Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 01, 2017 | Oct. 27, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | ORBITAL ATK, INC. | |
Entity Central Index Key | 866,121 | |
Document Type | 10-Q | |
Document Period End Date | Oct. 1, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 57,686,000 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Millions | Oct. 01, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 119 | $ 200 |
Net receivables | 1,939 | 1,741 |
Net inventories | 267 | 215 |
Other current assets | 90 | 79 |
Total current assets | 2,415 | 2,235 |
Property, plant and equipment, net of accumulated depreciation of $1,191 at October 1, 2017 and $1,121 at December 31, 2016 | 858 | 816 |
Goodwill | 1,832 | 1,832 |
Net intangibles | 70 | 98 |
Other noncurrent assets | 362 | 437 |
Total assets | 5,537 | 5,418 |
Current liabilities: | ||
Current portion of long-term debt | 40 | 40 |
Accounts payable | 141 | 175 |
Contract loss reserve | 160 | 197 |
Contract advances and allowances | 274 | 233 |
Accrued compensation | 142 | 120 |
Other current liabilities | 536 | 577 |
Total current liabilities | 1,293 | 1,342 |
Long-term debt | 1,370 | 1,398 |
Pension and postemployment benefits | 705 | 744 |
Other noncurrent liabilities | 106 | 117 |
Total liabilities | 3,474 | 3,601 |
Commitments and contingencies (Note 12) | ||
Common stock—$.01 par value: authorized—180,000,000 shares; issued and outstanding—57,685,462 shares at October 1, 2017 and 57,487,466 shares at December 31, 2016 | 1 | 1 |
Additional paid-in-capital | 2,169 | 2,175 |
Retained earnings | 1,459 | 1,266 |
Accumulated other comprehensive loss | (714) | (764) |
Common stock in treasury, at cost—11,249,562 shares held at October 1, 2017 and 11,447,558 shares held at December 31, 2016 | (863) | (872) |
Total Orbital ATK, Inc. stockholders' equity | 2,052 | 1,806 |
Noncontrolling interest | 11 | 11 |
Total equity | 2,063 | 1,817 |
Total liabilities and equity | $ 5,537 | $ 5,418 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Millions | Oct. 01, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 1,191 | $ 1,121 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 180,000,000 | 180,000,000 |
Common stock, issued shares | 57,685,462 | 57,487,466 |
Common stock, outstanding shares | 57,685,462 | 57,487,466 |
Common stock in treasury, shares | 11,249,562 | 11,447,558 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2017 | Oct. 02, 2016 | Oct. 01, 2017 | Oct. 02, 2016 | |
Income Statement [Abstract] | ||||
Sales | $ 1,216 | $ 1,043 | $ 3,416 | $ 3,183 |
Cost of sales | 941 | 833 | 2,645 | 2,466 |
Gross profit | 275 | 210 | 771 | 717 |
Operating expenses: | ||||
Research and development | 24 | 25 | 78 | 81 |
Selling | 31 | 28 | 90 | 82 |
General and administrative | 78 | 66 | 214 | 195 |
Income before interest, income taxes and noncontrolling interest | 142 | 91 | 389 | 359 |
Net interest expense | (17) | (17) | (51) | (51) |
Income before income taxes and noncontrolling interest | 125 | 74 | 338 | 308 |
Income taxes | 31 | 14 | 90 | 80 |
Income before noncontrolling interest | 94 | 60 | 248 | 228 |
Less net income attributable to noncontrolling interest | 0 | 0 | 0 | 0 |
Net income attributable to Orbital ATK, Inc. | $ 94 | $ 60 | $ 248 | $ 228 |
Basic earnings per common share from: | ||||
Net income attributable to Orbital ATK, Inc. (in dollars per share) | $ 1.65 | $ 1.04 | $ 4.33 | $ 3.92 |
Weighted-average number of common shares outstanding (in shares) | 57,310 | 57,930 | 57,370 | 58,210 |
Diluted earnings per common share from: | ||||
Net income attributable to Orbital ATK, Inc. (in dollars per share) | $ 1.64 | $ 1.04 | $ 4.29 | $ 3.89 |
Weighted-average number of diluted common shares outstanding (in shares) | 57,760 | 58,260 | 57,860 | 58,640 |
Cash dividends per common share (in dollars per share) | $ 0.32 | $ 0.3 | $ 0.96 | $ 0.90 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2017 | Oct. 02, 2016 | Oct. 01, 2017 | Oct. 02, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 94 | $ 60 | $ 248 | $ 228 |
Pension and other postretirement benefits: | ||||
Prior service credits for pension and postretirement benefit plans recorded to net income | (7) | 33 | (21) | 20 |
Net actuarial loss for pension and postretirement benefit plans recorded to net income | 33 | 29 | 100 | 92 |
Valuation adjustment for pension and postretirement benefit plans | 0 | 0 | 0 | 2 |
Change in fair value of derivatives | 4 | 1 | 1 | 5 |
Unrealized gain on available-for-sale securities | 1 | 0 | 1 | 0 |
Other | 0 | 1 | 0 | 2 |
Income tax expense | (12) | (24) | (31) | (46) |
Other comprehensive income, net of tax | 19 | 40 | 50 | 75 |
Comprehensive income | 113 | 100 | 298 | 303 |
Less comprehensive income attributable to noncontrolling interest | 0 | 0 | 0 | 0 |
Comprehensive income attributable to Orbital ATK, Inc. | $ 113 | $ 100 | $ 298 | $ 303 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Oct. 01, 2017 | Oct. 02, 2016 | |
Operating Activities | ||
Net income | $ 248 | $ 228 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 115 | 120 |
Fixed asset impairment | 3 | 5 |
Deferred income taxes | 13 | (12) |
Stock-based plans expense | 18 | 18 |
Other | 4 | 11 |
Change in assets and liabilities: | ||
Net receivables | (168) | (203) |
Net inventories | (25) | (22) |
Income taxes receivable | 0 | 50 |
Accounts payable | (58) | 39 |
Contract loss reserve | (36) | (24) |
Contract advances and allowances | 41 | (18) |
Accrued compensation | 22 | (7) |
Pension and postemployment benefits | 40 | (8) |
Other assets and liabilities | (60) | (70) |
Cash flows provided by operating activities | 157 | 107 |
Investing Activities | ||
Capital expenditures | (138) | (106) |
Cash flows used in investing activities | (138) | (106) |
Financing Activities | ||
Borrowings on revolving credit facilities | 450 | 800 |
Payments on revolving credit facilities | (450) | (665) |
Payment of long-term debt | (30) | (30) |
Purchase of treasury shares | (32) | (95) |
Dividends paid | (55) | (53) |
Proceeds from employee stock compensation plans | 17 | 0 |
Other | 0 | 1 |
Cash flows used in financing activities | (100) | (42) |
Decrease in cash and cash equivalents | (81) | (41) |
Cash and cash equivalents at beginning of period | 200 | 104 |
Cash and cash equivalents at end of period | 119 | 63 |
Noncash investing activity: | ||
Capital expenditures included in accounts payable | 5 | 4 |
Noncash financing activity: | ||
Treasury shares purchased included in accounts payable | $ 0 | $ 3 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 01, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Nature of Operations and Basis of Presentation The unaudited condensed consolidated financial statements of Orbital ATK, Inc. ("the Company" or "Orbital ATK") as set forth in this quarterly report have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States ("U.S. GAAP") can be condensed or omitted. The Company's accounting policies are described in the notes to the consolidated financial statements in its Form 10-K for the year ended December 31, 2016 ("Form 10-K") filed on April 28, 2017 with the SEC. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature necessary for a fair presentation of the Company’s financial position as of October 1, 2017 , its results of operations and comprehensive income for the quarters and nine months ended October 1, 2017 and October 2, 2016 and its cash flows for the nine months ended October 1, 2017 and October 2, 2016 . The condensed consolidated balance sheet as of December 31, 2016 was derived from the audited financial statements included in the Form 10-K but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates. Significant estimates inherent in the preparation of our condensed consolidated financial statements include, but are not limited to, accounting for sales and cost recognition, postretirement benefit plans, environmental receivables and liabilities, evaluation of goodwill and other assets for impairment, income taxes including deferred tax assets, fair value measurements and contingencies. Intercompany balances and transactions are eliminated in consolidation. Sales, expenses, cash flows, assets and liabilities can and do vary during the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 2016. The Company's interim quarterly periods are based on 13-week periods and end on the Sunday closest to the last calendar day of each of March, June and September. Change In Estimates The majority of our sales are from long-term contracts, which are accounted for using the percentage-of-completion method. Accounting for contracts under the percentage-of-completion method requires judgment relative to assessing risks and estimating contract revenues and costs. Profits expected to be realized on contracts are based on management’s estimates of total contract value and costs at completion. Changes in estimates of contract sales, costs or profits are recognized using the cumulative catch-up method of accounting. The cumulative effect of a change in estimate is recognized in the period a change in estimate occurs. The effect of the changes on future periods of contract performance is recognized as if the revised estimate had been used since contract inception or, in the case of contracts acquired in business combinations, from the date of acquisition. Changes in contract estimates occur for a variety of reasons including changes in contract scope, unforeseen changes in contract cost estimates due to unanticipated cost growth or risks affecting contract costs and/or the resolution of contract risks at lower costs than anticipated, termination of commercial contracts in the event of a lack of end user demand, as well as changes in contract overhead costs over the performance period. Changes in estimates could have a material effect on the Company's consolidated financial position or results of operations. Generally, favorable changes in contract estimates recognized using the cumulative catch-up method of accounting represent margin improvement on programs where either estimated cost at completion was lower than previously estimated or a change in contract scope on a program caused a higher profit rate. Conversely, the unfavorable changes in contract estimates represent margin declines on programs where either estimated cost at completion was higher than previously estimated or a change in contract scope on a program caused a lower profit rate. Aggregate net changes in contract estimates recognized increased income before income taxes and noncontrolling interest by approximately $45 million ( $0.60 per diluted share) for the quarter ended October 1, 2017 and $6 million ( $0.08 per diluted share) for the quarter ended October 2, 2016 . Aggregate net changes in contract estimates recognized increased income before income taxes and noncontrolling interest by approximately $81 million ( $1.03 per diluted share) for the nine months ended October 1, 2017 and $92 million ( $1.16 per diluted share) for the nine months ended October 2, 2016 . Estimated costs to complete on loss contracts at October 1, 2017 and December 31, 2016 were $967 million and $1,333 million , respectively. Accounting Standards Updates Adopted In October 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2016-17, Consolidation (Topic 810), Interests Held through Related Parties That Are under Common Control ("ASU 2016-17"). This ASU amends the consolidation guidance issued under ASU 2015-02, Consolidation (Topic 810) Amendments to the Consolidation Analysis, for those entities that are the single decision maker of a variable interest entity ("VIE") such that a single decision maker is not required to consider indirect interests held through related parties that are under common control with the single decision maker to be the equivalent of direct interest in their entirety. Instead, they are required to include those interests on a proportionate basis consistent with indirect interests held through other related parties. The amendments in this ASU were effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Accounting Standards Updates Issued But Not Yet Adopted In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). The ASU amends Accounting Standard Codification ("ASC") Topic 815 , Derivatives and Hedging , in order to simplify hedge accounting by better aligning an entity’s financial reporting for hedging relationships with its risk management activities. The ASU also simplifies the application of the hedge accounting guidance. ASU 2017-12 is effective for annual periods beginning after December 15, 2018, and interim periods therein. The ASU will be applied utilizing a modified retrospective approach to existing hedging relationships as of the adoption date. The Company does not expect the provisions of ASU 2017-12 to have a material impact on the Company's consolidated financial position, results of operations and cash flows. In May 2017, the FASB issued ASU 2017-09, Modification Accounting for Share-Based Payment Arrangements (“ASU 2017-09”), which