Postretirement Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2012

Summary of Funded Status of Postretirement Benefit Plans and Presentation of Such Balances within Consolidated Balance Sheet

The following table provides a summary of the funded status of our postretirement benefit plans and the presentation of the funded status within our Consolidated Balance Sheet as of December 31, 2012 and 2011.


	2012									2011
	Pension			Other Benefits			Total			Pension			Other Benefits			Total

Fair value of plan assets	$	249.1		$	7.9		$	257.0		$	184.3		$	7.5		$	191.8
Projected benefit obligation		387.0			213.0			600.0			330.1			191.8			521.9
Funded status	$	(137.9	)	$	(205.1	)	$	(343.0	)	$	(145.8	)	$	(184.3	)	$	(330.1	)
Amounts reported within:
Accrued liabilities	$	(4.2	)	$	(8.5	)	$	(12.7	)	$	(3.6	)	$	(11.1	)	$	(14.7	)
Non-current liabilities		(133.7	)		(196.6	)		(330.3	)		(142.2	)		(173.2	)		(315.4	)

Amount Recognized in Accumulated Other Comprehensive Income Loss

The following table provides a summary of amounts recorded within accumulated other comprehensive loss at December 31, 2012 and 2011.


	2012							2011
	Pension		Other Benefits			Total		Pension		Other Benefits			Total
Net actuarial loss	$	175.7	$	75.0		$	250.7	$	147.0	$	57.5		$	204.5
Prior service cost (benefit)		4.8		(3.7	)		1.1		5.7		(0.7	)		5.0
Total	$	180.5	$	71.3		$	251.8	$	152.7	$	56.8		$	209.5

Changes in Projected Benefit Obligations of Pension and Other Employee-Related Defined Benefit Plans

The following table provides a rollforward of the projected benefit obligations for our U.S. and international pension plans for the years ended December 31, 2012 and 2011.


	2012									2011
	U.S.			Int’l			Total			U.S.			Int’l			Total
Change in benefit obligation
Benefit obligation – January 1	$	277.8		$	52.3		$	330.1		$	246.1		$	52.5		$	298.6
Service cost		4.8			1.0			5.8			5.6			0.9			6.5
Interest cost		12.9			2.5			15.4			13.4			2.5			15.9
Actuarial loss (gain)		24.2			14.8			39.0			26.9			(1.2	)		25.7
Benefits and expenses paid		(16.1	)		(3.1	)		(19.2	)		(15.1	)		(3.0	)		(18.1	)
Curtailment / Special termination benefit		–			–			–			0.9			–			0.9
Assumed in acquisition		–			15.0			15.0			–			1.4			1.4
Foreign currency translation		–			0.9			0.9			–			(0.8	)		(0.8	)
Benefit obligation – December 31	$	303.6		$	83.4		$	387.0		$	277.8		$	52.3		$	330.1

Changes in Fair Value of Plan Assets of Pension Plans

The following table provides a rollforward of the pension plan assets and the funded status for our U.S. and international pension plans for the years ended December 31, 2012 and 2011.


	2012									2011
	U.S.			Int’l			Total			U.S.			Int’l			Total
Change in plan assets
Plan assets – January 1	$	182.3		$	2.0		$	184.3		$	185.0		$	1.7		$	186.7
Actual return on plan assets		22.6			0.1			22.7			(5.8	)		0.1			(5.7	)
Employer contributions		58.3			3.0			61.3			18.2			3.2			21.4
Benefits and expenses paid		(16.1	)		(3.1	)		(19.2	)		(15.1	)		(3.0	)		(18.1	)
Plan assets – December 31	$	247.1		$	2.0		$	249.1		$	182.3		$	2.0		$	184.3
Funded status at end of year	$	(56.5	)	$	(81.4	)	$	(137.9	)	$	(95.5	)	$	(50.3	)	$	(145.8	)

Changes in Fair Value of Plan Assets of Other Employee-Related defined Benefit Plan Assets

The following table provides a rollforward of the other employee-related defined benefit plan assets and the funded status for the years ended December 31, 2012 and 2011.


	2012			2011
Change in plan assets
Plan assets – January 1	$	7.5		$	7.8
Actual return on plan assets		0.4			(0.3	)
Employer contributions		9.7			9.4
Benefits paid		(9.7	)		(9.4	)
Plan assets – December 31	$	7.9		$	7.5
Funded status at end of year	$	(205.1	)	$	(184.3	)

Pension Plans with Accumulated Benefit Obligation in Excess of Plan Assets

The following table provides information for pension plans with an accumulated benefit obligation in excess of plan assets.


