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Retirement Benefits
 12 Months Ended
Dec. 31, 2017
Retirement Benefits [Abstract]  
Retirement Benefits
Retirement Benefits
a.  Plan Descriptions
Pension Benefits
The Company's defined benefit pension plan future benefit accrual was discontinued in fiscal 2009. As of December 31, 2017, the assets, projected benefit obligations, and unfunded pension obligation were $931.2 million, $1,442.9 million, and $511.7 million, respectively.
The Company expects to make cash contributions of approximately $42.0 million to its tax-qualified defined benefit pension plan in fiscal 2018. The Company is generally able to recover these contributions related to its tax-qualified defined benefit pension plan as allowable costs on its U.S. government contracts, but there is a lag between when the Company contributes cash to its tax-qualified defined benefit pension plan under pension funding rules and recovers the cash under the U.S. government Cost Accounting Standards. During fiscal 2017, the Company made cash contributions of $75.8 million to its tax-qualified defined benefit pension plan of which $33.7 million was recoverable from the Company's U.S. government contracts in fiscal 2017 with the remaining $42.1 million expected to be recoverable from the Company's U.S. government contracts in the future.
The funded status of the Company's tax-qualified pension plan may be adversely affected by the investment experience of the plan's assets, by any changes in U.S. law and by changes in the statutory interest rates used by tax-qualified pension plans in the U.S. to calculate funding requirements. Accordingly, if the performance of the plan's assets does not meet assumptions, if there are changes to the Internal Revenue Service regulations or other applicable law, or if other actuarial assumptions are modified, future contributions to the underfunded pension plans could be higher than the Company expects.
Medical and Life Insurance Benefits
The Company provides medical and life insurance benefits to certain eligible retired employees, with varied coverage by employee group. Generally, employees hired after January 1, 1997 are not eligible for retiree medical and life insurance benefits. The medical benefit plan provides for cost sharing between the Company and its retirees in the form of retiree contributions, deductibles, and coinsurance. Medical and life insurance benefit obligations are unfunded. Medical and life insurance benefit cash payments for eligible retired employees are recoverable from the Company’s U.S. government contracts.
Defined Contribution 401(k) Benefits
The Company sponsors a defined contribution 401(k) plan and participation in the plan is available to all employees. The Company makes matching contributions in cash equal to 100% of the first 3% of the participants’ compensation contributed and 50% of the next 3% of the compensation contributed. The cost of the 401(k) plan was $21.2 million, $20.7 million, $24.9 million, and $1.3 million in fiscal 2017, 2016, 2015, and the one month ended December 31, 2015, respectively.
b.  Plan Results
Summarized below is the balance sheet impact of the Company’s pension benefits and medical and life insurance benefits. Pension benefits include the consolidated tax-qualified plan and the unfunded non-qualified plan for benefits provided to employees beyond those provided by the Company’s tax-qualified plan. Assets, benefit obligations, and the funded status of the plans were determined at December 31, 2017 and 2016.
 
Pension Benefits 
 
Medical and
Life Insurance
Benefits
 
As of December 31,
 
2017
 
2016
 
2017
 
2016
 
(In millions)
Change in fair value of assets:
 
 
 
 
 
 
 
Fair value - beginning of period
$
925.1

 
$
931.4

 
$
—

 
$
—

Gain on assets
96.8

 
93.7

 
—

 
—

Employer contributions
77.2

 
34.1

 
4.2

 
4.3

Benefits paid (1)
(133.2
)
 
(134.1
)
 
(4.2
)
 
(4.3
)
Settlements (2)
(34.7
)
 
—

 
—

 
—

Fair value - end of period
$
931.2

 
$
925.1

 
$
—

 
$
—

Change in benefit obligation:
 
 
 
 
 
 
 
Benefit obligation - beginning of period
$
1,492.1

 
$
1,531.0

 
$
42.6

 
$
50.8

Service cost
15.0

 
14.0

 
—

 
—

Interest cost
57.6

 
64.1

 
1.5

 
1.9

Actuarial losses (gains)
46.1

 
17.1

 
(2.4
)
 
(5.8
)
Benefits paid
(133.2
)
 
(134.1
)
 
(4.2
)
 
(4.3
)
Settlements (2)
(34.7
)
 
—

 
—

 
—

Benefit obligation - end of period (3)
$
1,442.9

 
$
1,492.1

 
$
37.5

 
$
42.6

Funded status of the plans
$
(511.7
)
 
$
(567.0
)
 
$
(37.5
)
 
