ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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90-0607005
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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PART I – FINANCIAL INFORMATION
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II – OTHER INFORMATION
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Three Months Ended
June 30 |
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Six Months Ended
June 30 |
||||||||||||
(in millions, except per share amounts)
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2014
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2013
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2014
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2013
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||||||||
Sales and service revenues
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||||||||
Product sales
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$
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1,433
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$
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1,423
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$
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2,765
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$
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2,744
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Service revenues
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286
|
|
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260
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548
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501
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||||
Total sales and service revenues
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1,719
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1,683
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3,313
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3,245
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Cost of sales and service revenues
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Cost of product sales
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1,131
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1,157
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2,191
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2,243
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||||
Cost of service revenues
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238
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|
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227
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|
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465
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|
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440
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||||
Income (loss) from operating investments, net
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1
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|
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2
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|
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3
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|
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4
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|
||||
General and administrative expenses
|
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170
|
|
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185
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|
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320
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|
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355
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||||
Operating income (loss)
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181
|
|
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116
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|
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340
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|
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211
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|
||||
Other income (expense)
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|
|
|
|
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||||||
Interest expense
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(29
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)
|
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(29
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)
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(56
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)
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(59
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)
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||||
Earnings (loss) before income taxes
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152
|
|
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87
|
|
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284
|
|
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152
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||||
Federal income taxes
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52
|
|
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30
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|
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94
|
|
|
51
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||||
Net earnings (loss)
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$
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100
|
|
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$
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57
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$
|
190
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$
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101
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||||||||
Basic earnings (loss) per share
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$
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2.05
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$
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1.14
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$
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3.88
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$
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2.02
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Weighted-average common shares outstanding
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48.8
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50.2
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49.0
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50.0
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Diluted earnings (loss) per share
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$
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2.04
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$
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1.12
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$
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3.84
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$
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2.00
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Weighted-average diluted shares outstanding
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49.1
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50.7
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49.5
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50.5
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||||||||
Dividends declared per share
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$
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0.20
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$
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0.10
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$
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0.40
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$
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0.20
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|
|
|
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||||||||
Net earnings (loss) from above
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$
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100
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$
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57
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$
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190
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$
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101
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Other comprehensive income (loss)
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|
|
|
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||||||||
Change in unamortized benefit plan costs
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8
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210
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16
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215
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Other
|
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1
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(1
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)
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2
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1
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Tax benefit (expense) for items of other comprehensive income
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(3
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)
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(81
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)
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(6
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)
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(86
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)
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Other comprehensive income (loss), net of tax
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6
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128
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12
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130
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Comprehensive income (loss)
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$
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106
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$
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185
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$
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202
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$
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231
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($ in millions)
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June 30
2014 |
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December 31
2013 |
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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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592