identifies and provides guidance on the types of changes to share-based payment awards that an entity would be required to apply modification accounting under ASU 2016-09, Stock Compensation ( Topic 718 ). Specifically, an entity would not apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. ASU 2017-09 is effective for annual periods beginning after December 15, 2017 and will be applied prospectively to awards modified on or after the effective date. The Company does not expect the provisions of ASU 2017-09 to have a material impact on the Company's consolidated financial position, results of operations and cash flows. In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). The ASU amends ASC Topic 715, Compensation — Retirement Benefits , to require employers that present a measure of operating income in their statement of income to include only the service cost component of net periodic pension costs and net periodic postretirement benefit cost in operating expenses. The ASU also stipulates that only the service cost component of net benefit cost is eligible for capitalization. This guidance is effective for fiscal years beginning after December 15, 2017. Early adoption is permitted as of the beginning of an annual period for which financial statements have not been issued or made available for issuance. Disclosures of the nature of and reason for the change in accounting principle are required in the first interim and annual periods of adoption. The Company is currently evaluating the provisions of ASU 2017-07 and its impact on the Company's consolidated financial position, results of operations and cash flows. In February 2017, the FASB issued ASU 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965), Employee Benefit Plan Master Trust Reporting (“ASU 2017-06”). The ASU relates primarily to the reporting by an employee benefit plan for its interest in a master trust. The amendments in ASU 2017-06 are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. An entity should apply the amendments in ASU 2017-06 retrospectively to each period for which financial statements are presented. The Company does not expect the provisions of ASU 2017-06 to have a material impact on the Company's consolidated financial position, results of operations and cash flows. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment ("ASU 2017-04") , which simplifies the accounting for goodwill impairments by eliminating Step 2 from the goodwill impairment test. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, versus determining an implied fair value in Step 2 to measure the impairment loss. ASU 2017-04 is effective for annual periods beginning after December 15, 2019. The Company does not expect the provisions of ASU 2017-04 to have a material impact on the Company's consolidated financial position, results of operations and cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which requires recognition of lease assets and lease liabilities for those leases classified as operating leases under previous U.S. GAAP. The new standard is effective for annual reporting periods beginning after December 15, 2018 with early adoption permitted. The Company currently is evaluating the potential changes from this ASU to its future financial reporting and disclosures. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , which will replace numerous requirements in U.S. GAAP, including industry-specific requirements, and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. In July 2015, the FASB approved the deferral of the new standard's effective date by one year. The new standard will now be effective for annual reporting periods beginning after December 15, 2017. The core principle of the new standard is that a Company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company will adopt the standard on January 1, 2018 and apply the modified retrospective method. The Company has substantially completed its analysis of ASU 2014-09, and the associated impact on the Company's business processes, systems and internal controls. As part of this analysis, the Company compared existing policies and procedures to the requirements of the standard and is preparing modifications to ensure appropriate application of the standard. Additionally, the Company is in the process of designing and implementing specific controls over the adoption of the new standard. The Company does not expect significant changes to current controls, however it is reviewing modifications to policies and procedures to ensure all changes are incorporated consistently. The Company is continuing its assessment of the quantitative impact of adopting ASU 2014-09 and expecting to disclose the impact in its 2017 Annual Report on Form 10-K. One area of anticipated change relates to the determination of performance obligations in a contract. The determination of the number of performance obligations could alter the timing of revenue recognition for certain contracts in the Company’s portfolio. In addition, the Company anticipates expanded disclosures related to revenues and contracts with customers as required by ASU 2014-09. Under ASU 2014-09, revenue is recognized as the Company satisfies a performance obligation by transferring control to the customer. For performance obligations satisfied over time, the objective is to measure progress in a manner which depicts the performance of transferring control to the customer. As such, the Company expects contract revenue will generally be recognized over time using a cost incurred input measure. This is consistent with the percentage of completion cost-to-cost revenue recognition model currently used for the majority of the Company’s contracts. Other new pronouncements issued but not effective for the Company until after October 1, 2017 are not expected to have a material impact on the Company's continuing financial position, results of operations and cash flows. |
Merger
Merger | 9 Months Ended |
Oct. 01, 2017 | |
Business Combinations [Abstract] | |
Merger | Merger On September 17, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Northrop Grumman Corporation (“Northrop Grumman”) and Neptune Merger, Inc., a wholly owned subsidiary of Northrop Grumman (“Sub”), under which Sub will merge with and into the Company, with the Company continuing as the surviving corporation and a wholly-owned subsidiary of Northrop Grumman (the “Merger”). Upon the closing of the Merger, each outstanding share of Company common stock, other than shares owned by the Company, Northrop Grumman or Sub (which will be canceled) and appraisal shares, will automatically be converted into the right to receive $134.50 in cash, without interest and less any applicable withholding taxes. The stockholders of the Company will vote on the approval of the Merger Agreement at a special meeting currently scheduled to be held on November 29, 2017. Closing is expected to occur during the first half of 2018, subject to customary closing conditions, including the stockholder vote and obtaining required regulatory approvals. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Oct. 01, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The current authoritative guidance on fair value clarifies the definition of fair value, prescribes a framework for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value, and expands disclosures about the use of fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The valuation techniques required by the current authoritative literature are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy: Level 1—Quoted prices for identical instruments in active markets. Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3—Significant inputs to the valuation model are unobservable. The following section describes the valuation methodologies used by the Company to measure its financial instruments at fair value. Derivative financial instruments and hedging activities In order to manage its exposure to commodity pricing, foreign currency risk and interest rate risk on debt, the Company periodically utilizes commodity, foreign currency and interest rate derivatives, which are considered Level 2 instruments. As discussed further in Note 4 - Derivative Financial Instruments , the Company has outstanding commodity forward contracts that were entered into to hedge forecasted purchases of copper and zinc, as well as outstanding foreign currency forward contracts that were entered into to hedge forecasted transactions denominated in a foreign currency. Commodity derivatives are valued based on prices of futures exchanges and recently reported transactions in the marketplace. The Company currently holds two interest rate swaps with a total notional value of $150 million . These swaps are valued based on future LIBOR rates and the established fixed rate is based primarily on quotes from banks. Foreign currency derivatives are valued based on observable market transactions of spot currency rates and forward currency prices. The carrying amounts of the Company’s financial instruments, other than derivatives, which include net receivables, inventory, accounts payable, accrued liabilities and other current assets and liabilities, are reasonable estimates of their related fair values. The fair value of the variable-rate long-term debt is calculated based on current market rates for debt of the same risk and maturities. The fair value of the fixed-rate debt is based on market quotes for each issuance. The Company considers these to be Level 2 instruments. The Company’s non-financial instruments measured at fair value on a non-recurring basis include goodwill, indefinite-lived intangible assets and long-lived tangible assets. The valuation methods used to determine fair value require a significant degree of management judgment to determine the key assumptions. As such, the Company generally classifies non-financial instruments as either Level 2 or Level 3 fair value measurements. At October 1, 2017 and December 31, 2016, the Company did not have any non-financial instruments measured at fair value on a non-recurring basis. Recorded carrying amount and fair value of debt was as follows (in millions) : October 1, 2017 December 31, 2016 Carrying Amount Fair Value Carrying Amount Fair Value Fixed-rate debt $ 700 $ 739 $ 700 $ 727 Variable-rate debt $ 720 $ 716 $ 750 $ 746 Investments in marketable securities The Company has investments in marketable securities held in a common collective trust ("CCT") that are primarily fixed income securities used to pay benefits under a nonqualified supplemental executive retirement plan for certain executives and highly compensated employees. Investments in a collective investment vehicle are valued by multiplying the investee company's net asset value per share, as determined by the investee company, with the number of units or shares owned at the valuation date. Net asset value per share is determined by the investee company's custodian or fund administrator by deducting from the value of the assets of the investee company all of its liabilities and dividing the resulting number by the outstanding number of shares or units. Investments held by the CCT, including collateral invested for securities on loan, are valued on the basis of valuations furnished by a pricing service approved by the CCT's investment manager, which determines valuations using methods based on market transactions for comparable securities and various relationships between securities which are generally recognized by institutional traders, or at fair value as determined in good faith by the CCT's investment manager. The fair value of these securities, not subject to leveling, is included within other noncurrent assets on the Company's consolidated balance sheet. The fair value of these securities is measured on a recurring basis and was $14 million as of October 1, 2017 and $13 million as of December 31, 2016 . |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Oct. 01, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The Company is exposed to market risks arising from adverse changes in commodity prices affecting the cost of raw materials and energy, interest rates and foreign exchange risks. In the normal course of business, these risks are managed through a variety of strategies, including the use of derivative instruments. Cash Flow Hedges The Company periodically uses interest rate swaps to hedge forecasted interest payments and the risk associated with variable interest rates on long-term debt. The Company entered into interest rate swaps during fiscal 2014 requiring fixed rate payments on a total notional amount of $400 million, of which $150 million remains outstanding, and receives one-month LIBOR. The fair value of interest rate swap agreements approximates the amount at which they could be settled, based on future LIBOR, and the established fixed rate is based primarily on quotes from banks. Interest rate swap agreements entered into to manage interest costs and risk associated with variable interest rates were as follows (in millions) : Notional