Balance Sheet Accounts

a. Fair Value of Financial Instruments

The accounting standards use a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The following are measured at fair value:



			Fair value measurement at March 31, 2017
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In millions)
Money market funds	$	128.0	$	128.0	$	—	$	—
			Fair value measurement at December 31, 2016
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In millions)
Money market funds	$	328.5	$	328.5	$	—	$	—

As of March 31, 2017, a summary of cash and cash equivalents and the grantor trust by investment type is as follows:



	Total		Cash and Cash Equivalents		Money Market Funds
	(In millions)
Cash and cash equivalents	$	382.1	$	261.7	$	120.4
Grantor trust (included as a component of other current and noncurrent assets)	7.6		—		7.6
	$	389.7	$	261.7	$	128.0

The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued compensation, and other accrued liabilities, approximate fair value because of their short maturities.

The estimated fair value and principal amount for the Company’s outstanding debt is presented below:



	Fair Value				Principal Amount
	March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016
	(In millions)
Term loan	$	385.0	$	390.0	$	385.0	$	390.0
2¹/₄% Notes	324.6		294.9		300.0		300.0
4¹/₁₆% Debentures (1)	—		70.8		—		35.6
	$	709.6	$	755.7	$	685.0	$	725.6

_______

(1)

In December 2016, the Company notified holders of its 4¹/₁₆% Debentures that the Company would redeem, on February 3, 2017, all of their 4¹/₁₆% Debentures at a purchase price equal to 100% of the principal amount of the 4¹/₁₆% Debentures to be redeemed, plus any accrued and unpaid interest. In January 2017, $35.6 million of the 4¹/₁₆% Debentures (the entire amount outstanding as of December 31, 2016) were converted to 3.9 million shares of common stock.

The fair values of the 2¹/₄% Notes and 4¹/₁₆% Debentures were determined using broker quotes that are based on open markets for the Company’s debt securities (Level 2 securities). The term loans bore interest at variable rates, which adjusted based on market conditions, and their carrying values approximated fair value.

b. Accounts Receivable



	March 31, 2017			December 31, 2016
	(In millions)
Billed	$	89.9		$	55.7
Unbilled	158.1			124.1
Reserve for overhead rate disallowance	(46.1		)	(44.5		)
Total receivables under long-term contracts	201.9			135.3
Other receivables	0.3			1.1
Accounts receivable	$	202.2		$	136.4

c. Inventories



	March 31, 2017			December 31, 2016
	(In millions)
Long-term contracts at average cost	$	575.0		$	551.9
Progress payments	(416.0		)	(368.2		)
Total long-term contract inventories	159.0			183.7
Total other inventories	1.4			1.4
Inventories	$	160.4		$	185.1

d. Other Current Assets, net



	March 31, 2017		December 31, 2016
	(In millions)
Recoverable from the U.S. government for acquisition related integration costs	$	11.9	$	11.9
Recoverable from the U.S. government for competitive improvement program obligations	8.0		7.6
Prepaid expenses	17.0		16.5
Receivables, net	19.5		17.8
Income taxes receivable	26.8		26.8
Indemnification receivable from UTC, net	5.5		5.5
Other	7.7		5.6
Other current assets, net	$	96.4	$	91.7

e. Property, Plant and Equipment, net



	March 31, 2017			December 31, 2016
	(In millions)
Land	$	71.4		$	71.4
Buildings and improvements	306.5			304.2
Machinery and equipment	544.5			540.8
Construction-in-progress	27.2			30.4
	949.6			946.8
Less: accumulated depreciation	(588.2		)	(580.8		)
Property, plant and equipment, net	$	361.4		$	366.0

f. Other Noncurrent Assets, net



	March 31, 2017		December 31, 2016
	(In millions)
Recoverable from the U.S. government for conditional asset retirement obligations	$	19.9	$	20.3
Recoverable from the U.S. government for restructuring costs	18.5		12.8
Recoverable from the U.S. government for acquisition related integration costs	7.9		10.9
Recoverable from the U.S. government for competitive improvement program obligations	—		1.3
Deferred financing costs	3.2		3.4
Grantor trusts	17.9		16.6
Income taxes receivable	10.8		10.8
Notes receivable, net	9.0		9.0
Other	4.9		5.1
Other noncurrent assets, net	$	92.1	$	90.2

g. Other Current Liabilities



	March 31, 2017		December 31, 2016
	(In millions)
Accrued compensation and employee benefits	$	105.7	$	105.7
Income taxes	2.1		2.1
Competitive improvement program obligations (see Note 10)	8.5		7.6
Interest payable	4.7		4.1
Contract loss provisions	5.2		6.8
Other	55.5		41.5
Other current liabilities	$	181.7	$	167.8

h. Other Noncurrent Liabilities



	March 31, 2017		December 31, 2016
	(In millions)
Conditional asset retirement obligations	$	30.7	$	30.6
Pension benefits, non-qualified	17.4		17.5
Deferred compensation	21.4		19.8
Deferred revenue	13.1		13.3
Competitive improvement program obligations (see Note 10)	—		1.3
Uncertain income tax positions	29.3		28.4
Other	12.9		13.1
Other noncurrent liabilities	$	124.8	$	124.0

i. Accumulated Other Comprehensive Loss, Net of Income Taxes

Changes in accumulated other comprehensive loss by components, net of income taxes:



	Actuarial Losses, Net			Prior Service Credits, Net			Total
	(In millions)
December 31, 2016	$	(303.2	)	$	0.2		$	(303.0	)
Amortization of actuarial losses and prior service credits, net of $6.2 million of income taxes	9.8			(0.1		)	9.7
March 31, 2017	$	(293.4	)	$	0.1		$	(293.3	)

j. Redeemable Common Stock

The Company inadvertently failed to register with the Securities Exchange Commission ("SEC") the issuance of certain of its common shares in its defined contribution 401(k) employee benefit plan (the “Plan”). As a result, certain Plan participants who purchased such securities pursuant to the Plan may have the right to rescind certain of their purchases for consideration equal to the purchase price paid for the securities (or if such security has been sold, to receive consideration with respect to any loss incurred on such sale) plus interest from the date of purchase. As of March 31, 2017 and December 31, 2016, the Company has classified less than 0.1 million shares and 0.1 million shares, respectively, as redeemable common stock because the redemption features are not within the control of the Company. The Company may also be subject to civil and other penalties by regulatory authorities as a result of the failure to register these shares. These shares have always been treated as outstanding for financial reporting purposes. In June 2008, the Company filed a registration statement on Form S-8 to register future transactions in the Company's stock fund in the Plan. During the first quarter of fiscal 2017 and 2016, the Company recorded $0.6 million and $0.1 million, respectively, for realized gains net of interest associated with this matter.