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$
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1,043
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Accounts receivable, net
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1,216
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1,123
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Inventoried costs, net
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294
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311
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Deferred income taxes
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179
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170
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Prepaid expenses and other current assets
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46
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29
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Total current assets
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2,327
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2,676
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Property, plant, and equipment, net of accumulated depreciation of $1,492 million as of 2014 and $1,404 million as of 2013
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1,850
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1,897
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Goodwill
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1,089
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881
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Other purchased intangibles, net
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557
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528
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Pension plan assets
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127
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124
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Miscellaneous other assets
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130
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119
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Total assets
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$
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6,080
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$
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6,225
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Liabilities and Stockholders' Equity
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Current Liabilities
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Trade accounts payable
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$
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297
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$
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337
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Accrued employees’ compensation
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210
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|
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230
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Current portion of long-term debt
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86
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79
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Current portion of postretirement plan liabilities
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139
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139
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Current portion of workers’ compensation liabilities
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233
|
|
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230
|
|
||
Advance payments and billings in excess of revenues
|
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58
|
|
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115
|
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||
Other current liabilities
|
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244
|
|
|
262
|
|
||
Total current liabilities
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1,267
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1,392
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Long-term debt
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1,679
|
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|
1,700
|
|
||
Pension plan liabilities
|
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437
|
|
|
529
|
|
||
Other postretirement plan liabilities
|
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482
|
|
|
477
|
|
||
Workers’ compensation liabilities
|
|
424
|
|
|
419
|
|
||
Deferred tax liabilities
|
|
112
|
|
|
83
|
|
||
Other long-term liabilities
|
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110
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|
|
104
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|
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Total liabilities
|
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4,511
|
|
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4,704
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|
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Commitments and Contingencies (Note 15)
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—
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—
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Stockholders’ Equity
|
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Common stock, $0.01 par value; 150 million shares authorized; 51.4 million issued and 48.6 million outstanding as of June 30, 2014, and 50.5 million issued and 48.7 million outstanding as of December 31, 2013
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1
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|
|
1
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|
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Additional paid-in capital
|
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1,896
|
|
|
1,925
|
|
||
Retained earnings (deficit)
|
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406
|
|
|
236
|
|
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Treasury stock
|
|
(225
|
)
|
|
(120
|
)
|
||
Accumulated other comprehensive income (loss)
|
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(509
|
)
|
|
(521
|
)
|
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Total stockholders’ equity
|
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1,569
|
|
|
1,521
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
6,080
|
|
|
$
|
6,225
|
|
|
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Six Months Ended
June 30 |
||||||
($ in millions)
|
|
2014
|
|
2013
|
||||
Operating Activities
|
|
|
|
|
||||
Net earnings (loss)
|
|
$
|
190
|
|
|
$
|
101
|
|
Adjustments to reconcile to net cash provided by (used in) operating activities
|
|
|
|
|
||||
Depreciation
|
|
97
|
|
|
82
|
|
||
Amortization of purchased intangibles
|
|
12
|
|
|
11
|
|
||
Amortization of debt issuance costs
|
|
5
|
|
|
4
|
|
||
Stock-based compensation
|
|
11
|
|
|
19
|
|
||
Excess tax benefit related to stock-based compensation
|
|
(15
|
)
|
|
(3
|
)
|
||
Deferred income taxes
|
|
(4
|
)
|
|
28
|
|
||
Change in
|
|
|
|
|
||||
Accounts receivable
|
|
(38
|
)
|
|
(196
|
)
|
||
Inventoried costs
|
|
18
|
|
|
(25
|
)
|
||
Prepaid expenses and other assets
|
|
(14
|
)
|
|
(28
|
)
|
||
Accounts payable and accruals
|
|
(131
|
)
|
|
(146
|
)
|
||
Retiree benefits
|
|
(73
|
)
|
|
(184
|
)
|
||
Net cash provided by (used in) operating activities
|
|
58
|
|
|
(337
|
)
|
||
Investing Activities
|
|
|
|
|
||||
Additions to property, plant, and equipment
|
|
(51
|
)
|
|
(55
|
)
|
||
Acquisitions of businesses, net of cash received
|
|
(273
|
)
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
|
(324
|
)
|
|
(55
|
)
|
||
Financing Activities
|
|
|
|
|
||||
Repayment of long-term debt
|
|
(14
|
)
|
|
(13
|
)
|
||
Dividends paid
|
|
(20
|
)
|
|
(10
|
)
|
||
Repurchases of common stock
|
|
(104
|
)
|
|
(25
|
)
|
||
Employee taxes on certain share-based payment arrangements
|
|
(64
|
)
|
|
—
|
|
||
Proceeds from stock option exercises
|
|
2
|
|
|
3
|
|
||
Excess tax benefit related to stock-based compensation
|
|
15
|
|
|
3
|
|
||
Net cash provided by (used in) financing activities
|
|
(185
|
)
|
|
(42
|
)
|
||
Change in cash and cash equivalents
|
|
(451
|
)
|
|
(434
|
)
|
||
Cash and cash equivalents, beginning of period
|
|
1,043
|
|
|
1,057
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
592
|
|
|
$
|
623
|
|
Supplemental Cash Flow Disclosure
|
|
|
|
|
||||
Cash paid for income taxes
|
|
$
|
94
|
|
|
$
|
41
|
|
Cash paid for interest
|
|
$
|
52
|
|
|
$
|
55
|
|
Non-Cash Investing and Financing Activities
|
|
|
|
|
||||
Capital expenditures accrued in accounts payable
|
|
$
|
3
|
|
|
$
|
3
|
|
Six Months Ended June 30, 2014 and 2013 ($ in millions)
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Retained Earnings (Deficit)
|
|
Treasury Stock
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Stockholders' Equity
|
||||||||||||
Balance as of December 31, 2012
|
|
$
|
—
|
|
|
$
|
1,894
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
(1,226
|
)
|
|
$
|
667
|
|
Net earnings (loss)
|
|
—
|
|
|
—
|
|
|
101
|
|
|
—
|
|
|
—
|
|
|
101
|
|
||||||
Dividends declared ($0.20 per share)
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
||||||
Additional paid-in capital
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||||
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
130
|
|
|
130
|
|
||||||
Common stock
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Treasury stock activity
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
(26
|
)
|
||||||
Balance as of June 30, 2013
|
|
$
|
1
|
|
|
$
|
1,904
|
|
|
$
|
91
|
|
|
$
|
(27
|
)
|
|
$
|
(1,096
|
)
|
|
$
|
873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance as of December 31, 2013
|
|
$
|
1
|
|
|
$
|
1,925
|
|
|
$
|
236
|
|
|
$
|
(120
|
)
|
|
$
|
(521
|
)
|
|
$
|
1,521
|
|
Net earnings (loss)
|
|
—
|
|
|
—
|
|
|
190
|
|
|
—
|
|
|
—
|
|
|
190
|
|
||||||
Dividends declared ($0.40 per share)
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
||||||
Additional paid-in capital
|
|
—
|
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
||||||
Other comprehensive income (loss), net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
12
|
|
||||||
Treasury stock activity
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(105
|
)
|
|
—
|
|
|
(105
|
)
|
||||||
Balance as of June 30, 2014
|
|
$
|
1
|
|
|
$
|
1,896
|
|
|
$
|
406
|
|
|
$
|
(225
|
)
|
|
$
|
(509
|
)
|
|
$
|
1,569
|
|
($ in millions)
|
|
Benefit Plans
|
|
Other
|
|
Total
|
||||||
Balance as of March 31, 2013
|
|
$
|
(1,225
|
)
|
|
$
|
1
|
|
|
$
|
(1,224
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
177
|
|
|
(1
|
)
|
|
176
|
|
|||
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
||||||
Amortization of prior service cost (credit)
1
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Amortization of net actuarial loss (gain)
1
|
|
33
|
|
|
—
|
|
|
33
|
|
|||
Tax benefit (expense) for items of other comprehensive income
|
|
(82
|
)
|
|
1
|
|
|
(81
|
)
|
|||
Net current period other comprehensive income (loss)
|
|
128
|
|
|
—
|
|
|
128
|
|
|||
Balance as of June 30, 2013
|
|
$
|
(1,097
|
)
|
|
$
|
1
|
|
|
$
|