Fair Value Pay Fixed Receive Floating Maturity Date Non-amortizing swap $ 100 $ — 1.69 % 1.24 % August 2018 Non-amortizing swap $ 50 $ — 1.10 % 1.24 % November 2017 The amount to be paid or received under these swaps is recorded as an adjustment to interest expense. The counterparties to the interest rate swap agreements expose the Company to credit risk in the event of nonperformance. However, at October 1, 2017 , the outstanding swap agreements were in a net liability position which would require the Company to make the net settlement payments to the counterparties if the agreements were settled as of that date. The Company does not anticipate nonperformance by the Company's counterparties and does not hold or issue derivative financial instruments for trading purposes. Commodity forward contracts are periodically used to hedge forecasted purchases of certain commodities. The contracts essentially establish a fixed price for the underlying commodity and are designated and qualify as effective cash flow hedges of purchases of the commodity. Ineffectiveness is calculated as the amount by which the change in the fair value of the derivatives exceeds the change in the fair value of the anticipated commodity purchases. Outstanding commodity forward contracts that hedge forecasted commodity purchases were as follows (in millions) : Number of Pounds Copper 17 Zinc 6 Due to the customer contract requirements, the benefits associated with the commodity contracts may be passed on to the customer and not realized by the Company. The Company enters into foreign currency forward contracts to hedge forecasted transactions, denominated in foreign currencies. These transactions qualify as effective cash flow hedges and are designated as such. Ineffectiveness with respect to forecasted transactions is calculated based on changes in the forward rate until the anticipated purchase or cash receipt occurs; ineffectiveness of the hedge of the accounts payable is evaluated based on the change in fair value of its anticipated settlement. Outstanding foreign currency forward contracts were as follows (in millions) : Quantity Hedged Euros sold 16 Euros purchased 52 The gains or losses on the commodity forward contracts are recorded in inventory as the commodities are purchased and in cost of sales when the related inventory is sold. The gains or losses on the foreign currency forward contracts are recorded in earnings when the related inventory is sold or customer cash receipts are received. The fair values of the commodity and foreign currency forward contracts are recorded in other assets or liabilities, as appropriate, and the effective portion is reflected in accumulated other comprehensive income (loss) in the financial statements. Fair values in the condensed consolidated balance sheets related to derivative instruments designated as hedging instruments were as follows (in millions) : Asset Derivatives Fair Value Liability Derivatives Fair Value October 1, 2017 December 31, 2016 October 1, 2017 December 31, 2016 Commodity forward contracts (1) $ 7 $ 5 $ — $ — Foreign currency forward contracts (1) 3 3 1 — Foreign currency forward contracts (2) — 1 1 — Interest rate swap contracts (2) — — — 1 Total $ 10 $ 9 $ 2 $ 1 ____________________________________________________________ (1) Location - Other current assets/Other current liabilities (2) Location - Other noncurrent assets/Other noncurrent liabilities Gains and (losses) reclassified from Accumulated Other Comprehensive Loss to the condensed consolidated statements of comprehensive income related to derivative instruments were as follows (in millions) : Quarters Ended Location October 1, 2017 October 2, 2016 Commodity forward contracts Cost of sales $ — $ — Interest rate contracts Interest expense $ — $ (1 ) Foreign currency contracts Cost of sales $ (2 ) $ — Nine Months Ended Location October 1, 2017 October 2, 2016 Commodity forward contracts Cost of sales $ (3 ) $ (4 ) Interest rate contracts Interest expense $ 1 $ (2 ) Foreign currency contracts Cost of sales $ (2 ) $ — The Company expects the remaining unrealized losses will be realized and reported in cost of sales or interest expense depending on the type of contract consistent with realized gains and losses noted in the table above. Estimated and actual gains or losses will change as market prices change. The Company performs assessments of the effectiveness of hedge instruments on a quarterly basis and determined the hedges to be highly effective. There was no ineffective portion of derivative instruments and no derivatives were excluded from effectiveness testing during the quarter and nine months ended October 1, 2017 and October 2, 2016 ; accordingly, the Company did not recognize any related gains or losses in the income statement. All derivatives used by the Company during the periods presented were designated as hedging instruments for accounting purposes. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Oct. 01, 2017 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following table summarizes the components of Accumulated Other Comprehensive Loss, net of income taxes (in millions) : October 1, 2017 December 31, 2016 Derivatives $ 5 $ 5 Pension and other postretirement benefits (721 ) (771 ) Available-for-sale securities 2 2 Total Accumulated Other Comprehensive Loss $ (714 ) $ (764 ) |
Net Inventories
Net Inventories | 9 Months Ended |
Oct. 01, 2017 | |
Inventory Disclosure [Abstract] | |
Net Inventories | Net Inventories Net inventories consisted of the following (in millions) : October 1, 2017 December 31, 2016 Raw materials $ 149 $ 93 Work / contracts in process 94 121 Finished goods 24 1 Net inventories $ 267 $ 215 |
Postretirement Plans
Postretirement Plans | 9 Months Ended |
Oct. 01, 2017 | |
Retirement Benefits [Abstract] | |
Postretirement Plans | Postretirement Plans The components of net periodic benefit cost for pension benefits were as follows (in millions) : Quarters Ended Nine Months Ended October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016 Service cost $ 5 $ 5 $ 13 $ 14 Interest cost 24 25 73 76 Expected return on plan assets (39 ) (41 ) (118 ) (122 ) Amortization of unrecognized net loss (1) 32 31 98 94 Amortization of unrecognized prior service cost (1) (5 ) (5 ) (15 ) (16 ) Net periodic benefit cost 17 15 51 46 Special termination benefit cost / curtailment — — — 2 Net periodic benefit cost $ 17 $ 15 $ 51 $ 48 ____________________________________________________________ (1) Amounts related to pension and other postemployment benefits that were reclassified from Accumulated Other Comprehensive Loss and recorded as a component of net periodic benefit cost for each period presented During the nine months ended October 2, 2016 , the Company recorded a settlement expense of $2 million to recognize the impact of lump sum benefit payments made in the nonqualified supplemental executive retirement plan. The components of net periodic benefit income for other postretirement benefits were as follows (in millions) : Quarters Ended Nine Months Ended October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016 Interest cost $ — $ 1 $ 1 $ 3 Expected return on plan assets — (1 ) (2 ) (3 ) Amortization of unrecognized net loss (1) — — 1 1 Amortization of unrecognized prior service cost (1) (2 ) (1 ) (5 ) (4 ) Net periodic benefit income $ (2 ) $ (1 ) $ (5 ) $ (3 ) ____________________________________________________________ (1) Amounts related to pension and other postretirement benefits that were reclassified from Accumulated Other Comprehensive Loss and recorded as a component of net periodic benefit cost for each period presented Effective January 1, 2016, the Company changed the approach used to measure service and interest costs for pension and other postretirement benefits. Prior to January 1, 2016, the Company measured service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the plan obligations. Beginning January 1, 2016, the Company has elected to measure service and interest costs by applying the specific spot rates along that yield curve to the plans' liability cash flows. Employer Contributions/Payments During the nine months ended October 1, 2017 , the Company made benefit payments of $3 million to retirees in connection with its nonqualified supplemental executive retirement plan and $2 million to retirees in connection with its other postretirement benefit plans. During the nine months ended October 1, 2017 , the Company made $3 million of contributions to the pension trust and no contributions to the postretirement benefit plans. During the remainder of 2017, the Company is required to make an additional pension benefit contribution of $22 million in order to meet the minimum required contributions for 2017. The Company anticipates making no contributions to the postretirement benefit plans. In addition, the Company anticipates making benefit payments of approximately $1 million to retirees under the nonqualified plan and $2 million to retirees in connection with its other postretirement benefit plans during the remainder of 2017. During the quarter ended October 2, 2016, the Company amended its retiree health care plan to provide coverage through a private exchange effective January 1, 2017. The exchange offers the retiree a broad choice of health care plans from which to choose. The Company contributes fixed payments to a Health Retirement Account ("HRA"), when applicable, for those retirees who previously had subsidized health care coverage through the Company. The Company's contributions to the HRAs are retirees' funds to be spent on qualified health care premiums and eligible out-of-pocket expenses. The plan amendment caused a remeasurement that increased the Company's funded status as of October 2, 2016 by $37 million and will reduce expenses recorded in future periods. |
Long-term Debt
Long-term Debt | 9 Months Ended |
Oct. 01, 2017 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt Long-term debt consisted of the following (in millions) : October 1, 2017 December 31, 2016 Senior Credit Facility: Term Loan A due 2020 $ 720 $ 750 Revolving Credit Facility due 2020 — — 5.25% Senior Notes due 2021 300 300 5.50% Senior Notes due 2023 400 400 Principal amount of long-term debt 1,420 1,450 Unamortized debt issuance costs: Senior Credit Facility 4 5 5.25% Senior Notes due 2021 1 2 5.50% Senior Notes due 2023 5 5 Unamortized debt issuance costs 10 12 Long-term debt less unamortized debt issuance costs 1,410 1,438 Less: Current portion of long-term debt 40 40 Long-term debt $ 1,370 $ 1,398 Senior Credit Facility In September 2015, the Company refinanced its former senior credit facility with a new senior credit facility (the "Senior Credit Facility"), which is comprised of a term loan of $800 million (the "Term Loan A") and a revolving credit facility of $1 billion (the "Revolving Credit Facility"), both of which mature in September 2020. The Term Loan A is subject to quarterly principal payments of $10 million , with the remaining balance due at maturity. Borrowings under the Senior Credit Facility bear interest at a per annum rate equal to either the sum of a base rate plus a margin or the sum of a LIBOR rate plus a margin. Each margin is based on the Company's total leverage ratio. In compliance with the terms of the Senior Credit Facility, the current base rate margin is 0.25% and the current LIBOR margin is 1.25% . The weighted-average interest rate for the Term Loan A, after taking into account the interest rate swaps, was 2.54% at October 1, 2017 . The Company pays a quarterly commitment fee on the unused portion of the Revolving Credit Facility based on its total leverage ratio. Based on the Company's current total leverage ratio, this fee is currently 0.20% . As of October 1, 2017 , the Company had no borrowings under the Revolving Credit Facility and had outstanding letters of credit of $181 million , which reduced amounts available on the Revolving Credit Facility to $819 million . 5.25% Senior Notes In fiscal 2014, the Company issued $300 million aggregate principal amount of 5.25% Senior Notes (the "5.25% Notes") that mature on October 1, 2021. Interest on these notes is payable on April 1 and October 1 of each year. The Company has the right to redeem some or all of these notes from time to time on or after October 1, 2016, at specified redemption prices. 