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Delaware
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52-2314475
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(State or other jurisdiction
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(I.R.S. Employer
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of incorporation or organization)
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Identification No.)
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400 Collins Road NE
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Cedar Rapids, Iowa
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52498
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
R
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Accelerated filer
£
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Non-accelerated filer
£
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(Do not check if a smaller reporting company)
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Smaller reporting company
£
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Page No.
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PART I
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PART I.
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FINANCIAL INFORMATION
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Item 1.
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Condensed Consolidated Financial Statements
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December 31,
2015 |
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September 30,
2015 |
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ASSETS
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|
||||
Current Assets:
|
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||||
Cash and cash equivalents
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$
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334
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$
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252
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Receivables, net
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1,036
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1,038
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|
||
Inventories, net
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1,938
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1,824
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Other current assets
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138
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110
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Total current assets
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3,446
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3,224
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Property
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973
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964
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Goodwill
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1,903
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1,904
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Intangible Assets
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693
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703
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Deferred Income Taxes
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141
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165
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Other Assets
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315
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344
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TOTAL ASSETS
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$
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7,471
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$
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7,304
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LIABILITIES AND EQUITY
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Current Liabilities:
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Short-term debt
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$
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1,105
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$
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448
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Accounts payable
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443
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487
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|
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Compensation and benefits
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218
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273
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Advance payments from customers
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336
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365
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|
||
Accrued customer incentives
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234
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232
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|
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Product warranty costs
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87
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89
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|
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Other current liabilities
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152
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166
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Total current liabilities
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2,575
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2,060
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Long-term Debt, Net
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1,370
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1,680
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Retirement Benefits
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1,381
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|
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1,466
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Other Liabilities
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240
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|
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218
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Equity:
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Common stock ($0.01 par value; shares authorized: 1,000; shares issued as of December 31, 2015 and September 30, 2015: 183.8)
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2
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2
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Additional paid-in capital
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1,520
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1,519
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Retained earnings
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5,215
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5,124
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Accumulated other comprehensive loss
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(1,693
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)
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(1,699
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)
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Common stock in treasury, at cost (shares held: December 31, 2015, 52.6; September
30, 2015, 51.9)
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(3,145
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)
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(3,071
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)
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||
Total shareowners’ equity
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1,899
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|
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1,875
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|
||
Noncontrolling interest
|
6
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5
