revenue recognized in 2021 and 2020 that was included in the contract liability balance at the beginning of each year was $108 million and $104 million, respectively. The change in the balances of the Company’s contract assets and liabilities primarily results from timing differences between revenue recognition and customer billings and/or payments. Contract assets related to amounts withheld by customers until contract completion are not considered a significant financing component of our contracts because the intent is to protect the customers from our failure to satisfactorily complete our performance obligations. Payments received from customers in advance of revenue recognition (contract liabilities) are not considered a significant financing component of our contracts because they are utilized to pay for contract costs within a one-year period or are requested by us to ensure the customers meet their payment obligations. Value of Remaining Performance Obligations The value of remaining performance obligations, which we also refer to as total backlog, includes the following components: • Funded - Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts. • Unfunded - Unfunded backlog represents the revenue value of firm orders for products and services under existing contracts for which funding has not yet been appropriated less funding previously recognized on these contracts. The following table summarizes the value of our backlog at December 31, 2021 and 2020: Backlog: Year Ended December 31, (Dollars in millions) 2021 2020 Funded $ 2,510 $ 2,847 Unfunded 351 444 Total Backlog $ 2,861 $ 3,291 We expect to recognize approximately 62.5% of our December 31, 2021 backlog as revenue over the next 12 months, with the remainder to be recognized thereafter. Disaggregation of Revenue ASC : ASC revenue is primarily derived from U.S. government development and production contracts and is generally recognized over time using the cost-to-cost method. We disaggregate ASC revenue by geographical region, customer relationship and contract type. We believe these categories best depict how the nature, amount, timing and uncertainty of ASC revenue and cash flows are affected by economic factors: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Revenue by Geographical Region United States $ 1,808 $ 1,763 $ 1,699 International 113 182 99 Intersegment Sales 19 13 12 Total $ 1,940 $ 1,958 $ 1,810 Revenue by Customer Relationship Prime contractor $ 1,209 $ 1,063 $ 1,027 Subcontractor 712 882 771 Intersegment Sales 19 13 12 Total $ 1,940 $ 1,958 $ 1,810 Revenue by Contract Type Firm Fixed Price $ 1,667 $ 1,716 $ 1,570 Flexibly Priced (1) 254 229 228 Intersegment Sales 19 13 12 Total $ 1,940 $ 1,958 $ 1,810 __________________ (1) Includes revenue derived from time-and-materials contracts. IMS : IMS revenue is primarily derived from U.S. government development and production contracts and is generally recognized over time using the cost-to-cost method. We disaggregate IMS revenue by geographical region, customer relationship and contract type. We believe these categories best depict how the nature, amount, timing and uncertainty of IMS revenue and cash flows are affected by economic factors: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Revenue by Geographical Region United States $ 913 $ 792 $ 895 International 45 41 21 Intersegment Sales 1 1 1 Total $ 959 $ 834 $ 917 Revenue by Customer Relationship Prime contractor $ 174 $ 283 $ 442 Subcontractor 784 550 474 Intersegment Sales 1 1 1 Total $ 959 $ 834 $ 917 Revenue by Contract Type Firm Fixed Price $ 831 $ 692 $ 763 Flexibly Priced (1) 127 141 153 Intersegment Sales 1 1 1 Total $ 959 $ 834 $ 917 __________________ (1) Includes revenue derived from time-and-materials contracts. |
Accounts Receivable
Accounts Receivable | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Receivables [Abstract] | ||
Accounts Receivable | Accounts Receivable Accounts receivable represent amounts billed and currently due from customers. Payment is typically received from our customers either at periodic intervals (e.g., biweekly, or monthly) or upon achievement of contractual milestones. Accounts receivable consist of the following: (Dollars in millions) June 30, 2022 December 31, 2021 Accounts receivable $ 126 $ 157 Less allowance for credit losses (1) (1) Accounts receivable, net $ 125 $ 156 The Company maintains certain agreements with financial institutions to sell certain trade receivables. Receivables are derecognized in their entirety when sold, and the Company’s continuing involvement in the sold receivables is limited to their servicing, for which the Company receives a fee commensurate with the service provided. Pursuant to the servicing agreements, the Company collected approximately $1 million and $15 million at June 30, 2022 and December 31, 2021, respectively, of these sold receivables that had not yet been remitted to the financial institutions. These unremitted amounts collected on behalf of the financial institutions are included within short-term borrowings and current portion of long-term debt in the Consolidated Balance Sheets. | Accounts Receivable Accounts receivable represent amounts billed and currently due from customers. Payment is typically received from our customers either at periodic intervals (e.g., biweekly, or monthly) or upon achievement of contractual milestones. Accounts receivable consist of the following: December 31, (Dollars in millions) 2021 2020 Accounts receivable $ 157 $ 104 Less allowance for doubtful accounts (1) (2) Accounts receivable, net $ 156 $ 102 The Company maintains certain agreements with financial institutions to sell certain trade receivables. Receivables are derecognized in their entirety when sold, and the Company’s continuing involvement in the sold receivables is limited to their servicing, for which the Company receives a fee commensurate with the service provided. Pursuant to the servicing agreements, the Company collected approximately $15 million and $27 million at December 31, 2021 and 2020, respectively, of these sold receivables that had not yet been remitted to the financial institutions. These unremitted amounts collected on behalf of the financial institutions are included within short-term borrowings and current portion of long-term debt in the Consolidated Balance Sheet. |
Inventories
Inventories | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | ||
Inventories | Inventories Inventories consists of the following: (Dollars in millions) June 30, 2022 December 31, 2021 Raw materials $ 49 $ 43 Work in progress 198 161 Finished goods 2 1 Total $ 249 $ 205 | Inventories Inventories consists of the following: December 31, (Dollars in millions) 2021 2020 Raw materials $ 43 $ 52 Work in progress 161 193 Finished goods 1 2 Total $ 205 $ 247 |
Property, Plant and Equipment
Property, Plant and Equipment | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment by major asset class consists of the following: (Dollars in millions) June 30, 2022 December 31, 2021 Land, buildings and improvements $ 321 $ 312 Plant and machinery 194 191 Equipment and other 303 298 Total property, plant and equipment, at cost 818 801 Less accumulated depreciation (455) (437) Total property, plant and equipment, net $ 363 $ 364 Depreciation expense related to property, plant and equipment was $14 million and $27 million for the three- and six-month periods ended June 30, 2022, and $12 million and $24 million for the three- and six-month periods ended June 30, 2021, respectively. | Property, Plant and Equipment Property, plant and equipment by major asset class consists of the following: December 31, (Dollars in millions) 2021 2020 Land, buildings and improvements $ 312 $ 294 Plant and machinery 191 186 Equipment and other 298 276 Total property, plant and equipment, at cost 801 756 Less accumulated depreciation (437) (401) Total property, plant and equipment, net $ 364 $ 355 Depreciation expense related to property, plant and equipment was $49 million, $44 million and $42 million for the years ended December 31, 2021, 2020 and 2019, respectively. Land, buildings and improvements include assets under finance leases in the amount of $104 million and $108 million as of December 31, 2021 and 2020, respectively. See Note 9: Leases for additional information. As of December 31, 2021, the Company accounted for our manufacturing facility in Menomonee Falls, WI as a build-to-suit lease with a failed sale-leaseback and is included in the Land, building, and improvements in the above table. See Note 11: Debt |
Other Liabilities
Other Liabilities | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | ||
Other Liabilities | Other Liabilities A summary of significant other liabilities by balance sheet caption follows: (Dollars in millions) June 30, 2022 December 31, 2021 Salaries, wages and accrued bonuses $ 46 $ 70 Fringe benefits 75 74 Litigation 10 10 Restructuring costs 1 4 Provision for contract losses 57 48 Operating lease liabilities 22 24 Other (1) 68 65 Total other current liabilities $ 279 $ 295 Operating lease liabilities $ 68 $ 73 Other 2 1 Total other noncurrent liabilities $ 70 $ 74 ________________ (1) Consists primarily of taxes payable, environmental remediation reserves and warranty reserves. See Note 15: Commitments and Contingencies for more information regarding the warranty provision | Other Liabilities A summary of significant other liabilities by balance sheet caption follows: December 31, (Dollars in millions) 2021 2020 Salaries, wages and accrued bonuses $ 70 $ 61 Fringe benefits 74 71 Litigation 10 10 Restructuring costs 4 1 Provision for contract losses 48 44 Operating lease liabilities 24 22 Other (1) 65 58 Total other current liabilities $ 295 $ 267 Retirement benefits $ — $ — Operating lease liabilities $ 73 $ 81 Other (2) 1 11 Total other noncurrent liabilities $ 74 $ 92 __________________ (1) Consists primarily of taxes payable, environmental remediation reserves and warranty reserves. See Note 15: Commitments and Contingencies for more information regarding the warranty provision. |
Goodwill
Goodwill | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | Goodwill Changes in the carrying amount of goodwill by reportable segment are as follows: (Dollars in millions) ASC IMS Total Balance as of December 31, 2021 $ 652 $ 419 $ 1,071 Reclassification to assets held for sale (117) — (117) Acquisition adjustment (2) (2) Balance as of June 30, 2022 533 419 952 | Goodwill Changes in the carrying amount of goodwill by reportable segment are as follows: (Dollars in millions) ASC IMS Total Balance at January 1, 2020 (1) $ 638 $ 419 $ 1,057 Acquisitions — — — Balance at December 31, 2020 638 419 1,057 Acquisitions 14 — 14 Balance at December 31, 2021 $ 652 $ 419 $ 1,071 ________________ |
Intangible Assets
Intangible Assets | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible Assets | Intangible Assets Other intangible assets mainly refer to the fair value of existing customer contractual relationships attributable to the acquired business and patents which are being amortized over their respective lives. The fair value of intangible assets typically is determined, as of the date of acquisition, based on estimates and judgments regarding expectations for the estimated future after-tax earnings and cash flows (including cash flows for working capital) arising from backlog and follow-on sales to the customer over their estimated lives, including the probability of expected future contract renewals and sales, less a contributory assets charge, all of which is discounted to present value. The following disclosure presents certain information regarding the Company's intangible assets as of June 30, 2022 and December 31, 2021. All intangible assets are being amortized over their estimated useful lives, as indicated below, with no estimated residual values. June 30, 2022 December 31, 2021 (Dollars in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 957 $ (913) $ 44 $ 957 $ (908) $ 49 Patents and licenses 9 (6) 3 9 (6) 3 Total intangible assets $ 966 $ (919) $ 47 $ 966 $ (914) $ 52 | Intangible Assets Other intangible assets mainly refer to the fair value of existing customer contractual relationships attributable to the acquired business and patents which are being amortized over their respective lives. The fair value of intangible assets typically is determined, as of the date of acquisition, based on estimates and judgments regarding expectations for the estimated future after-tax earnings and cash flows (including cash flows for working capital) arising from backlog and follow-on sales to the customer over their estimated lives, including the probability of expected future contract renewals and sales, less a contributory assets charge, all of which is discounted to present value. The following disclosure presents certain information regarding the Company's intangible assets as of December 31, 2021 and 2020. All intangible assets are being amortized over their estimated useful lives, as indicated below, with no estimated residual values. December 31, 2021 December 31, 2020 (Dollars in millions) Gross Accumulated Amortization Net Carrying Amount Gross Accumulated Amortization Net Carrying Amount Customer relationships $ 957 $ (908) $ 49 $ 957 $ (899) $ 58 Patents and licenses 9 (6) 3 7 (5) 2 Total intangible assets $ 966 $ (914) $ 52 $ 964 $ (904) $ 60 Amortization expense related to intangible assets was $9 million, $9 million, and $9 million respectively, for the years ended December 31, 2021, 2020 and 2019. Customer relationships are amortized on a straight-line basis over their estimated useful lives of 10 to 15 years. Patents and licenses are amortized on a straight-line basis over their estimated useful lives of 5 to 10 years. The estimated annual amortization expense related to intangible assets for the subsequent five years is as follows: (in millions) Estimated 2022 $ 9 2023 9 2024 9 2025 9 2026 9 |
Income Taxes
Income Taxes | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Income Taxes | Income Taxes The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of June 30, 2022 and December 31, 2021 are as follows: (Dollars in millions) June 30, 2022 December 31, 2021 Deferred tax assets $ 107 $ 120 Valuation allowance 10 10 Deferred tax assets 97 110 Deferred tax liabilities 51 54 Deferred tax assets, net $ 46 $ 56 Our deferred tax balance associated with our retirement benefit plans includes a deferred tax asset of $10 million and $11 million as of June 30, 2022 and December 31, 2021, respectively, that are recorded in accumulated other comprehensive earnings to recognize the funded status of our retirement plans. See Note 11: Pension and Other Postretirement Benefits | Income Taxes Earnings (loss) before taxes consists of the following: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Earnings before taxes Domestic $ 203 $ 112 $ 89 Foreign (3) — 6 Total $ 200 $ 112 $ 95 Income tax provision (benefit) consists of the following: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Current: Federal $ (1) $ — $ — State — 3 2 Foreign 1 2 1 — 5 3 Deferred: Federal 43 24 17 State 5 — — Foreign (2) (2) — 46 22 17 Total $ 46 $ 27 $ 20 The reconciliation from the statutory federal income tax rate to our effective income tax rate follows: Year Ended December 31, 2021 2020 2019 Statutory federal rate 21.0 % 21.0 % 21.0 % State rate, net of federal benefit 3.6 % 2.3 % 0.5 % Foreign rate differential (0.2) % 0.5 % 0.5 % Research & development credit, net of reserves (0.2) % (0.7) % (2.3) % Nondeductible expenses 0.9 % 0.4 % 0.7 % Global intangible low taxed income — % 0.2 % 1.0 % Change in valuation allowance (1.4) % (2.5) % 0.2 % Change in tax reserves (0.4) % 2.2 % 0.2 % Other (0.3) % 0.7 % (0.7) % Effective tax rate 23.0 % 24.1 % 21.1 % The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020 is as follows: December 31, (Dollars in millions) 2021 2020 Deferred tax assets: Federal net operating losses $ 5 $ 18 State net operating losses 16 21 Tax credit carryforwards 21 23 Accrued compensation and benefits 23 26 Contract liabilities 21 20 Accrued expenses 5 5 Pension and post-retirement plans 18 24 Inventory capitalization 5 8 Other 5 8 Disallowed interest 1 1 Total gross deferred tax assets 120 154 Less valuation allowance 10 11 Deferred tax assets 110 143 Deferred tax liabilities: Intangible assets (41) (44) Fixed assets (12) (11) Other (1) (1) Deferred tax liabilities (54) (56) Net deferred tax asset $ 56 $ 87 Our deferred tax balance associated with our retirement benefit plans includes a deferred tax asset of $11 million and $14 million as of December 31, 2021 and 2020 respectively, that are recorded in accumulated other comprehensive earnings to recognize the funded status of our retirement plans. See ‘ for additional details. As of December 31, 2021 and 2020 the Company had U.S. federal net operating loss carryforwards of $28 million and $131 million, respectively, which we anticipate we will be able to apply prior to their expiration which commences in 2025. The annual utilization of approximately $28 million of certain our Federal net operating losses is subject to limitations under section 382 of the Internal Revenue Code. As of December 31, 2021 and 2020 we had apportioned state net operating loss carryforwards of $239 million and $327 million, respectively, which are associated with jurisdictions in which we currently file and the Company expects to utilize prior to expiration except for those for which we have recorded a valuation allowance. We have federal tax credit carryforwards that commence expiring in 2032, which we anticipate being able to utilize prior to their expiration. Tax Uncertainties The Company maintains reserves for uncertain tax positions related to unrecognized income tax benefits. These reserves involve considerable judgment and estimation and are evaluated by management at least quarterly based on the best information available. The Company’s total liability for unrecognized tax benefits as of December 31, 2021, 2020 and 2019 was approximately $22 million, $25 million and $18 million, respectively; all of which will impact the effective tax rate when recognized. Approximately $15 million, $22 million and $16 million as of December 31, 2021, 2020 and 2019, respectively, have been recorded within (and as an offset to) deferred tax assets. In addition, the Company does not believe there are any tax positions for which it is reasonably possible that the unrecognized tax benefits will vary significantly over the next 12 months. The table below summarizes the activity associated with our unrecognized tax benefits: (Dollars in millions) 2021 2020 2019 Balance at January 1, $ 25 $ 18 $ 14 Increase related to prior year tax positions — 3 3 Increase related to current year tax positions 1 4 1 Decreases related to prior year tax positions (4) — — Lapse of statute of limitations — — — Settlements with taxing authorities — — — Balance at December 31, $ 22 $ 25 $ 18 The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company has substantially concluded all U.S. federal income tax matters for years through the tax year ended December 31, 2016 except as it relates to the net operating loss carryforward and tax credit carryforwards. Substantially all material state and local matters have been concluded for years through the tax year ended December 31, 2015. The Company has substantially concluded all material tax matters in foreign jurisdictions for years through the tax years ending during 2016. |
Debt
Debt | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Debt Disclosure [Abstract] | ||
Debt | Debt The Company’s debt consists of the following: (Dollars in millions) June 30, 2022 December 31, 2021 7.5% Term loan due November 30, 2023 (1) $ 139 $ 139 5.0% Daylight term loan due October 15, 2024 (1) 78 78 Borrowings under revolving credit facility (1) 110 — Finance lease and other 162 161 Short-term borrowings 1 15 Total debt principal 490 393 Less unamortized debt issuance costs and discounts — — Total debt, net 490 393 Less short-term borrowings and current portion of long-term debt (140) (41) Total long-term debt $ 350 $ 352 ________________ (1) The Company’s debt with related parties consists of two term loans and a working capital credit facility with US Holding, as described below. Term Loans In January 2009, the Company entered into a credit agreement with its ultimate parent company, Finmeccanica S.p.A. (presently Leonardo S.p.A.) in the amount of $2 billion (the “2009 Credit Agreement”). The 2009 Credit Agreement was subsequently assigned to US Holding and has a maturity of November 30, 2023. The 2009 Credit Agreement provides for a term loan bearing interest at a rate of 7.5%, with interest payments due semi-annually on June 20 and December 20 in each year (the “7.5% Term loan”). The outstanding balance of the 7.5% Term loan at June 30, 2022 and December 31, 2021 was $139 million. The fair value of this term loan at June 30, 2022 and December 31, 2021 was $142 million and $182 million, respectively; however, the Company has the ability to prepay the outstanding principal balance at the carrying amount without penalty. In June 2017, the Company entered into an unsecured term loan with US Holding in the principal amount of $137.5 million, the proceeds of which were used to finance the acquisition of Daylight Solutions, Inc. (the “Daylight Term Loan”). The Daylight Term Loan had an outstanding balance of $78 million at June 30, 2022 and December 31, 2021. The fair value of the Daylight Term Loan as of June 30, 2020 and December 31, 2021 was approximately $81 million and $84 million, respectively. The Daylight Term Loan matures on October 15, 2024. The Daylight Term Loan has an interest rate of 5.0%, with interest payments due semi-annually on April 15 and October 15. Credit Facilities The 2009 Credit Agreement provides for a revolving credit facility available for working capital needs of the Company (the “Revolving Credit Facility”). As of June 30, 2022 and December 31, 2021, the Revolving Credit Facility had a credit limit of $450 million and an interest rate of LIBOR plus 3.5%. There is a commitment fee of 0.25% applied to the unused balance of the Revolving Credit Facility and there are no compensating balance requirements. The outstanding balance as of June 30, 2022 was $110 million and there was no balance on the Revolving Credit Facility as of December 31, 2021. The Company also maintains uncommitted working capital credit facilities with certain financial institutions in the aggregate of $65 million at June 30, 2022 and December 31, 2021, respectively (the “Financial Institution Credit Facilities”). The Financial Institution Credit Facilities are guaranteed by Leonardo S.p.A. The primary purpose of the Financial Institution Credit Facilities is to support standby letter of credit issuances on contracts with customers and also includes a revolving facility with a maximum borrowing limit of $15 million, which bears interest at LIBOR plus 0.5%. At June 30, 2022 and December 31, 2021, there was no balance outstanding on the revolving facility. The Company had letters of credit outstanding of approximately $31 million and $35 million as of June 30, 2022, and December 31, 2021, respectively, which reduces the available capacity of the Financial Institution Credit Facilities by an equal amount. Short-term Borrowings As of June 30, 2022 and December 31, 2021, the Company recognized $1 million and $15 million, respectively, collected on behalf of the buyers of our trade receivables pursuant to our factoring arrangements as short-term borrowings and current portion of long-term debt in the Consolidated Balance Sheets, which approximates its fair value. Refer to Note 3: Accounts Receivable | Debt The Company’s debt consists of the following: December 31, (Dollars in millions) 2021 2020 7.5% Term loan due November 30, 2023 (1) 139 139 5.0% Daylight term loan due October 15, 2024 (1) 78 98 Finance lease and other 161 163 Short-term borrowings 15 27 Total debt principal 393 427 Less unamortized debt issuance costs and discounts — — Total debt, net 393 427 Less short-term borrowings and current portion of long-term debt (41) (53) Total long-term debt $ 352 374 __________________ (1) The Company’s debt with related parties consists of two term loans and a working capital credit facility with US Holding, as described below. Term Loans In January 2009, the Company entered into a credit agreement with its ultimate parent company, Finmeccanica S.p.A. (presently Leonardo S.p.A.) in the amount of $2 billion (the “2009 Credit Agreement”). The 2009 Credit Agreement was subsequently assigned to US Holding and has a maturity of November 30, 2023. The 2009 Credit Agreement provides for a term loan bearing interest at a rate of 7.5%, with interest payments due semi-annually on June 20 and December 20 in each year (the “7.5% Term loan”). The outstanding balance of the 7.5% Term loan at December 31, 2021 and 2020 was $139 million and $139 million, respectively. The fair value of this term loan at December 31, 2021 and 2020 was $182 million and $182 million, respectively; however the Company has the ability to prepay the outstanding principal balance at the carrying amount without penalty. During 2020, US Holding forgave $300 million of related party debt. This was treated as a capital transaction and the amount was recorded in additional paid-in capital, as US Holding is a related party. In June 2017, the Company entered into an unsecured term loan with US Holding in the principal amount of $137.5 million, the proceeds of which were used to finance the acquisition of Daylight Solutions, Inc. (the “Daylight Term Loan”). The Daylight Term Loan had an outstanding balance of $78 million and $98 million at December 31, 2021 and 2020, respectively, which approximates its fair value. The Daylight Term Loan matures on October 15, 2024. The Daylight Term Loan has an interest rate of 5.0%, with interest payments due semi-annually on April 15 and October 15. During April 2018, the Company was advanced an additional $50 million by US Holding under a term loan. This term loan bears interest at 4.0% and had an initial maturity date of December 31, 2018, which was extended until December 31, 2021. This term loan was repaid in full, with no prepayment penalty, on December 19, 2020. Credit Facilities The 2009 Credit Agreement provides for a revolving credit facility available for working capital needs of the Company (the “Revolving Credit Facility”). As of December 31, 2021 and 2020, the Revolving Credit Facility had a credit limit of $450 million and $450 million, respectively, and an interest rate of LIBOR plus 3.5%. There is a commitment fee of 0.25% applied to the unused balance of the Revolving Credit Facility and there are no compensating balance requirements. There was no balance on the Revolving Credit Facility as of December 31, 2021 and 2020. The Company also maintains uncommitted working capital credit facilities with certain financial institutions in the aggregate of $65 million and $60 million at December 31, 2021 and 2020, respectively (the “Financial Institution Credit Facilities”). The Financial Institution Credit Facilities are guaranteed by Leonardo S.p.A. The primary purpose of the Financial Institution Credit Facilities is to support standby letter of credit issuances on contracts with customers and also includes a revolving facility with a maximum borrowing limit of $15 million, which bears interest at LIBOR plus 0.5%. At December 31, 2021 and 2020, there was no balance outstanding on the revolving facility. The Company had letters of credit outstanding of approximately $35 million and $31 million as of December 31, 2021 and 2020, respectively, which reduces the available capacity of the Financial Institution Credit Facilities by an equal amount. Finance Lease and Other As of December 31, 2021, finance lease and other of $161 million includes approximately $113 million related to finance lease liabilities and $48 million related to our Menomonee Falls, WI manufacturing facility, which has been accounted for as a build-to-suit lease with a failed sale leaseback. Approximately $6 million has been recognized as the current portion of long-term debt for the finance lease liabilities and financing liability related to the build-to-suit arrangement. Short-term Borrowings As of December 31, 2021 and 2020, the Company recognized $15 million and $27 million, respectively, collected on behalf of the buyers of our trade receivables pursuant to our factoring arrangements as short-term borrowings and current portion of long-term debt in the Consolidated Balance Sheet, which approximates its fair value. Refer to Note 3: Accounts Receivable for more information. Interest Paid Total interest paid associated with our debt was $35 million, $64 million and $65 million in 2021, 2020 and 2019, respectively. Maturities of long-term debt as of December 31, 2021 are as follows: (Dollars in millions) Year Ending December 31, 2022 $ 41 2023 171 2024 40 2025 7 2026 7 Thereafter 127 Total principal payments $ 393 |
Pension and Other Postretiremen
Pension and Other Postretirement Benefits | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Retirement Benefits [Abstract] | ||
Pension and Other Postretirement Benefits | Pension and Other Postretirement Benefits Retirement Plan Summary Information The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility requirements for participation in the plans vary, and benefits generally are based on the participant's compensation and years of service, as defined in the respective plan. The Company's funding policy generally is to contribute in accordance with cost accounting standards that affect government contractors, subject to the Tax Code and regulations thereunder. Plan assets are invested primarily in equities, bonds (both corporate and U.S. government), U.S. government-sponsored entity instruments, cash and cash equivalents and real estate. The Company also provides postretirement medical benefits for certain retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company's postretirement benefit plans. The Company's contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees' Beneficiary Association (“VEBA”) trust and, for non-funded plans, recovery of claims on a pay-as-you-go basis, subject to the Tax Code and regulations thereunder, with the retiree generally paying a portion of the costs through contributions, deductibles and coinsurance provisions. The Company also maintains certain non-contributory and unfunded supplemental retirement plans. Eligibility for participation in the supplemental retirement plans is limited, and benefits generally are based on the participant's compensation and/or years of service. The following table summarizes the components of net periodic benefit cost for the Company's pension, postretirement and supplemental retirement plans for the three months ended June 30: Defined Benefit Pension Plans Postretirement Benefit Plan Supplemental Retirement Plans (Dollars in millions) Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Service cost $ — $ — $ — $ — $ — $ — Interest cost 1 2 — — — — Less Expected return on plan assets (2) (2) — — — — Amortization of net actuarial loss (gain) 1 — — — — — Amortization of prior service cost — — — — — — Settlement expense (income) — — — — — — Net periodic benefit cost $ — $ — $ — $ — $ — $ — The following table summarizes the components of net periodic benefit cost for the Company's pension, postretirement and supplemental retirement plans for the six months ended June 30: Defined Benefit Pension Plans Postretirement Benefit Plan Supplemental Retirement Plans (Dollars in millions) Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Service cost $ — $ — $ — $ — $ — $ — Interest cost $ 3 $ 3 — — — — Less Expected return on plan assets $ (4) $ (4) — — — — Amortization of net actuarial loss (gain) $ 1 $ 1 — — — — Amortization of prior service cost $ — $ — — — — — Settlement expense (income) $ 1 $ — — — — — Net periodic benefit cost $ 1 $ — $ — $ — $ — $ — The expected long-term return on plan assets assumption represents the average rate that the Company expects to earn over the long-term on the assets of the Company's benefit plans, including those from dividends, interest income and capital appreciation. The assumption has been determined based on expectations regarding future rates of return for the plans' investment portfolio, with consideration given to the allocation of investments by asset class and historical rates of return for each individual asset class. Pension related expenses are reflected in the Total costs of revenues and General and administrative expenses on the Consolidated Statement of Earnings (unaudited). A one percentage increase or decrease in healthcare trend rates in the table above would have an insignificant impact to our service and interest cost and the postretirement medical obligations. | Pension and Other Postretirement Benefits Retirement Plan Summary Information The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility requirements for participation in the plans vary, and benefits generally are based on the participant's compensation and years of service, as defined in the respective plan. The Company's funding policy generally is to contribute in accordance with cost accounting standards that affect government contractors, subject to the Tax Code and regulations thereunder. Plan assets are invested primarily in equities, bonds (both corporate and U.S. government), U.S. government-sponsored entity instruments, cash and cash equivalents and real estate. The Company also provides postretirement medical benefits for certain retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company's postretirement benefit plans. The Company's contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees' Beneficiary Association (“VEBA”) trust and, for non-funded plans, recovery of claims on a pay-as-you-go basis, subject to the Tax Code and regulations thereunder, with the retiree generally paying a portion of the costs through contributions, deductibles and coinsurance provisions. The Company also maintains certain non-contributory and unfunded supplemental retirement plans. Eligibility for participation in the supplemental retirement plans is limited, and benefits generally are based on the participant's compensation and/or years of service. The following tables provide certain information regarding the Company's pension, postretirement and supplemental retirement plans as of December 31, 2021 and 2020: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2021 2020 2021 2020 Change in benefit obligation: Benefit obligation at beginning of year $ 226 $ 261 $ 2 $ 3 $ 23 $ 24 Service cost — — — — — — Interest cost 5 7 — — 1 1 Plan participants' contributions — — — — — — Actuarial (gain) loss (3) (10) — (1) (1) (1) Benefits paid (13) (10) — — (1) (1) (Gain) loss due to settlement — (21) — — — — Plan amendments — — — — — — Exchange rate differences and other — (1) — — — — Benefit obligation at end of year $ 215 $ 226 $ 2 $ 2 $ 22 $ 23 Change in plan assets: Fair value of plan assets at beginning of year $ 151 $ 158 $ 1 $ 1 $ 11 $ 10 Actual return on plan assets 15 19 — — 1 1 Plan participants' contributions — — — — — — Employer contributions 13 6 — — 1 1 Benefits paid (13) (10) — — (1) (1) (Loss) gain due to settlement — (21) — — — — Exchange rate differences and other — (1) — — — — Fair value of plan assets at end of year 166 151 1 1 12 11 Contributions between measurement date and year end — — — — — — Funded status of the plans at year end $ (49) $ (75) $ (1) $ (1) $ (10) $ (12) The amounts recognized in the Consolidated Balance Sheet, as of December 31, 2021 and 2020 consist of: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2021 2020 2021 2020 Noncurrent assets $ — $ — $ 1 $ 1 $ — $ — Current liabilities — — — — — — Noncurrent liabilities (49) (75) (2) (2) (10) (11) Net liability recognized $ (49) $ (75) $ (1) $ (1) $ (10) $ (11) Amounts recognized in accumulated other comprehensive income (before taxes) at December 31, 2021 and 2020 consist of: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2021 2020 2021 2020 Prior service cost $ — $ — $ — $ — $ — $ — Net actuarial loss (gain) 40 52 (1) (2) 6 7 Total amount recognized in accumulated other comprehensive losses (earnings) $ 40 $ 52 $ (1) $ (2) $ 6 $ 7 The aggregate accumulated benefit obligation (“ABO”) for the Company's defined benefit pension plans combined was $237 million and $249 million at December 31, 2021 and 2020, respectively. The ABO represents benefits accrued without assuming future compensation increases to plan participants and is approximately equal to our projected benefit obligation (“PBO”).The table below presents information for the pension plans with an ABO and PBO in excess of the fair value of plan assets at December 31, 2021 and 2020. (Dollars in millions) December 31, 2021 December 31, 2020 Projected benefit obligation $ 237 $ 249 Accumulated benefit obligation 237 249 Fair value of plan assets 178 162 The following table summarizes the weighted average actuarial assumptions used to determine our benefit obligations at December 31, 2021 and 2020: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans 2021 2020 2021 2020 2021 2020 Rate assumptions Discount rate 2.8 % 2.4 % 2.6 % 4.3 % 2.8 % 2.5 % Increase in future compensation levels N/A N/A N/A N/A N/A N/A Expected long-term return on plan assets 5.9 % 6.4 % 5.9 % 6.4 % N/A N/A Health care trend rate assumed for next year N/A N/A 4.6 % 5.4 % N/A N/A Ultimate health care trend rate N/A N/A 4.3 % 4.3 % N/A N/A Year rate reaches ultimate trend rate N/A N/A 2031 2031 N/A N/A The following table summarizes the components of net periodic benefit cost for the Company's pension, postretirement and supplemental retirement plans for the years ended December 31, 2021 and 2020 and 2019: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2019 2021 2020 2019 2021 2020 2019 Service cost $ — $ — $ — $ — $ — $ — $ — $ — $ — Interest cost $ 5 $ 7 $ 7 $ — $ — $ — $ 1 $ 1 $ 1 Expected return on plan assets $ (7) $ (8) $ (7) $ — $ — $ — $ — $ — $ — Amortization of net actuarial loss (gain) $ 2 $ 3 $ 2 $ (1) $ (1) $ — $ — $ — $ — Amortization of prior service cost $ — $ — $ — $ — $ — $ — $ — $ — $ — Settlement expense (income) $ — $ 3 $ — $ — $ — $ — $ — $ — Net periodic benefit cost $ — $ 5 $ 2 $ (1) $ (1) $ — $ 1 $ 1 $ 1 The following table summarizes the other changes in plan assets and benefit obligations recognized in other comprehensive earnings for the Company's pension, postretirement and supplemental retirement benefit plans for the years ended December 31, 2021 and 2020 and 2019: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2019 2021 2020 2019 2021 2020 2019 Net actuarial (gain) loss $ (11) $ (21) $ 19 $ — $ (1) $ (1) $ (1) $ (1) $ 4 Prior service cost — — — — — — — — — Amortization of net actuarial (loss) gain from prior years (2) (6) (2) 1 1 — — — — Amortization of prior service cost — — — — — — — — — Other (1) — — — — — — — — — Total recognized in other comprehensive income $ (13) $ (27) $ 17 $ 1 $ — $ (1) $ (1) $ (1) $ 4 __________________ (1) Includes foreign exchange translation The following table summarizes the weighted average actuarial assumptions used to determine our net periodic cost of the plans for the years ended December 31, 2021, 2020 and 2019: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans 2021 2020 2019 2021 2020 2019 2021 2020 2019 Rate assumptions Discount rate 2.8 % 2.7 % 3.6 % 2.1 % 2.8 % 3.3 % 2.4 % 2.4 % 3.5 % Expected long - term return on plan assets 6.4 % 6.3 % 6.9 % 6.4 % 5.8 % 5.7 % N/A N/A N/A Increase in future compensation levels N/A N/A N/A N/A N/A N/A N/A N/A N/A Health care trend rate assumed for next year N/A N/A N/A 5.8 % 6.0 % 6.5 % N/A N/A N/A Ultimate health care trend rate N/A N/A N/A 4.5 % 4.5 % 4.5 % N/A N/A N/A Year rate reaches ultimate trend rate N/A N/A N/A 2030 2029 2027 N/A N/A N/A The expected long-term return on plan assets assumption represents the average rate that the Company expects to earn over the long-term on the assets of the Company's benefit plans, including those from dividends, interest income and capital appreciation. The assumption has been determined based on expectations regarding future rates of return for the plans' investment portfolio, with consideration given to the allocation of investments by asset class and historical rates of return for each individual asset class. A one percentage increase or decrease in healthcare trend rates in the table above would have an insignificant impact to our service and interest cost and the postretirement medical obligations. Plan Assets The Company is responsible for formulating the investment policies and strategies for each plan's assets. Presently all of the plans are governed by a single investment policy and are uniformly invested. As part of the policy statement the Company has implemented a glide path which adjusts the percentage of assets invested in return seeking assets based upon the attainment of specific funding percentages. The non-return seeking assets are invested primarily in bonds with maturities closely matching the anticipated payment of benefits. The table below represents all of the Company's funded pension plans' and postretirement benefit plans' weighted-average asset allocation at December 31, 2021 and 2020 by asset category: Asset Allocation 2021 2020 Asset Category Equity securities 41 % 55 % Debt securities 47 % 33 % Real estate 6 % 6 % Other, primarily cash and cash equivalents, and hedge funds 6 % 6 % The table below presents the target allocation ranges for each major asset category for the Company's benefit plans for the years ended December 31, 2021 and 2020. Target Asset Allocation Range 2021 2020 Asset Category Equity securities 40% - 60% 40% - 60% Debt securities 30% - 50% 40% - 50% Real estate 5% - 10% 5% - 10% Other, primarily cash and cash equivalents and hedge funds 5% - 10% 5% - 10% The following tables provides the fair value of plan assets held by our defined benefit plan by asset category and by fair value hierarchy level. Certain investments are measured at their NAV per share and do not have readily determined fair values. As such, these investments are not subject to leveling in the fair value hierarchy. December 31, 2021 (Dollars in millions) Level 1 Level 2 Level 3 Total Asset category Investments measured at fair value: $ — $ — $ — $ — Cash and cash equivalents $ 11 $ — $ — $ 11 Equity securities 6 — — 6 Debt securities — — — — Total $ 17 $ — $ — $ 17 Investments measured at NAV: Collective trust funds — — — 162 Equity and fixed income funds — — — — Total $ 17 $ — $ — $ 179 December 31, 2020 (Dollars in millions) Level 1 Level 2 Level 3 Total Asset category Investments measured at fair value: Cash and cash equivalents $ 9 $ — $ — $ 9 Equity securities 6 — — 6 Debt securities — — — — Total $ 15 $ — $ — $ 15 Investments measured at NAV: Collective trust funds — — — 148 Equity and fixed income funds — — — — Total $ 15 $ — $ — $ 163 For the year ended December 31, 2022, the Company expects to contribute $5 million to its pension plans and an inconsequential amount to its postretirement plans. During 2020 the Company deferred approximately $7 million in pension contributions until 2021 under the CARES Act and IRS Notice 2020-82, which was included in the total pension contributions for 2021 of $13 million. The following table presents expected pension and postretirement benefit payments over the next 10 years: (Dollars in millions) Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans Year Ending December 31, 2022 $ 12 $ — $ 1 2023 12 — 1 2024 13 — 1 2025 13 — 1 2026 13 — 1 2027-2031 63 — 6 Defined Contribution Plans The Company maintains defined contribution plans covering substantially all domestic full-time eligible employees. The Company's contributions to these plans for the years ended December 31, 2021, 2020 and 2019 amounted to $22 million, $21 million and $19 million, respectively. |
Share-based compensation plans
Share-based compensation plans | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Share-based compensation plans | Share-based compensation plans The Company does not have any share-based compensation plans. See Note 6 : Other Liabilities | Share-based compensation plans The Company does not have any share-based compensation plans. See Note 6 : Other Liabilities |
Commitment and Contingencies
Commitment and Contingencies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | Commitments and Contingencies Commitments The Company’s commitments are primarily related to our lease and credit agreements. Contingencies From time to time we are subject to certain legal proceedings and claims in the ordinary course of business. These matters are subject to many uncertainties and it is possible that some of these matters ultimately could be decided, resolved or settled in a manner adverse to us. Although the precise amount of liability that may result from these matters is not ascertainable, the Company believes that any amounts exceeding the Company's recorded accruals should not materially adversely affect the Company's financial condition or liquidity. It is possible, however, that the ultimate resolution of those matters could result in a material adverse effect on the Company's results of operations and/or cash flows from operating activities for a particular reporting period. We establish reserves for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. Some environmental laws, such as the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (also known as “CERCLA” or the “Superfund law”) and similar state statutes, can impose liability upon former owners or operators for the entire cost of investigating and remediating contaminated sites regardless of the lawfulness of the original activities that led to the contamination. In July 2000, an entity which later became a subsidiary of the Company received a Section 104(e) Request for Information (“RFI”) from the National Park Service (“NPS”), pursuant to CERCLA, regarding the presence of radioactive material at a site within a national park, which site was operated by an alleged predecessor to our subsidiary over 50 years ago. Following the subsidiary’s response to the RFI, the NPS directed it and another alleged former operator to perform an Engineering Evaluation and Cost Analysis (“EE/CA”) of a portion of the site. The Company’s subsidiary made a good faith offer to conduct an alternative EE/CA work plan, but the NPS rejected this offer and opted to perform the EE/CA itself. The NPS previously posted its intention to open a formal public comment period regarding the EE/CA at the end of 2019. To the Company’s knowledge, the EE/CA has not been released and a public comment period has yet to be opened. Following completion of the EE/CA, the NPS may seek reimbursement for its investigative and remedial efforts to date, or direct one or more of the potentially responsible parties to perform any remediation that may be required by CERCLA or may enter an alternative dispute resolution proceeding to attempt to resolve each party’s share. In addition, the NPS may seek to recover damages for loss of use of certain natural resources. The Company believes that it has legitimate defenses to its subsidiary’s potential liability and that there are other potentially responsible parties for the environmental conditions at the site, including the U.S. government as owner, operator and arranger at the site. The potential liability associated with this matter could change substantially due to such factors as additional information on the nature or extent of contamination, methods of remediation that might be recommended or required, changes in the apportionment of costs among the responsible parties, whether the NPS seeks to recover additional damages, whether the NPS’s plans to investigate additional areas to identify a need for further remedial action for which the Company may be identified as a potentially responsible party and other actions by governmental agencies or private parties. The Company has recorded its best estimate of damages and its share of remediation costs related to the site to reflect what we and our advisors reasonably believe we would be liable for based on the current information and circumstances of the claim, exclusive of other potential liabilities that may be asserted in the future. In the performance of our contracts we routinely request contract modifications that require additional funding from the customer. Most often, these requests are due to customer-directed changes in the scope of work. While we are entitled to recovery of these costs under our contracts, the administrative process with our customer may be protracted. Based on the circumstances, we periodically file requests for equitable adjustment (“REAs”) that are sometimes converted into claims. In some cases, these requests are disputed by our customer. We believe our outstanding modifications, REAs and other claims will be resolved without material impact to our results of operations, financial condition or cash flows. As a government contractor, with customers including the U.S. government as well as various state and local government entities, the Company may be subject to audits, investigations and claims with respect to its contract performance, pricing, costs, cost allocations and procurement practices. Additionally, amounts billed under such contracts, including direct and indirect costs, are subject to potential adjustments before final settlement. Management believes that adequate provisions for such potential audits, investigations, claims and contract adjustments, if any, have been made in the financial statements. Product Warranties Product warranty costs generally are accrued in proportion to product revenue realized in conjunction with our over-time revenue recognition policy. Product warranty expense is recognized based on the term of the product warranty, generally one year to three years, and the related estimated costs, considering historical claims expense. Accrued warranty costs are reduced as these costs are incurred and as the warranty period expires, and otherwise may be modified as specific product performance issues are identified and resolved. The following is a summary of changes in the product warranty balances during the period ended June 30, 2022: (Dollars in millions) Balance as of December 31, 2021 $ 19 Additional provision 6 Reversal and utilization (6) Balance as of June 30, 2022 19 | Commitments and Contingencies Commitments The Company’s commitments are primarily related to our lease and credit agreements. See Note 9 : Leases and Note 11 : Debt for additional information on our leases and credit agreements. Contingencies From time to time we are subject to certain legal proceedings and claims in the ordinary course of business. These matters are subject to many uncertainties and it is possible that some of these matters ultimately could be decided, resolved or settled in a manner adverse to us. Although the precise amount of liability that may result from these matters is not ascertainable, the Company believes that any amounts exceeding the Company's recorded accruals should not materially adversely affect the Company's financial condition or liquidity. It is possible, however, that the ultimate resolution of those matters could result in a material adverse effect on the Company's results of operations and/or cash flows from operating activities for a particular reporting period. We establish reserves for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. Some environmental laws, such as the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (also known as “CERCLA” or the “Superfund law”) and similar state statutes, can impose liability upon former owners or operators for the entire cost of investigating and remediating contaminated sites regardless of the lawfulness of the original activities that led to the contamination. In July 2000, an entity which later became a subsidiary of the Company received a Section 104(e) Request for Information (“RFI”) from the National Park Service (“NPS”), pursuant to CERCLA, regarding the presence of radioactive material at a site within a national park, which site was operated by an alleged predecessor to our subsidiary over 50 years ago. Following the subsidiary’s response to the RFI, the NPS directed it and another alleged former operator to perform an Engineering Evaluation and Cost Analysis (“EE/CA”) of a portion of the site. The Company’s subsidiary made a good faith offer to conduct an alternative EE/CA work plan, but the NPS rejected this offer and opted to perform the EE/CA itself. The NPS previously posted its intention to open a formal public comment period regarding the EE/CA at the end of 2019. To the Company’s knowledge, the EE/CA has not been released and a public comment period has yet to be opened. Following completion of the EE/CA, the NPS may seek reimbursement for its investigative and remedial efforts to date, or direct one or more of the potentially responsible parties to perform any remediation that may be required by CERCLA or may enter an alternative dispute resolution proceeding to attempt to resolve each party’s share. In addition, the NPS may seek to recover damages for loss of use of certain natural resources. The Company believes that it has legitimate defenses to its subsidiary’s potential liability and that there are other potentially responsible parties for the environmental conditions at the site, including the U.S. government as owner, operator and arranger at the site. The potential liability associated with this matter could change substantially due to such factors as additional information on the nature or extent of contamination, methods of remediation that might be recommended or required, changes in the apportionment of costs among the responsible parties, whether the NPS seeks to recover additional damages, whether the NPS’s plans to investigate additional areas to identify a need for further remedial action for which the Company may be identified as a potentially responsible party and other actions by governmental agencies or private parties. The Company has recorded its best estimate of damages and its share of remediation costs related to the site to reflect what we and our advisors reasonably believe we would be liable for based on the current information and circumstances of the claim, exclusive of other potential liabilities that may be asserted in the future. In the performance of our contracts we routinely request contract modifications that require additional funding from the customer. Most often, these requests are due to customer-directed changes in the scope of work. While we are entitled to recovery of these costs under our contracts, the administrative process with our customer may be protracted. Based on the circumstances, we periodically file requests for equitable adjustment (“REAs”) that are sometimes converted into claims. In some cases, these requests are disputed by our customer. We believe our outstanding modifications, REAs and other claims will be resolved without material impact to our results of operations, financial condition or cash flows. As a government contractor, with customers including the U.S. government as well as various state and local government entities, the Company may be subject to audits, investigations and claims with respect to its contract performance, pricing, costs, cost allocations and procurement practices. Additionally, amounts billed under such contracts, including direct and indirect costs, are subject to potential adjustments before final settlement. Management believes that adequate provisions for such potential audits, investigations, claims and contract adjustments, if any, have been made in the Consolidated Financial Statements. Restructuring costs We engage in targeted restructuring initiatives in order to rationalize headcount and align our operations in a more strategic and cost-efficient structure. In connection with these restructuring initiatives we recorded charges totaling $5 million, $12 million and $20 million for the years ended December 31, 2021, 2020 and 2019, respectively. Costs incurred were related to employee termination and severance costs, as well as costs related to discontinuing product lines or closing down of locations. Charges were recorded within other operating expenses, net, with the exception of costs incurred related to the write-down of inventory, which were recorded in cost of products. See the table below for a breakout of restructuring costs incurred by segment and by nature of cost incurred: Year Ended December 31, (Dollars in millions) 2021 2020 2019 ASC Severance $ 5 $ 6 $ 1 Facility abandonment — — 3 Inventory — — 2 Total ASC 5 6 6 IMS Severance — — 2 Facility abandonment — 6 6 Inventory — — 5 Total IMS — 6 13 Corporate Severance — — — Facility abandonment — — 1 Inventory — — — Total Corporate — — 1 Total $ 5 $ 12 $ 20 The following is a summary of changes in the restructuring provision balance during the years ended December 31, 2020 and 2021: (Dollars in millions) Balance at January 1, 2020 $ 4 Additional provision 12 Reversal and utilization (15) Balance at December 31, 2020 1 Additional provision 5 Reversal and utilization (2) Balance at December 31, 2021 $ 4 Product Warranties Product warranty costs generally are accrued in proportion to product revenue realized in conjunction with our over-time revenue recognition policy. Product warranty expense is recognized based on the term of the product warranty, generally one year to three years, and the related estimated costs, considering historical claims expense. Accrued warranty costs are reduced as these costs are incurred and as the warranty period expires, and otherwise may be modified as specific product performance issues are identified and resolved. The following is a summary of changes in the product warranty balances during the years ended December 31, 2020 and 2021: (Dollars in millions) Balance at January 1, 2020 $ 13 Additional provision 16 Reversal and utilization (12) Balance at December 31, 2020 17 Additional provision 17 Reversal and utilization (15) Balance at December 31, 2021 $ 19 |
