2.2.0.25falsefalse0219 - Disclosure - Commitments and Contingenciestruefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010 USD ($) USD ($) / shares $Jan-01-2010_Dec-31-2010http://www.sec.gov/CIK0001056239duration2010-01-01T00:00:002010-12-31T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170PureStandardhttp://www.xbrl.org/2003/instancepurexbrli0SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0lll_CommitmentsAndContingenciesAbstractlllfalsenadurationCommitments and Contingencies.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringCommitments and Contingencies.falsefalseCommitments and Contingencies [Abstract]3false0us-gaap_CommitmentsAndContingenciesDisclosureTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00  <div style="margin-left: 0%"> <div style="margin-top: 12pt; font-size: 1pt">  </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent; text-align: left"> <tr> <td width="3%"></td> <td width="97%"></td> </tr> <tr valign="top"> <td> <b><font style="font-family: 'Times New Roman', Times">19. </font></b> </td> <td> <b><font style="font-family: 'Times New Roman', Times">Commitments and Contingencies</font></b> </td> </tr> </table> <div style="margin-top: 12pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent"> <b><i><font style="font-family: 'Times New Roman', Times">Non-Cancelable Operating Leases</font></i></b> </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> The Company leases certain facilities and equipment under agreements expiring at various dates through 2028. Certain leases contain renewal options or escalation clauses providing for increased rental payments based upon maintenance, utility and tax increases. No lease agreement imposes a restriction on the Company’s ability to pay dividends, engage in debt or equity financing transactions, or enter into further lease agreements. </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> The following table presents future minimum payments under non-cancelable operating leases with initial or remaining terms in excess of one year at December 31, 2010. </div> <div style="margin-top: 6pt; font-size: 1pt">  </div> <table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">  <tr style="font-size: 1pt" valign="bottom"> <td width="74%"> </td> <td width="1%"> </td> <td width="1%" align="right"> </td> <td width="7%" align="right"> </td> <td width="1%" align="left"> </td> <td width="1%"> </td> <td width="1%" align="right"> </td> <td width="7%" align="right"> </td> <td width="1%" align="left"> </td> <td width="1%"> </td> <td width="1%" align="right"> </td> <td width="3%" align="right"> </td> <td width="1%" align="left"> </td> </tr>   <tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap" align="center" valign="bottom">   </td> <td>   </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000"> <b>Real Estate</b> </td> <td>   </td> <td>   </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000"> <b>Equipment</b> </td> <td>   </td> <td>   </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000"> <b>Total</b> </td> <td>   </td> </tr> <tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap" align="center" valign="bottom">   </td> <td>   </td> <td colspan="10" align="center" valign="bottom"> <b>(in millions)</b> </td> <td>   </td> </tr> <tr style="line-height: 3pt; font-size: 1pt"> <td>  </td> </tr>  <tr valign="bottom" style="background: #cceeff"> <td nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent: -9pt; margin-left: 9pt"> 2011 </div> </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom"> 169 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom"> 20 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom"> 189 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> </tr> <tr valign="bottom"> <td nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent: -9pt; margin-left: 9pt"> 2012 </div> </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 119 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 17 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 136 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent: -9pt; margin-left: 9pt"> 2013 </div> </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 98 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 10 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 108 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> </tr> <tr valign="bottom"> <td nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent: -9pt; margin-left: 9pt"> 2014 </div> </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 83 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 7 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 90 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent: -9pt; margin-left: 9pt"> 2015 </div> </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 57 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 6 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 63 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> </tr> <tr valign="bottom"> <td nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent: -9pt; margin-left: 9pt"> Thereafter </div> </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 128 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 16 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 144 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> </tr> <tr valign="bottom" style="font-size: 1pt"> <td>   </td> <td>   </td> <td style="border-top: 1px solid #000000">   </td> <td style="border-top: 1px solid #000000">   </td> <td>   </td> <td>   </td> <td style="border-top: 1px solid #000000">   </td> <td style="border-top: 1px solid #000000">   </td> <td>   </td> <td>   </td> <td style="border-top: 1px solid #000000">   </td> <td style="border-top: 1px solid #000000">   </td> <td>   </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td align="left" valign="bottom"> <div style="text-indent: -9pt; margin-left: 9pt"> Total minimum payments required </div> </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 654 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 76 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 730 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> </tr> <tr valign="bottom"> <td align="left" valign="bottom"> <div style="text-indent: -9pt; margin-left: 9pt"> Less: Sublease rentals under non-cancelable leases </div> </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 16 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> — </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td nowrap="nowrap" align="right" valign="bottom"> 16 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> </tr> <tr valign="bottom" style="font-size: 1pt"> <td>   </td> <td>   </td> <td style="border-top: 1px solid #000000">   </td> <td style="border-top: 1px solid #000000">   </td> <td>   </td> <td>   </td> <td style="border-top: 1px solid #000000">   </td> <td style="border-top: 1px solid #000000">   </td> <td>   </td> <td>   </td> <td style="border-top: 1px solid #000000">   </td> <td style="border-top: 1px solid #000000">   </td> <td>   </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td align="left" valign="bottom"> <div style="text-indent: -9pt; margin-left: 9pt"> Net minimum payments required </div> </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">  638 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">  76 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> <td>   </td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">  714 </td> <td nowrap="nowrap" align="left" valign="bottom">   </td> </tr> <tr valign="bottom" style="font-size: 1pt"> <td>   </td> <td>   </td> <td style="border-top: 3px double #000000">   </td> <td style="border-top: 3px double #000000">   </td> <td>   </td> <td>   </td> <td style="border-top: 3px double #000000">   </td> <td style="border-top: 3px double #000000">   </td> <td>   </td> <td>   </td> <td style="border-top: 3px double #000000">   </td> <td style="border-top: 3px double #000000">   </td> <td>   </td> </tr> </table> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> Rent expense, net of sublease income, was $176 million for 2010, $170 million for 2009, and $166 million for 2008. </div> <div style="margin-top: 12pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent"> <b><i><font style="font-family: 'Times New Roman', Times">Letters of Credit</font></i></b> </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> The Company enters into standby letters of credit with financial institutions covering performance and financial guarantees pursuant to contractual arrangements with certain customers. The Company had total outstanding letters of credit aggregating to $394 million, of which $17 million reduces the amount of available borrowings to the Company under the Revolving Credit Facility at December 31, 2010, and $360 million, of which, $32 million reduced the amount of available borrowings under the Revolving Credit Facility at December 31, 2009. These letters of credit may be drawn upon in the event of the Company’s nonperformance. </div> <div style="margin-top: 12pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent"> <b><i><font style="font-family: 'Times New Roman', Times">Guarantees</font></i></b> </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> The Company, from time to time, enters into contractual guarantees that arise in connection with its business acquisitions, dispositions, and other contractual arrangements in the normal course of business. </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> In connection with the Company’s acquisition of L-3 Communications MAPPS Inc. in 2005, the Company acquired a 47.5% interest in FAST Holdings Limited (FAST), a joint venture corporation. FAST has been contracted to provide and operate training facilities and equipment for the United Kingdom’s Astute Class Submarine Training Service program. The Company has guaranteed 50% of certain bank debt borrowed by FAST to finance its activities on this program. At December 31, 2010, the Company’s guarantee amounted to $44 million. The Company expects to be released from the guarantee upon customer acceptance of all contract deliverables, which is expected to occur no later than the second quarter of 2011. </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> The Company has two existing real estate lease agreements, which include residual guarantee amounts, expiring on August 31, 2011 and are accounted for as operating leases. On or before the lease expiration date, the Company can exercise options under the lease agreements to either renew the leases, purchase both properties for $28 million, or sell both properties on behalf of the lessor (the “Sale Option”). If the Company elects the Sale Option, the Company must pay the lessor a residual guarantee amount of $23 million for both properties, on or before the lease expiration date. In addition, at the time both properties are sold, the Company must pay the lessor a supplemental rent payment equal to the gross sales proceeds in excess of the residual guarantee, provided that such amount shall not exceed $5 million. For these real estate lease agreements, if the