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L-3 Announces Second Quarter 2015 ResultsL-3 Communications Holdings, Inc. (NYSE:LLL) today reported diluted earnings per share (diluted EPS) of $1.44 and adjusted diluted EPS of $1.41 for the quarter ended June 26, 2015 (2015 second quarter), compared to diluted EPS of $1.53 for the quarter ended June 27, 2014 (2014 second quarter). Results for the 2015 second quarter were impacted by the items discussed below, which, in the aggregate, decreased EPS by $0.34 per diluted share. Adjusted diluted EPS excludes a net gain related to the divestitures of Marine Systems International (MSI) and Broadcast Sports, Inc. (BSI) of $0.03 per diluted share. Net sales of $2.8 billion for the 2015 second quarter decreased by 7% compared to the 2014 second quarter. The 2015 second quarter results in the Aerospace Systems segment were impacted by charges of $103 million, or $0.77 per diluted share, for contract cost growth at the Platform Integration division, primarily due to additional losses of $84 million, or $0.63 per diluted share, related to our international head-of-state aircraft modification contracts and $19 million of cost growth on three other aircraft modification contracts. These losses were partially offset by income tax benefits of $36 million, or $0.43 per diluted share. These items are further discussed below. "Our second quarter results were impacted by disappointing charges in the Platform Integration division of our Aerospace Systems segment, as well as continuing headwinds from the U.S. defense budget constraints," said Michael T. Strianese, chairman, president and chief executive officer. "Despite these challenges, we made progress repositioning our portfolio, investing in our core businesses and expanding our commercial aviation training solutions business through our recent acquisition of CTC Aviation Group, a higher margin business that we expect to be immediately accretive to our operating results, and also completed the sale of our MSI business. In addition, we received an extension of our Army C-12 contract on profitable terms, which begins on August 1, 2015." "We will continue to reposition our portfolio to sharpen our focus on our core defense electronics and communications systems businesses, which we expect will improve our sales growth and margin profile. In this regard, we are engaged in a process to evaluate strategic alternatives for the National Security Solutions business to maximize value for our shareholders. These strategic alternatives could include, among other possibilities, a potential sale, spin-off or other divestiture transactions for the business. We expect to conclude our review by the end of the year, although no timetable has been set." "Looking ahead, we believe L-3 will capture the significant opportunities we see in the defense and commercial markets. Supported by a book-to-bill ratio of 1.01x, or $2.8 billion in funded orders, we expect to significantly improve our performance during the second half of the year." (1)Adjusted diluted earnings per share is a non-GAAP financial measure. See Table E for a reconciliation and a discussion on why this information is presented. Funded orders of $2.8 billion for the quarter included the following key wins:
Adjusted diluted EPS for the 2015 second quarter excludes a net pre-tax gain of $2 million ($3 million after income taxes), or $0.03 per diluted share, related to the divestiture of MSI, which was completed on May 29, 2015, and the divestiture of BSI, which was completed on April 24, 2015. Adjusted diluted EPS for the first half ended June 26, 2015 (2015 first half) excludes a pre-tax loss of $20 million ($12 million after income taxes), or $0.15 per diluted share, related to business divestitures. The loss related to business divestitures for the 2015 first half includes a pre-tax loss of $17 million related to the MSI divestiture, and a pre-tax loss of $3 million related to the BSI divestiture, and is included in consolidated operating income, but excluded from segment operating income, because it is excluded by management for purposes of assessing segment operating performance. L-3 Consolidated Results
The 2015 second quarter results were impacted by the items discussed below, which, together, led to a net decrease in operating income of $103 million and net income attributable to L-3 of $28 million, or $0.34 per diluted share.