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Total equity
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1,905
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1,880
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TOTAL LIABILITIES AND EQUITY
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$
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7,471
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$
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7,304
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Three Months Ended
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||||||
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December 31
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||||||
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2015
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|
2014
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||||
Sales:
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Product sales
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$
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968
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$
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1,035
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Service sales
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201
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191
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Total sales
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1,169
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1,226
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Costs, expenses and other:
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Product cost of sales
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691
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718
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Service cost of sales
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145
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139
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Selling, general and administrative expenses
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163
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137
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Interest expense
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15
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15
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Other income, net
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(2
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)
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(1
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)
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Total costs, expenses and other
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1,012
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1,008
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Income from continuing operations before income taxes
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157
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218
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Income tax expense
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24
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49
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Income from continuing operations
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133
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169
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Income (loss) from discontinued operations, net of taxes
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2
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(2
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)
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Net income
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$
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135
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$
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167
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Earnings (loss) per share:
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Basic
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Continuing operations
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$
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1.01
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$
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1.28
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Discontinued operations
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0.02
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(0.02
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)
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Basic earnings per share
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$
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1.03
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$
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1.26
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Diluted
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Continuing operations
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$
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1.00
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$
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1.26
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Discontinued operations
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0.02
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(0.02
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)
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Diluted earnings per share
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$
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1.02
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$
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1.24
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Weighted average common shares:
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Basic
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131.4
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133.0
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Diluted
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132.8
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134.5
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Cash dividends per share
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$
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0.33
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$
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0.30
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Three Months Ended
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||||||
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December 31
|
||||||
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2015
|
|
2014
|
||||
Net income
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$
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135
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$
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167
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Unrealized foreign currency translation adjustments
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(8
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)
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(14
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)
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Pension and other retirement benefits adjustments (net of taxes for the three months ended December 31, 2015 and 2014 of $8 and $7, respectively)
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13
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11
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Foreign currency cash flow hedge adjustments (net of taxes for the three months ended December 31, 2015 and 2014 of $0 and $(2), respectively)
|
1
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(4
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)
|
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Comprehensive income
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$
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141
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$
|
160