Related Party Transactions
Related Party Transactions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | Related Party Transactions The Company provides services related to the US interface for the Parent and its other affiliates. These services include financial, tax, trade compliance, marketing and communications and legal. The Company also has related-party sales with the Parent and its other affiliates that occur in the regular course of business. Related-party sales for these transactions are included in revenues and were $54 million and $4 million or the six-month periods ended June 30, 2022 and June 30, 2021, respectively and $51 million and $2 million for the three- month periods ended June 30, 2022 and June 30, 2021 respectively. The Company has related-party purchases with the Parent and its other affiliates that occur in the regular course of business. Related-party purchases for these transactions are included in cost of revenues and were $18 million and $6 million for the six-month periods ended June 30, 2022 and June 30, 2021, respectively and related-party purchases for these transactions are included in cost of revenues for the three -month periods ended June 30, 2022 and June 30, 2021 were $7 million and $5 million, respectively. The receivables related to these transactions with the Parent and its other affiliates of $17 million and $2 million as of June 30, 2022 and December 31, 2021, respectively, and payables of $9 million and $1 million respectively, are recorded in our Consolidated Balance Sheets. An unbilled receivable with the Parent and its other affiliates of $36 million is included in contract assets in our Consolidated Balance Sheets as of June 30, 2022. The Company entered into a Surplus Treasury Agreement with US Holding (the “Surplus Agreement”) in December 2019. The Surplus Agreement allows the Company to advance excess funds to US Holding when funds are available. The advances bear interest at LIBOR plus between 5 and 20 basis points depending on the tenor of the advance. As of June 30, 2022 and December 31, 2021 the Company did not advance any amount to US Holding. The Company entered into Tax Allocation Agreement with US Holding, dated as of November 16, 2020. Refer to Note 1: Summary of Significant Accounting Policies for more information. | Related Party Transactions Under our current proxy agreement, DRS remains largely independent from the Parent. Additionally, the Company provides services related to the US interface for the Parent and its other affiliates. These services include financial, tax, trade compliance, marketing and communications and legal. The Company also has related-party sales with the Parent and its other affiliates that occur in the regular course of business. Related-party sales for these transactions are included in revenues and were $11 million, $26 million and $16 million for the years ended December 31, 2021,2020 and 2019, respectively. The receivables related to these transactions with the Parent and its other affiliates of $2 million and $5 million, respectively, and payables of $1 million and $8 million, respectively, are included in accounts receivable and accounts payable in our Consolidated Balance Sheet as of December 31, 2021 and 2020. The Company entered into a Surplus Treasury Agreement with US Holding (the “Surplus Agreement”) in December 2019. The Surplus Agreement allows the Company to advance excess funds to US Holding when funds are available. The advances bear interest at LIBOR plus between 5 and 20 basis points depending on the tenor of the advance. As of December 31, 2021 and 2020, the Company had advanced $0 million and $115 million to US Holding, which is presented on the balance sheet as a related party note receivable. During 2020, US Holding forgave $300 million of related party debt. This was treated as a capital transaction and the amount was recorded in additional paid-in capital, as US Holding is a related party. The Company entered into Tax Allocation Agreement with US Holding, dated as of November 16, 2020. Refer to Note 1: Summary of Significant Accounting Policies for more information. |
Segment Information
Segment Information | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Segment Reporting [Abstract] | ||
Segment Information | Segment Information Operating segments represent components of an enterprise for which separate financial information is available that is regularly reviewed by the CODM in determining how to allocate resources and assess performance. Our Chief Executive Officer is our CODM and he uses a variety of measures to assess the performance of the Company as a whole, depending on the nature of the activity. Beginning in the first quarter of 2022, the Company’s operating and reportable segments were revised into two reportable segments, ASC and IMS, to align our market strategy and capital allocation decision making with our operating structure. Prior year information was revised to reflect the new segment structure. All other operations, which consists primarily of DRS Corporate Headquarters and certain non-operating subsidiaries of the Company, are grouped in Corporate & Eliminations. We primarily use Adjusted EBITDA to manage the Company and allocate resources. Adjusted EBITDA of our business segments includes our net earnings before income taxes, amortization of acquired intangible assets, depreciation, restructuring costs, interest, transaction costs related to an anticipated offering of securities, acquisition and divestiture related expenses, foreign exchange, COVID-19 response costs, non-service pension expenditures and other one-time non-operational events. Adjusted EBITDA is used to facilitate a comparison of the ordinary, ongoing and customary course of our operations on a consistent basis from period to period and provide an additional understanding of factors and trends affecting our business segments. This measure assists the CODM in assessing segment operating performance consistently over time without the impact of our capital structure, asset base and items outside the control of the management team and expenses that do not relate to our core operations. Certain information related to our segments for the three- and six-month periods ended June 30, 2022 and June 30, 2021 is presented in the following tables. Consistent accounting policies have been applied by all segments within the Company, within all reporting periods. A description of our reportable segments as of June 30, 2022 and June 30, 2021 has been included in Note 1: Summary of Significant Accounting Policies . Transactions between segments generally are negotiated and accounted for under terms and conditions that are similar to other government and commercial contracts; however, these intercompany transactions are eliminated in consolidation. Total revenues and intersegment revenues by segment for the three- and six-month periods ended June 30, 2022 and, June 30, 2021 consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 ASC $ 444 $ 489 $ 840 $ 971 IMS 187 174 405 375 Corporate & Eliminations (4) (4) (6) (7) Total revenue $ 627 $ 658 $ 1,239 $ 1,339 (Dollars in millions) 2022 2021 2022 2021 ASC $ 3 $ 4 $ 5 $ 7 IMS 1 — 1 — Total intersegment revenue $ 4 $ 4 $ 6 $ 7 Depreciation by segment for the three- and six-month periods ended June 30, 2022 and June 30, 2021 consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 ASC $ 9 $ 8 $ 18 $ 16 IMS 5 4 9 8 Total depreciation $ 14 $ 12 $ 27 $ 24 Total assets by segment as of June 30, 2022 and December 31, 2021 consist of the following: (Dollars in millions) June 30, 2022 December 31, 2021 ASC $ 1,619 $ 1,545 IMS 1,124 1,145 Corporate & Eliminations 126 379 Held for Sale 174 — Total assets $ 3,043 $ 3,069 Reconciliation of reportable segment Adjusted EBITDA to Net Earnings (loss) consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Adjusted EBITDA ASC $ 57 $ 61 $ 89 $ 115 IMS 10 7 51 25 Corporate & Eliminations — 1 — — Total Adjusted EBITDA 67 69 140 140 Amortization of intangibles (2) (2) (4) (4) Depreciation (14) (12) (27) (24) Restructuring costs — — — — Interest expense (10) (9) (18) (18) Deal related transaction costs (8) — (10) (4) Acquisition and divestiture related expenses — — — — Foreign exchange — (1) — (1) COVID-19 response costs — (2) — (5) Non-service pension expense (1) — (1) — Other one-time non-operational events — — — — Income tax (provision) benefit (7) (11) (19) (23) Net earnings $ 25 $ 32 $ 61 $ 61 | Segment Information Operating segments represent components of an enterprise for which separate financial information is available that is regularly reviewed by the CODM in determining how to allocate resources and assess performance. Our Chief Executive Officer is our CODM and he uses a variety of measures to assess the performance of the Company as a whole, depending on the nature of the activity. The Company’s operating and reportable segments consist of ASC and IMS. All other operations, which consists primarily of DRS Corporate Headquarters and certain non-operating subsidiaries of the Company, are grouped in Corporate & Eliminations. We primarily use Adjusted EBITDA to manage the Company and allocate resources. Adjusted EBITDA of our business segments includes our net earnings before income taxes, amortization of acquired intangible assets, depreciation, restructuring costs, interest, deal related transaction costs , acquisition and divestiture related expenses, foreign exchange, COVID-19 response costs, non-service pension expenditures and other one-time non-operational events. Adjusted EBITDA is used to facilitate a comparison of the ordinary, ongoing and customary course of our operations on a consistent basis from period to period and provide an additional understanding of factors and trends affecting our business segments. This measure assists the CODM in assessing segment operating performance consistently over time without the impact of our capital structure, asset base and items outside the control of the management team and expenses that do not relate to our core operations. Certain information related to our segments for the years ended December 31, 2021, 2020 and 2019, is presented in the following tables. Consistent accounting policies have been applied by all segments within the Company, within all reporting periods. A description of our reportable segments as of December 31, 2021 and 2020 has been included in Note 1: Summary of Significant Accounting Policies . Transactions between segments generally are negotiated and accounted for under terms and conditions that are similar to other government and commercial contracts; however, these intercompany transactions are eliminated in consolidation. Total revenues and intersegment revenues by segment for the years ended December 31, 2021, 2020 and 2019 consists of the following: (Dollars in millions) 2021 2020 2019 ASC $ 1,940 $ 1,958 $ 1,810 IMS 959 834 917 Corporate & Eliminations (20) (14) (13) Total revenue $ 2,879 $ 2,778 $ 2,714 (Dollars in millions) 2021 2020 2019 ASC $ 19 $ 13 $ 12 IMS 1 1 1 Total intersegment revenue $ 20 $ 14 $ 13 Depreciation by segment as of December 31, 2021, 2020 and 2019 consists of the following: (Dollars in millions) 2021 2020 2019 ASC $ 33 $ 30 $ 29 IMS 16 14 13 Total depreciation $ 49 $ 44 $ 42 Total assets by segment as of December 31, 2021 and 2020 consist of the following: (Dollars in millions) 2021 2020 (1) ASC $ 1,545 $ 1,563 IMS 1,145 1,018 Corporate & Eliminations 379 375 Total assets $ 3,069 $ 2,956 __________________ (1) The 2020 amounts have been adjusted to reflect the correction of the allocation of certain assets within each segment. Reconciliation of reportable segment Adjusted EBITDA to Net Earnings (loss) consists of the following: (Dollars in millions) 2021 2020 2019 Adjusted EBITDA ASC $ 220 $ 213 $ 169 IMS 90 55 63 Corporate & Eliminations — — 2 Total Adjusted EBITDA $ 310 $ 268 $ 234 Amortization of intangibles (9) (9) (9) Depreciation (49) (44) (42) Restructuring costs (5) (12) (20) Interest expense (35) (64) (65) Deal related transaction costs (5) (9) — Acquisition and divestiture related expenses — — — Foreign exchange (1) (1) — COVID-19 response costs (6) (12) — Non-service pension expense — (5) (3) Other one-time non-operational events — — — Income tax provision (46) (27) (20) Net earnings $ 154 $ 85 $ 75 |
Subsequent Events
Subsequent Events | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Subsequent Events [Abstract] | ||
Subsequent Events | Subsequent Events The Company has evaluated subsequent events through August 15, 2022 , which represents the date on which the Consolidated Financial Statements were issued. On August 4, 2022, the Board of Directors approved a $396 million dividend to US Holding which was paid on August 5, 2022. The dividend was paid from proceeds received from the completion of the sale of GES on August 1, 2022, and the sale of ACC on July 8, 2022. | Subsequent Events The Company has evaluated subsequent events through August 2, 2022, which represents the date on which the Consolidated Financial Statements were issued. On March 21, 2022, the Company entered into a definitive agreement to sell its Global Enterprise Solutions (GES) business to SES Government Solutions, Inc., a wholly owned subsidiary of SES S.A., for $450 million in cash. GES, which was part of the ASC segment for all periods reported, provides commercial satellite communications to the U.S. Government and delivers satellite communications and security solutions to customers worldwide. SES S.A. has guaranteed the payment of the purchase price and performance of all other obligations of SES Government Solutions, Inc. under the agreement. The transaction was completed on August 1, 2022. In February 2022, the Leonardo DRS Board of Directors approved the strategic initiative to divest of the Company’s interest in AAC. On April 19, 2022, we entered into a definitive sales agreement to divest our share of our current equity investment in Advanced Acoustic Concepts (AAC) to Thales Defense & Security, Inc (TDSI), the minority partner in the Joint Venture. The sale was completed on July 8, 2022. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Summary of Significant Accounting Policies | Organization Leonardo DRS, Inc., together with its wholly owned subsidiaries (hereinafter, “DRS,” “the Company,” “us,” “our,” or “we”) is a supplier of defense electronics products, systems and military support services. The Company is controlled by Leonardo S.p.A (hereinafter, “Leonardo S.p.A.,” or “the Parent”), an Italian multi-national aerospace, defense and security company headquartered in Rome, Italy, through its direct sole ownership of Leonardo US Holding, Inc. (“US Holding”). US Holding is the direct and sole shareholder of the Company. DRS is a provider of defense products and technologies that are used across land, air, sea, space and cyber domains. Our diverse array of defense systems and solutions are offered to all branches of the U.S. military, major aerospace and defense prime contractors, government intelligence agencies, international military customers and industrial markets for deployment on a wide range of military platforms. We focus our capabilities in areas of critical importance to the U.S. military, such as sensing, electronic warfare (“EW”), network computing and communications, force protection and electrical power conversion and propulsion. These capabilities directly align with our two reportable segments: Advanced Sensing and Computing and Integrated Mission Systems. The U.S. Department of Defense (“DoD”) is our largest customer and accounts for approximately 78% and 82% of our total revenues as an end-user for the second quarter and first six months of 2022, respectively, and 85% for the second quarter and first six months of 2021. Specific international commercial market opportunities exist within these segments and make up approximately 22% and 18% of our total revenues for the second quarter and first six months of 2022, respectively, and 15% for the second quarter and first half of 2021. Our two reportable segments reflect the way performance is assessed and resources are allocated by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). Advanced Sensing and Computing (“ASC”) The ASC segment provides sensing and computing systems and subsystem solutions to the U.S. military and allied nations focused on solving the most complex threat dynamics facing our service men and women today. We provide world class sensing products in all warfighting domains along with the computation systems to provide situational understanding. Our technologies and products are deployed on nearly all military platforms across land, sea, air, cyberspace, and space on individual soldiers, ground vehicles, ships, aircraft, and satellites. We have market leading capabilities in electro-optic and infrared imaging, advanced lasers, electronic warfare and cyber, communications, and computing in these domains. Integrated Mission Systems (“IMS”) The IMS segment provides critical force protection, platform integration, transportation and logistics and power conversion and propulsion systems to the U.S. military and its allies. Our force protection systems provide much needed protection for our service members and military assets from evolving and proliferating threats and include advanced solutions for counter-unmanned aerial systems, short-range air defense systems and active protection systems on ground vehicles. Additionally, we provide power conversion and propulsion systems for the U.S. Navy’s top priority shipbuilding programs, building on our legacy of providing power components and systems for nearly all naval combat vessels for three decades, positioning us to continue as a leading provider of electrical ship propulsion systems and components for the U.S. Navy and its allies. Other The Company separately presents the unallocable costs associated with corporate functions and certain non-operating subsidiaries of the Company as Corporate & Eliminations. See Note 15 : Segment Information for further information regarding our business segments. B. Basis of presentation The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of DRS, its wholly owned subsidiaries and its controlling interests. Interests in joint ventures that are controlled by the Company, or for which the Company is otherwise deemed to be the primary beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts significant influence, the Company applies the equity method of accounting. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation. Interim Financial Statements . The unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These rules and regulations permit some of the information and footnote disclosures included in financial statements prepared in accordance with U.S. GAAP to be condensed or omitted. These unaudited Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements as of and for the year ended December 31, 2021 filed as Exhibit 99.1 to the Current Report on Form 8-K filed on August 2, 2022. C. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant of these estimates and assumptions relate to the recognition of contract revenues and estimated costs to complete contracts in process, recoverability of reported amounts of goodwill, long-lived assets and intangible assets, valuation of pensions and other postretirement benefits, the valuation of deferred tax assets and liabilities and the valuation of unrecognized tax benefits. Actual results could differ from these estimates. D. Revenue Recognition Our revenues consist of sales of products (tangible goods) and sales of services to customers. We recognize the majority of our revenue from contracts with customers using an over time, cost-to-cost method of accounting. On certain other contracts, primarily time and material (“T&M”) and cost-plus contracts, revenue is recognized using the right-to-invoice practical expedient as we are contractually able to bill our customer based on control transferred to the customer. See Note 2 . Revenue from Contracts with Customers for additional information regarding revenue recognition. E. Cost of Revenues Cost of revenues includes materials, labor and overhead costs incurred in the manufacturing, design, and provision of products and services sold in the period as well as warranty costs. Material costs include raw materials, purchased components and sub-assemblies, outside processing and inbound freight costs. Labor and overhead costs consist of direct and indirect manufacturing costs, including wages and fringe benefits, operating supplies, depreciation and amortization, occupancy costs, and purchasing, receiving and inspection costs. F. Research and Development Expenses We conduct research and development (“R&D”) activities using our own funds (referred to as company-funded R&D or independent research and development (“IR&D”)) and under contractual arrangements with our customers (referred to as customer-funded R&D) to enhance existing products and services and to develop future products, solutions, and technologies. R&D costs include basic research, applied research, concept formulation studies, design, development, and related test activities. IR&D costs are allocated to customer contracts as part of the general and administrative overhead costs and generally recoverable on our customer contracts with the U.S. Government. Customer-funded R&D costs are charged directly to the related customer contract. Substantially all R&D costs are charged to cost of revenues as incurred. G. Foreign Currency Significant transactions in foreign currencies are translated into U.S. dollars at the approximate prevailing rate at the time of the transaction. Foreign exchange transaction gains and losses in the second quarter and first six months of 2022 and 2021 were immaterial to the Company's results of operations. The operations of the Company's foreign subsidiaries are translated from the local (functional) currencies into U.S. dollars using weighted average rates of exchange during each monthly period. The rates of exchange at each balance sheet date are used for translating certain balance sheet accounts and gains or losses resulting from these translation adjustments are included in the accompanying Consolidated Balance Sheets as a component of other comprehensive earnings. H. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits with banks or other short-term, highly liquid investments with original maturities of three months or less. I. Accounts Receivable Accounts receivable consist of amounts billed and currently due from customers. We maintain an allowance recorded in the Allowance for Credit Losses account that is estimated and recorded utilizing relevant information about past events, including historical experience, current conditions and a reasonable and supportable forecast that affects the collectability of the related financial asset. See Note 3 : Accounts Receivable for additional information regarding accounts receivable. J. Inventories Inventories are recorded at the lower of cost (determined by either actual, weighted average or first-in, first-out methods) or net realizable value, and include direct production costs as well as indirect costs, such as factory overhead. The net realizable value is calculated as the expected sales price in the course of normal operations net of estimated costs to finish and sell the goods. See Note 4 : Inventories for additional information regarding inventories. K. Property, Plant and Equipment Property, plant and equipment is carried at cost less accumulated depreciation. Depreciation is calculated on the straight-line method. The estimated useful lives of plant, machinery and equipment and building and building improvements generally range from 3 to 10 years and 15 to 40 years, respectively. Leasehold improvements are amortized over the shorter of the estimated useful life of the improvements or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the Consolidated Balance Sheets, and the net gain or loss is included in the determination of net earnings. Maintenance and repairs are charged to operations as incurred and renewals and improvements are capitalized. See Note 5 : Property, Plant and Equipment for additional information regarding property, plant and equipment. L. Goodwill Goodwill is assigned to reporting units and is reviewed for impairment at the reporting unit level on an annual basis, or whenever changes in circumstances indicate that the carrying amount may not be recoverable. A reporting unit is an operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by the segment manager. Two or more components of an operating segment may be aggregated and deemed a single reporting unit if the components have similar economic characteristics. Based upon the aggregation criteria the Company concluded it had seven reporting units at both June 30, 2022 and December 31, 2021. The annual impairment test is conducted as of December 31. The Company did not identify any triggering events during the six months ended June 30, 2022 or June 30, 2021. See Note 7 : Goodwill for additional information regarding goodwill. M. Long-Lived Assets and Acquired Identifiable Intangible Assets Identifiable intangible assets represent assets acquired as part of the Company's business acquisitions and include customer and program/contract-related assets. The values assigned to acquired identifiable intangible assets are determined as of the date of acquisition based on estimates and judgments regarding expectations for the estimated future after-tax cash flows from those assets over their lives, including the probability of expected future contract renewals and revenues, all of which are discounted to present value. The Company assesses the recoverability of the carrying value of its long-lived assets and intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable. If there are any indicators of impairment present, the Company then evaluates the recoverability of the potentially impaired long-lived assets and acquired identifiable intangible assets based upon expectations of undiscounted net cash flows from such assets. If the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset or asset group, a loss is recognized for the difference between the estimated fair value and the carrying amount of the assets. Assets to be disposed of, including those of discontinued operations, are reported at the lower of the carrying amount or fair value, less the costs to sell. See Note 5 : Property, Plant and Equipment and Note 8 : Intangible Assets for additional information regarding long-lived assets and intangible assets. N. Derivative Financial Instruments The Company does not use derivative financial instruments for trading purposes. All derivative instruments are carried on the Consolidated Balance Sheets as either assets or liabilities at fair value. The classification of gains and losses resulting from changes in the fair values of derivatives depends on the intended use of the derivative and its resultant designation. The Company had no significant derivative or hedging instruments for the periods presented. O. Pension and Other Postretirement Benefits The obligations for the Company's pension plans and postretirement benefit plans and the related annual costs of employee benefits are calculated based on several long-term assumptions, including discount rates for participant benefit liabilities, rates of return on plan assets, expected annual rates of salary increases for employee participants in the case of pension plans and expected annual increases in the costs of medical and other health care benefits in the case of postretirement benefit plans. These long-term assumptions are subject to revision based on changes in interest rates, financial market conditions, expected versus actual returns on plan assets, participant mortality rates and other actuarial assumptions, including future rates of salary increases, benefit formulas and levels, and rates of increase in the costs of benefits. Changes in these assumptions, if significant, can materially affect the amount of annual net periodic benefit costs recognized in the Company's results of operations from one year to the next, the liabilities for the pension plans and postretirement benefit plans and the Company's annual cash requirements to fund these plans. See Note 11: Pension and Other Postretirement Benefits for further information regarding our pension and postretirement plans. P. Income Taxes We and US Holding have entered into a Tax Allocation Agreement (“Tax Allocation Agreement”), dated as of November 16, 2020, with members of an affiliated group, as defined in Section 1504(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Tax Code”), members of one or more consolidated, combined, unitary or similar state tax groups and additional parties who are part of an “expanded affiliated group” for certain tax purposes. The agreement provides for the method of computing and allocating the consolidated U.S. federal tax liability of the affiliated group among its members and of allocating any state group tax liabilities among the state members for the taxable year ending December 31, 2020 and each subsequent year in which the parties are members of a group (whether federal or state). The agreement also provides for reimbursement of US Holding and/or DRS for payment of such tax liabilities, for compensation of any member for use of its “net operating loss” or “tax credits” in arriving at such tax liabilities and the allocation and payment of any refund arising from a carryback of net operating losses or tax credits from subsequent taxable years. Under the agreement, the parties have agreed to calculate and allocate their respective tax liabilities and other tax attributes for taxable years beginning with the first consolidated taxable year that included DRS (i.e., the taxable year ended December 31, 2008) as if the agreement was then in effect. We calculate the provision for incomes taxes during interim periods by applying an estimate of our annual effective tax rate for the full year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items). The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Income taxes as presented attribute deferred income taxes of US Holding to DRS in a manner that is systematic, rational and consistent with the asset and liability method and the governing Tax Allocation Agreement which allocates the tax liability amongst the entities, including DRS. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of DRS’ assets and liabilities and are adjusted for changes in tax rates and tax laws when such changes are enacted. In general, the taxable income of DRS is included in the consolidated U.S. federal and state tax returns of US Holding. Where applicable, US Holding’s current portion of U.S. federal income taxes payable were offset against DRS’ net operating loss carryforwards in the period the related tax expense was recorded. Consequently, our net operating loss carryforwards are deemed to have been settled with US Holding in each year in an amount commensurate with the carrying value of the tax effected net operating loss utilized. If management determines that some portion or all of a deferred tax asset is not “more likely than not” to be realized, a valuation allowance is recorded as a component of the income tax provision to reduce the deferred tax asset to the amounts expected to be realized. In determining whether the Company’s deferred tax assets are realizable, management considers all evidence, both positive and negative, including the history of financial reporting earnings, existing taxable temporary differences and their projected reversals, as well as projected future income and tax planning strategies. We believe it is more likely than not that we will generate sufficient taxable income in future periods to realize our deferred tax assets, subject to the valuation allowances recognized. The Company assesses its tax positions for all periods open to examination by tax authorities based on the latest available information. Those positions are evaluated to determine whether they will more likely than not be sustained upon examination by the relevant taxing authorities. Liabilities for unrecognized tax benefits are measured based on the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. These unrecognized tax benefits are recorded as a component of income tax expense. Interest and penalties related to unrecognized tax benefits are not material. See Note 9 : Income Taxes for additional information regarding income taxes. Q. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during each period. The computation of diluted EPS includes the dilutive effect of outstanding stock-based compensation awards, only in periods in which such effect would have been dilutive for the period. In February 2021, the Company completed a forward stock split of 1,450,000 - for- 1 share of common stock. The consolidated financial statements have been adjusted to reflect the forward stock split for all periods presented. There were 100 shares and 145 million basic and diluted common shares outstanding before and after the forward stock split, respectively, for all periods presented. R. Fair Value Measurements Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant on the measurement date. We are required to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value, and to utilize a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three hierarchical levels used to measure fair value are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are directly or indirectly observable. Level 3 — Significant inputs to the valuation model are unobservable. In certain instances, fair value is determined through information obtained from third parties using the latest available market data. In obtaining such data from third parties, we have evaluated the methodologies used to develop the estimate of fair value in order to assess whether such valuations are representative of fair value. The Company categorizes plan assets for disclosure purposes in accordance with this fair value hierarchy. Certain plan investments are measured at fair value using the net asset value (“NAV”) per share (or its equivalent) practical expedient and are therefore not categorized as Level 1, 2, or 3. NAV is defined as the total value of the fund divided by the number of the fund’s shares outstanding. See Note 12: Pension and Other Postretirement Benefits for further information regarding our pension and postretirement plans. S. Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities. Financial instruments are reported in the Consolidated Balance Sheets at carrying value, which other than the 7.5% Term loan due November 30, 2023, approximate fair value. See Note 11: Debt for further information regarding our debt. T. Acquisitions, Investments and Variable Interest Entities Acquisitions Our consolidated financial statements include the operations of acquired businesses from the date of acquisition. We account for acquired businesses using the acquisition method of accounting, which requires that any assets acquired and liabilities assumed be measured at their respective fair values on the acquisition date. The accounting for business combinations requires the Company to make significant judgments and estimates. Any excess of the fair value of consideration transferred over the assigned values of the net assets acquired is recognized as goodwill. As previously announced, on June 21, 2022, we entered into the Agreement and Plan of Merger, dated as of June 21, 2022 (the “merger agreement”), by and among the Company, RADA Electronic Industries Ltd (“RADA”) and Blackstart Ltd, a company organized under the laws of the State of Israel and a wholly owned subsidiary of DRS (“Merger Sub”). Upon the terms and subject to the conditions of the merger agreement, and in accordance with the Companies Law, 5759-1999, of the State of Israel, at the effective time of the merger contemplated by the merger agreement (the “merger”), Merger Sub will be merged with and into RADA, with RADA as the surviving company of the merger and thereby becoming a wholly owned subsidiary of DRS. At the effective time of the merger (the “effective time”), each ordinary share of RADA, par value New Israeli Shekel 0.03 per share (“RADA shares”), issued and outstanding immediately prior to the effective time will be converted into and become exchangeable for one share of common stock of DRS, par value $0.01 per share (“DRS common stock”). Immediately prior to the effective time, the shares of DRS common stock held by US Holding, the current sole stockholder of DRS, will be split (rounded up to the nearest whole share), as necessary, such that, immediately following the effective time and the issuance of the shares of DRS common stock to holders of RADA shares and the treatment of options to purchase RADA shares: (A) US Holding will hold 80.5% of the issued and outstanding shares of DRS common stock on a fully diluted basis (with US Holding’s ownership percentage including 50% of any awards or other equity interests that DRS may issue pursuant to entitlements under any grants of certain one-time special awards of restricted stock units (the “One-Time Awards”) and the foregoing percentage calculation excluding any awards or other equity interests that DRS may issue pursuant to entitlements under the DRS’s long term incentive plan and 50% of any awards or other equity interests that DRS may issue pursuant to entitlements in connection with any grants of One-Time Awards, and such foregoing percentage will assume a reference price for RADA options equal to the volume-weighted average price of the RADA shares on the NASDAQ for the ten trading days immediately prior to the closing date); and (B) the holders of RADA shares, RADA vested options and RADA unvested options (or DRS options issued pursuant to the provisions of the merger agreement) will hold or have entitlements to 19.5% of the issued and outstanding shares of DRS common stock on a fully diluted basis (the foregoing percentage calculation excluding any awards or other equity interests that DRS may issue pursuant to entitlements under the DRS long-term incentive plan or the issuance of any One-Time Awards). Each of DRS’s and RADA’s obligation to consummate the merger is subject to the satisfaction or waiver of a number of conditions specified in the merger agreement. The merger is expected to close in the fourth quarter of 2022. On August 3, 2022, we filed a registration statement on Form S-4 with the SEC for the shares of DRS common stock to be issued in the merger, which has not yet been declared effective by the SEC. Investments Investments where we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other noncurrent assets on our Consolidated Balance Sheets. Significant influence typically exists if we have a 20% to 50% ownership interest in the investee. Under this method of accounting, our share of the net earnings or losses of the investee is included in operating profit in other income, net on our Consolidated Statements of Earnings since the activities of the investee are closely aligned with the operations of the business segment holding the investment. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is therefore recorded during the current period. The Company’s cost method investment consists of an investment in a private company in which we do not have the ability to exercise significant influence over its operating and financial activities. Management evaluates this investment for possible impairment quarterly. Variable Interest Entities The Company occasionally forms joint ventures and/or enters into arrangements with special purpose limited liability companies for the purpose of bidding and executing on specific projects. The Company analyzes each such arrangement to determine whether it represents a variable interest entity (“VIE”). If the arrangement is determined to be a VIE, the Company assesses whether it is the primary beneficiary of the VIE and if it is, consequently required to consolidate the VIE. The Company did not have any investment in VIEs for the periods presented. Divestitures / Held for Sale On March 21, 2022, the Company entered into a definitive agreement to sell its Global Enterprise Solutions (“GES”) business to SES Government Solutions, Inc., a wholly-owned subsidiary of SES S.A., for $450 million in cash. The transaction was completed on August 1, 2022 and resulted in proceeds of $427 million. We are in the process of finalizing the accounting for the transaction and will report the gain on the transaction in the third quarter. GES, which was part of the ASC segment, provides commercial satellite communications to the U.S. Government and delivers satellite communications and security solutions to customers worldwide. SES S.A. has guaranteed the payment of the purchase price and performance of all other obligations of SES Government Solutions, Inc. under the agreement. As of June 30, 2022, the assets and liabilities related to GES were reported on the Consolidated Balance Sheets as Held for Sale. In February 2022, the Company’s Board of Directors approved the strategic initiative to divest of the Company’s interest in Advanced Acoustic Concepts (“AAC”). On April 19, 2022, we entered into a definitive sales agreement to divest our share of our equity investment in AAC for $56 million to Thales Defense & Security, Inc., the minority partner in the joint venture. The transaction was completed on July 8, 2022 and resulted in proceeds of $56 million. We are in the process of finalizing the accounting for the transaction and will report the gain on the transaction in the third quarter. As of June 30, 2022, the Investment was reported as Held for Sale. The proceeds generated from the GES and AAC divestitures resulted in a $396 million dividend to Leonardo US Holdings, our sole shareholder. The $396 million represents the proceeds generated net of our costs to sell and estimated tax obligations. The dividend was issued on August 5, 2022 | Summary of Significant Accounting Policies A. Organization Leonardo DRS, Inc., together with its wholly owned subsidiaries (hereinafter, “DRS”, “the Company”, “us”, “our”, or “we”) is a supplier of defense electronics products, systems and military support services. The Company is controlled by Leonardo S.p.A (hereinafter, “Leonardo S.p.A.”, “the Parent”), an Italian multi-national aerospace, defense and security company headquartered in Rome, Italy, through its direct sole ownership of Leonardo US Holding, Inc. (“US Holding”). US Holding is the direct and sole shareholder of the Company. DRS is a provider of defense products and technologies that are used across land, air, sea, space and cyber domains. Our diverse array of defense systems and solutions are offered to all branches of the U.S. military, major aerospace and defense prime contractors, government intelligence agencies, international military customers and industrial markets for deployment on a wide range of military platforms. We focus our capabilities in areas of critical importance to the U.S. military, such as sensing, electronic warfare (“EW”), network computing and communications, force protection and electrical power conversion and propulsion. These capabilities directly align with our two reportable segments: Advanced Sensing and Computing and Integrated Mission Systems. The U.S. Department of Defense (“DoD”) is our largest customer and accounts for approximately 86% and 84% of our total revenues as an end-user for the years ended December 31, 2021 and 2020, respectively. Specific international and commercial market opportunities exist within these segments and comprise approximately 14% and 16% of our total revenues for the years ended December 31, 2021 and 2020. Our two reportable segments reflect the way performance is assessed and resources are allocated by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). Advanced Sensing and Computing (“ASC”) The ASC segment provides sensing and computing systems and subsystem solutions to the U.S. military and allied nations focused on solving the most complex threat dynamics facing our service men and women today. We provide world class sensing products in all warfighting domains along with the computation systems to provide situational understanding. Our technologies and products are deployed on nearly all military platforms across land, sea, air, cyberspace, and space on individual soldiers, ground vehicles, ships, aircraft, and satellites. We have market leading capabilities in electro-optic and infrared imaging, advanced lasers, electronic warfare and cyber, communications, and computing in these domains. Integrated Mission Systems (“IMS”) The IMS segment provides critical force protection, platform integration, transportation and logistics and power conversion and propulsion systems to the U.S. military and its allies. Our force protection systems provide much needed protection for our service members and military assets from evolving and proliferating threats and include advanced solutions for counter-unmanned aerial systems, short-range air defense systems and active protection systems on ground vehicles. Additionally, we provide power conversion and propulsion systems for the U.S. Navy’s top priority shipbuilding programs, building on our legacy of providing power components and systems for nearly all naval combat vessels for three decades, positioning us to continue as a leading provider of electrical ship propulsion systems and components for the U.S. Navy and its allies. Other The Company separately presents the unallocable costs associated with corporate functions and certain non-operating subsidiaries of the Company as Corporate & Eliminations. See Note 17 : Segment Information for further information regarding our business segments. B. Basis of presentation The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of DRS, its wholly owned subsidiaries and its controlling interests. Interests in joint ventures that are controlled by the Company, or for which the Company is otherwise deemed to be the primary beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts significant influence, the Company applies the equity method of accounting. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation. C. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant of these estimates and assumptions relate to the recognition of contract revenues and estimated costs to complete contracts in process, recoverability of reported amounts of goodwill, long-lived assets and intangible assets, valuation of pensions and other postretirement benefits, the valuation of deferred tax assets and liabilities and the valuation of unrecognized tax benefits. Actual results could differ from these estimates. D. Revenue Recognition Our revenues consist of sales of products (tangible goods) and sales of services to customers. We recognize the majority of our revenue from contracts with customers using an over time, cost-to-cost method of accounting. On certain other contracts, primarily time and material (“T&M”) and cost-plus contracts, revenue is recognized using the right-to-invoice practical expedient as we are contractually able to bill our customer based on control transferred to the customer. See Note 2 : Revenue from Contracts with Customers for additional information regarding revenue recognition. E. Cost of Revenues Cost of revenues includes materials, labor and overhead costs incurred in the manufacturing, design, and provision of products and services sold in the period as well as warranty costs. Material costs include raw materials, purchased components and sub-assemblies, outside processing and inbound freight costs. Labor and overhead costs consist of direct and indirect manufacturing costs, including wages and fringe benefits, operating supplies, depreciation and amortization, occupancy costs, and purchasing, receiving and inspection costs. F. Research and Development Expenses We conduct research and development (“R&D”) activities using our own funds (referred to as company-funded R&D or independent research and development (“IR&D”)) and under contractual arrangements with our customers (referred to as customer-funded R&D) to enhance existing products and services and to develop future technologies. R&D costs include basic research, applied research, concept formulation studies, design, development, and related test activities. IR&D costs are allocated to customer contracts as part of the general and administrative overhead costs and generally recoverable on our customer contracts with the U.S. Government. Customer-funded R&D costs are charged directly to the related customer contract. Substantially all R&D costs are charged to cost of revenues as incurred. Company-funded R&D costs charged to cost of revenues totaled $48 million, $41 million and $31 million in 2021, 2020 and 2019, respectively. G. Foreign Currency Significant transactions in foreign currencies are translated into U.S. dollars at the approximate prevailing rate at the time of the transaction. Foreign exchange transaction gains and losses in 2021, 2020 and 2019 were immaterial to the Company's results of operations. The operations of the Company's foreign subsidiaries are translated from the local (functional) currencies into U.S. dollars using weighted average rates of exchange during each monthly period. The rates of exchange at each balance sheet date are used for translating certain balance sheet accounts and gains or losses resulting from these translation adjustments are included in the accompanying Consolidated Balance Sheet as a component of other comprehensive income. H. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits with banks or other short-term, highly liquid investments with original maturities of three months or less. I. Accounts Receivable Accounts receivable consist of amounts billed and currently due from customers. When events or conditions indicate that amounts outstanding from customers may become uncollectible, an allowance is estimated and recorded. See Note 3 : Accounts Receivable for additional information regarding accounts receivable. J. Inventories Inventories are recorded at the lower of cost (determined by either actual, weighted average or first-in, first-out methods) or net realizable value, and include direct production costs as well as indirect costs, such as factory overhead. The net realizable value is calculated as the expected sales price in the course of normal operations net of estimated costs to finish and sell the goods. See Note 4 : Inventories for additional information regarding inventories. K. Property, Plant and Equipment Property, plant and equipment is carried at cost less accumulated depreciation. Depreciation is calculated on the straight-line method. The estimated useful lives of plant, machinery and equipment and building and building improvements generally range from 3 to 10 years and 15 to 40 years, respectively. Leasehold improvements are amortized over the shorter of the estimated useful life of the improvements or the remaining life of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the Consolidated Balance Sheet, and the net gain or loss is included in the determination of net earnings. Maintenance and repairs are charged to operations as incurred and renewals and improvements are capitalized. See Note 5 : Property, Plant and Equipment for additional information regarding property, plant and equipment. L. Goodwill Goodwill represents the excess purchase price paid to acquire a business over the fair value of net assets acquired. Goodwill is assigned to reporting units and is reviewed for impairment at the reporting unit level on an annual basis, or whenever changes in circumstances indicate that the carrying amount may not be recoverable. A reporting unit is an operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by the segment manager. Two or more components of an operating segment may be aggregated and deemed a single reporting unit if the components have similar economic characteristics. Based upon the aggregation criteria the Company concluded it had seven reporting units at both December 31, 2021 and 2020. The annual impairment test is typically performed after completion of the Company's annual financial operating plan, which occurs as of December 31. The Company uses quantitative assessments and qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the optional qualitative assessment is performed (Step 0) and the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, an additional quantitative fair value test (Step 1) is performed. When performing the Step 1 goodwill impairment test, we compare the fair values of each of our reporting units to their respective carrying values. In order to compute the fair value of our reporting units, we primarily use the income approach based on the discounted cash flows that each reporting unit expects to generate in the future, consistent with our operating plans. Determining the fair value of our reporting units requires significant judgments, including the timing and amount of future cash flows, long-term growth rates, determination of the weighted-average cost of capital and terminal value assumptions. If, based on the quantitative fair value test, the Company concludes that the carrying value of the reporting unit exceeds its fair value, the Company will recognize a goodwill impairment loss in an amount equal to that excess. The Company completed impairment tests as of December 31, 2021, 2020 and 2019 and no adjustment to the carrying value of goodwill was deemed to be necessary. See Note 7 : Goodwill for additional information regarding goodwill. M. Long-Lived Assets and Acquired Identifiable Intangible Assets Identifiable intangible assets represent assets acquired as part of the Company's business acquisitions and include customer and program/contract-related assets. The values assigned to acquired identifiable intangible assets are determined as of the date of acquisition based on estimates and judgments regarding expectations for the estimated future after-tax cash flows from those assets over their lives, including the probability of expected future contract renewals and revenues, all of which are discounted to present value. The Company assesses the recoverability of the carrying value of its long-lived assets and intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable. If there are any indicators of impairment present, the Company then evaluates the recoverability of the potentially impaired long-lived assets and acquired identifiable intangible assets based upon expectations of undiscounted net cash flows from such assets. If the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset or asset group, a loss is recognized for the difference between the estimated fair value and the carrying amount of the assets. Assets to be disposed of, including those of discontinued operations, are reported at the lower of the carrying amount or fair value, less the costs to sell. See Note 5 : Property, Plant and Equipment and Note 8 : Intangible Assets for additional information regarding long-lived assets and intangible assets. N. Derivative Financial Instruments The Company does not use derivative financial instruments for trading purposes. All derivative instruments are carried on the Consolidated Balance Sheet as either assets or liabilities at fair value. The classification of gains and losses resulting from changes in the fair values of derivatives depends on the intended use of the derivative and its resultant designation. The Company had no significant derivative or hedging instruments during the years ended December 31, 2021, 2020 or 2019. O. Pension and Other Postretirement Benefits The obligations for the Company's pension plans and postretirement benefit plans and the related annual costs of employee benefits are calculated based on several long-term assumptions, including discount rates for employee benefit liabilities, rates of return on plan assets, expected annual rates of salary increases for employee participants in the case of pension plans and expected annual increases in the costs of medical and other health care benefits in the case of postretirement benefit plans. These long-term assumptions are subject to revision based on changes in interest rates, financial market conditions, expected versus actual returns on plan assets, participant mortality rates and other actuarial assumptions, including future rates of salary increases, benefit formulas and levels, and rates of increase in the costs of benefits. Changes in these assumptions, if significant, can materially affect the amount of annual net periodic benefit costs recognized in the Company's results of operations from one year to the next, the liabilities for the pension plans and postretirement benefit plans and the Company's annual cash requirements to fund these plans. See Note 12. Pension and Other Postretirement Benefits for further information regarding our pension and postretirement plans. P. Income Taxes We and US Holding have entered into a Tax Allocation Agreement (“Tax Allocation Agreement”), dated as of November 16, 2020, with members of an affiliated group, as defined in Section 1504(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Tax Code”), members of one or more consolidated, combined, unitary or similar state tax groups and additional parties who are part of an “expanded affiliated group” for certain tax purposes. The agreement provides for the method of computing and allocating the consolidated U.S. federal tax liability of the affiliated group among its members and of allocating any state group tax liabilities among the state members for the taxable year ending December 31, 2021 and each subsequent year in which the parties are members of a group (whether federal or state). The agreement also provides for reimbursement of US Holding and/or DRS for payment of such tax liabilities, for compensation of any member for use of its “net operating loss” or “tax credits” in arriving at such tax liabilities and the allocation and payment of any refund arising from a carryback of net operating losses or tax credits from subsequent taxable years. Under the agreement, the parties have agreed to calculate and allocate their respective tax liabilities and other tax attributes for taxable years beginning with the first consolidated taxable year that included DRS (i.e., the taxable year ended December 31, 2008) as if the agreement was then in effect. The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Income taxes as presented attribute deferred income taxes of US Holding to DRS in a manner that is systematic, rational and consistent with the asset and liability method and the governing Tax Allocation Agreement which allocates the tax liability amongst the entities, including DRS. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of DRS’s assets and liabilities and are adjusted for changes in tax rates and tax laws when such changes are enacted. In general, the taxable income of DRS is included in the consolidated U.S. federal and state tax returns of US Holding. Where applicable, US Holding’s current portion of U.S. federal income taxes payable were offset against DRS’s net operating loss carryforwards in the period the related tax expense was recorded. Consequently, our net operating loss carryforwards are deemed to have been settled with US Holding in each year in an amount commensurate with the carrying value of the tax effected net operating loss utilized. If management determines that some portion or all of a deferred tax asset is not “more likely than not” to be realized, a valuation allowance is recorded as a component of the income tax provision to reduce the deferred tax asset to the amounts expected to be realized. In determining whether the Company’s deferred tax assets are realizable, management considers all evidence, both positive and negative, including the history of financial reporting earnings, existing taxable temporary differences and their projected reversals, as well as projected future income and tax planning strategies. We believe it is more likely than not that we will generate sufficient taxable income in future periods to realize our deferred tax assets, subject to the valuation allowances recognized. The Company assesses its tax positions for all periods open to examination by tax authorities based on the latest available information. Those positions are evaluated to determine whether they will more likely than not be sustained upon examination by the relevant taxing authorities. Liabilities for unrecognized tax benefits are measured based on the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. These unrecognized tax benefits are recorded as a component of income tax expense. Interest and penalties related to unrecognized tax benefits are not material. See Note 10 : Income Taxes for additional information regarding income taxes. Q. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during each period. The computation of diluted EPS includes the dilutive effect of outstanding stock-based compensation awards, only in periods in which such effect would have been dilutive for the period. In February 2021, the Company completed a forward stock split of 1-for-1,450,000 shares of common stock. The consolidated financial statements have been retroactively adjusted as necessary to reflect the forward stock split for all periods presented. There were 100 shares and 145.00 million basic and diluted common shares outstanding before and after the forward stock split, respectively, for all periods presented. R. Fair Value Measurements Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant on the measurement date. We are required to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value, and to utilize a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three hierarchical levels used to measure fair value are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are directly or indirectly observable. Level 3 — Significant inputs to the valuation model are unobservable. In certain instances, fair value is determined through information obtained from third parties using the latest available market data. In obtaining such data from third parties, we have evaluated the methodologies used to develop the estimate of fair value in order to assess whether such valuations are representative of fair value. The Company categorizes plan assets for disclosure purposes in accordance with this fair value hierarchy. Certain plan investments are measured at fair value using the net asset value (“NAV”) per share (or its equivalent) practical expedient and are therefore not categorized as Level 1, 2, or 3. NAV is defined as the total value of the fund divided by the number of the fund’s shares outstanding. See Note 12: Pension and Other Postretirement Benefits for further information regarding our pension and postretirement plans. S. Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities. Financial instruments are reported in the Consolidated Balance Sheet at carrying value, which other than the 7.5% Term loan due November 30, 2023, approximate fair value. See Note 11: Debt for further information regarding our debt. T. Acquisitions, Investments, Variable Interest Entities and Divestitures Acquisitions Our consolidated financial statements include the operations of acquired businesses from the date of acquisition. We account for acquired businesses using the acquisition method of accounting, which requires that any assets acquired and liabilities assumed be measured at their respective fair values on the acquisition date. The accounting for business combinations requires the Company to make significant judgments and estimates. Any excess of the fair value of consideration transferred over the assigned values of the net assets acquired is recognized as goodwill. During the third quarter of 2021 the Company acquired substantially all the assets of Ascendant Engineering Solutions (AES), an advanced gimbal producer located in Austin, TX. The purchase closed on July 28, 2021 for a purchase price of $11 million with an additional $5 million payable upon the achievement of certain financial and operational targets. AES designs, develops and manufactures high-performance, stabilized, multi-sensor gimbal systems for the growing market of Group 1, 2 and 3 unmanned aerial systems (UAS) serving several branches of the DoD. The company is focused on gimbal payload opportunities in strategic U.S. government programs including those intended to counter current and next-generation anti-access and area-denial systems. We believe this acquisition enables the integration of our own Electro-Optical and Infrared systems with the gimbals of AES and is a strategic investment, offering an integrated solution for our customers in the market for lightweight military platforms including small unmanned aerial systems. The acquisition has been accounted for as a business combination and has been integrated into our Advanced Sensing and Computing segment. Investments Investments where we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other noncurrent assets on our Consolidated Balance Sheet. Significant influence typically exists if we have a 20% to 50% ownership interest in the investee. Under this method of accounting, our share of the net earnings or losses of the investee is included in operating profit in other income, net on our Consolidated Statements of Earnings (Loss) since the activities of the investee are closely aligned with the operations of the business segment holding the investment. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is therefore recorded during the current period. See Note 13: Equity Method Investments for further information regarding our equity method investments. The Company’s cost method investment consists of an investment in a private company in which we do not have the ability to exercise significant influence over its operating and financial activities. Management evaluates this investment for possible impairment quarterly. Variable Interest Entities The Company occasionally forms joint ventures and/or enters into arrangements with special purpose limited liability companies for the purpose of bidding and executing on specific projects. The Company analyzes each such arrangement to determine whether it represents a variable interest entity (“VIE”). If the arrangement is determined to be a VIE, the Company assesses whether it is the primary beneficiary of the VIE and if it is, consequently required to consolidate the VIE. The Company did not have any investment in VIEs as of December 31, 2021 or 2020. U. New Accounting Pronouncements Recently Adopted Accounting Pronouncements Changes to Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans . Specifically, the amendment removes disclosure requirements for amounts classified in accumulated other comprehensive income expected to be recognized over the next year and the effects of a one-percentage-point change in the assumed health care cost trend rate on service cost, interest cost and the benefit obligation for postretirement benefits. The amendment also requires additional disclosure around weighted-average interest crediting rates for cash balance plans, a narrative description of the reasons for significant gains and losses, and an explanation of any other significant changes in the benefit obligation or plan assets. The adoption of the standard as of January 1, 2021 did not have a material impact on our consolidated financial statements. Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes which removes certain exceptions to the general principles in Topic 740 for: recognizing deferred taxes for investments, performing intra-period allocations and calculating taxes in interim periods. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The standard is effective for fiscal years beginning after December 15, 2020. The adoption of the standard as of January 1, 2021 did not have a material impact on our consolidated financial statements. Accounting Guidance Issued but Not Yet Adopted as of December 31, 2021: Government Assistance In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance which requires certain disclosures to be included with respect to the types of assistance, the accounting for the assistance as well as the effect on the financial statements of the assistance. The purposes of the ASU is to increase transparency and eliminate disparity of accounting for and reporting of the receipt of government assistance. The standard is effective for fiscal periods beginning after December 15, 2021. The Company does not expect the adoption to have a material impact on our disclosures. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Revenue from Contracts with Customers | Revenue from Contracts with Customers The Company recognizes revenue for each separately identifiable performance obligation in a contract representing an obligation to transfer a distinct good or service to a customer. In most cases, goods and services provided under the Company’s contracts are accounted for as single performance obligations due to the complex and integrated nature of our products and services. These contracts generally require significant integration of a group of goods and/or services to deliver a combined output. In some contracts, the Company provides multiple distinct goods or services to a customer. In those cases, the Company accounts for the distinct contract deliverables as separate performance obligations and allocates the transaction price to each performance obligation based on its relative standalone selling price, which is generally estimated using cost plus a reasonable margin. We classify revenues as products or services on our Consolidated Statements of Earnings based on the predominant attributes of the performance obligations. While the Company provides warranties on certain contracts, we typically do not provide for services beyond standard assurances and therefore do not consider warranties to be separate performance obligations. Typically we enter into three types of contracts: fixed-price contracts, cost-plus contracts and T&M contracts (cost-plus contracts and T&M contracts are aggregated below as flexibly priced contracts). The majority of our total revenues are derived from fixed-price contracts; refer to the revenue disaggregation disclosures that follow. For fixed-price contracts, customers agree to pay a fixed amount, negotiated in advanced for a specified scope of work. For cost-plus contracts typically we are reimbursed for allowable or otherwise defined total costs (defined as cost of revenues plus allowable general and administrative expenses) incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. T&M contracts provide for reimbursement of labor hours expended at a contractual fixed labor rate per hour, plus the actual costs of material and other direct non-labor costs. The fixed labor rates on T&M contracts include amounts for the cost of direct labor, indirect contract costs and profit. Estimating the transaction price for an arrangement requires judgment and is based on expected results which are determined using the Company’s historical data. We estimate that the revenue that we expect to be entitled to receive from a customer to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Revenue from contracts with customers is recognized when the performance obligations are satisfied through the transfer of control over the good or service to the customer, which may occur either over time or at a point in time. Revenues for the majority of our contracts are measured as determined by the ratio of cumulative costs incurred to date to estimated total contract costs at completion (the "cost-to-cost method"). We believe this is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of our work and transfer of control to our customers. Due to the long-term nature of many of our contracts, developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. After establishing the estimated total cost at completion, we follow a standard Estimate at Completion (“EAC”) process in which we review the progress and performance on our ongoing contracts at least quarterly. Adjustments to original estimates for a contract's revenue, estimated costs at completion and estimated profit or loss often are required as work progresses under a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change and are also required if contract modifications occur. When adjustments in estimated total costs at completion or in estimated total transaction price are determined, the related impact on revenue and operating income are recognized using the cumulative catch-up method, which recognizes in the current period the cumulative effect of such adjustments for all prior periods. Any anticipated losses on these contracts are fully recognized in the period in which the losses become evident. EAC adjustments had the following impacts to revenue for the periods presented: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenue $ (10) $ (8) $ (11) $ (9) Total % of Revenue 1.6 % 1.3 % 0.9 % 0.7 % The impacts noted above are attributed primarily to changes in our firm-fixed-price type programs. They consist of changes in the designs required to achieve contractual specifications for fixed priced development programs and inflationary impacts on certain naval production programs that resulted in a change in the programs’ estimate and related profitability. The reduction to revenue for the three- and six-month periods ended June 30, 2022 and June 30, 2021 was attributed primarily to certain cost impacts on surface ship programs within our IMS segment and inflationary pressures on naval programs within our ASC segment. Conversely, if the requirements for the recognition of contracts over time are not met, revenue is recognized at a point in time when control transfers to the customer, which is generally upon transfer of title. In such cases, the production that is in progress and costs that will be recognized at a future point in time are reported within "inventories". Costs to obtain a contract are incremental direct costs incurred to obtain a contract with a customer, including sales commissions and dealer fees, and are capitalized if material. Costs to fulfill a contract include costs directly related to a contract or specific anticipated contract (e.g., certain design costs) that generate or enhance our ability to satisfy our performance obligations under these contracts. These costs are capitalized to the extent they are expected to be recovered from the associated contract. Contract Assets and Liabilities The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities. (Dollars in millions) June 30, 2022 December 31, 2021 Contract assets $ 874 $ 743 Contract liabilities 156 174 Net contract assets $ 718 $ 569 Revenue recognized in the three-and six-month periods ended June 30, 2022 that was included in the contract liability balance at the beginning of each period was $33 million and $107 million, respectively. Revenue recognized in the three- and six-month periods ended June 30, 2021 that was included in the contract liability balance at the beginning of each period was $20 million and $89 million, respectively. The change in the balances of the Company’s contract assets and liabilities primarily results from timing differences between revenue recognition and customer billings and/or payments. Contract assets related to amounts withheld by customers until contract completion are not considered a significant financing component of our contracts because the intent is to protect the customers from our failure to satisfactorily complete our performance obligations. Payments received from customers in advance of revenue recognition (contract liabilities) are not considered a significant financing component of our contracts because they are utilized to pay for contract costs within a one-year period or are requested by us to ensure the customers meet their payment obligations. Value of Remaining Performance Obligations The value of remaining performance obligations, which we also refer to as total backlog, includes the following components: • Funded - Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previo usl y recognized on these contracts. • Unfunded - Unfunded backlog represents the revenue value of firm orders for products and services under existing contracts for which funding has not yet been appropriated less funding previously recognized on these contracts. The following table summarizes the value of our total backlog as of June 30, 2022, incorporating both funded and unfunded components: Backlog: June 30, 2022 (Dollars in millions) Total Backlog $ 3,051 We expect to recognize approximately 39% of our June 30, 2022 backlog as revenue over the next six months, with the remainder to be recognized thereafter. Disaggregation of Revenue ASC : ASC revenue is primarily derived from U.S. government development and production contracts and is generally recognized over time using the cost-to-cost method. We disaggregate ASC revenue by geographical region, customer relationship and contract type. We believe these categories best depict how the nature, amount, timing and uncertainty of ASC revenue and cash flows are affected by economic factors: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenue by Geographical Region United States $ 367 $ 457 $ 739 $ 901 International 74 28 96 63 Intersegment Sales 3 4 5 7 Total $ 444 $ 489 $ 840 $ 971 Revenue by Customer Relationship Prime contractor $ 216 $ 279 $ 448 $ 555 Subcontractor 225 206 387 409 Intersegment Sales 3 4 5 7 Total $ 444 $ 489 $ 840 $ 971 Revenue by Contract Type Firm Fixed Price $ 394 $ 419 $ 736 $ 845 Flexibly Priced (1) 47 66 99 119 Intersegment Sales 3 4 5 7 Total $ 444 $ 489 $ 840 $ 971 ________________ (1) Includes revenue derived from time-and-materials contracts. IMS : IMS revenue is primarily derived from U.S. government development and production contracts and is generally recognized over time using the cost-to-cost method. We disaggregate IMS revenue by geographical region, customer relationship and contract type We believe these categories best depict how the nature, amount, timing and uncertainty of IMS revenue and cash flows are affected by economic factors: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenue by Geographical Region United States $ 178 $ 160 $ 390 $ 349 International 8 14 14 26 Intersegment Sales 1 — 1 — Total $ 187 $ 174 $ 405 $ 375 Revenue by Customer Relationship Prime contractor $ 36 $ 42 $ 69 $ 86 Subcontractor 150 132 335 289 Intersegment Sales 1 — 1 — Total $ 187 $ 174 $ 405 $ 375 Revenue by Contract Type Firm Fixed Price $ 154 $ 146 $ 347 $ 316 Flexibly Priced (1) 32 28 57 59 Intersegment Sales 1 — 1 — Total $ 187 $ 174 $ 405 $ 375 ________________ (1) Includes revenue derived from time-and-materials contracts. | Revenue from Contracts with Customers The Company recognizes revenue for each separately identifiable performance obligation in a contract representing an obligation to transfer a distinct good or service to a customer. In most cases, goods and services provided under the Company’s contracts are accounted for as single performance obligations due to the complex and integrated nature of our products and services. These contracts generally require significant integration of a group of goods and/or services to deliver a combined output. In some contracts, the Company provides multiple distinct goods or services to a customer. In those cases, the Company accounts for the distinct contract deliverables as separate performance obligations and allocates the transaction price to each performance obligation based on its relative standalone selling price, which is generally estimated using cost plus a reasonable margin. We classify revenues as products or services on our Consolidated Statements of Earnings based on the predominant attributes of the performance obligations. While the Company provides warranties on certain contracts, we typically do not provide for services beyond standard assurances and therefore do not consider warranties to be separate performance obligations. Typically we enter into three types of contracts: fixed-price contracts, cost-plus contracts and T&M contracts (cost-plus contracts and T&M contracts are aggregated below as flexibly priced contracts). The majority of our total revenues are derived from fixed-price contracts; refer to the revenue disaggregation disclosures that follow. For fixed-price contracts, customers agree to pay a fixed amount, negotiated in advanced for a specified scope of work. For cost-plus contracts typically we are reimbursed for allowable or otherwise defined total costs (defined as cost of revenues plus allowable general and administrative expenses) incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. T&M contracts provide for reimbursement of labor hours expended at a contractual fixed labor rate per hour, plus the actual costs of material and other direct non-labor costs. The fixed labor rates on T&M contracts include amounts for the cost of direct labor, indirect contract costs and profit. Estimating the transaction price for an arrangement requires judgment and is based on expected results which are determined using the Company’s historical data. We estimate that the revenue that we expect to be entitled to receive from a customer to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Revenue from contracts with customers is recognized when the performance obligations are satisfied through the transfer of control over the good or service to the customer, which may occur either over time or at a point in time. Revenues for the majority of our contracts are measured as determined by the ratio of cumulative costs incurred to date to estimated total contract costs at completion (the "cost-to-cost method"). We believe this is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of our work and transfer of control to our customers. Due to the long-term nature of many of our contracts, developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. After establishing the estimated total cost at completion, we follow a standard Estimate at Completion (“EAC”) process in which we review the progress and performance on our ongoing contracts at least quarterly. Adjustments to original estimates for a contract's revenue, estimated costs at completion and estimated profit or loss often are required as work progresses under a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change and are also required if contract modifications occur. When adjustments in estimated total costs at completion or in estimated total transaction price are determined, the related impact on revenue and operating income are recognized using the cumulative catch-up method, which recognizes in the current period the cumulative effect of such adjustments for all prior periods. Any anticipated losses on these contracts are fully recognized in the period in which the losses become evident. EAC adjustments had the following impacts to revenue for the periods presented: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Revenue $ (34) $ (77) $ (55) Total % of Revenue 1 % 3 % 2 % The impacts noted above are attributed primarily to changes in our firm-fixed-price development type programs. As changes happen in the design required to achieve contractual specifications, those changes often result in the programs’ estimate and related profitability. The reductions to revenue for the years ended December 31, 2021, 2020 and 2019 were related to certain masted surveillance and submarine electric propulsion programs within our IMS segment, solider sensing programs within our ASC segment and adjustments to the measurement of variable consideration related to certain requests for equitable adjustment with the U.S. Navy also within our ASC segment. Conversely, if the requirements for the recognition of contracts over time are not met, revenue is recognized at a point in time when control transfers to the customer, which is generally upon transfer of title. In such cases, the production that is in progress and costs that will be recognized at a future point in time are reported within "inventories". Costs to obtain a contract are incremental direct costs incurred to obtain a contract with a customer, including sales commissions and dealer fees, and are capitalized if material. Costs to fulfill a contract include costs directly related to a contract or specific anticipated contract (e.g., certain design costs) that generate or enhance our ability to satisfy our performance obligations under these contracts. These costs are capitalized to the extent they are expected to be recovered from the associated contract. Contract Assets and Liabilities The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities. Year Ended December 31, (Dollars in millions) 2021 2020 Contract assets $ 743 $ 672 Contract liabilities 174 177 Net contract assets $ 569 $ 495 Revenue recognized in 2021 and 2020 that was included in the contract liability balance at the beginning of each year was $108 million and $104 million, respectively. The change in the balances of the Company’s contract assets and liabilities primarily results from timing differences between revenue recognition and customer billings and/or payments. Contract assets related to amounts withheld by customers until contract completion are not considered a significant financing component of our contracts because the intent is to protect the customers from our failure to satisfactorily complete our performance obligations. Payments received from customers in advance of revenue recognition (contract liabilities) are not considered a significant financing component of our contracts because they are utilized to pay for contract costs within a one-year period or are requested by us to ensure the customers meet their payment obligations. Value of Remaining Performance Obligations The value of remaining performance obligations, which we also refer to as total backlog, includes the following components: • Funded - Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts. • Unfunded - Unfunded backlog represents the revenue value of firm orders for products and services under existing contracts for which funding has not yet been appropriated less funding previously recognized on these contracts. The following table summarizes the value of our backlog at December 31, 2021 and 2020: Backlog: Year Ended December 31, (Dollars in millions) 2021 2020 Funded $ 2,510 $ 2,847 Unfunded 351 444 Total Backlog $ 2,861 $ 3,291 We expect to recognize approximately 62.5% of our December 31, 2021 backlog as revenue over the next 12 months, with the remainder to be recognized thereafter. Disaggregation of Revenue ASC : ASC revenue is primarily derived from U.S. government development and production contracts and is generally recognized over time using the cost-to-cost method. We disaggregate ASC revenue by geographical region, customer relationship and contract type. We believe these categories best depict how the nature, amount, timing and uncertainty of ASC revenue and cash flows are affected by economic factors: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Revenue by Geographical Region United States $ 1,808 $ 1,763 $ 1,699 International 113 182 99 Intersegment Sales 19 13 12 Total $ 1,940 $ 1,958 $ 1,810 Revenue by Customer Relationship Prime contractor $ 1,209 $ 1,063 $ 1,027 Subcontractor 712 882 771 Intersegment Sales 19 13 12 Total $ 1,940 $ 1,958 $ 1,810 Revenue by Contract Type Firm Fixed Price $ 1,667 $ 1,716 $ 1,570 Flexibly Priced (1) 254 229 228 Intersegment Sales 19 13 12 Total $ 1,940 $ 1,958 $ 1,810 __________________ (1) Includes revenue derived from time-and-materials contracts. IMS : IMS revenue is primarily derived from U.S. government development and production contracts and is generally recognized over time using the cost-to-cost method. We disaggregate IMS revenue by geographical region, customer relationship and contract type. We believe these categories best depict how the nature, amount, timing and uncertainty of IMS revenue and cash flows are affected by economic factors: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Revenue by Geographical Region United States $ 913 $ 792 $ 895 International 45 41 21 Intersegment Sales 1 1 1 Total $ 959 $ 834 $ 917 Revenue by Customer Relationship Prime contractor $ 174 $ 283 $ 442 Subcontractor 784 550 474 Intersegment Sales 1 1 1 Total $ 959 $ 834 $ 917 Revenue by Contract Type Firm Fixed Price $ 831 $ 692 $ 763 Flexibly Priced (1) 127 141 153 Intersegment Sales 1 1 1 Total $ 959 $ 834 $ 917 __________________ (1) Includes revenue derived from time-and-materials contracts. |
Accounts Receivable_2
Accounts Receivable | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Receivables [Abstract] | ||
Accounts Receivable | Accounts Receivable Accounts receivable represent amounts billed and currently due from customers. Payment is typically received from our customers either at periodic intervals (e.g., biweekly, or monthly) or upon achievement of contractual milestones. Accounts receivable consist of the following: (Dollars in millions) June 30, 2022 December 31, 2021 Accounts receivable $ 126 $ 157 Less allowance for credit losses (1) (1) Accounts receivable, net $ 125 $ 156 The Company maintains certain agreements with financial institutions to sell certain trade receivables. Receivables are derecognized in their entirety when sold, and the Company’s continuing involvement in the sold receivables is limited to their servicing, for which the Company receives a fee commensurate with the service provided. Pursuant to the servicing agreements, the Company collected approximately $1 million and $15 million at June 30, 2022 and December 31, 2021, respectively, of these sold receivables that had not yet been remitted to the financial institutions. These unremitted amounts collected on behalf of the financial institutions are included within short-term borrowings and current portion of long-term debt in the Consolidated Balance Sheets. | Accounts Receivable Accounts receivable represent amounts billed and currently due from customers. Payment is typically received from our customers either at periodic intervals (e.g., biweekly, or monthly) or upon achievement of contractual milestones. Accounts receivable consist of the following: December 31, (Dollars in millions) 2021 2020 Accounts receivable $ 157 $ 104 Less allowance for doubtful accounts (1) (2) Accounts receivable, net $ 156 $ 102 The Company maintains certain agreements with financial institutions to sell certain trade receivables. Receivables are derecognized in their entirety when sold, and the Company’s continuing involvement in the sold receivables is limited to their servicing, for which the Company receives a fee commensurate with the service provided. Pursuant to the servicing agreements, the Company collected approximately $15 million and $27 million at December 31, 2021 and 2020, respectively, of these sold receivables that had not yet been remitted to the financial institutions. These unremitted amounts collected on behalf of the financial institutions are included within short-term borrowings and current portion of long-term debt in the Consolidated Balance Sheet. |
Inventories_2
Inventories | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | ||
Inventories | Inventories Inventories consists of the following: (Dollars in millions) June 30, 2022 December 31, 2021 Raw materials $ 49 $ 43 Work in progress 198 161 Finished goods 2 1 Total $ 249 $ 205 | Inventories Inventories consists of the following: December 31, (Dollars in millions) 2021 2020 Raw materials $ 43 $ 52 Work in progress 161 193 Finished goods 1 2 Total $ 205 $ 247 |
Property, Plant, and Equipment
Property, Plant, and Equipment | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment by major asset class consists of the following: (Dollars in millions) June 30, 2022 December 31, 2021 Land, buildings and improvements $ 321 $ 312 Plant and machinery 194 191 Equipment and other 303 298 Total property, plant and equipment, at cost 818 801 Less accumulated depreciation (455) (437) Total property, plant and equipment, net $ 363 $ 364 Depreciation expense related to property, plant and equipment was $14 million and $27 million for the three- and six-month periods ended June 30, 2022, and $12 million and $24 million for the three- and six-month periods ended June 30, 2021, respectively. | Property, Plant and Equipment Property, plant and equipment by major asset class consists of the following: December 31, (Dollars in millions) 2021 2020 Land, buildings and improvements $ 312 $ 294 Plant and machinery 191 186 Equipment and other 298 276 Total property, plant and equipment, at cost 801 756 Less accumulated depreciation (437) (401) Total property, plant and equipment, net $ 364 $ 355 Depreciation expense related to property, plant and equipment was $49 million, $44 million and $42 million for the years ended December 31, 2021, 2020 and 2019, respectively. Land, buildings and improvements include assets under finance leases in the amount of $104 million and $108 million as of December 31, 2021 and 2020, respectively. See Note 9: Leases for additional information. As of December 31, 2021, the Company accounted for our manufacturing facility in Menomonee Falls, WI as a build-to-suit lease with a failed sale-leaseback and is included in the Land, building, and improvements in the above table. See Note 11: Debt |
Other Liabilities_2
Other Liabilities | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | ||
Other Liabilities | Other Liabilities A summary of significant other liabilities by balance sheet caption follows: (Dollars in millions) June 30, 2022 December 31, 2021 Salaries, wages and accrued bonuses $ 46 $ 70 Fringe benefits 75 74 Litigation 10 10 Restructuring costs 1 4 Provision for contract losses 57 48 Operating lease liabilities 22 24 Other (1) 68 65 Total other current liabilities $ 279 $ 295 Operating lease liabilities $ 68 $ 73 Other 2 1 Total other noncurrent liabilities $ 70 $ 74 ________________ (1) Consists primarily of taxes payable, environmental remediation reserves and warranty reserves. See Note 15: Commitments and Contingencies for more information regarding the warranty provision | Other Liabilities A summary of significant other liabilities by balance sheet caption follows: December 31, (Dollars in millions) 2021 2020 Salaries, wages and accrued bonuses $ 70 $ 61 Fringe benefits 74 71 Litigation 10 10 Restructuring costs 4 1 Provision for contract losses 48 44 Operating lease liabilities 24 22 Other (1) 65 58 Total other current liabilities $ 295 $ 267 Retirement benefits $ — $ — Operating lease liabilities $ 73 $ 81 Other (2) 1 11 Total other noncurrent liabilities $ 74 $ 92 __________________ (1) Consists primarily of taxes payable, environmental remediation reserves and warranty reserves. See Note 15: Commitments and Contingencies for more information regarding the warranty provision. |
Goodwill_2
Goodwill | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | Goodwill Changes in the carrying amount of goodwill by reportable segment are as follows: (Dollars in millions) ASC IMS Total Balance as of December 31, 2021 $ 652 $ 419 $ 1,071 Reclassification to assets held for sale (117) — (117) Acquisition adjustment (2) (2) Balance as of June 30, 2022 533 419 952 | Goodwill Changes in the carrying amount of goodwill by reportable segment are as follows: (Dollars in millions) ASC IMS Total Balance at January 1, 2020 (1) $ 638 $ 419 $ 1,057 Acquisitions — — — Balance at December 31, 2020 638 419 1,057 Acquisitions 14 — 14 Balance at December 31, 2021 $ 652 $ 419 $ 1,071 ________________ |
Intangible Assets_2
Intangible Assets | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible Assets | Intangible Assets Other intangible assets mainly refer to the fair value of existing customer contractual relationships attributable to the acquired business and patents which are being amortized over their respective lives. The fair value of intangible assets typically is determined, as of the date of acquisition, based on estimates and judgments regarding expectations for the estimated future after-tax earnings and cash flows (including cash flows for working capital) arising from backlog and follow-on sales to the customer over their estimated lives, including the probability of expected future contract renewals and sales, less a contributory assets charge, all of which is discounted to present value. The following disclosure presents certain information regarding the Company's intangible assets as of June 30, 2022 and December 31, 2021. All intangible assets are being amortized over their estimated useful lives, as indicated below, with no estimated residual values. June 30, 2022 December 31, 2021 (Dollars in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 957 $ (913) $ 44 $ 957 $ (908) $ 49 Patents and licenses 9 (6) 3 9 (6) 3 Total intangible assets $ 966 $ (919) $ 47 $ 966 $ (914) $ 52 | Intangible Assets Other intangible assets mainly refer to the fair value of existing customer contractual relationships attributable to the acquired business and patents which are being amortized over their respective lives. The fair value of intangible assets typically is determined, as of the date of acquisition, based on estimates and judgments regarding expectations for the estimated future after-tax earnings and cash flows (including cash flows for working capital) arising from backlog and follow-on sales to the customer over their estimated lives, including the probability of expected future contract renewals and sales, less a contributory assets charge, all of which is discounted to present value. The following disclosure presents certain information regarding the Company's intangible assets as of December 31, 2021 and 2020. All intangible assets are being amortized over their estimated useful lives, as indicated below, with no estimated residual values. December 31, 2021 December 31, 2020 (Dollars in millions) Gross Accumulated Amortization Net Carrying Amount Gross Accumulated Amortization Net Carrying Amount Customer relationships $ 957 $ (908) $ 49 $ 957 $ (899) $ 58 Patents and licenses 9 (6) 3 7 (5) 2 Total intangible assets $ 966 $ (914) $ 52 $ 964 $ (904) $ 60 Amortization expense related to intangible assets was $9 million, $9 million, and $9 million respectively, for the years ended December 31, 2021, 2020 and 2019. Customer relationships are amortized on a straight-line basis over their estimated useful lives of 10 to 15 years. Patents and licenses are amortized on a straight-line basis over their estimated useful lives of 5 to 10 years. The estimated annual amortization expense related to intangible assets for the subsequent five years is as follows: (in millions) Estimated 2022 $ 9 2023 9 2024 9 2025 9 2026 9 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Leases | Leases The Company leases various real estate for manufacturing facilities, administrative offices and warehouses under both finance leases and operating leases. In addition, the Company leases vehicles, machinery and office equipment under operating leases. We determine whether our contracts are or contain a lease at the inception of such arrangements. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. ROU assets and lease liabilities are recorded on the Consolidated Balance Sheet as of the lease commencement based on the present value of the future lease payments over the lease term. As our leases do not generally explicitly state the discount rate implicit in the lease, we use our incremental borrowing rate, which is determined based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term as of the lease commencement date. In addition to the present value of the future lease payments, the calculation of the ROU asset also includes lease payments made at or before the commencement date of the lease, less any lease incentives received. The remaining lease cost is amortized over the remaining life of the lease on a straight-line basis. We evaluate ROU assets for impairment consistent with the treatment of other long-lived assets. Some of our leases include options to extend the lease terms or to terminate the lease early. We include the impact of the option in the determination of the ROU assets and liabilities when it is reasonably certain that we will exercise the option. Our lease payments are largely fixed, but may include variable payments that do not depend on an index or rate, such as usage-based amounts, and are recorded as a lease expense in the period incurred. The Company’s lease agreements do not contain any material residual value guarantees or restrictive covenants. In 2019, we have entered into a sale-leaseback transaction related to a facility in Milwaukee, WI. We have analyzed the transaction and determined the criteria to recognize a sale has been met and we have derecognized the related assets. The arrangement does not contain a repurchase option or other substantive obligations related to the property. Further, we have determined that the underlying lease meets the criteria to be classified as an operating lease. As a result, we have recognized an immaterial loss related to the transaction. As of December 31, 2021, the Company has not entered into any significant leases that have not yet commenced. We elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less. These leases are expensed on a straight-line basis over the lease term. The Company elected the practical expedient to not separate lease and non-lease components and to instead account for them as a single component. We have elected this practical expedient for all classes of assets. Lease Cost The Company’s total lease cost consists of the following: Year Ended December 31, (Dollars in millions) 2021 2020 Operating lease cost (1) $ 26 $ 24 Finance lease cost (2) : Amortization of right-of-use assets 8 7 Interest on lease liabilities 5 5 Total lease cost $ 39 $ 36 ________________ (1) Operating lease expense is included within cost of products, cost of services or general and administrative expenses, dependent upon the nature and use of the ROU asset, in the Company’s Consolidated Statements of Earnings Operating lease cost includes short-term leases of approximately $3 million and $5 million and an insignificant amount of variable lease cost for both 2021 and 2020 . (2) Finance lease expense is recorded as depreciation and amortization expense within cost of products, cost of services or general and administrative expenses, dependent upon the nature and use of the ROU asset and interest expense, net in the Company’s Consolidated Statements of Earnings. Supplemental Balance Sheet Information Supplemental balance sheet information related to leases is as follows: December 31, (Dollars in millions) 2021 2020 ROU assets Operating leases (1) $ 84 $ 88 Finance leases (2) 104 108 Total leased assets $ 188 $ 196 Liabilities Current lease liabilities: Operating (1) $ 24 $ 22 Finance (2) 6 5 Noncurrent lease liabilities: Operating (1) 73 81 Finance (2) 107 109 Total lease liabilities $ 210 $ 217 _________________ (1) Operating lease assets are included within other noncurrent assets other current liabilities other noncurrent liabilities (2) Finance lease assets are included within property, plant and equipment, net short-term borrowings and current portion of long-term debt (current portion) long-term debt (noncurrent portion) Supplemental Cash Flow Information Supplemental cash flow information related to leases is as follows: Year Ended December 31, (Dollars in millions) 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 27 $ 27 Operating cash flows from finance leases 5 5 Financing cash flows from finance leases 5 4 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases 18 16 Finance leases 4 46 Weighted Average Lease Term and Discount Rate Lease terms and discount rates related to leases are as follows: December 31, 2021 2020 Weighted-average remaining lease term: Operating leases 5 years 5 years Finance leases 15 years 16 years Weighted-average discount rate: Operating leases 4.3 % 4.4 % Finance leases 4.6 % 4.5 % Maturity of Lease Liabilities: As of December 31, 2021, future minimum rental payments on leases with initial non-cancellable lease terms in excess of one year were due as follows: (Dollars in millions) Operating Leases Finance Leases Year Ending December 31, 2022 $ 27 $ 11 2023 25 11 2024 19 11 2025 12 10 2026 9 10 Thereafter 14 104 Total lease payments 106 157 Less: imputed interest 9 44 Present value of lease liabilities 97 113 Less: current maturities 24 6 Long-term lease obligations $ 73 $ 107 |
Leases | Leases The Company leases various real estate for manufacturing facilities, administrative offices and warehouses under both finance leases and operating leases. In addition, the Company leases vehicles, machinery and office equipment under operating leases. We determine whether our contracts are or contain a lease at the inception of such arrangements. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. ROU assets and lease liabilities are recorded on the Consolidated Balance Sheet as of the lease commencement based on the present value of the future lease payments over the lease term. As our leases do not generally explicitly state the discount rate implicit in the lease, we use our incremental borrowing rate, which is determined based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term as of the lease commencement date. In addition to the present value of the future lease payments, the calculation of the ROU asset also includes lease payments made at or before the commencement date of the lease, less any lease incentives received. The remaining lease cost is amortized over the remaining life of the lease on a straight-line basis. We evaluate ROU assets for impairment consistent with the treatment of other long-lived assets. Some of our leases include options to extend the lease terms or to terminate the lease early. We include the impact of the option in the determination of the ROU assets and liabilities when it is reasonably certain that we will exercise the option. Our lease payments are largely fixed, but may include variable payments that do not depend on an index or rate, such as usage-based amounts, and are recorded as a lease expense in the period incurred. The Company’s lease agreements do not contain any material residual value guarantees or restrictive covenants. In 2019, we have entered into a sale-leaseback transaction related to a facility in Milwaukee, WI. We have analyzed the transaction and determined the criteria to recognize a sale has been met and we have derecognized the related assets. The arrangement does not contain a repurchase option or other substantive obligations related to the property. Further, we have determined that the underlying lease meets the criteria to be classified as an operating lease. As a result, we have recognized an immaterial loss related to the transaction. As of December 31, 2021, the Company has not entered into any significant leases that have not yet commenced. We elected not to recognize a ROU asset and lease liability for leases with an initial term of 12 months or less. These leases are expensed on a straight-line basis over the lease term. The Company elected the practical expedient to not separate lease and non-lease components and to instead account for them as a single component. We have elected this practical expedient for all classes of assets. Lease Cost The Company’s total lease cost consists of the following: Year Ended December 31, (Dollars in millions) 2021 2020 Operating lease cost (1) $ 26 $ 24 Finance lease cost (2) : Amortization of right-of-use assets 8 7 Interest on lease liabilities 5 5 Total lease cost $ 39 $ 36 ________________ (1) Operating lease expense is included within cost of products, cost of services or general and administrative expenses, dependent upon the nature and use of the ROU asset, in the Company’s Consolidated Statements of Earnings Operating lease cost includes short-term leases of approximately $3 million and $5 million and an insignificant amount of variable lease cost for both 2021 and 2020 . (2) Finance lease expense is recorded as depreciation and amortization expense within cost of products, cost of services or general and administrative expenses, dependent upon the nature and use of the ROU asset and interest expense, net in the Company’s Consolidated Statements of Earnings. Supplemental Balance Sheet Information Supplemental balance sheet information related to leases is as follows: December 31, (Dollars in millions) 2021 2020 ROU assets Operating leases (1) $ 84 $ 88 Finance leases (2) 104 108 Total leased assets $ 188 $ 196 Liabilities Current lease liabilities: Operating (1) $ 24 $ 22 Finance (2) 6 5 Noncurrent lease liabilities: Operating (1) 73 81 Finance (2) 107 109 Total lease liabilities $ 210 $ 217 _________________ (1) Operating lease assets are included within other noncurrent assets other current liabilities other noncurrent liabilities (2) Finance lease assets are included within property, plant and equipment, net short-term borrowings and current portion of long-term debt (current portion) long-term debt (noncurrent portion) Supplemental Cash Flow Information Supplemental cash flow information related to leases is as follows: Year Ended December 31, (Dollars in millions) 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 27 $ 27 Operating cash flows from finance leases 5 5 Financing cash flows from finance leases 5 4 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases 18 16 Finance leases 4 46 Weighted Average Lease Term and Discount Rate Lease terms and discount rates related to leases are as follows: December 31, 2021 2020 Weighted-average remaining lease term: Operating leases 5 years 5 years Finance leases 15 years 16 years Weighted-average discount rate: Operating leases 4.3 % 4.4 % Finance leases 4.6 % 4.5 % Maturity of Lease Liabilities: As of December 31, 2021, future minimum rental payments on leases with initial non-cancellable lease terms in excess of one year were due as follows: (Dollars in millions) Operating Leases Finance Leases Year Ending December 31, 2022 $ 27 $ 11 2023 25 11 2024 19 11 2025 12 10 2026 9 10 Thereafter 14 104 Total lease payments 106 157 Less: imputed interest 9 44 Present value of lease liabilities 97 113 Less: current maturities 24 6 Long-term lease obligations $ 73 $ 107 |
Income Taxes_2
Income Taxes | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Income Taxes | Income Taxes The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of June 30, 2022 and December 31, 2021 are as follows: (Dollars in millions) June 30, 2022 December 31, 2021 Deferred tax assets $ 107 $ 120 Valuation allowance 10 10 Deferred tax assets 97 110 Deferred tax liabilities 51 54 Deferred tax assets, net $ 46 $ 56 Our deferred tax balance associated with our retirement benefit plans includes a deferred tax asset of $10 million and $11 million as of June 30, 2022 and December 31, 2021, respectively, that are recorded in accumulated other comprehensive earnings to recognize the funded status of our retirement plans. See Note 11: Pension and Other Postretirement Benefits | Income Taxes Earnings (loss) before taxes consists of the following: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Earnings before taxes Domestic $ 203 $ 112 $ 89 Foreign (3) — 6 Total $ 200 $ 112 $ 95 Income tax provision (benefit) consists of the following: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Current: Federal $ (1) $ — $ — State — 3 2 Foreign 1 2 1 — 5 3 Deferred: Federal 43 24 17 State 5 — — Foreign (2) (2) — 46 22 17 Total $ 46 $ 27 $ 20 The reconciliation from the statutory federal income tax rate to our effective income tax rate follows: Year Ended December 31, 2021 2020 2019 Statutory federal rate 21.0 % 21.0 % 21.0 % State rate, net of federal benefit 3.6 % 2.3 % 0.5 % Foreign rate differential (0.2) % 0.5 % 0.5 % Research & development credit, net of reserves (0.2) % (0.7) % (2.3) % Nondeductible expenses 0.9 % 0.4 % 0.7 % Global intangible low taxed income — % 0.2 % 1.0 % Change in valuation allowance (1.4) % (2.5) % 0.2 % Change in tax reserves (0.4) % 2.2 % 0.2 % Other (0.3) % 0.7 % (0.7) % Effective tax rate 23.0 % 24.1 % 21.1 % The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020 is as follows: December 31, (Dollars in millions) 2021 2020 Deferred tax assets: Federal net operating losses $ 5 $ 18 State net operating losses 16 21 Tax credit carryforwards 21 23 Accrued compensation and benefits 23 26 Contract liabilities 21 20 Accrued expenses 5 5 Pension and post-retirement plans 18 24 Inventory capitalization 5 8 Other 5 8 Disallowed interest 1 1 Total gross deferred tax assets 120 154 Less valuation allowance 10 11 Deferred tax assets 110 143 Deferred tax liabilities: Intangible assets (41) (44) Fixed assets (12) (11) Other (1) (1) Deferred tax liabilities (54) (56) Net deferred tax asset $ 56 $ 87 Our deferred tax balance associated with our retirement benefit plans includes a deferred tax asset of $11 million and $14 million as of December 31, 2021 and 2020 respectively, that are recorded in accumulated other comprehensive earnings to recognize the funded status of our retirement plans. See ‘ for additional details. As of December 31, 2021 and 2020 the Company had U.S. federal net operating loss carryforwards of $28 million and $131 million, respectively, which we anticipate we will be able to apply prior to their expiration which commences in 2025. The annual utilization of approximately $28 million of certain our Federal net operating losses is subject to limitations under section 382 of the Internal Revenue Code. As of December 31, 2021 and 2020 we had apportioned state net operating loss carryforwards of $239 million and $327 million, respectively, which are associated with jurisdictions in which we currently file and the Company expects to utilize prior to expiration except for those for which we have recorded a valuation allowance. We have federal tax credit carryforwards that commence expiring in 2032, which we anticipate being able to utilize prior to their expiration. Tax Uncertainties The Company maintains reserves for uncertain tax positions related to unrecognized income tax benefits. These reserves involve considerable judgment and estimation and are evaluated by management at least quarterly based on the best information available. The Company’s total liability for unrecognized tax benefits as of December 31, 2021, 2020 and 2019 was approximately $22 million, $25 million and $18 million, respectively; all of which will impact the effective tax rate when recognized. Approximately $15 million, $22 million and $16 million as of December 31, 2021, 2020 and 2019, respectively, have been recorded within (and as an offset to) deferred tax assets. In addition, the Company does not believe there are any tax positions for which it is reasonably possible that the unrecognized tax benefits will vary significantly over the next 12 months. The table below summarizes the activity associated with our unrecognized tax benefits: (Dollars in millions) 2021 2020 2019 Balance at January 1, $ 25 $ 18 $ 14 Increase related to prior year tax positions — 3 3 Increase related to current year tax positions 1 4 1 Decreases related to prior year tax positions (4) — — Lapse of statute of limitations — — — Settlements with taxing authorities — — — Balance at December 31, $ 22 $ 25 $ 18 The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company has substantially concluded all U.S. federal income tax matters for years through the tax year ended December 31, 2016 except as it relates to the net operating loss carryforward and tax credit carryforwards. Substantially all material state and local matters have been concluded for years through the tax year ended December 31, 2015. The Company has substantially concluded all material tax matters in foreign jurisdictions for years through the tax years ending during 2016. |
Debt_2
Debt | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Debt Disclosure [Abstract] | ||