Second Quarter Results of Operations: For the 2015 second quarter, consolidated net sales of $2.8 billion decreased $226 million, or 7%, compared to the 2014 second quarter. Sales to the U.S. Government declined 6%, or $129 million, to $2,042 million in the 2015 second quarter, compared to $2,171 million in the 2014 second quarter, driven primarily by the U.S. military drawdown in Afghanistan and U.S. defense budget reductions. Sales to international and commercial customers, declined 11%, or $97 million, to $751 million in the 2015 second quarter, compared to $848 million in the 2014 second quarter driven by: (1) a $61 million decline related to the MSI and BSI business divestitures(2), partially offset by $23 million of sales from the Miteq, Inc. and CTC business acquisitions(2), (2) a $46 million decline on international head-of-state aircraft modification contracts primarily due to unfavorable contract performance adjustments and (3) a $33 million decline due to foreign currency exchange rate changes. These decreases were partially offset by an increase of $20 million primarily due to higher volume for small Intelligence, Surveillance and Reconnaisance (ISR) aircraft systems to a foreign government. (2) Sales from acquired businesses are defined as sales from business acquisitions that are included in L-3's actual results for less than 12 months. Sales from business divestitures are defined as sales from business divestitures that are included in L-3's actual results for the 12 months prior to the divestitures. Consolidated operating income for the 2015 second quarter decreased $73 million, or 31%, compared to the 2014 second quarter. Segment operating income for the 2015 second quarter decreased by $75 million, or 31%, compared to the 2014 second quarter. Segment operating income as a percentage of sales (segment operating margin) decreased by 200 basis points to 5.9% for the 2015 second quarter compared to 7.9% for the 2014 second quarter. Segment operating margin decreased by: (1) 210 basis points due to unfavorable contract performance adjustments at Aerospace Systems segment, (2) 50 basis points due to higher pension expense of $14 million and (3) 30 basis points related to a product specification matter in the Electronics Systems segment. These decreases were partially offset by improved contract performance in Communication Systems and Electronic Systems, which increased segment operating margin by 90 basis points. See the reportable segment results below for additional discussion of sales and operating margin trends. Interest expense in the 2015 second quarter increased by $9 million compared to the 2014 second quarter due to: (1) the issuance of $1 billion in new debt on May 28, 2014 and (2) the redemption of our convertible contingent debt securities (CODES) in June 2014, which resulted in a $3 million reversal of previously accrued interest expense during the 2014 second quarter. The effective income tax rate for the 2015 second quarter was a benefit of 0.8% compared to a provision of 30.9% for the same period last year. The 2015 second quarter tax benefit included: (1) $17 million of foreign tax benefits related to a legal restructuring of our foreign entities, (2) a $10 million benefit related to the resolution of various outstanding income tax matters with U.S. and foreign tax authorities and (3) $9 million related to deferred tax benefits. Net income attributable to L-3 in the 2015 second quarter decreased 12% to $120 million compared to the 2014 second quarter, and diluted EPS decreased 6% to $1.44 from $1.53. Adjusted net income attributable to L-3 decreased 15% to $117 million compared to the 2014 second quarter, and adjusted diluted EPS decreased 8% to $1.41. Diluted weighted average common shares outstanding for the 2015 second quarter declined by 7% compared to the 2014 second quarter due to repurchases of L-3 common stock. Excluding $114 million of sales for the 2015 second quarter and $160 million of sales for the 2014 second quarter from business divestitures and acquisitions completed since January 1, 2014, consolidated net sales would have decreased by 6% to $2,679 million for the 2015 second quarter from $2,859 million for the 2014 second quarter. First Half Results of Operations: For the 2015 first half, consolidated net sales of $5.5 billion decreased $470 million, or 8%, compared to the first half ended June 27, 2014 (2014 first half). Sales to the U.S. Government, including $5 million of sales from acquired businesses, declined 8%, or $337 million, to $3,941 million in the 2015 first half compared to $4,278 million in the 2014 first half, driven primarily by the U.S. military drawdown in Afghanistan and U.S. defense budget reductions. Sales to international and commercial customers declined 8%, or $133 million, to $1,565 million in the 2015 first half, compared to $1,698 million in the 2014 first half driven by: (1) a $67 million decline due to foreign currency exchange rate changes, (2) a $62 million decline primarily relating to the MSI and BSI business divestitures, partially offset by $34 million of sales from the Miteq, Inc. and CTC business acquisitions and (3) a $59 million decline on international head-of-state aircraft modification contracts primarily due to unfavorable contract performance adjustments. These decreases were partially offset by an increase of $21 million primarily due to higher volume for small ISR aircraft systems to a foreign