gross sales proceeds are less than the sum of the residual guarantee amount and the supplemental rent payment, the Company is required to pay a supplemental rent payment to the extent the reduction in the fair value of the properties is demonstrated by an independent appraisal to have been caused by the Company’s failure to properly maintain the properties. The aggregate residual guarantee amounts equal $23 million and are included in the future minimum payments under non-cancelable real estate operating lease payments relating to the expiration dates of such leases. </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> The Company has a contract to provide and operate for the U.S. Air Force (USAF) a full-service training facility, including simulator systems adjacent to a USAF base in Oklahoma. The Company acted as the construction agent on behalf of the third-party owner-lessors for procurement and construction for the simulator systems, which were completed and delivered in August 2002. The Company, as lessee, entered into operating lease agreements for a term of 15 years for the simulator systems with the owner-lessors. At the end of the lease term, the Company may elect to purchase the simulator systems at fair market value, which can be no less than $7 million and no greater than $21 million. If the Company does not elect to purchase the simulator systems on the date of expiration (July 15, 2017), the Company shall pay to the lessor, as additional rent, $3 million and return the simulator systems to the lessors. </div> <div style="margin-top: 12pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent"> <b><i><font style="font-family: 'Times New Roman', Times">Environmental Matters</font></i></b> </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> Management continually assesses the Company’s obligations with respect to applicable environmental protection laws, including those obligations assumed in connection with certain business acquisitions. While it is difficult to determine the timing and ultimate cost to be incurred by the Company in order to comply with these laws, based upon available internal and external assessments, with respect to those environmental loss contingencies of which management is aware, the Company believes that, after considering amounts accrued, there are no environmental loss contingencies that, individually or in the aggregate, would be material to the Company’s consolidated results of operations. The Company accrues for these contingencies when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. </div> <div style="margin-top: 12pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent"> <b><i><font style="font-family: 'Times New Roman', Times">Procurement Regulations</font></i></b> </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> A substantial majority of the Company’s revenues are generated from providing products and services under legally binding agreements or contracts with U.S. Government and foreign government customers. U.S. Government contracts are subject to extensive legal and regulatory requirements, and from time to time, agencies of the U.S. Government investigate whether such contracts were and are being conducted in accordance with these requirements. The Company is currently cooperating with the U.S. Government on several investigations, including those specified below, from which civil, criminal or administrative proceedings have or could result and give rise to fines, penalties, compensatory and treble damages, restitution <font style="white-space: nowrap">and/or</font> forfeitures. The Company does not currently anticipate that any of these investigations will have a material adverse effect, individually or in the aggregate, on its consolidated financial position, results of operations or cash flows. However, under U.S. Government regulations, an indictment of the Company by a federal grand jury, or an administrative finding against the Company as to its present responsibility to be a U.S. Government contractor or subcontractor, could result in the Company being suspended for a period of time from eligibility for awards of new government contracts or task orders or in a loss of export privileges. A conviction, or an administrative finding against the Company that satisfies the requisite level of seriousness, could result in debarment from contracting with the federal government for a specified term. In addition, all of the Company’s U.S. Government contracts: (1) are subject to audit and various pricing and cost controls, (2) include standard provisions for termination for the convenience of the U.S. Government or for default, and (3) are subject to cancellation if funds for contracts become unavailable. Foreign government contracts generally include comparable provisions relating to terminations for convenience and default, as well as other procurement clauses relevant to the foreign government. </div> <div style="margin-top: 12pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent"> <b><i><font style="font-family: 'Times New Roman', Times">Litigation Matters</font></i></b> </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> The Company is also subject to litigation, proceedings, claims or assessments and various contingent liabilities incidental to its businesses, including those specified below. Furthermore, in connection with certain business acquisitions, the Company has assumed some or all claims against, and liabilities of, the acquired business, including both asserted and unasserted claims and