Debt | Debt The Company’s debt consists of the following: (Dollars in millions) June 30, 2022 December 31, 2021 7.5% Term loan due November 30, 2023 (1) $ 139 $ 139 5.0% Daylight term loan due October 15, 2024 (1) 78 78 Borrowings under revolving credit facility (1) 110 — Finance lease and other 162 161 Short-term borrowings 1 15 Total debt principal 490 393 Less unamortized debt issuance costs and discounts — — Total debt, net 490 393 Less short-term borrowings and current portion of long-term debt (140) (41) Total long-term debt $ 350 $ 352 ________________ (1) The Company’s debt with related parties consists of two term loans and a working capital credit facility with US Holding, as described below. Term Loans In January 2009, the Company entered into a credit agreement with its ultimate parent company, Finmeccanica S.p.A. (presently Leonardo S.p.A.) in the amount of $2 billion (the “2009 Credit Agreement”). The 2009 Credit Agreement was subsequently assigned to US Holding and has a maturity of November 30, 2023. The 2009 Credit Agreement provides for a term loan bearing interest at a rate of 7.5%, with interest payments due semi-annually on June 20 and December 20 in each year (the “7.5% Term loan”). The outstanding balance of the 7.5% Term loan at June 30, 2022 and December 31, 2021 was $139 million. The fair value of this term loan at June 30, 2022 and December 31, 2021 was $142 million and $182 million, respectively; however, the Company has the ability to prepay the outstanding principal balance at the carrying amount without penalty. In June 2017, the Company entered into an unsecured term loan with US Holding in the principal amount of $137.5 million, the proceeds of which were used to finance the acquisition of Daylight Solutions, Inc. (the “Daylight Term Loan”). The Daylight Term Loan had an outstanding balance of $78 million at June 30, 2022 and December 31, 2021. The fair value of the Daylight Term Loan as of June 30, 2020 and December 31, 2021 was approximately $81 million and $84 million, respectively. The Daylight Term Loan matures on October 15, 2024. The Daylight Term Loan has an interest rate of 5.0%, with interest payments due semi-annually on April 15 and October 15. Credit Facilities The 2009 Credit Agreement provides for a revolving credit facility available for working capital needs of the Company (the “Revolving Credit Facility”). As of June 30, 2022 and December 31, 2021, the Revolving Credit Facility had a credit limit of $450 million and an interest rate of LIBOR plus 3.5%. There is a commitment fee of 0.25% applied to the unused balance of the Revolving Credit Facility and there are no compensating balance requirements. The outstanding balance as of June 30, 2022 was $110 million and there was no balance on the Revolving Credit Facility as of December 31, 2021. The Company also maintains uncommitted working capital credit facilities with certain financial institutions in the aggregate of $65 million at June 30, 2022 and December 31, 2021, respectively (the “Financial Institution Credit Facilities”). The Financial Institution Credit Facilities are guaranteed by Leonardo S.p.A. The primary purpose of the Financial Institution Credit Facilities is to support standby letter of credit issuances on contracts with customers and also includes a revolving facility with a maximum borrowing limit of $15 million, which bears interest at LIBOR plus 0.5%. At June 30, 2022 and December 31, 2021, there was no balance outstanding on the revolving facility. The Company had letters of credit outstanding of approximately $31 million and $35 million as of June 30, 2022, and December 31, 2021, respectively, which reduces the available capacity of the Financial Institution Credit Facilities by an equal amount. Short-term Borrowings As of June 30, 2022 and December 31, 2021, the Company recognized $1 million and $15 million, respectively, collected on behalf of the buyers of our trade receivables pursuant to our factoring arrangements as short-term borrowings and current portion of long-term debt in the Consolidated Balance Sheets, which approximates its fair value. Refer to Note 3: Accounts Receivable | Debt The Company’s debt consists of the following: December 31, (Dollars in millions) 2021 2020 7.5% Term loan due November 30, 2023 (1) 139 139 5.0% Daylight term loan due October 15, 2024 (1) 78 98 Finance lease and other 161 163 Short-term borrowings 15 27 Total debt principal 393 427 Less unamortized debt issuance costs and discounts — — Total debt, net 393 427 Less short-term borrowings and current portion of long-term debt (41) (53) Total long-term debt $ 352 374 __________________ (1) The Company’s debt with related parties consists of two term loans and a working capital credit facility with US Holding, as described below. Term Loans In January 2009, the Company entered into a credit agreement with its ultimate parent company, Finmeccanica S.p.A. (presently Leonardo S.p.A.) in the amount of $2 billion (the “2009 Credit Agreement”). The 2009 Credit Agreement was subsequently assigned to US Holding and has a maturity of November 30, 2023. The 2009 Credit Agreement provides for a term loan bearing interest at a rate of 7.5%, with interest payments due semi-annually on June 20 and December 20 in each year (the “7.5% Term loan”). The outstanding balance of the 7.5% Term loan at December 31, 2021 and 2020 was $139 million and $139 million, respectively. The fair value of this term loan at December 31, 2021 and 2020 was $182 million and $182 million, respectively; however the Company has the ability to prepay the outstanding principal balance at the carrying amount without penalty. During 2020, US Holding forgave $300 million of related party debt. This was treated as a capital transaction and the amount was recorded in additional paid-in capital, as US Holding is a related party. In June 2017, the Company entered into an unsecured term loan with US Holding in the principal amount of $137.5 million, the proceeds of which were used to finance the acquisition of Daylight Solutions, Inc. (the “Daylight Term Loan”). The Daylight Term Loan had an outstanding balance of $78 million and $98 million at December 31, 2021 and 2020, respectively, which approximates its fair value. The Daylight Term Loan matures on October 15, 2024. The Daylight Term Loan has an interest rate of 5.0%, with interest payments due semi-annually on April 15 and October 15. During April 2018, the Company was advanced an additional $50 million by US Holding under a term loan. This term loan bears interest at 4.0% and had an initial maturity date of December 31, 2018, which was extended until December 31, 2021. This term loan was repaid in full, with no prepayment penalty, on December 19, 2020. Credit Facilities The 2009 Credit Agreement provides for a revolving credit facility available for working capital needs of the Company (the “Revolving Credit Facility”). As of December 31, 2021 and 2020, the Revolving Credit Facility had a credit limit of $450 million and $450 million, respectively, and an interest rate of LIBOR plus 3.5%. There is a commitment fee of 0.25% applied to the unused balance of the Revolving Credit Facility and there are no compensating balance requirements. There was no balance on the Revolving Credit Facility as of December 31, 2021 and 2020. The Company also maintains uncommitted working capital credit facilities with certain financial institutions in the aggregate of $65 million and $60 million at December 31, 2021 and 2020, respectively (the “Financial Institution Credit Facilities”). The Financial Institution Credit Facilities are guaranteed by Leonardo S.p.A. The primary purpose of the Financial Institution Credit Facilities is to support standby letter of credit issuances on contracts with customers and also includes a revolving facility with a maximum borrowing limit of $15 million, which bears interest at LIBOR plus 0.5%. At December 31, 2021 and 2020, there was no balance outstanding on the revolving facility. The Company had letters of credit outstanding of approximately $35 million and $31 million as of December 31, 2021 and 2020, respectively, which reduces the available capacity of the Financial Institution Credit Facilities by an equal amount. Finance Lease and Other As of December 31, 2021, finance lease and other of $161 million includes approximately $113 million related to finance lease liabilities and $48 million related to our Menomonee Falls, WI manufacturing facility, which has been accounted for as a build-to-suit lease with a failed sale leaseback. Approximately $6 million has been recognized as the current portion of long-term debt for the finance lease liabilities and financing liability related to the build-to-suit arrangement. Short-term Borrowings As of December 31, 2021 and 2020, the Company recognized $15 million and $27 million, respectively, collected on behalf of the buyers of our trade receivables pursuant to our factoring arrangements as short-term borrowings and current portion of long-term debt in the Consolidated Balance Sheet, which approximates its fair value. Refer to Note 3: Accounts Receivable for more information. Interest Paid Total interest paid associated with our debt was $35 million, $64 million and $65 million in 2021, 2020 and 2019, respectively. Maturities of long-term debt as of December 31, 2021 are as follows: (Dollars in millions) Year Ending December 31, 2022 $ 41 2023 171 2024 40 2025 7 2026 7 Thereafter 127 Total principal payments $ 393 |
Pension and Other Postretirem_2
Pension and Other Postretirement Benefits | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Retirement Benefits [Abstract] | ||
Pension and Other Postretirement Benefits | Pension and Other Postretirement Benefits Retirement Plan Summary Information The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility requirements for participation in the plans vary, and benefits generally are based on the participant's compensation and years of service, as defined in the respective plan. The Company's funding policy generally is to contribute in accordance with cost accounting standards that affect government contractors, subject to the Tax Code and regulations thereunder. Plan assets are invested primarily in equities, bonds (both corporate and U.S. government), U.S. government-sponsored entity instruments, cash and cash equivalents and real estate. The Company also provides postretirement medical benefits for certain retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company's postretirement benefit plans. The Company's contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees' Beneficiary Association (“VEBA”) trust and, for non-funded plans, recovery of claims on a pay-as-you-go basis, subject to the Tax Code and regulations thereunder, with the retiree generally paying a portion of the costs through contributions, deductibles and coinsurance provisions. The Company also maintains certain non-contributory and unfunded supplemental retirement plans. Eligibility for participation in the supplemental retirement plans is limited, and benefits generally are based on the participant's compensation and/or years of service. The following table summarizes the components of net periodic benefit cost for the Company's pension, postretirement and supplemental retirement plans for the three months ended June 30: Defined Benefit Pension Plans Postretirement Benefit Plan Supplemental Retirement Plans (Dollars in millions) Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Service cost $ — $ — $ — $ — $ — $ — Interest cost 1 2 — — — — Less Expected return on plan assets (2) (2) — — — — Amortization of net actuarial loss (gain) 1 — — — — — Amortization of prior service cost — — — — — — Settlement expense (income) — — — — — — Net periodic benefit cost $ — $ — $ — $ — $ — $ — The following table summarizes the components of net periodic benefit cost for the Company's pension, postretirement and supplemental retirement plans for the six months ended June 30: Defined Benefit Pension Plans Postretirement Benefit Plan Supplemental Retirement Plans (Dollars in millions) Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Service cost $ — $ — $ — $ — $ — $ — Interest cost $ 3 $ 3 — — — — Less Expected return on plan assets $ (4) $ (4) — — — — Amortization of net actuarial loss (gain) $ 1 $ 1 — — — — Amortization of prior service cost $ — $ — — — — — Settlement expense (income) $ 1 $ — — — — — Net periodic benefit cost $ 1 $ — $ — $ — $ — $ — The expected long-term return on plan assets assumption represents the average rate that the Company expects to earn over the long-term on the assets of the Company's benefit plans, including those from dividends, interest income and capital appreciation. The assumption has been determined based on expectations regarding future rates of return for the plans' investment portfolio, with consideration given to the allocation of investments by asset class and historical rates of return for each individual asset class. Pension related expenses are reflected in the Total costs of revenues and General and administrative expenses on the Consolidated Statement of Earnings (unaudited). A one percentage increase or decrease in healthcare trend rates in the table above would have an insignificant impact to our service and interest cost and the postretirement medical obligations. | Pension and Other Postretirement Benefits Retirement Plan Summary Information The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility requirements for participation in the plans vary, and benefits generally are based on the participant's compensation and years of service, as defined in the respective plan. The Company's funding policy generally is to contribute in accordance with cost accounting standards that affect government contractors, subject to the Tax Code and regulations thereunder. Plan assets are invested primarily in equities, bonds (both corporate and U.S. government), U.S. government-sponsored entity instruments, cash and cash equivalents and real estate. The Company also provides postretirement medical benefits for certain retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company's postretirement benefit plans. The Company's contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees' Beneficiary Association (“VEBA”) trust and, for non-funded plans, recovery of claims on a pay-as-you-go basis, subject to the Tax Code and regulations thereunder, with the retiree generally paying a portion of the costs through contributions, deductibles and coinsurance provisions. The Company also maintains certain non-contributory and unfunded supplemental retirement plans. Eligibility for participation in the supplemental retirement plans is limited, and benefits generally are based on the participant's compensation and/or years of service. The following tables provide certain information regarding the Company's pension, postretirement and supplemental retirement plans as of December 31, 2021 and 2020: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2021 2020 2021 2020 Change in benefit obligation: Benefit obligation at beginning of year $ 226 $ 261 $ 2 $ 3 $ 23 $ 24 Service cost — — — — — — Interest cost 5 7 — — 1 1 Plan participants' contributions — — — — — — Actuarial (gain) loss (3) (10) — (1) (1) (1) Benefits paid (13) (10) — — (1) (1) (Gain) loss due to settlement — (21) — — — — Plan amendments — — — — — — Exchange rate differences and other — (1) — — — — Benefit obligation at end of year $ 215 $ 226 $ 2 $ 2 $ 22 $ 23 Change in plan assets: Fair value of plan assets at beginning of year $ 151 $ 158 $ 1 $ 1 $ 11 $ 10 Actual return on plan assets 15 19 — — 1 1 Plan participants' contributions — — — — — — Employer contributions 13 6 — — 1 1 Benefits paid (13) (10) — — (1) (1) (Loss) gain due to settlement — (21) — — — — Exchange rate differences and other — (1) — — — — Fair value of plan assets at end of year 166 151 1 1 12 11 Contributions between measurement date and year end — — — — — — Funded status of the plans at year end $ (49) $ (75) $ (1) $ (1) $ (10) $ (12) The amounts recognized in the Consolidated Balance Sheet, as of December 31, 2021 and 2020 consist of: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2021 2020 2021 2020 Noncurrent assets $ — $ — $ 1 $ 1 $ — $ — Current liabilities — — — — — — Noncurrent liabilities (49) (75) (2) (2) (10) (11) Net liability recognized $ (49) $ (75) $ (1) $ (1) $ (10) $ (11) Amounts recognized in accumulated other comprehensive income (before taxes) at December 31, 2021 and 2020 consist of: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2021 2020 2021 2020 Prior service cost $ — $ — $ — $ — $ — $ — Net actuarial loss (gain) 40 52 (1) (2) 6 7 Total amount recognized in accumulated other comprehensive losses (earnings) $ 40 $ 52 $ (1) $ (2) $ 6 $ 7 The aggregate accumulated benefit obligation (“ABO”) for the Company's defined benefit pension plans combined was $237 million and $249 million at December 31, 2021 and 2020, respectively. The ABO represents benefits accrued without assuming future compensation increases to plan participants and is approximately equal to our projected benefit obligation (“PBO”).The table below presents information for the pension plans with an ABO and PBO in excess of the fair value of plan assets at December 31, 2021 and 2020. (Dollars in millions) December 31, 2021 December 31, 2020 Projected benefit obligation $ 237 $ 249 Accumulated benefit obligation 237 249 Fair value of plan assets 178 162 The following table summarizes the weighted average actuarial assumptions used to determine our benefit obligations at December 31, 2021 and 2020: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans 2021 2020 2021 2020 2021 2020 Rate assumptions Discount rate 2.8 % 2.4 % 2.6 % 4.3 % 2.8 % 2.5 % Increase in future compensation levels N/A N/A N/A N/A N/A N/A Expected long-term return on plan assets 5.9 % 6.4 % 5.9 % 6.4 % N/A N/A Health care trend rate assumed for next year N/A N/A 4.6 % 5.4 % N/A N/A Ultimate health care trend rate N/A N/A 4.3 % 4.3 % N/A N/A Year rate reaches ultimate trend rate N/A N/A 2031 2031 N/A N/A The following table summarizes the components of net periodic benefit cost for the Company's pension, postretirement and supplemental retirement plans for the years ended December 31, 2021 and 2020 and 2019: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2019 2021 2020 2019 2021 2020 2019 Service cost $ — $ — $ — $ — $ — $ — $ — $ — $ — Interest cost $ 5 $ 7 $ 7 $ — $ — $ — $ 1 $ 1 $ 1 Expected return on plan assets $ (7) $ (8) $ (7) $ — $ — $ — $ — $ — $ — Amortization of net actuarial loss (gain) $ 2 $ 3 $ 2 $ (1) $ (1) $ — $ — $ — $ — Amortization of prior service cost $ — $ — $ — $ — $ — $ — $ — $ — $ — Settlement expense (income) $ — $ 3 $ — $ — $ — $ — $ — $ — Net periodic benefit cost $ — $ 5 $ 2 $ (1) $ (1) $ — $ 1 $ 1 $ 1 The following table summarizes the other changes in plan assets and benefit obligations recognized in other comprehensive earnings for the Company's pension, postretirement and supplemental retirement benefit plans for the years ended December 31, 2021 and 2020 and 2019: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2019 2021 2020 2019 2021 2020 2019 Net actuarial (gain) loss $ (11) $ (21) $ 19 $ — $ (1) $ (1) $ (1) $ (1) $ 4 Prior service cost — — — — — — — — — Amortization of net actuarial (loss) gain from prior years (2) (6) (2) 1 1 — — — — Amortization of prior service cost — — — — — — — — — Other (1) — — — — — — — — — Total recognized in other comprehensive income $ (13) $ (27) $ 17 $ 1 $ — $ (1) $ (1) $ (1) $ 4 __________________ (1) Includes foreign exchange translation The following table summarizes the weighted average actuarial assumptions used to determine our net periodic cost of the plans for the years ended December 31, 2021, 2020 and 2019: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans 2021 2020 2019 2021 2020 2019 2021 2020 2019 Rate assumptions Discount rate 2.8 % 2.7 % 3.6 % 2.1 % 2.8 % 3.3 % 2.4 % 2.4 % 3.5 % Expected long - term return on plan assets 6.4 % 6.3 % 6.9 % 6.4 % 5.8 % 5.7 % N/A N/A N/A Increase in future compensation levels N/A N/A N/A N/A N/A N/A N/A N/A N/A Health care trend rate assumed for next year N/A N/A N/A 5.8 % 6.0 % 6.5 % N/A N/A N/A Ultimate health care trend rate N/A N/A N/A 4.5 % 4.5 % 4.5 % N/A N/A N/A Year rate reaches ultimate trend rate N/A N/A N/A 2030 2029 2027 N/A N/A N/A The expected long-term return on plan assets assumption represents the average rate that the Company expects to earn over the long-term on the assets of the Company's benefit plans, including those from dividends, interest income and capital appreciation. The assumption has been determined based on expectations regarding future rates of return for the plans' investment portfolio, with consideration given to the allocation of investments by asset class and historical rates of return for each individual asset class. A one percentage increase or decrease in healthcare trend rates in the table above would have an insignificant impact to our service and interest cost and the postretirement medical obligations. Plan Assets The Company is responsible for formulating the investment policies and strategies for each plan's assets. Presently all of the plans are governed by a single investment policy and are uniformly invested. As part of the policy statement the Company has implemented a glide path which adjusts the percentage of assets invested in return seeking assets based upon the attainment of specific funding percentages. The non-return seeking assets are invested primarily in bonds with maturities closely matching the anticipated payment of benefits. The table below represents all of the Company's funded pension plans' and postretirement benefit plans' weighted-average asset allocation at December 31, 2021 and 2020 by asset category: Asset Allocation 2021 2020 Asset Category Equity securities 41 % 55 % Debt securities 47 % 33 % Real estate 6 % 6 % Other, primarily cash and cash equivalents, and hedge funds 6 % 6 % The table below presents the target allocation ranges for each major asset category for the Company's benefit plans for the years ended December 31, 2021 and 2020. Target Asset Allocation Range 2021 2020 Asset Category Equity securities 40% - 60% 40% - 60% Debt securities 30% - 50% 40% - 50% Real estate 5% - 10% 5% - 10% Other, primarily cash and cash equivalents and hedge funds 5% - 10% 5% - 10% The following tables provides the fair value of plan assets held by our defined benefit plan by asset category and by fair value hierarchy level. Certain investments are measured at their NAV per share and do not have readily determined fair values. As such, these investments are not subject to leveling in the fair value hierarchy. December 31, 2021 (Dollars in millions) Level 1 Level 2 Level 3 Total Asset category Investments measured at fair value: $ — $ — $ — $ — Cash and cash equivalents $ 11 $ — $ — $ 11 Equity securities 6 — — 6 Debt securities — — — — Total $ 17 $ — $ — $ 17 Investments measured at NAV: Collective trust funds — — — 162 Equity and fixed income funds — — — — Total $ 17 $ — $ — $ 179 December 31, 2020 (Dollars in millions) Level 1 Level 2 Level 3 Total Asset category Investments measured at fair value: Cash and cash equivalents $ 9 $ — $ — $ 9 Equity securities 6 — — 6 Debt securities — — — — Total $ 15 $ — $ — $ 15 Investments measured at NAV: Collective trust funds — — — 148 Equity and fixed income funds — — — — Total $ 15 $ — $ — $ 163 For the year ended December 31, 2022, the Company expects to contribute $5 million to its pension plans and an inconsequential amount to its postretirement plans. During 2020 the Company deferred approximately $7 million in pension contributions until 2021 under the CARES Act and IRS Notice 2020-82, which was included in the total pension contributions for 2021 of $13 million. The following table presents expected pension and postretirement benefit payments over the next 10 years: (Dollars in millions) Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans Year Ending December 31, 2022 $ 12 $ — $ 1 2023 12 — 1 2024 13 — 1 2025 13 — 1 2026 13 — 1 2027-2031 63 — 6 Defined Contribution Plans The Company maintains defined contribution plans covering substantially all domestic full-time eligible employees. The Company's contributions to these plans for the years ended December 31, 2021, 2020 and 2019 amounted to $22 million, $21 million and $19 million, respectively. |
Equity Method Investments
Equity Method Investments | 12 Months Ended |
Dec. 31, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | Equity Method Investments Our share of net earnings related to our equity method investments was $2 million, $3 million and $2 million for the years ended December 31, 2021, 2020 and 2019, respectively, which was included in our Advanced Sensing and Computing business segment operating profit. Below is a list of the entities accounted for under the equity method and recorded in other noncurrent assets on our Consolidated Balance Sheet: % of Ownership Carrying Value (Dollars in millions) 2021 2020 2021 2020 Advanced Acoustics Concepts, LLC 51 % 51 % $ 27 $ 25 |
Share-based compensation plan_2
Share-based compensation plans | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Share-based compensation plans | Share-based compensation plans The Company does not have any share-based compensation plans. See Note 6 : Other Liabilities | Share-based compensation plans The Company does not have any share-based compensation plans. See Note 6 : Other Liabilities |
Commitment and Contingencies_2
Commitment and Contingencies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | Commitments and Contingencies Commitments The Company’s commitments are primarily related to our lease and credit agreements. Contingencies From time to time we are subject to certain legal proceedings and claims in the ordinary course of business. These matters are subject to many uncertainties and it is possible that some of these matters ultimately could be decided, resolved or settled in a manner adverse to us. Although the precise amount of liability that may result from these matters is not ascertainable, the Company believes that any amounts exceeding the Company's recorded accruals should not materially adversely affect the Company's financial condition or liquidity. It is possible, however, that the ultimate resolution of those matters could result in a material adverse effect on the Company's results of operations and/or cash flows from operating activities for a particular reporting period. We establish reserves for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. Some environmental laws, such as the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (also known as “CERCLA” or the “Superfund law”) and similar state statutes, can impose liability upon former owners or operators for the entire cost of investigating and remediating contaminated sites regardless of the lawfulness of the original activities that led to the contamination. In July 2000, an entity which later became a subsidiary of the Company received a Section 104(e) Request for Information (“RFI”) from the National Park Service (“NPS”), pursuant to CERCLA, regarding the presence of radioactive material at a site within a national park, which site was operated by an alleged predecessor to our subsidiary over 50 years ago. Following the subsidiary’s response to the RFI, the NPS directed it and another alleged former operator to perform an Engineering Evaluation and Cost Analysis (“EE/CA”) of a portion of the site. The Company’s subsidiary made a good faith offer to conduct an alternative EE/CA work plan, but the NPS rejected this offer and opted to perform the EE/CA itself. The NPS previously posted its intention to open a formal public comment period regarding the EE/CA at the end of 2019. To the Company’s knowledge, the EE/CA has not been released and a public comment period has yet to be opened. Following completion of the EE/CA, the NPS may seek reimbursement for its investigative and remedial efforts to date, or direct one or more of the potentially responsible parties to perform any remediation that may be required by CERCLA or may enter an alternative dispute resolution proceeding to attempt to resolve each party’s share. In addition, the NPS may seek to recover damages for loss of use of certain natural resources. The Company believes that it has legitimate defenses to its subsidiary’s potential liability and that there are other potentially responsible parties for the environmental conditions at the site, including the U.S. government as owner, operator and arranger at the site. The potential liability associated with this matter could change substantially due to such factors as additional information on the nature or extent of contamination, methods of remediation that might be recommended or required, changes in the apportionment of costs among the responsible parties, whether the NPS seeks to recover additional damages, whether the NPS’s plans to investigate additional areas to identify a need for further remedial action for which the Company may be identified as a potentially responsible party and other actions by governmental agencies or private parties. The Company has recorded its best estimate of damages and its share of remediation costs related to the site to reflect what we and our advisors reasonably believe we would be liable for based on the current information and circumstances of the claim, exclusive of other potential liabilities that may be asserted in the future. In the performance of our contracts we routinely request contract modifications that require additional funding from the customer. Most often, these requests are due to customer-directed changes in the scope of work. While we are entitled to recovery of these costs under our contracts, the administrative process with our customer may be protracted. Based on the circumstances, we periodically file requests for equitable adjustment (“REAs”) that are sometimes converted into claims. In some cases, these requests are disputed by our customer. We believe our outstanding modifications, REAs and other claims will be resolved without material impact to our results of operations, financial condition or cash flows. As a government contractor, with customers including the U.S. government as well as various state and local government entities, the Company may be subject to audits, investigations and claims with respect to its contract performance, pricing, costs, cost allocations and procurement practices. Additionally, amounts billed under such contracts, including direct and indirect costs, are subject to potential adjustments before final settlement. Management believes that adequate provisions for such potential audits, investigations, claims and contract adjustments, if any, have been made in the financial statements. Product Warranties Product warranty costs generally are accrued in proportion to product revenue realized in conjunction with our over-time revenue recognition policy. Product warranty expense is recognized based on the term of the product warranty, generally one year to three years, and the related estimated costs, considering historical claims expense. Accrued warranty costs are reduced as these costs are incurred and as the warranty period expires, and otherwise may be modified as specific product performance issues are identified and resolved. The following is a summary of changes in the product warranty balances during the period ended June 30, 2022: (Dollars in millions) Balance as of December 31, 2021 $ 19 Additional provision 6 Reversal and utilization (6) Balance as of June 30, 2022 19 | Commitments and Contingencies Commitments The Company’s commitments are primarily related to our lease and credit agreements. See Note 9 : Leases and Note 11 : Debt for additional information on our leases and credit agreements. Contingencies From time to time we are subject to certain legal proceedings and claims in the ordinary course of business. These matters are subject to many uncertainties and it is possible that some of these matters ultimately could be decided, resolved or settled in a manner adverse to us. Although the precise amount of liability that may result from these matters is not ascertainable, the Company believes that any amounts exceeding the Company's recorded accruals should not materially adversely affect the Company's financial condition or liquidity. It is possible, however, that the ultimate resolution of those matters could result in a material adverse effect on the Company's results of operations and/or cash flows from operating activities for a particular reporting period. We establish reserves for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. Some environmental laws, such as the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (also known as “CERCLA” or the “Superfund law”) and similar state statutes, can impose liability upon former owners or operators for the entire cost of investigating and remediating contaminated sites regardless of the lawfulness of the original activities that led to the contamination. In July 2000, an entity which later became a subsidiary of the Company received a Section 104(e) Request for Information (“RFI”) from the National Park Service (“NPS”), pursuant to CERCLA, regarding the presence of radioactive material at a site within a national park, which site was operated by an alleged predecessor to our subsidiary over 50 years ago. Following the subsidiary’s response to the RFI, the NPS directed it and another alleged former operator to perform an Engineering Evaluation and Cost Analysis (“EE/CA”) of a portion of the site. The Company’s subsidiary made a good faith offer to conduct an alternative EE/CA work plan, but the NPS rejected this offer and opted to perform the EE/CA itself. The NPS previously posted its intention to open a formal public comment period regarding the EE/CA at the end of 2019. To the Company’s knowledge, the EE/CA has not been released and a public comment period has yet to be opened. Following completion of the EE/CA, the NPS may seek reimbursement for its investigative and remedial efforts to date, or direct one or more of the potentially responsible parties to perform any remediation that may be required by CERCLA or may enter an alternative dispute resolution proceeding to attempt to resolve each party’s share. In addition, the NPS may seek to recover damages for loss of use of certain natural resources. The Company believes that it has legitimate defenses to its subsidiary’s potential liability and that there are other potentially responsible parties for the environmental conditions at the site, including the U.S. government as owner, operator and arranger at the site. The potential liability associated with this matter could change substantially due to such factors as additional information on the nature or extent of contamination, methods of remediation that might be recommended or required, changes in the apportionment of costs among the responsible parties, whether the NPS seeks to recover additional damages, whether the NPS’s plans to investigate additional areas to identify a need for further remedial action for which the Company may be identified as a potentially responsible party and other actions by governmental agencies or private parties. The Company has recorded its best estimate of damages and its share of remediation costs related to the site to reflect what we and our advisors reasonably believe we would be liable for based on the current information and circumstances of the claim, exclusive of other potential liabilities that may be asserted in the future. In the performance of our contracts we routinely request contract modifications that require additional funding from the customer. Most often, these requests are due to customer-directed changes in the scope of work. While we are entitled to recovery of these costs under our contracts, the administrative process with our customer may be protracted. Based on the circumstances, we periodically file requests for equitable adjustment (“REAs”) that are sometimes converted into claims. In some cases, these requests are disputed by our customer. We believe our outstanding modifications, REAs and other claims will be resolved without material impact to our results of operations, financial condition or cash flows. As a government contractor, with customers including the U.S. government as well as various state and local government entities, the Company may be subject to audits, investigations and claims with respect to its contract performance, pricing, costs, cost allocations and procurement practices. Additionally, amounts billed under such contracts, including direct and indirect costs, are subject to potential adjustments before final settlement. Management believes that adequate provisions for such potential audits, investigations, claims and contract adjustments, if any, have been made in the Consolidated Financial Statements. Restructuring costs We engage in targeted restructuring initiatives in order to rationalize headcount and align our operations in a more strategic and cost-efficient structure. In connection with these restructuring initiatives we recorded charges totaling $5 million, $12 million and $20 million for the years ended December 31, 2021, 2020 and 2019, respectively. Costs incurred were related to employee termination and severance costs, as well as costs related to discontinuing product lines or closing down of locations. Charges were recorded within other operating expenses, net, with the exception of costs incurred related to the write-down of inventory, which were recorded in cost of products. See the table below for a breakout of restructuring costs incurred by segment and by nature of cost incurred: Year Ended December 31, (Dollars in millions) 2021 2020 2019 ASC Severance $ 5 $ 6 $ 1 Facility abandonment — — 3 Inventory — — 2 Total ASC 5 6 6 IMS Severance — — 2 Facility abandonment — 6 6 Inventory — — 5 Total IMS — 6 13 Corporate Severance — — — Facility abandonment — — 1 Inventory — — — Total Corporate — — 1 Total $ 5 $ 12 $ 20 The following is a summary of changes in the restructuring provision balance during the years ended December 31, 2020 and 2021: (Dollars in millions) Balance at January 1, 2020 $ 4 Additional provision 12 Reversal and utilization (15) Balance at December 31, 2020 1 Additional provision 5 Reversal and utilization (2) Balance at December 31, 2021 $ 4 Product Warranties Product warranty costs generally are accrued in proportion to product revenue realized in conjunction with our over-time revenue recognition policy. Product warranty expense is recognized based on the term of the product warranty, generally one year to three years, and the related estimated costs, considering historical claims expense. Accrued warranty costs are reduced as these costs are incurred and as the warranty period expires, and otherwise may be modified as specific product performance issues are identified and resolved. The following is a summary of changes in the product warranty balances during the years ended December 31, 2020 and 2021: (Dollars in millions) Balance at January 1, 2020 $ 13 Additional provision 16 Reversal and utilization (12) Balance at December 31, 2020 17 Additional provision 17 Reversal and utilization (15) Balance at December 31, 2021 $ 19 |
Related Party Transactions_2
Related Party Transactions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | Related Party Transactions The Company provides services related to the US interface for the Parent and its other affiliates. These services include financial, tax, trade compliance, marketing and communications and legal. The Company also has related-party sales with the Parent and its other affiliates that occur in the regular course of business. Related-party sales for these transactions are included in revenues and were $54 million and $4 million or the six-month periods ended June 30, 2022 and June 30, 2021, respectively and $51 million and $2 million for the three- month periods ended June 30, 2022 and June 30, 2021 respectively. The Company has related-party purchases with the Parent and its other affiliates that occur in the regular course of business. Related-party purchases for these transactions are included in cost of revenues and were $18 million and $6 million for the six-month periods ended June 30, 2022 and June 30, 2021, respectively and related-party purchases for these transactions are included in cost of revenues for the three -month periods ended June 30, 2022 and June 30, 2021 were $7 million and $5 million, respectively. The receivables related to these transactions with the Parent and its other affiliates of $17 million and $2 million as of June 30, 2022 and December 31, 2021, respectively, and payables of $9 million and $1 million respectively, are recorded in our Consolidated Balance Sheets. An unbilled receivable with the Parent and its other affiliates of $36 million is included in contract assets in our Consolidated Balance Sheets as of June 30, 2022. The Company entered into a Surplus Treasury Agreement with US Holding (the “Surplus Agreement”) in December 2019. The Surplus Agreement allows the Company to advance excess funds to US Holding when funds are available. The advances bear interest at LIBOR plus between 5 and 20 basis points depending on the tenor of the advance. As of June 30, 2022 and December 31, 2021 the Company did not advance any amount to US Holding. The Company entered into Tax Allocation Agreement with US Holding, dated as of November 16, 2020. Refer to Note 1: Summary of Significant Accounting Policies for more information. | Related Party Transactions Under our current proxy agreement, DRS remains largely independent from the Parent. Additionally, the Company provides services related to the US interface for the Parent and its other affiliates. These services include financial, tax, trade compliance, marketing and communications and legal. The Company also has related-party sales with the Parent and its other affiliates that occur in the regular course of business. Related-party sales for these transactions are included in revenues and were $11 million, $26 million and $16 million for the years ended December 31, 2021,2020 and 2019, respectively. The receivables related to these transactions with the Parent and its other affiliates of $2 million and $5 million, respectively, and payables of $1 million and $8 million, respectively, are included in accounts receivable and accounts payable in our Consolidated Balance Sheet as of December 31, 2021 and 2020. The Company entered into a Surplus Treasury Agreement with US Holding (the “Surplus Agreement”) in December 2019. The Surplus Agreement allows the Company to advance excess funds to US Holding when funds are available. The advances bear interest at LIBOR plus between 5 and 20 basis points depending on the tenor of the advance. As of December 31, 2021 and 2020, the Company had advanced $0 million and $115 million to US Holding, which is presented on the balance sheet as a related party note receivable. During 2020, US Holding forgave $300 million of related party debt. This was treated as a capital transaction and the amount was recorded in additional paid-in capital, as US Holding is a related party. The Company entered into Tax Allocation Agreement with US Holding, dated as of November 16, 2020. Refer to Note 1: Summary of Significant Accounting Policies for more information. |
Segment Information_2
Segment Information | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Segment Reporting [Abstract] | ||
Segment Information | Segment Information Operating segments represent components of an enterprise for which separate financial information is available that is regularly reviewed by the CODM in determining how to allocate resources and assess performance. Our Chief Executive Officer is our CODM and he uses a variety of measures to assess the performance of the Company as a whole, depending on the nature of the activity. Beginning in the first quarter of 2022, the Company’s operating and reportable segments were revised into two reportable segments, ASC and IMS, to align our market strategy and capital allocation decision making with our operating structure. Prior year information was revised to reflect the new segment structure. All other operations, which consists primarily of DRS Corporate Headquarters and certain non-operating subsidiaries of the Company, are grouped in Corporate & Eliminations. We primarily use Adjusted EBITDA to manage the Company and allocate resources. Adjusted EBITDA of our business segments includes our net earnings before income taxes, amortization of acquired intangible assets, depreciation, restructuring costs, interest, transaction costs related to an anticipated offering of securities, acquisition and divestiture related expenses, foreign exchange, COVID-19 response costs, non-service pension expenditures and other one-time non-operational events. Adjusted EBITDA is used to facilitate a comparison of the ordinary, ongoing and customary course of our operations on a consistent basis from period to period and provide an additional understanding of factors and trends affecting our business segments. This measure assists the CODM in assessing segment operating performance consistently over time without the impact of our capital structure, asset base and items outside the control of the management team and expenses that do not relate to our core operations. Certain information related to our segments for the three- and six-month periods ended June 30, 2022 and June 30, 2021 is presented in the following tables. Consistent accounting policies have been applied by all segments within the Company, within all reporting periods. A description of our reportable segments as of June 30, 2022 and June 30, 2021 has been included in Note 1: Summary of Significant Accounting Policies . Transactions between segments generally are negotiated and accounted for under terms and conditions that are similar to other government and commercial contracts; however, these intercompany transactions are eliminated in consolidation. Total revenues and intersegment revenues by segment for the three- and six-month periods ended June 30, 2022 and, June 30, 2021 consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 ASC $ 444 $ 489 $ 840 $ 971 IMS 187 174 405 375 Corporate & Eliminations (4) (4) (6) (7) Total revenue $ 627 $ 658 $ 1,239 $ 1,339 (Dollars in millions) 2022 2021 2022 2021 ASC $ 3 $ 4 $ 5 $ 7 IMS 1 — 1 — Total intersegment revenue $ 4 $ 4 $ 6 $ 7 Depreciation by segment for the three- and six-month periods ended June 30, 2022 and June 30, 2021 consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 ASC $ 9 $ 8 $ 18 $ 16 IMS 5 4 9 8 Total depreciation $ 14 $ 12 $ 27 $ 24 Total assets by segment as of June 30, 2022 and December 31, 2021 consist of the following: (Dollars in millions) June 30, 2022 December 31, 2021 ASC $ 1,619 $ 1,545 IMS 1,124 1,145 Corporate & Eliminations 126 379 Held for Sale 174 — Total assets $ 3,043 $ 3,069 Reconciliation of reportable segment Adjusted EBITDA to Net Earnings (loss) consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Adjusted EBITDA ASC $ 57 $ 61 $ 89 $ 115 IMS 10 7 51 25 Corporate & Eliminations — 1 — — Total Adjusted EBITDA 67 69 140 140 Amortization of intangibles (2) (2) (4) (4) Depreciation (14) (12) (27) (24) Restructuring costs — — — — Interest expense (10) (9) (18) (18) Deal related transaction costs (8) — (10) (4) Acquisition and divestiture related expenses — — — — Foreign exchange — (1) — (1) COVID-19 response costs — (2) — (5) Non-service pension expense (1) — (1) — Other one-time non-operational events — — — — Income tax (provision) benefit (7) (11) (19) (23) Net earnings $ 25 $ 32 $ 61 $ 61 | Segment Information Operating segments represent components of an enterprise for which separate financial information is available that is regularly reviewed by the CODM in determining how to allocate resources and assess performance. Our Chief Executive Officer is our CODM and he uses a variety of measures to assess the performance of the Company as a whole, depending on the nature of the activity. The Company’s operating and reportable segments consist of ASC and IMS. All other operations, which consists primarily of DRS Corporate Headquarters and certain non-operating subsidiaries of the Company, are grouped in Corporate & Eliminations. We primarily use Adjusted EBITDA to manage the Company and allocate resources. Adjusted EBITDA of our business segments includes our net earnings before income taxes, amortization of acquired intangible assets, depreciation, restructuring costs, interest, deal related transaction costs , acquisition and divestiture related expenses, foreign exchange, COVID-19 response costs, non-service pension expenditures and other one-time non-operational events. Adjusted EBITDA is used to facilitate a comparison of the ordinary, ongoing and customary course of our operations on a consistent basis from period to period and provide an additional understanding of factors and trends affecting our business segments. This measure assists the CODM in assessing segment operating performance consistently over time without the impact of our capital structure, asset base and items outside the control of the management team and expenses that do not relate to our core operations. Certain information related to our segments for the years ended December 31, 2021, 2020 and 2019, is presented in the following tables. Consistent accounting policies have been applied by all segments within the Company, within all reporting periods. A description of our reportable segments as of December 31, 2021 and 2020 has been included in Note 1: Summary of Significant Accounting Policies . Transactions between segments generally are negotiated and accounted for under terms and conditions that are similar to other government and commercial contracts; however, these intercompany transactions are eliminated in consolidation. Total revenues and intersegment revenues by segment for the years ended December 31, 2021, 2020 and 2019 consists of the following: (Dollars in millions) 2021 2020 2019 ASC $ 1,940 $ 1,958 $ 1,810 IMS 959 834 917 Corporate & Eliminations (20) (14) (13) Total revenue $ 2,879 $ 2,778 $ 2,714 (Dollars in millions) 2021 2020 2019 ASC $ 19 $ 13 $ 12 IMS 1 1 1 Total intersegment revenue $ 20 $ 14 $ 13 Depreciation by segment as of December 31, 2021, 2020 and 2019 consists of the following: (Dollars in millions) 2021 2020 2019 ASC $ 33 $ 30 $ 29 IMS 16 14 13 Total depreciation $ 49 $ 44 $ 42 Total assets by segment as of December 31, 2021 and 2020 consist of the following: (Dollars in millions) 2021 2020 (1) ASC $ 1,545 $ 1,563 IMS 1,145 1,018 Corporate & Eliminations 379 375 Total assets $ 3,069 $ 2,956 __________________ (1) The 2020 amounts have been adjusted to reflect the correction of the allocation of certain assets within each segment. Reconciliation of reportable segment Adjusted EBITDA to Net Earnings (loss) consists of the following: (Dollars in millions) 2021 2020 2019 Adjusted EBITDA ASC $ 220 $ 213 $ 169 IMS 90 55 63 Corporate & Eliminations — — 2 Total Adjusted EBITDA $ 310 $ 268 $ 234 Amortization of intangibles (9) (9) (9) Depreciation (49) (44) (42) Restructuring costs (5) (12) (20) Interest expense (35) (64) (65) Deal related transaction costs (5) (9) — Acquisition and divestiture related expenses — — — Foreign exchange (1) (1) — COVID-19 response costs (6) (12) — Non-service pension expense — (5) (3) Other one-time non-operational events — — — Income tax provision (46) (27) (20) Net earnings $ 154 $ 85 $ 75 |
Subsequent Events_2
Subsequent Events | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Subsequent Events [Abstract] | ||
Subsequent Events | Subsequent Events The Company has evaluated subsequent events through August 15, 2022 , which represents the date on which the Consolidated Financial Statements were issued. On August 4, 2022, the Board of Directors approved a $396 million dividend to US Holding which was paid on August 5, 2022. The dividend was paid from proceeds received from the completion of the sale of GES on August 1, 2022, and the sale of ACC on July 8, 2022. | Subsequent Events The Company has evaluated subsequent events through August 2, 2022, which represents the date on which the Consolidated Financial Statements were issued. On March 21, 2022, the Company entered into a definitive agreement to sell its Global Enterprise Solutions (GES) business to SES Government Solutions, Inc., a wholly owned subsidiary of SES S.A., for $450 million in cash. GES, which was part of the ASC segment for all periods reported, provides commercial satellite communications to the U.S. Government and delivers satellite communications and security solutions to customers worldwide. SES S.A. has guaranteed the payment of the purchase price and performance of all other obligations of SES Government Solutions, Inc. under the agreement. The transaction was completed on August 1, 2022. In February 2022, the Leonardo DRS Board of Directors approved the strategic initiative to divest of the Company’s interest in AAC. On April 19, 2022, we entered into a definitive sales agreement to divest our share of our current equity investment in Advanced Acoustic Concepts (AAC) to Thales Defense & Security, Inc (TDSI), the minority partner in the Joint Venture. The sale was completed on July 8, 2022. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Segment Reporting | Our two reportable segments reflect the way performance is assessed and resources are allocated by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). Advanced Sensing and Computing (“ASC”) The ASC segment provides sensing and computing systems and subsystem solutions to the U.S. military and allied nations focused on solving the most complex threat dynamics facing our service men and women today. We provide world class sensing products in all warfighting domains along with the computation systems to provide situational understanding. Our technologies and products are deployed on nearly all military platforms across land, sea, air, cyberspace, and space on individual soldiers, ground vehicles, ships, aircraft, and satellites. We have market leading capabilities in electro-optic and infrared imaging, advanced lasers, electronic warfare and cyber, communications, and computing in these domains. Integrated Mission Systems (“IMS”) The IMS segment provides critical force protection, platform integration, transportation and logistics and power conversion and propulsion systems to the U.S. military and its allies. Our force protection systems provide much needed protection for our service members and military assets from evolving and proliferating threats and include advanced solutions for counter-unmanned aerial systems, short-range air defense systems and active protection systems on ground vehicles. Additionally, we provide power conversion and propulsion systems for the U.S. Navy’s top priority shipbuilding programs, building on our legacy of providing power components and systems for nearly all naval combat vessels for three decades, positioning us to continue as a leading provider of electrical ship propulsion systems and components for the U.S. Navy and its allies. Other The Company separately presents the unallocable costs associated with corporate functions and certain non-operating subsidiaries of the Company as Corporate & Eliminations. | Our two reportable segments reflect the way performance is assessed and resources are allocated by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). Advanced Sensing and Computing (“ASC”) The ASC segment provides sensing and computing systems and subsystem solutions to the U.S. military and allied nations focused on solving the most complex threat dynamics facing our service men and women today. We provide world class sensing products in all warfighting domains along with the computation systems to provide situational understanding. Our technologies and products are deployed on nearly all military platforms across land, sea, air, cyberspace, and space on individual soldiers, ground vehicles, ships, aircraft, and satellites. We have market leading capabilities in electro-optic and infrared imaging, advanced lasers, electronic warfare and cyber, communications, and computing in these domains. Integrated Mission Systems (“IMS”) The IMS segment provides critical force protection, platform integration, transportation and logistics and power conversion and propulsion systems to the U.S. military and its allies. Our force protection systems provide much needed protection for our service members and military assets from evolving and proliferating threats and include advanced solutions for counter-unmanned aerial systems, short-range air defense systems and active protection systems on ground vehicles. Additionally, we provide power conversion and propulsion systems for the U.S. Navy’s top priority shipbuilding programs, building on our legacy of providing power components and systems for nearly all naval combat vessels for three decades, positioning us to continue as a leading provider of electrical ship propulsion systems and components for the U.S. Navy and its allies. Other The Company separately presents the unallocable costs associated with corporate functions and certain non-operating subsidiaries of the Company as Corporate & Eliminations. |
Basis of Presentation | Basis of presentation The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of DRS, its wholly owned subsidiaries and its controlling interests. Interests in joint ventures that are controlled by the Company, or for which the Company is otherwise deemed to be the primary beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts significant influence, the Company applies the equity method of accounting. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation. Interim Financial Statements . The unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These rules and regulations permit some of the information and footnote disclosures included in financial statements prepared in accordance with U.S. GAAP to be condensed or omitted. These unaudited Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements as of and for the year ended December 31, 2021 filed as Exhibit 99.1 to the Current Report on Form 8-K filed on August 2, 2022. | Basis of presentationThe accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of DRS, its wholly owned subsidiaries and its controlling interests. Interests in joint ventures that are controlled by the Company, or for which the Company is otherwise deemed to be the primary beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts significant influence, the Company applies the equity method of accounting. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation. |