government. Consolidated operating income for the 2015 first half decreased $159 million, or 30%, compared to the 2014 first half. Segment operating income for the 2015 first half decreased by $139 million, or 26%, compared to the 2014 first half. Segment operating margin decreased by 180 basis points to 7.0% for the 2015 first half compared to 8.8% for the 2014 first half. Segment operating margin decreased by: (1) 120 basis points due to unfavorable contract performance adjustments at Aerospace Systems segment, (2) 50 basis points due to higher pension expense of $28 million, (3) 30 basis points due to lower sales and mix changes and (4) 20 basis points related to a product specification matter. Improved contract performance in Communication Systems and Electronic Systems increased segment operating margin by 40 basis points. See the reportable segment results below for additional discussion of sales and operating margin trends. Interest expense in the 2015 first half increased by $10 million compared to the 2014 first half due to the issuance of $1 billion in new debt on May 28, 2014. The effective income tax rate for the 2015 first half decreased to 17.4% from 30.8% for the same period last year primarily due to $36 million of tax benefits in the 2015 second quarter, which are discussed above. Net income attributable to L-3 in the 2015 first half decreased 27% to $225 million compared to the 2014 first half, and diluted EPS decreased 22% to $2.69 from $3.43. Adjusted net income attributable to L-3 decreased 23% to $237 million compared to the 2014 first half, and adjusted diluted EPS decreased 17% to $2.84. Diluted weighted average common shares outstanding for the 2015 first half declined by 7% compared to the 2014 first half due to repurchases of L-3 common stock. Excluding $239 million of sales for the 2015 first half and $300 million of sales for the 2014 first half from business divestitures and acquisitions completed since January 1, 2014, consolidated net sales would have decreased by 7% to $5,267 million for the 2015 first half from $5,676 million for the 2014 first half. Orders: Funded orders for the 2015 second quarter were $2.8 billion, a decrease of 14% compared to the 2014 second quarter. Funded orders for the 2015 first half were $5.7 billion compared to $6.3 billion for the 2014 first half. The book-to-bill ratio was 1.01x for the 2015 second quarter and 1.04x for the 2015 first half. Funded backlog declined 4% to $9.8 billion at June 26, 2015, compared to $10.2 billion at December 31, 2014 due to the divestiture of MSI. Cash flow and cash returned to shareholders: Net cash from operating activities decreased by $50 million, or 18%, to $227 million for the 2015 second quarter, compared to $277 million for the 2014 second quarter. Net cash from operating activities increased by $99 million, or 46%, to $314 million for the 2015 first half, compared to $215 million for the 2014 first half. The increase in net cash from operating activities in the 2015 first half was due to a lower increase in net working capital in the 2015 first half compared to the 2014 first half, primarily related to receivables and accounts payable and lower income tax payments. The table below summarizes the cash returned to shareholders during the 2015 and 2014 second quarter and first half periods.
Reportable Segment Results Electronic Systems
Second Quarter: Electronic Systems net sales for the 2015 second quarter decreased by $67 million, or 6%, compared to the 2014 second quarter. Sales declined by: (1) $61 million related to the MSI and BSI business divestitures, partially offset by $7 million of sales related to the CTC acquisition, (2) $28 million due to foreign currency exchange rate changes and (3) $10 million due to temporarily suspended shipments of holographic weapon sights for most of the 2015 second quarter in connection with a product specification matter. These decreases were partially offset by an increase of $25 million primarily for Aviation Products & Security Systems driven by timing of shipments of airport security system products to international customers and the U.S. Transportation Security Administration (TSA). Electronic Systems operating income for the 2015 second quarter decreased by $14 million, or 11%, compared to the 2014 second quarter. Operating margin decreased by 60 basis points to 11.5%. Operating margin decreased by: (1) 80 basis points due to an increased provision of $8 million in anticipation of a settlement with the U.S. Government related to a product specification matter regarding our holographic weapon sight product in the Warrior Systems sector, (2) 70 basis points for sales mix changes, (3) 60 basis points due to a $6 million charge related to an adverse arbitration ruling to resolve a dispute for the termination of a supply arrangement in the Aviation Products & Security business and (4) 30 basis points due to higher pension expense of $3 million. These decreases were partially offset by 100 basis points for favorable contract performance adjustments and 80 basis points due to lower severance expense of $8 million. Severance expense for the 2015 second quarter was $2 million, compared to $10 million for the 2014 second quarter. First Half: Electronic Systems net sales for the 2015 first half decreased by $135 million, or 6%, compared to the 2014 first half. Sales declined by: (1) $62 million primarily related to the MSI and BSI business divestitures, partially offset by $7 million of sales related to the CTC acquisition and (2) $58 million due to foreign currency exchange rate changes. The remaining decrease of $22 million is primarily due to reduced sales at Warrior Systems. This decline is due to temporarily suspended shipments of holographic weapon sights for most of the 2015 second quarter in connection with a product specification matter and lower volume for night vision goggles and precision targeting equipment. Electronic Systems operating income for the 2015 first half decreased by $25 million, or 10%, compared to the 2014 first half. Operating margin decreased by 40 basis points to 11.4% due to trends similar to the 2015 second quarter, as well as higher pension expense of $6 million. Aerospace Systems
