Other Current Liabilities and Other Liabilities (Tables)

12 Months Ended

Dec. 31, 2016

Other Current Liabilities and Other Liabilities [Abstract]

The table below presents the components of other current liabilities.

	December 31,
	2016		2015
	(in millions)
Other Current Liabilities:
Estimated costs in excess of estimated contract value to complete contracts in process in a loss position	$	70	$	75
Accrued product warranty costs		68		70
Accruals for pending and threatened litigation (see Note 18)⁽¹⁾		51		6
Accrued interest		43		45
Deferred revenues		34		32
Product returns allowance⁽²⁾		5		20
Other		160		146
Total other current liabilities	$	431	$	394

⁽¹⁾

The year ended December 31, 2016, includes $14 million accrued in the third quarter of 2016 in connection with the EoTech matter.

⁽²⁾

In November 2015, the Company commenced a voluntary return program and began accepting customer returns for various EoTech HWS products that may have been affected by certain performance issues. The return program gives eligible owners of such HWS products the option to return their products in exchange for a refund of the purchase price, including shipping costs. The Company initially recorded a reduction to net sales of $20 million in the Warrior Systems sector of the Electronic Systems segment in the fourth quarter of 2015 associated with establishing a product returns allowance to reflect the estimated cost of the return program. Beginning in the first quarter of 2016, with the benefit of a larger volume of actual refund transactions, the Company began using a statistical analysis of the voluntary return program to estimate the number and cost of future refunds. In its statistical analysis, the Company utilized empirical models to forecast the expected emergence pattern of new refunds over time to produce a probabilistic distribution of new refund costs that reflects the existing level of estimation uncertainty. Based on this analysis, the Company expects the total cost of the voluntary return program to be approximately $38 million. Accordingly, during 2016 the product returns allowance was increased by $18 million as a reduction to net sales. The product returns allowance, net of refund payments made to eligible owners, was $5 million at December 31, 2016. As of February 3, 2017, the Company had approved refunds at a cost of approximately $35 million, with an average refund cost per unit of $500. The Company will continue to monitor the product returns allowance. The Company’s ongoing evaluation may cause it to record further adjustments to the allowance in future periods. These adjustments could be material.

Other Liabilities

The table below presents the components of other liabilities.

	December 31,
	2016		2015
	(in millions)
Other Liabilities:
Non-current income taxes payable (see Note 16)	$	124	$	161
Deferred compensation		47		45
Accrued product warranty costs		41		35
Accrued workers’ compensation		30		38
Estimated contingent purchase price payable for acquired businesses (see Note 3)		29		—
Notes payable and capital lease obligations		13		10
Other		84		79
Total other liabilities	$	368	$	368