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|
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Three Months Ended December 31
|
||||||
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2015
|
|
2014
|
||||
Operating Activities:
|
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|
||||
Net income
|
$
|
135
|
|
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$
|
167
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Income (loss) from discontinued operations, net of tax
|
2
|
|
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(2
|
)
|
||
Income from continuing operations
|
133
|
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169
|
|
||
Adjustments to arrive at cash used for operating activities:
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|
||||
Non-cash restructuring charges
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6
|
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—
|
|
||
Depreciation
|
35
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38
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|
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Amortization of intangible assets and pre-production engineering costs
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23
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24
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Stock-based compensation expense
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6
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5
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Compensation and benefits paid in common stock
|
12
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11
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Excess tax benefit from stock-based compensation
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(3
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)
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(7
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)
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Deferred income taxes
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15
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13
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Pension plan contributions
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(58
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)
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(58
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)
|
||
Changes in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments:
|
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|
||||
Receivables
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16
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(15
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)
|
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Production inventory
|
(84
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)
|
|
(52
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)
|
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Pre-production engineering costs
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(49
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)
|
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(43
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)
|
||
Accounts payable
|
(32
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)
|
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(51
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)
|
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Compensation and benefits
|
(54
|
)
|
|
(59
|
)
|
||
Advance payments from customers
|
(28
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)
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13
|
|
||
Accrued customer incentives
|
2
|
|
|
(1
|
)
|
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Product warranty costs
|
(2
|
)
|
|
—
|
|
||
Income taxes
|
7
|
|
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8
|
|
||
Other assets and liabilities
|
(36
|
)
|
|
(55
|
)
|
||
Cash Used for Operating Activities from Continuing Operations
|
(91
|
)
|
|
(60
|
)
|
||
Investing Activities:
|
|
|
|
|
|
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Property additions
|
(48
|
)
|
|
(62
|
)
|
||
Other investing activities
|
—
|
|
|
(14
|
)
|
||
Cash Used for Investing Activities from Continuing Operations
|
(48
|
)
|
|
(76
|
)
|
||
Financing Activities:
|
|
|
|
|
|
||
Purchases of treasury stock
|
(96
|
)
|
|
(173
|
)
|
||
Cash dividends
|
(43
|
)
|
|
(40
|
)
|
||
Increase in short-term commercial paper borrowings, net
|
357
|
|
|
327
|
|
||
Proceeds from the exercise of stock options
|
3
|
|
|
17
|
|
||
Excess tax benefit from stock-based compensation
|
3
|
|
|
7
|
|
||
Other financing activities
|
(1
|
)
|
|
—
|
|
||
Cash Provided by Financing Activities from Continuing Operations
|
223
|
|
|
138
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(2
|
)
|
|
(9
|
)
|
||
Discontinued Operations:
|
|
|
|
||||
Operating activities
|
—
|
|
|
(1
|
)
|
||
Cash (Used for) Discontinued Operations
|
—
|
|
|
(1
|
)
|
||
Net Change in Cash and Cash Equivalents
|
82
|
|
|
(8
|
)
|
||
Cash and Cash Equivalents at Beginning of Period
|
252
|
|
|
323
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
334
|
|
|
$
|
315
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Shares Outstanding
|
|
Par Value
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Treasury Stock
|
|
Noncontrolling Interest
|
|
Total Equity
|
|||||||||||||||
Balance at September 30, 2015
|
131.9
|
|
|
$
|
2
|
|
|
$
|
1,519
|
|
|
$
|
5,124
|
|
|
$
|
(1,699
|
)
|
|
$
|
(3,071
|
)
|
|
$
|
5
|
|
|
$
|
1,880
|
|
Net income
|
|
|
|
|
|
|
135
|
|
|
|
|
|
|
|
|
135
|
|
|||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
6
|
|
|||||||||||||
Cash dividends
|
|
|
|
|
|
|
(43
|
)
|
|
|
|
|
|
|
|
(43
|
)
|
|||||||||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Exercise of stock options
|
0.1
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
4
|
|
|
|
|
3
|
|
|||||||||||
Vesting of performance shares and restricted stock
|
0.1
|
|
|
|
|
(11
|
)
|
|
|
|
|
|
5
|
|
|
|
|
(6
|
)
|
|||||||||||
Excess tax pools
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|||||||||||||
Employee stock purchase plan
|
—
|
|
|
|
|
1
|
|
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|||||||||||
Employee savings plan
|
0.1
|
|
|
|
|
3
|
|
|
|
|
|
|
6
|
|
|
|
|
9
|
|
|||||||||||
Stock-based compensation
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|||||||||||||
Treasury share repurchases
|
(1.0
|
)
|
|
|
|
|
|
|
|
|
|
(90
|
)
|
|
|
|
(90
|
)
|
||||||||||||
Other
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
1
|
|
|
—
|
|
||||||||||||
Balance at December 31, 2015
|
131.2
|
|
|
$
|
2
|
|
|
$
|
1,520
|
|
|
$
|
5,215
|
|
|
$
|
(1,693
|
)
|
|
$
|
(3,145
|
)
|
|
$
|
6
|
|
|
$
|
1,905
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Shares Outstanding
|
|
Par Value
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Treasury Stock
|
|
Noncontrolling Interest
|
|
Total Equity
|
|||||||||||||||
Balance at September 30, 2014
|
134.0
|
|
|
$
|
2
|
|
|
$
|
1,489
|
|
|
$
|
4,605
|
|
|
$
|
(1,366
|
)
|
|
$
|
(2,846
|
)
|
|
$
|
5
|
|
|
$
|
1,889
|
|
Net income
|
|
|
|
|
|
|
167
|
|
|
|
|
|
|
|
|
167
|
|
|||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
(7
|
)
|
|||||||||||||
Cash dividends
|
|
|
|
|
|
|
(40
|
)
|
|
|
|
|
|
|
|
(40
|
)
|
|||||||||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Exercise of stock options
|
0.4
|
|
|
|
|
(8
|
)
|
|
|
|
|
|
25
|
|
|
|
|
17
|
|
|||||||||||
Vesting of performance shares and restricted stock
|
0.2
|
|
|
|
|
(10
|
)
|
|
|
|
|
|
4
|
|
|
|
|
(6
|
)
|
|||||||||||
Excess tax pools
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|||||||||||||
Employee stock purchase plan
|
—
|
|
|
|
|
1
|
|
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|||||||||||
Employee savings plan
|
0.1
|
|
|
|
|
3
|
|
|
|
|
|
|
6
|
|
|
|
|
9
|
|
|||||||||||
Stock-based compensation
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|||||||||||||
Treasury share repurchases
|
(2.2
|
)
|
|
|
|
|
|
|
|
|
|
(174
|
)
|
|
|
|
(174
|
)
|
||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
1
|
|
||||||||||||
Balance at December 31, 2014
|
132.5
|
|
|
$
|
2
|
|
|
$
|
1,486
|
|
|
$
|
4,732
|
|
|
$
|
(1,373
|
)
|
|
$
|
(2,983
|
)
|
|
$
|
6
|
|
|
$
|
1,870
|
|
1.
|
Business Description and Basis of Presentation
|
2.
|
Recently Issued Accounting Standards
|
3.