5.50% Senior Notes In September 2015, the Company issued $400 million aggregate principal amount of 5.50% Senior Notes (the "5.50% Notes") that mature on October 1, 2023. Interest on these notes is payable on April 1 and October 1 of each year. The Company has the right to redeem some or all of these notes from time to time on or after October 1, 2018, at specified redemption prices. Interest Rate Swaps As of October 1, 2017 , the Company had interest rate swap agreements in order to manage interest costs and the risk associated with variable interest rates - see Note 4 - Derivative Financial Instruments . Rank and Guarantees The 5.25% Notes and the 5.50% Notes are the Company's general unsecured and unsubordinated obligations and rank equally in right of payment with all of the Company’s existing and future unsecured and unsubordinated indebtedness, rank senior in right of payment to all of the Company's existing and future subordinated indebtedness and are effectively subordinated to all existing and future senior secured indebtedness, including the Senior Credit Facility, to the extent of the collateral. The 5.25% Notes and the 5.50% Notes are guaranteed on an unsecured basis, jointly and severally and fully and unconditionally, by substantially all of the Company's domestic subsidiaries. The Senior Credit Facility obligations are guaranteed on a secured basis, jointly and severally and fully and unconditionally, by substantially all of the Company's domestic subsidiaries. All of these guarantor subsidiaries are 100% owned by the Company. The Company, exclusive of these guarantor subsidiaries, has no independent operations or material assets. Scheduled Minimum Loan Payments The scheduled minimum loan payments on outstanding long-term debt are as follows (in millions) : Remainder of 2017 $ 10 2018 40 2019 40 2020 630 2021 300 Thereafter 400 Total $ 1,420 Covenants and Default Provisions The Company's Senior Credit Facility and the indentures governing the 5.25% Notes and the 5.50% Notes impose restrictions on the Company, including limitations on its ability to incur additional debt, enter into capital leases, grant liens, pay dividends and make certain other payments, sell assets, or merge or consolidate with or into another entity. In addition, the Senior Credit Facility limits the Company's ability to enter into sale-and-leaseback transactions. The Senior Credit Facility also requires the Company to meet and maintain specified financial ratios, including a minimum interest coverage ratio and a maximum consolidated total leverage ratio. The Company's debt agreements contain cross-default provisions so that noncompliance with the covenants within one debt agreement that would give rise to the right to accelerate repayment of any outstanding indebtedness could cause a default under other debt agreements as well. The Company's ability to comply with these covenants and to meet and maintain the financial ratios may be affected by events beyond its control. Borrowings under the Senior Credit Facility are subject to compliance with these covenants. The Company is in compliance with its credit agreement covenants as of October 1, 2017 . |
Income Taxes
Income Taxes | 9 Months Ended |
Oct. 01, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's income taxes include federal, foreign and state income taxes. Income taxes for interim periods are based on estimated effective annual income tax rates. The effective income tax rates for the quarters ended October 1, 2017 and October 2, 2016 were 24.4% and 18.0% , respectively. The increase in the rate from the quarter ended October 2, 2016 is primarily due to the impact of the favorable true up of prior-year taxes and the settlement of the examination by the Internal Revenue Service ("IRS") of the fiscal 2013 and 2014 tax returns in the quarter ended October 2, 2016 and the decrease in benefit from domestic manufacturing deduction ("DMD") in the quarter ended October 1, 2017, partially offset by the favorable changes in uncertain tax benefits, research and development ("R&D") tax credits, and state taxes in the quarter ended October 1, 2017. The effective income tax rates for the nine months ended October 1, 2017 and October 2, 2016 were 26.5% and 25.9% , respectively. The increase in the rate from the nine months ended October 2, 2016 is primarily due to the impact of the favorable true up of prior-year taxes and the settlement of the examination by the IRS of the fiscal 2013 and 2014 tax returns in the nine months ended October 2, 2016, partially offset by favorable changes in uncertain tax benefits and R&D tax credits in the nine months ended October 1, 2017. The Company or one of its subsidiaries files income tax returns in the U.S. federal, various U.S. state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities for years prior to 2011. The IRS has completed the audits of the Company through fiscal 2014 and is currently auditing the Company's income tax returns for fiscal year 2015 and calendar year 2015. The Company believes appropriate provisions for all outstanding issues have been made for all remaining open years in all jurisdictions. Although the timing and outcome of audit settlements are uncertain, it is reasonably possible that a $6 million reduction of the uncertain tax benefits will occur in the next 12 months . The settlement of these unrecognized tax benefits could result in an increase in net income up to $6 million . During the quarter ended October 1, 2017, the company recognized an $11 million reduction of the uncertain tax benefits associated with the lapse of statute of limitations. This reduction has resulted in an increase in net income of $10 million in the quarter ended October 1, 2017. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Oct. 01, 2017 | |
Equity [Abstract] | |
Stock-based Compensation | Stock-based Compensation The Company sponsors five stock-based incentive plans: the Orbital ATK, Inc. 2015 Stock Incentive Plan (the "2015 Stock Incentive Plan"); three legacy ATK plans (the Alliant Techsystems Inc. 2005 Stock Incentive Plan, the Non-Employee Director Restricted Stock Plan and the 1990 Equity Incentive Plan); and one legacy Orbital plan (the Orbital Sciences Corporation 2005 Amended and Restated Stock Incentive Plan), under which the Company assumed the obligation to issue Company common stock pursuant to the terms of the transaction agreement ("the Transaction Agreement") relating to the merger of the Company with Orbital Sciences Corporation and distribution of its former Sporting Group. At October 1, 2017 , the Company had authorized up to 3,750,000 common shares under the 2015 Stock Incentive Plan, of which 2,083,777 common shares were available to be granted. No new grants will be made out of the other four plans. The Company adopted an Employee Stock Purchase Plan ("ESPP") during the year ended December 31, 2016. As of October 1, 2017 , the Company had authorized up to 2,000,000 common shares, of which 1,781,318 common shares were available for purchase under the ESPP. In connection with the Merger, the ESPP has been suspended as of October 1, 2017. Restricted Stock Units Pursuant to the terms of the Transaction Agreement and under the terms of the ATK 2005 Stock Incentive Plan, all of the performance awards and Total Stockholder Return ("TSR") awards outstanding as of February 9, 2015 were converted into time-vesting restricted stock units with vesting periods corresponding to the respective performance periods. During the nine months ended October 1, 2017 , 53,449 shares of restricted stock units vested for the performance period ending in 2017. As of October 1, 2017 , no restricted stock units remained outstanding under the ATK 2005 Stock Incentive Plan. Pursuant to the terms of the Transaction Agreement, the Company also assumed the obligation to issue Company common stock under the legacy Orbital plan. As of October 1, 2017 , there were no restricted stock units outstanding under the legacy Orbital plan as the remaining 45,120 shares of restricted stock units outstanding vested during the nine months ended October 1, 2017 . Performance Awards There are performance shares reserved for executive officers and key employees. Performance shares are valued at the fair value of the Company's common stock as of the grant date and expense is recognized based on the number of shares expected to vest under the terms of the award under which they are granted. Of these performance shares: • up to 58,506 will become payable upon achievement of financial performance goals relating to absolute sales growth and return on investment of capital for the performance period beginning January 1, 2017 and ending December 31, 2019; and • up to 71,074 will become payable upon achievement of financial performance goals relating to absolute sales growth and return on investment of capital for the performance period beginning January 1, 2016 and ending December 31, 2018; and • up to 79,235 will become payable upon achievement of financial performance goals relating to absolute earnings per share growth and absolute sales growth for the performance period beginning April 1, 2015 and ending December 31, 2017. TSR Awards There were 58,506 , 71,074 and 79,235 shares reserved for TSR awards for executive officers and key employees for the fiscal year 2017-2019, 2016-2018 and 2015-2017 performance periods, respectively. The Company used an integrated Monte Carlo simulation model to determine the fair value of the TSR awards. The Monte Carlo model calculates the probability of satisfying the market conditions stipulated in the award. This probability is an input into the trinomial lattice model used to determine the fair value of the awards. There were 59,393 TSR awards granted with a weighted-average fair value of $115.26 per share during the nine months ended October 1, 2017 . Restricted Stock Awards Restricted stock granted to certain key employees totaled 160,907 shares with a weighted-average fair value of $95.89 during the nine months ended October 1, 2017 . Restricted shares vest over periods generally ranging from one to three years from the date of award and are valued at the fair value of the Company's common stock as of the grant date. Stock Options Stock options are granted with an exercise price equal to the fair market value of the Company's common stock on the date of grant, and generally vest from one to three years from the date of grant. Options are generally granted with seven -year or ten -year terms. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. There were 58,434 stock options granted during the nine months ended October 1, 2017 with a weighted-average fair value of $24.47 per stock option. Stock-based compensation expense totaled $6 million and $18 million in the quarter and nine months ended October 1, 2017 and October 2, 2016, respectively. The income tax benefit recognized for stock-based compensation was $2 million and $6 million in the quarter and nine months ended October 1, 2017 and October 2, 2016 , respectively. Share Repurchases Shares of the Company's common stock may be purchased in the open market, subject to compliance with applicable laws and regulations and the Company’s debt covenants, depending upon market conditions and other factors. During 2016, the Board of Directors authorized an increase to the amount for repurchase of the Company's common stock to the lesser of $300 million or 4 million shares through March 2017. In February 2017, the Board of Directors further increased the amount authorized for repurchase to $450 million , removed the share quantity limitation and extended the repurchase period through March 31, 2018. The Company repurchased 64,489 shares for $7 million and 230,918 shares for $23 million during the quarter and nine months ended October 1, 2017 , respectively. The Company repurchased 576,407 shares for $44 million and 1,104,511 shares for $88 million during the quarter and nine months ended October 2, 2016 , respectively. In connection with the Merger, the Company halted its share repurchase program. |
Earnings Per Share Data
Earnings Per Share Data | 9 Months Ended |
Oct. 01, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share Data | Earnings Per Share Data Basic earnings per share ("EPS") is computed based upon the weighted-average number of common shares outstanding for each period. Diluted EPS is computed based on the weighted-average number of common shares outstanding and increased to include the dilutive effect of outstanding stock-based equity awards for each period. In computing basic and diluted EPS for both the quarters and nine months ended October 1, 2017 and October 2, 2016 , the reported earnings for each respective period were divided by the weighted-average shares outstanding, determined as follows (in millions) : Quarters Ended Nine Months Ended October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016 Basic weighted-average number of shares outstanding 57.31 57.93 57.37 58.21 Dilutive common share equivalents - share-based equity awards 0.45 0.33 0.49 0.43 Diluted weighted-average number of shares outstanding 57.76 58.26 57.86 58.64 Anti-dilutive stock options and other stock awards excluded from the calculation of diluted shares 0.15 0.15 0.22 0.15 |
Contingencies
Contingencies | 9 Months Ended |