(1,096
|
)
|
|
|
|
|
|
|
|
||||||
Balance as of March 31, 2014
|
|
$
|
(518
|
)
|
|
$
|
3
|
|
|
$
|
(515
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
—
|
|
|
1
|
|
|
1
|
|
|||
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
||||||
Amortization of prior service cost (credit)
1
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Amortization of net actuarial loss (gain)
1
|
|
10
|
|
|
—
|
|
|
10
|
|
|||
Tax benefit (expense) for items of other comprehensive income
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||
Net current period other comprehensive income (loss)
|
|
5
|
|
|
1
|
|
|
6
|
|
|||
Balance as of June 30, 2014
|
|
$
|
(513
|
)
|
|
$
|
4
|
|
|
$
|
(509
|
)
|
($ in millions)
|
|
Benefit Plans
|
|
Other
|
|
Total
|
||||||
Balance as of December 31, 2012
|
|
$
|
(1,226
|
)
|
|
$
|
—
|
|
|
$
|
(1,226
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
146
|
|
|
1
|
|
|
147
|
|
|||
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
||||||
Amortization of prior service cost (credit)
1
|
|
2
|
|
|
—
|
|
|
2
|
|
|||
Amortization of net actuarial loss (gain)
1
|
|
67
|
|
|
—
|
|
|
67
|
|
|||
Tax benefit (expense) for items of other comprehensive income
|
|
(86
|
)
|
|
—
|
|
|
(86
|
)
|
|||
Net current period other comprehensive income (loss)
|
|
129
|
|
|
1
|
|
|
130
|
|
|||
Balance as of June 30, 2013
|
|
$
|
(1,097
|
)
|
|
$
|
1
|
|
|
$
|
(1,096
|
)
|
|
|
|
|
|
|
|
||||||
Balance as of December 31, 2013
|
|
$
|
(523
|
)
|
|
$
|
2
|
|
|
$
|
(521
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
—
|
|
|
2
|
|
|
2
|
|
|||
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
|
|
|
|
|
||||||
Amortization of prior service cost (credit)
1
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||
Amortization of net actuarial loss (gain)
1
|
|
20
|
|
|
—
|
|
|
20
|
|
|||
Tax benefit (expense) for items of other comprehensive income
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
|||
Net current period other comprehensive income (loss)
|
|
10
|
|
|
2
|
|
|
12
|
|
|||
Balance as of June 30, 2014
|
|
$
|
(513
|
)
|
|
$
|
4
|
|
|
$
|
(509
|
)
|
|
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
||||||||||||
(in millions, except per share amounts)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net earnings (loss)
|
|
$
|
100
|
|
|
$
|
57
|
|
|
$
|
190
|
|
|
$
|
101
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
|
48.8
|
|
|
50.2
|
|
|
49.0
|
|
|
50.0
|
|
||||
Net dilutive effect of stock options and awards
|
|
0.3
|
|
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
||||
Dilutive weighted-average common shares outstanding
|
|
49.1
|
|
|
50.7
|
|
|
49.5
|
|
|
50.5
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share - basic
|
|
$
|
2.05
|
|
|
$
|
1.14
|
|
|
$
|
3.88
|
|
|
$
|
2.02
|
|
Earnings (loss) per share - diluted
|
|
$
|
2.04
|
|
|
$
|
1.12
|
|
|
$
|
3.84
|
|
|
$
|
2.00
|
|
|
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
||||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Sales and Service Revenues
|
|
|
|
|
|
|
|
|
||||||||
Ingalls
|
|
$
|
572
|
|
|
$
|
592
|
|
|
$
|
1,119
|
|
|
$
|
1,142
|
|
Newport News
|
|
1,129
|
|
|
1,092
|
|
|
2,176
|
|
|
2,104
|
|
||||
Other
|
|
20
|
|
|
—
|
|
|
20
|
|
|
—
|
|
||||
Intersegment eliminations
|
|
(2
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(1
|
)
|
||||
Total sales and service revenues
|
|
$
|
1,719
|
|
|
$
|
1,683
|
|
|
$
|
3,313
|
|
|
$
|
3,245
|
|
Operating Income (Loss)
|
|
|
|
|
|
|
|
|
||||||||
Ingalls
|
|
$
|
59
|
|
|
$
|
31
|
|
|
$
|
102
|
|
|
$
|
55
|
|
Newport News
|
|
104
|
|
|
105
|
|
|
198
|
|
|
201
|
|
||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total segment operating income (loss)
|
|
163
|
|
|
136
|
|
|
300
|
|
|
256
|
|
||||
Non-segment factors affecting operating income (loss)
|
|
|
|
|
|
|
|
|
||||||||
FAS/CAS Adjustment
|
|
21
|
|
|
(18
|
)
|
|
43
|
|
|
(41
|
)
|
||||
Deferred state income taxes
|
|
(3
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(4
|
)
|
||||
Total operating income (loss)
|
|
$
|
181
|
|
|
$
|
116
|
|
|
$
|
340
|
|
|
$
|
211
|
|
($ in millions)
|
|
June 30
2014 |
|
December 31
2013 |
||||
Assets
|
|
|
|
|
||||
Ingalls
|
|
$
|
1,557
|
|
|
$
|
1,663
|
|
Newport News
|
|
3,236
|
|
|
3,111
|
|
||
Other
|
|
265
|
|
|
—
|
|
||
Corporate
|
|
1,022
|
|
|
1,451
|
|
||
Total assets
|
|
$
|
6,080
|
|
|
$
|
6,225
|
|
($ in millions)
|
|
June 30
2014 |
|
December 31
2013 |
||||
Production costs of contracts in process
|
|
$
|
195
|
|
|
$
|
218
|
|
General and administrative expenses
|
|
3
|
|
|
2
|
|
||
|
|
198
|
|
|
220
|
|
||
Raw material inventory
|
|
96
|
|
|
91
|
|
||
Total inventoried costs, net
|
|
$
|
294
|
|
|
$
|
311
|
|
($ in millions)
|
|
Ingalls
|
|
Newport News
|
|
Other
|
|
Total
|
||||||||
Balance as of December 31, 2013
|
|
$
|
175
|
|
|
$
|
706
|
|
|
$
|
—
|
|
|
$
|
881
|
|
Acquisitions
|
|
—
|
|
|
42
|
|
|
166
|
|
|
208
|
|
||||
Balance as of June 30, 2014
|
|
$
|
175
|
|
|
$
|
748
|
|
|
$
|
166
|
|
|
$
|
1,089
|
|
($ in millions)
|
|
June 30
2014 |
|
December 31
2013 |
||||
Gross carrying amount
|
|
$
|
980
|
|
|
$
|
939
|
|
Accumulated amortization
|
|
(423
|
)
|
|
(411
|
)
|
||
Net carrying amount
|
|
$
|
557
|
|
|
$
|
528
|
|
($ in millions)
|
|
June 30
2014 |
|
December 31
2013 |
||||
Net current deferred tax assets
|
|
$
|
179
|
|
|
$
|
170
|
|
Net non-current deferred tax liabilities
|
|
(112
|
)
|
|
(83
|
)
|
||
Total net deferred tax assets
|
|
$
|
67
|
|
|
$
|
87
|
|
($ in millions)
|
|
June 30
2014 |
|
December 31
2013 |
||||
Term loan due March 30, 2016
|
|
$
|
460
|
|
|
$
|
474
|
|
Senior notes due March 15, 2018, 6.875%
|
|
600
|
|
|
600
|
|
||
Senior notes due March 15, 2021, 7.125%
|
|
600
|
|
|
600
|
|
||
Mississippi economic development revenue bonds due May 1, 2024, 7.81%
|
|
84
|
|
|
84
|
|
||
Gulf opportunity zone industrial development revenue bonds due December 1, 2028, 4.55%
|
|
21
|
|
|
21
|
|
||
Total long-term debt
|
|
1,765
|
|
|
1,779
|
|
||
Less current portion
|
|
86
|
|
|
79
|
|
||
Long-term debt, net of current portion
|
|
$
|
1,679
|
|
|
$
|
1,700
|
|
|
|
Three Months Ended
June 30 |
|
Six Months Ended
June 30 |
||||||||||||||||||||||||||||
|
|
Pension Benefits
|
|
Other Benefits
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||||||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||
Components of Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Service cost
|
|
$
|
34
|
|
|
$
|
36
|
|
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
68
|
|
|
$
|
73
|
|
|
$
|
6
|
|
|
$
|
11
|
|
Interest cost
|
|
62
|
|
|
54
|
|
|
7
|
|
|
8
|
|
|
123
|
|
|
107
|
|
|
15
|
|
|
18
|
|
||||||||
Expected return on plan assets
|
|
(81
|
)
|
|
(72
|
)
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
|
(144
|
)
|
|
—
|
|
|
—
|
|
||||||||
Amortization of prior service cost (credit)
|
|
4
|
|
|
5
|
|
|
(6
|
)
|
|
(5
|
)
|
|
9
|
|
|
9
|
|
|
(13
|
)
|
|
(7
|
)
|
||||||||
Amortization of net actuarial loss (gain)
|
|
10
|
|
|
29
|
|
|
—
|
|
|
4
|
|
|
20
|
|
|
59
|
|
|
—
|
|
|
8
|
|
||||||||
Net periodic benefit cost
|
|
$
|
29
|
|
|
$
|
52
|
|
|
$
|
4
|
|
|
$
|
13
|
|
|
$
|
59
|
|
|
$
|
104
|
|
|
$
|
8
|
|
|
$
|
30
|
|
|
|
Six Months Ended
June 30 |
||||||
($ in millions)
|
|
2014
|
|
2013
|
||||
Pension plans
|
|
|
|
|
||||
Qualified minimum
|
|
$
|
—
|
|
|
$
|
—
|
|
Discretionary
|
|
|
|
|
||||
Qualified
|
|
123
|
|
|
301
|
|
||
Non-qualified
|
|
2
|
|
|
2
|
|
||
Other benefit plans
|
|
16
|
|
|
15
|
|
||
Total contributions
|
|
$
|
141
|
|
|
$
|
318
|
|
|
|
Shares Under
Option
(in thousands)
|
|
Weighted-
Average
Exercise Price
|
|
Weighted- Average
Remaining
Contractual Term
(in years)
|
|
Aggregate
Intrinsic
Value
($ in millions)
|
|||||
Outstanding and exercisable at June 30, 2014
|
|
680
|
|
|
$
|
35.81
|
|
|
1.8
|
|
$
|
40
|
|
|
|
Stock Awards
(in thousands)
|
|
Weighted-Average
Grant Date Fair
Value
|
|
Weighted-Average Remaining Contractual Term
(in years)
|
|||
Total stock awards
|
|
1,307
|
|
|
$
|
49.96
|
|
|
1.2
|
|
|
Three Months Ended June 30, 2014
|
||||||||||||||||||
($ in millions)
|
|
Huntington Ingalls Industries, Inc.
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Sales and service revenues
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product sales
|
|
$
|
—
|
|
|
$
|
1,433
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,433
|
|
Service revenues
|
|
—
|
|
|
281
|
|
|
13
|
|
|
(8
|
)
|
|
286
|
|
|||||
Total sales and service revenues
|
|
—
|
|
|
1,714
|
|
|
13
|
|
|
(8
|
)
|
|
1,719
|
|
|||||
Cost of sales and service revenues
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of product sales
|
|
—
|
|
|
1,131
|
|
|
—
|
|
|
—
|
|
|
1,131
|
|
|||||
Cost of service revenues
|
|
—
|
|
|
234
|
|
|
12
|
|
|
(8
|
)
|
|
238
|
|
|||||
Income (loss) from operating investments, net
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
General and administrative expenses
|
|
—
|
|
|
170
|
|
|
—
|
|
|
—
|
|
|
170
|
|
|||||
Operating income (loss)
|
|
—
|
|
|
180
|
|
|
1
|
|
|
—
|
|
|
181
|
|
|||||
Interest expense
|
|
(27
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|||||
Equity in earnings (loss) of subsidiaries
|
|
118
|
|
|
—
|
|
|
—
|
|
|
(118
|
)
|
|
—
|
|
|||||
Earnings (loss) before income taxes
|
|
91
|
|
|
178
|
|
|
1
|
|
|
(118
|
)
|
|
152
|
|
|||||
Federal income taxes
|
|
(9
|
)
|
|
61
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|||||
Net earnings (loss)
|
|
$
|
100
|
|
|
$
|
117
|
|
|
$
|
1
|
|
|
$
|
(118
|
)
|
|
$
|
100
|
|
Other comprehensive income (loss), net of tax
|
|
6
|
|
|
6
|
|
|
—
|
|
|
(6
|
)
|
|
6
|
|
|||||
Comprehensive income (loss)
|
|
$
|
106
|
|
|
$
|
123
|
|
|
$
|
1
|
|
|
$
|
(124
|
)
|
|
$
|
106
|
|
|
|
Three Months Ended June 30, 2013
|
||||||||||||||||||
($ in millions)
|
|
Huntington Ingalls Industries, Inc.
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Sales and service revenues
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product sales
|
|
$
|
—
|
|
|
$
|
1,423
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,423
|
|
Service revenues
|
|
—
|
|
|
260
|
|
|
6
|
|
|
(6
|
)
|
|
260
|
|
|||||
Total sales and service revenues
|
|
—
|
|
|
1,683
|
|
|
6
|
|
|
(6
|
)
|
|
1,683
|
|
|||||
Cost of sales and service revenues
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of product sales
|
|
—
|
|
|
1,157
|
|
|
—
|
|
|
—
|
|
|
1,157
|
|
|||||
Cost of service revenues
|
|
—
|
|
|
227
|
|
|
6
|
|
|
(6
|
)
|
|
227
|
|
|||||
Income (loss) from operating investments, net
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
General and administrative expenses
|
|
—
|
|
|
185
|
|
|
—
|
|
|
—
|
|
|
185
|
|
|||||
Operating income (loss)
|
|
—
|
|
|
116
|
|
|
—
|
|
|
—
|
|
|
116
|
|
|||||
Interest expense
|
|
(27
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|||||
Equity in earnings (loss) of subsidiaries
|
|
75
|
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|
—
|
|
|||||
Earnings (loss) before income taxes
|
|
48
|
|
|
114
|
|
|
—
|
|
|
(75
|
)
|
|
87
|
|
|||||
Federal income taxes
|
|
(9
|
)
|
|
39
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|||||
Net earnings (loss)
|
|
$
|
57
|
|
|
$
|
75
|
|
|
$
|
—
|
|
|
$
|
(75
|
)
|
|
$
|
57
|
|
Other comprehensive income (loss), net of tax
|
|
128
|
|
|
128
|
|
|
—
|
|
|
(128
|
)
|
|
128
|
|
|||||
Comprehensive income (loss)
|
|
$
|
185
|
|
|
$
|
203
|
|
|
$
|
—
|
|
|
$
|
(203
|
)
|
|
$
|
185
|
|
|
|
Six Months Ended June 30, 2014
|
||||||||||||||||||
($ in millions)
|
|
Huntington Ingalls Industries, Inc.