|
Acquisitions, Goodwill and Intangible Assets
|
(in millions)
|
Commercial
Systems
|
|
Government
Systems
|
|
Information Management Services
|
|
Total
|
||||||||
Balance at September 30, 2015
|
$
|
314
|
|
|
$
|
500
|
|
|
$
|
1,090
|
|
|
$
|
1,904
|
|
Foreign currency translation adjustments
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Balance at December 31, 2015
|
$
|
314
|
|
|
$
|
499
|
|
|
$
|
1,090
|
|
|
$
|
1,903
|
|
|
December 31, 2015
|
|
September 30, 2015
|
||||||||||||||||||||
(in millions)
|
Gross
|
|
Accum
Amort
|
|
Net
|
|
Gross
|
|
Accum
Amort
|
|
Net
|
||||||||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Developed technology and patents
|
$
|
346
|
|
|
$
|
(201
|
)
|
|
$
|
145
|
|
|
$
|
346
|
|
|
$
|
(195
|
)
|
|
$
|
151
|
|
Backlog
|
5
|
|
|
(2
|
)
|
|
3
|
|
|
5
|
|
|
(2
|
)
|
|
3
|
|
||||||
Customer relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Acquired
|
338
|
|
|
(91
|
)
|
|
247
|
|
|
338
|
|
|
(87
|
)
|
|
251
|
|
||||||
Up-front sales incentives
|
305
|
|
|
(65
|
)
|
|
240
|
|
|
301
|
|
|
(62
|
)
|
|
239
|
|
||||||
License agreements
|
13
|
|
|
(10
|
)
|
|
3
|
|
|
13
|
|
|
(9
|
)
|
|
4
|
|
||||||
Trademarks and tradenames
|
15
|
|
|
(14
|
)
|
|
1
|
|
|
15
|
|
|
(14
|
)
|
|
1
|
|
||||||
Intangible assets with indefinite lives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trademarks and tradenames
|
47
|
|
|
—
|
|
|
47
|
|
|
47
|
|
|
—
|
|
|
47
|
|
||||||
In process research and development
|
7
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||
Intangible assets
|
$
|
1,076
|
|
|
$
|
(383
|
)
|
|
$
|
693
|
|
|
$
|
1,072
|
|
|
$
|
(369
|
)
|
|
$
|
703
|
|
(in millions)
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
||||||||||||
Anticipated amortization expense for up-front sales incentives
|
$
|
16
|
|
|
$
|
18
|
|
|
$
|
21
|
|
|
$
|
25
|
|
|
$
|
25
|
|
|
$
|
138
|
|
Anticipated amortization expense for all other intangible assets
|
44
|
|
|
39
|
|
|
38
|
|
|
34
|
|
|
32
|
|
|
223
|
|
||||||
Total
|
$
|
60
|
|
|
$
|
57
|
|
|
$
|
59
|
|
|
$
|
59
|
|
|
$
|
57
|
|
|
$
|
361
|
|
4.
|
Discontinued Operations and Divestitures
|
|
|
Three Months Ended
|
||||||
|
|
December 31
|
||||||
(in millions)
|
|
2015
|
|
2014
|
||||
Sales
|
|
$
|
—
|
|
|
$
|
8
|
|
Income (loss) from discontinued operations before income taxes
|
|
3
|
|
|
(3
|
)
|
||
Income tax benefit (expense) from discontinued operations
|
|
(1
|
)
|
|
1
|
|
5.
|
Receivables, Net
|
(in millions)
|
December 31,
2015 |
|
September 30,
2015 |
||||
Billed
|
$
|
729
|
|
|
$
|
752
|
|
Unbilled
|
435
|
|
|
403
|
|
||
Less progress payments
|
(121
|
)
|
|
(110
|
)
|
||
Total
|
1,043
|
|
|
1,045
|
|
||
Less allowance for doubtful accounts
|
(7
|
)
|
|
(7
|
)
|
||
Receivables, net
|
$
|
1,036
|
|
|
$
|
1,038
|
|
6.
|
Inventories, Net
|
(in millions)
|
December 31,
2015 |
|
September 30,
2015 |
||||
Finished goods
|
$
|
248
|
|
|
$
|
216
|
|
Work in process
|
263
|
|
|
250
|
|
||
Raw materials, parts and supplies
|
388
|
|
|
353
|
|
||
Less progress payments
|
(13
|
)
|
|
(7
|
)
|
||
Total
|
886
|
|
|
812
|
|
||
Pre-production engineering costs
|
1,052
|
|
|
1,012
|
|
||
Inventories, net
|
$
|
1,938
|
|
|
$
|
1,824
|
|
(in millions)
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
||||||||||||
Anticipated amortization expense for pre-production engineering costs
(1)
|
$
|
53
|
|
|
$
|
81
|
|
|
$
|
111
|
|
|
$
|
132
|
|
|
$
|
131
|
|
|
$
|
526
|
|
7.