Use of Estimates | Use of EstimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant of these estimates and assumptions relate to the recognition of contract revenues and estimated costs to complete contracts in process, recoverability of reported amounts of goodwill, long-lived assets and intangible assets, valuation of pensions and other postretirement benefits, the valuation of deferred tax assets and liabilities and the valuation of unrecognized tax benefits. Actual results could differ from these estimates. | Use of estimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant of these estimates and assumptions relate to the recognition of contract revenues and estimated costs to complete contracts in process, recoverability of reported amounts of goodwill, long-lived assets and intangible assets, valuation of pensions and other postretirement benefits, the valuation of deferred tax assets and liabilities and the valuation of unrecognized tax benefits. Actual results could differ from these estimates. |
Revenue Recognition and Cost of Revenues | Revenue Recognition Our revenues consist of sales of products (tangible goods) and sales of services to customers. We recognize the majority of our revenue from contracts with customers using an over time, cost-to-cost method of accounting. On certain other contracts, primarily time and material (“T&M”) and cost-plus contracts, revenue is recognized using the right-to-invoice practical expedient as we are contractually able to bill our customer based on control transferred to the customer. See Note 2 . Revenue from Contracts with Customers for additional information regarding revenue recognition. The Company recognizes revenue for each separately identifiable performance obligation in a contract representing an obligation to transfer a distinct good or service to a customer. In most cases, goods and services provided under the Company’s contracts are accounted for as single performance obligations due to the complex and integrated nature of our products and services. These contracts generally require significant integration of a group of goods and/or services to deliver a combined output. In some contracts, the Company provides multiple distinct goods or services to a customer. In those cases, the Company accounts for the distinct contract deliverables as separate performance obligations and allocates the transaction price to each performance obligation based on its relative standalone selling price, which is generally estimated using cost plus a reasonable margin. We classify revenues as products or services on our Consolidated Statements of Earnings based on the predominant attributes of the performance obligations. While the Company provides warranties on certain contracts, we typically do not provide for services beyond standard assurances and therefore do not consider warranties to be separate performance obligations. Typically we enter into three types of contracts: fixed-price contracts, cost-plus contracts and T&M contracts (cost-plus contracts and T&M contracts are aggregated below as flexibly priced contracts). The majority of our total revenues are derived from fixed-price contracts; refer to the revenue disaggregation disclosures that follow. For fixed-price contracts, customers agree to pay a fixed amount, negotiated in advanced for a specified scope of work. For cost-plus contracts typically we are reimbursed for allowable or otherwise defined total costs (defined as cost of revenues plus allowable general and administrative expenses) incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. T&M contracts provide for reimbursement of labor hours expended at a contractual fixed labor rate per hour, plus the actual costs of material and other direct non-labor costs. The fixed labor rates on T&M contracts include amounts for the cost of direct labor, indirect contract costs and profit. Estimating the transaction price for an arrangement requires judgment and is based on expected results which are determined using the Company’s historical data. We estimate that the revenue that we expect to be entitled to receive from a customer to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Revenue from contracts with customers is recognized when the performance obligations are satisfied through the transfer of control over the good or service to the customer, which may occur either over time or at a point in time. Revenues for the majority of our contracts are measured as determined by the ratio of cumulative costs incurred to date to estimated total contract costs at completion (the "cost-to-cost method"). We believe this is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of our work and transfer of control to our customers. Due to the long-term nature of many of our contracts, developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. | Revenue Recognition Our revenues consist of sales of products (tangible goods) and sales of services to customers. We recognize the majority of our revenue from contracts with customers using an over time, cost-to-cost method of accounting. On certain other contracts, primarily time and material (“T&M”) and cost-plus contracts, revenue is recognized using the right-to-invoice practical expedient as we are contractually able to bill our customer based on control transferred to the customer. Cost of RevenuesCost of revenues includes materials, labor and overhead costs incurred in the manufacturing, design, and provision of products and services sold in the period as well as warranty costs. Material costs include raw materials, purchased components and sub-assemblies, outside processing and inbound freight costs. Labor and overhead costs consist of direct and indirect manufacturing costs, including wages and fringe benefits, operating supplies, depreciation and amortization, occupancy costs, and purchasing, receiving and inspection costs. The Company recognizes revenue for each separately identifiable performance obligation in a contract representing an obligation to transfer a distinct good or service to a customer. In most cases, goods and services provided under the Company’s contracts are accounted for as single performance obligations due to the complex and integrated nature of our products and services. These contracts generally require significant integration of a group of goods and/or services to deliver a combined output. In some contracts, the Company provides multiple distinct goods or services to a customer. In those cases, the Company accounts for the distinct contract deliverables as separate performance obligations and allocates the transaction price to each performance obligation based on its relative standalone selling price, which is generally estimated using cost plus a reasonable margin. We classify revenues as products or services on our Consolidated Statements of Earnings based on the predominant attributes of the performance obligations. While the Company provides warranties on certain contracts, we typically do not provide for services beyond standard assurances and therefore do not consider warranties to be separate performance obligations. Typically we enter into three types of contracts: fixed-price contracts, cost-plus contracts and T&M contracts (cost-plus contracts and T&M contracts are aggregated below as flexibly priced contracts). The majority of our total revenues are derived from fixed-price contracts; refer to the revenue disaggregation disclosures that follow. For fixed-price contracts, customers agree to pay a fixed amount, negotiated in advanced for a specified scope of work. For cost-plus contracts typically we are reimbursed for allowable or otherwise defined total costs (defined as cost of revenues plus allowable general and administrative expenses) incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. T&M contracts provide for reimbursement of labor hours expended at a contractual fixed labor rate per hour, plus the actual costs of material and other direct non-labor costs. The fixed labor rates on T&M contracts include amounts for the cost of direct labor, indirect contract costs and profit. Estimating the transaction price for an arrangement requires judgment and is based on expected results which are determined using the Company’s historical data. We estimate that the revenue that we expect to be entitled to receive from a customer to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Revenue from contracts with customers is recognized when the performance obligations are satisfied through the transfer of control over the good or service to the customer, which may occur either over time or at a point in time. Revenues for the majority of our contracts are measured as determined by the ratio of cumulative costs incurred to date to estimated total contract costs at completion (the "cost-to-cost method"). We believe this is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of our work and transfer of control to our customers. Due to the long-term nature of many of our contracts, developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. After establishing the estimated total cost at completion, we follow a standard Estimate at Completion (“EAC”) process in which we review the progress and performance on our ongoing contracts at least quarterly. Adjustments to original estimates for a contract's revenue, estimated costs at completion and estimated profit or loss often are required as work progresses under a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change and are also required if contract modifications occur. When adjustments in estimated total costs at completion or in estimated total transaction price are determined, the related impact on revenue and operating income are recognized using the cumulative catch-up method, which recognizes in the current period the cumulative effect of such adjustments for all prior periods. Any anticipated losses on these contracts are fully recognized in the period in which the losses become evident. Conversely, if the requirements for the recognition of contracts over time are not met, revenue is recognized at a point in time when control transfers to the customer, which is generally upon transfer of title. In such cases, the production that is in progress and costs that will be recognized at a future point in time are reported within "inventories". Costs to obtain a contract are incremental direct costs incurred to obtain a contract with a customer, including sales commissions and dealer fees, and are capitalized if material. Costs to fulfill a contract include costs directly related to a contract or specific anticipated contract (e.g., certain design costs) that generate or enhance our ability to satisfy our performance obligations under these contracts. These costs are capitalized to the extent they are expected to be recovered from the associated contract. Contract Assets and Liabilities The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities. The change in the balances of the Company’s contract assets and liabilities primarily results from timing differences between revenue recognition and customer billings and/or payments. Contract assets related to amounts withheld by customers until contract completion are not considered a significant financing component of our contracts because the intent is to protect the customers from our failure to satisfactorily complete our performance obligations. Payments received from customers in advance of revenue recognition (contract liabilities) are not considered a significant financing component of our contracts because they are utilized to pay for contract costs within a one-year period or are requested by us to ensure the customers meet their payment obligations. Value of Remaining Performance Obligations The value of remaining performance obligations, which we also refer to as total backlog, includes the following components: • Funded - Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts. • Unfunded - Unfunded backlog represents the revenue value of firm orders for products and services under existing contracts for which funding has not yet been appropriated less funding previously recognized on these contracts. |
Research and Development Expenses | Research and Development ExpensesWe conduct research and development (“R&D”) activities using our own funds (referred to as company-funded R&D or independent research and development (“IR&D”)) and under contractual arrangements with our customers (referred to as customer-funded R&D) to enhance existing products and services and to develop future products, solutions, and technologies. R&D costs include basic research, applied research, concept formulation studies, design, development, and related test activities. IR&D costs are allocated to customer contracts as part of the general and administrative overhead costs and generally recoverable on our customer contracts with the U.S. Government. Customer-funded R&D costs are charged directly to the related customer contract. Substantially all R&D costs are charged to cost of revenues as incurred. | Research and Development ExpensesWe conduct research and development (“R&D”) activities using our own funds (referred to as company-funded R&D or independent research and development (“IR&D”)) and under contractual arrangements with our customers (referred to as customer-funded R&D) to enhance existing products and services and to develop future technologies. R&D costs include basic research, applied research, concept formulation studies, design, development, and related test activities. IR&D costs are allocated to customer contracts as part of the general and administrative overhead costs and generally recoverable on our customer contracts with the U.S. Government. Customer-funded R&D costs are charged directly to the related customer contract. Substantially all R&D costs are charged to cost of revenues as incurred. |
Foreign Currency | Foreign CurrencySignificant transactions in foreign currencies are translated into U.S. dollars at the approximate prevailing rate at the time of the transaction. Foreign exchange transaction gains and losses in the second quarter and first six months of 2022 and 2021 were immaterial to the Company's results of operations. The operations of the Company's foreign subsidiaries are translated from the local (functional) currencies into U.S. dollars using weighted average rates of exchange during each monthly period. The rates of exchange at each balance sheet date are used for translating certain balance sheet accounts and gains or losses resulting from these translation adjustments are included in the accompanying Consolidated Balance Sheets as a component of other comprehensive earnings. | Foreign CurrencySignificant transactions in foreign currencies are translated into U.S. dollars at the approximate prevailing rate at the time of the transaction. Foreign exchange transaction gains and losses in 2021, 2020 and 2019 were immaterial to the Company's results of operations. The operations of the Company's foreign subsidiaries are translated from the local (functional) currencies into U.S. dollars using weighted average rates of exchange during each monthly period. The rates of exchange at each balance sheet date are used for translating certain balance sheet accounts and gains or losses resulting from these translation adjustments are included in the accompanying Consolidated Balance Sheet as a component of other comprehensive income. |
Cash and Cash Equivalents | Cash and Cash EquivalentsCash and cash equivalents include cash on hand, deposits with banks or other short-term, highly liquid investments with original maturities of three months or less. | Cash and Cash EquivalentsCash and cash equivalents include cash on hand, deposits with banks or other short-term, highly liquid investments with original maturities of three months or less. |
Accounts Receivable | Accounts ReceivableAccounts receivable consist of amounts billed and currently due from customers. We maintain an allowance recorded in the Allowance for Credit Losses account that is estimated and recorded utilizing relevant information about past events, including historical experience, current conditions and a reasonable and supportable forecast that affects the collectability of the related financial asset. | Accounts ReceivableAccounts receivable consist of amounts billed and currently due from customers. When events or conditions indicate that amounts outstanding from customers may become uncollectible, an allowance is estimated and recorded. |
Inventories | InventoriesInventories are recorded at the lower of cost (determined by either actual, weighted average or first-in, first-out methods) or net realizable value, and include direct production costs as well as indirect costs, such as factory overhead. The net realizable value is calculated as the expected sales price in the course of normal operations net of estimated costs to finish and sell the goods. | InventoriesInventories are recorded at the lower of cost (determined by either actual, weighted average or first-in, first-out methods) or net realizable value, and include direct production costs as well as indirect costs, such as factory overhead. The net realizable value is calculated as the expected sales price in the course of normal operations net of estimated costs to finish and sell the goods. |
Property, Plant and Equipment | Property, Plant and EquipmentProperty, plant and equipment is carried at cost less accumulated depreciation. Depreciation is calculated on the straight-line method. The estimated useful lives of plant, machinery and equipment and building and building improvements generally range from 3 to 10 years and 15 to 40 years, respectively. Leasehold improvements are amortized over the shorter of the estimated useful life of the improvements or the remaining life of the lease.When assets are retired or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the Consolidated Balance Sheets, and the net gain or loss is included in the determination of net earnings. Maintenance and repairs are charged to operations as incurred and renewals and improvements are capitalized. | Property, Plant and EquipmentProperty, plant and equipment is carried at cost less accumulated depreciation. Depreciation is calculated on the straight-line method. The estimated useful lives of plant, machinery and equipment and building and building improvements generally range from 3 to 10 years and 15 to 40 years, respectively. Leasehold improvements are amortized over the shorter of the estimated useful life of the improvements or the remaining life of the lease.When assets are retired or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the Consolidated Balance Sheet, and the net gain or loss is included in the determination of net earnings. Maintenance and repairs are charged to operations as incurred and renewals and improvements are capitalized. |
Goodwill | Goodwill Goodwill is assigned to reporting units and is reviewed for impairment at the reporting unit level on an annual basis, or whenever changes in circumstances indicate that the carrying amount may not be recoverable. A reporting unit is an operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by the segment manager. Two or more components of an operating segment may be aggregated and deemed a single reporting unit if the components have similar economic characteristics. Based upon the aggregation criteria the Company concluded it had seven reporting units at both June 30, 2022 and December 31, 2021. The annual impairment test is conducted as of December 31. The Company did not identify any triggering events during the six months ended June 30, 2022 or June 30, 2021. | Goodwill Goodwill represents the excess purchase price paid to acquire a business over the fair value of net assets acquired. Goodwill is assigned to reporting units and is reviewed for impairment at the reporting unit level on an annual basis, or whenever changes in circumstances indicate that the carrying amount may not be recoverable. A reporting unit is an operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by the segment manager. Two or more components of an operating segment may be aggregated and deemed a single reporting unit if the components have similar economic characteristics. Based upon the aggregation criteria the Company concluded it had seven reporting units at both December 31, 2021 and 2020. The annual impairment test is typically performed after completion of the Company's annual financial operating plan, which occurs as of December 31. The Company uses quantitative assessments and qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the optional qualitative assessment is performed (Step 0) and the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, an additional quantitative fair value test (Step 1) is performed. When performing the Step 1 goodwill impairment test, we compare the fair values of each of our reporting units to their respective carrying values. In order to compute the fair value of our reporting units, we primarily use the income approach based on the discounted cash flows that each reporting unit expects to generate in the future, consistent with our operating plans. Determining the fair value of our reporting units requires significant judgments, including the timing and amount of future cash flows, long-term growth rates, determination of the weighted-average cost of capital and terminal value assumptions. If, based on the quantitative fair value test, the |
Acquired Identifiable Intangible Assets | Identifiable intangible assets represent assets acquired as part of the Company's business acquisitions and include customer and program/contract-related assets. The values assigned to acquired identifiable intangible assets are determined as of the date of acquisition based on estimates and judgments regarding expectations for the estimated future after-tax cash flows from those assets over their lives, including the probability of expected future contract renewals and revenues, all of which are discounted to present value. | Identifiable intangible assets represent assets acquired as part of the Company's business acquisitions and include customer and program/contract-related assets. The values assigned to acquired identifiable intangible assets are determined as of the date of acquisition based on estimates and judgments regarding expectations for the estimated future after-tax cash flows from those assets over their lives, including the probability of expected future contract renewals and revenues, all of which are discounted to present value. |
Long-Lived Assets | The Company assesses the recoverability of the carrying value of its long-lived assets and intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable. If there are any indicators of impairment present, the Company then evaluates the recoverability of the potentially impaired long-lived assets and acquired identifiable intangible assets based upon expectations of undiscounted net cash flows from such assets. If the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset or asset group, a loss is recognized for the difference between the estimated fair value and the carrying amount of the assets. Assets to be disposed of, including those of discontinued operations, are reported at the lower of the carrying amount or fair value, less the costs to sell. | The Company assesses the recoverability of the carrying value of its long-lived assets and intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable. If there are any indicators of impairment present, the Company then evaluates the recoverability of the potentially impaired long-lived assets and acquired identifiable intangible assets based upon expectations of undiscounted net cash flows from such assets. If the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset or asset group, a loss is recognized for the difference between the estimated fair value and the carrying amount of the assets. Assets to be disposed of, including those of discontinued operations, are reported at the lower of the carrying amount or fair value, less the costs to sell. |
Derivative Financial Instruments | Derivative Financial InstrumentsThe Company does not use derivative financial instruments for trading purposes. All derivative instruments are carried on the Consolidated Balance Sheets as either assets or liabilities at fair value. The classification of gains and losses resulting from changes in the fair values of derivatives depends on the intended use of the derivative and its resultant designation. The Company had no significant derivative or hedging instruments for the periods presented. | Derivative Financial InstrumentsThe Company does not use derivative financial instruments for trading purposes. All derivative instruments are carried on the Consolidated Balance Sheet as either assets or liabilities at fair value. The classification of gains and losses resulting from changes in the fair values of derivatives depends on the intended use of the derivative and its resultant designation. |
Pension and Other Postretirement Benefits | Pension and Other Postretirement BenefitsThe obligations for the Company's pension plans and postretirement benefit plans and the related annual costs of employee benefits are calculated based on several long-term assumptions, including discount rates for participant benefit liabilities, rates of return on plan assets, expected annual rates of salary increases for employee participants in the case of pension plans and expected annual increases in the costs of medical and other health care benefits in the case of postretirement benefit plans. These long-term assumptions are subject to revision based on changes in interest rates, financial market conditions, expected versus actual returns on plan assets, participant mortality rates and other actuarial assumptions, including future rates of salary increases, benefit formulas and levels, and rates of increase in the costs of benefits. Changes in these assumptions, if significant, can materially affect the amount of annual net periodic benefit costs recognized in the Company's results of operations from one year to the next, the liabilities for the pension plans and postretirement benefit plans and the Company's annual cash requirements to fund these plans. The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility requirements for participation in the plans vary, and benefits generally are based on the participant's compensation and years of service, as defined in the respective plan. The Company's funding policy generally is to contribute in accordance with cost accounting standards that affect government contractors, subject to the Tax Code and regulations thereunder. Plan assets are invested primarily in equities, bonds (both corporate and U.S. government), U.S. government-sponsored entity instruments, cash and cash equivalents and real estate. The Company also provides postretirement medical benefits for certain retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company's postretirement benefit plans. The Company's contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees' Beneficiary Association (“VEBA”) trust and, for non-funded plans, recovery of claims on a pay-as-you-go basis, subject to the Tax Code and regulations thereunder, with the retiree generally paying a portion of the costs through contributions, deductibles and coinsurance provisions. The Company also maintains certain non-contributory and unfunded supplemental retirement plans. Eligibility for participation in the supplemental retirement plans is limited, and benefits generally are based on the participant's compensation and/or years of service. | Pension and Other Postretirement BenefitsThe obligations for the Company's pension plans and postretirement benefit plans and the related annual costs of employee benefits are calculated based on several long-term assumptions, including discount rates for employee benefit liabilities, rates of return on plan assets, expected annual rates of salary increases for employee participants in the case of pension plans and expected annual increases in the costs of medical and other health care benefits in the case of postretirement benefit plans. These long-term assumptions are subject to revision based on changes in interest rates, financial market conditions, expected versus actual returns on plan assets, participant mortality rates and other actuarial assumptions, including future rates of salary increases, benefit formulas and levels, and rates of increase in the costs of benefits. Changes in these assumptions, if significant, can materially affect the amount of annual net periodic benefit costs recognized in the Company's results of operations from one year to the next, the liabilities for the pension plans and postretirement benefit plans and the Company's annual cash requirements to fund these plans. The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility requirements for participation in the plans vary, and benefits generally are based on the participant's compensation and years of service, as defined in the respective plan. The Company's funding policy generally is to contribute in accordance with cost accounting standards that affect government contractors, subject to the Tax Code and regulations thereunder. Plan assets are invested primarily in equities, bonds (both corporate and U.S. government), U.S. government-sponsored entity instruments, cash and cash equivalents and real estate. The Company also provides postretirement medical benefits for certain retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company's postretirement benefit plans. The Company's contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees' Beneficiary Association (“VEBA”) trust and, for non-funded plans, recovery of claims on a pay-as-you-go basis, subject to the Tax Code and regulations thereunder, with the retiree generally paying a portion of the costs through contributions, deductibles and coinsurance provisions. The Company also maintains certain non-contributory and unfunded supplemental retirement plans. Eligibility for participation in the supplemental retirement plans is limited, and benefits generally are based on the participant's compensation and/or years of service. |
Income Taxes | Income TaxesWe and US Holding have entered into a Tax Allocation Agreement (“Tax Allocation Agreement”), dated as of November 16, 2020, with members of an affiliated group, as defined in Section 1504(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Tax Code”), members of one or more consolidated, combined, unitary or similar state tax groups and additional parties who are part of an “expanded affiliated group” for certain tax purposes. The agreement provides for the method of computing and allocating the consolidated U.S. federal tax liability of the affiliated group among its members and of allocating any state group tax liabilities among the state members for the taxable year ending December 31, 2020 and each subsequent year in which the parties are members of a group (whether federal or state). The agreement also provides for reimbursement of US Holding and/or DRS for payment of such tax liabilities, for compensation of any member for use of its “net operating loss” or “tax credits” in arriving at such tax liabilities and the allocation and payment of any refund arising from a carryback of net operating losses or tax credits from subsequent taxable years. Under the agreement, the parties have agreed to calculate and allocate their respective tax liabilities and other tax attributes for taxable years beginning with the first consolidated taxable year that included DRS (i.e., the taxable year ended December 31, 2008) as if the agreement was then in effect. We calculate the provision for incomes taxes during interim periods by applying an estimate of our annual effective tax rate for the full year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items). The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Income taxes as presented attribute deferred income taxes of US Holding to DRS in a manner that is systematic, rational and consistent with the asset and liability method and the governing Tax Allocation Agreement which allocates the tax liability amongst the entities, including DRS. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of DRS’ assets and liabilities and are adjusted for changes in tax rates and tax laws when such changes are enacted. In general, the taxable income of DRS is included in the consolidated U.S. federal and state tax returns of US Holding. Where applicable, US Holding’s current portion of U.S. federal income taxes payable were offset against DRS’ net operating loss carryforwards in the period the related tax expense was recorded. Consequently, our net operating loss carryforwards are deemed to have been settled with US Holding in each year in an amount commensurate with the carrying value of the tax effected net operating loss utilized. If management determines that some portion or all of a deferred tax asset is not “more likely than not” to be realized, a valuation allowance is recorded as a component of the income tax provision to reduce the deferred tax asset to the amounts expected to be realized. In determining whether the Company’s deferred tax assets are realizable, management considers all evidence, both positive and negative, including the history of financial reporting earnings, existing taxable temporary differences and their projected reversals, as well as projected future income and tax planning strategies. We believe it is more likely than not that we will generate sufficient taxable income in future periods to realize our deferred tax assets, subject to the valuation allowances recognized. The Company assesses its tax positions for all periods open to examination by tax authorities based on the latest available information. Those positions are evaluated to determine whether they will more likely than not be sustained upon examination by the relevant taxing authorities. Liabilities for unrecognized tax benefits are measured based on the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. These unrecognized tax benefits are recorded as a component of income tax expense. Interest and penalties related to unrecognized tax benefits are not material. | Income TaxesWe and US Holding have entered into a Tax Allocation Agreement (“Tax Allocation Agreement”), dated as of November 16, 2020, with members of an affiliated group, as defined in Section 1504(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Tax Code”), members of one or more consolidated, combined, unitary or similar state tax groups and additional parties who are part of an “expanded affiliated group” for certain tax purposes. The agreement provides for the method of computing and allocating the consolidated U.S. federal tax liability of the affiliated group among its members and of allocating any state group tax liabilities among the state members for the taxable year ending December 31, 2021 and each subsequent year in which the parties are members of a group (whether federal or state). The agreement also provides for reimbursement of US Holding and/or DRS for payment of such tax liabilities, for compensation of any member for use of its “net operating loss” or “tax credits” in arriving at such tax liabilities and the allocation and payment of any refund arising from a carryback of net operating losses or tax credits from subsequent taxable years. Under the agreement, the parties have agreed to calculate and allocate their respective tax liabilities and other tax attributes for taxable years beginning with the first consolidated taxable year that included DRS (i.e., the taxable year ended December 31, 2008) as if the agreement was then in effect. The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Income taxes as presented attribute deferred income taxes of US Holding to DRS in a manner that is systematic, rational and consistent with the asset and liability method and the governing Tax Allocation Agreement which allocates the tax liability amongst the entities, including DRS. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of DRS’s assets and liabilities and are adjusted for changes in tax rates and tax laws when such changes are enacted. In general, the taxable income of DRS is included in the consolidated U.S. federal and state tax returns of US Holding. Where applicable, US Holding’s current portion of U.S. federal income taxes payable were offset against DRS’s net operating loss carryforwards in the period the related tax expense was recorded. Consequently, our net operating loss carryforwards are deemed to have been settled with US Holding in each year in an amount commensurate with the carrying value of the tax effected net operating loss utilized. If management determines that some portion or all of a deferred tax asset is not “more likely than not” to be realized, a valuation allowance is recorded as a component of the income tax provision to reduce the deferred tax asset to the amounts expected to be realized. In determining whether the Company’s deferred tax assets are realizable, management considers all evidence, both positive and negative, including the history of financial reporting earnings, existing taxable temporary differences and their projected reversals, as well as projected future income and tax planning strategies. We believe it is more likely than not that we will generate sufficient taxable income in future periods to realize our deferred tax assets, subject to the valuation allowances recognized. The Company assesses its tax positions for all periods open to examination by tax authorities based on the latest available information. Those positions are evaluated to determine whether they will more likely than not be sustained upon examination by the relevant taxing authorities. Liabilities for unrecognized tax benefits are measured based on the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. These unrecognized tax benefits are recorded as a component of income tax expense. Interest and penalties related to unrecognized tax benefits are not material. |
Earnings Per Share | Earnings Per ShareBasic earnings per share (“EPS”) is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during each period. The computation of diluted EPS includes the dilutive effect of outstanding stock-based compensation awards, only in periods in which such effect would have been dilutive for the period. In February 2021, the Company completed a forward stock split of 1,450,000 - for- 1 share of common stock. The consolidated financial statements have been adjusted to reflect the forward stock split for all periods presented. There were 100 shares and 145 million basic and diluted common shares outstanding before and after the forward stock split, respectively, for all periods presented. | Earnings Per ShareBasic earnings per share (“EPS”) is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during each period. The computation of diluted EPS includes the dilutive effect of outstanding stock-based compensation awards, only in periods in which such effect would have been dilutive for the period. In February 2021, the Company completed a forward stock split of 1-for-1,450,000 shares of common stock. The consolidated financial statements have been retroactively adjusted as necessary to reflect the forward stock split for all periods presented. There were 100 shares and 145.00 million basic and diluted common shares outstanding before and after the forward stock split, respectively, for all periods presented. |
Fair Value Measurements | Fair Value MeasurementsFair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant on the measurement date. We are required to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value, and to utilize a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three hierarchical levels used to measure fair value are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are directly or indirectly observable. Level 3 — Significant inputs to the valuation model are unobservable. | Fair Value MeasurementsFair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant on the measurement date. We are required to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value, and to utilize a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three hierarchical levels used to measure fair value are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are directly or indirectly observable. Level 3 — Significant inputs to the valuation model are unobservable. |
Financial Instruments | Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities. Financial instruments are reported in the Consolidated Balance Sheets at carrying value, which other than the 7.5% Term loan due November 30, 2023, approximate fair value. See Note 11: Debt | Financial InstrumentsOur financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities. Financial instruments are reported in the Consolidated Balance Sheet at carrying value, which other than the 7.5% Term loan due November 30, 2023, approximate fair value. |
Acquisitions | Acquisitions Our consolidated financial statements include the operations of acquired businesses from the date of acquisition. We account for acquired businesses using the acquisition method of accounting, which requires that any assets acquired and liabilities assumed be measured at their respective fair values on the acquisition date. The accounting for business combinations requires the Company to make significant judgments and estimates. Any excess of the fair value of consideration transferred over the assigned values of the net assets acquired is recognized as goodwill. As previously announced, on June 21, 2022, we entered into the Agreement and Plan of Merger, dated as of June 21, 2022 (the “merger agreement”), by and among the Company, RADA Electronic Industries Ltd (“RADA”) and Blackstart Ltd, a company organized under the laws of the State of Israel and a wholly owned subsidiary of DRS (“Merger Sub”). Upon the terms and subject to the conditions of the merger agreement, and in accordance with the Companies Law, 5759-1999, of the State of Israel, at the effective time of the merger contemplated by the merger agreement (the “merger”), Merger Sub will be merged with and into RADA, with RADA as the surviving company of the merger and thereby becoming a wholly owned subsidiary of DRS. At the effective time of the merger (the “effective time”), each ordinary share of RADA, par value New Israeli Shekel 0.03 per share (“RADA shares”), issued and outstanding immediately prior to the effective time will be converted into and become exchangeable for one share of common stock of DRS, par value $0.01 per share (“DRS common stock”). Immediately prior to the effective time, the shares of DRS common stock held by US Holding, the current sole stockholder of DRS, will be split (rounded up to the nearest whole share), as necessary, such that, immediately following the effective time and the issuance of the shares of DRS common stock to holders of RADA shares and the treatment of options to purchase RADA shares: (A) US Holding will hold 80.5% of the issued and outstanding shares of DRS common stock on a fully diluted basis (with US Holding’s ownership percentage including 50% of any awards or other equity interests that DRS may issue pursuant to entitlements under any grants of certain one-time special awards of restricted stock units (the “One-Time Awards”) and the foregoing percentage calculation excluding any awards or other equity interests that DRS may issue pursuant to entitlements under the DRS’s long term incentive plan and 50% of any awards or other equity interests that DRS may issue pursuant to entitlements in connection with any grants of One-Time Awards, and such foregoing percentage will assume a reference price for RADA options equal to the volume-weighted average price of the RADA shares on the NASDAQ for the ten trading days immediately prior to the closing date); and (B) the holders of RADA shares, RADA vested options and RADA unvested options (or DRS options issued pursuant to the provisions of the merger agreement) will hold or have entitlements to 19.5% of the issued and outstanding shares of DRS common stock on a fully diluted basis (the foregoing percentage calculation excluding any awards or other equity interests that DRS may issue pursuant to entitlements under the DRS long-term incentive plan or the issuance of any One-Time Awards). Each of DRS’s and RADA’s obligation to consummate the merger is subject to the satisfaction or waiver of a number of conditions specified in the merger agreement. The merger is expected to close in the fourth quarter of 2022. On August 3, 2022, we filed a registration statement on Form S-4 with the SEC for the shares of DRS common stock to be issued in the merger, which has not yet been declared effective by the SEC. | AcquisitionsOur consolidated financial statements include the operations of acquired businesses from the date of acquisition. We account for acquired businesses using the acquisition method of accounting, which requires that any assets acquired and liabilities assumed be measured at their respective fair values on the acquisition date. The accounting for business combinations requires the Company to make significant judgments and estimates. Any excess of the fair value of consideration transferred over the assigned values of the net assets acquired is recognized as goodwill. |
Investments | Investments Investments where we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other noncurrent assets on our Consolidated Balance Sheets. Significant influence typically exists if we have a 20% to 50% ownership interest in the investee. Under this method of accounting, our share of the net earnings or losses of the investee is included in operating profit in other income, net on our Consolidated Statements of Earnings since the activities of the investee are closely aligned with the operations of the business segment holding the investment. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is therefore recorded during the current period. The Company’s cost method investment consists of an investment in a private company in which we do not have the ability to exercise significant influence over its operating and financial activities. Management evaluates this investment for possible impairment quarterly. | Investments Investments where we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other noncurrent assets on our Consolidated Balance Sheet. Significant influence typically exists if we have a 20% to 50% ownership interest in the investee. Under this method of accounting, our share of the net earnings or losses of the investee is included in operating profit in other income, net on our Consolidated Statements of Earnings (Loss) since the activities of the investee are closely aligned |
Variable Interest Entities | Variable Interest Entities The Company occasionally forms joint ventures and/or enters into arrangements with special purpose limited liability companies for the purpose of bidding and executing on specific projects. The Company analyzes each such arrangement to determine whether it represents a variable interest entity (“VIE”). If the arrangement is determined to be a VIE, the Company assesses whether it is the primary beneficiary of the VIE and if it is, consequently required to consolidate the VIE. The Company did not have any investment in VIEs for the periods presented. | Variable Interest EntitiesThe Company occasionally forms joint ventures and/or enters into arrangements with special purpose limited liability companies for the purpose of bidding and executing on specific projects. The Company analyzes each such arrangement to determine whether it represents a variable interest entity (“VIE”). If the arrangement is determined to be a VIE, the Company assesses whether it is the primary beneficiary of the VIE and if it is, consequently required to consolidate the VIE. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Segment Reporting | Our two reportable segments reflect the way performance is assessed and resources are allocated by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). Advanced Sensing and Computing (“ASC”) The ASC segment provides sensing and computing systems and subsystem solutions to the U.S. military and allied nations focused on solving the most complex threat dynamics facing our service men and women today. We provide world class sensing products in all warfighting domains along with the computation systems to provide situational understanding. Our technologies and products are deployed on nearly all military platforms across land, sea, air, cyberspace, and space on individual soldiers, ground vehicles, ships, aircraft, and satellites. We have market leading capabilities in electro-optic and infrared imaging, advanced lasers, electronic warfare and cyber, communications, and computing in these domains. Integrated Mission Systems (“IMS”) The IMS segment provides critical force protection, platform integration, transportation and logistics and power conversion and propulsion systems to the U.S. military and its allies. Our force protection systems provide much needed protection for our service members and military assets from evolving and proliferating threats and include advanced solutions for counter-unmanned aerial systems, short-range air defense systems and active protection systems on ground vehicles. Additionally, we provide power conversion and propulsion systems for the U.S. Navy’s top priority shipbuilding programs, building on our legacy of providing power components and systems for nearly all naval combat vessels for three decades, positioning us to continue as a leading provider of electrical ship propulsion systems and components for the U.S. Navy and its allies. Other The Company separately presents the unallocable costs associated with corporate functions and certain non-operating subsidiaries of the Company as Corporate & Eliminations. | Our two reportable segments reflect the way performance is assessed and resources are allocated by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). Advanced Sensing and Computing (“ASC”) The ASC segment provides sensing and computing systems and subsystem solutions to the U.S. military and allied nations focused on solving the most complex threat dynamics facing our service men and women today. We provide world class sensing products in all warfighting domains along with the computation systems to provide situational understanding. Our technologies and products are deployed on nearly all military platforms across land, sea, air, cyberspace, and space on individual soldiers, ground vehicles, ships, aircraft, and satellites. We have market leading capabilities in electro-optic and infrared imaging, advanced lasers, electronic warfare and cyber, communications, and computing in these domains. Integrated Mission Systems (“IMS”) The IMS segment provides critical force protection, platform integration, transportation and logistics and power conversion and propulsion systems to the U.S. military and its allies. Our force protection systems provide much needed protection for our service members and military assets from evolving and proliferating threats and include advanced solutions for counter-unmanned aerial systems, short-range air defense systems and active protection systems on ground vehicles. Additionally, we provide power conversion and propulsion systems for the U.S. Navy’s top priority shipbuilding programs, building on our legacy of providing power components and systems for nearly all naval combat vessels for three decades, positioning us to continue as a leading provider of electrical ship propulsion systems and components for the U.S. Navy and its allies. Other The Company separately presents the unallocable costs associated with corporate functions and certain non-operating subsidiaries of the Company as Corporate & Eliminations. |
Basis of Presentation | Basis of presentation The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of DRS, its wholly owned subsidiaries and its controlling interests. Interests in joint ventures that are controlled by the Company, or for which the Company is otherwise deemed to be the primary beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts significant influence, the Company applies the equity method of accounting. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation. Interim Financial Statements . The unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These rules and regulations permit some of the information and footnote disclosures included in financial statements prepared in accordance with U.S. GAAP to be condensed or omitted. These unaudited Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements as of and for the year ended December 31, 2021 filed as Exhibit 99.1 to the Current Report on Form 8-K filed on August 2, 2022. | Basis of presentationThe accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of DRS, its wholly owned subsidiaries and its controlling interests. Interests in joint ventures that are controlled by the Company, or for which the Company is otherwise deemed to be the primary beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts significant influence, the Company applies the equity method of accounting. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation. |
Use of Estimates | Use of EstimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant of these estimates and assumptions relate to the recognition of contract revenues and estimated costs to complete contracts in process, recoverability of reported amounts of goodwill, long-lived assets and intangible assets, valuation of pensions and other postretirement benefits, the valuation of deferred tax assets and liabilities and the valuation of unrecognized tax benefits. Actual results could differ from these estimates. | Use of estimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant of these estimates and assumptions relate to the recognition of contract revenues and estimated costs to complete contracts in process, recoverability of reported amounts of goodwill, long-lived assets and intangible assets, valuation of pensions and other postretirement benefits, the valuation of deferred tax assets and liabilities and the valuation of unrecognized tax benefits. Actual results could differ from these estimates. |