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Sales and service revenues
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product sales
|
|
$
|
—
|
|
|
$
|
2,765
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,765
|
|
Service revenues
|
|
—
|
|
|
543
|
|
|
15
|
|
|
(10
|
)
|
|
548
|
|
|||||
Total sales and service revenues
|
|
—
|
|
|
3,308
|
|
|
15
|
|
|
(10
|
)
|
|
3,313
|
|
|||||
Cost of sales and service revenues
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of product sales
|
|
—
|
|
|
2,191
|
|
|
—
|
|
|
—
|
|
|
2,191
|
|
|||||
Cost of service revenues
|
|
—
|
|
|
461
|
|
|
14
|
|
|
(10
|
)
|
|
465
|
|
|||||
Income (loss) from operating investments, net
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
General and administrative expenses
|
|
—
|
|
|
320
|
|
|
—
|
|
|
—
|
|
|
320
|
|
|||||
Operating income (loss)
|
|
—
|
|
|
339
|
|
|
1
|
|
|
—
|
|
|
340
|
|
|||||
Interest expense
|
|
(52
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(56
|
)
|
|||||
Equity in earnings (loss) of subsidiaries
|
|
225
|
|
|
—
|
|
|
—
|
|
|
(225
|
)
|
|
—
|
|
|||||
Earnings (loss) before income taxes
|
|
173
|
|
|
335
|
|
|
1
|
|
|
(225
|
)
|
|
284
|
|
|||||
Federal income taxes
|
|
(17
|
)
|
|
111
|
|
|
—
|
|
|
—
|
|
|
94
|
|
|||||
Net earnings (loss)
|
|
$
|
190
|
|
|
$
|
224
|
|
|
$
|
1
|
|
|
$
|
(225
|
)
|
|
$
|
190
|
|
Other comprehensive income (loss), net of tax
|
|
12
|
|
|
12
|
|
|
—
|
|
|
(12
|
)
|
|
12
|
|
|||||
Comprehensive income (loss)
|
|
$
|
202
|
|
|
$
|
236
|
|
|
$
|
1
|
|
|
$
|
(237
|
)
|
|
$
|
202
|
|
|
|
Six Months Ended June 30, 2013
|
||||||||||||||||||
($ in millions)
|
|
Huntington Ingalls Industries, Inc.
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Sales and service revenues
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product sales
|
|
$
|
—
|
|
|
$
|
2,744
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,744
|
|
Service revenues
|
|
—
|
|
|
501
|
|
|
12
|
|
|
(12
|
)
|
|
501
|
|
|||||
Total sales and service revenues
|
|
—
|
|
|
3,245
|
|
|
12
|
|
|
(12
|
)
|
|
3,245
|
|
|||||
Cost of sales and service revenues
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of product sales
|
|
—
|
|
|
2,243
|
|
|
—
|
|
|
—
|
|
|
2,243
|
|
|||||
Cost of service revenues
|
|
—
|
|
|
440
|
|
|
12
|
|
|
(12
|
)
|
|
440
|
|
|||||
Income (loss) from operating investments, net
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
General and administrative expenses
|
|
—
|
|
|
355
|
|
|
—
|
|
|
—
|
|
|
355
|
|
|||||
Operating income (loss)
|
|
—
|
|
|
211
|
|
|
—
|
|
|
—
|
|
|
211
|
|
|||||
Interest expense
|
|
(55
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(59
|
)
|
|||||
Equity in earnings (loss) of subsidiaries
|
|
138
|
|
|
—
|
|
|
—
|
|
|
(138
|
)
|
|
—
|
|
|||||
Earnings (loss) before income taxes
|
|
83
|
|
|
207
|
|
|
—
|
|
|
(138
|
)
|
|
152
|
|
|||||
Federal income taxes
|
|
(18
|
)
|
|
69
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|||||
Net earnings (loss)
|
|
$
|
101
|
|
|
$
|
138
|
|
|
$
|
—
|
|
|
$
|
(138
|
)
|
|
$
|
101
|
|
Other comprehensive income (loss), net of tax
|
|
130
|
|
|
130
|
|
|
—
|
|
|
(130
|
)
|
|
130
|
|
|||||
Comprehensive income (loss)
|
|
$
|
231
|
|
|
$
|
268
|
|
|
$
|
—
|
|
|
$
|
(268
|
)
|
|
$
|
231
|
|
|
|
June 30, 2014
|
||||||||||||||||||
($ in millions)
|
|
Huntington Ingalls Industries, Inc.
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
587
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
592
|
|
Accounts receivable, net
|
|
—
|
|
|
1,203
|
|
|
13
|
|
|
—
|
|
|
1,216
|
|
|||||
Inventoried costs, net
|
|
—
|
|
|
294
|
|
|
—
|
|
|
—
|
|
|
294
|
|
|||||
Deferred income taxes
|
|
—
|
|
|
179
|
|
|
—
|
|
|
—
|
|
|
179
|
|
|||||
Prepaid expenses and other current assets
|
|
4
|
|
|
42
|
|
|
14
|
|
|
(14
|
)
|
|
46
|
|
|||||
Total current assets
|
|
591
|
|
|
1,720
|
|
|
30
|
|
|
(14
|
)
|
|
2,327
|
|
|||||
Property, plant, and equipment, net
|
|
—
|
|
|
1,848
|
|
|
2
|
|
|
—
|
|
|
1,850
|
|
|||||
Goodwill
|
|
—
|
|
|
1,089
|
|
|
—
|
|
|
—
|
|
|
1,089
|
|
|||||
Other purchased intangibles, net
|
|
—
|
|
|
557
|
|
|
—
|
|
|
—
|
|
|
557
|
|
|||||
Pension plan asset
|
|
—
|
|
|
127
|
|
|
—
|
|
|
—
|
|
|
127
|
|
|||||
Miscellaneous other assets
|
|
30
|
|
|
100
|
|
|
—
|
|
|
—
|
|
|
130
|
|
|||||
Investment in subsidiaries
|
|
3,504
|
|
|
—
|
|
|
—
|
|
|
(3,504
|
)
|
|
—
|
|
|||||
Intercompany receivables
|
|
—
|
|
|
874
|
|
|
—
|
|
|
(874
|
)
|
|
—
|
|
|||||
Total assets
|
|
$
|
4,125
|
|
|
$
|
6,315
|
|
|
$
|
32
|
|
|
$
|
(4,392
|
)
|
|
$
|
6,080
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade accounts payable
|
|
$
|
—
|
|
|
$
|
292
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
297
|
|
Accrued employees’ compensation
|
|
—
|
|
|
209
|
|
|
1
|
|
|
—
|
|
|
210
|
|
|||||
Current portion of long-term debt
|
|
86
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86
|
|
|||||
Current portion of postretirement plan liabilities
|
|
—
|
|
|
139
|
|
|
—
|
|
|
—
|
|
|
139
|
|
|||||
Current portion of workers’ compensation liabilities
|
|
—
|
|
|
233
|
|
|
—
|
|
|
—
|
|
|
233
|
|
|||||
Advance payments and billings in excess of revenues
|
|
—
|
|
|
58
|
|
|
—
|
|
|
—
|
|
|
58
|
|
|||||
Other current liabilities
|
|
27
|
|
|
217
|
|
|
14
|
|
|
(14
|
)
|
|
244
|
|
|||||
Total current liabilities
|
|
113
|
|
|
1,148
|
|
|
20
|
|
|
(14
|
)
|
|
1,267
|
|
|||||
Long-term debt
|
|
1,574
|
|
|
105
|
|
|
—
|
|
|
—
|
|
|
1,679
|
|
|||||
Pension plan liabilities
|
|
—
|
|
|
437
|
|
|
—
|
|
|
—
|
|
|
437
|
|
|||||
Other postretirement plan liabilities
|
|
—
|
|
|
482
|
|
|
—
|
|
|
—
|
|
|
482
|
|
|||||
Workers’ compensation liabilities
|
|
—
|
|
|
424
|
|
|
—
|
|
|
—
|
|
|
424
|
|
|||||
Deferred tax liabilities
|
|
—
|
|
|
112
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|||||
Other long-term liabilities
|
|
—
|
|
|
110
|
|
|
—
|
|
|
—
|
|
|
110
|
|
|||||
Intercompany liabilities
|
|
869
|
|
|
—
|
|
|
5
|
|
|
(874
|
)
|
|
—
|
|
|||||
Total liabilities
|
|
2,556
|
|
|
2,818
|
|
|
25
|
|
|
(888
|
)
|
|
4,511
|
|
|||||
Stockholders’ equity
|
|
1,569
|
|
|
3,497
|
|
|
7
|
|
|
(3,504
|
)
|
|
1,569
|
|
|||||
Total liabilities and stockholders’ equity
|
|
$
|
4,125
|
|
|
$
|
6,315
|
|
|
$
|
32
|
|
|
$
|
(4,392
|
)
|
|
$
|
6,080
|
|
|
|
December 31, 2013
|
||||||||||||||||||
($ in millions)
|
|
Huntington Ingalls Industries, Inc.