Oct. 01, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Litigation From time to time, the Company is subject to various legal proceedings, including lawsuits, which arise out of, and are incidental to, the conduct of the Company's business. The Company does not consider any of such proceedings that are currently pending, individually or in the aggregate to be material to its business or likely to result in a material adverse effect on its operating results, financial condition or cash flows, notwithstanding that the unfavorable resolution of any matter may have a material effect on net earnings in any particular quarter. Securities Class Action At least six purported class actions challenging the Merger have been filed in the United States District Court for the Eastern District of Virginia, captioned Lickteig v. Orbital ATK, Inc., et al., filed October 11, 2017 (the “Lickteig Action”), Ayzin v. Orbital ATK, Inc. et al., filed October 13, 2017 (the “Ayzin Action”), Sedon v. Orbital ATK, Inc., et al., filed October 16, 2017 (the “Sedon Action”), Berg v. Orbital ATK, Inc., et al., filed October 16, 2017 (the "Berg Action"), Simnowitz v. Orbital ATK, Inc. et al., filed October 18, 2017 (the "Simnowitz Action"), and Cramer v. Orbital ATK, Inc. et al, filed October 25, 2017 (the "Cramer Action" and collectively with the Lickteig Action, Ayzin Action, Sedon Action and Berg Action, the “Actions”). The Lickteig Action and Berg Action name as defendants the Company, the Company’s directors, Northrop Grumman and Sub. The Ayzin Action, the Sedon Action, the Simnowitz Action and the Cramer Action name as defendants the Company and the Company’s directors. The Actions allege certain violations of the Securities and Exchange Act of 1934, as amended, and seek, among other things, damages, attorneys’ fees and injunctive relief to prevent the Merger from closing. The Company believes that the Actions lack merit and intend to defend against them vigorously. The outcome of the Actions is uncertain. If the Actions are not resolved on a timely basis, the Actions could delay consummation of the Merger and result in substantial costs to the Company, including any costs associated with the indemnification of directors. Additional plaintiffs may file additional lawsuits against the Company and/or the directors and officers of the Company in connection with the Merger. On August 12, 2016, a putative class action complaint, naming the Company, our Chief Executive Officer and our Chief Financial Officer as defendants, was filed in the United States District Court for the Eastern District of Virginia ( Steven Knurr, et al. v. Orbital ATK, Inc., (TSE-MSN) ). The class action complaint asserts claims on behalf of purchasers of Orbital ATK securities for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 thereunder, arising out of allegedly false and misleading statements and the failure to disclose that: (i) the Company lacked effective control over financial reporting; and (ii) as a result, the Company failed to record an anticipated loss on its long-term contract with the U.S. Army to manufacture and supply small caliber ammunition at the U.S. Army's Lake City Army Ammunition Plant. On April 24, 2017 and October 10, 2017, the plaintiffs filed amended complaints naming additional defendants and asserting claims for violations of additional sections of the Exchange Act and alleged false and misleading statements in the Company’s Form S-4 filed with the SEC relating to the merger between the Company and Orbital Sciences Corporation. The complaint seeks an award of damages, an award of reasonable costs and expenses at trial, including counsel and expert fees, and an award of such other relief as deemed appropriate by the Court. The Company is defending this action vigorously. SEC Investigation The SEC is conducting a non-public investigation relating to our historical accounting practices as a result of the prior restatement of the Company's unaudited condensed consolidated financial statements for the quarterly periods ended July 5, 2015 and October 4, 2015 described in the Transition Report on Form 10-K for the nine-month period ending December 31, 2015 previously filed on March 15, 2016, and the Company also has voluntarily self-reported to the SEC regarding matters pertaining to the restatement described in the Form 10-K/A for the nine-month period ending December 31, 2015 filed on February 24, 2017. The Company is cooperating fully with the SEC in connection with these matters. U.S. Government Investigations The Company is also subject to U.S. Government investigations from which civil, criminal or administrative proceedings could result. Such proceedings could involve claims by the U.S. Government for fines, penalties, compensatory and treble damages, restitution and/or forfeitures. Under government regulations, a company, or one or more of its operating divisions or subdivisions, can also be suspended or debarred from government contracts, or lose its export privileges, based on the results of investigations. The Company believes, based upon all available information, that the outcome of any such pending government investigations will not have a material adverse effect on its operating results, financial condition or cash flows. Claim Recovery Profits expected to be realized on contracts are based on management's estimates of total contract sales value and costs at completion. Estimated amounts for contract changes and claims are included in contract sales only when realization is estimated to be probable. Unbilled receivables included $10 million and $18 million as of October 1, 2017 and December 31, 2016 , respectively, for contract claims. Environmental Liabilities The Company's operations and ownership or use of real property are subject to a number of federal, state and local environmental laws and regulations, as well as applicable foreign laws and regulations, including those for discharge of hazardous materials, remediation of contaminated sites and restoration of damage to the environment. At certain sites that the Company owns or operates or formerly owned or operated, there is known or potential contamination that the Company is required to investigate or remediate. The Company could incur substantial costs, including remediation costs, resource restoration costs, fines and penalties, or third party property damage or personal injury claims, as a result of liabilities associated with past practices or violations of environmental laws or non-compliance with environmental permits. The Company has been identified as a potentially responsible party (“PRP”), along with other parties, in several regulatory agency actions associated with hazardous waste sites. As a PRP, the Company may be required to pay a share of the costs of the investigation and clean-up of these sites. While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities, based on currently available information, the Company has concluded that these matters, individually or in the aggregate, will not have a material adverse effect on operating results, financial condition or cash flows. The Company could incur substantial costs, including cleanup costs, resource restoration costs, fines and penalties or third-party property damage or personal injury claims, as a result of violations or liabilities under environmental laws or non-compliance with environmental permits. While environmental laws and regulations have not had a material adverse effect on the Company's operating results, financial condition or cash flows in the past, and the Company has environmental management programs in place to mitigate these risks, it is difficult to predict whether they will have a material impact in the future. The liability for environmental remediation represents management's best estimate of the probable and reasonably estimable costs related to known remediation obligations. The receivable represents the amount that the Company expects to recover, as discussed below. The following is a summary of the amounts recorded for environmental remediation (in millions) : October 1, 2017 December 31, 2016 Liability Receivable Liability Receivable Current $ 5 $ 3 $ 6 $ 3 Noncurrent 32 14 35 15 Total $ 37 $ 17 $ 41 $ 18 As of October 1, 2017 , the estimated range of reasonably possible costs of environmental remediation was $37 million to $69 million . The Company expects that a portion of its environmental compliance and remediation costs will be recoverable under U.S. Government contracts. Some of the remediation costs that are not recoverable from the U.S. Government that are associated with facilities purchased in a business acquisition are covered by various indemnification agreements, as described in Note 16 - Contingencies , to the audited consolidated financial statements included in the Company's Form 10-K. |
Operating Segment Information
Operating Segment Information | 9 Months Ended |
Oct. 01, 2017 | |
Segment Reporting [Abstract] | |
Operating Segment Information | Operating Segment Information The Company operates its business within three operating segments. These operating segments ("groups") are defined based on the reporting and review process used by the Company's Chief Executive Officer and other management. The operating structure aligns the Company's capabilities and resources with its customers and markets and positions the Company for long-term growth and improved profitability. • Flight Systems Group develops rockets that are used as small- and medium-class space launch vehicles to place satellites into Earth orbit and escape trajectories, interceptor and target vehicles for missile defense systems and suborbital launch vehicles that place payloads into a variety of high-altitude trajectories. The group also develops and produces medium- and large-class rocket propulsion systems for human and cargo launch vehicles, strategic missiles, missile defense interceptors and target vehicles. Additionally, Flight Systems Group operates in the military and commercial aircraft and launch structures markets. • Defense Systems Group develops and produces small-, medium- and large-caliber ammunition, propulsion systems for tactical missiles and missile defense applications, strike weapons, precision weapons and munitions, high-performance gun systems, aircraft survivability systems, fuzes and warheads, energetic materials and special mission aircraft. • Space Systems Group develops and produces small- and medium-class satellites that are used to enable global and regional communications and broadcasting, conduct space-related scientific research and perform other activities related to national security. In addition, Space Systems Group develops and produces human-rated space systems for Earth-orbit and deep-space exploration, including cargo delivery to the International Space Station. This group is also a provider of spacecraft components and subsystems and specialized engineering and operations services to U.S. Government agencies. The following summarizes the Company's results by segment (in millions) : Quarters Ended Nine Months Ended October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016 Sales to external customers: Flight Systems Group $ 423 $ 360 $ 1,214 $ 1,081 Defense Systems Group 511 451 1,378 1,326 Space Systems Group 282 232 824 776 Total external sales 1,216 1,043 3,416 3,183 Intercompany sales: Flight Systems Group 3 3 8 10 Defense Systems Group 4 5 12 15 Space Systems Group 32 16 93 37 Corporate (39 ) (24 ) (113 ) (62 ) Total intercompany sales — — — — Total sales $ 1,216 $ 1,043 $ 3,416 $ 3,183 Income before interest, income taxes and noncontrolling interest: Flight Systems Group $ 61 $ 44 $ 161 $ 152 Defense Systems Group 48 33 133 126 Space Systems Group 40 20 98 96 Corporate (7 ) (6 ) (3 ) (15 ) Total income before interest, income taxes and noncontrolling interest $ 142 $ 91 $ 389 $ 359 The following summarizes the Company's total assets by segment (in millions) : October 1, 2017 December 31, 2016 Total assets: Flight Systems Group $ 2,293 $ 2,208 Defense Systems Group 1,358 1,228 Space Systems Group 1,276 1,280 Corporate 610 702 Total assets $ 5,537 $ 5,418 Certain administrative functions are primarily managed by the Company at the corporate headquarters ("Corporate"). Some examples of such functions are human resources, pension and postretirement benefits, corporate accounting, legal, tax, treasury and certain strategic growth initiatives. Significant assets and liabilities managed at Corporate include those associated with debt, restructuring, pension and postretirement benefits, environmental liabilities, litigation liabilities, strategic growth assets and income taxes. Costs related to the administrative functions managed by Corporate are either recorded at Corporate or allocated to the segments based on the nature of the expense. The difference between pension and postretirement benefit expense calculated under U.S. GAAP and the expense calculated under U.S. Cost Accounting Standards is recorded at the corporate level which provides for greater clarity on the operating results of the business segments. Administrative expenses such as corporate accounting, legal and treasury costs are allocated out to the business segments. The amortization expense related to purchase accounting attributed to the acquisition of Orbital Sciences Corporation is also recorded in Corporate. Transactions between segments are recorded at the segment level, consistent with the Company's financial accounting policies. Intercompany balances and transactions involving different segments are eliminated at the Company's consolidated financial statements level and are shown above in Corporate. |