$
(42.6
)
Amounts recognized in the consolidated balance sheets:
 
 
 
 
 
 
 
Postretirement medical and life insurance benefits, current
$
—

 
$
—

 
$
(4.8
)
 
$
(5.2
)
Postretirement medical and life insurance benefits, noncurrent
—

 
—

 
(32.7
)
 
(37.4
)
Pension liability, non-qualified current (component of other current liabilities)
(1.3
)
 
(1.3
)
 
—

 
—

Pension liability, non-qualified (component of other noncurrent liabilities)
(17.6
)
 
(17.5
)
 
—

 
—

Pension benefits, noncurrent (4)
(492.8
)
 
(548.2
)
 
—

 
—

Net liability recognized in the consolidated balance sheets
$
(511.7
)
 
$
(567.0
)
 
$
(37.5
)
 
$
(42.6
)
__________ 
(1)
Benefits paid for medical and life insurance benefits are net of the Medicare Part D Subsidy of $0.1 million and $0.1 million received in fiscal 2017 and 2016, respectively.
(2)
On October 17, 2017, the Company's tax-qualified defined benefit pension plan purchased non-participating annuity contracts in the amount of $34.7 million for approximately 2,800 participants.
(3)
Pension benefit obligation includes $18.9 million and $18.8 million as of December 31, 2017 and 2016, respectively, for the non-qualified plan.
(4)
The net cash flow impact of the pension benefit obligation in fiscal 2017 was $42.3 million.
The accumulated benefit obligation for the defined benefit pension plans was $1,442.9 million and $1,492.1 million as of the December 31, 2017 and 2016 measurement dates, respectively.
Components of retirement benefit expense (income) were: 
 
Pension Benefits
 
Medical and
Life Insurance Benefits 
 
Year Ended
 
One month ended
 
Year Ended
 
One month ended
 
December 31,
 
December 31,
 
November 30,
 
December 31,
 
December 31,
 
December 31,
 
November 30,
 
December 31,
 
2017
 
2016
 
2015
 
2015
 
2017
 
2016
 
2015
 
2015
 
(In millions)
Service cost
$
15.0

 
$
14.0

 
$
10.8

 
$
1.1

 
$
—

 
$
—

 
$
—

 
$
—

Interest cost on benefit obligation
57.6

 
64.1

 
63.6

 
5.3

 
1.5

 
1.9

 
1.9

 
0.2

Assumed return on assets (1)
(64.5
)
 
(70.1
)
 
(88.1
)
 
(6.0
)
 
—

 
—

 
—

 
—

Amortization of prior service costs (credits)
0.1

 
0.1

 
—

 
—

 
(0.2
)
 
(1.2
)
 
(1.1
)
 
(0.1
)
Amortization of net losses (gains)
67.8

 
63.7

 
84.0

 
5.4

 
(4.1
)
 
(3.6
)
 
(3.5
)
 
(0.3
)
 
$
76.0

 
$
71.8

 
$
70.3

 
$
5.8

 
$
(2.8
)
 
$
(2.9
)
 
$
(2.7
)
 
$
(0.2
)
__________ 
(1)
The actual return and rate of return on assets was as follows:
 
 
Year Ended
 
One month ended
 
December 31,
 
December 31,
 
November 30,
 
December 31,
 
2017
 
2016
 
2015
 
2015
 
(In millions, except rate of return)
Actual gain (loss) on assets
$
96.8

 
$
93.7

 
$
(64.2
)
 
$
(22.2
)
Actual rate of return on assets
10.8
%
 
11.0
%
 
(6.1
)%
 
(2.3
)%

Market conditions and interest rates significantly affect assets and liabilities of the pension plans. Pension accounting permits market gains and losses to be deferred and recognized over a period of years. This “smoothing” results in the creation of other accumulated income or loss which will be amortized to pension costs in future years. The accounting method the Company utilizes recognizes one-fifth of the unamortized gains and losses in the market-related value of pension assets and all other gains and losses including changes in the discount rate used to calculate the benefit obligation each year. Investment gains or losses for this purpose are the difference between the expected return and the actual return on the market-related value of assets which smoothes asset values over three years. Although the smoothing period mitigates some volatility in the calculation of annual retirement benefit expense, future expenses are impacted by changes in the market value of assets and changes in interest rates.
c.  Plan Assumptions
The Company used the following assumptions, calculated based on a weighted-average, to determine the benefit obligations:
 