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
1,042
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1,043
|
|
Accounts receivable, net
|
|
—
|
|
|
1,123
|
|
|
—
|
|
|
—
|
|
|
1,123
|
|
|||||
Inventoried costs, net
|
|
—
|
|
|
311
|
|
|
—
|
|
|
—
|
|
|
311
|
|
|||||
Deferred income taxes
|
|
—
|
|
|
170
|
|
|
—
|
|
|
—
|
|
|
170
|
|
|||||
Prepaid expenses and other current assets
|
|
—
|
|
|
30
|
|
|
5
|
|
|
(6
|
)
|
|
29
|
|
|||||
Total current assets
|
|
1,042
|
|
|
1,634
|
|
|
6
|
|
|
(6
|
)
|
|
2,676
|
|
|||||
Property, plant, and equipment, net
|
|
—
|
|
|
1,897
|
|
|
—
|
|
|
—
|
|
|
1,897
|
|
|||||
Goodwill
|
|
—
|
|
|
881
|
|
|
—
|
|
|
—
|
|
|
881
|
|
|||||
Other purchased intangibles, net
|
|
—
|
|
|
528
|
|
|
—
|
|
|
—
|
|
|
528
|
|
|||||
Pension plan asset
|
|
—
|
|
|
124
|
|
|
—
|
|
|
—
|
|
|
124
|
|
|||||
Miscellaneous other assets
|
|
35
|
|
|
84
|
|
|
—
|
|
|
—
|
|
|
119
|
|
|||||
Investment in subsidiaries
|
|
3,295
|
|
|
—
|
|
|
—
|
|
|
(3,295
|
)
|
|
—
|
|
|||||
Intercompany receivables
|
|
—
|
|
|
1,152
|
|
|
—
|
|
|
(1,152
|
)
|
|
—
|
|
|||||
Total assets
|
|
$
|
4,372
|
|
|
$
|
6,300
|
|
|
$
|
6
|
|
|
$
|
(4,453
|
)
|
|
$
|
6,225
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade accounts payable
|
|
$
|
—
|
|
|
$
|
337
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
337
|
|
Accrued employees’ compensation
|
|
—
|
|
|
230
|
|
|
—
|
|
|
—
|
|
|
230
|
|
|||||
Current portion of long-term debt
|
|
79
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|||||
Current portion of postretirement plan liabilities
|
|
—
|
|
|
139
|
|
|
—
|
|
|
—
|
|
|
139
|
|
|||||
Current portion of workers’ compensation liabilities
|
|
—
|
|
|
230
|
|
|
—
|
|
|
—
|
|
|
230
|
|
|||||
Advance payments and billings in excess of revenues
|
|
—
|
|
|
115
|
|
|
—
|
|
|
—
|
|
|
115
|
|
|||||
Other current liabilities
|
|
25
|
|
|
237
|
|
|
6
|
|
|
(6
|
)
|
|
262
|
|
|||||
Total current liabilities
|
|
104
|
|
|
1,288
|
|
|
6
|
|
|
(6
|
)
|
|
1,392
|
|
|||||
Long-term debt
|
|
1,595
|
|
|
105
|
|
|
—
|
|
|
—
|
|
|
1,700
|
|
|||||
Pension plan liabilities
|
|
—
|
|
|
529
|
|
|
—
|
|
|
—
|
|
|
529
|
|
|||||
Other postretirement plan liabilities
|
|
—
|
|
|
477
|
|
|
—
|
|
|
—
|
|
|
477
|
|
|||||
Workers’ compensation liabilities
|
|
—
|
|
|
419
|
|
|
—
|
|
|
—
|
|
|
419
|
|
|||||
Deferred tax liabilities
|
|
—
|
|
|
83
|
|
|
—
|
|
|
—
|
|
|
83
|
|
|||||
Other long-term liabilities
|
|
—
|
|
|
104
|
|
|
—
|
|
|
—
|
|
|
104
|
|
|||||
Intercompany liabilities
|
|
1,152
|
|
|
—
|
|
|
—
|
|
|
(1,152
|
)
|
|
—
|
|
|||||
Total liabilities
|
|
2,851
|
|
|
3,005
|
|
|
6
|
|
|
(1,158
|
)
|
|
4,704
|
|
|||||
Stockholders’ equity
|
|
1,521
|
|
|
3,295
|
|
|
—
|
|
|
(3,295
|
)
|
|
1,521
|
|
|||||
Total liabilities and stockholders’ equity
|
|
$
|
4,372
|
|
|
$
|
6,300
|
|
|
$
|
6
|
|
|
$
|
(4,453
|
)
|
|
$
|
6,225
|
|
|
|
Six Months Ended June 30, 2014
|
||||||||||||||||||
($ in millions)
|
|
Huntington Ingalls Industries, Inc.
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
|
$
|
(36
|
)
|
|
$
|
95
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
58
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Additions to property, plant, and equipment
|
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
—
|
|
|
(51
|
)
|
|||||
Acquisitions of businesses, net of cash received
|
|
—
|
|
|
(276
|
)
|
|
3
|
|
|
—
|
|
|
(273
|
)
|
|||||
Net funding from (to) parent
|
|
—
|
|
|
281
|
|
|
—
|
|
|
(281
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
|
—
|
|
|
(46
|
)
|
|
3
|
|
|
(281
|
)
|
|
(324
|
)
|
|||||
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayment of long-term debt
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|||||
Dividends paid
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|||||
Repurchases of common stock
|
|
(104
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(104
|
)
|
|||||
Employee taxes on certain share-based payment arrangements
|
|
—
|
|
|
(64
|
)
|
|
—
|
|
|
—
|
|
|
(64
|
)
|
|||||
Proceeds from stock option exercises
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Excess tax benefit related to stock-based compensation
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
Net funding from (to) subsidiary
|
|
(281
|
)
|
|
—
|
|
|
—
|
|
|
281
|
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
|
(419
|
)
|
|
(47
|
)
|
|
—
|
|
|
281
|
|
|
(185
|
)
|
|||||
Change in cash and cash equivalents
|
|
(455
|
)
|
|
2
|
|
|
2
|
|
|
—
|
|
|
(451
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
|
1,042
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1,043
|
|
|||||
Cash and cash equivalents, end of period
|
|
$
|
587
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
592
|
|
|
|
Six Months Ended June 30, 2013
|
||||||||||||||||||
($ in millions)
|
|
Huntington Ingalls Industries, Inc.
|
|
Subsidiary Guarantors
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
|
$
|
(32
|
)
|
|
$
|
(305
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(337
|
)
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Additions to property, plant, and equipment
|
|
—
|
|
|
(55
|
)
|
|
—
|
|
|
—
|
|
|
(55
|
)
|
|||||
Net funding from (to) parent
|
|
—
|
|
|
357
|
|
|
—
|
|
|
(357
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
|
—
|
|
|
302
|
|
|
—
|
|
|
(357
|
)
|
|
(55
|
)
|
|||||
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayment of long-term debt
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|||||
Dividends paid
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|||||
Repurchases of common stock
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|||||
Proceeds from stock option exercises
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Excess tax benefit related to stock-based compensation
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Net funding from (to) subsidiary
|
|
(357
|
)
|
|
—
|
|
|
—
|
|
|
357
|
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
|
(402
|
)
|
|
3
|
|
|
—
|
|
|
357
|
|
|
(42
|
)
|
|||||
Change in cash and cash equivalents
|
|
(434
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(434
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
|
1,056
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1,057
|
|
|||||
Cash and cash equivalents, end of period
|
|
$
|
622
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
623
|
|
•
|
Revenue recognition;
|
•
|
Purchase accounting and goodwill;
|
•
|
Litigation, commitments and contingencies;
|
•
|
Retirement related plans; and
|
•
|
Workers' compensation.
|
•
|
Flexibly-Priced Contracts
- Includes both cost-type and fixed-price incentive contracts. Cost-type contracts provide for reimbursement of the contractor's allowable costs plus a fee that represents profit. Cost-type contracts generally require that the contractor use its reasonable efforts to accomplish the scope of the work within some specified time and some stated dollar limitation. Fixed-price incentive contracts also provide for reimbursement of the contractor's allowable costs, but are subject to a cost-share limit that affects profitability. Fixed-price incentive contracts effectively become firm fixed-price contracts once the cost-share limit is reached. Approximately
97%
of our revenues for the
three and six months ended
June 30, 2014
, and approximately
98%
of our revenues for the
three and six months ended
June 30, 2013
, were generated from flexibly-priced contracts, including certain fixed-price incentive contracts that have exceeded their cost-share limit.
|
•
|
Firm Fixed-Price Contracts
- A firm fixed-price contract is a contract in which the specified scope of work is agreed to for a price that is predetermined by bid or negotiation, and not generally subject to adjustment regardless of costs incurred by the contractor. Time and materials contracts, which specify a fixed hourly rate for each labor hour charged, are considered firm fixed-price contracts. Approximately
3%
of our revenues for the
three and six months ended
June 30, 2014
, and approximately
2%
of our revenues for the
three and six months ended
June 30, 2013
, were generated from firm fixed-price arrangements.
