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Related Party Transactions and Parent Company Equity
 9 Months Ended
Sep. 30, 2014
Related Party Transactions [Abstract]  
Related Party Transactions and Parent Company Equity
RELATED PARTY TRANSACTIONS AND PARENT COMPANY EQUITY
The unaudited Condensed Combined Financial Statements have been prepared on a stand-alone basis and are derived from the consolidated and combined financial statements and accounting records of Exelis.
Allocation of General Corporate Expenses
The unaudited Condensed Combined Financial Statements include expense allocations for certain functions provided by Exelis as well as other Exelis employees not solely dedicated to the Company, including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources, communications, ethics and compliance, shared services, employee benefits and incentives and stock-based compensation. These expenses have been allocated to us on the basis of direct usage when identifiable, with the remainder allocated on the basis of revenue, headcount or other measures. We were allocated $10 million and $8 million for the three months ended September 30, 2014 and 2013, respectively, and $23 million and $27 million for the nine months ended September 30, 2014, and 2013, respectively, of general corporate expenses incurred by Exelis which are primarily included within selling, general and administrative expenses in the unaudited Condensed Combined Statements of Income.
The expense allocations from Exelis discussed above include costs associated with defined benefit pension and other post retirement benefit plans (the “Shared Plans”) sponsored by Exelis in which some of our employees participate. We account for such Shared Plans as multiemployer benefit plans. Accordingly, we do not record an asset or liability to recognize the funded status of the Shared Plans. Subsequent to September 27, 2014, the date the employees' benefits were frozen in the plans, we do not expect to incur further costs.
The expense allocations have been determined on a basis that we consider to be a reasonable reflection of the utilization of services provided or the benefit received by us during the periods presented. The allocations may not, however, reflect the expense we would have incurred as an independent, publicly-traded company for the periods presented. Actual costs that may have been incurred if we had been a stand-alone company would depend on a number of factors, including the chosen organizational structure, functions outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure.
Parent Company Equity
Parent company equity in the unaudited Condensed Combined Balance Sheets represents Exelis' historical investment in our accumulated net earnings after taxes and the net effect of the transactions with and allocations of general corporate expenses from Exelis described above.