|
Other Assets
|
(in millions)
|
December 31,
2015 |
|
September 30,
2015 |
||||
Long-term receivables
|
$
|
92
|
|
|
$
|
109
|
|
Investments in equity affiliates
|
11
|
|
|
13
|
|
||
Exchange and rental assets (net of accumulated depreciation of $98 at December 31, 2015 and $97 at September 30, 2015)
|
65
|
|
|
66
|
|
||
Other
|
147
|
|
|
156
|
|
||
Other assets
|
$
|
315
|
|
|
$
|
344
|
|
8.
|
Debt
|
(in millions, except weighted average amounts)
|
December 31,
2015 |
|
September 30,
2015 |
||||
Short-term commercial paper borrowings outstanding
(1)
|
$
|
805
|
|
|
$
|
448
|
|
Current portion of long-term debt
|
300
|
|
|
—
|
|
||
Short-term debt
|
$
|
1,105
|
|
|
$
|
448
|
|
Weighted average interest rate of commercial paper borrowings
|
0.67
|
%
|
|
0.52
|
%
|
||
Weighted average maturity period of commercial paper borrowings (days)
|
8
|
|
|
25
|
|
(in millions, except interest rate figures)
|
Interest Rate
|
|
December 31,
2015 |
|
September 30,
2015 |
||||
Fixed-rate notes due:
|
|
|
|
|
|
||||
December 2043
|
4.80%
|
|
$
|
398
|
|
|
$
|
398
|
|
December 2023
|
3.70%
|
|
399
|
|
|
399
|
|
||
November 2021
|
3.10%
|
|
250
|
|
|
250
|
|
||
July 2019
|
5.25%
|
|
299
|
|
|
299
|
|
||
Variable-rate note due:
|
|
|
|
|
|
||||
December 2016
|
3 month LIBOR + 0.35%
(1)
|
|
300
|
|
|
300
|
|
||
Fair value swap adjustment (see Notes 13 and 14)
|
|
|
24
|
|
|
34
|
|
||
Total
|
|
|
1,670
|
|
|
1,680
|
|
||
Less current portion of long-term debt
|
|
|
300
|
|
|
—
|
|
||
Long-term Debt, Net
|
|
|
$
|
1,370
|
|
|
$
|
1,680
|
|
9.
|
Retirement Benefits
|
|
Pension Benefits
|
|
Other Retirement Benefits
|
||||||||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||
|
December 31
|
|
December 31
|
||||||||||||
(in millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Service cost
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
32
|
|
|
39
|
|
|
1
|
|
|
1
|
|
||||
Expected return on plan assets
|
(60
|
)
|
|
(60
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization:
|
|
|
|
|
|
|
|
|
|
||||||
Prior service credit
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Net actuarial loss
|
19
|
|
|
18
|
|
|
2
|
|
|
2
|
|
||||
Net benefit expense (income)
|
$
|
(6
|
)
|
|
$
|
(1
|
)
|
|
$
|
3
|
|
|
$
|
2
|
|
10.