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||||||||||||
|
|
June 30
|
|
2014 over 2013
|
|
June 30
|
|
2014 over 2013
|
||||||||||||||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
||||||||||||||
Sales and service revenues
|
|
$
|
1,719
|
|
|
$
|
1,683
|
|
|
$
|
36
|
|
|
2
|
%
|
|
$
|
3,313
|
|
|
$
|
3,245
|
|
|
$
|
68
|
|
|
2
|
%
|
Cost of product sales and service revenues
|
|
1,369
|
|
|
1,384
|
|
|
(15
|
)
|
|
(1
|
)%
|
|
2,656
|
|
|
2,683
|
|
|
(27
|
)
|
|
(1
|
)%
|
||||||
Income (loss) from operating investments, net
|
|
1
|
|
|
2
|
|
|
(1
|
)
|
|
(50
|
)%
|
|
3
|
|
|
4
|
|
|
(1
|
)
|
|
(25
|
)%
|
||||||
General and administrative expenses
|
|
170
|
|
|
185
|
|
|
(15
|
)
|
|
(8
|
)%
|
|
320
|
|
|
355
|
|
|
(35
|
)
|
|
(10
|
)%
|
||||||
Operating income (loss)
|
|
181
|
|
|
116
|
|
|
65
|
|
|
56
|
%
|
|
340
|
|
|
211
|
|
|
129
|
|
|
61
|
%
|
||||||
Interest expense
|
|
29
|
|
|
29
|
|
|
—
|
|
|
—
|
%
|
|
56
|
|
|
59
|
|
|
(3
|
)
|
|
(5
|
)%
|
||||||
Federal income taxes
|
|
52
|
|
|
30
|
|
|
22
|
|
|
73
|
%
|
|
94
|
|
|
51
|
|
|
43
|
|
|
84
|
%
|
||||||
Net earnings (loss)
|
|
$
|
100
|
|
|
$
|
57
|
|
|
$
|
43
|
|
|
75
|
%
|
|
$
|
190
|
|
|
$
|
101
|
|
|
$
|
89
|
|
|
88
|
%
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||||||||||||
|
|
June 30
|
|
2014 over 2013
|
|
June 30
|
|
2014 over 2013
|
||||||||||||||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
||||||||||||||
Product sales
|
|
$
|
1,433
|
|
|
$
|
1,423
|
|
|
$
|
10
|
|
|
1
|
%
|
|
$
|
2,765
|
|
|
$
|
2,744
|
|
|
$
|
21
|
|
|
1
|
%
|
Service revenues
|
|
286
|
|
|
260
|
|
|
26
|
|
|
10
|
%
|
|
548
|
|
|
501
|
|
|
47
|
|
|
9
|
%
|
||||||
Sales and service revenues
|
|
$
|
1,719
|
|
|
$
|
1,683
|
|
|
$
|
36
|
|
|
2
|
%
|
|
$
|
3,313
|
|
|
$
|
3,245
|
|
|
$
|
68
|
|
|
2
|
%
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||||||||||||
|
|
June 30
|
|
2014 over 2013
|
|
June 30
|
|
2014 over 2013
|
||||||||||||||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
||||||||||||||
Cost of product sales
|
|
$
|
1,131
|
|
|
$
|
1,157
|
|
|
$
|
(26
|
)
|
|
(2
|
)%
|
|
$
|
2,191
|
|
|
$
|
2,243
|
|
|
$
|
(52
|
)
|
|
(2
|
)%
|
% of product sales
|
|
78.9
|
%
|
|
81.3
|
%
|
|
—
|
|
|
|
|
79.2
|
%
|
|
81.7
|
%
|
|
—
|
|
|
|
||||||||
Cost of service revenues
|
|
238
|
|
|
227
|
|
|
11
|
|
|
5
|
%
|
|
465
|
|
|
440
|
|
|
25
|
|
|
6
|
%
|
||||||
% of service revenues
|
|
83.2
|
%
|
|
87.3
|
%
|
|
—
|
|
|
|
|
84.9
|
%
|
|
87.8
|
%
|
|
—
|
|
|
|
||||||||
Income (loss) from operating investments, net
|
|
1
|
|
|
2
|
|
|
(1
|
)
|
|
(50
|
)%
|
|
3
|
|
|
4
|
|
|
(1
|
)
|
|
(25
|
)%
|
||||||
General and administrative expenses
|
|
170
|
|
|
185
|
|
|
(15
|
)
|
|
(8
|
)%
|
|
320
|
|
|
355
|
|
|
(35
|
)
|
|
(10
|
)%
|
||||||
% of total sales and service revenues
|
|
9.9
|
%
|
|
11.0
|
%
|
|
—
|
|
|
|
|
9.7
|
%
|
|
10.9
|
%
|
|
—
|
|
|
|
||||||||
Cost of sales and service revenues
|
|
$
|
1,538
|
|
|
$
|
1,567
|
|
|
$
|
(29
|
)
|
|
(2
|
)%
|
|
$
|
2,973
|
|
|
$
|
3,034
|
|
|
$
|
(61
|
)
|
|
(2
|
)%
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||||||||||||
|
|
June 30
|
|
2014 over 2013
|
|
June 30
|
|
2014 over 2013
|
||||||||||||||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
||||||||||||||
Segment operating income (loss)
|
|
$
|
163
|
|
|
$
|
136
|
|
|
$
|
27
|
|
|
20
|
%
|
|
$
|
300
|
|
|
$
|
256
|
|
|
$
|
44
|
|
|
17
|
%
|
FAS/CAS Adjustment
|
|
21
|
|
|
(18
|
)
|
|
39
|
|
|
217
|
%
|
|
43
|
|
|
(41
|
)
|
|
84
|
|
|
205
|
%
|
||||||
Deferred state income taxes
|
|
(3
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(50
|
)%
|
|
(3
|
)
|
|
(4
|
)
|
|
1
|
|
|
25
|
%
|
||||||
Total operating income (loss)
|
|
$
|
181
|
|
|
$
|
116
|
|
|
$
|
65
|
|
|
56
|
%
|
|
$
|
340
|
|
|
$
|
211
|
|
|
$
|
129
|
|
|
61
|
%
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||||||||||||
|
|
June 30
|
|
2014 over 2013
|
|
June 30
|
|
2014 over 2013
|
||||||||||||||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
||||||||||||||
FAS expense
|
|
$
|
(33
|
)
|
|
$
|
(65
|
)
|
|
$
|
32
|
|
|
49
|
%
|
|
$
|
(67
|
)
|
|
$
|
(134
|
)
|
|
$
|
67
|
|
|
50
|
%
|
CAS cost
|
|
54
|
|
|
47
|
|
|
7
|
|
|
15
|
%
|
|
110
|
|
|
93
|
|
|
17
|
|
|
18
|
%
|
||||||
FAS/CAS Adjustment
|
|
$
|
21
|
|
|
$
|
(18
|
)
|
|
$
|
39
|
|
|
217
|
%
|
|
$
|
43
|
|
|
$
|
(41
|
)
|
|
$
|
84
|
|
|
205
|
%
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||||||||||||
|
|
June 30
|
|
2014 over 2013
|
|
June 30
|
|
2014 over 2013
|
||||||||||||||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
||||||||||||||
Sales and Service Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Ingalls
|
|
$
|
572
|
|
|
$
|
592
|
|
|
$
|
(20
|
)
|
|
(3
|
)%
|
|
$
|
1,119
|
|
|
$
|
1,142
|
|
|
$
|
(23
|
)
|
|
(2
|
)%
|
Newport News
|
|
1,129
|
|
|
1,092
|
|
|
37
|
|
|
3
|
%
|
|
2,176
|
|
|
2,104
|
|
|
72
|
|
|
3
|
%
|
||||||
Other
|
|
20
|
|
|
—
|
|
|
20
|
|
|
—
|
%
|
|
20
|
|
|
—
|
|
|
20
|
|
|
—
|
%
|
||||||
Intersegment eliminations
|
|
(2
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(100
|
)%
|
|
(2
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(100
|
)%
|
||||||
Total sales and service revenues
|
|
$
|
1,719
|
|
|
$
|
1,683
|
|
|
$
|
36
|
|
|
2
|
%
|
|
$
|
3,313
|
|
|
$
|
3,245
|
|
|
$
|
68
|
|
|
2
|
%
|
Operating Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Ingalls
|
|
$
|
59
|
|
|
$
|
31
|
|
|
$
|
28
|
|
|
90
|
%
|
|
$
|
102
|
|
|
$
|
55
|
|
|
$
|
47
|
|
|
85
|
%
|
Newport News
|
|
104
|
|
|
105
|
|
|
(1
|
)
|
|
(1
|
)%
|
|
198
|
|
|
201
|
|
|
(3
|
)
|
|
(1
|
)%
|
||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
||||||
Total Segment Operating Income (Loss)
|
|
163
|
|
|
136
|
|
|
27
|
|
|
20
|
%
|
|
300
|
|
|
256
|
|
|
44
|
|
|
17
|
%
|
||||||
Non-segment factors affecting operating income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
FAS/CAS Adjustment
|
|
21
|
|
|
(18
|
)
|
|
39
|
|
|
217
|
%
|
|
43
|
|
|
(41
|
)
|
|
84
|
|
|
205
|
%
|
||||||
Deferred state income taxes
|
|
(3
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(50
|
)%
|
|
(3
|
)
|
|
(4
|
)
|
|
1
|
|
|
25
|
%
|
||||||
Total operating income (loss)
|
|
$
|
181
|
|
|
$
|
116
|
|
|
$
|
65
|
|
|
56
|
%
|
|
$
|
340
|
|
|
$
|
211
|
|
|
$
|
129
|
|
|
61
|
%
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30
|
|
June 30
|
||||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Gross favorable adjustments
|
|
$
|
75
|
|
|
$
|
55
|
|
|
$
|
127
|
|
|
$
|
100
|
|
Gross unfavorable adjustments
|
|
(11
|
)
|
|
(20
|
)
|
|
(19
|
)
|
|
(35
|
)
|
||||
Net adjustments
|
|
$
|
64
|
|
|
$
|
35
|
|
|
$
|
108
|
|
|
$
|
65
|
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||||||||||||
|
|
June 30
|
|
2014 over 2013
|
|
June 30
|
|
2014 over 2013
|