Pension
Benefits
 
Medical and
Life Insurance Benefits
 
As of December 31,
 
As of December 31,
 
2017
 
2016
 
2017
 
2016
Discount rate
3.59
%
 
4.02
%
 
3.37
%
 
3.68
%
Discount rate (non-qualified plan)
3.62
%
 
4.07
%
 
*

 
*

Ultimate healthcare trend rate
*

 
*

 
5.00
%
 
5.00
%
Initial healthcare trend rate (pre 65/post 65)
*

 
*

 
6.50
%
 
7.00
%
Year ultimate rate attained (pre 65/post 65)
*

 
*

 
2021

 
2021

______
*
Not applicable
The Company used the following assumptions, calculated based on a weighted-average, to determine the retirement benefit expense (income):
 
Pension Benefits
 
Medical and
Life Insurance Benefits 
 
Year Ended
 
One month ended
 
Year Ended
 
One month ended
 
December 31,
 
December 31,
 
November 30,
 
December 31,
 
December 31,
 
December 31,
 
November 30,
 
December 31,
 
2017
 
2016
 
2015
 
2015
 
2017
 
2016
 
2015
 
2015
Discount rate
4.02
%
 
4.36
%
 
3.96
%
 
4.26
%
 
3.68
%
 
3.99
%
 
3.54
%
 
3.87
%
Discount rate (non-qualified plan)
4.07
%
 
4.41
%
 
4.01
%
 
4.32
%
 
*

 
*

 
*

 
*

Expected long-term rate of return on assets
7.00
%
 
7.00
%
 
8.00
%
 
7.00
%
 
*

 
*

 
*

 
*

Ultimate healthcare trend rate
*

 
*

 
*

 
*

 
5.00
%
 
5.00
%
 
5.00
%
 
5.00
%
Initial healthcare trend rate (pre 65/post 65)
*

 
*

 
*

 
*

 
7.00
%
 
7.00
%
 
7.00
%
 
7.00
%
Year ultimate rate attained (pre 65/post 65)
*

 
*

 
*

 
*

 
2021

 
2021

 
2021

 
2021

______
*
Not applicable
Certain actuarial assumptions, such as assumed discount rate, long-term rate of return, and assumed healthcare cost trend rates can have a significant effect on amounts reported for periodic cost of pension benefits and medical and life insurance benefits, as well as respective benefit obligation amounts. The assumed discount rate represents the market rate available for investments in high-quality fixed income instruments with maturities matched to the expected benefit payments for pension and medical and life insurance benefit plans.
The expected long-term rate of return on assets represents the rate of earnings expected in the funds invested, and funds to be invested, to provide for anticipated benefit payments to plan participants. The Company evaluated historical investment performance, current and expected asset allocation, and, with input from the Company’s external advisors, developed best estimates of future investment performance. Based on this analysis, the Company assumed a long-term expected rate of return of 7.0% in fiscal 2017.
The Company reviews external data and its own historical trends for healthcare costs to determine the healthcare cost trend rates for the medical benefit plans. For fiscal 2017 medical benefit obligations, the Company assumed a 6.5% annual rate of increase for pre and post 65 participants in the per capita cost of covered healthcare claims with the rate decreasing over three years until reaching 5.0%.
A one percentage point change in the key assumptions would have the following effects on the projected benefit obligations as of December 31, 2017 and on retirement benefit expense for fiscal 2017:
 
Pension Benefits and
Medical and Life Insurance Benefits Discount Rate
 
Expected Long-term
Rate of Return
 
Assumed Healthcare
Cost Trend Rate
 
Net Periodic
Benefit Expense
 
Projected
Benefit
Obligation
 
Net Periodic Pension
Benefit Expense
 
Net Periodic
Medical and Life
Insurance Benefit Expense
 
Accumulated
Benefit
Obligation
 
(In millions)
1% decrease
$21.7
 
$153.5
 
$9.2
 
$(0.2)
 
$(0.7)
1% increase
(18.5)
 
(128.9)
 
(9.2)
 
0.3
 
0.8

d.  Plan Assets and Investment Policy
The Company’s investment policy is to maximize the total rate of return within a prudent risk framework, while maintaining adequate liquidity throughout volatile market cycles to meet benefit obligations when due.  The Company's strategies employ active management and are generally focused on minimizing the permanent loss of capital.  The Company's asset diversification objectives target a global portfolio that invests across the capital structure via strategies with complimentary risk and return profiles. Diversification is achieved by investing in various asset types, which may include cash, fixed income, equities, and private equity and credit holdings. Further, the Company's strategy allows for diversification as to the types of investment vehicle structures, investment and redemption periods, and the number of investment managers used to carry out its strategy. Allocations between asset types, structures and managers may change as a result of changing market conditions, tactical investment opportunities, planned Company contributions, and cash obligations of the plan.