|
Stock-Based Compensation and Earnings Per Share
|
|
|
Three Months Ended
|
||||||
|
|
December 31
|
||||||
(in millions)
|
|
2015
|
|
2014
|
||||
Stock-based compensation expense included in:
|
|
|
|
|
||||
Product cost of sales
|
|
$
|
2
|
|
|
$
|
2
|
|
Selling, general and administrative expenses
|
|
4
|
|
|
3
|
|
||
Total
|
|
$
|
6
|
|
|
$
|
5
|
|
Income tax benefit
|
|
$
|
2
|
|
|
$
|
2
|
|
|
Options
|
|
Performance Shares
|
|
Restricted Stock Units
|
||||||||||||
(shares in thousands)
|
Number Issued
|
Weighted Average Fair Value
|
|
Number Issued
|
Weighted Average Fair Value
|
|
Number Issued
|
Weighted Average Fair Value
|
|||||||||
Three months ended December 31, 2015
|
622.9
|
|
$
|
17.78
|
|
|
127.5
|
|
$
|
85.11
|
|
|
55.4
|
|
$
|
86.67
|
|
Three months ended December 31, 2014
|
555.6
|
|
$
|
19.60
|
|
|
129.7
|
|
$
|
82.63
|
|
|
52.8
|
|
$
|
83.60
|
|
|
2016 Grants
|
|
2015 Grants
|
||
Risk-free interest rate
|
0.9% - 2.5%
|
|
|
0.5% - 2.6%
|
|
Expected dividend yield
|
1.5
|
%
|
|
1.6
|
%
|
Expected volatility
|
20.0
|
%
|
|
24.0
|
%
|
Expected life
|
7 years
|
|
|
7 years
|
|
|
|
Three Months Ended
|
||||||
|
|
December 31
|
||||||
(in millions, except per share amounts)
|
|
2015
|
|
2014
|
||||
Numerator for basic and diluted earnings per share:
|
|
|
|
|
||||
Income from continuing operations
|
|
$
|
133
|
|
|
$
|
169
|
|
Income (loss) from discontinued operations, net of taxes
|
|
2
|
|
|
(2
|
)
|
||
Net income
|
|
$
|
135
|
|
|
$
|
167
|
|
Denominator:
|
|
|
|
|
|
|
||
Denominator for basic earnings per share – weighted average common shares
|
|
131.4
|
|
|
133.0
|
|
||
Effect of dilutive securities:
|
|
|
|
|
||||
Stock options
|
|
0.9
|
|
|
1.1
|
|
||
Performance shares, restricted stock and restricted stock units
|
|
0.5
|
|
|
0.4
|
|
||
Dilutive potential common shares
|
|
1.4
|
|
|
1.5
|
|
||
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversion
|
|
132.8
|
|
|
134.5
|
|
||
Earnings (loss) per share:
|
|
|
|
|
|
|
||
Basic
|
|
|
|
|
||||
Continuing operations
|
|
$
|
1.01
|
|
|
$
|
1.28
|
|
Discontinued operations
|
|
0.02
|
|
|
(0.02
|
)
|
||
Basic earnings per share
|
|
$
|
1.03
|
|
|
$
|
1.26
|
|
Diluted
|
|
|
|
|
||||
Continuing operations
|
|
$
|
1.00
|
|
|
$
|
1.26
|
|
Discontinued operations
|
|
0.02
|
|
|
(0.02
|
)
|
||
Diluted earnings per share
|
|
$
|
1.02
|
|
|
$
|
1.24
|
|
11.
|
Accumulated Other Comprehensive Loss
|
|
|
Foreign Exchange Translation Adjustment
|
|
Pension and Other Postretirement Adjustments
(1)
|
|
Change in the Fair Value of Effective Cash Flow Hedges
|
|
Total
|
||||||||
Balance at September 30, 2015
|
|
$
|
(56
|
)
|
|
$
|
(1,637
|
)
|
|
$
|
(6
|
)
|
|
$
|
(1,699
|
)
|
Other comprehensive loss before reclassifications
|
|
(8
|
)
|
|
—
|
|
|
(1
|
)
|
|
(9
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
|
—
|
|
|
13
|
|
|
2
|
|
|
15
|
|
||||
Net current period other comprehensive income(loss)
|
|
(8
|
)
|
|
13
|
|
|
1
|
|
|
6
|
|
||||
Balance at December 31, 2015
|
|
$
|
(64
|
)
|
|
$
|
(1,624
|
)
|
|
$
|
(5
|
)
|
|
$
|
(1,693
|
)
|
|
|
Foreign Exchange Translation Adjustment
|
|
Pension and Other Postretirement Adjustments
(1)
|
|
Change in the Fair Value of Effective Cash Flow Hedges
|
|
Total
|
||||||||
Balance at September 30, 2014
|
|
$
|
(15
|
)
|
|
$
|
(1,348
|
)
|
|
$
|
(3
|
)
|
|
$
|
(1,366
|
)
|
Other comprehensive loss before reclassifications
|
|
(14
|
)
|
|
—
|
|
|
(5
|
)
|
|
(19
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
|
—
|
|
|
11
|
|
|
1
|
|
|
12
|
|
||||
Net current period other comprehensive income(loss)
|
|
(14
|
)
|
|
11
|
|
|
(4
|
)
|
|
(7
|
)
|
||||
Balance at December 31, 2014
|
|
$
|
(29
|
)
|
|
$
|
(1,337
|
)
|
|
$
|
(7
|
)
|
|
$
|
(1,373
|
)
|
12.