||||||||||||||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
||||||||||||||
Sales and service revenues
|
|
$
|
572
|
|
|
$
|
592
|
|
|
$
|
(20
|
)
|
|
(3
|
)%
|
|
$
|
1,119
|
|
|
$
|
1,142
|
|
|
$
|
(23
|
)
|
|
(2
|
)%
|
Segment operating income (loss)
|
|
59
|
|
|
31
|
|
|
28
|
|
|
90
|
%
|
|
102
|
|
|
55
|
|
|
47
|
|
|
85
|
%
|
||||||
As a percentage of segment sales
|
|
10.3
|
%
|
|
5.2
|
%
|
|
|
|
|
|
9.1
|
%
|
|
4.8
|
%
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
||||||||||||||||||||||
|
|
June 30
|
|
2014 over 2013
|
|
June 30
|
|
2014 over 2013
|
||||||||||||||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
||||||||||||||
Sales and service revenues
|
|
$
|
1,129
|
|
|
$
|
1,092
|
|
|
$
|
37
|
|
|
3
|
%
|
|
$
|
2,176
|
|
|
$
|
2,104
|
|
|
$
|
72
|
|
|
3
|
%
|
Segment operating income (loss)
|
|
104
|
|
|
105
|
|
|
(1
|
)
|
|
(1
|
)%
|
|
198
|
|
|
201
|
|
|
(3
|
)
|
|
(1
|
)%
|
||||||
As a percentage of segment sales
|
|
9.2
|
%
|
|
9.6
|
%
|
|
|
|
|
|
9.1
|
%
|
|
9.6
|
%
|
|
|
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||||||||||||||||||
|
|
|
|
|
|
Total
|
|
|
|
|
|
Total
|
||||||||||||
($ in millions)
|
|
Funded
|
|
Unfunded
|
|
Backlog
|
|
Funded
|
|
Unfunded
|
|
Backlog
|
||||||||||||
Ingalls
|
|
$
|
6,635
|
|
|
$
|
1,929
|
|
|
$
|
8,564
|
|
|
$
|
6,335
|
|
|
$
|
2,570
|
|
|
$
|
8,905
|
|
Newport News
|
|
7,647
|
|
|
7,816
|
|
|
15,463
|
|
|
5,495
|
|
|
3,638
|
|
|
9,133
|
|
||||||
Other
|
|
130
|
|
|
—
|
|
|
130
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total backlog
|
|
$
|
14,412
|
|
|
$
|
9,745
|
|
|
$
|
24,157
|
|
|
$
|
11,830
|
|
|
$
|
6,208
|
|
|
$
|
18,038
|
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
|
|
June 30
|
|
2014 over 2013
|
|||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|||||||
Net earnings (loss)
|
|
$
|
190
|
|
|
$
|
101
|
|
|
$
|
89
|
|
|
88
|
%
|
Depreciation and amortization
|
|
114
|
|
|
97
|
|
|
17
|
|
|
18
|
%
|
|||
Stock-based compensation
|
|
11
|
|
|
19
|
|
|
(8
|
)
|
|
(42
|
)%
|
|||
Excess tax benefit related to stock-based compensation
|
|
(15
|
)
|
|
(3
|
)
|
|
(12
|
)
|
|
(400
|
)%
|
|||
Deferred income taxes
|
|
(4
|
)
|
|
28
|
|
|
(32
|
)
|
|
(114
|
)%
|
|||
Retiree benefit funding less than (in excess of) expense
|
|
(73
|
)
|
|
(184
|
)
|
|
111
|
|
|
60
|
%
|
|||
Trade working capital decrease (increase)
|
|
(165
|
)
|
|
(395
|
)
|
|
230
|
|
|
58
|
%
|
|||
Net cash provided by (used in) operating activities
|
|
$
|
58
|
|
|
$
|
(337
|
)
|
|
$
|
395
|
|
|
117
|
%
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
|
|
June 30
|
|
2014 over 2013
|
|||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|||||||
Net cash provided by (used in) operating activities
|
|
$
|
58
|
|
|
$
|
(337
|
)
|
|
$
|
395
|
|
|
117
|
%
|
Less:
|
|
|
|
|
|
|
|
|
|||||||
Capital expenditures
|
|
(51
|
)
|
|
(55
|
)
|
|
4
|
|
|
7
|
%
|
|||
Free cash flow provided by (used in) operations
|
|
$
|
7
|
|
|
$
|
(392
|
)
|
|
$
|
399
|
|
|
102
|
%
|
•
|
changes in government and customer priorities and requirements (including government budgetary constraints, shifts in defense spending, and changes in customer short-range and long-range plans);
|
•
|
our ability to obtain new contracts, estimate our future contract costs and perform our contracts effectively;
|
•
|
changes in government regulations and procurement processes and our ability to comply with such requirements;
|
•
|
our ability to realize the expected benefits from consolidation of our Ingalls facilities;
|
•
|
natural disasters;
|
•
|
adverse economic conditions in the United States and globally;
|
•
|
risks related to our indebtedness and leverage; and
|
•
|
other risk factors discussed herein and in our filings with the SEC.
|
Program Name
|
|
Program Description
|
|
|
|
Carrier RCOH
|
|
Perform refueling and complex overhaul ("RCOH") of nuclear-powered aircraft carriers, which is required at the mid-point of their 50-year life cycle. CVN-72 USS
Abraham Lincoln
is currently undergoing RCOH.
|
|
|
|
CVN-65 USS
Enterprise
|
|
Defuel and inactivate the world's first nuclear-powered aircraft carrier, which began in 2013.
|
|
|
|
CVN-78
Gerald R. Ford
-class aircraft carriers
|
|
Design and construction for the
Ford
-class program, which is the future aircraft carrier replacement program for CVN-65 USS
Enterprise
and CVN-68
Nimitz
-class aircraft carriers. CVN-78
Gerald R. Ford
, the first ship of the
Ford
-class, is currently under construction. CVN-79
John F. Kennedy
is under contract for engineering, advance construction, and purchase of long-lead-time components and material. This category also includes the class' non-recurring engineering. The class is expected to bring improved warfighting capability, quality of life improvements for sailors, and reduced life cycle costs.
|
|
|
|
DDG-51
Arleigh Burke
-class destroyers
|
|
Build guided missile destroyers designed for conducting anti-air, anti-submarine, anti-surface and strike operations. The Aegis-equipped DDG-51
Arleigh Burke
-class destroyers are the U.S. Navy's primary surface combatant, and have been constructed in variants, allowing technological advances during construction. DDG-113
John Finn
and DDG-114
Ralph Johnson
are currently under construction. In June 2013, we were awarded a multi-year contract for construction of five additional DDG-51
Arleigh Burke
-class destroyers.
|
|
|
|
DDG-1000
Zumwalt
-class destroyers
|
|
Design and build multi-mission surface combatants in conjunction with Bath Iron Works and construct the ships' integrated composite deckhouses, as well as portions of the ships' aft peripheral vertical launch systems. In 2012, we delivered the composite superstructure of DDG-1000
Zumwalt
. We are currently constructing the composite deckhouse of DDG-1001
Michael Monsoor
. This deckhouse will complete our participation in this program as the Navy has decided on a steel deckhouse for the third and final ship of the class.
|
|
|
|
Energy products and services
|
|
Leverage our core competencies in nuclear operations, program management and heavy manufacturing for U.S. Department of Energy ("DoE") and commercial nuclear programs. We also provide a range of services to the energy and petrochemical industries as well as government customers.
|
|
|
|
Fleet Support services
|
|
Fleet Support provides comprehensive life cycle services, including depot maintenance, modernization, repairs, logistics and technical support and planning yard services for naval and commercial vessels. We have ship repair facilities in Newport News, Virginia, and San Diego, California, which are near the U.S. Navy's largest homeports of Norfolk, Virginia and San Diego, respectively. We also perform emergent repair for the U.S. Navy on all classes of ships.