	2012		2011
Projected benefit obligation	$	387.0	$	328.2
Accumulated benefit obligation		383.7		326.5
Fair value of plan assets		249.1		182.3

Other Changes in Plan Assets and Net Periodic Postretirement Cost Recognized in Other Comprehensive Income (Loss)

The following table provides the components of net periodic postretirement cost and other amounts recognized in other comprehensive loss for each of the three years ended December 31, 2012, as they pertain to our defined benefit pension plans.


	2012									2011									2010
	U.S.			Int’l			Total			U.S.			Int’l			Total			U.S.			Int’l			Total
Net periodic postretirement cost
Service cost	$	4.8		$	1.0		$	5.8		$	5.6		$	0.9		$	6.5		$	6.3		$	0.9		$	7.2
Interest cost		12.9			2.5			15.4			13.4			2.5			15.9			13.6			2.4			16.0
Expected return on plan assets		(18.2	)		(0.1	)		(18.3	)		(18.9	)		(0.1	)		(19.0	)		(18.6	)		(0.1	)		(18.7	)
Amortization of net actuarial loss (gain)		6.5			(0.2	)		6.3			3.7			(0.1	)		3.6			2.4			–			2.4
Amortization of prior service cost		0.9			–			0.9			1.2			–			1.2			1.2			–			1.2
Net periodic postretirement cost		6.9			3.2			10.1			5.0			3.2			8.2			4.9			3.2			8.1
Effect of curtailment / Special termination benefit		–			–			–			2.5			–			2.5			–			2.0			2.0
Total net periodic postretirement cost		6.9			3.2			10.1			7.5			3.2			10.7			4.9			5.2			10.1
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Net actuarial loss (gain)		19.8			14.8			34.6			51.6			(1.1	)		50.5			5.6			0.1			5.7
Prior service cost		–			–			–			–			–			–			1.0			0.1			1.1
Amortization of net actuarial (loss) gain		(6.5	)		0.2			(6.3	)		(3.7	)		0.1			(3.6	)		(2.4	)		–			(2.4	)
Amortization of prior service cost		(0.9	)		–			(0.9	)		(2.8	)		–			(2.8	)		(1.2	)		–			(1.2	)
Foreign currency translation		–			0.4			0.4			–			–			–			–			–			–
Total change recognized in other comprehensive loss		12.4			15.4			27.8			45.1			(1.0	)		44.1			3.0			0.2			3.2
Total impact from net periodic postretirement cost and changes in other comprehensive loss	$	19.3		$	18.6		$	37.9		$	52.6		$	2.2		$	54.8		$	7.9		$	5.4		$	13.3

Net Loss and Prior Service Cost that will be Amortized from Accumulated Other Comprehensive Income Loss

The following table provides the estimated net actuarial loss and prior service cost that is expected to be amortized from accumulated other comprehensive income into net periodic postretirement cost during 2013.


	Pension		Other Benefits			Total
Net actuarial loss	$	9.5	$	5.1		$	14.6
Prior service cost (credit)		0.8		(0.4	)		0.4
Total	$	10.3	$	4.7		$	15.0

Weighted Average Assumptions used to Determine Benefit Obligations

The following table provides the weighted-average assumptions used to determine projected benefit obligations and net periodic postretirement cost, as they pertain to our defined benefit pension plans.


	2012						2011
	U.S.			Int’l			U.S.			Int’l
Obligation Assumptions:
Discount rate		4.1	%		3.1	%		4.8	%		4.8	%
Rate of future compensation increase		N/A			3.2	%		N/A			2.5	%
Cost Assumptions:
Discount rate		4.8	%		4.8	%		5.7	%		5.0	%
Expected return on plan assets		8.0	%		4.7	%		9.0	%		4.8	%

Weighted Average Assumptions used to Determine Net Periodic Benefit Cost

The following table provides the weighted-average assumptions used to determine projected benefit obligations and net periodic postretirement cost, as they pertain to other employee-related defined benefit plans.


	2012			2011
Obligation Assumptions:
Discount rate		4.1	%		4.8	%

Cost Assumptions:

Discount rate		4.8	%		5.5	%
Expected return on plan assets		8.0	%		9.0	%

Actual Versus Expected Long Term Returns for Our Domestic Pension Plans

For postretirement plans that participate in the current master trust and participated in the master trust distributed to Exelis, the chart below shows actual returns compared to the expected long-term returns for our postretirement plans that were utilized in the calculation of the net periodic postretirement cost for each respective year.