|
Income Taxes
|
13.
|
Fair Value Measurements
|
Level 1 -
|
quoted prices (unadjusted) in active markets for identical assets or liabilities
|
Level 2 -
|
quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument
|
Level 3 -
|
unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value
|
|
|
|
December 31, 2015
|
|
September 30, 2015
|
||||
(in millions)
|
Fair Value
Hierarchy
|
|
Fair Value
Asset (Liability)
|
|
Fair Value
Asset (Liability)
|
||||
Deferred compensation plan investments
|
Level 1
|
|
$
|
54
|
|
|
$
|
50
|
|
Interest rate swap assets
|
Level 2
|
|
24
|
|
|
34
|
|
||
Foreign currency forward exchange contract assets
|
Level 2
|
|
8
|
|
|
7
|
|
||
Foreign currency forward exchange contract liabilities
|
Level 2
|
|
(10
|
)
|
|
(11
|
)
|
||
Contingent consideration for ICG acquisition
|
Level 3
|
|
(12
|
)
|
|
(12
|
)
|
|
Asset (Liability)
|
||||||||||||||
|
December 31, 2015
|
|
September 30, 2015
|
||||||||||||
(in millions)
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Cash and cash equivalents
|
$
|
334
|
|
|
$
|
334
|
|
|
$
|
252
|
|
|
$
|
252
|
|
Short-term debt
|
(1,105
|
)
|
|
(1,105
|
)
|
|
(448
|
)
|
|
(448
|
)
|
||||
Long-term debt
|
(1,346
|
)
|
|
(1,429
|
)
|
|
(1,646
|
)
|
|
(1,750
|
)
|
14.
|
Derivative Financial Instruments
|
|
|
|
Asset Derivatives
|
||||||
(in millions)
|
Classification
|
|
December 31,
2015 |
|
September 30, 2015
|
||||
Foreign currency forward exchange contracts
|
Other current assets
|
|
$
|
8
|
|
|
$
|
7
|
|
Interest rate swaps
|
Other assets
|
|
24
|
|
|
34
|
|
||
Total
|
|
|
$
|
32
|
|
|
$
|
41
|
|
|
|
|
Liability Derivatives
|
||||||
(in millions)
|
Classification
|
|
December 31,
2015 |
|
September 30, 2015
|
||||
Foreign currency forward exchange contracts
|
Other current liabilities
|
|
$
|
10
|
|
|
$
|
11
|
|
|
|
|
Amount of Gain (Loss)
|
||||||
|
|
|
Three Months Ended
|
||||||
|
|
|
December 31
|
||||||
(in millions)
|
Location of Gain (Loss)
|
|
2015
|
|
2014
|
||||
Derivatives Designated as Hedging Instruments:
|
|
|
|
|
|
||||
Fair Value Hedges
|
|
|
|
|
|
||||
Interest rate swaps
|
Interest expense
|
|
$
|
3
|
|
|
$
|
3
|
|
Cash Flow Hedges
|
|
|
|
|
|
||||
Foreign currency forward exchange contracts:
|
|
|
|
|
|
||||
Amount of (loss) recognized in AOCL (effective portion, before deferred tax impact)
|
AOCL
|
|
(1
|
)
|
|
(7
|
)
|
||
Amount of (loss) reclassified from AOCL into income
|
Cost of sales
|
|
(2
|
)
|
|
(1
|
)
|
||
Derivatives Not Designated as Hedging Instruments:
|
|
|
|
|
|
||||
Foreign currency forward exchange contracts
|
Cost of sales
|
|
(3
|
)
|
|
(2
|
)
|
15.