Second Quarter: Aerospace Systems net sales for the 2015 second quarter decreased by $66 million, or 6%, compared to the 2014 second quarter. Sales decreased $83 million for Aircraft Systems and $3 million for Logistics Solutions. Sales for ISR Systems increased by $20 million. Sales decreased for Aircraft Systems due to lower volume of: (1) $46 million on international head-of-state aircraft modification contracts primarily due to unfavorable contract performance adjustments and (2) $37 million primarily to the U.S. Air Force (USAF) from the Department of Defense's (DoD) planned reduction of the Compass Call aircraft fleet and the DoD's retirement of the Joint Cargo Aircraft (JCA). The decrease in sales for Logistics Solutions was due to lower volume for field maintenance and sustainment services, primarily for USAF and U.S. Navy training aircraft because of lower demand and lower prices due to competitive pressures, mostly offset by higher volume on the Army C-12 contract. The increase in ISR Systems was due to an increase in sales of $56 million on higher volume for large ISR aircraft systems for U.S. Government customers and small ISR aircraft systems to the DoD and a foreign government, partially offset by $36 million of lower sales for small ISR aircraft fleet management services primarily to the DoD due to the U.S. military drawdown in Afghanistan. Aerospace Systems operating income for the 2015 second quarter decreased by $56 million compared to the 2014 second quarter. Operating margin decreased by 540 basis points to a negative 1.7%. Operating margin decreased by: (1) 740 basis points due to contract performance adjustments at Aircraft Systems, which includes $84 million of cost growth related to international head-of-state aircraft modification contracts, compared to $11 million of cost growth on the same contracts in the 2014 second quarter, (2) 70 basis points due to higher pension expense of $7 million and (3) 40 basis points primarily due to reduced flight hours and lower pricing due to competitive pressures at Logistics Solutions, including the U.S Navy T-45 contract, partially offset by cost improvements on the Army C-12 contract. These decreases were partially offset by: (1) 170 basis points due to a $17 million increase in reserves for excess and obsolete inventory at Logistics Solutions recorded during the 2014 second quarter that did not recur and (2) 140 basis points due to favorable contract performance adjustments at ISR Systems. First Half: Aerospace Systems net sales for the 2015 first half decreased by $113 million, or 5%, compared to the 2014 first half. Sales decreased $107 million for Aircraft Systems and $31 million for Logistic Solutions. Sales for ISR Systems increased by $25 million. Sales decreased for Aircraft Systems due to lower volume of: (1) $59 million on international head-of-state aircraft modification contracts primarily due to unfavorable contract performance adjustments and (2) $48 million primarily to the USAF from the DoD's planned reduction of the Compass Call aircraft fleet and the DoD's retirement of the JCA. The decrease in sales for Logistics Solutions was due to lower volume for field maintenance and sustainment services, primarily for USAF and U.S. Navy training aircraft due to lower demand and lower prices due to competitive pressures, partially offset by higher volume on the Army C-12 contract. The increase in ISR Systems was due to an increase in sales of $107 million primarily on higher volume for large ISR aircraft systems for U.S. Government customers and small ISR aircraft systems to the DoD and a foreign government, partially offset by $82 million of lower sales for small ISR aircraft fleet management services to the DoD due to the U.S. military drawdown in Afghanistan. Aerospace Systems operating income for the 2015 first half decreased by $87 million, or 66%, compared to the 2014 first half. Operating margin decreased by 400 basis points to 2.2%. Operating margin decreased by: (1) 480 basis points due to contract performance adjustments at Aircraft Systems, which includes $101 million of cost growth on international head-of-state aircraft modification contracts, compared to $11 million of cost growth on the same contracts in the 2014 first half, (2) 80 basis points primarily due to reduced flight hours and lower pricing due to competitive pressures at Logistics Solutions, including the U.S Navy T-45 contract, partially offset by cost improvements on the Army C-12 contract and (3) 70 basis points due to higher pension expense of $13 million. These decreases were partially offset by 150 basis points due to favorable contract performance adjustments at ISR Systems and by 80 basis points due to a $17 million increase in reserves for excess and obsolete inventory at Logistics Solutions recorded during the 2014 first half that did not recur. Communication Systems