Revenue Recognition and Cost of Revenues | Revenue Recognition Our revenues consist of sales of products (tangible goods) and sales of services to customers. We recognize the majority of our revenue from contracts with customers using an over time, cost-to-cost method of accounting. On certain other contracts, primarily time and material (“T&M”) and cost-plus contracts, revenue is recognized using the right-to-invoice practical expedient as we are contractually able to bill our customer based on control transferred to the customer. See Note 2 . Revenue from Contracts with Customers for additional information regarding revenue recognition. The Company recognizes revenue for each separately identifiable performance obligation in a contract representing an obligation to transfer a distinct good or service to a customer. In most cases, goods and services provided under the Company’s contracts are accounted for as single performance obligations due to the complex and integrated nature of our products and services. These contracts generally require significant integration of a group of goods and/or services to deliver a combined output. In some contracts, the Company provides multiple distinct goods or services to a customer. In those cases, the Company accounts for the distinct contract deliverables as separate performance obligations and allocates the transaction price to each performance obligation based on its relative standalone selling price, which is generally estimated using cost plus a reasonable margin. We classify revenues as products or services on our Consolidated Statements of Earnings based on the predominant attributes of the performance obligations. While the Company provides warranties on certain contracts, we typically do not provide for services beyond standard assurances and therefore do not consider warranties to be separate performance obligations. Typically we enter into three types of contracts: fixed-price contracts, cost-plus contracts and T&M contracts (cost-plus contracts and T&M contracts are aggregated below as flexibly priced contracts). The majority of our total revenues are derived from fixed-price contracts; refer to the revenue disaggregation disclosures that follow. For fixed-price contracts, customers agree to pay a fixed amount, negotiated in advanced for a specified scope of work. For cost-plus contracts typically we are reimbursed for allowable or otherwise defined total costs (defined as cost of revenues plus allowable general and administrative expenses) incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. T&M contracts provide for reimbursement of labor hours expended at a contractual fixed labor rate per hour, plus the actual costs of material and other direct non-labor costs. The fixed labor rates on T&M contracts include amounts for the cost of direct labor, indirect contract costs and profit. Estimating the transaction price for an arrangement requires judgment and is based on expected results which are determined using the Company’s historical data. We estimate that the revenue that we expect to be entitled to receive from a customer to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Revenue from contracts with customers is recognized when the performance obligations are satisfied through the transfer of control over the good or service to the customer, which may occur either over time or at a point in time. Revenues for the majority of our contracts are measured as determined by the ratio of cumulative costs incurred to date to estimated total contract costs at completion (the "cost-to-cost method"). We believe this is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of our work and transfer of control to our customers. Due to the long-term nature of many of our contracts, developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. | Revenue Recognition Our revenues consist of sales of products (tangible goods) and sales of services to customers. We recognize the majority of our revenue from contracts with customers using an over time, cost-to-cost method of accounting. On certain other contracts, primarily time and material (“T&M”) and cost-plus contracts, revenue is recognized using the right-to-invoice practical expedient as we are contractually able to bill our customer based on control transferred to the customer. Cost of RevenuesCost of revenues includes materials, labor and overhead costs incurred in the manufacturing, design, and provision of products and services sold in the period as well as warranty costs. Material costs include raw materials, purchased components and sub-assemblies, outside processing and inbound freight costs. Labor and overhead costs consist of direct and indirect manufacturing costs, including wages and fringe benefits, operating supplies, depreciation and amortization, occupancy costs, and purchasing, receiving and inspection costs. The Company recognizes revenue for each separately identifiable performance obligation in a contract representing an obligation to transfer a distinct good or service to a customer. In most cases, goods and services provided under the Company’s contracts are accounted for as single performance obligations due to the complex and integrated nature of our products and services. These contracts generally require significant integration of a group of goods and/or services to deliver a combined output. In some contracts, the Company provides multiple distinct goods or services to a customer. In those cases, the Company accounts for the distinct contract deliverables as separate performance obligations and allocates the transaction price to each performance obligation based on its relative standalone selling price, which is generally estimated using cost plus a reasonable margin. We classify revenues as products or services on our Consolidated Statements of Earnings based on the predominant attributes of the performance obligations. While the Company provides warranties on certain contracts, we typically do not provide for services beyond standard assurances and therefore do not consider warranties to be separate performance obligations. Typically we enter into three types of contracts: fixed-price contracts, cost-plus contracts and T&M contracts (cost-plus contracts and T&M contracts are aggregated below as flexibly priced contracts). The majority of our total revenues are derived from fixed-price contracts; refer to the revenue disaggregation disclosures that follow. For fixed-price contracts, customers agree to pay a fixed amount, negotiated in advanced for a specified scope of work. For cost-plus contracts typically we are reimbursed for allowable or otherwise defined total costs (defined as cost of revenues plus allowable general and administrative expenses) incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. T&M contracts provide for reimbursement of labor hours expended at a contractual fixed labor rate per hour, plus the actual costs of material and other direct non-labor costs. The fixed labor rates on T&M contracts include amounts for the cost of direct labor, indirect contract costs and profit. Estimating the transaction price for an arrangement requires judgment and is based on expected results which are determined using the Company’s historical data. We estimate that the revenue that we expect to be entitled to receive from a customer to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Revenue from contracts with customers is recognized when the performance obligations are satisfied through the transfer of control over the good or service to the customer, which may occur either over time or at a point in time. Revenues for the majority of our contracts are measured as determined by the ratio of cumulative costs incurred to date to estimated total contract costs at completion (the "cost-to-cost method"). We believe this is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of our work and transfer of control to our customers. Due to the long-term nature of many of our contracts, developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. After establishing the estimated total cost at completion, we follow a standard Estimate at Completion (“EAC”) process in which we review the progress and performance on our ongoing contracts at least quarterly. Adjustments to original estimates for a contract's revenue, estimated costs at completion and estimated profit or loss often are required as work progresses under a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change and are also required if contract modifications occur. When adjustments in estimated total costs at completion or in estimated total transaction price are determined, the related impact on revenue and operating income are recognized using the cumulative catch-up method, which recognizes in the current period the cumulative effect of such adjustments for all prior periods. Any anticipated losses on these contracts are fully recognized in the period in which the losses become evident. Conversely, if the requirements for the recognition of contracts over time are not met, revenue is recognized at a point in time when control transfers to the customer, which is generally upon transfer of title. In such cases, the production that is in progress and costs that will be recognized at a future point in time are reported within "inventories". Costs to obtain a contract are incremental direct costs incurred to obtain a contract with a customer, including sales commissions and dealer fees, and are capitalized if material. Costs to fulfill a contract include costs directly related to a contract or specific anticipated contract (e.g., certain design costs) that generate or enhance our ability to satisfy our performance obligations under these contracts. These costs are capitalized to the extent they are expected to be recovered from the associated contract. Contract Assets and Liabilities The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities. The change in the balances of the Company’s contract assets and liabilities primarily results from timing differences between revenue recognition and customer billings and/or payments. Contract assets related to amounts withheld by customers until contract completion are not considered a significant financing component of our contracts because the intent is to protect the customers from our failure to satisfactorily complete our performance obligations. Payments received from customers in advance of revenue recognition (contract liabilities) are not considered a significant financing component of our contracts because they are utilized to pay for contract costs within a one-year period or are requested by us to ensure the customers meet their payment obligations. Value of Remaining Performance Obligations The value of remaining performance obligations, which we also refer to as total backlog, includes the following components: • Funded - Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts. • Unfunded - Unfunded backlog represents the revenue value of firm orders for products and services under existing contracts for which funding has not yet been appropriated less funding previously recognized on these contracts. |
Research and Development Expenses | Research and Development ExpensesWe conduct research and development (“R&D”) activities using our own funds (referred to as company-funded R&D or independent research and development (“IR&D”)) and under contractual arrangements with our customers (referred to as customer-funded R&D) to enhance existing products and services and to develop future products, solutions, and technologies. R&D costs include basic research, applied research, concept formulation studies, design, development, and related test activities. IR&D costs are allocated to customer contracts as part of the general and administrative overhead costs and generally recoverable on our customer contracts with the U.S. Government. Customer-funded R&D costs are charged directly to the related customer contract. Substantially all R&D costs are charged to cost of revenues as incurred. | Research and Development ExpensesWe conduct research and development (“R&D”) activities using our own funds (referred to as company-funded R&D or independent research and development (“IR&D”)) and under contractual arrangements with our customers (referred to as customer-funded R&D) to enhance existing products and services and to develop future technologies. R&D costs include basic research, applied research, concept formulation studies, design, development, and related test activities. IR&D costs are allocated to customer contracts as part of the general and administrative overhead costs and generally recoverable on our customer contracts with the U.S. Government. Customer-funded R&D costs are charged directly to the related customer contract. Substantially all R&D costs are charged to cost of revenues as incurred. |
Foreign Currency | Foreign CurrencySignificant transactions in foreign currencies are translated into U.S. dollars at the approximate prevailing rate at the time of the transaction. Foreign exchange transaction gains and losses in the second quarter and first six months of 2022 and 2021 were immaterial to the Company's results of operations. The operations of the Company's foreign subsidiaries are translated from the local (functional) currencies into U.S. dollars using weighted average rates of exchange during each monthly period. The rates of exchange at each balance sheet date are used for translating certain balance sheet accounts and gains or losses resulting from these translation adjustments are included in the accompanying Consolidated Balance Sheets as a component of other comprehensive earnings. | Foreign CurrencySignificant transactions in foreign currencies are translated into U.S. dollars at the approximate prevailing rate at the time of the transaction. Foreign exchange transaction gains and losses in 2021, 2020 and 2019 were immaterial to the Company's results of operations. The operations of the Company's foreign subsidiaries are translated from the local (functional) currencies into U.S. dollars using weighted average rates of exchange during each monthly period. The rates of exchange at each balance sheet date are used for translating certain balance sheet accounts and gains or losses resulting from these translation adjustments are included in the accompanying Consolidated Balance Sheet as a component of other comprehensive income. |
Cash and Cash Equivalents | Cash and Cash EquivalentsCash and cash equivalents include cash on hand, deposits with banks or other short-term, highly liquid investments with original maturities of three months or less. | Cash and Cash EquivalentsCash and cash equivalents include cash on hand, deposits with banks or other short-term, highly liquid investments with original maturities of three months or less. |
Accounts Receivable | Accounts ReceivableAccounts receivable consist of amounts billed and currently due from customers. We maintain an allowance recorded in the Allowance for Credit Losses account that is estimated and recorded utilizing relevant information about past events, including historical experience, current conditions and a reasonable and supportable forecast that affects the collectability of the related financial asset. | Accounts ReceivableAccounts receivable consist of amounts billed and currently due from customers. When events or conditions indicate that amounts outstanding from customers may become uncollectible, an allowance is estimated and recorded. |
Inventories | InventoriesInventories are recorded at the lower of cost (determined by either actual, weighted average or first-in, first-out methods) or net realizable value, and include direct production costs as well as indirect costs, such as factory overhead. The net realizable value is calculated as the expected sales price in the course of normal operations net of estimated costs to finish and sell the goods. | InventoriesInventories are recorded at the lower of cost (determined by either actual, weighted average or first-in, first-out methods) or net realizable value, and include direct production costs as well as indirect costs, such as factory overhead. The net realizable value is calculated as the expected sales price in the course of normal operations net of estimated costs to finish and sell the goods. |
Property, Plant and Equipment | Property, Plant and EquipmentProperty, plant and equipment is carried at cost less accumulated depreciation. Depreciation is calculated on the straight-line method. The estimated useful lives of plant, machinery and equipment and building and building improvements generally range from 3 to 10 years and 15 to 40 years, respectively. Leasehold improvements are amortized over the shorter of the estimated useful life of the improvements or the remaining life of the lease.When assets are retired or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the Consolidated Balance Sheets, and the net gain or loss is included in the determination of net earnings. Maintenance and repairs are charged to operations as incurred and renewals and improvements are capitalized. | Property, Plant and EquipmentProperty, plant and equipment is carried at cost less accumulated depreciation. Depreciation is calculated on the straight-line method. The estimated useful lives of plant, machinery and equipment and building and building improvements generally range from 3 to 10 years and 15 to 40 years, respectively. Leasehold improvements are amortized over the shorter of the estimated useful life of the improvements or the remaining life of the lease.When assets are retired or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the Consolidated Balance Sheet, and the net gain or loss is included in the determination of net earnings. Maintenance and repairs are charged to operations as incurred and renewals and improvements are capitalized. |
Goodwill | Goodwill Goodwill is assigned to reporting units and is reviewed for impairment at the reporting unit level on an annual basis, or whenever changes in circumstances indicate that the carrying amount may not be recoverable. A reporting unit is an operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by the segment manager. Two or more components of an operating segment may be aggregated and deemed a single reporting unit if the components have similar economic characteristics. Based upon the aggregation criteria the Company concluded it had seven reporting units at both June 30, 2022 and December 31, 2021. The annual impairment test is conducted as of December 31. The Company did not identify any triggering events during the six months ended June 30, 2022 or June 30, 2021. | Goodwill Goodwill represents the excess purchase price paid to acquire a business over the fair value of net assets acquired. Goodwill is assigned to reporting units and is reviewed for impairment at the reporting unit level on an annual basis, or whenever changes in circumstances indicate that the carrying amount may not be recoverable. A reporting unit is an operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by the segment manager. Two or more components of an operating segment may be aggregated and deemed a single reporting unit if the components have similar economic characteristics. Based upon the aggregation criteria the Company concluded it had seven reporting units at both December 31, 2021 and 2020. The annual impairment test is typically performed after completion of the Company's annual financial operating plan, which occurs as of December 31. The Company uses quantitative assessments and qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the optional qualitative assessment is performed (Step 0) and the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, an additional quantitative fair value test (Step 1) is performed. When performing the Step 1 goodwill impairment test, we compare the fair values of each of our reporting units to their respective carrying values. In order to compute the fair value of our reporting units, we primarily use the income approach based on the discounted cash flows that each reporting unit expects to generate in the future, consistent with our operating plans. Determining the fair value of our reporting units requires significant judgments, including the timing and amount of future cash flows, long-term growth rates, determination of the weighted-average cost of capital and terminal value assumptions. If, based on the quantitative fair value test, the |
Acquired Identifiable Intangible Assets | Identifiable intangible assets represent assets acquired as part of the Company's business acquisitions and include customer and program/contract-related assets. The values assigned to acquired identifiable intangible assets are determined as of the date of acquisition based on estimates and judgments regarding expectations for the estimated future after-tax cash flows from those assets over their lives, including the probability of expected future contract renewals and revenues, all of which are discounted to present value. | Identifiable intangible assets represent assets acquired as part of the Company's business acquisitions and include customer and program/contract-related assets. The values assigned to acquired identifiable intangible assets are determined as of the date of acquisition based on estimates and judgments regarding expectations for the estimated future after-tax cash flows from those assets over their lives, including the probability of expected future contract renewals and revenues, all of which are discounted to present value. |
Long-Lived Assets | The Company assesses the recoverability of the carrying value of its long-lived assets and intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable. If there are any indicators of impairment present, the Company then evaluates the recoverability of the potentially impaired long-lived assets and acquired identifiable intangible assets based upon expectations of undiscounted net cash flows from such assets. If the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset or asset group, a loss is recognized for the difference between the estimated fair value and the carrying amount of the assets. Assets to be disposed of, including those of discontinued operations, are reported at the lower of the carrying amount or fair value, less the costs to sell. | The Company assesses the recoverability of the carrying value of its long-lived assets and intangible assets with finite useful lives whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable. If there are any indicators of impairment present, the Company then evaluates the recoverability of the potentially impaired long-lived assets and acquired identifiable intangible assets based upon expectations of undiscounted net cash flows from such assets. If the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset or asset group, a loss is recognized for the difference between the estimated fair value and the carrying amount of the assets. Assets to be disposed of, including those of discontinued operations, are reported at the lower of the carrying amount or fair value, less the costs to sell. |
Derivative Financial Instruments | Derivative Financial InstrumentsThe Company does not use derivative financial instruments for trading purposes. All derivative instruments are carried on the Consolidated Balance Sheets as either assets or liabilities at fair value. The classification of gains and losses resulting from changes in the fair values of derivatives depends on the intended use of the derivative and its resultant designation. The Company had no significant derivative or hedging instruments for the periods presented. | Derivative Financial InstrumentsThe Company does not use derivative financial instruments for trading purposes. All derivative instruments are carried on the Consolidated Balance Sheet as either assets or liabilities at fair value. The classification of gains and losses resulting from changes in the fair values of derivatives depends on the intended use of the derivative and its resultant designation. |
Pension and Other Postretirement Benefits | Pension and Other Postretirement BenefitsThe obligations for the Company's pension plans and postretirement benefit plans and the related annual costs of employee benefits are calculated based on several long-term assumptions, including discount rates for participant benefit liabilities, rates of return on plan assets, expected annual rates of salary increases for employee participants in the case of pension plans and expected annual increases in the costs of medical and other health care benefits in the case of postretirement benefit plans. These long-term assumptions are subject to revision based on changes in interest rates, financial market conditions, expected versus actual returns on plan assets, participant mortality rates and other actuarial assumptions, including future rates of salary increases, benefit formulas and levels, and rates of increase in the costs of benefits. Changes in these assumptions, if significant, can materially affect the amount of annual net periodic benefit costs recognized in the Company's results of operations from one year to the next, the liabilities for the pension plans and postretirement benefit plans and the Company's annual cash requirements to fund these plans. The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility requirements for participation in the plans vary, and benefits generally are based on the participant's compensation and years of service, as defined in the respective plan. The Company's funding policy generally is to contribute in accordance with cost accounting standards that affect government contractors, subject to the Tax Code and regulations thereunder. Plan assets are invested primarily in equities, bonds (both corporate and U.S. government), U.S. government-sponsored entity instruments, cash and cash equivalents and real estate. The Company also provides postretirement medical benefits for certain retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company's postretirement benefit plans. The Company's contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees' Beneficiary Association (“VEBA”) trust and, for non-funded plans, recovery of claims on a pay-as-you-go basis, subject to the Tax Code and regulations thereunder, with the retiree generally paying a portion of the costs through contributions, deductibles and coinsurance provisions. The Company also maintains certain non-contributory and unfunded supplemental retirement plans. Eligibility for participation in the supplemental retirement plans is limited, and benefits generally are based on the participant's compensation and/or years of service. | Pension and Other Postretirement BenefitsThe obligations for the Company's pension plans and postretirement benefit plans and the related annual costs of employee benefits are calculated based on several long-term assumptions, including discount rates for employee benefit liabilities, rates of return on plan assets, expected annual rates of salary increases for employee participants in the case of pension plans and expected annual increases in the costs of medical and other health care benefits in the case of postretirement benefit plans. These long-term assumptions are subject to revision based on changes in interest rates, financial market conditions, expected versus actual returns on plan assets, participant mortality rates and other actuarial assumptions, including future rates of salary increases, benefit formulas and levels, and rates of increase in the costs of benefits. Changes in these assumptions, if significant, can materially affect the amount of annual net periodic benefit costs recognized in the Company's results of operations from one year to the next, the liabilities for the pension plans and postretirement benefit plans and the Company's annual cash requirements to fund these plans. The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility requirements for participation in the plans vary, and benefits generally are based on the participant's compensation and years of service, as defined in the respective plan. The Company's funding policy generally is to contribute in accordance with cost accounting standards that affect government contractors, subject to the Tax Code and regulations thereunder. Plan assets are invested primarily in equities, bonds (both corporate and U.S. government), U.S. government-sponsored entity instruments, cash and cash equivalents and real estate. The Company also provides postretirement medical benefits for certain retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company's postretirement benefit plans. The Company's contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees' Beneficiary Association (“VEBA”) trust and, for non-funded plans, recovery of claims on a pay-as-you-go basis, subject to the Tax Code and regulations thereunder, with the retiree generally paying a portion of the costs through contributions, deductibles and coinsurance provisions. The Company also maintains certain non-contributory and unfunded supplemental retirement plans. Eligibility for participation in the supplemental retirement plans is limited, and benefits generally are based on the participant's compensation and/or years of service. |
Income Taxes | Income TaxesWe and US Holding have entered into a Tax Allocation Agreement (“Tax Allocation Agreement”), dated as of November 16, 2020, with members of an affiliated group, as defined in Section 1504(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Tax Code”), members of one or more consolidated, combined, unitary or similar state tax groups and additional parties who are part of an “expanded affiliated group” for certain tax purposes. The agreement provides for the method of computing and allocating the consolidated U.S. federal tax liability of the affiliated group among its members and of allocating any state group tax liabilities among the state members for the taxable year ending December 31, 2020 and each subsequent year in which the parties are members of a group (whether federal or state). The agreement also provides for reimbursement of US Holding and/or DRS for payment of such tax liabilities, for compensation of any member for use of its “net operating loss” or “tax credits” in arriving at such tax liabilities and the allocation and payment of any refund arising from a carryback of net operating losses or tax credits from subsequent taxable years. Under the agreement, the parties have agreed to calculate and allocate their respective tax liabilities and other tax attributes for taxable years beginning with the first consolidated taxable year that included DRS (i.e., the taxable year ended December 31, 2008) as if the agreement was then in effect. We calculate the provision for incomes taxes during interim periods by applying an estimate of our annual effective tax rate for the full year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items). The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Income taxes as presented attribute deferred income taxes of US Holding to DRS in a manner that is systematic, rational and consistent with the asset and liability method and the governing Tax Allocation Agreement which allocates the tax liability amongst the entities, including DRS. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of DRS’ assets and liabilities and are adjusted for changes in tax rates and tax laws when such changes are enacted. In general, the taxable income of DRS is included in the consolidated U.S. federal and state tax returns of US Holding. Where applicable, US Holding’s current portion of U.S. federal income taxes payable were offset against DRS’ net operating loss carryforwards in the period the related tax expense was recorded. Consequently, our net operating loss carryforwards are deemed to have been settled with US Holding in each year in an amount commensurate with the carrying value of the tax effected net operating loss utilized. If management determines that some portion or all of a deferred tax asset is not “more likely than not” to be realized, a valuation allowance is recorded as a component of the income tax provision to reduce the deferred tax asset to the amounts expected to be realized. In determining whether the Company’s deferred tax assets are realizable, management considers all evidence, both positive and negative, including the history of financial reporting earnings, existing taxable temporary differences and their projected reversals, as well as projected future income and tax planning strategies. We believe it is more likely than not that we will generate sufficient taxable income in future periods to realize our deferred tax assets, subject to the valuation allowances recognized. The Company assesses its tax positions for all periods open to examination by tax authorities based on the latest available information. Those positions are evaluated to determine whether they will more likely than not be sustained upon examination by the relevant taxing authorities. Liabilities for unrecognized tax benefits are measured based on the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. These unrecognized tax benefits are recorded as a component of income tax expense. Interest and penalties related to unrecognized tax benefits are not material. | Income TaxesWe and US Holding have entered into a Tax Allocation Agreement (“Tax Allocation Agreement”), dated as of November 16, 2020, with members of an affiliated group, as defined in Section 1504(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Tax Code”), members of one or more consolidated, combined, unitary or similar state tax groups and additional parties who are part of an “expanded affiliated group” for certain tax purposes. The agreement provides for the method of computing and allocating the consolidated U.S. federal tax liability of the affiliated group among its members and of allocating any state group tax liabilities among the state members for the taxable year ending December 31, 2021 and each subsequent year in which the parties are members of a group (whether federal or state). The agreement also provides for reimbursement of US Holding and/or DRS for payment of such tax liabilities, for compensation of any member for use of its “net operating loss” or “tax credits” in arriving at such tax liabilities and the allocation and payment of any refund arising from a carryback of net operating losses or tax credits from subsequent taxable years. Under the agreement, the parties have agreed to calculate and allocate their respective tax liabilities and other tax attributes for taxable years beginning with the first consolidated taxable year that included DRS (i.e., the taxable year ended December 31, 2008) as if the agreement was then in effect. The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Income taxes as presented attribute deferred income taxes of US Holding to DRS in a manner that is systematic, rational and consistent with the asset and liability method and the governing Tax Allocation Agreement which allocates the tax liability amongst the entities, including DRS. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of DRS’s assets and liabilities and are adjusted for changes in tax rates and tax laws when such changes are enacted. In general, the taxable income of DRS is included in the consolidated U.S. federal and state tax returns of US Holding. Where applicable, US Holding’s current portion of U.S. federal income taxes payable were offset against DRS’s net operating loss carryforwards in the period the related tax expense was recorded. Consequently, our net operating loss carryforwards are deemed to have been settled with US Holding in each year in an amount commensurate with the carrying value of the tax effected net operating loss utilized. If management determines that some portion or all of a deferred tax asset is not “more likely than not” to be realized, a valuation allowance is recorded as a component of the income tax provision to reduce the deferred tax asset to the amounts expected to be realized. In determining whether the Company’s deferred tax assets are realizable, management considers all evidence, both positive and negative, including the history of financial reporting earnings, existing taxable temporary differences and their projected reversals, as well as projected future income and tax planning strategies. We believe it is more likely than not that we will generate sufficient taxable income in future periods to realize our deferred tax assets, subject to the valuation allowances recognized. The Company assesses its tax positions for all periods open to examination by tax authorities based on the latest available information. Those positions are evaluated to determine whether they will more likely than not be sustained upon examination by the relevant taxing authorities. Liabilities for unrecognized tax benefits are measured based on the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. These unrecognized tax benefits are recorded as a component of income tax expense. Interest and penalties related to unrecognized tax benefits are not material. |
Earnings Per Share | Earnings Per ShareBasic earnings per share (“EPS”) is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during each period. The computation of diluted EPS includes the dilutive effect of outstanding stock-based compensation awards, only in periods in which such effect would have been dilutive for the period. In February 2021, the Company completed a forward stock split of 1,450,000 - for- 1 share of common stock. The consolidated financial statements have been adjusted to reflect the forward stock split for all periods presented. There were 100 shares and 145 million basic and diluted common shares outstanding before and after the forward stock split, respectively, for all periods presented. | Earnings Per ShareBasic earnings per share (“EPS”) is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during each period. The computation of diluted EPS includes the dilutive effect of outstanding stock-based compensation awards, only in periods in which such effect would have been dilutive for the period. In February 2021, the Company completed a forward stock split of 1-for-1,450,000 shares of common stock. The consolidated financial statements have been retroactively adjusted as necessary to reflect the forward stock split for all periods presented. There were 100 shares and 145.00 million basic and diluted common shares outstanding before and after the forward stock split, respectively, for all periods presented. |
Fair Value Measurements | Fair Value MeasurementsFair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant on the measurement date. We are required to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value, and to utilize a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three hierarchical levels used to measure fair value are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are directly or indirectly observable. Level 3 — Significant inputs to the valuation model are unobservable. | Fair Value MeasurementsFair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant on the measurement date. We are required to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value, and to utilize a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three hierarchical levels used to measure fair value are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are directly or indirectly observable. Level 3 — Significant inputs to the valuation model are unobservable. |
Financial Instruments | Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities. Financial instruments are reported in the Consolidated Balance Sheets at carrying value, which other than the 7.5% Term loan due November 30, 2023, approximate fair value. See Note 11: Debt | Financial InstrumentsOur financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities. Financial instruments are reported in the Consolidated Balance Sheet at carrying value, which other than the 7.5% Term loan due November 30, 2023, approximate fair value. |
Acquisitions | Acquisitions Our consolidated financial statements include the operations of acquired businesses from the date of acquisition. We account for acquired businesses using the acquisition method of accounting, which requires that any assets acquired and liabilities assumed be measured at their respective fair values on the acquisition date. The accounting for business combinations requires the Company to make significant judgments and estimates. Any excess of the fair value of consideration transferred over the assigned values of the net assets acquired is recognized as goodwill. As previously announced, on June 21, 2022, we entered into the Agreement and Plan of Merger, dated as of June 21, 2022 (the “merger agreement”), by and among the Company, RADA Electronic Industries Ltd (“RADA”) and Blackstart Ltd, a company organized under the laws of the State of Israel and a wholly owned subsidiary of DRS (“Merger Sub”). Upon the terms and subject to the conditions of the merger agreement, and in accordance with the Companies Law, 5759-1999, of the State of Israel, at the effective time of the merger contemplated by the merger agreement (the “merger”), Merger Sub will be merged with and into RADA, with RADA as the surviving company of the merger and thereby becoming a wholly owned subsidiary of DRS. At the effective time of the merger (the “effective time”), each ordinary share of RADA, par value New Israeli Shekel 0.03 per share (“RADA shares”), issued and outstanding immediately prior to the effective time will be converted into and become exchangeable for one share of common stock of DRS, par value $0.01 per share (“DRS common stock”). Immediately prior to the effective time, the shares of DRS common stock held by US Holding, the current sole stockholder of DRS, will be split (rounded up to the nearest whole share), as necessary, such that, immediately following the effective time and the issuance of the shares of DRS common stock to holders of RADA shares and the treatment of options to purchase RADA shares: (A) US Holding will hold 80.5% of the issued and outstanding shares of DRS common stock on a fully diluted basis (with US Holding’s ownership percentage including 50% of any awards or other equity interests that DRS may issue pursuant to entitlements under any grants of certain one-time special awards of restricted stock units (the “One-Time Awards”) and the foregoing percentage calculation excluding any awards or other equity interests that DRS may issue pursuant to entitlements under the DRS’s long term incentive plan and 50% of any awards or other equity interests that DRS may issue pursuant to entitlements in connection with any grants of One-Time Awards, and such foregoing percentage will assume a reference price for RADA options equal to the volume-weighted average price of the RADA shares on the NASDAQ for the ten trading days immediately prior to the closing date); and (B) the holders of RADA shares, RADA vested options and RADA unvested options (or DRS options issued pursuant to the provisions of the merger agreement) will hold or have entitlements to 19.5% of the issued and outstanding shares of DRS common stock on a fully diluted basis (the foregoing percentage calculation excluding any awards or other equity interests that DRS may issue pursuant to entitlements under the DRS long-term incentive plan or the issuance of any One-Time Awards). Each of DRS’s and RADA’s obligation to consummate the merger is subject to the satisfaction or waiver of a number of conditions specified in the merger agreement. The merger is expected to close in the fourth quarter of 2022. On August 3, 2022, we filed a registration statement on Form S-4 with the SEC for the shares of DRS common stock to be issued in the merger, which has not yet been declared effective by the SEC. | AcquisitionsOur consolidated financial statements include the operations of acquired businesses from the date of acquisition. We account for acquired businesses using the acquisition method of accounting, which requires that any assets acquired and liabilities assumed be measured at their respective fair values on the acquisition date. The accounting for business combinations requires the Company to make significant judgments and estimates. Any excess of the fair value of consideration transferred over the assigned values of the net assets acquired is recognized as goodwill. |
Investments | Investments Investments where we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other noncurrent assets on our Consolidated Balance Sheets. Significant influence typically exists if we have a 20% to 50% ownership interest in the investee. Under this method of accounting, our share of the net earnings or losses of the investee is included in operating profit in other income, net on our Consolidated Statements of Earnings since the activities of the investee are closely aligned with the operations of the business segment holding the investment. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is therefore recorded during the current period. The Company’s cost method investment consists of an investment in a private company in which we do not have the ability to exercise significant influence over its operating and financial activities. Management evaluates this investment for possible impairment quarterly. | Investments Investments where we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other noncurrent assets on our Consolidated Balance Sheet. Significant influence typically exists if we have a 20% to 50% ownership interest in the investee. Under this method of accounting, our share of the net earnings or losses of the investee is included in operating profit in other income, net on our Consolidated Statements of Earnings (Loss) since the activities of the investee are closely aligned |
Variable Interest Entities | Variable Interest Entities The Company occasionally forms joint ventures and/or enters into arrangements with special purpose limited liability companies for the purpose of bidding and executing on specific projects. The Company analyzes each such arrangement to determine whether it represents a variable interest entity (“VIE”). If the arrangement is determined to be a VIE, the Company assesses whether it is the primary beneficiary of the VIE and if it is, consequently required to consolidate the VIE. The Company did not have any investment in VIEs for the periods presented. | Variable Interest EntitiesThe Company occasionally forms joint ventures and/or enters into arrangements with special purpose limited liability companies for the purpose of bidding and executing on specific projects. The Company analyzes each such arrangement to determine whether it represents a variable interest entity (“VIE”). If the arrangement is determined to be a VIE, the Company assesses whether it is the primary beneficiary of the VIE and if it is, consequently required to consolidate the VIE. |
New Accounting Pronouncements | New Accounting Pronouncements Recently Adopted Accounting Pronouncements Changes to Disclosure Requirements for Defined Benefit Plans In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans . Specifically, the amendment removes disclosure requirements for amounts classified in accumulated other comprehensive income expected to be recognized over the next year and the effects of a one-percentage-point change in the assumed health care cost trend rate on service cost, interest cost and the benefit obligation for postretirement benefits. The amendment also requires additional disclosure around weighted-average interest crediting rates for cash balance plans, a narrative description of the reasons for significant gains and losses, and an explanation of any other significant changes in the benefit obligation or plan assets. The adoption of the standard as of January 1, 2021 did not have a material impact on our consolidated financial statements. Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes which removes certain exceptions to the general principles in Topic 740 for: recognizing deferred taxes for investments, performing intra-period allocations and calculating taxes in interim periods. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The standard is effective for fiscal years beginning after December 15, 2020. The adoption of the standard as of January 1, 2021 did not have a material impact on our consolidated financial statements. Accounting Guidance Issued but Not Yet Adopted as of December 31, 2021: Government Assistance In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance which requires certain disclosures to be included with respect to the types of assistance, the accounting for the assistance as well as the effect on the financial statements of the assistance. The purposes of the ASU is to increase transparency and eliminate disparity of accounting for and reporting of the receipt of government assistance. The standard is effective for fiscal periods beginning after December 15, 2021. The Company does not expect the adoption to have a material impact on our disclosures. |
Revenue from Contract with Cust
Revenue from Contract with Customer (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Revenue Recognition and Cost of Revenues | Revenue Recognition Our revenues consist of sales of products (tangible goods) and sales of services to customers. We recognize the majority of our revenue from contracts with customers using an over time, cost-to-cost method of accounting. On certain other contracts, primarily time and material (“T&M”) and cost-plus contracts, revenue is recognized using the right-to-invoice practical expedient as we are contractually able to bill our customer based on control transferred to the customer. See Note 2 . Revenue from Contracts with Customers for additional information regarding revenue recognition. The Company recognizes revenue for each separately identifiable performance obligation in a contract representing an obligation to transfer a distinct good or service to a customer. In most cases, goods and services provided under the Company’s contracts are accounted for as single performance obligations due to the complex and integrated nature of our products and services. These contracts generally require significant integration of a group of goods and/or services to deliver a combined output. In some contracts, the Company provides multiple distinct goods or services to a customer. In those cases, the Company accounts for the distinct contract deliverables as separate performance obligations and allocates the transaction price to each performance obligation based on its relative standalone selling price, which is generally estimated using cost plus a reasonable margin. We classify revenues as products or services on our Consolidated Statements of Earnings based on the predominant attributes of the performance obligations. While the Company provides warranties on certain contracts, we typically do not provide for services beyond standard assurances and therefore do not consider warranties to be separate performance obligations. Typically we enter into three types of contracts: fixed-price contracts, cost-plus contracts and T&M contracts (cost-plus contracts and T&M contracts are aggregated below as flexibly priced contracts). The majority of our total revenues are derived from fixed-price contracts; refer to the revenue disaggregation disclosures that follow. For fixed-price contracts, customers agree to pay a fixed amount, negotiated in advanced for a specified scope of work. For cost-plus contracts typically we are reimbursed for allowable or otherwise defined total costs (defined as cost of revenues plus allowable general and administrative expenses) incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. T&M contracts provide for reimbursement of labor hours expended at a contractual fixed labor rate per hour, plus the actual costs of material and other direct non-labor costs. The fixed labor rates on T&M contracts include amounts for the cost of direct labor, indirect contract costs and profit. Estimating the transaction price for an arrangement requires judgment and is based on expected results which are determined using the Company’s historical data. We estimate that the revenue that we expect to be entitled to receive from a customer to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Revenue from contracts with customers is recognized when the performance obligations are satisfied through the transfer of control over the good or service to the customer, which may occur either over time or at a point in time. Revenues for the majority of our contracts are measured as determined by the ratio of cumulative costs incurred to date to estimated total contract costs at completion (the "cost-to-cost method"). We believe this is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of our work and transfer of control to our customers. Due to the long-term nature of many of our contracts, developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. | Revenue Recognition Our revenues consist of sales of products (tangible goods) and sales of services to customers. We recognize the majority of our revenue from contracts with customers using an over time, cost-to-cost method of accounting. On certain other contracts, primarily time and material (“T&M”) and cost-plus contracts, revenue is recognized using the right-to-invoice practical expedient as we are contractually able to bill our customer based on control transferred to the customer. Cost of RevenuesCost of revenues includes materials, labor and overhead costs incurred in the manufacturing, design, and provision of products and services sold in the period as well as warranty costs. Material costs include raw materials, purchased components and sub-assemblies, outside processing and inbound freight costs. Labor and overhead costs consist of direct and indirect manufacturing costs, including wages and fringe benefits, operating supplies, depreciation and amortization, occupancy costs, and purchasing, receiving and inspection costs. The Company recognizes revenue for each separately identifiable performance obligation in a contract representing an obligation to transfer a distinct good or service to a customer. In most cases, goods and services provided under the Company’s contracts are accounted for as single performance obligations due to the complex and integrated nature of our products and services. These contracts generally require significant integration of a group of goods and/or services to deliver a combined output. In some contracts, the Company provides multiple distinct goods or services to a customer. In those cases, the Company accounts for the distinct contract deliverables as separate performance obligations and allocates the transaction price to each performance obligation based on its relative standalone selling price, which is generally estimated using cost plus a reasonable margin. We classify revenues as products or services on our Consolidated Statements of Earnings based on the predominant attributes of the performance obligations. While the Company provides warranties on certain contracts, we typically do not provide for services beyond standard assurances and therefore do not consider warranties to be separate performance obligations. Typically we enter into three types of contracts: fixed-price contracts, cost-plus contracts and T&M contracts (cost-plus contracts and T&M contracts are aggregated below as flexibly priced contracts). The majority of our total revenues are derived from fixed-price contracts; refer to the revenue disaggregation disclosures that follow. For fixed-price contracts, customers agree to pay a fixed amount, negotiated in advanced for a specified scope of work. For cost-plus contracts typically we are reimbursed for allowable or otherwise defined total costs (defined as cost of revenues plus allowable general and administrative expenses) incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract. T&M contracts provide for reimbursement of labor hours expended at a contractual fixed labor rate per hour, plus the actual costs of material and other direct non-labor costs. The fixed labor rates on T&M contracts include amounts for the cost of direct labor, indirect contract costs and profit. Estimating the transaction price for an arrangement requires judgment and is based on expected results which are determined using the Company’s historical data. We estimate that the revenue that we expect to be entitled to receive from a customer to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Revenue from contracts with customers is recognized when the performance obligations are satisfied through the transfer of control over the good or service to the customer, which may occur either over time or at a point in time. Revenues for the majority of our contracts are measured as determined by the ratio of cumulative costs incurred to date to estimated total contract costs at completion (the "cost-to-cost method"). We believe this is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of our work and transfer of control to our customers. Due to the long-term nature of many of our contracts, developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. After establishing the estimated total cost at completion, we follow a standard Estimate at Completion (“EAC”) process in which we review the progress and performance on our ongoing contracts at least quarterly. Adjustments to original estimates for a contract's revenue, estimated costs at completion and estimated profit or loss often are required as work progresses under a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change and are also required if contract modifications occur. When adjustments in estimated total costs at completion or in estimated total transaction price are determined, the related impact on revenue and operating income are recognized using the cumulative catch-up method, which recognizes in the current period the cumulative effect of such adjustments for all prior periods. Any anticipated losses on these contracts are fully recognized in the period in which the losses become evident. Conversely, if the requirements for the recognition of contracts over time are not met, revenue is recognized at a point in time when control transfers to the customer, which is generally upon transfer of title. In such cases, the production that is in progress and costs that will be recognized at a future point in time are reported within "inventories". Costs to obtain a contract are incremental direct costs incurred to obtain a contract with a customer, including sales commissions and dealer fees, and are capitalized if material. Costs to fulfill a contract include costs directly related to a contract or specific anticipated contract (e.g., certain design costs) that generate or enhance our ability to satisfy our performance obligations under these contracts. These costs are capitalized to the extent they are expected to be recovered from the associated contract. Contract Assets and Liabilities The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities. The change in the balances of the Company’s contract assets and liabilities primarily results from timing differences between revenue recognition and customer billings and/or payments. Contract assets related to amounts withheld by customers until contract completion are not considered a significant financing component of our contracts because the intent is to protect the customers from our failure to satisfactorily complete our performance obligations. Payments received from customers in advance of revenue recognition (contract liabilities) are not considered a significant financing component of our contracts because they are utilized to pay for contract costs within a one-year period or are requested by us to ensure the customers meet their payment obligations. Value of Remaining Performance Obligations The value of remaining performance obligations, which we also refer to as total backlog, includes the following components: • Funded - Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts. • Unfunded - Unfunded backlog represents the revenue value of firm orders for products and services under existing contracts for which funding has not yet been appropriated less funding previously recognized on these contracts. |
Revenue from Contracts with C_3
Revenue from Contracts with Customers (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Schedule of Change in Estimate at Completion Adjustments | EAC adjustments had the following impacts to revenue for the periods presented: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenue $ (10) $ (8) $ (11) $ (9) Total % of Revenue 1.6 % 1.3 % 0.9 % 0.7 % | EAC adjustments had the following impacts to revenue for the periods presented: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Revenue $ (34) $ (77) $ (55) Total % of Revenue 1 % 3 % 2 % |
Schedule of Contract Assets and Contract Liabilities | (Dollars in millions) June 30, 2022 December 31, 2021 Contract assets $ 874 $ 743 Contract liabilities 156 174 Net contract assets $ 718 $ 569 | Year Ended December 31, (Dollars in millions) 2021 2020 Contract assets $ 743 $ 672 Contract liabilities 174 177 Net contract assets $ 569 $ 495 |