|
|
|
|
Legend
-class National Security Cutter
|
|
Design and build the U.S. Coast Guard's National Security Cutters, the largest and most technically advanced class of cutter in the U.S. Coast Guard. The NSC is equipped to carry out maritime homeland security, maritime safety, protection of natural resources, maritime mobility and national defense missions. The plan is for a total of eight ships, of which the first three ships have been delivered. NSC-4
Hamilton,
NSC-5
James
and NSC-6
Munro
are under construction, and, in 2014, we were awarded the construction contract for NSC-7
Kimball
and an advance procurement contract for NSC-8
Midgett.
|
|
|
|
LHA-6
America-
class amphibious assault ships
|
|
Design and build amphibious assault ships that provide forward presence and power projection as an integral part of joint, interagency and multinational maritime expeditionary forces. The LHA-6
America
-class ships, together with the LHD-1
Wasp
-class ships, are the successors to the aging LHA-1
Tarawa
-class ships. Three of the original five
Tarawa
-class ships have been recently decommissioned, and the remainder of the class is scheduled to be decommissioned by 2015. The LHA-6
America
-class ships optimize aviation operations and support capabilities. We delivered LHA-6
America
in April 2014 and LHA-7
Tripoli
is currently under construction.
|
|
|
|
LPD-17
San Antonio-
class amphibious transport dock ships
|
|
Design and build amphibious transport dock ships, which are warships that embark, transport and land elements of a landing force for a variety of expeditionary warfare missions, and also serve as the secondary aviation platform for Amphibious Readiness Groups. The LPD-17
San Antonio
-class is the newest addition to the U.S. Navy's 21st century amphibious assault force, and these ships are a key element of the U.S. Navy's seabase transformation. In October 2013, we delivered LPD-25
Somerset
, and we are currently constructing LPD-26
John P. Murtha
and LPD-27
Portland
. The LPD-17
San Antonio
-class currently includes a total of 11 ships.
|
|
|
|
Savannah River Nuclear Solutions, LLC
|
|
Participate, as a minority member in a joint venture, in the management and operation of DoE nuclear sites, currently at the Savannah River Site near Aiken, South Carolina, and potentially at other DoE sites. Our joint venture partners at the Savannah River Site include Fluor Federal Services, Inc. and Honeywell International Inc.
|
|
|
|
SSBN(X)
Ohio
-class Submarine Replacement Program
|
|
Perform, through an agreement with Electric Boat, as design subcontractor for the SSBN(X)
Ohio
-class replacement boats. The U.S. Navy has committed to designing a replacement class for the SSBN
Ohio
-class ballistic missile submarines, which were first introduced into service in 1981. We are currently participating in the design effort and our experience and well-qualified workforce position us for a potential role in the construction effort but no decisions have been made regarding that aspect of the program. The SSBN
Ohio
-class includes 14 ballistic missile submarines ("SSBN"). The
Ohio
Replacement Program currently anticipates 12 new ballistic missile submarines over a 15-year period at a cost of approximately $4 billion to $7 billion each. The U.S. Navy has initiated the design process for the new class of submarine, and we have begun design work as a subcontractor to Electric Boat. Congress has delayed the start of the first
Ohio
replacement submarine by two years and construction is now expected to begin in 2021, with procurement of long-lead-time materials in 2017 and delivery in 2030. The first
Ohio
-class ballistic missile submarine is expected to be retired in 2027 with an additional submarine being retired each year thereafter. By 2030 the
Ohio
-class ballistic missile submarine fleet is expected to be ten. The current fiscal environment and uncertainty in defense budgets may cause additional delay to the start of construction or result in a reduction in the number of ships being procured, but we believe the
Ohio
Replacement Program may represent an opportunity for us in the future.
|
|
|
SSN-774
Virginia
-class fast attack submarines
|
|
Construct the newest attack submarines as the principal subcontractor to Electric Boat. The SSN-774
Virginia
-class is a post-Cold War design tailored to excel in a wide range of warfighting missions, including anti-submarine and surface ship warfare; special operation forces; strike; intelligence, surveillance, and reconnaissance; carrier and expeditionary strike group support; and mine warfare.
|
Period
|
|
Total Number of Shares Purchased
1
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions)
2
|
||||||
April 1, 2014 to April 30, 2014
|
|
545,802
|
|
|
$
|
100.80
|
|
|
260,814
|
|
|
$
|
129.0
|
|
May 1, 2014 to May 31, 2014
|
|
172,213
|
|
|
96.49
|
|
|
172,213
|
|
|
112.4
|
|
||
June 1, 2014 to June 30, 2014
|
|
384,235
|
|
|
98.13
|
|
|
384,235
|
|
|
74.7
|
|
||
Total
|
|
1,102,250
|
|
|
$
|
99.20
|
|
|
817,262
|
|
|
$
|
74.7
|
|
3.1
|
|
|
Restated Certificate of Incorporation of Huntington Ingalls Industries, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on April 4, 2011).
|
|
|
|
|
3.2
|
|
|
Certificate of Amendment to the Restated Certificate of Incorporation of Huntington Ingalls Industries, Inc.
|
|
|
|
|
3.3
|
|
|
Restated Bylaws of Huntington Ingalls Industries, Inc. (incorporated by reference to Exhibit 3(ii) to the Company's Current Report on Form 8-K filed on May 6, 2013).
|
|
|
|
|
11
|
|
|
Computation of Per Share Earnings (provided in Note 8 "Earnings Per Share" of the Notes to the Unaudited Condensed Consolidated Financial Statements included in this Report).
|
|
|
|
|
12.1
|
|
|
Ratio of Earnings to Fixed Charges.
|
|
|
|
|
31.1
|
|
|
Certification of the Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
31.2
|
|
|
Certification of the Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.1
|
|
|
Certificate of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
32.2
|
|
|
Certificate of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
101
|
|
|
The following financial information for the company, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations and Comprehensive Income, (ii) the Condensed Consolidated Statements of Financial Position, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Changes in Equity, and (v) the Notes to Condensed Consolidated Financial Statements.
|
Date:
|
August 7, 2014
|
Huntington Ingalls Industries, Inc.
|
|
|
|
(Registrant)
|
|
|
|
||
|
|
By:
|
/s/ Douglass L. Fontaine II
|
|
|
|
Douglass L. Fontaine II
|
|
|
|
Corporate Vice President, Controller and Chief Accounting Officer
|
|
|
|
(Principal Accounting Officer)
|
1.
|
This Certificate of Amendment (the “Certificate of Amendment”) amends the provisions of the Corporation’s Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on March 30, 2011 (the “Certificate of Incorporation”).
|
2.
|
This amendment was duly adopted in accordance with the provisions of Section 242 of the DGCL.
|
3.
|
Article Sixth of the Certificate of Incorporation is hereby amended and restated in its entirety as follows:
|
4.
|
Section 2 of Article Eighth of the Certificate of Incorporation is hereby amended and restated in its entirety as follows:
|
5.
|
Article Fourteenth of the Certificate of Incorporation is hereby amended and restated in its entirety as follows:
|
|
|
Six Months Ended
June 30
|
|
Year Ended December 31
|
||||||||||||||||||||
($ in millions)
|
|
2014
|
|
2013
|
|
2012
|
|
2011
(1)
|
|
2010
|
|
2009
|
||||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings from continuing operations before income taxes
|
|
$
|
284
|
|
|
$
|
394
|
|
|
$
|
241
|
|
|
$
|
(4
|
)
|
|
$
|
199
|
|
|
$
|
168
|
|
Amortization of Capitalized Interest
|
|
1
|
|
|
2
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
3
|
|
||||||
Interest Capitalized
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(8
|
)
|
||||||
Net adjustment for earnings from affiliates
|
|
(1
|
)
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expensed and capitalized, including amortization of debt issuance
|
|
57
|
|
|
118
|
|
|
119
|
|
|
106
|
|
|
43
|
|
|
44
|
|
||||||
Portion of rental expenses on operating leases deemed to be representative of the interest factor
(2)
|
|
7
|
|
|
15
|
|
|
15
|
|
|
15
|
|
|
15
|
|
|
16
|
|
||||||
Total Earnings
|
|
$
|
347
|
|
|
$
|
531
|
|
|
$
|
377
|
|
|
$
|
118
|
|
|
$
|
258
|
|
|
$
|
223
|
|
Fixed Charges:
|
|
$
|
64
|
|
|
$
|
133
|
|
|
$
|
134
|
|
|
$
|
121
|
|
|
$
|
58
|
|
|
$
|
60
|
|
Ratio of earnings to fixed charges
|
|
5.4
|
|
|
4.0
|
|
|
2.8
|
|
|
1.0
|
|
|
4.4
|
|
|
3.7
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Huntington Ingalls Industries, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ C. Michael Petters
|
|
C. Michael Petters
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Huntington Ingalls Industries, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Barbara A. Niland
|
|
Barbara A. Niland
|
|
Corporate Vice President, Business Management and Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.
|
|
/s/ C. Michael Petters
|
|
C. Michael Petters
|
|
President and Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.
|
|
/s/ Barbara A. Niland
|
|
Barbara A. Niland
|
|
Corporate Vice President, Business Management and Chief Financial Officer
|