Basis of Presentation and Sum20
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 01, 2017 | |
Accounting Policies [Abstract] | |
Nature of Operations and Basis of Presentation | Nature of Operations and Basis of Presentation The unaudited condensed consolidated financial statements of Orbital ATK, Inc. ("the Company" or "Orbital ATK") as set forth in this quarterly report have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States ("U.S. GAAP") can be condensed or omitted. The Company's accounting policies are described in the notes to the consolidated financial statements in its Form 10-K for the year ended December 31, 2016 ("Form 10-K") filed on April 28, 2017 with the SEC. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature necessary for a fair presentation of the Company’s financial position as of October 1, 2017 , its results of operations and comprehensive income for the quarters and nine months ended October 1, 2017 and October 2, 2016 and its cash flows for the nine months ended October 1, 2017 and October 2, 2016 . The condensed consolidated balance sheet as of December 31, 2016 was derived from the audited financial statements included in the Form 10-K but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates. Significant estimates inherent in the preparation of our condensed consolidated financial statements include, but are not limited to, accounting for sales and cost recognition, postretirement benefit plans, environmental receivables and liabilities, evaluation of goodwill and other assets for impairment, income taxes including deferred tax assets, fair value measurements and contingencies. Intercompany balances and transactions are eliminated in consolidation. Sales, expenses, cash flows, assets and liabilities can and do vary during the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 2016. The Company's interim quarterly periods are based on 13-week periods and end on the Sunday closest to the last calendar day of each of March, June and September. |
Change In Estimates | Change In Estimates The majority of our sales are from long-term contracts, which are accounted for using the percentage-of-completion method. Accounting for contracts under the percentage-of-completion method requires judgment relative to assessing risks and estimating contract revenues and costs. Profits expected to be realized on contracts are based on management’s estimates of total contract value and costs at completion. Changes in estimates of contract sales, costs or profits are recognized using the cumulative catch-up method of accounting. The cumulative effect of a change in estimate is recognized in the period a change in estimate occurs. The effect of the changes on future periods of contract performance is recognized as if the revised estimate had been used since contract inception or, in the case of contracts acquired in business combinations, from the date of acquisition. Changes in contract estimates occur for a variety of reasons including changes in contract scope, unforeseen changes in contract cost estimates due to unanticipated cost growth or risks affecting contract costs and/or the resolution of contract risks at lower costs than anticipated, termination of commercial contracts in the event of a lack of end user demand, as well as changes in contract overhead costs over the performance period. Changes in estimates could have a material effect on the Company's consolidated financial position or results of operations. Generally, favorable changes in contract estimates recognized using the cumulative catch-up method of accounting represent margin improvement on programs where either estimated cost at completion was lower than previously estimated or a change in contract scope on a program caused a higher profit rate. Conversely, the unfavorable changes in contract estimates represent margin declines on programs where either estimated cost at completion was higher than previously estimated or a change in contract scope on a program caused a lower profit rate. |
Fair Value of Financial Instruments | The current authoritative guidance on fair value clarifies the definition of fair value, prescribes a framework for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value, and expands disclosures about the use of fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The valuation techniques required by the current authoritative literature are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy: Level 1—Quoted prices for identical instruments in active markets. Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3—Significant inputs to the valuation model are unobservable. The following section describes the valuation methodologies used by the Company to measure its financial instruments at fair value. Derivative financial instruments and hedging activities In order to manage its exposure to commodity pricing, foreign currency risk and interest rate risk on debt, the Company periodically utilizes commodity, foreign currency and interest rate derivatives, which are considered Level 2 instruments. As discussed further in Note 4 - Derivative Financial Instruments , the Company has outstanding commodity forward contracts that were entered into to hedge forecasted purchases of copper and zinc, as well as outstanding foreign currency forward contracts that were entered into to hedge forecasted transactions denominated in a foreign currency. Commodity derivatives are valued based on prices of futures exchanges and recently reported transactions in the marketplace. The Company currently holds two interest rate swaps with a total notional value of $150 million . These swaps are valued based on future LIBOR rates and the established fixed rate is based primarily on quotes from banks. Foreign currency derivatives are valued based on observable market transactions of spot currency rates and forward currency prices. The carrying amounts of the Company’s financial instruments, other than derivatives, which include net receivables, inventory, accounts payable, accrued liabilities and other current assets and liabilities, are reasonable estimates of their related fair values. The fair value of the variable-rate long-term debt is calculated based on current market rates for debt of the same risk and maturities. The fair value of the fixed-rate debt is based on market quotes for each issuance. The Company considers these to be Level 2 instruments. The Company’s non-financial instruments measured at fair value on a non-recurring basis include goodwill, indefinite-lived intangible assets and long-lived tangible assets. The valuation methods used to determine fair value require a significant degree of management judgment to determine the key assumptions. As such, the Company generally classifies non-financial instruments as either Level 2 or Level 3 fair value measurements. |
Fair Value of Financial Instr21
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Oct. 01, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of carrying values and estimated fair values of assets and liabilities that are not measured on a recurring basis | Recorded carrying amount and fair value of debt was as follows (in millions) : October 1, 2017 December 31, 2016 Carrying Amount Fair Value Carrying Amount Fair Value Fixed-rate debt $ 700 $ 739 $ 700 $ 727 Variable-rate debt $ 720 $ 716 $ 750 $ 746 |
Derivative Financial Instrume22
Derivative Financial Instruments (Tables) | 9 Months Ended |
Oct. 01, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of notional amounts of outstanding derivatives | Interest rate swap agreements entered into to manage interest costs and risk associated with variable interest rates were as follows (in millions) : Notional Fair Value Pay Fixed Receive Floating Maturity Date Non-amortizing swap $ 100 $ — 1.69 % 1.24 % August 2018 Non-amortizing swap $ 50 $ — 1.10 % 1.24 % November 2017 The amount to be paid or received under these swaps is recorded as an adjustment to interest expense. The counterparties to the interest rate swap agreements expose the Company to credit risk in the event of nonperformance. However, at October 1, 2017 , the outstanding swap agreements were in a net liability position which would require the Company to make the net settlement payments to the counterparties if the agreements were settled as of that date. The Company does not anticipate nonperformance by the Company's counterparties and does not hold or issue derivative financial instruments for trading purposes. Commodity forward contracts are periodically used to hedge forecasted purchases of certain commodities. The contracts essentially establish a fixed price for the underlying commodity and are designated and qualify as effective cash flow hedges of purchases of the commodity. Ineffectiveness is calculated as the amount by which the change in the fair value of the derivatives exceeds the change in the fair value of the anticipated commodity purchases. Outstanding commodity forward contracts that hedge forecasted commodity purchases were as follows (in millions) : Number of Pounds Copper 17 Zinc 6 Due to the customer contract requirements, the benefits associated with the commodity contracts may be passed on to the customer and not realized by the Company. The Company enters into foreign currency forward contracts to hedge forecasted transactions, denominated in foreign currencies. These transactions qualify as effective cash flow hedges and are designated as such. Ineffectiveness with respect to forecasted transactions is calculated based on changes in the forward rate until the anticipated purchase or cash receipt occurs; ineffectiveness of the hedge of the accounts payable is evaluated based on the change in fair value of its anticipated settlement. Outstanding foreign currency forward contracts were as follows (in millions) : Quantity Hedged Euros sold 16 Euros purchased 52 |
Schedule of fair value and location of derivative instruments designated as hedging instruments in the consolidated balance sheet | Fair values in the condensed consolidated balance sheets related to derivative instruments designated as hedging instruments were as follows (in millions) : Asset Derivatives Fair Value Liability Derivatives Fair Value October 1, 2017 December 31, 2016 October 1, 2017 December 31, 2016 Commodity forward contracts (1) $ 7 $ 5 $ — $ — Foreign currency forward contracts (1) 3 3 1 — Foreign currency forward contracts (2) — 1 1 — Interest rate swap contracts (2) — — — 1 Total $ 10 $ 9 $ 2 $ 1 ____________________________________________________________ (1) Location - Other current assets/Other current liabilities (2) Location - Other noncurrent assets/Other noncurrent liabilities |
Schedule of derivative gains and losses in the consolidated income statements related to commodity forward contracts and foreign currency forward contracts | Gains and (losses) reclassified from Accumulated Other Comprehensive Loss to the condensed consolidated statements of comprehensive income related to derivative instruments were as follows (in millions) : Quarters Ended Location October 1, 2017 October 2, 2016 Commodity forward contracts Cost of sales $ — $ — Interest rate contracts Interest expense $ — $ (1 ) Foreign currency contracts Cost of sales $ (2 ) $ — Nine Months Ended Location October 1, 2017 October 2, 2016 Commodity forward contracts Cost of sales $ (3 ) $ (4 ) Interest rate contracts Interest expense $ 1 $ (2 ) Foreign currency contracts Cost of sales $ (2 ) $ — |
Accumulated Other Comprehensi23
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Oct. 01, 2017 | |
Equity [Abstract] | |
Schedule of components of accumulated OCI, net of income taxes | The following table summarizes the components of Accumulated Other Comprehensive Loss, net of income taxes (in millions) : October 1, 2017 December 31, 2016 Derivatives $ 5 $ 5 Pension and other postretirement benefits (721 ) (771 ) Available-for-sale securities 2 2 Total Accumulated Other Comprehensive Loss $ (714 ) $ (764 ) |
Net Inventories (Tables)
Net Inventories (Tables) | 9 Months Ended |
Oct. 01, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of net inventories | Net inventories consisted of the following (in millions) : October 1, 2017 December 31, 2016 Raw materials $ 149 $ 93 Work / contracts in process 94 121 Finished goods 24 1 Net inventories $ 267 $ 215 |
Postretirement Plans (Tables)
Postretirement Plans (Tables) | 9 Months Ended |
Oct. 01, 2017 | |
Retirement Benefits [Abstract] | |