Second Quarter: Communication Systems net sales for the 2015 second quarter decreased by $19 million, or 4%, compared to the 2014 second quarter. Sales decreased $31 million for Space & Power Systems, due to reduced demand for power devices for commercial satellites and for satellite command and control software from U.S. Government agencies. Sales also decreased $14 million for Advanced Communications products, due to lower volume for data recorders and secure communications equipment for the U.S. military as contracts near completion and $12 million for Tactical Satellite Communications products due to reduced deliveries of mobile and ground-based satellite communication systems for the U.S. military. These decreases were partially offset by increases of: (1) $22 million for Broadband Communication Systems primarily due to increased deliveries of remote video terminals to the United States Special Operations Command and higher demand for engineering support services for the DoD and (2) $16 million related to the Miteq, Inc. acquisition. Communication Systems operating income for the 2015 second quarter increased by $4 million, or 8%, compared to the 2014 second quarter. Operating margin increased by 120 basis points to 10.4%. Improved contract performance, partially offset by lower sales and mix changes, increased operating margin by 200 basis points. Higher pension expense of $4 million decreased operating margin by 80 basis points. First Half: Communication Systems net sales for the 2015 first half decreased by $87 million, or 9%, compared to the 2014 first half due to lower volume and reduced deliveries on lower demand. Sales decreased: (1) $49 million for Space & Power Systems, primarily satellite command and control software for U.S. Government agencies, power devices for commercial satellites and high frequency radios for a foreign government, (2) $33 million for Tactical Satellite Communications products, primarily mobile and ground-based satellite communication systems for the U.S. military and (3) $32 million primarily for Advanced Communications products, primarily data recorders and secure communications equipment for the U.S. military as contracts near completion. The Miteq, Inc. acquisition increased sales by $27 million. Communication Systems operating income for the 2015 first half decreased by $11 million, or 11%, compared to the 2014 first half. Operating margin decreased by 30 basis points to 9.3%. Operating margin decreased by 100 basis points due to higher pension expense of $9 million. Improved contract performance, partially offset by lower sales and mix changes, increased operating margin by 70 basis points. NSS
Second Quarter: NSS net sales for the 2015 second quarter decreased by $74 million, or 22%, compared to the 2014 second quarter. Sales decreased due to lower volume of: (1) $45 million for Defense Solutions primarily due to lower material requirements on a systems and software sustainment contract with the U.S. Army, and lower demand driven by the U.S. military drawdown in Afghanistan and completed contracts, (2) $15 million primarily for Intelligence Solutions due to reduced tasking for technical support services for a U.S. Government agency due to defense budget reductions and (3) $14 million for Global Solutions primarily due to completed contracts. NSS operating income for the 2015 second quarter decreased by $9 million, or 47%, compared to the 2014 second quarter. Operating margin decreased by 190 basis points to 3.8%. Operating margin decreased by: (1) 120 basis points primarily due to lower margins on new business and recompetitions caused by competitive pricing pressures, (2) 80 basis points due to lower sales and higher overhead expense rates caused by delayed awards for international contracts and (3) 40 basis points due to favorable contract performance adjustments in the 2014 second quarter for a completed contract that did not recur in the 2015 second quarter. These decreases were partially offset by 50 basis points due to higher award fees for intelligence and defense support services contracts. First Half: NSS net sales for the 2015 first half decreased by $135 million, or 21%, compared to the 2014 first half. Sales decreased due to trends similar to the 2015 second quarter, which were partially offset by $5 million of sales related to the Data Tactics Corporation acquisition. NSS operating income for the 2015 first half decreased by $16 million, or 43%, compared to the 2014 first half. Operating margin decreased by 160 basis points to 4.2% due to trends similar to the 2015 second quarter. Financial Guidance Based on information known as of today, the company has updated its consolidated and segment financial guidance for the year ending December 31, 2015, previously provided on April 30, 2015, as presented in the tables below. All financial guidance amounts are estimates subject to change in the future, including as a result of matters discussed under the "Forward-Looking Statements" cautionary language beginning on page 12 and the company undertakes no duty to update its guidance.
The revisions to our Current Guidance compared to our Prior Guidance primarily include:
The table below presents the 2015 third quarter consolidated guidance.