	2012			2011			2010
Expected rate of return on plan assets		8.0	%		9.0	%		9.0	%
Actual rate of return on plan assets		11.1	%		(3.2	)%		14.1	%

Asset Allocation Range

The following table provides the allocation of plan assets held in the master investment trust by asset category, as of December 31, 2012 and 2011, and the related targeted asset allocation ranges by asset category.


	2012			Target Allocation Range			2011			Target Allocation Range
Domestic equities		35	%		30-40	%		33	%		30-40	%
International equities		29	%		20-40	%		27	%		20-40	%
Fixed income		35	%		25-45	%		35	%		25-45	%
Cash and other		1	%		0-5	%		5	%		0-5	%

Fair Value of Plan Assets Held by Our Postretirement Benefits Plans

The following table provides the fair value of plan assets held by our postretirement benefit plans, at December 31, 2012 and 2011, by asset class.

Pension

Other Benefits

2012

Total

Level 2

Total

Level 3

Asset Category

Equities:

Domestic

86.9

–

International

46.0

–

Emerging Markets

26.2

–

Fixed income

86.1

7.9

Cash and other

3.9

–

Total

249.1

7.9


	Pension				Other Benefits
2011	Total		Level 2		Total		Level 3
Asset Category
Equities:
Domestic	$	60.0	$	60.0	$	–	$	–
International		33.5		33.5		–		–
Emerging Markets		16.4		16.4		–		–
Fixed income		62.8		62.8		7.5		7.5
Cash and other		11.6		11.6		–		–
Total	$	184.3	$	184.3	$	7.5	$	7.5

Fair Value Measurement Pension Plan and Post Retirement Welfare

The following table presents a reconciliation of fair value measurement within our pension plans using significant unobservable inputs (Level 3) for the year ended December 31, 2011.


	Equity Securities			Private Equity			Absolute Returns			Commodities, Fixed Income and Other			Total
Level 3 balance – December 31, 2010	$	10.6		$	48.0		$	20.4		$	2.5		$	81.5
Realized gains (losses), net		(1.0	)		2.6			(0.2	)		–			1.4
Unrealized gains (losses), net		–			–			–			–			–
Purchases/(sales) and settlements, net		(9.6	)		(50.6	)		(20.2	)		(2.5	)		(82.9	)
Transfers in (out), net		–			–			–			–			–
Level 3 balance – December 31, 2011	$	–		$	–		$	–		$	–		$	–

Estimated Future Benefit Payments

The following table provides the projected timing of payments for benefits earned to date and the expectation that certain future service will be earned by current active employees for our pension and other employee-related benefit plans.


	U.S. Pension		Int’l Pension		Other Benefits
2013	$	15.8	$	3.4	$	11.7
2014		16.1		4.7		11.7
2015		16.6		4.2		12.0
2016		17.1		4.1		12.2
2017		17.7		4.3		12.4
2018 – 2021	$	95.2	$	21.2	$	58.3

Others Benefits [Member]

Changes in Projected Benefit Obligations of Pension and Other Employee-Related Defined Benefit Plans

The following table provides a rollforward of the projected benefit obligations for our other employee-related defined benefit plans for the years ended December 31, 2012 and 2011.


	2012			2011
Change in benefit obligation
Benefit obligation – January 1	$	191.8		$	175.5
Service cost		2.5			1.8
Interest cost		9.5			9.5
Amendments		(3.1	)		–
Actuarial loss		22.0			14.4
Benefits paid		(9.7	)		(9.4	)
Benefit obligation – December 31	$	213.0		$	191.8

Other Changes in Plan Assets and Net Periodic Postretirement Cost Recognized in Other Comprehensive Income (Loss)


	2012			2011			2010
Net periodic postretirement cost
Service cost	$	2.5		$	1.8		$	1.5
Interest cost		9.5			9.5			9.3
Expected return on plan assets		(0.5	)		(0.6	)		(0.8	)
Amortization of net actuarial loss		4.6			2.6			1.4
Amortization of prior service credit		(0.1	)		(0.1	)		(0.1	)
Total net periodic postretirement cost		16.0			13.2			11.3
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Net actuarial loss		22.1			14.5			2.0
Prior service credit		(3.1	)		–			–
Amortization of net actuarial loss		(4.6	)		(2.6	)		(1.4	)
Amortization of prior service credit		0.1			0.1			0.1
Total changes recognized in other comprehensive loss		14.5			12.0			0.7
Total impact from net periodic postretirement cost and changes in other comprehensive loss	$	30.5		$	25.2		$	12.0