Schedule of Remaining Performance Obligations, Expected Timing of Satisfaction | The following table summarizes the value of our total backlog as of June 30, 2022, incorporating both funded and unfunded components: Backlog: June 30, 2022 (Dollars in millions) Total Backlog $ 3,051 | The following table summarizes the value of our backlog at December 31, 2021 and 2020: Backlog: Year Ended December 31, (Dollars in millions) 2021 2020 Funded $ 2,510 $ 2,847 Unfunded 351 444 Total Backlog $ 2,861 $ 3,291 |
Schedule of Disaggregation of Revenue | We believe these categories best depict how the nature, amount, timing and uncertainty of ASC revenue and cash flows are affected by economic factors: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenue by Geographical Region United States $ 367 $ 457 $ 739 $ 901 International 74 28 96 63 Intersegment Sales 3 4 5 7 Total $ 444 $ 489 $ 840 $ 971 Revenue by Customer Relationship Prime contractor $ 216 $ 279 $ 448 $ 555 Subcontractor 225 206 387 409 Intersegment Sales 3 4 5 7 Total $ 444 $ 489 $ 840 $ 971 Revenue by Contract Type Firm Fixed Price $ 394 $ 419 $ 736 $ 845 Flexibly Priced (1) 47 66 99 119 Intersegment Sales 3 4 5 7 Total $ 444 $ 489 $ 840 $ 971 ________________ (1) Includes revenue derived from time-and-materials contracts. We believe these categories best depict how the nature, amount, timing and uncertainty of IMS revenue and cash flows are affected by economic factors: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenue by Geographical Region United States $ 178 $ 160 $ 390 $ 349 International 8 14 14 26 Intersegment Sales 1 — 1 — Total $ 187 $ 174 $ 405 $ 375 Revenue by Customer Relationship Prime contractor $ 36 $ 42 $ 69 $ 86 Subcontractor 150 132 335 289 Intersegment Sales 1 — 1 — Total $ 187 $ 174 $ 405 $ 375 Revenue by Contract Type Firm Fixed Price $ 154 $ 146 $ 347 $ 316 Flexibly Priced (1) 32 28 57 59 Intersegment Sales 1 — 1 — Total $ 187 $ 174 $ 405 $ 375 ________________ (1) Includes revenue derived from time-and-materials contracts. | We believe these categories best depict how the nature, amount, timing and uncertainty of ASC revenue and cash flows are affected by economic factors: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Revenue by Geographical Region United States $ 1,808 $ 1,763 $ 1,699 International 113 182 99 Intersegment Sales 19 13 12 Total $ 1,940 $ 1,958 $ 1,810 Revenue by Customer Relationship Prime contractor $ 1,209 $ 1,063 $ 1,027 Subcontractor 712 882 771 Intersegment Sales 19 13 12 Total $ 1,940 $ 1,958 $ 1,810 Revenue by Contract Type Firm Fixed Price $ 1,667 $ 1,716 $ 1,570 Flexibly Priced (1) 254 229 228 Intersegment Sales 19 13 12 Total $ 1,940 $ 1,958 $ 1,810 __________________ (1) Includes revenue derived from time-and-materials contracts. Year Ended December 31, (Dollars in millions) 2021 2020 2019 Revenue by Geographical Region United States $ 913 $ 792 $ 895 International 45 41 21 Intersegment Sales 1 1 1 Total $ 959 $ 834 $ 917 Revenue by Customer Relationship Prime contractor $ 174 $ 283 $ 442 Subcontractor 784 550 474 Intersegment Sales 1 1 1 Total $ 959 $ 834 $ 917 Revenue by Contract Type Firm Fixed Price $ 831 $ 692 $ 763 Flexibly Priced (1) 127 141 153 Intersegment Sales 1 1 1 Total $ 959 $ 834 $ 917 __________________ (1) Includes revenue derived from time-and-materials contracts. |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Receivables [Abstract] | ||
Schedule of Accounts Receivable | Accounts receivable consist of the following: (Dollars in millions) June 30, 2022 December 31, 2021 Accounts receivable $ 126 $ 157 Less allowance for credit losses (1) (1) Accounts receivable, net $ 125 $ 156 | Accounts receivable consist of the following: December 31, (Dollars in millions) 2021 2020 Accounts receivable $ 157 $ 104 Less allowance for doubtful accounts (1) (2) Accounts receivable, net $ 156 $ 102 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventories consists of the following: December 31, (Dollars in millions) 2021 2020 Raw materials $ 43 $ 52 Work in progress 161 193 Finished goods 1 2 Total $ 205 $ 247 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Schedule of Property, Plant and Equipment | Property, plant and equipment by major asset class consists of the following: (Dollars in millions) June 30, 2022 December 31, 2021 Land, buildings and improvements $ 321 $ 312 Plant and machinery 194 191 Equipment and other 303 298 Total property, plant and equipment, at cost 818 801 Less accumulated depreciation (455) (437) Total property, plant and equipment, net $ 363 $ 364 | Property, plant and equipment by major asset class consists of the following: December 31, (Dollars in millions) 2021 2020 Land, buildings and improvements $ 312 $ 294 Plant and machinery 191 186 Equipment and other 298 276 Total property, plant and equipment, at cost 801 756 Less accumulated depreciation (437) (401) Total property, plant and equipment, net $ 364 $ 355 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | ||
Other Liabilities | A summary of significant other liabilities by balance sheet caption follows: (Dollars in millions) June 30, 2022 December 31, 2021 Salaries, wages and accrued bonuses $ 46 $ 70 Fringe benefits 75 74 Litigation 10 10 Restructuring costs 1 4 Provision for contract losses 57 48 Operating lease liabilities 22 24 Other (1) 68 65 Total other current liabilities $ 279 $ 295 Operating lease liabilities $ 68 $ 73 Other 2 1 Total other noncurrent liabilities $ 70 $ 74 ________________ (1) Consists primarily of taxes payable, environmental remediation reserves and warranty reserves. See Note 15: Commitments and Contingencies for more information regarding the warranty provision | A summary of significant other liabilities by balance sheet caption follows: December 31, (Dollars in millions) 2021 2020 Salaries, wages and accrued bonuses $ 70 $ 61 Fringe benefits 74 71 Litigation 10 10 Restructuring costs 4 1 Provision for contract losses 48 44 Operating lease liabilities 24 22 Other (1) 65 58 Total other current liabilities $ 295 $ 267 Retirement benefits $ — $ — Operating lease liabilities $ 73 $ 81 Other (2) 1 11 Total other noncurrent liabilities $ 74 $ 92 __________________ (1) Consists primarily of taxes payable, environmental remediation reserves and warranty reserves. See Note 15: Commitments and Contingencies for more information regarding the warranty provision. |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Schedule of Goodwill | Changes in the carrying amount of goodwill by reportable segment are as follows: (Dollars in millions) ASC IMS Total Balance as of December 31, 2021 $ 652 $ 419 $ 1,071 Reclassification to assets held for sale (117) — (117) Acquisition adjustment (2) (2) Balance as of June 30, 2022 533 419 952 | Changes in the carrying amount of goodwill by reportable segment are as follows: (Dollars in millions) ASC IMS Total Balance at January 1, 2020 (1) $ 638 $ 419 $ 1,057 Acquisitions — — — Balance at December 31, 2020 638 419 1,057 Acquisitions 14 — 14 Balance at December 31, 2021 $ 652 $ 419 $ 1,071 ________________ |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Schedule of Finite-Lived Intangible Assets | The following disclosure presents certain information regarding the Company's intangible assets as of June 30, 2022 and December 31, 2021. All intangible assets are being amortized over their estimated useful lives, as indicated below, with no estimated residual values. June 30, 2022 December 31, 2021 (Dollars in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 957 $ (913) $ 44 $ 957 $ (908) $ 49 Patents and licenses 9 (6) 3 9 (6) 3 Total intangible assets $ 966 $ (919) $ 47 $ 966 $ (914) $ 52 | The following disclosure presents certain information regarding the Company's intangible assets as of December 31, 2021 and 2020. All intangible assets are being amortized over their estimated useful lives, as indicated below, with no estimated residual values. December 31, 2021 December 31, 2020 (Dollars in millions) Gross Accumulated Amortization Net Carrying Amount Gross Accumulated Amortization Net Carrying Amount Customer relationships $ 957 $ (908) $ 49 $ 957 $ (899) $ 58 Patents and licenses 9 (6) 3 7 (5) 2 Total intangible assets $ 966 $ (914) $ 52 $ 964 $ (904) $ 60 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of June 30, 2022 and December 31, 2021 are as follows: (Dollars in millions) June 30, 2022 December 31, 2021 Deferred tax assets $ 107 $ 120 Valuation allowance 10 10 Deferred tax assets 97 110 Deferred tax liabilities 51 54 Deferred tax assets, net $ 46 $ 56 | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020 is as follows: December 31, (Dollars in millions) 2021 2020 Deferred tax assets: Federal net operating losses $ 5 $ 18 State net operating losses 16 21 Tax credit carryforwards 21 23 Accrued compensation and benefits 23 26 Contract liabilities 21 20 Accrued expenses 5 5 Pension and post-retirement plans 18 24 Inventory capitalization 5 8 Other 5 8 Disallowed interest 1 1 Total gross deferred tax assets 120 154 Less valuation allowance 10 11 Deferred tax assets 110 143 Deferred tax liabilities: Intangible assets (41) (44) Fixed assets (12) (11) Other (1) (1) Deferred tax liabilities (54) (56) Net deferred tax asset $ 56 $ 87 |
Debt (Tables)
Debt (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Debt Disclosure [Abstract] | ||
Schedule of Debt | The Company’s debt consists of the following: (Dollars in millions) June 30, 2022 December 31, 2021 7.5% Term loan due November 30, 2023 (1) $ 139 $ 139 5.0% Daylight term loan due October 15, 2024 (1) 78 78 Borrowings under revolving credit facility (1) 110 — Finance lease and other 162 161 Short-term borrowings 1 15 Total debt principal 490 393 Less unamortized debt issuance costs and discounts — — Total debt, net 490 393 Less short-term borrowings and current portion of long-term debt (140) (41) Total long-term debt $ 350 $ 352 ________________ (1) The Company’s debt with related parties consists of two term loans and a working capital credit facility with US Holding, as described below. | The Company’s debt consists of the following: December 31, (Dollars in millions) 2021 2020 7.5% Term loan due November 30, 2023 (1) 139 139 5.0% Daylight term loan due October 15, 2024 (1) 78 98 Finance lease and other 161 163 Short-term borrowings 15 27 Total debt principal 393 427 Less unamortized debt issuance costs and discounts — — Total debt, net 393 427 Less short-term borrowings and current portion of long-term debt (41) (53) Total long-term debt $ 352 374 __________________ (1) The Company’s debt with related parties consists of two term loans and a working capital credit facility with US Holding, as described below. |
Pension and Other Postretirem_3
Pension and Other Postretirement Benefits (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Retirement Benefits [Abstract] | ||
Schedule of Net Benefit Costs | The following table summarizes the components of net periodic benefit cost for the Company's pension, postretirement and supplemental retirement plans for the three months ended June 30: Defined Benefit Pension Plans Postretirement Benefit Plan Supplemental Retirement Plans (Dollars in millions) Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Service cost $ — $ — $ — $ — $ — $ — Interest cost 1 2 — — — — Less Expected return on plan assets (2) (2) — — — — Amortization of net actuarial loss (gain) 1 — — — — — Amortization of prior service cost — — — — — — Settlement expense (income) — — — — — — Net periodic benefit cost $ — $ — $ — $ — $ — $ — The following table summarizes the components of net periodic benefit cost for the Company's pension, postretirement and supplemental retirement plans for the six months ended June 30: Defined Benefit Pension Plans Postretirement Benefit Plan Supplemental Retirement Plans (Dollars in millions) Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Service cost $ — $ — $ — $ — $ — $ — Interest cost $ 3 $ 3 — — — — Less Expected return on plan assets $ (4) $ (4) — — — — Amortization of net actuarial loss (gain) $ 1 $ 1 — — — — Amortization of prior service cost $ — $ — — — — — Settlement expense (income) $ 1 $ — — — — — Net periodic benefit cost $ 1 $ — $ — $ — $ — $ — | The following table summarizes the components of net periodic benefit cost for the Company's pension, postretirement and supplemental retirement plans for the years ended December 31, 2021 and 2020 and 2019: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2019 2021 2020 2019 2021 2020 2019 Service cost $ — $ — $ — $ — $ — $ — $ — $ — $ — Interest cost $ 5 $ 7 $ 7 $ — $ — $ — $ 1 $ 1 $ 1 Expected return on plan assets $ (7) $ (8) $ (7) $ — $ — $ — $ — $ — $ — Amortization of net actuarial loss (gain) $ 2 $ 3 $ 2 $ (1) $ (1) $ — $ — $ — $ — Amortization of prior service cost $ — $ — $ — $ — $ — $ — $ — $ — $ — Settlement expense (income) $ — $ 3 $ — $ — $ — $ — $ — $ — Net periodic benefit cost $ — $ 5 $ 2 $ (1) $ (1) $ — $ 1 $ 1 $ 1 |
Commitment and Contingencies (T
Commitment and Contingencies (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Schedule of Product Warranty Liability | The following is a summary of changes in the product warranty balances during the period ended June 30, 2022: (Dollars in millions) Balance as of December 31, 2021 $ 19 Additional provision 6 Reversal and utilization (6) Balance as of June 30, 2022 19 | The following is a summary of changes in the product warranty balances during the years ended December 31, 2020 and 2021: (Dollars in millions) Balance at January 1, 2020 $ 13 Additional provision 16 Reversal and utilization (12) Balance at December 31, 2020 17 Additional provision 17 Reversal and utilization (15) Balance at December 31, 2021 $ 19 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Segment Reporting [Abstract] | ||
Schedule of Total Revenues and Intersegment Revenues by Segment | Total revenues and intersegment revenues by segment for the three- and six-month periods ended June 30, 2022 and, June 30, 2021 consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 ASC $ 444 $ 489 $ 840 $ 971 IMS 187 174 405 375 Corporate & Eliminations (4) (4) (6) (7) Total revenue $ 627 $ 658 $ 1,239 $ 1,339 (Dollars in millions) 2022 2021 2022 2021 ASC $ 3 $ 4 $ 5 $ 7 IMS 1 — 1 — Total intersegment revenue $ 4 $ 4 $ 6 $ 7 | Total revenues and intersegment revenues by segment for the years ended December 31, 2021, 2020 and 2019 consists of the following: (Dollars in millions) 2021 2020 2019 ASC $ 1,940 $ 1,958 $ 1,810 IMS 959 834 917 Corporate & Eliminations (20) (14) (13) Total revenue $ 2,879 $ 2,778 $ 2,714 (Dollars in millions) 2021 2020 2019 ASC $ 19 $ 13 $ 12 IMS 1 1 1 Total intersegment revenue $ 20 $ 14 $ 13 |
Schedule of Depreciation, Assets by Segment and EBITDA Reconciliation to Net Earnings | Depreciation by segment for the three- and six-month periods ended June 30, 2022 and June 30, 2021 consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 ASC $ 9 $ 8 $ 18 $ 16 IMS 5 4 9 8 Total depreciation $ 14 $ 12 $ 27 $ 24 Total assets by segment as of June 30, 2022 and December 31, 2021 consist of the following: (Dollars in millions) June 30, 2022 December 31, 2021 ASC $ 1,619 $ 1,545 IMS 1,124 1,145 Corporate & Eliminations 126 379 Held for Sale 174 — Total assets $ 3,043 $ 3,069 Reconciliation of reportable segment Adjusted EBITDA to Net Earnings (loss) consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Adjusted EBITDA ASC $ 57 $ 61 $ 89 $ 115 IMS 10 7 51 25 Corporate & Eliminations — 1 — — Total Adjusted EBITDA 67 69 140 140 Amortization of intangibles (2) (2) (4) (4) Depreciation (14) (12) (27) (24) Restructuring costs — — — — Interest expense (10) (9) (18) (18) Deal related transaction costs (8) — (10) (4) Acquisition and divestiture related expenses — — — — Foreign exchange — (1) — (1) COVID-19 response costs — (2) — (5) Non-service pension expense (1) — (1) — Other one-time non-operational events — — — — Income tax (provision) benefit (7) (11) (19) (23) Net earnings $ 25 $ 32 $ 61 $ 61 | Depreciation by segment as of December 31, 2021, 2020 and 2019 consists of the following: (Dollars in millions) 2021 2020 2019 ASC $ 33 $ 30 $ 29 IMS 16 14 13 Total depreciation $ 49 $ 44 $ 42 Total assets by segment as of December 31, 2021 and 2020 consist of the following: (Dollars in millions) 2021 2020 (1) ASC $ 1,545 $ 1,563 IMS 1,145 1,018 Corporate & Eliminations 379 375 Total assets $ 3,069 $ 2,956 __________________ (1) The 2020 amounts have been adjusted to reflect the correction of the allocation of certain assets within each segment. Reconciliation of reportable segment Adjusted EBITDA to Net Earnings (loss) consists of the following: (Dollars in millions) 2021 2020 2019 Adjusted EBITDA ASC $ 220 $ 213 $ 169 IMS 90 55 63 Corporate & Eliminations — — 2 Total Adjusted EBITDA $ 310 $ 268 $ 234 Amortization of intangibles (9) (9) (9) Depreciation (49) (44) (42) Restructuring costs (5) (12) (20) Interest expense (35) (64) (65) Deal related transaction costs (5) (9) — Acquisition and divestiture related expenses — — — Foreign exchange (1) (1) — COVID-19 response costs (6) (12) — Non-service pension expense — (5) (3) Other one-time non-operational events — — — Income tax provision (46) (27) (20) Net earnings $ 154 $ 85 $ 75 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Schedule of Change in Estimate at Completion Adjustments | EAC adjustments had the following impacts to revenue for the periods presented: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenue $ (10) $ (8) $ (11) $ (9) Total % of Revenue 1.6 % 1.3 % 0.9 % 0.7 % | EAC adjustments had the following impacts to revenue for the periods presented: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Revenue $ (34) $ (77) $ (55) Total % of Revenue 1 % 3 % 2 % |
Schedule of Contract Assets and Contract Liabilities | (Dollars in millions) June 30, 2022 December 31, 2021 Contract assets $ 874 $ 743 Contract liabilities 156 174 Net contract assets $ 718 $ 569 | Year Ended December 31, (Dollars in millions) 2021 2020 Contract assets $ 743 $ 672 Contract liabilities 174 177 Net contract assets $ 569 $ 495 |
Schedule of Remaining Performance Obligations, Expected Timing of Satisfaction | The following table summarizes the value of our total backlog as of June 30, 2022, incorporating both funded and unfunded components: Backlog: June 30, 2022 (Dollars in millions) Total Backlog $ 3,051 | The following table summarizes the value of our backlog at December 31, 2021 and 2020: Backlog: Year Ended December 31, (Dollars in millions) 2021 2020 Funded $ 2,510 $ 2,847 Unfunded 351 444 Total Backlog $ 2,861 $ 3,291 |
Schedule of Disaggregation of Revenue | We believe these categories best depict how the nature, amount, timing and uncertainty of ASC revenue and cash flows are affected by economic factors: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenue by Geographical Region United States $ 367 $ 457 $ 739 $ 901 International 74 28 96 63 Intersegment Sales 3 4 5 7 Total $ 444 $ 489 $ 840 $ 971 Revenue by Customer Relationship Prime contractor $ 216 $ 279 $ 448 $ 555 Subcontractor 225 206 387 409 Intersegment Sales 3 4 5 7 Total $ 444 $ 489 $ 840 $ 971 Revenue by Contract Type Firm Fixed Price $ 394 $ 419 $ 736 $ 845 Flexibly Priced (1) 47 66 99 119 Intersegment Sales 3 4 5 7 Total $ 444 $ 489 $ 840 $ 971 ________________ (1) Includes revenue derived from time-and-materials contracts. We believe these categories best depict how the nature, amount, timing and uncertainty of IMS revenue and cash flows are affected by economic factors: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Revenue by Geographical Region United States $ 178 $ 160 $ 390 $ 349 International 8 14 14 26 Intersegment Sales 1 — 1 — Total $ 187 $ 174 $ 405 $ 375 Revenue by Customer Relationship Prime contractor $ 36 $ 42 $ 69 $ 86 Subcontractor 150 132 335 289 Intersegment Sales 1 — 1 — Total $ 187 $ 174 $ 405 $ 375 Revenue by Contract Type Firm Fixed Price $ 154 $ 146 $ 347 $ 316 Flexibly Priced (1) 32 28 57 59 Intersegment Sales 1 — 1 — Total $ 187 $ 174 $ 405 $ 375 ________________ (1) Includes revenue derived from time-and-materials contracts. | We believe these categories best depict how the nature, amount, timing and uncertainty of ASC revenue and cash flows are affected by economic factors: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Revenue by Geographical Region United States $ 1,808 $ 1,763 $ 1,699 International 113 182 99 Intersegment Sales 19 13 12 Total $ 1,940 $ 1,958 $ 1,810 Revenue by Customer Relationship Prime contractor $ 1,209 $ 1,063 $ 1,027 Subcontractor 712 882 771 Intersegment Sales 19 13 12 Total $ 1,940 $ 1,958 $ 1,810 Revenue by Contract Type Firm Fixed Price $ 1,667 $ 1,716 $ 1,570 Flexibly Priced (1) 254 229 228 Intersegment Sales 19 13 12 Total $ 1,940 $ 1,958 $ 1,810 __________________ (1) Includes revenue derived from time-and-materials contracts. Year Ended December 31, (Dollars in millions) 2021 2020 2019 Revenue by Geographical Region United States $ 913 $ 792 $ 895 International 45 41 21 Intersegment Sales 1 1 1 Total $ 959 $ 834 $ 917 Revenue by Customer Relationship Prime contractor $ 174 $ 283 $ 442 Subcontractor 784 550 474 Intersegment Sales 1 1 1 Total $ 959 $ 834 $ 917 Revenue by Contract Type Firm Fixed Price $ 831 $ 692 $ 763 Flexibly Priced (1) 127 141 153 Intersegment Sales 1 1 1 Total $ 959 $ 834 $ 917 __________________ (1) Includes revenue derived from time-and-materials contracts. |
Accounts Receivable (Tables)_2
Accounts Receivable (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Receivables [Abstract] | ||
Schedule of Accounts Receivable | Accounts receivable consist of the following: (Dollars in millions) June 30, 2022 December 31, 2021 Accounts receivable $ 126 $ 157 Less allowance for credit losses (1) (1) Accounts receivable, net $ 125 $ 156 | Accounts receivable consist of the following: December 31, (Dollars in millions) 2021 2020 Accounts receivable $ 157 $ 104 Less allowance for doubtful accounts (1) (2) Accounts receivable, net $ 156 $ 102 |
Inventories (Tables)_2
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventories consists of the following: December 31, (Dollars in millions) 2021 2020 Raw materials $ 43 $ 52 Work in progress 161 193 Finished goods 1 2 Total $ 205 $ 247 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Schedule of Property, Plant and Equipment | Property, plant and equipment by major asset class consists of the following: (Dollars in millions) June 30, 2022 December 31, 2021 Land, buildings and improvements $ 321 $ 312 Plant and machinery 194 191 Equipment and other 303 298 Total property, plant and equipment, at cost 818 801 Less accumulated depreciation (455) (437) Total property, plant and equipment, net $ 363 $ 364 | Property, plant and equipment by major asset class consists of the following: December 31, (Dollars in millions) 2021 2020 Land, buildings and improvements $ 312 $ 294 Plant and machinery 191 186 Equipment and other 298 276 Total property, plant and equipment, at cost 801 756 Less accumulated depreciation (437) (401) Total property, plant and equipment, net $ 364 $ 355 |
Other Liabilities (Tables)_2
Other Liabilities (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | ||
Other Liabilities | A summary of significant other liabilities by balance sheet caption follows: (Dollars in millions) June 30, 2022 December 31, 2021 Salaries, wages and accrued bonuses $ 46 $ 70 Fringe benefits 75 74 Litigation 10 10 Restructuring costs 1 4 Provision for contract losses 57 48 Operating lease liabilities 22 24 Other (1) 68 65 Total other current liabilities $ 279 $ 295 Operating lease liabilities $ 68 $ 73 Other 2 1 Total other noncurrent liabilities $ 70 $ 74 ________________ (1) Consists primarily of taxes payable, environmental remediation reserves and warranty reserves. See Note 15: Commitments and Contingencies for more information regarding the warranty provision | A summary of significant other liabilities by balance sheet caption follows: December 31, (Dollars in millions) 2021 2020 Salaries, wages and accrued bonuses $ 70 $ 61 Fringe benefits 74 71 Litigation 10 10 Restructuring costs 4 1 Provision for contract losses 48 44 Operating lease liabilities 24 22 Other (1) 65 58 Total other current liabilities $ 295 $ 267 Retirement benefits $ — $ — Operating lease liabilities $ 73 $ 81 Other (2) 1 11 Total other noncurrent liabilities $ 74 $ 92 __________________ (1) Consists primarily of taxes payable, environmental remediation reserves and warranty reserves. See Note 15: Commitments and Contingencies for more information regarding the warranty provision. |
Goodwill (Tables)_2
Goodwill (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Schedule of Goodwill | Changes in the carrying amount of goodwill by reportable segment are as follows: (Dollars in millions) ASC IMS Total Balance as of December 31, 2021 $ 652 $ 419 $ 1,071 Reclassification to assets held for sale (117) — (117) Acquisition adjustment (2) (2) Balance as of June 30, 2022 533 419 952 | Changes in the carrying amount of goodwill by reportable segment are as follows: (Dollars in millions) ASC IMS Total Balance at January 1, 2020 (1) $ 638 $ 419 $ 1,057 Acquisitions — — — Balance at December 31, 2020 638 419 1,057 Acquisitions 14 — 14 Balance at December 31, 2021 $ 652 $ 419 $ 1,071 ________________ |
Intangible Assets (Tables)_2
Intangible Assets (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Schedule of Finite-Lived Intangible Assets | The following disclosure presents certain information regarding the Company's intangible assets as of June 30, 2022 and December 31, 2021. All intangible assets are being amortized over their estimated useful lives, as indicated below, with no estimated residual values. June 30, 2022 December 31, 2021 (Dollars in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 957 $ (913) $ 44 $ 957 $ (908) $ 49 Patents and licenses 9 (6) 3 9 (6) 3 Total intangible assets $ 966 $ (919) $ 47 $ 966 $ (914) $ 52 | The following disclosure presents certain information regarding the Company's intangible assets as of December 31, 2021 and 2020. All intangible assets are being amortized over their estimated useful lives, as indicated below, with no estimated residual values. December 31, 2021 December 31, 2020 (Dollars in millions) Gross Accumulated Amortization Net Carrying Amount Gross Accumulated Amortization Net Carrying Amount Customer relationships $ 957 $ (908) $ 49 $ 957 $ (899) $ 58 Patents and licenses 9 (6) 3 7 (5) 2 Total intangible assets $ 966 $ (914) $ 52 $ 964 $ (904) $ 60 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated annual amortization expense related to intangible assets for the subsequent five years is as follows: (in millions) Estimated 2022 $ 9 2023 9 2024 9 2025 9 2026 9 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Schedule of Lease Cost | Lease Cost The Company’s total lease cost consists of the following: Year Ended December 31, (Dollars in millions) 2021 2020 Operating lease cost (1) $ 26 $ 24 Finance lease cost (2) : Amortization of right-of-use assets 8 7 Interest on lease liabilities 5 5 Total lease cost $ 39 $ 36 ________________ (1) Operating lease expense is included within cost of products, cost of services or general and administrative expenses, dependent upon the nature and use of the ROU asset, in the Company’s Consolidated Statements of Earnings Operating lease cost includes short-term leases of approximately $3 million and $5 million and an insignificant amount of variable lease cost for both 2021 and 2020 . (2) Finance lease expense is recorded as depreciation and amortization expense within cost of products, cost of services or general and administrative expenses, dependent upon the nature and use of the ROU asset and interest expense, net in the Company’s Consolidated Statements of Earnings. |
Schedule of Balance Sheet Information | Supplemental balance sheet information related to leases is as follows: December 31, (Dollars in millions) 2021 2020 ROU assets Operating leases (1) $ 84 $ 88 Finance leases (2) 104 108 Total leased assets $ 188 $ 196 Liabilities Current lease liabilities: Operating (1) $ 24 $ 22 Finance (2) 6 5 Noncurrent lease liabilities: Operating (1) 73 81 Finance (2) 107 109 Total lease liabilities $ 210 $ 217 _________________ (1) Operating lease assets are included within other noncurrent assets other current liabilities other noncurrent liabilities (2) Finance lease assets are included within property, plant and equipment, net short-term borrowings and current portion of long-term debt (current portion) long-term debt (noncurrent portion) |
Schedule of Supplemental Cash Flows Information | Supplemental cash flow information related to leases is as follows: Year Ended December 31, (Dollars in millions) 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 27 $ 27 Operating cash flows from finance leases 5 5 Financing cash flows from finance leases 5 4 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases 18 16 Finance leases 4 46 |
Schedule of Weighted Average Remaining Lease Term | Lease terms and discount rates related to leases are as follows: December 31, 2021 2020 Weighted-average remaining lease term: Operating leases 5 years 5 years Finance leases 15 years 16 years Weighted-average discount rate: Operating leases 4.3 % 4.4 % Finance leases 4.6 % 4.5 % |
Maturities of Lease Liability | As of December 31, 2021, future minimum rental payments on leases with initial non-cancellable lease terms in excess of one year were due as follows: (Dollars in millions) Operating Leases Finance Leases Year Ending December 31, 2022 $ 27 $ 11 2023 25 11 2024 19 11 2025 12 10 2026 9 10 Thereafter 14 104 Total lease payments 106 157 Less: imputed interest 9 44 Present value of lease liabilities 97 113 Less: current maturities 24 6 Long-term lease obligations $ 73 $ 107 |
Income Taxes (Tables)_2
Income Taxes (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Schedule of Income before Income Tax, Domestic and Foreign | Earnings (loss) before taxes consists of the following: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Earnings before taxes Domestic $ 203 $ 112 $ 89 Foreign (3) — 6 Total $ 200 $ 112 $ 95 | |
Schedule of Income Tax Provision (Benefit) | Income tax provision (benefit) consists of the following: Year Ended December 31, (Dollars in millions) 2021 2020 2019 Current: Federal $ (1) $ — $ — State — 3 2 Foreign 1 2 1 — 5 3 Deferred: Federal 43 24 17 State 5 — — Foreign (2) (2) — 46 22 17 Total $ 46 $ 27 $ 20 | |
Schedule of Effective Income Tax Rate Reconciliation | The reconciliation from the statutory federal income tax rate to our effective income tax rate follows: Year Ended December 31, 2021 2020 2019 Statutory federal rate 21.0 % 21.0 % 21.0 % State rate, net of federal benefit 3.6 % 2.3 % 0.5 % Foreign rate differential (0.2) % 0.5 % 0.5 % Research & development credit, net of reserves (0.2) % (0.7) % (2.3) % Nondeductible expenses 0.9 % 0.4 % 0.7 % Global intangible low taxed income — % 0.2 % 1.0 % Change in valuation allowance (1.4) % (2.5) % 0.2 % Change in tax reserves (0.4) % 2.2 % 0.2 % Other (0.3) % 0.7 % (0.7) % Effective tax rate 23.0 % 24.1 % 21.1 % | |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of June 30, 2022 and December 31, 2021 are as follows: (Dollars in millions) June 30, 2022 December 31, 2021 Deferred tax assets $ 107 $ 120 Valuation allowance 10 10 Deferred tax assets 97 110 Deferred tax liabilities 51 54 Deferred tax assets, net $ 46 $ 56 | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020 is as follows: December 31, (Dollars in millions) 2021 2020 Deferred tax assets: Federal net operating losses $ 5 $ 18 State net operating losses 16 21 Tax credit carryforwards 21 23 Accrued compensation and benefits 23 26 Contract liabilities 21 20 Accrued expenses 5 5 Pension and post-retirement plans 18 24 Inventory capitalization 5 8 Other 5 8 Disallowed interest 1 1 Total gross deferred tax assets 120 154 Less valuation allowance 10 11 Deferred tax assets 110 143 Deferred tax liabilities: Intangible assets (41) (44) Fixed assets (12) (11) Other (1) (1) Deferred tax liabilities (54) (56) Net deferred tax asset $ 56 $ 87 |
Schedule of Unrecognized Tax Benefits | The table below summarizes the activity associated with our unrecognized tax benefits: (Dollars in millions) 2021 2020 2019 Balance at January 1, $ 25 $ 18 $ 14 Increase related to prior year tax positions — 3 3 Increase related to current year tax positions 1 4 1 Decreases related to prior year tax positions (4) — — Lapse of statute of limitations — — — Settlements with taxing authorities — — — Balance at December 31, $ 22 $ 25 $ 18 |
Debt (Tables)_2
Debt (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Debt Disclosure [Abstract] | ||
Schedule of Debt | The Company’s debt consists of the following: (Dollars in millions) June 30, 2022 December 31, 2021 7.5% Term loan due November 30, 2023 (1) $ 139 $ 139 5.0% Daylight term loan due October 15, 2024 (1) 78 78 Borrowings under revolving credit facility (1) 110 — Finance lease and other 162 161 Short-term borrowings 1 15 Total debt principal 490 393 Less unamortized debt issuance costs and discounts — — Total debt, net 490 393 Less short-term borrowings and current portion of long-term debt (140) (41) Total long-term debt $ 350 $ 352 ________________ (1) The Company’s debt with related parties consists of two term loans and a working capital credit facility with US Holding, as described below. | The Company’s debt consists of the following: December 31, (Dollars in millions) 2021 2020 7.5% Term loan due November 30, 2023 (1) 139 139 5.0% Daylight term loan due October 15, 2024 (1) 78 98 Finance lease and other 161 163 Short-term borrowings 15 27 Total debt principal 393 427 Less unamortized debt issuance costs and discounts — — Total debt, net 393 427 Less short-term borrowings and current portion of long-term debt (41) (53) Total long-term debt $ 352 374 __________________ (1) The Company’s debt with related parties consists of two term loans and a working capital credit facility with US Holding, as described below. |
Schedule of Maturities of Long-term Debt | Maturities of long-term debt as of December 31, 2021 are as follows: (Dollars in millions) Year Ending December 31, 2022 $ 41 2023 171 2024 40 2025 7 2026 7 Thereafter 127 Total principal payments $ 393 |
Pension and Other Postretirem_4
Pension and Other Postretirement Benefits (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Retirement Benefits [Abstract] | ||
Changes in Projected Benefit Obligations, Fair Value of Plan Assets, and Funded Status of Plan | The following tables provide certain information regarding the Company's pension, postretirement and supplemental retirement plans as of December 31, 2021 and 2020: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2021 2020 2021 2020 Change in benefit obligation: Benefit obligation at beginning of year $ 226 $ 261 $ 2 $ 3 $ 23 $ 24 Service cost — — — — — — Interest cost 5 7 — — 1 1 Plan participants' contributions — — — — — — Actuarial (gain) loss (3) (10) — (1) (1) (1) Benefits paid (13) (10) — — (1) (1) (Gain) loss due to settlement — (21) — — — — Plan amendments — — — — — — Exchange rate differences and other — (1) — — — — Benefit obligation at end of year $ 215 $ 226 $ 2 $ 2 $ 22 $ 23 Change in plan assets: Fair value of plan assets at beginning of year $ 151 $ 158 $ 1 $ 1 $ 11 $ 10 Actual return on plan assets 15 19 — — 1 1 Plan participants' contributions — — — — — — Employer contributions 13 6 — — 1 1 Benefits paid (13) (10) — — (1) (1) (Loss) gain due to settlement — (21) — — — — Exchange rate differences and other — (1) — — — — Fair value of plan assets at end of year 166 151 1 1 12 11 Contributions between measurement date and year end — — — — — — Funded status of the plans at year end $ (49) $ (75) $ (1) $ (1) $ (10) $ (12) | |
Schedule of Amounts Recognized in Balance Sheet | The amounts recognized in the Consolidated Balance Sheet, as of December 31, 2021 and 2020 consist of: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2021 2020 2021 2020 Noncurrent assets $ — $ — $ 1 $ 1 $ — $ — Current liabilities — — — — — — Noncurrent liabilities (49) (75) (2) (2) (10) (11) Net liability recognized $ (49) $ (75) $ (1) $ (1) $ (10) $ (11) | |
Schedule of Amounts Recognized in Other Comprehensive Earnings | Amounts recognized in accumulated other comprehensive income (before taxes) at December 31, 2021 and 2020 consist of: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2021 2020 2021 2020 Prior service cost $ — $ — $ — $ — $ — $ — Net actuarial loss (gain) 40 52 (1) (2) 6 7 Total amount recognized in accumulated other comprehensive losses (earnings) $ 40 $ 52 $ (1) $ (2) $ 6 $ 7 | |
Schedule of Pension Plans with ABO and PBO in Excess of the Fair Value of Plan Assets | The table below presents information for the pension plans with an ABO and PBO in excess of the fair value of plan assets at December 31, 2021 and 2020. (Dollars in millions) December 31, 2021 December 31, 2020 Projected benefit obligation $ 237 $ 249 Accumulated benefit obligation 237 249 Fair value of plan assets 178 162 | |
Defined Benefit Plan, Assumptions | The following table summarizes the weighted average actuarial assumptions used to determine our benefit obligations at December 31, 2021 and 2020: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans 2021 2020 2021 2020 2021 2020 Rate assumptions Discount rate 2.8 % 2.4 % 2.6 % 4.3 % 2.8 % 2.5 % Increase in future compensation levels N/A N/A N/A N/A N/A N/A Expected long-term return on plan assets 5.9 % 6.4 % 5.9 % 6.4 % N/A N/A Health care trend rate assumed for next year N/A N/A 4.6 % 5.4 % N/A N/A Ultimate health care trend rate N/A N/A 4.3 % 4.3 % N/A N/A Year rate reaches ultimate trend rate N/A N/A 2031 2031 N/A N/A The following table summarizes the weighted average actuarial assumptions used to determine our net periodic cost of the plans for the years ended December 31, 2021, 2020 and 2019: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans 2021 2020 2019 2021 2020 2019 2021 2020 2019 Rate assumptions Discount rate 2.8 % 2.7 % 3.6 % 2.1 % 2.8 % 3.3 % 2.4 % 2.4 % 3.5 % Expected long - term return on plan assets 6.4 % 6.3 % 6.9 % 6.4 % 5.8 % 5.7 % N/A N/A N/A Increase in future compensation levels N/A N/A N/A N/A N/A N/A N/A N/A N/A Health care trend rate assumed for next year N/A N/A N/A 5.8 % 6.0 % 6.5 % N/A N/A N/A Ultimate health care trend rate N/A N/A N/A 4.5 % 4.5 % 4.5 % N/A N/A N/A Year rate reaches ultimate trend rate N/A N/A N/A 2030 2029 2027 N/A N/A N/A | |
Schedule of Net Benefit Costs | The following table summarizes the components of net periodic benefit cost for the Company's pension, postretirement and supplemental retirement plans for the three months ended June 30: Defined Benefit Pension Plans Postretirement Benefit Plan Supplemental Retirement Plans (Dollars in millions) Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 Service cost $ — $ — $ — $ — $ — $ — Interest cost 1 2 — — — — Less Expected return on plan assets (2) (2) — — — — Amortization of net actuarial loss (gain) 1 — — — — — Amortization of prior service cost — — — — — — Settlement expense (income) — — — — — — Net periodic benefit cost $ — $ — $ — $ — $ — $ — The following table summarizes the components of net periodic benefit cost for the Company's pension, postretirement and supplemental retirement plans for the six months ended June 30: Defined Benefit Pension Plans Postretirement Benefit Plan Supplemental Retirement Plans (Dollars in millions) Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Service cost $ — $ — $ — $ — $ — $ — Interest cost $ 3 $ 3 — — — — Less Expected return on plan assets $ (4) $ (4) — — — — Amortization of net actuarial loss (gain) $ 1 $ 1 — — — — Amortization of prior service cost $ — $ — — — — — Settlement expense (income) $ 1 $ — — — — — Net periodic benefit cost $ 1 $ — $ — $ — $ — $ — | The following table summarizes the components of net periodic benefit cost for the Company's pension, postretirement and supplemental retirement plans for the years ended December 31, 2021 and 2020 and 2019: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2019 2021 2020 2019 2021 2020 2019 Service cost $ — $ — $ — $ — $ — $ — $ — $ — $ — Interest cost $ 5 $ 7 $ 7 $ — $ — $ — $ 1 $ 1 $ 1 Expected return on plan assets $ (7) $ (8) $ (7) $ — $ — $ — $ — $ — $ — Amortization of net actuarial loss (gain) $ 2 $ 3 $ 2 $ (1) $ (1) $ — $ — $ — $ — Amortization of prior service cost $ — $ — $ — $ — $ — $ — $ — $ — $ — Settlement expense (income) $ — $ 3 $ — $ — $ — $ — $ — $ — Net periodic benefit cost $ — $ 5 $ 2 $ (1) $ (1) $ — $ 1 $ 1 $ 1 |
Schedule of Defined Benefit Plan Amounts Recognized in Other Comprehensive Income | The following table summarizes the other changes in plan assets and benefit obligations recognized in other comprehensive earnings for the Company's pension, postretirement and supplemental retirement benefit plans for the years ended December 31, 2021 and 2020 and 2019: Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans (Dollars in millions) 2021 2020 2019 2021 2020 2019 2021 2020 2019 Net actuarial (gain) loss $ (11) $ (21) $ 19 $ — $ (1) $ (1) $ (1) $ (1) $ 4 Prior service cost — — — — — — — — — Amortization of net actuarial (loss) gain from prior years (2) (6) (2) 1 1 — — — — Amortization of prior service cost — — — — — — — — — Other (1) — — — — — — — — — Total recognized in other comprehensive income $ (13) $ (27) $ 17 $ 1 $ — $ (1) $ (1) $ (1) $ 4 __________________ (1) Includes foreign exchange translation | |
Schedule of Allocation of Plan Assets | The table below represents all of the Company's funded pension plans' and postretirement benefit plans' weighted-average asset allocation at December 31, 2021 and 2020 by asset category: Asset Allocation 2021 2020 Asset Category Equity securities 41 % 55 % Debt securities 47 % 33 % Real estate 6 % 6 % Other, primarily cash and cash equivalents, and hedge funds 6 % 6 % The table below presents the target allocation ranges for each major asset category for the Company's benefit plans for the years ended December 31, 2021 and 2020. Target Asset Allocation Range 2021 2020 Asset Category Equity securities 40% - 60% 40% - 60% Debt securities 30% - 50% 40% - 50% Real estate 5% - 10% 5% - 10% Other, primarily cash and cash equivalents and hedge funds 5% - 10% 5% - 10% | |
Schedule of Fair Value of Category of Plan Assets | The following tables provides the fair value of plan assets held by our defined benefit plan by asset category and by fair value hierarchy level. Certain investments are measured at their NAV per share and do not have readily determined fair values. As such, these investments are not subject to leveling in the fair value hierarchy. December 31, 2021 (Dollars in millions) Level 1 Level 2 Level 3 Total Asset category Investments measured at fair value: $ — $ — $ — $ — Cash and cash equivalents $ 11 $ — $ — $ 11 Equity securities 6 — — 6 Debt securities — — — — Total $ 17 $ — $ — $ 17 Investments measured at NAV: Collective trust funds — — — 162 Equity and fixed income funds — — — — Total $ 17 $ — $ — $ 179 December 31, 2020 (Dollars in millions) Level 1 Level 2 Level 3 Total Asset category Investments measured at fair value: Cash and cash equivalents $ 9 $ — $ — $ 9 Equity securities 6 — — 6 Debt securities — — — — Total $ 15 $ — $ — $ 15 Investments measured at NAV: Collective trust funds — — — 148 Equity and fixed income funds — — — — Total $ 15 $ — $ — $ 163 | |
Schedule of Expected Benefit Payments | The following table presents expected pension and postretirement benefit payments over the next 10 years: (Dollars in millions) Defined Benefit Pension Plans Postretirement Benefit Plans Supplemental Retirement Plans Year Ending December 31, 2022 $ 12 $ — $ 1 2023 12 — 1 2024 13 — 1 2025 13 — 1 2026 13 — 1 2027-2031 63 — 6 |
Equity Method Investments (Tabl
Equity Method Investments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Equity Method Investments | Below is a list of the entities accounted for under the equity method and recorded in other noncurrent assets on our Consolidated Balance Sheet: % of Ownership Carrying Value (Dollars in millions) 2021 2020 2021 2020 Advanced Acoustics Concepts, LLC 51 % 51 % $ 27 $ 25 |
Commitment and Contingencies _2
Commitment and Contingencies (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Schedule of Restructuring and Related Costs | See the table below for a breakout of restructuring costs incurred by segment and by nature of cost incurred: Year Ended December 31, (Dollars in millions) 2021 2020 2019 ASC Severance $ 5 $ 6 $ 1 Facility abandonment — — 3 Inventory — — 2 Total ASC 5 6 6 IMS Severance — — 2 Facility abandonment — 6 6 Inventory — — 5 Total IMS — 6 13 Corporate Severance — — — Facility abandonment — — 1 Inventory — — — Total Corporate — — 1 Total $ 5 $ 12 $ 20 The following is a summary of changes in the restructuring provision balance during the years ended December 31, 2020 and 2021: (Dollars in millions) Balance at January 1, 2020 $ 4 Additional provision 12 Reversal and utilization (15) Balance at December 31, 2020 1 Additional provision 5 Reversal and utilization (2) Balance at December 31, 2021 $ 4 | |
Schedule of Product Warranty Liability | The following is a summary of changes in the product warranty balances during the period ended June 30, 2022: (Dollars in millions) Balance as of December 31, 2021 $ 19 Additional provision 6 Reversal and utilization (6) Balance as of June 30, 2022 19 | The following is a summary of changes in the product warranty balances during the years ended December 31, 2020 and 2021: (Dollars in millions) Balance at January 1, 2020 $ 13 Additional provision 16 Reversal and utilization (12) Balance at December 31, 2020 17 Additional provision 17 Reversal and utilization (15) Balance at December 31, 2021 $ 19 |
Segment Information (Tables)_2
Segment Information (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Segment Reporting [Abstract] | ||
Schedule of Total Revenues and Intersegment Revenues by Segment | Total revenues and intersegment revenues by segment for the three- and six-month periods ended June 30, 2022 and, June 30, 2021 consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 ASC $ 444 $ 489 $ 840 $ 971 IMS 187 174 405 375 Corporate & Eliminations (4) (4) (6) (7) Total revenue $ 627 $ 658 $ 1,239 $ 1,339 (Dollars in millions) 2022 2021 2022 2021 ASC $ 3 $ 4 $ 5 $ 7 IMS 1 — 1 — Total intersegment revenue $ 4 $ 4 $ 6 $ 7 | Total revenues and intersegment revenues by segment for the years ended December 31, 2021, 2020 and 2019 consists of the following: (Dollars in millions) 2021 2020 2019 ASC $ 1,940 $ 1,958 $ 1,810 IMS 959 834 917 Corporate & Eliminations (20) (14) (13) Total revenue $ 2,879 $ 2,778 $ 2,714 (Dollars in millions) 2021 2020 2019 ASC $ 19 $ 13 $ 12 IMS 1 1 1 Total intersegment revenue $ 20 $ 14 $ 13 |
Schedule of Depreciation, Assets by Segment and EBITDA Reconciliation to Net Earnings | Depreciation by segment for the three- and six-month periods ended June 30, 2022 and June 30, 2021 consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 ASC $ 9 $ 8 $ 18 $ 16 IMS 5 4 9 8 Total depreciation $ 14 $ 12 $ 27 $ 24 Total assets by segment as of June 30, 2022 and December 31, 2021 consist of the following: (Dollars in millions) June 30, 2022 December 31, 2021 ASC $ 1,619 $ 1,545 IMS 1,124 1,145 Corporate & Eliminations 126 379 Held for Sale 174 — Total assets $ 3,043 $ 3,069 Reconciliation of reportable segment Adjusted EBITDA to Net Earnings (loss) consists of the following: Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2022 2021 2022 2021 Adjusted EBITDA ASC $ 57 $ 61 $ 89 $ 115 IMS 10 7 51 25 Corporate & Eliminations — 1 — — Total Adjusted EBITDA 67 69 140 140 Amortization of intangibles (2) (2) (4) (4) Depreciation (14) (12) (27) (24) Restructuring costs — — — — Interest expense (10) (9) (18) (18) Deal related transaction costs (8) — (10) (4) Acquisition and divestiture related expenses — — — — Foreign exchange — (1) — (1) COVID-19 response costs — (2) — (5) Non-service pension expense (1) — (1) — Other one-time non-operational events — — — — Income tax (provision) benefit (7) (11) (19) (23) Net earnings $ 25 $ 32 $ 61 $ 61 | Depreciation by segment as of December 31, 2021, 2020 and 2019 consists of the following: (Dollars in millions) 2021 2020 2019 ASC $ 33 $ 30 $ 29 IMS 16 14 13 Total depreciation $ 49 $ 44 $ 42 Total assets by segment as of December 31, 2021 and 2020 consist of the following: (Dollars in millions) 2021 2020 (1) ASC $ 1,545 $ 1,563 IMS 1,145 1,018 Corporate & Eliminations 379 375 Total assets $ 3,069 $ 2,956 __________________ (1) The 2020 amounts have been adjusted to reflect the correction of the allocation of certain assets within each segment. Reconciliation of reportable segment Adjusted EBITDA to Net Earnings (loss) consists of the following: (Dollars in millions) 2021 2020 2019 Adjusted EBITDA ASC $ 220 $ 213 $ 169 IMS 90 55 63 Corporate & Eliminations — — 2 Total Adjusted EBITDA $ 310 $ 268 $ 234 Amortization of intangibles (9) (9) (9) Depreciation (49) (44) (42) Restructuring costs (5) (12) (20) Interest expense (35) (64) (65) Deal related transaction costs (5) (9) — Acquisition and divestiture related expenses — — — Foreign exchange (1) (1) — COVID-19 response costs (6) (12) — Non-service pension expense — (5) (3) Other one-time non-operational events — — — Income tax provision (46) (27) (20) Net earnings $ 154 $ 85 $ 75 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Concentration Risk (Details) - segment | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Concentration Risk [Line Items] | ||||||
Number of reportable segments | 2 | 2 | ||||
U.S. Department Of Defense | Revenue from Contract with Customer Benchmark | Government Contracts Concentration Risk | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 78% | 85% | 82% | 85% | 86% | 84% |
International And Commercial Customers | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 22% | 15% | 18% | 15% | 14% | 16% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Property, Plant and Equipment (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Plant and machinery | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life (in years) | 3 years | 3 years |
Plant and machinery | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life (in years) | 10 years | 10 years |
Building and Building Improvements | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life (in years) | 15 years | 15 years |
Building and Building Improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life (in years) | 40 years | 40 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Goodwill (Details) - reportingUnit | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | |||
Number of reporting units | 7 | 7 | 7 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Earnings Per Share (Details) | 1 Months Ended | ||||
Feb. 28, 2021 shares | Jun. 30, 2022 shares | Dec. 31, 2021 shares | Jan. 31, 2021 shares | Dec. 31, 2020 shares | |
Accounting Policies [Abstract] | |||||
Stockholders' Equity Note, Stock Split, Conversion Ratio | 1,450,000 | ||||
Basic and Diluted common shares outstanding (in shares) | 145,000,000 | 145,000,000 | 145,000,000 | 100 | 145,000,000 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Financial Instruments (Details) | Jun. 30, 2022 | Dec. 31, 2021 |
Term Loan | Line of Credit | ||
Debt Instrument [Line Items] | ||
Stated interest rate (as percent) | 7.50% | 7.50% |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Acquisitions (Details) | Jun. 30, 2022 $ / shares | Jun. 21, 2022 $ / shares | Jun. 21, 2022 ₪ / shares | Dec. 31, 2021 $ / shares | Dec. 31, 2020 $ / shares |
Business Acquisition [Line Items] | |||||
Common stock, par value (in monetary per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |
Common stock, exchange ratio | 1 | 1 | |||
Holders Of RADA's Equity Interests | |||||
Business Acquisition [Line Items] | |||||
Business combination, percent of ownership after transaction | 19.50% | 19.50% | |||
RADA Electronic Industries Ltd | |||||
Business Acquisition [Line Items] | |||||
Common stock, par value (in monetary per share) | ₪ / shares | ₪ 0.03 | ||||
US Holdings | |||||
Business Acquisition [Line Items] | |||||
Business combination, percent of ownership after transaction | 80.50% | 80.50% | |||
Business combination, percent of ownership of one time awards | 50% | 50% |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Divestitures/Held for Sale (Details) - USD ($) $ in Millions | Aug. 01, 2022 | Jul. 08, 2022 | Jun. 30, 2022 | Mar. 21, 2022 |
US Holdings | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Dividends payable | $ 396 | |||
Global Enterprise Solutions | Subsequent Event | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Sale of business, consideration to be received | $ 450 | |||
Global Enterprise Solutions | Disposal Group, Held-for-sale, Not Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Sale of business, consideration to be received | 450 | |||
Global Enterprise Solutions | Disposal Group, Disposed of by Sale, Not Discontinued Operations | Subsequent Event | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Proceeds from divestiture of businesses | $ 427 | |||
Advanced Acoustic Concepts | Disposal Group, Held-for-sale, Not Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Sale of business, consideration to be received | $ 56 | |||
Advanced Acoustic Concepts | Disposal Group, Disposed of by Sale, Not Discontinued Operations | Subsequent Event | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Proceeds from divestiture of interest in joint venture | $ 56 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Estimate at Completion Adjustments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Change in Accounting Estimate [Line Items] | |||||||
Revenue | $ 627 | $ 658 | $ 1,239 | $ 1,339 | $ 2,879 | $ 2,778 | $ 2,714 |
Contracts Accounted for under Percentage of Completion | |||||||
Change in Accounting Estimate [Line Items] | |||||||
Revenue | $ (10) | $ (8) | $ (11) | $ (9) | $ (34) | $ (77) | $ (55) |
Total % of Revenue | 1.60% | 1.30% | 0.90% | 0.70% | 1% | 3% | 2% |
Revenue from Contracts with C_6
Revenue from Contracts with Customers - Contract Assets and Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | |||
Contract assets | $ 874 | $ 743 | $ 672 |
Contract liabilities | 156 | 174 | 177 |
Net contract assets | $ 718 | $ 569 | $ 495 |
Revenue from Contracts with C_7
Revenue from Contracts with Customers - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | ||||||
Contract with customer, liability, revenue recognized | $ 33 | $ 20 | $ 107 | $ 89 | $ 108 | $ 104 |
Revenue from Contracts with C_8
Revenue from Contracts with Customers - Remaining Performance Obligations, Backlog Schedule (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | |||
Total Backlog | $ 3,051 | $ 2,861 | $ 3,291 |
Revenue from Contracts with C_9
Revenue from Contracts with Customers - Remaining Performance Obligations, Narrative (Details) | Jun. 30, 2022 | Dec. 31, 2021 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue, remaining performance obligation, percentage | 62.50% | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue, remaining performance obligation, percentage | 39% | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 6 months |
Revenue from Contracts with _10
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | $ 627 | $ 658 | $ 1,239 | $ 1,339 | $ 2,879 | $ 2,778 | $ 2,714 |
Intersegment Sales | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | (4) | (4) | (6) | (7) | (20) | (14) | (13) |
ASC | Prime contractor | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 216 | 279 | 448 | 555 | |||
ASC | Subcontractor | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 225 | 206 | 387 | 409 | |||
ASC | Firm Fixed Price | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 394 | 419 | 736 | 845 | |||
ASC | Flexibly Priced | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 47 | 66 | 99 | 119 | |||
ASC | Intersegment Sales | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 3 | 4 | 5 | 7 | |||
ASC | Operating Segments | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 444 | 489 | 840 | 971 | |||
IMS | Prime contractor | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 36 | 42 | 69 | 86 | 174 | 283 | 442 |
IMS | Subcontractor | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 150 | 132 | 335 | 289 | 784 | 550 | 474 |
IMS | Firm Fixed Price | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 154 | 146 | 347 | 316 | 831 | 692 | 763 |
IMS | Flexibly Priced | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 32 | 28 | 57 | 59 | 127 | 141 | 153 |
IMS | Intersegment Sales | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 1 | 0 | 1 | 0 | 1 | 1 | 1 |
IMS | Operating Segments | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 187 | 174 | 405 | 375 | 959 | 834 | 917 |
United States | ASC | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 367 | 457 | 739 | 901 | |||
United States | IMS | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 178 | 160 | 390 | 349 | 913 | 792 | 895 |
International | ASC | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 74 | 28 | 96 | 63 | |||
International | IMS | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | $ 8 | $ 14 | $ 14 | $ 26 | $ 45 | $ 41 | $ 21 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Receivables [Abstract] | |||
Accounts receivable | $ 126 | $ 157 | $ 104 |
Less allowance for credit losses | (1) | (1) | (2) |
Accounts receivable, net | $ 125 | $ 156 | $ 102 |
Accounts Receivable - Narrative
Accounts Receivable - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Receivables [Abstract] | |||
Collection of sold receivables | $ 1 | $ 15 | $ 27 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | |||
Raw materials | $ 49 | $ 43 | $ 52 |
Work in progress | 198 | 161 | 193 |
Finished goods | 2 | 1 | 2 |
Total | $ 249 | $ 205 | $ 247 |
Property, Plant and Equipment -
Property, Plant and Equipment - Components of Property, Plant and Equipment (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment, at cost | $ 818 | $ 801 | $ 756 |
Less accumulated depreciation | (455) | (437) | (401) |
Total property, plant and equipment, net | 363 | 364 | 355 |
Land, buildings and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment, at cost | 321 | 312 | 294 |
Plant and machinery | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment, at cost | 194 | 191 | 186 |