The Current Guidance excludes any potential non-cash goodwill impairment charges for which the information is presently unknown, and potential litigation charges, if any, and additional expenses relating to the Internal Review at Aerospace Systems, which was completed in October 2014, and assumes that the R&E tax credit that expired on December 31, 2014 is not re-enacted for 2015. If re-enacted for 2015, the annual R&E tax credit would reduce the effective tax rate by approximately 250 basis points and increase diluted EPS by $0.24. Additional financial information regarding the 2015 second quarter results and the 2015 financial guidance is available on the company's website at www.L-3com.com. Conference Call In conjunction with this release, L-3 will host a conference call today, Thursday, July 30, 2015 at 11:00 a.m. ET that will be simultaneously broadcast over the Internet. Michael T. Strianese, chairman, president and chief executive officer, and Ralph G. D'Ambrosio, senior vice president and chief financial officer, will host the call.
11:00 a.m. ET Listeners may access the conference call live over the Internet at the company's website at: Please allow fifteen minutes prior to the call to visit our website to download and install any necessary audio software. The archived version of the call may be accessed at our website or by dialing (877) 344-7529 (passcode: 10069260), beginning approximately two hours after the call ends and will be available until the company's next quarterly earnings release. Headquartered in New York City, L-3 employs approximately 43,000 people worldwide and is a prime contractor in aerospace systems and national security solutions. L-3 is also a leading provider of a broad range of communication and electronic systems and products used on military and commercial platforms. To learn more about L-3, please visit the company's website at www.L-3com.com. L-3 uses its website as a channel of distribution of material company information. Financial and other material information regarding L-3 is routinely posted on the company's website and is readily accessible. Forward-Looking Statements Certain of the matters discussed in this press release, including information regarding the company's 2015 financial guidance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than historical facts, may be forward-looking statements, such as "may," "will," "should," "likely," "projects," "financial guidance," ''expects,'' ''anticipates,'' ''intends,'' ''plans,'' ''believes,'' ''estimates,'' and similar expressions are used to identify forward-looking statements. The company cautions investors that these statements are subject to risks and uncertainties many of which are difficult to predict and generally beyond the company's control that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Some of the factors that could cause actual results to differ include, but are not limited to, the following: our dependence on the defense industry; backlog processing and program slips resulting from delayed awards and/or funding from the Department of Defense (DoD) and other major customers; the U.S. Government fiscal situation; changes in DoD budget levels and spending priorities; U.S. Government failure to raise the debt ceiling; our reliance on contracts with a limited number of customers and the possibility of termination of government contracts by unilateral government action or for failure to perform; the extensive legal and regulatory requirements surrounding many of our contracts; our ability to retain our existing business and related contracts; our ability to successfully compete for and win new business; or, identify, acquire and integrate additional businesses; our ability to maintain and improve our operating margin; the availability of government funding and changes in customer requirements for our products and services; our significant amount of debt and the restrictions contained in our debt agreements and actions taken by rating agencies that could result in a downgrade of our debt; our ability to continue to recruit, retain and train our employees; actual future interest rates, volatility and other assumptions used in the determination of pension benefits and equity based compensation, as well as the market performance of benefit plan assets; our collective bargaining agreements, our ability to successfully negotiate contracts with labor unions and our ability to favorably resolve labor disputes should they arise; the business, economic and political conditions in the markets in which we operate; global economic uncertainty; the DoD's Better Buying Power and other efficiency initiatives; events beyond our control such as acts of terrorism; our ability to perform contracts on schedule; our international operations; our extensive use of fixed-price type revenue arrangements; the rapid change of technology and high level of competition in which our businesses participate; risks relating to technology and data security; our introduction of new products into commercial markets or our investments in civil and commercial products or companies; the outcome of litigation matters; results of audits by U.S. Government agencies and of ongoing governmental investigations, including the internal review of the Aerospace Systems segment; the impact on our business of improper conduct by our employees, agents or business partners; ultimate resolution of contingent matters, claims and investigations relating to acquired businesses, and the impact on the final purchase price allocations; and the fair values of our assets. Our forward-looking statements speak only as of the date of this press release or as of the date they were made, and we undertake no obligation to update forward-looking statements. For a more detailed discussion of these factors, also see the information under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent report on Form 10-K for the year ended December 31, 2014, and any material updates to these factors contained in any of our future filings. As for the forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent uncertainties of estimates, forecasts and projections and may be better or worse than projected and such differences could be material. Given these uncertainties, you should not place any reliance on these forward-looking statements.
- Financial Tables Follow -
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