Schedule of components of net periodic benefit cost and income | The components of net periodic benefit cost for pension benefits were as follows (in millions) : Quarters Ended Nine Months Ended October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016 Service cost $ 5 $ 5 $ 13 $ 14 Interest cost 24 25 73 76 Expected return on plan assets (39 ) (41 ) (118 ) (122 ) Amortization of unrecognized net loss (1) 32 31 98 94 Amortization of unrecognized prior service cost (1) (5 ) (5 ) (15 ) (16 ) Net periodic benefit cost 17 15 51 46 Special termination benefit cost / curtailment — — — 2 Net periodic benefit cost $ 17 $ 15 $ 51 $ 48 ____________________________________________________________ (1) Amounts related to pension and other postemployment benefits that were reclassified from Accumulated Other Comprehensive Loss and recorded as a component of net periodic benefit cost for each period presented During the nine months ended October 2, 2016 , the Company recorded a settlement expense of $2 million to recognize the impact of lump sum benefit payments made in the nonqualified supplemental executive retirement plan. The components of net periodic benefit income for other postretirement benefits were as follows (in millions) : Quarters Ended Nine Months Ended October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016 Interest cost $ — $ 1 $ 1 $ 3 Expected return on plan assets — (1 ) (2 ) (3 ) Amortization of unrecognized net loss (1) — — 1 1 Amortization of unrecognized prior service cost (1) (2 ) (1 ) (5 ) (4 ) Net periodic benefit income $ (2 ) $ (1 ) $ (5 ) $ (3 ) ____________________________________________________________ (1) Amounts related to pension and other postretirement benefits that were reclassified from Accumulated Other Comprehensive Loss and recorded as a component of net periodic benefit cost for each period presented |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Oct. 01, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt, including the current portion | Long-term debt consisted of the following (in millions) : October 1, 2017 December 31, 2016 Senior Credit Facility: Term Loan A due 2020 $ 720 $ 750 Revolving Credit Facility due 2020 — — 5.25% Senior Notes due 2021 300 300 5.50% Senior Notes due 2023 400 400 Principal amount of long-term debt 1,420 1,450 Unamortized debt issuance costs: Senior Credit Facility 4 5 5.25% Senior Notes due 2021 1 2 5.50% Senior Notes due 2023 5 5 Unamortized debt issuance costs 10 12 Long-term debt less unamortized debt issuance costs 1,410 1,438 Less: Current portion of long-term debt 40 40 Long-term debt $ 1,370 $ 1,398 |
Schedule of minimum payments on outstanding long-term debt | The scheduled minimum loan payments on outstanding long-term debt are as follows (in millions) : Remainder of 2017 $ 10 2018 40 2019 40 2020 630 2021 300 Thereafter 400 Total $ 1,420 |
Earnings Per Share Data (Tables
Earnings Per Share Data (Tables) | 9 Months Ended |
Oct. 01, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of weighted average number of shares | In computing basic and diluted EPS for both the quarters and nine months ended October 1, 2017 and October 2, 2016 , the reported earnings for each respective period were divided by the weighted-average shares outstanding, determined as follows (in millions) : Quarters Ended Nine Months Ended October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016 Basic weighted-average number of shares outstanding 57.31 57.93 57.37 58.21 Dilutive common share equivalents - share-based equity awards 0.45 0.33 0.49 0.43 Diluted weighted-average number of shares outstanding 57.76 58.26 57.86 58.64 Anti-dilutive stock options and other stock awards excluded from the calculation of diluted shares 0.15 0.15 0.22 0.15 |
Contingencies (Tables)
Contingencies (Tables) | 9 Months Ended |
Oct. 01, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of the amounts recorded for environmental remediation | The following is a summary of the amounts recorded for environmental remediation (in millions) : October 1, 2017 December 31, 2016 Liability Receivable Liability Receivable Current $ 5 $ 3 $ 6 $ 3 Noncurrent 32 14 35 15 Total $ 37 $ 17 $ 41 $ 18 |
Operating Segment Information (
Operating Segment Information (Tables) | 9 Months Ended |
Oct. 01, 2017 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information, by segment | The following summarizes the Company's results by segment (in millions) : Quarters Ended Nine Months Ended October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016 Sales to external customers: Flight Systems Group $ 423 $ 360 $ 1,214 $ 1,081 Defense Systems Group 511 451 1,378 1,326 Space Systems Group 282 232 824 776 Total external sales 1,216 1,043 3,416 3,183 Intercompany sales: Flight Systems Group 3 3 8 10 Defense Systems Group 4 5 12 15 Space Systems Group 32 16 93 37 Corporate (39 ) (24 ) (113 ) (62 ) Total intercompany sales — — — — Total sales $ 1,216 $ 1,043 $ 3,416 $ 3,183 Income before interest, income taxes and noncontrolling interest: Flight Systems Group $ 61 $ 44 $ 161 $ 152 Defense Systems Group 48 33 133 126 Space Systems Group 40 20 98 96 Corporate (7 ) (6 ) (3 ) (15 ) Total income before interest, income taxes and noncontrolling interest $ 142 $ 91 $ 389 $ 359 The following summarizes the Company's total assets by segment (in millions) : October 1, 2017 December 31, 2016 Total assets: Flight Systems Group $ 2,293 $ 2,208 Defense Systems Group 1,358 1,228 Space Systems Group 1,276 1,280 Corporate 610 702 Total assets $ 5,537 $ 5,418 |
Basis of Presentation and Sum30
Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Oct. 01, 2017 | Oct. 02, 2016 | Oct. 01, 2017 | Oct. 02, 2016 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||||
Operating income adjustments under percentage of completion method | $ 45 | $ 6 | $ 81 | $ 92 | |
Operating income adjustments under percentage of completion method, per diluted share (in dollars per share) | $ 0.60 | $ 0.08 | $ 1.03 | $ 1.16 | |
Estimated costs to complete on loss contracts | $ 967 | $ 967 | $ 1,333 |
Merger (Details)
Merger (Details) | Sep. 17, 2017$ / shares |
Merger Agreement With Northrop Grumman And Neptune Merger | Common Stock | |
Business Acquisition [Line Items] | |
Conversion of stock, amount issued per share (in dollars per share) | $ 134.50 |
Fair Value of Financial Instr32
Fair Value of Financial Instruments - Fair value of assets and liabilities measured on a recurring basis (Details) | Oct. 01, 2017USD ($)derivative | Dec. 31, 2016USD ($) | Dec. 31, 2014USD ($) |
Fair value of assets and liabilities measured on a recurring basis | |||
Number of interest rate derivatives held | derivative | 2 | ||
Fair value of assets and liabilities that are measured on a recurring basis | |||
Fair value of assets and liabilities measured on a recurring basis | |||
Marketable securities | $ 14,000,000 | $ 13,000,000 | |
Interest Rate Swap | |||
Fair value of assets and liabilities measured on a recurring basis | |||
Notional amount | $ 150,000,000 | $ 400,000,000 |
Fair Value of Financial Instr33
Fair Value of Financial Instruments - Carrying values and estimated fair values of assets and liabilities not measured on a recurring basis (Details) - USD ($) $ in Millions | Oct. 01, 2017 | Dec. 31, 2016 |
Carrying Amount | ||
Assets and liabilities that are not measured on a recurring basis | ||
Fixed-rate debt | $ 700 | $ 700 |
Variable-rate debt | 720 | 750 |
Fair Value | ||
Assets and liabilities that are not measured on a recurring basis | ||
Fixed-rate debt | 739 | 727 |
Variable-rate debt | $ 716 | $ 746 |
Derivative Financial Instrume34
Derivative Financial Instruments - Floating to fixed rate (Details) - USD ($) | Oct. 01, 2017 | Dec. 31, 2014 |
Interest Rate Swap | ||
Derivative [Line Items] | ||
Notional | $ 150,000,000 | $ 400,000,000 |
Interest Rate Swap, Maturing August 2018 | ||
Derivative [Line Items] | ||
Notional | 100,000,000 | |
Fair Value | $ 0 | |
Pay Fixed | 1.69% | |
Receive Floating | 1.24% | |
Interest Rate Swap, Maturing November 2017 | ||
Derivative [Line Items] | ||
Notional | $ 50,000,000 | |
Fair Value | $ 0 | |
Pay Fixed | 1.10% | |
Receive Floating | 1.24% |
Derivative Financial Instrume35
Derivative Financial Instruments (Details) € in Millions, lb in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Oct. 01, 2017USD ($) | Oct. 02, 2016USD ($) | Oct. 01, 2017USD ($)lb | Oct. 02, 2016USD ($) | Oct. 01, 2017EUR (€) | Dec. 31, 2016USD ($) | |
Designated as Hedging Instrument | ||||||
Asset Derivatives Fair Value | ||||||
Fair value of derivative assets | $ 10 | $ 10 | $ 9 | |||
Liability Derivatives Fair Value | ||||||
Fair value of derivative liabilities | 2 | $ 2 | 1 | |||
Copper | ||||||
Derivative [Line Items] | ||||||
Notional amount, mass (in pounds) | lb | 17 | |||||
Zinc | ||||||
Derivative [Line Items] | ||||||
Notional amount, mass (in pounds) | lb | 6 | |||||
Commodity forward contracts | Cost of sales | ||||||
Pretax amount of gain (loss) reclassified from Accumulated Other Comprehensive Income (Loss) | ||||||
Commodity forward contracts, gain/(loss) reclassified from accumulated other comprehensive income (loss) | 0 | $ 0 | $ (3) | $ (4) | ||
Commodity forward contracts | Designated as Hedging Instrument | Other Current Assets | ||||||
Asset Derivatives Fair Value | ||||||
Commodity forward contracts, fair value of assets | 7 | 7 | 5 | |||
Commodity forward contracts | Designated as Hedging Instrument | Other Current Liabilities | ||||||
Liability Derivatives Fair Value | ||||||
Commodity forward contracts, fair value of liabilities | 0 | 0 | 0 | |||
Foreign currency forward contracts | Designated as Hedging Instrument | Other Current Assets | ||||||
Asset Derivatives Fair Value | ||||||
Foreign currency forward contracts, fair value of assets | 3 | 3 | 3 | |||
Foreign currency forward contracts | Designated as Hedging Instrument | Other Current Liabilities | ||||||
Liability Derivatives Fair Value | ||||||
Foreign currency forward contracts, fair value of liabilities | 1 | 1 | 0 | |||
Foreign currency forward contracts | Designated as Hedging Instrument | Other Noncurrent Assets | ||||||
Asset Derivatives Fair Value | ||||||
Foreign currency forward contracts, fair value of assets | 0 | 0 | 1 | |||
Foreign currency forward contracts | Designated as Hedging Instrument | Other Noncurrent Liabilities | ||||||
Liability Derivatives Fair Value | ||||||
Foreign currency forward contracts, fair value of liabilities | 1 | 1 | 0 | |||
Interest rate swap contracts | Interest expense | ||||||
Pretax amount of gain (loss) reclassified from Accumulated Other Comprehensive Income (Loss) | ||||||
Interest rate contracts, gain/(loss) reclassified from accumulated other comprehensive income (loss) | 0 | (1) | 1 | (2) | ||
Interest rate swap contracts | Designated as Hedging Instrument | Other Noncurrent Assets | ||||||
Asset Derivatives Fair Value | ||||||
Interest rate contracts, fair value of assets | 0 | 0 | 0 | |||
Interest rate swap contracts | Designated as Hedging Instrument | Other Noncurrent Liabilities | ||||||
Liability Derivatives Fair Value | ||||||
Interest rate contracts, fair value of liabilities | 0 | 0 | $ 1 | |||
Interest rate contracts | Cost of sales | ||||||
Pretax amount of gain (loss) reclassified from Accumulated Other Comprehensive Income (Loss) | ||||||
Foreign currency contracts, gain/(loss) reclassified from accumulated other comprehensive income (loss) | $ (2) | $ 0 | $ (2) | $ 0 | ||
Euros sold | Foreign currency forward contracts | ||||||
Derivative [Line Items] | ||||||
Notional amount (in euros) | € | € 16 | |||||
Euros purchased | Foreign currency forward contracts | ||||||
Derivative [Line Items] | ||||||
Notional amount (in euros) | € | € 52 |
Accumulated Other Comprehensi36
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | Oct. 01, 2017 | Dec. 31, 2016 |
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Accumulated other comprehensive income (loss) | $ (714) | $ (764) |
Derivatives | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Accumulated other comprehensive income (loss) | 5 | 5 |
Pension and other postretirement benefits | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Accumulated other comprehensive income (loss) | (721) | (771) |
Available-for-sale Securities | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Accumulated other comprehensive income (loss) | $ 2 | $ 2 |
Net Inventories (Details)
Net Inventories (Details) - USD ($) $ in Millions | Oct. 01, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 149 | $ 93 |
Work / contracts in process | 94 | 121 |
Finished goods | 24 | 1 |
Net inventories | $ 267 | $ 215 |
Postretirement Plans - Componen
Postretirement Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2017 | Oct. 02, 2016 | Oct. 01, 2017 | Oct. 02, 2016 | |
Pension Benefits | ||||
Change in benefit obligation | ||||
Service cost | $ 5 | $ 5 | $ 13 | $ 14 |
Interest cost | 24 | 25 | 73 | 76 |
Expected return on plan assets | (39) | (41) | (118) | (122) |
Amortization of unrecognized net loss | 32 | 31 | 98 | 94 |
Amortization of unrecognized prior service cost | (5) | (5) | (15) | (16) |
Net periodic benefit cost | 17 | 15 | 51 | 46 |
Special termination benefit cost / curtailment | 0 | 0 | 0 | 2 |
Net periodic benefit cost (income) | 17 | 15 | 51 | 48 |
Other Postretirement Benefits | ||||
Change in benefit obligation | ||||
Interest cost | 0 | 1 | 1 | 3 |
Expected return on plan assets | 0 | (1) | (2) | (3) |