Equipment and other | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment, at cost | $ 303 | $ 298 | $ 276 |
Property, Plant and Equipment_3
Property, Plant and Equipment - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |||||||
Depreciation | $ 14 | $ 12 | $ 27 | $ 24 | $ 49 | $ 44 | $ 42 |
Other Liabilities (Details)
Other Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Other Liabilities Disclosure [Abstract] | |||
Salaries, wages and accrued bonuses | $ 46 | $ 70 | $ 61 |
Fringe benefits | 75 | 74 | 71 |
Litigation | 10 | 10 | 10 |
Restructuring costs | 1 | 4 | 1 |
Provision for contract losses | 57 | 48 | 44 |
Operating lease liabilities | 22 | 24 | 22 |
Other | $ 68 | $ 65 | $ 58 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Total other current liabilities | Total other current liabilities | Total other current liabilities |
Total other current liabilities | $ 279 | $ 295 | $ 267 |
Operating lease liabilities | 68 | 73 | 81 |
Other | $ 2 | $ 1 | $ 11 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Total other noncurrent liabilities | Total other noncurrent liabilities | Total other noncurrent liabilities |
Total other noncurrent liabilities | $ 70 | $ 74 | $ 92 |
Goodwill (Details)
Goodwill (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 1,071 |
Reclassification to assets held for sale | (117) |
Acquisition adjustment | (2) |
Ending balance | 952 |
ASC | |
Goodwill [Roll Forward] | |
Beginning balance | 652 |
Reclassification to assets held for sale | (117) |
Acquisition adjustment | (2) |
Ending balance | 533 |
IMS | |
Goodwill [Roll Forward] | |
Beginning balance | 419 |
Reclassification to assets held for sale | 0 |
Acquisition adjustment | |
Ending balance | $ 419 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 966 | $ 966 | $ 964 |
Accumulated Amortization | (919) | (914) | (904) |
Net Carrying Amount | 47 | 52 | 60 |
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 957 | 957 | 957 |
Accumulated Amortization | (913) | (908) | (899) |
Net Carrying Amount | 44 | 49 | 58 |
Patents and licenses | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 9 | 9 | 7 |
Accumulated Amortization | (6) | (6) | (5) |
Net Carrying Amount | $ 3 | $ 3 | $ 2 |
Intangible Assets - Additional
Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||||||||
Amortization of intangible assets | $ 2 | $ 2 | $ 4 | $ 4 | $ 9 | $ 9 | $ 9 | |
Minimum | Customer relationships | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Finite-lived intangible asset, useful life | 10 years | 10 years | ||||||
Minimum | Patents and licenses | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Finite-lived intangible asset, useful life | 5 years | 5 years | ||||||
Maximum | Customer relationships | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Finite-lived intangible asset, useful life | 15 years | 15 years | ||||||
Maximum | Patents and licenses | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Finite-lived intangible asset, useful life | 10 years | 10 years |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Income Tax Disclosure [Abstract] | |||
Deferred tax assets | $ 107 | $ 120 | $ 154 |
Valuation allowance | 10 | 10 | 11 |
Deferred tax assets | 97 | 110 | 143 |
Deferred tax liabilities | 51 | 54 | 56 |
Net deferred tax asset | $ 46 | $ 56 | $ 87 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Income Tax Disclosure [Abstract] | |||
Tax deferred asset | $ 10 | $ 11 | $ 14 |
Debt - Schedule of Long-Term De
Debt - Schedule of Long-Term Debt (Details) $ in Millions | Jun. 30, 2022 USD ($) loan | Dec. 31, 2021 USD ($) loan | Dec. 31, 2020 USD ($) | Jan. 31, 2009 |
Debt Instrument [Line Items] | ||||
Finance lease and other | $ 162 | $ 161 | $ 163 | |
Short-term borrowings | 1 | 15 | 27 | |
Total debt principal | 490 | 393 | ||
Less unamortized debt issuance costs and discounts | 0 | 0 | 0 | |
Total debt, net | 490 | 393 | 427 | |
Less short-term borrowings and current portion of long-term debt | (140) | (41) | (53) | |
Total long-term debt | $ 350 | 352 | 374 | |
7.5% Term Loan due November 30, 2022 | Notes Payable, Other Payables | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate (as percent) | 7.50% | 7.50% | ||
Long-term debt, gross | $ 139 | $ 139 | ||
5.0% Daylight Term Loan Due October 15, 2024 | Notes Payable, Other Payables | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate (as percent) | 5% | 5% | ||
Long-term debt, gross | $ 78 | $ 78 | $ 98 | |
Revolving Credit Facility | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, gross | $ 110 | $ 0 | ||
Term Loan | Notes Payable, Other Payables | Affiliated Entity | US Holdings | ||||
Debt Instrument [Line Items] | ||||
Number of term loans | loan | 2 | 2 | ||
Term Loan | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate (as percent) | 7.50% | 7.50% |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2017 | Jan. 31, 2009 | |
Debt Instrument [Line Items] | |||||
Collection of sold receivables | $ 1,000,000 | $ 15,000,000 | $ 27,000,000 | ||
Line of Credit | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Credit limit | 450,000,000 | 450,000,000 | 450,000,000 | ||
Line of credit outstanding | $ 110,000,000 | $ 0 | $ 0 | ||
Line of Credit | Revolving Credit Facility | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Variable rate percentage | 3.50% | 3.50% | 3.50% | ||
Commitment fee percentage | 0.25% | 0.25% | |||
7.5% Term Loan due November 30, 2022 | Notes Payable, Other Payables | |||||
Debt Instrument [Line Items] | |||||
Principal amount | $ 2,000,000,000 | ||||
Stated interest rate (as percent) | 7.50% | 7.50% | |||
Long-term debt, gross | $ 139,000,000 | $ 139,000,000 | |||
Fair value of long-term debt | $ 142,000,000 | $ 182,000,000 | |||
5.0% Daylight Term Loan Due October 15, 2024 | Notes Payable, Other Payables | |||||
Debt Instrument [Line Items] | |||||
Principal amount | $ 137,500,000 | ||||
Stated interest rate (as percent) | 5% | 5% | |||
Long-term debt, gross | $ 78,000,000 | $ 78,000,000 | $ 98,000,000 | ||
Fair value of long-term debt | 81,000,000 | 84,000,000 | |||
Financial Institution Credit Facilities | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Credit limit | 65,000,000 | 65,000,000 | 60,000,000 | ||
Letters of credit outstanding | 31,000,000 | 35,000,000 | 31,000,000 | ||
Financial Institution Credit Facilities | Line of Credit | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Credit limit | 15,000,000 | 15,000,000 | |||
Line of credit outstanding | $ 0 | $ 0 | $ 0 | ||
Financial Institution Credit Facilities | Line of Credit | Revolving Credit Facility | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Variable rate percentage | 0.50% | 0.50% |
Pension and Other Postretirem_5
Pension and Other Postretirement Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Pension Plan | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Service cost | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Interest cost | 1 | 2 | 3 | 3 | 5 | 7 | 7 |
Less Expected return on plan assets | (2) | (2) | (4) | (4) | (7) | (8) | (7) |
Amortization of net actuarial loss (gain) | 1 | 0 | 1 | 1 | 2 | 3 | 2 |
Amortization of prior service cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Settlement expense (income) | 0 | 0 | 1 | 0 | 0 | 3 | 0 |
Net periodic benefit cost | 0 | 0 | 1 | 0 | 0 | 5 | 2 |
Other Postretirement Benefits Plan | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Service cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Interest cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Less Expected return on plan assets | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Amortization of net actuarial loss (gain) | 0 | 0 | 0 | 0 | (1) | (1) | 0 |
Amortization of prior service cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Settlement expense (income) | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Net periodic benefit cost | 0 | 0 | 0 | 0 | (1) | (1) | 0 |
Supplemental Employee Retirement Plan | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Service cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Interest cost | 0 | 0 | 0 | 0 | 1 | 1 | 1 |
Less Expected return on plan assets | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Amortization of net actuarial loss (gain) | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Amortization of prior service cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Settlement expense (income) | 0 | 0 | 0 | 0 | 0 | 0 | |
Net periodic benefit cost | $ 0 | $ 0 | $ 0 | $ 0 | $ 1 | $ 1 | $ 1 |
Commitment and Contingencies (D
Commitment and Contingencies (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Balance at December 31, 2021 | $ 19 | $ 17 | $ 13 |
Additional provision | 6 | 17 | 16 |
Reversal and utilization | (6) | (15) | (12) |
Balance at March 31, 2022 | $ 19 | $ 19 | $ 17 |
Minimum | |||
Product Warranty Liability [Line Items] | |||
Product warranty term | 1 year | 1 year | |
Maximum | |||
Product Warranty Liability [Line Items] | |||
Product warranty term | 3 years | 3 years |
Related Party Transactions (Det
Related Party Transactions (Details) - Affiliated Entity - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Dec. 31, 2019 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Leonardo S.p.A. | ||||||||
Related Party Transaction [Line Items] | ||||||||
Revenue from related parties | $ 51 | $ 2 | $ 54 | $ 4 | $ 11 | $ 26 | $ 16 | |
Related parties amount in cost of sales | 7 | $ 5 | 18 | $ 6 | ||||
Receivables | 17 | 17 | 2 | 5 | ||||
Payables | 9 | 9 | $ 1 | $ 8 | ||||
Unbilled receivable from related party | $ 36 | $ 36 | ||||||
US Holdings | Minimum | Surplus Agreement Receivable | ||||||||
Related Party Transaction [Line Items] | ||||||||
Variable rate spread | 0.05% | 0.05% | ||||||
US Holdings | Maximum | Surplus Agreement Receivable | ||||||||
Related Party Transaction [Line Items] | ||||||||
Variable rate spread | 0.20% | 0.20% |
Segment Information - Revenues
Segment Information - Revenues and Intersegment Revenues (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||||||
Revenue | $ 627 | $ 658 | $ 1,239 | $ 1,339 | $ 2,879 | $ 2,778 | $ 2,714 |
Operating Segments | ASC | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue | 444 | 489 | 840 | 971 | |||
Operating Segments | IMS | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue | 187 | 174 | 405 | 375 | 959 | 834 | 917 |
Corporate & Eliminations | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue | (4) | (4) | (6) | (7) | (20) | (14) | (13) |
Corporate & Eliminations | ASC | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue | 3 | 4 | 5 | 7 | |||
Corporate & Eliminations | IMS | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue | $ 1 | $ 0 | $ 1 | $ 0 | $ 1 | $ 1 | $ 1 |
Segment Information - Depreciat
Segment Information - Depreciation and Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||||||
Depreciation | $ 14 | $ 12 | $ 27 | $ 24 | $ 49 | $ 44 | $ 42 |
Assets | 3,043 | 3,043 | 3,069 | 2,956 | |||
Held for sale | 174 | 174 | 0 | ||||
ASC | |||||||
Segment Reporting Information [Line Items] | |||||||
Depreciation | 9 | 8 | 18 | 16 | |||
IMS | |||||||
Segment Reporting Information [Line Items] | |||||||
Depreciation | 5 | $ 4 | 9 | $ 8 | 16 | 14 | $ 13 |
Operating Segments | ASC | |||||||
Segment Reporting Information [Line Items] | |||||||
Assets | 1,619 | 1,619 | 1,545 | ||||
Operating Segments | IMS | |||||||
Segment Reporting Information [Line Items] | |||||||
Assets | 1,124 | 1,124 | 1,145 | 1,018 | |||
Corporate & Eliminations | |||||||
Segment Reporting Information [Line Items] | |||||||
Assets | $ 126 | $ 126 | $ 379 | $ 375 |
Segment Information - EBITDA Re
Segment Information - EBITDA Reconciliation to Net Earnings (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Adjusted EBITDA | |||||||
Adjusted EBITDA | $ 67 | $ 69 | $ 140 | $ 140 | $ 310 | $ 268 | $ 234 |
Amortization of intangibles | (2) | (2) | (4) | (4) | (9) | (9) | (9) |
Depreciation | (14) | (12) | (27) | (24) | (49) | (44) | (42) |
Restructuring costs | 0 | 0 | 0 | 0 | (5) | (12) | (20) |
Interest expense | (10) | (9) | (18) | (18) | (35) | (64) | (65) |
Deal related transaction costs | (8) | 0 | (10) | (4) | (5) | (9) | 0 |
Acquisition and divestiture related expenses | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Foreign exchange | 0 | (1) | 0 | (1) | (1) | (1) | 0 |
COVID-19 response costs | 0 | (2) | 0 | (5) | (6) | (12) | 0 |
Non-service pension expense | (1) | 0 | (1) | 0 | 0 | (5) | (3) |
Other one-time non-operational events | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Income tax (provision) benefit | (7) | (11) | (19) | (23) | (46) | (27) | (20) |
Net earnings | 25 | 32 | 61 | 61 | 154 | 85 | 75 |
ASC | |||||||
Adjusted EBITDA | |||||||
Depreciation | (9) | (8) | (18) | (16) | |||
IMS | |||||||
Adjusted EBITDA | |||||||
Depreciation | (5) | (4) | (9) | (8) | (16) | (14) | (13) |
Operating Segments | ASC | |||||||
Adjusted EBITDA | |||||||
Adjusted EBITDA | 57 | 61 | 89 | 115 | |||
Operating Segments | IMS | |||||||
Adjusted EBITDA | |||||||
Adjusted EBITDA | 10 | 7 | 51 | 25 | 90 | 55 | 63 |
Restructuring costs | 0 | (6) | (13) | ||||
Corporate & Eliminations | |||||||
Adjusted EBITDA | |||||||
Adjusted EBITDA | $ 0 | $ 1 | $ 0 | $ 0 | $ 0 | $ 0 | $ 2 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Aug. 05, 2022 USD ($) |
Subsequent Event | US Holdings | |
Subsequent Event [Line Items] | |
Payments of dividends | $ 396 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Concentration Risk (Details) - segment | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Concentration Risk [Line Items] | ||||||
Number of reportable segments | 2 | 2 | ||||
U.S. Department Of Defense | Revenue from Contract with Customer Benchmark | Government Contracts Concentration Risk | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 78% | 85% | 82% | 85% | 86% | 84% |
International And Commercial Customers | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 22% | 15% | 18% | 15% | 14% | 16% |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Research and Development Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||
Research and development expense | $ 48 | $ 41 | $ 31 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Property, Plant and Equipment (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Plant and machinery | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life (in years) | 3 years | 3 years |
Plant and machinery | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life (in years) | 10 years | 10 years |
Building and Building Improvements | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life (in years) | 15 years | 15 years |
Building and Building Improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life (in years) | 40 years | 40 years |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Goodwill (Details) - reportingUnit | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | |||
Number of reporting units | 7 | 7 | 7 |
Summary of Significant Accou_16
Summary of Significant Accounting Policies - Earnings Per Share (Details) | 1 Months Ended | ||||
Feb. 28, 2021 shares | Jun. 30, 2022 shares | Dec. 31, 2021 shares | Jan. 31, 2021 shares | Dec. 31, 2020 shares | |
Accounting Policies [Abstract] | |||||
Stockholders' Equity Note, Stock Split, Conversion Ratio | 1,450,000 | ||||
Basic and Diluted common shares outstanding (in shares) | 145,000,000 | 145,000,000 | 145,000,000 | 100 | 145,000,000 |
Summary of Significant Accou_17
Summary of Significant Accounting Policies - Financial Instruments (Details) | Jun. 30, 2022 | Dec. 31, 2021 |
Term Loan | Line of Credit | ||
Debt Instrument [Line Items] | ||
Stated interest rate (as percent) | 7.50% | 7.50% |
Summary of Significant Accou_18
Summary of Significant Accounting Policies - Acquisitions (Details) - Ascendant Engineering Solutions $ in Millions | Jul. 28, 2021 USD ($) |
Business Acquisition [Line Items] | |
Business combination, purchase price | $ 11 |
Business combination, contingent consideration | $ 5 |
Revenue from Contracts with _11
Revenue from Contracts with Customers - Estimate at Completion Adjustments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Change in Accounting Estimate [Line Items] | |||||||
Total revenues | $ 627 | $ 658 | $ 1,239 | $ 1,339 | $ 2,879 | $ 2,778 | $ 2,714 |
Contracts Accounted for under Percentage of Completion | |||||||
Change in Accounting Estimate [Line Items] | |||||||
Total revenues | $ (10) | $ (8) | $ (11) | $ (9) | $ (34) | $ (77) | $ (55) |
Total % of Revenue | 1.60% | 1.30% | 0.90% | 0.70% | 1% | 3% | 2% |
Revenue from Contracts with _12
Revenue from Contracts with Customers - Contract Assets and Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | |||
Contract assets | $ 874 | $ 743 | $ 672 |
Contract liabilities | 156 | 174 | 177 |
Net contract assets | $ 718 | $ 569 | $ 495 |
Revenue from Contracts with _13
Revenue from Contracts with Customers - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | ||||||
Contract with customer, liability, revenue recognized | $ 33 | $ 20 | $ 107 | $ 89 | $ 108 | $ 104 |
Revenue from Contracts with _14
Revenue from Contracts with Customers - Remaining Performance Obligations, Backlog Schedule (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | |||
Funded | $ 2,510 | $ 2,847 | |
Unfunded | 351 | 444 | |
Total Backlog | $ 3,051 | $ 2,861 | $ 3,291 |
Revenue from Contracts with _15
Revenue from Contracts with Customers - Remaining Performance Obligations, Narrative (Details) | Jun. 30, 2022 | Dec. 31, 2021 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue, remaining performance obligation, percentage | 62.50% | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue, remaining performance obligation, percentage | 39% | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 6 months |
Revenue from Contracts with _16
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | $ 627 | $ 658 | $ 1,239 | $ 1,339 | $ 2,879 | $ 2,778 | $ 2,714 |
Intersegment Sales | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | (4) | (4) | (6) | (7) | (20) | (14) | (13) |
ASC | Prime contractor | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 1,209 | 1,063 | 1,027 | ||||
ASC | Subcontractor | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 712 | 882 | 771 | ||||
ASC | Firm Fixed Price | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 1,667 | 1,716 | 1,570 | ||||
ASC | Flexibly Priced | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 254 | 229 | 228 | ||||
ASC | Intersegment Sales | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 19 | 13 | 12 | ||||
ASC | Operating Segments | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 1,940 | 1,958 | 1,810 | ||||
IMS | Prime contractor | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 36 | 42 | 69 | 86 | 174 | 283 | 442 |
IMS | Subcontractor | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 150 | 132 | 335 | 289 | 784 | 550 | 474 |
IMS | Firm Fixed Price | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 154 | 146 | 347 | 316 | 831 | 692 | 763 |
IMS | Flexibly Priced | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 32 | 28 | 57 | 59 | 127 | 141 | 153 |
IMS | Intersegment Sales | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 1 | 0 | 1 | 0 | 1 | 1 | 1 |
IMS | Operating Segments | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 187 | 174 | 405 | 375 | 959 | 834 | 917 |
United States | ASC | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 1,808 | 1,763 | 1,699 | ||||
United States | IMS | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 178 | 160 | 390 | 349 | 913 | 792 | 895 |
International | ASC | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | 113 | 182 | 99 | ||||
International | IMS | |||||||
Disaggregation of Revenue [Line Items] | |||||||
Total revenues | $ 8 | $ 14 | $ 14 | $ 26 | $ 45 | $ 41 | $ 21 |
Accounts Receivable (Details)_2
Accounts Receivable (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Receivables [Abstract] | |||
Accounts receivable | $ 126 | $ 157 | $ 104 |
Less allowance for credit losses | (1) | (1) | (2) |
Accounts receivable, net | $ 125 | $ 156 | $ 102 |
Accounts Receivable - Narrati_2
Accounts Receivable - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Receivables [Abstract] | |||
Collection of sold receivables | $ 1 | $ 15 | $ 27 |
Inventories (Details)_2
Inventories (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | |||
Raw materials | $ 49 | $ 43 | $ 52 |
Work in progress | 198 | 161 | 193 |
Finished goods | 2 | 1 | 2 |
Total | $ 249 | $ 205 | $ 247 |
Property, Plant and Equipment_4
Property, Plant and Equipment - Components of Property, Plant and Equipment (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment, at cost | $ 818 | $ 801 | $ 756 |
Less accumulated depreciation | (455) | (437) | (401) |
Total property, plant and equipment, net | 363 | 364 | 355 |
Land, buildings and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment, at cost | 321 | 312 | 294 |
Plant and machinery | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment, at cost | 194 | 191 | 186 |
Equipment and other | |||
Property, Plant and Equipment [Line Items] | |||
Total property, plant and equipment, at cost | $ 303 | $ 298 | $ 276 |
Property, Plant and Equipment_5
Property, Plant and Equipment - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |||||||
Depreciation expense | $ 14 | $ 12 | $ 27 | $ 24 | $ 49 | $ 44 | $ 42 |
Finance leases | $ 104 | $ 108 |
Other Liabilities (Details)_2
Other Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Other Liabilities Disclosure [Abstract] | |||
Salaries, wages and accrued bonuses | $ 46 | $ 70 | $ 61 |
Fringe benefits | 75 | 74 | 71 |
Litigation | 10 | 10 | 10 |
Restructuring costs | 1 | 4 | 1 |
Provision for contract losses | 57 | 48 | 44 |
Operating lease liabilities | 22 | 24 | 22 |
Other | $ 68 | $ 65 | $ 58 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Total other current liabilities | Total other current liabilities | Total other current liabilities |
Total other current liabilities | $ 279 | $ 295 | $ 267 |
Retirement benefits | 0 | 0 | |
Operating lease liabilities | 68 | 73 | 81 |
Other | $ 2 | $ 1 | $ 11 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Total other noncurrent liabilities | Total other noncurrent liabilities | Total other noncurrent liabilities |
Total other noncurrent liabilities | $ 70 | $ 74 | $ 92 |
Goodwill - Schedule of Goodwill
Goodwill - Schedule of Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 1,057 | $ 1,057 |
Acquisitions | 14 | 0 |
Ending balance | 1,071 | 1,057 |
ASC | ||
Goodwill [Roll Forward] | ||
Beginning balance | 638 | 638 |
Acquisitions | 14 | 0 |
Ending balance | 652 | 638 |
IMS | ||
Goodwill [Roll Forward] | ||
Beginning balance | 419 | 419 |
Acquisitions | 0 | 0 |
Ending balance | $ 419 | $ 419 |
Goodwill - Narrative (Details)
Goodwill - Narrative (Details) $ in Millions | Jan. 31, 2020 USD ($) |
ASC | |
Goodwill [Line Items] | |
Accumulated impairment | $ 2,362 |
IMS | |
Goodwill [Line Items] | |
Accumulated impairment | $ 606 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 966 | $ 966 | $ 964 |
Accumulated Amortization | (919) | (914) | (904) |
Net Carrying Amount | 47 | 52 | 60 |
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 957 | 957 | 957 |
Accumulated Amortization | (913) | (908) | (899) |
Net Carrying Amount | 44 | 49 | 58 |
Patents and licenses | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 9 | 9 | 7 |
Accumulated Amortization | (6) | (6) | (5) |
Net Carrying Amount | $ 3 | $ 3 | $ 2 |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||||||||
Amortization of intangible assets | $ 2 | $ 2 | $ 4 | $ 4 | $ 9 | $ 9 | $ 9 | |
Minimum | Customer relationships | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Finite-lived intangible asset, useful life | 10 years | 10 years | ||||||
Minimum | Patents and licenses | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Finite-lived intangible asset, useful life | 5 years | 5 years | ||||||
Maximum | Customer relationships | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Finite-lived intangible asset, useful life | 15 years | 15 years | ||||||
Maximum | Patents and licenses | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Finite-lived intangible asset, useful life | 10 years | 10 years |
Intangible Assets - Schedule _2
Intangible Assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) $ in Millions | Dec. 31, 2021 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2022 | $ 9 |
2023 | 9 |
2024 | 9 |
2025 | 9 |
2026 | $ 9 |
Leases - Schedule of Lease Cost
Leases - Schedule of Lease Cost (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | ||
Operating lease cost | $ 26 | $ 24 |
Finance lease cost: | ||
Amortization of right-of-use assets | 8 | 7 |
Interest on lease liabilities | 5 | 5 |
Total lease cost | 39 | 36 |
Short-term lease cost | $ 3 | $ 5 |
Leases - Schedule of Balance Sh
Leases - Schedule of Balance Sheet Information (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Right-of-Use Assets [Abstract] | |||
Operating lease | $ 84 | $ 88 | |
Finance lease asset | 104 | 108 | |
Total leased assets | 188 | 196 | |
Current lease liabilities: | |||
Current lease liability, operating | $ 22 | 24 | 22 |
Current lease liability, finance | 6 | 5 | |
Noncurrent lease liabilities: | |||
Noncurrent lease liabilities, operating | $ 68 | 73 | 81 |
Noncurrent lease liabilities, finance | 107 | 109 | |
Total lease liabilities | $ 210 | $ 217 | |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other noncurrent assets | Other noncurrent assets | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Current | Other Liabilities, Current | Other Liabilities, Current |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property, plant and equipment, net | Property, plant and equipment, net | |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Short-term borrowings and current portion of long-term debt | Short-term borrowings and current portion of long-term debt | |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Total long-term debt | Total long-term debt |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Cash Flows Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 27 | $ 27 |
Operating cash flows from finance leases | 5 | 5 |
Financing cash flows from finance leases | 5 | 4 |
Right-Of-Use Asset Obtained In Exchange For Lease Liability [Abstract] | ||
Operating leases | 18 | 16 |
Finance leases | $ 4 | $ 46 |
Leases - Weighted Average Lease
Leases - Weighted Average Lease Term and Discount Rate (Details) | Dec. 31, 2021 | Dec. 31, 2020 |
Weighted-average remaining lease term: | ||
Operating leases | 5 years | 5 years |
Finance leases | 15 years | 16 years |
Weighted-average discount rate: | ||
Operating leases | 4.30% | 4.40% |
Finance leases | 4.60% | 4.50% |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |||
2022 | $ 27 | ||
2023 | 25 | ||
2024 | 19 | ||
2025 | 12 | ||
2026 | 9 | ||
Thereafter | 14 | ||
Total lease payments | 106 | ||
Less: imputed interest | 9 | ||
Present value of lease liabilities | 97 | ||
Operating lease liabilities | $ 22 | 24 | $ 22 |
Long-term lease obligations | $ 68 | 73 | 81 |
Finance Lease, Liability, Payment, Due [Abstract] | |||
2022 | 11 | ||
2023 | 11 | ||
2024 | 11 | ||
2025 | 10 | ||
2026 | 10 | ||
Thereafter | 104 | ||
Total lease payments | 157 | ||
Less: imputed interest | 44 | ||
Present value of lease liabilities | 113 | ||
Less: current maturities | 6 | 5 | |
Long-term lease obligations | $ 107 | $ 109 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income before Income Tax, Domestic and Foreign (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings before taxes | |||||||
Domestic | $ 203 | $ 112 | $ 89 | ||||
Foreign | (3) | 0 | 6 | ||||
Earnings before taxes | $ 32 | $ 43 | $ 80 | $ 84 | $ 200 | $ 112 | $ 95 |
Income Taxes - Schedule of In_2
Income Taxes - Schedule of Income Tax Provision (Benefit) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Current: | |||||||
Federal | $ (1) | $ 0 | $ 0 | ||||
State | 0 | 3 | 2 | ||||
Foreign | 1 | 2 | 1 | ||||
Current income tax provision | 0 | 5 | 3 | ||||
Deferred: | |||||||
Federal | 43 | 24 | 17 | ||||
State | 5 | 0 | 0 | ||||
Foreign | (2) | (2) | 0 | ||||
Deferred income tax provision (benefit) | $ 14 | $ 23 | 46 | 22 | 17 | ||
Total | $ 7 | $ 11 | $ 19 | $ 23 | $ 46 | $ 27 | $ 20 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Statutory federal rate | 21% | 21% | 21% |
State rate, net of federal benefit | 3.60% | 2.30% | 0.50% |
Foreign rate differential | (0.20%) | 0.50% | 0.50% |
Research & development credit, net of reserves | (0.20%) | (0.70%) | (2.30%) |
Nondeductible expenses | 0.90% | 0.40% | 0.70% |
Global intangible low taxed income | 0% | 0.20% | 1% |
Change in valuation allowance | (1.40%) | (2.50%) | 0.20% |
Change in tax reserves | (0.40%) | 2.20% | 0.20% |
Other | (0.30%) | 0.70% | (0.70%) |
Effective tax rate | 23% | 24.10% | 21.10% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets: | |||
Federal net operating losses | $ 5 | $ 18 | |
State net operating losses | 16 | 21 | |
Tax credit carryforwards | 21 | 23 | |
Accrued compensation and benefits | 23 | 26 | |
Contract liabilities | 21 | 20 | |
Accrued expenses | 5 | 5 | |
Pension and post-retirement plans | 18 | 24 | |
Inventory capitalization | 5 | 8 | |
Other | 5 | 8 | |
Disallowed interest | 1 | 1 | |
Total gross deferred tax assets | $ 107 | 120 | 154 |
Valuation allowance | 10 | 10 | 11 |
Deferred tax assets | 97 | 110 | 143 |
Deferred tax liabilities: | |||
Intangible assets | (41) | (44) | |
Fixed assets | (12) | (11) | |
Other | (1) | (1) | |
Deferred tax liabilities | (51) | (54) | (56) |
Net deferred tax asset | $ 46 | $ 56 | $ 87 |
Income Taxes - Narrative (Det_2
Income Taxes - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Operating Loss Carryforwards [Line Items] | |||||
Tax deferred asset | $ 10 | $ 11 | $ 14 | ||
Unrecognized tax benefits | 22 | 25 | $ 18 | $ 14 | |
Deferred Tax Assets | |||||
Operating Loss Carryforwards [Line Items] | |||||
Unrecognized tax benefits | 15 | 22 | $ 16 | ||
State and Local Jurisdiction | |||||
Operating Loss Carryforwards [Line Items] | |||||
Operating loss carryforwards | 239 | 327 | |||
Internal Revenue Service (IRS) | Domestic Tax Authority | |||||
Operating Loss Carryforwards [Line Items] | |||||
Operating loss carryforwards | 28 | $ 131 | |||
Operating loss carryforwards, limitations on use | $ 28 |
Income Taxes - Schedule of Unre
Income Taxes - Schedule of Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Beginning balance | $ 25 | $ 18 | $ 14 |
Increase related to prior year tax positions | 0 | 3 | 3 |
Increase related to current year tax positions | 1 | 4 | 1 |
Decreases related to prior year tax positions | (4) | 0 | 0 |
Lapse of statute of limitations | 0 | 0 | 0 |
Settlements with taxing authorities | 0 | 0 | 0 |
Ending balance | $ 22 | $ 25 | $ 18 |
Debt - Schedule of Long-Term _2
Debt - Schedule of Long-Term Debt (Details) $ in Millions | Jun. 30, 2022 USD ($) loan | Dec. 31, 2021 USD ($) loan | Dec. 31, 2020 USD ($) | Jan. 31, 2009 |
Debt Instrument [Line Items] | ||||
Finance lease and other | $ 162 | $ 161 | $ 163 | |
Short-term borrowings | 1 | 15 | 27 | |
Total debt principal | 393 | 427 | ||
Less unamortized debt issuance costs and discounts | 0 | 0 | 0 | |
Total debt, net | 490 | 393 | 427 | |
Less short-term borrowings and current portion of long-term debt | (140) | (41) | (53) | |
Total long-term debt | $ 350 | $ 352 | 374 | |
7.5% Term Loan due November 30, 2023 | Notes Payable, Other Payables | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate (as percent) | 7.50% | 7.50% | ||
Long-term debt, gross | $ 139 | 139 | ||
5.0% Daylight Term Loan Due October 15, 2024 | Notes Payable, Other Payables | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate (as percent) | 5% | 5% | ||
Long-term debt, gross | $ 78 | $ 78 | $ 98 | |
Term Loan | Notes Payable, Other Payables | Affiliated Entity | US Holdings | ||||
Debt Instrument [Line Items] | ||||
Number of term loans | loan | 2 | 2 |
Debt - Narrative (Details)_2
Debt - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Apr. 30, 2018 | Jun. 30, 2017 | Jan. 31, 2009 | |
Debt Instrument [Line Items] | ||||||||||
Finance lease and other | $ 113,000,000 | |||||||||
Other financing liability | 48,000,000 | |||||||||
Current lease liability, finance | 6,000,000 | $ 5,000,000 | ||||||||
Collection of sold receivables | $ 1,000,000 | $ 1,000,000 | 15,000,000 | 27,000,000 | ||||||
Interest expense | (10,000,000) | $ (9,000,000) | (18,000,000) | $ (18,000,000) | (35,000,000) | (64,000,000) | $ (65,000,000) | |||
Line of Credit | Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Credit limit | 450,000,000 | 450,000,000 | 450,000,000 | 450,000,000 | ||||||
Line of credit outstanding | $ 110,000,000 | $ 110,000,000 | $ 0 | $ 0 | ||||||
Line of Credit | Revolving Credit Facility | LIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Variable rate percentage | 3.50% | 3.50% | 3.50% | |||||||
Commitment fee percentage | 0.25% | 0.25% | ||||||||
7.5% Term Loan due November 30, 2023 | Notes Payable, Other Payables | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal amount | $ 2,000,000,000 | |||||||||
Stated interest rate (as percent) | 7.50% | 7.50% | ||||||||
Long-term debt, gross | $ 139,000,000 | $ 139,000,000 | ||||||||
Fair value of long-term debt | $ 182,000,000 | 182,000,000 | ||||||||
Debt forgiven | 300,000,000 | |||||||||
5.0% Daylight Term Loan Due October 15, 2024 | Notes Payable, Other Payables | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal amount | $ 137,500,000 | |||||||||
Stated interest rate (as percent) | 5% | 5% | 5% | |||||||
Long-term debt, gross | $ 78,000,000 | $ 78,000,000 | $ 78,000,000 | 98,000,000 | ||||||
Fair value of long-term debt | 81,000,000 | 81,000,000 | $ 84,000,000 | |||||||
4.0% Term Loan due December 31, 2021 | Notes Payable, Other Payables | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Stated interest rate (as percent) | 4% | |||||||||
Long-term debt, gross | $ 50,000,000 | |||||||||
Financial Institution Credit Facilities | Line of Credit | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Credit limit | 65,000,000 | 65,000,000 | $ 65,000,000 | 60,000,000 | ||||||
Letters of credit outstanding | 31,000,000 | 31,000,000 | 35,000,000 | 31,000,000 | ||||||
Financial Institution Credit Facilities | Line of Credit | Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Credit limit | 15,000,000 | 15,000,000 | 15,000,000 | |||||||
Line of credit outstanding | $ 0 | $ 0 | $ 0 | $ 0 | ||||||
Financial Institution Credit Facilities | Line of Credit | Revolving Credit Facility | LIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Variable rate percentage | 0.50% | 0.50% |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Long-term Debt (Details) $ in Millions | Dec. 31, 2021 USD ($) |
Debt Disclosure [Abstract] | |
2022 | $ 41 |
2023 | 171 |
2024 | 40 |
2025 | 7 |
2026 | 7 |
Thereafter | 127 |
Total principal payments | $ 393 |
Pension and Other Postretirem_6
Pension and Other Postretirement Benefits - Changes in Projected Benefit Obligations, Fair Value of Plan Assets, and Funded Status of Plan (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Pension Plan | |||||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||||||
Benefit obligation at beginning of year | $ 215 | $ 226 | $ 226 | $ 261 | |||
Service cost | $ 0 | $ 0 | 0 | 0 | 0 | 0 | $ 0 |
Interest cost | 1 | 2 | 3 | 3 | 5 | 7 | 7 |
Plan participants' contributions | 0 | 0 | |||||
Actuarial (gain) loss | (3) | (10) | |||||
Benefits paid | (13) | (10) | |||||
(Gain) loss due to settlement | 0 | (21) | |||||
Plan amendments | 0 | 0 | |||||
Exchange rate differences and other | 0 | (1) | |||||
Benefit obligation at end of year | 215 | 226 | 261 | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | |||||||
Fair value of plan assets at beginning of year | 166 | 151 | 151 | 158 | |||
Actual return on plan assets | 15 | 19 | |||||
Plan participants' contributions | 0 | 0 | |||||
Employer contributions | 13 | 6 | |||||
Benefits paid | (13) | (10) | |||||
(Loss) gain due to settlement | 0 | (21) | |||||
Exchange rate differences and other | 0 | (1) | |||||
Fair value of plan assets at end of year | 166 | 151 | 158 | ||||
Contributions between measurement date and year end | 0 | 0 | |||||
Funded status of the plans at year end | (49) | (75) | |||||
Other Postretirement Benefits Plan | |||||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||||||
Benefit obligation at beginning of year | 2 | 2 | 2 | 3 | |||
Service cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Interest cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Plan participants' contributions | 0 | 0 | |||||
Actuarial (gain) loss | 0 | (1) | |||||
Benefits paid | 0 | 0 | |||||
(Gain) loss due to settlement | 0 | 0 | |||||
Plan amendments | 0 | 0 | |||||
Exchange rate differences and other | 0 | 0 | |||||
Benefit obligation at end of year | 2 | 2 | 3 | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | |||||||
Fair value of plan assets at beginning of year | 1 | 1 | 1 | 1 | |||
Actual return on plan assets | 0 | 0 | |||||
Plan participants' contributions | 0 | 0 | |||||
Employer contributions | 0 | 0 | |||||
Benefits paid | 0 | 0 | |||||
(Loss) gain due to settlement | 0 | 0 | |||||
Exchange rate differences and other | 0 | 0 | |||||
Fair value of plan assets at end of year | 1 | 1 | 1 | ||||
Contributions between measurement date and year end | 0 | 0 | |||||
Funded status of the plans at year end | (1) | (1) | |||||
Supplemental Employee Retirement Plan | |||||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||||||
Benefit obligation at beginning of year | 22 | 23 | 23 | 24 | |||
Service cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Interest cost | $ 0 | $ 0 | 0 | 0 | 1 | 1 | 1 |
Plan participants' contributions | 0 | 0 | |||||
Actuarial (gain) loss | (1) | (1) | |||||
Benefits paid | (1) | (1) | |||||
(Gain) loss due to settlement | 0 | 0 | |||||
Plan amendments | 0 | 0 | |||||
Exchange rate differences and other | 0 | 0 | |||||
Benefit obligation at end of year | 22 | 23 | 24 | ||||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | |||||||
Fair value of plan assets at beginning of year | $ 12 | $ 11 | 11 | 10 | |||
Actual return on plan assets | 1 | 1 | |||||
Plan participants' contributions | 0 | 0 | |||||
Employer contributions | 1 | 1 | |||||
Benefits paid | (1) | (1) | |||||
(Loss) gain due to settlement | 0 | 0 | |||||
Exchange rate differences and other | 0 | 0 | |||||
Fair value of plan assets at end of year | 12 | 11 | $ 10 | ||||
Contributions between measurement date and year end | 0 | 0 | |||||
Funded status of the plans at year end | $ (10) | $ (12) |
Pension and Other Postretirem_7
Pension and Other Postretirement Benefits - Schedule of Amounts Recognized in Balance Sheet (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Pension Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Noncurrent assets | $ 0 | $ 0 |
Current liabilities | 0 | 0 |
Noncurrent liabilities | (49) | (75) |
Net liability recognized | (49) | (75) |
Other Postretirement Benefits Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Noncurrent assets | 1 | 1 |
Current liabilities | 0 | 0 |
Noncurrent liabilities | (2) | (2) |
Net liability recognized | (1) | (1) |
Supplemental Employee Retirement Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Noncurrent assets | 0 | 0 |
Current liabilities | 0 | 0 |
Noncurrent liabilities | (10) | (11) |
Net liability recognized | $ (10) | $ (11) |
Pension and Other Postretirem_8
Pension and Other Postretirement Benefits - Schedule of Amounts Recognized in Other Comprehensive Earnings (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Pension Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Prior service cost | $ 0 | $ 0 |
Net actuarial loss (gain) | 40 | 52 |
Total amount recognized in accumulated other comprehensive losses (earnings) | 40 | 52 |
Other Postretirement Benefits Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Prior service cost | 0 | 0 |
Net actuarial loss (gain) | (1) | (2) |
Total amount recognized in accumulated other comprehensive losses (earnings) | (1) | (2) |
Supplemental Employee Retirement Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Prior service cost | 0 | 0 |
Net actuarial loss (gain) | 6 | 7 |
Total amount recognized in accumulated other comprehensive losses (earnings) | $ 6 | $ 7 |
Pension and Other Postretirem_9
Pension and Other Postretirement Benefits - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Defined benefit plan, expected employer contribution next fiscal year | $ 5 | $ 13 | ||
Defined benefit plan, expected current year employer contributions deferred under CARES Act | $ 7 | |||
Defined contribution plan, employer contribution amount | 22 | 21 | $ 19 | |
Pension Plans and Supplemental Retirement Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Accumulated benefit obligation | $ 237 | $ 249 |
Pension and Other Postretire_10
Pension and Other Postretirement Benefits - Schedule of Pension Plans with ABO and PBO in Excess of the Fair Value of Plan Assets (Details) - Pension Plans and Supplemental Retirement Plans - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Defined Benefit Plan Disclosure [Line Items] | ||
Projected benefit obligation | $ 237 | $ 249 |
Accumulated benefit obligation | 237 | 249 |
Fair value of plan assets | $ 178 | $ 162 |
Pension and Other Postretire_11
Pension and Other Postretirement Benefits - Defined Benefit Plan Assumptions Used to Calculate Benefit Obligation (Details) | Dec. 31, 2021 | Dec. 31, 2020 |
Pension Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate | 2.80% | 2.40% |
Expected long-term return on plan assets | 5.90% | 6.40% |
Other Postretirement Benefits Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate | 2.60% | 4.30% |
Expected long-term return on plan assets | 5.90% | 6.40% |
Health care trend rate assumed for next year | 4.60% | 5.40% |
Ultimate health care trend rate | 4.30% | 4.30% |
Supplemental Employee Retirement Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate | 2.80% | 2.50% |
Pension and Other Postretire_12
Pension and Other Postretirement Benefits - Schedule of Net Benefit Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Pension Plan | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Service cost | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Interest cost | 1 | 2 | 3 | 3 | 5 | 7 | 7 |
Less Expected return on plan assets | (2) | (2) | (4) | (4) | (7) | (8) | (7) |
Amortization of net actuarial loss (gain) | 1 | 0 | 1 | 1 | 2 | 3 | 2 |
Amortization of prior service cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Settlement expense (income) | 0 | 0 | 1 | 0 | 0 | 3 | 0 |
Net periodic benefit cost | 0 | 0 | 1 | 0 | 0 | 5 | 2 |
Other Postretirement Benefits Plan | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Service cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Interest cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Less Expected return on plan assets | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Amortization of net actuarial loss (gain) | 0 | 0 | 0 | 0 | (1) | (1) | 0 |
Amortization of prior service cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Settlement expense (income) | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Net periodic benefit cost | 0 | 0 | 0 | 0 | (1) | (1) | 0 |
Supplemental Employee Retirement Plan | |||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||
Service cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Interest cost | 0 | 0 | 0 | 0 | 1 | 1 | 1 |
Less Expected return on plan assets | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Amortization of net actuarial loss (gain) | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Amortization of prior service cost | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Settlement expense (income) | 0 | 0 | 0 | 0 | 0 | 0 | |
Net periodic benefit cost | $ 0 | $ 0 | $ 0 | $ 0 | $ 1 | $ 1 | $ 1 |
Pension and Other Postretire_13
Pension and Other Postretirement Benefits - Schedule of Other Changes Recognized in Other Comprehensive Earnings (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Pension Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net actuarial (gain) loss | $ (11) | $ (21) | $ 19 |
Prior service cost | 0 | 0 | 0 |
Amortization of net actuarial (loss) gain from prior years | (2) | (6) | (2) |
Amortization of prior service cost | 0 | 0 | 0 |
Other | 0 | 0 | 0 |
Total recognized in other comprehensive income | (13) | (27) | 17 |
Other Postretirement Benefits Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net actuarial (gain) loss | 0 | (1) | (1) |
Prior service cost | 0 | 0 | 0 |
Amortization of net actuarial (loss) gain from prior years | 1 | 1 | 0 |
Amortization of prior service cost | 0 | 0 | 0 |
Other | 0 | 0 | 0 |
Total recognized in other comprehensive income | 1 | 0 | (1) |
Supplemental Employee Retirement Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net actuarial (gain) loss | (1) | (1) | 4 |
Prior service cost | 0 | 0 | 0 |
Amortization of net actuarial (loss) gain from prior years | 0 | 0 | 0 |
Amortization of prior service cost | 0 | 0 | 0 |
Other | 0 | 0 | 0 |
Total recognized in other comprehensive income | $ (1) | $ (1) | $ 4 |
Pension and Other Postretire_14
Pension and Other Postretirement Benefits - Defined Benefit Plan Assumptions Used to Calculate Net Periodic Benefit Cost (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Pension Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 2.80% | 2.70% | 3.60% |
Expected long - term return on plan assets | 6.40% | 6.30% | 6.90% |
Other Postretirement Benefits Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 2.10% | 2.80% | 3.30% |
Expected long - term return on plan assets | 6.40% | 5.80% | 5.70% |
Health care trend rate assumed for next year | 5.80% | 6% | 6.50% |
Ultimate health care trend rate | 4.50% | 4.50% | 4.50% |
Supplemental Employee Retirement Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 2.40% | 2.40% | 3.50% |
Pension and Other Postretire_15
Pension and Other Postretirement Benefits - Schedule of Allocation of Plan Assets (Details) | Dec. 31, 2021 | Dec. 31, 2020 |
Equity securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets, actual allocation percentage | 41% | 55% |
Equity securities | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets, target allocation percentage | 40% | 40% |
Equity securities | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets, target allocation percentage | 60% | 60% |
Debt securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets, actual allocation percentage | 47% | 33% |
Debt securities | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets, target allocation percentage | 30% | 40% |
Debt securities | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets, target allocation percentage | 50% | 50% |
Real estate | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets, actual allocation percentage | 6% | 6% |
Real estate | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets, target allocation percentage | 5% | 5% |
Real estate | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets, target allocation percentage | 10% | 10% |
Other, primarily cash and cash equivalents, and hedge funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets, actual allocation percentage | 6% | 6% |
Other, primarily cash and cash equivalents, and hedge funds | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets, target allocation percentage | 5% | 5% |
Other, primarily cash and cash equivalents, and hedge funds | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets, target allocation percentage | 10% | 10% |
Pension and Other Postretire_16
Pension and Other Postretirement Benefits - Schedule of Fair Value of Category of Plan Assets (Details) - Pension Plan - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 166 | $ 151 | $ 158 |
Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 179 | 163 | |
Fair Value, Inputs, Level 1, 2 and 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 17 | 15 | |
Level 1 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 17 | 15 | |
Level 2 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Level 3 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Cash and cash equivalents | Fair Value, Inputs, Level 1, 2 and 3 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 11 | 9 | |
Cash and cash equivalents | Level 1 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 11 | 9 | |
Cash and cash equivalents | Level 2 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Cash and cash equivalents | Level 3 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Equity securities | Fair Value, Inputs, Level 1, 2 and 3 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 6 | 6 | |
Equity securities | Level 1 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 6 | 6 | |
Equity securities | Level 2 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Equity securities | Level 3 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Debt securities | Fair Value, Inputs, Level 1, 2 and 3 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Debt securities | Level 1 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Debt securities | Level 2 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Debt securities | Level 3 | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Collective trust funds | Investments measured at NAV: | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 162 | 148 | |
Equity and fixed income funds | Investments measured at NAV: | Fair Value, Recurring | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 |
Pension and Other Postretire_17
Pension and Other Postretirement Benefits - Schedule of Expected Benefit Payments (Details) $ in Millions | Dec. 31, 2021 USD ($) |
Pension Plan | |
Defined Benefit Plan Disclosure [Line Items] | |
2022 | $ 12 |
2023 | 12 |
2024 | 13 |
2025 | 13 |
2026 | 13 |
2027-2031 | 63 |
Other Postretirement Benefits Plan | |
Defined Benefit Plan Disclosure [Line Items] | |
2022 | 0 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
2027-2031 | 0 |
Supplemental Employee Retirement Plan | |
Defined Benefit Plan Disclosure [Line Items] | |
2022 | 1 |
2023 | 1 |
2024 | 1 |
2025 | 1 |
2026 | 1 |
2027-2031 | $ 6 |
Equity Method Investments - Nar
Equity Method Investments - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |||
Share of earnings from equity method investments | $ 2 | $ 3 | $ 2 |
Equity Method Investments - Sch
Equity Method Investments - Schedule of Equity Method Investments (Details) - Advanced Acoustics Concepts, LLC - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Schedule of Equity Method Investments [Line Items] | ||
% of Ownership | 51% | 51% |
Carrying Value | $ 27 | $ 25 |
Commitment and Contingencies -
Commitment and Contingencies - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Product Warranty Liability [Line Items] | |||||||
Restructuring costs | $ 0 | $ 0 | $ 0 | $ 0 | $ 5 | $ 12 | $ 20 |
Minimum | |||||||
Product Warranty Liability [Line Items] | |||||||
Product warranty term | 1 year | 1 year | |||||
Maximum | |||||||
Product Warranty Liability [Line Items] | |||||||
Product warranty term | 3 years | 3 years |
Commitment and Contingencies _3
Commitment and Contingencies - Schedule of Restructuring and Related Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | $ 0 | $ 0 | $ 0 | $ 0 | $ 5 | $ 12 | $ 20 |
Corporate | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | 0 | 0 | 1 | ||||
ASC | Operating Segments | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | 5 | 6 | 6 | ||||
IMS | Operating Segments | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | 0 | 6 | 13 | ||||
Severance | Corporate | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | 0 | 0 | 0 | ||||
Severance | ASC | Operating Segments | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | 5 | 6 | 1 | ||||
Severance | IMS | Operating Segments | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | 0 | 0 | 2 | ||||
Facility abandonment | Corporate | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | 0 | 0 | 1 | ||||
Facility abandonment | ASC | Operating Segments | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | 0 | 0 | 3 | ||||
Facility abandonment | IMS | Operating Segments | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | 0 | 6 | 6 | ||||
Inventory | Corporate | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | 0 | 0 | 0 | ||||
Inventory | ASC | Operating Segments | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | 0 | 0 | 2 | ||||
Inventory | IMS | Operating Segments | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring costs | $ 0 | $ 0 | $ 5 |
Commitment and Contingencies _4
Commitment and Contingencies - Schedule of Restructuring Provision (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Restructuring Reserve [Roll Forward] | |||||||
Beginning balance | $ 4 | $ 1 | $ 1 | $ 4 | |||
Additional provision | $ 0 | $ 0 | $ 0 | $ 0 | 5 | 12 | $ 20 |
Reversal and utilization | (2) | (15) | |||||
Ending balance | $ 4 | $ 1 | $ 4 |
Commitment and Contingencies _5
Commitment and Contingencies - Schedule of Product Warranty Liability (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Balance at December 31, 2021 | $ 19 | $ 17 | $ 13 |
Additional provision | 6 | 17 | 16 |
Reversal and utilization | (6) | (15) | (12) |
Balance at March 31, 2022 | $ 19 | $ 19 | $ 17 |
Related Party Transactions (D_2
Related Party Transactions (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Dec. 31, 2019 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | ||||||||
Related party note receivable | $ 0 | $ 0 | $ 0 | $ 115 | ||||
7.5% Term Loan due November 30, 2023 | Notes Payable, Other Payables | ||||||||
Related Party Transaction [Line Items] | ||||||||
Debt forgiven | 300 | |||||||
Affiliated Entity | Leonardo S.p.A. | ||||||||
Related Party Transaction [Line Items] | ||||||||
Revenue from related parties | 51 | $ 2 | 54 | $ 4 | 11 | 26 | $ 16 | |
Receivables | 17 | 17 | 2 | 5 | ||||
Payables | $ 9 | $ 9 | 1 | 8 | ||||
Affiliated Entity | US Holdings | 7.5% Term Loan due November 30, 2023 | Notes Payable, Other Payables | ||||||||
Related Party Transaction [Line Items] | ||||||||
Debt forgiven | 300 | |||||||
Affiliated Entity | US Holdings | Surplus Agreement Receivable | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party note receivable | $ 0 | $ 115 | ||||||
Affiliated Entity | US Holdings | Minimum | Surplus Agreement Receivable | ||||||||
Related Party Transaction [Line Items] | ||||||||
Variable rate spread | 0.05% | 0.05% | ||||||
Affiliated Entity | US Holdings | Maximum | Surplus Agreement Receivable | ||||||||
Related Party Transaction [Line Items] | ||||||||
Variable rate spread | 0.20% | 0.20% |
Segment Information - Revenue_2
Segment Information - Revenues and Intersegment Revenues (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||||||
Revenue | $ 627 | $ 658 | $ 1,239 | $ 1,339 | $ 2,879 | $ 2,778 | $ 2,714 |
Operating Segments | ASC | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue | 1,940 | 1,958 | 1,810 | ||||
Operating Segments | IMS | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue | 187 | 174 | 405 | 375 | 959 | 834 | 917 |
Corporate & Eliminations | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue | (4) | (4) | (6) | (7) | (20) | (14) | (13) |
Corporate & Eliminations | ASC | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue | 19 | 13 | 12 | ||||
Corporate & Eliminations | IMS | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenue | $ 1 | $ 0 | $ 1 | $ 0 | $ 1 | $ 1 | $ 1 |
Segment Information - Depreci_2
Segment Information - Depreciation and Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||||||
Depreciation | $ 14 | $ 12 | $ 27 | $ 24 | $ 49 | $ 44 | $ 42 |
Assets | 3,043 | 3,043 | 3,069 | 2,956 | |||
ASC | |||||||
Segment Reporting Information [Line Items] | |||||||
Depreciation | 33 | 30 | 29 | ||||
IMS | |||||||
Segment Reporting Information [Line Items] | |||||||
Depreciation | 5 | $ 4 | 9 | $ 8 | 16 | 14 | $ 13 |
Operating Segments | ASC | |||||||
Segment Reporting Information [Line Items] | |||||||
Assets | 1,545 | 1,563 | |||||
Operating Segments | IMS | |||||||
Segment Reporting Information [Line Items] | |||||||
Assets | 1,124 | 1,124 | 1,145 | 1,018 | |||
Corporate & Eliminations | |||||||
Segment Reporting Information [Line Items] | |||||||
Assets | $ 126 | $ 126 | $ 379 | $ 375 |
Segment Information - EBITDA _2
Segment Information - EBITDA Reconciliation to Net Earnings (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Adjusted EBITDA | |||||||
Adjusted EBITDA | $ 67 | $ 69 | $ 140 | $ 140 | $ 310 | $ 268 | $ 234 |
Amortization of intangibles | (2) | (2) | (4) | (4) | (9) | (9) | (9) |
Depreciation | (14) | (12) | (27) | (24) | (49) | (44) | (42) |
Restructuring costs | 0 | 0 | 0 | 0 | (5) | (12) | (20) |
Interest expense | (10) | (9) | (18) | (18) | (35) | (64) | (65) |
Deal related transaction costs | (8) | 0 | (10) | (4) | (5) | (9) | 0 |
Acquisition and divestiture related expenses | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Foreign exchange | 0 | (1) | 0 | (1) | (1) | (1) | 0 |
COVID-19 response costs | 0 | (2) | 0 | (5) | (6) | (12) | 0 |
Non-service pension expense | (1) | 0 | (1) | 0 | 0 | (5) | (3) |
Other one-time non-operational events | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Income tax (provision) benefit | (7) | (11) | (19) | (23) | (46) | (27) | (20) |
Net earnings | 25 | 32 | 61 | 61 | 154 | 85 | 75 |
ASC | |||||||
Adjusted EBITDA | |||||||
Depreciation | (33) | (30) | (29) | ||||
IMS | |||||||
Adjusted EBITDA | |||||||
Depreciation | (5) | (4) | (9) | (8) | (16) | (14) | (13) |
Operating Segments | ASC | |||||||
Adjusted EBITDA | |||||||
Adjusted EBITDA | 220 | 213 | 169 | ||||
Restructuring costs | (5) | (6) | (6) | ||||
Operating Segments | IMS | |||||||
Adjusted EBITDA | |||||||
Adjusted EBITDA | 10 | 7 | 51 | 25 | 90 | 55 | 63 |
Restructuring costs | 0 | (6) | (13) | ||||
Corporate & Eliminations | |||||||
Adjusted EBITDA | |||||||
Adjusted EBITDA | $ 0 | $ 1 | $ 0 | $ 0 | $ 0 | $ 0 | $ 2 |
Subsequent Events (Details)_2
Subsequent Events (Details) $ in Millions | Mar. 21, 2022 USD ($) |
Subsequent Event | Global Enterprise Solutions | |
Subsequent Event [Line Items] | |
Sale of business, consideration to be received | $ 450 |