Business Dispositions

12 Months Ended

Dec. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

Business Dispositions

BUSINESS DISPOSITIONS

There were no material dispositions in 2012.

Huntington Ingalls Industries, Inc. (HII)

Effective March 31, 2011, the company completed the spin-off to its shareholders of HII. HII was formed to operate the company's former shipbuilding business. The company made a pro rata distribution to its shareholders of one share of HII common stock for every six shares of the company’s common stock held on the record date of March 30, 2011, or 48.8 million shares of HII common stock. HII paid a $1.4 billion cash contribution to the company. There was no gain or loss recognized as a result of the spin-off transaction.

Prior to the completion of the spin-off, the company and HII entered into a Separation and Distribution Agreement dated March 29, 2011, and several other agreements that govern the post-separation relationship. These agreements generally provide that each party is responsible for its respective assets, liabilities and obligations following the spin-off, including employee benefits, intellectual property, information technology, insurance, and tax-related assets and liabilities.

In connection with the spin-off, the company incurred $28 million of non-deductible transaction costs for each of the years ended December 31, 2011 and 2010, which were included in discontinued operations.

National Security Technologies Deconsolidation

Effective January 1, 2011, the company reduced its participation in the National Security Technologies joint venture (NSTec). As a result of the reduced participation in the joint venture, the company no longer consolidates NSTec’s results in the consolidated financial statements. NSTec’s sales that were included in the company’s total sales for the year ended December 31, 2010, were $579 million.

Discontinued Operations

Earnings for the former shipbuilding business and an adjustment to the gain from a previous divestiture, are reported as discontinued operations, as presented in the following table:

	Year Ended December 31
$ in millions	2011			2010
Sales		$1,646			$6,711
Earnings from discontinued operations	59			229
Income tax expense	(28		)	(95		)
Earnings, net of tax	31			134
Gain on divestiture, net of income tax expense of $1 in 2011 and a benefit of $5 in 2010	1			15
Earnings from discontinued operations, net of tax		$ 32			$ 149

Tax rates on discontinued operations vary from the company’s effective tax rate generally due to the non-deductibility of goodwill for tax purposes and the effects, if any, of capital loss carryforwards.

There were no assets or liabilities related to these discontinued operations included in the consolidated statements of financial position as of December 31, 2012 or 2011.