The asset allocations by asset category were as follows:
 
As of December 31,
 
2017
 
2016
Cash and cash equivalents
6
%
 
26
%
Equity securities
52

 
43

Fixed income
16

 
15

Private assets
10

 
8

Hedge funds
16

 
8

Total
100
%
 
100
%

The fair value by asset category and by level was as follows:
 
Total
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
 
(In millions)
December 31, 2017
 
 
 
 
 
 
 
Cash and cash equivalents
$
28.2

 
$
28.2

 
$
—

 
$
—

Equity securities:
 
 
 
 
 
 
 
  Domestic equity securities
440.9

 
437.1

 
—

 
3.8

  International equity securities
39.9

 
39.9

 
—

 
—

Fixed income:
 
 
 
 
 
 
 
  Corporate debt securities
87.1

 
—

 
75.8

 
11.3

  Asset-backed securities
33.8

 
—

 
33.8

 
—

  Foreign bonds
0.1

 
—

 
0.1

 
—

  U.S. government securities
10.7

 
—

 
10.7

 
—

Private assets
25.7

 
—

 
—

 
25.7

Total
666.4

 
$
505.2

 
$
120.4

 
$
40.8

Investment measured at Net Asset Value ("NAV")
 
 
 
 
 
 
 
  Private assets
69.0

 
 
 
 
 
 
  Hedge funds
153.7

 
 
 
 
 
 
  Registered investment companies
10.5

 
 
 
 
 
 
  Common/collective trusts ("CCTs")
39.3

 
 
 
 
 
 
Total investments measured at NAV
272.5

 
 
 
 
 
 
Receivables
1.0

 
 
 
 
 
 
Payables
(8.7
)
 
 
 
 
 
 
Total assets
$
931.2

 
 
 
 
 
 

 
Total
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
 
(In millions)
December 31, 2016
 
 
 
 
 
 
 
Cash and cash equivalents
$
31.3

 
$
31.3

 
$
—

 
$
—

Equity securities:
 
 
 
 
 
 
 
  Domestic equity securities
377.2

 
373.8

 
1.2

 
2.2

  International equity securities
16.2

 
16.2

 
—

 
—

  Derivatives:
 
 
 
 
 
 
 
    Written options
(0.1
)
 
(0.1
)
 
—

 
—

  Short sales
(0.1
)
 
(0.1
)
 
—

 
—

Fixed income:
 
 
 
 
 
 
 
  Corporate debt securities
33.8

 
—

 
27.0

 
6.8

  Asset-backed securities
71.5

 
—

 
71.5

 
—

  Municipal bonds
26.3

 
—

 
26.3

 
—

  Short sales
(0.2
)
 
—

 
(0.2
)
 
—

Real estate investments
0.5

 
—

 
—

 
0.5

Total
556.4

 
$
421.1

 
$
125.8

 
$
9.5

Investment measured at NAV
 
 
 
 
 
 
 
  Private assets
70.7

 
 
 
 
 
 
  Hedge funds
79.3

 
 
 
 
 
 
  CCTs
219.4

 
 
 
 
 
 
Total investments measured at NAV
369.4

 
 
 
 
 
 
Receivables
1.8

 
 
 
 
 
 
Payables
(2.5
)
 
 
 
 
 
 
Total assets
$
925.1

 
 
 
 
 
 