|
Guarantees and Indemnifications
|
|
Three Months Ended
|
||||||
|
December 31
|
||||||
(in millions)
|
2015
|
|
2014
|
||||
Balance at beginning of year
|
$
|
89
|
|
|
$
|
104
|
|
Warranty costs incurred
|
(10
|
)
|
|
(11
|
)
|
||
Product warranty accrual
|
9
|
|
|
11
|
|
||
Changes in estimates for prior years
|
(1
|
)
|
|
—
|
|
||
Foreign currency translation adjustments and other
|
—
|
|
|
(1
|
)
|
||
Balance at December 31
|
$
|
87
|
|
|
$
|
103
|
|
16.
|
Environmental Matters
|
17.
|
Legal Matters
|
18.
|
Restructuring and Asset Impairment Charges
|
(in millions)
|
Cost of Sales
|
|
Selling, General and Administrative Expenses
|
|
Total
|
||||||
Employee separation costs
|
$
|
31
|
|
|
$
|
8
|
|
|
$
|
39
|
|
Asset impairment charges
|
2
|
|
|
4
|
|
|
6
|
|
|||
Restructuring and asset impairment charges
|
$
|
33
|
|
|
$
|
12
|
|
|
$
|
45
|
|
19.
|
Business Segment Information
|
|
|
Three Months Ended
|
||||||
|
|
December 31
|
||||||
(in millions)
|
|
2015
|
|
2014
|
||||
Sales:
|
|
|
|
|
||||
Commercial Systems
|
|
$
|
562
|
|
|
$
|
568
|
|
Government Systems
|
|
451
|
|
|
509
|
|
||
Information Management Services
|
|
156
|
|
|
149
|
|
||
Total sales
|
|
$
|
1,169
|
|
|
$
|
1,226
|
|
|
|
|
|
|
||||
Segment operating earnings:
|
|
|
|
|
|
|
||
Commercial Systems
|
|
$
|
125
|
|
|
$
|
125
|
|
Government Systems
|
|
86
|
|
|
106
|
|
||
Information Management Services
|
|
24
|
|
|
21
|
|
||
Total segment operating earnings
|
|
235
|
|
|
252
|
|
||
|
|
|
|
|
||||
Interest expense
|
|
(15
|
)
|
|
(15
|
)
|
||
Stock-based compensation
|
|
(6
|
)
|
|
(5
|
)
|
||
General corporate, net
|
|
(12
|
)
|
|
(14
|
)
|
||
Restructuring and asset impairment charges
|
|
(45
|
)
|
|
—
|
|
||
|
|
|
|
|
||||
Income from continuing operations before income taxes
|
|
157
|
|
|
218
|
|
||
Income tax expense
|
|
(24
|
)
|
|
(49
|
)
|
||
Income from continuing operations
|
|
$
|
133
|
|
|
$
|
169
|
|
|
|
Three Months Ended
|
||||||
|
|
December 31
|
||||||
(in millions)
|
|
2015
|
|
2014
|
||||
Commercial Systems sales categories:
|
|
|
|
|
|
|||
Air transport aviation electronics
|
|
$
|
327
|
|
|
$
|
338
|
|
Business and regional aviation electronics
|
|
235
|
|
|
230
|
|
||
Commercial Systems sales
|
|
562
|
|
|
568
|
|
||
|
|
|
|
|
||||
Government Systems sales categories:
|
|
|
|
|
|
|
||
Avionics
|
|
293
|
|
|
327
|
|
||
Communication and navigation
|
|
158
|
|
|
182
|
|
||
Government Systems sales
|
|
451
|
|
|
509
|
|
||
|
|
|
|
|
||||
Information Management Services sales
|
|
156
|
|
|
149
|
|
||
|
|
|
|
|
||||
Total sales
|
|
$
|
1,169
|
|
|
$
|