Amortization of unrecognized net loss | 0 | 0 | 1 | 1 |
Amortization of unrecognized prior service cost | (2) | (1) | (5) | (4) |
Net periodic benefit cost (income) | $ (2) | $ (1) | $ (5) | $ (3) |
Postretirement Plans - Narrativ
Postretirement Plans - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Oct. 02, 2016 | Oct. 01, 2017 | |
Defined Benefit Plans | ||
Increase in funded status | $ 37 | |
Supplemental (nonqualified) executive retirement plan | ||
Defined Benefit Plans | ||
Employer's contribution to retirees during the period | $ 3 | |
Estimated future employer contributions in current fiscal year | 1 | |
Other Postretirement Benefits | ||
Defined Benefit Plans | ||
Employer contributions directly to the pension trust for the period | 2 | |
Estimated future employer contributions in current fiscal year | 2 | |
Pension Benefits | ||
Defined Benefit Plans | ||
Contributions by employer | 3 | |
Estimated future employer contributions in current fiscal year | $ 22 |
Long-term Debt - Summary Of Deb
Long-term Debt - Summary Of Debt (Details) - USD ($) $ in Millions | Oct. 01, 2017 | Dec. 31, 2016 | Sep. 30, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||||
Long-term debt, gross | $ 1,420 | $ 1,450 | ||
Unamortized debt issuance costs | 10 | 12 | ||
Long-term debt less unamortized debt issuance costs | 1,410 | 1,438 | ||
Current portion of long-term debt | 40 | 40 | ||
Long-term debt | 1,370 | 1,398 | ||
Senior Notes | 5.25% Senior Notes due 2021 | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, gross | 300 | 300 | ||
Unamortized debt issuance costs | $ 1 | 2 | ||
Interest rate | 5.25% | 5.25% | ||
Senior Notes | 5.50% Senior Notes due 2023 | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, gross | $ 400 | 400 | ||
Unamortized debt issuance costs | $ 5 | 5 | ||
Interest rate | 5.50% | 5.50% | ||
Senior Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Unamortized debt issuance costs | $ 4 | 5 | ||
Senior Credit Facility | Term Loan | Term Loan A due 2020 | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, gross | 720 | 750 | ||
Senior Credit Facility | Line of Credit | Revolving Credit Facility due 2020 | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, gross | $ 0 | $ 0 |
Long-term Debt - Senior Credit
Long-term Debt - Senior Credit Facility (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Oct. 01, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | |||
Long-term debt | $ 1,420,000,000 | $ 1,450,000,000 | |
Senior Credit Facility | Line of Credit | |||
Debt Instrument [Line Items] | |||
Outstanding letters of credit | $ 181,000,000 | ||
Senior Credit Facility | Line of Credit | Base Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 0.25% | ||
Senior Credit Facility | Line of Credit | LIBOR | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.25% | ||
Senior Credit Facility | Line of Credit | Term Loan A due 2020 | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 800,000,000 | ||
Periodic principal payments | 10,000,000 | ||
Weighted average interest rate | 2.54% | ||
Senior Credit Facility | Line of Credit | Revolving Credit Facility due 2020 | |||
Debt Instrument [Line Items] | |||
Revolving credit facility, maximum borrowing capacity | $ 1,000,000,000 | ||
Annual commitment fee on the unused portion (as a percent) | 0.20% | ||
Long-term debt | $ 0 | $ 0 | |
Line of credit facility, remaining borrowing capacity | $ 819,000,000 |
Long-term Debt - Senior Notes (
Long-term Debt - Senior Notes (Details) - USD ($) | Oct. 01, 2017 | Sep. 30, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | |||
Subsidiary guarantors percentage owned | 100.00% | ||
Senior Notes | 5.50% Senior Notes due 2023 | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 400,000,000 | ||
Interest rate | 5.50% | 5.50% | |
Senior Notes | 5.25% Senior Notes due 2021 | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 300,000,000 | ||
Interest rate | 5.25% | 5.25% |
Long-term Debt - Minimum loan p
Long-term Debt - Minimum loan payments (Details) - USD ($) $ in Millions | Oct. 01, 2017 | Dec. 31, 2016 |
Minimum payments on outstanding long-term debt | ||
Remainder of 2017 | $ 10 | |
2,018 | 40 | |
2,019 | 40 | |
2,020 | 630 | |
2,021 | 300 | |
Thereafter | 400 | |
Total | $ 1,420 | $ 1,450 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2017 | Oct. 02, 2016 | Oct. 01, 2017 | Oct. 02, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate (as a percent) | 24.40% | 18.00% | 26.50% | 25.90% |
Potential reduction of uncertain tax benefits over the next 12 months from audit settlements | $ 6 | $ 6 | ||
Maximum increase in earnings from settlement of unrecognized tax benefits based on current estimates | $ 6 | |||
Uncertain tax benefits reduction resulting from lapse of applicable statute of limitations | 11 | |||
Increase in net income | $ 10 |
Stock-based Compensation (Detai
Stock-based Compensation (Details) | 3 Months Ended | 9 Months Ended | ||||
Oct. 01, 2017USD ($)planshares | Oct. 02, 2016USD ($)shares | Oct. 01, 2017USD ($)plan$ / sharesshares | Oct. 02, 2016USD ($)shares | Feb. 27, 2017USD ($) | Dec. 31, 2016USD ($)shares | |
Stock-Based Compensation | ||||||
Number of stock-based incentive plans | plan | 5 | 5 | ||||
Number of plans under which no new grants are being made | plan | 4 | 4 | ||||
Total pre-tax stock-based compensation expense | $ | $ 6,000,000 | $ 18,000,000 | ||||
Total income tax benefit recognized in the income statement for share-based compensation | $ | $ 2,000,000 | $ 6,000,000 | ||||
Stock repurchase program, authorized amount | $ | $ 450,000,000 | $ 300,000,000 | ||||
Stock repurchase program, number of shares authorized to be repurchased (in shares) | 4,000,000 | |||||
Treasury stock purchased (in shares) | 64,489 | 576,407 | 230,918 | 1,104,511 | ||
Treasury stock purchased | $ | $ 7,000,000 | $ 44,000,000 | $ 23,000,000 | $ 88,000,000 | ||
Employee Stock Purchase Plan | ||||||
Stock-Based Compensation | ||||||
Number of authorized common shares | 2,000,000 | 2,000,000 | ||||
Number of available shares to be granted | 1,781,318 | 1,781,318 | ||||
Restricted stock | Minimum | ||||||
Stock-Based Compensation | ||||||
Vesting period | 1 year | |||||
Restricted stock | Maximum | ||||||
Stock-Based Compensation | ||||||
Vesting period | 3 years | |||||
Stock options | ||||||
Stock-Based Compensation | ||||||
Minimum terms of options | 7 years | |||||
Maximum terms of options | 10 years | |||||
Stock options granted | 58,434 | |||||
Weighted average fair value (in dollars per share) | $ / shares | $ 24.47 | |||||
Stock options | Minimum | ||||||
Stock-Based Compensation | ||||||
Vesting period | 1 year | |||||
Stock options | Maximum | ||||||
Stock-Based Compensation | ||||||
Vesting period | 3 years | |||||
Legacy ATK Plans | ||||||
Stock-Based Compensation | ||||||
Number of stock-based incentive plans | plan | 3 | 3 | ||||
Legacy Orbital Plans | ||||||
Stock-Based Compensation | ||||||
Number of stock-based incentive plans | plan | 1 | 1 | ||||
Legacy Orbital Plans | Restricted stock | ||||||
Stock-Based Compensation | ||||||
Shares issued upon vesting (in shares) | 45,120 | |||||
Units outstanding (in shares) | 0 | 0 | ||||
2005 Stock Incentive Plan | ||||||
Stock-Based Compensation | ||||||
Number of authorized common shares | 3,750,000 | 3,750,000 | ||||
Number of available shares to be granted | 2,083,777 | 2,083,777 | ||||
2005 Stock Incentive Plan | Restricted stock | ||||||
Stock-Based Compensation | ||||||
Shares issued upon vesting (in shares) | 53,449 | |||||
Executive Officers and Key Employees | TSR Awards | ||||||
Stock-Based Compensation | ||||||
Restricted stock granted to non-employee directors and certain key employees (in shares) | 59,393 | |||||
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 115.26 | |||||
Executive Officers and Key Employees | Tranche One | Performance Shares | ||||||
Stock-Based Compensation | ||||||
Number of shares payable only upon the achievement of certain financial performance goals | 58,506 | 58,506 | ||||
Executive Officers and Key Employees | Tranche One | TSR Awards | ||||||
Stock-Based Compensation | ||||||
Number of shares payable only upon the achievement of certain financial performance goals | 58,506 | 58,506 | ||||
Executive Officers and Key Employees | Tranche Two | Performance Shares | ||||||
Stock-Based Compensation | ||||||
Number of shares payable only upon the achievement of certain financial performance goals | 71,074 | 71,074 | ||||
Executive Officers and Key Employees | Tranche Two | TSR Awards | ||||||
Stock-Based Compensation | ||||||
Number of shares payable only upon the achievement of certain financial performance goals | 71,074 | 71,074 | ||||
Executive Officers and Key Employees | Tranche Three | Performance Shares | ||||||
Stock-Based Compensation | ||||||
Number of shares payable only upon the achievement of certain financial performance goals | 79,235 | 79,235 | ||||
Executive Officers and Key Employees | Tranche Three | TSR Awards | ||||||
Stock-Based Compensation | ||||||
Number of shares payable only upon the achievement of certain financial performance goals | 79,235 | 79,235 | ||||
Certain Key Employees | Restricted stock | ||||||
Stock-Based Compensation | ||||||
Restricted stock granted to non-employee directors and certain key employees (in shares) | 160,907 | |||||
Weighted average grant date fair value (in dollars per share) | $ / shares | $ 95.89 |
Earnings Per Share Data (Detail
Earnings Per Share Data (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2017 | Oct. 02, 2016 | Oct. 01, 2017 | Oct. 02, 2016 | |
Earnings Per Share [Abstract] | ||||
Basic weighted-average number of shares outstanding (in shares) | 57,310 | 57,930 | 57,370 | 58,210 |
Dilutive common share equivalents - share-based equity awards (in shares) | 450 | 330 | 490 | 430 |
Diluted weighted-average number of shares outstanding (in shares) | 57,760 | 58,260 | 57,860 | 58,640 |
Anti-dilutive stock options and other stock awards excluded from the calculation of diluted shares (in shares) | 150 | 150 | 220 | 150 |
Contingencies (Details)
Contingencies (Details) $ in Millions | Oct. 16, 2017action | Oct. 01, 2017USD ($) | Dec. 31, 2016USD ($) |
Business Acquisition [Line Items] | |||
Unbilled receivables for contract claims | $ 10 | $ 18 | |
Environmental remediation | |||
Liability recorded in other current liabilities | 5 | 6 | |
Environmental remediation, noncurrent | 32 | 35 | |
Liability | 37 | 41 | |
Receivable recorded in other current assets | 3 | 3 | |
Environmental recoveries, noncurrent | 14 | 15 | |
Receivable | 17 | $ 18 | |
Minimum | |||
Environmental remediation | |||
Estimated reasonably possible costs of environmental remediation | 37 | ||
Maximum | |||
Environmental remediation | |||
Estimated reasonably possible costs of environmental remediation | $ 69 | ||
Lickteig, Ayzin, Sedon And Berg Actions | Subsequent Event | |||
Business Acquisition [Line Items] | |||
Number of purported class actions filed | action | 6 |
Operating Segment Information48
Operating Segment Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Oct. 01, 2017USD ($) | Oct. 02, 2016USD ($) | Oct. 01, 2017USD ($)segment | Oct. 02, 2016USD ($) | Dec. 31, 2016USD ($) | |
Segment Reporting [Abstract] | |||||
Number of operating segments | segment | 3 | ||||
Results by operating segment | |||||
Sales | $ 1,216 | $ 1,043 | $ 3,416 | $ 3,183 | |
Income before interest, income taxes and noncontrolling interest | 142 | 91 | 389 | 359 | |
Total assets | 5,537 | 5,537 | $ 5,418 | ||
Operating segments | |||||
Results by operating segment | |||||
Sales | 1,216 | 1,043 | 3,416 | 3,183 | |
Operating segments | Flight Systems Group | |||||
Results by operating segment | |||||
Sales | 423 | 360 | 1,214 | 1,081 | |
Income before interest, income taxes and noncontrolling interest | 61 | 44 | 161 | 152 | |
Total assets | 2,293 | 2,293 | 2,208 | ||
Operating segments | Defense Systems Group | |||||
Results by operating segment | |||||
Sales | 511 | 451 | 1,378 | 1,326 | |
Income before interest, income taxes and noncontrolling interest | 48 | 33 | 133 | 126 | |
Total assets | 1,358 | 1,358 | 1,228 | ||
Operating segments | Space Systems Group | |||||
Results by operating segment | |||||
Sales | 282 | 232 | 824 | 776 | |
Income before interest, income taxes and noncontrolling interest | 40 | 20 | 98 | 96 | |
Total assets | 1,276 | 1,276 | 1,280 | ||
Intercompany Sales | |||||
Results by operating segment | |||||
Revenues | 0 | 0 | 0 | 0 | |
Intercompany Sales | Flight Systems Group | |||||
Results by operating segment | |||||
Sales | 3 | 3 | 8 | 10 | |
Intercompany Sales | Defense Systems Group | |||||
Results by operating segment | |||||
Sales | 4 | 5 | 12 | 15 | |
Intercompany Sales | Space Systems Group | |||||
Results by operating segment | |||||
Sales | 32 | 16 | 93 | 37 | |
Corporate | |||||
Results by operating segment | |||||
Sales | (39) | (24) | (113) | (62) | |
Income before interest, income taxes and noncontrolling interest | (7) | $ (6) | (3) | $ (15) | |
Total assets | $ 610 | $ 610 | $ 702 |