Below is a description of the significant investment strategies and valuation methodologies used for the investments measured at fair value, including the general classification of such investments pursuant to the valuation hierarchy. There have been no changes in the methodologies used at December 31, 2017 and 2016.
Cash and cash equivalents
Cash and cash equivalents are held in money market accounts or invested in Short-Term Investment Funds (“STIFs”). Cash and cash equivalents held in money market accounts are classified as Level 1 investments. STIFs are measured at NAV and included in CCTs as a reconciling item to the fair value tables above.
Equity securities
Equity securities are invested broadly in U.S. and non-U.S. companies in a variety of sectors and market capitalizations. These investments are comprised of common stocks, exchange-traded funds (“ETFs”), CCTs, derivatives and other investment vehicles. Common stocks and ETFs are stated at fair value as quoted on a recognized securities exchange and are valued at the last reported sales price on the last business day of the fiscal year and are classified as Level 1 investments. Derivatives include call and put options on common stocks or ETFs, which are all listed on an exchange and active market and classified as Level 1 investments. Short sales are short equity positions which are all listed on an exchange and active market and classified as Level 1 investments. Equity securities that are invested in common stock or preferred stock and priced using observable inputs are classified as Level 2 investments. Equity securities that are invested in common stock of private companies and priced using unobservable inputs are classified as Level 3 investments. CCTs invested in equity securities are measured at NAV and included as a reconciling item to the fair value tables above.
Fixed income securities
Fixed income securities are invested in a variety of instruments, including, but not limited to, corporate debt securities, CCTs, registered investment companies, asset-backed securities, and other investment vehicles. Corporate debt securities are invested in corporate bonds or ETFs. ETFs are traded in an exchange and active market and classified as Level 1 investments. Corporate bonds that are valued at bid evaluations using observable and market-based inputs are classified as Level 2 investments. Corporate bonds that are priced by brokers using unobservable inputs are classified as Level 3 investments. Asset-backed securities, including government-backed mortgage securities, non-government-backed collateralized mortgage obligations, asset-backed securities, and commercial mortgage-backed securities, are valued at bid evaluations and are classified as Level 2 investments. Short sales are short fixed income positions which are classified as Level 1 investments if they are listed on an exchange and active market, and are classified as Level 2 investments if they are valued at bid evaluation using observable and market-based inputs. Registered investment companies and CCTs invested in fixed income securities are measured at NAV and included as a reconciling item to the fair value tables above.
Real estate investments
Real estate investments include residential lots located in Benicia, California and are classified as Level 3 investments.
Private assets
Private assets are primarily limited partnerships and fund-of-funds that mainly invest in U.S. and non-U.S. leveraged buyout, venture capital and special situation strategies. Generally, the individual investments within the partnerships or funds are valued at public market, private market, or appraised value. Private assets are valued by investment managers using unobservable inputs such as extrapolated data, proprietary data, or indicative quotes. The majority of the private assets are valued at NAV and included as a reconciling item to the fair value tables above. Private assets for which there is no NAV are classified as Level 3 investments. Valuations of certain assets were based on the NAV or market value three months prior to the fiscal year-end. The Company made adjustments amounting to an increase of $0.3 million and $11.3 million for fiscal 2017 and 2016, respectively, to account for changes since the valuation date.
Hedge funds
Hedge funds primarily consist of multi-strategy hedge funds that invest across a range of equity and debt securities in a variety of industry sectors. Hedge funds are valued at NAV calculated by investment managers using unobservable inputs such as extrapolated data, proprietary data, or indicative quotes and are included as a reconciling item to the fair value tables above. Valuations of certain assets were based on the NAV or total market value three months prior to the fiscal year-end. The Company made adjustments amounting to an increase of $0.3 million for fiscal 2017 to account for changes since the valuation date.
Changes in the fair value of the Level 3 investments were as follows:
 
December 31, 2016
 
Unrealized
Gains
 
Purchases, Sales, and
Settlements, net 
 
December 31,
2017
 
(In millions)
Domestic equity securities
$
2.2

 
$
2.9

 
$
(1.3
)
 
$
3.8

Corporate debt securities
6.8

 
2.0

 
2.5

 
11.3

Real estate investments
0.5

 
—

 
(0.5
)
 
—

Private assets
—

 
1.2

 
24.5

 
25.7

Total
$
9.5

 
$
6.1

 
$
25.2

 
$
40.8

 
December 31, 2015 
 
Unrealized
Gains
 
Purchases, Sales, and
Settlements, net 
 
December 31,
2016 
 
(In millions)
Domestic equity securities
$
0.5

 
$
0.1

 
$
1.6

 
$
2.2

Corporate debt securities
—

 
—

 
6.8

 
6.8

Real estate investments
0.7

 
—

 
(0.2
)
 
0.5

Total
$
1.2

 
$
0.1

 
$
8.2

 
$
9.5


e.  Benefit Payments
The following table presents estimated future benefit payments:
 
 
Pension
Benefit
Payments
 
Medical and Life Insurance Benefits 
 
Year Ending December 31,
 
Gross Benefit Payments
 
Medicare D
Subsidy 
 
Net Benefit
Payments 
 
(In millions)
2018
$
116.2

 
$
5.0

 
$
0.2

 
$
4.8

2019
113.9

 
4.7

 
0.2

 
4.5

2020
110.7

 
4.4

 
0.2

 
4.2

2021
107.2

 
4.0

 
0.1

 
3.9

2022
103.6

 
3.6

 
0.1

 
3.5

Years 2023 - 2027
463.2

 
13.1

 
0.4

 
12.7