liabilities. </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> In accordance with the accounting standard for contingencies, the Company records a liability when management believes that it is both probable that a liability has been incurred and the Company can reasonably estimate the amount of the loss. Generally, the loss is recorded at the amount the Company expects to resolve the liability. The estimated amounts of liabilities recorded for pending and threatened litigation are disclosed in Note 8. Amounts recoverable from insurance contracts or third parties are recorded as assets when deemed probable. At December 31, 2010, the Company did not record any amounts for recoveries from insurance contracts or third parties in connection with the amount of liabilities recorded for pending and threatened litigation. Legal defense costs are expensed as incurred. The Company believes it has recorded adequate provisions for its litigation matters. The Company reviews these provisions quarterly and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. While it is reasonably possible that an unfavorable outcome may occur in one or more of the following matters, unless otherwise stated below, the Company believes that it is not probable that a loss has been incurred in any of these matters. An estimate of loss or range of loss is disclosed for a particular litigation matter when such amount or amounts can be reasonably estimated and no loss has been accrued. The Company believes that any damage amounts claimed in the specific matters discussed below do not constitute reasonable estimates of loss. Although the Company believes that it has valid defenses with respect to legal matters and investigations pending against it, the results of litigation can be difficult to predict, including those involving jury trials. Accordingly, our current judgment as to the likelihood of our loss (or our current estimate as to the potential range of loss, if applicable) with respect to any particular litigation matter may turn out to be wrong. Therefore, it is possible that the financial position, results of operations or cash flows of the Company could be materially adversely affected in any particular period by the unfavorable resolution of one or more of these or other contingencies. </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> <i>Kalitta Air.</i> On January 31, 1997, a predecessor of Kalitta Air filed a lawsuit in the U.S. District Court for the Northern District of California (the trial court) asserting, among other things, negligence and negligent misrepresentation against Central Texas Airborne Systems, Inc. (CTAS), a predecessor to L-3 Integrated Systems (L-3 IS), in connection with work performed by a predecessor to CTAS to convert two Boeing 747 aircraft from passenger configuration to cargo freighters. The work was performed using Supplemental Type Certificates (STCs) issued in 1988 by the Federal Aviation Administration (FAA). In 1996, following completion of the work, the FAA issued an airworthiness directive with respect to the STCs that effectively grounded the aircraft. On August 11, 2000, the trial court granted CTAS’ motion for summary judgment as to negligence, dismissing that claim. In January 2001, after a ruling by the trial court that excluded certain evidence from trial, a jury rendered a unanimous defense verdict in favor of CTAS on the negligent misrepresentation claim. On December 10, 2002, the U.S. Court of Appeals for the Ninth Circuit (the Court of Appeals) reversed the trial court’s decisions as to summary judgment and the exclusion of evidence, and remanded the case for a new trial on both the negligence and negligent misrepresentation claims. The retrial ended on March 2, 2005 with a deadlocked jury and mistrial. On July 22, 2005, the trial court granted CTAS’ motion for judgment as a matter of law as to negligence, dismissing that claim, and denied CTAS’ motion for judgment as a matter of law as to negligent misrepresentation. On October 8, 2008, the Court of Appeals reversed the trial court’s dismissal of the negligence claim and affirmed the trial court’s ruling as to the negligent misrepresentation claim. As a result, the case was remanded to the trial court to reconsider the negligence claim and for further proceedings on the negligent misrepresentation claim. The trial court held a new hearing on CTAS’ motion to dismiss the negligence claim on April 30, 2009, after which it determined to take the matter under advisement. The case is currently scheduled to go to a third jury trial on October 31, 2011. The parties have participated in court-ordered mediations from time to time, and are expected to participate in future court-ordered mediations prior to trial, but to date such mediations have not resulted in a mutually acceptable resolution of this matter. In connection with these mediations, Kalitta Air has claimed it may seek damages at the third trial of between $430 million and $900 million, including between $200 million and $240 million of pre-judgment interest. CTAS’ insurance carrier has accepted defense of this matter and has retained counsel, subject to a reservation of rights by the insurer to dispute its obligations under the applicable insurance policies in the event of a finding against L-3. The Company believes that it has meritorious defenses to the claims asserted and the damages sought and intends to defend itself vigorously. </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> <i>Titan Government Investigation.</i> In October 2002, The Titan Corporation (Titan) received a grand jury subpoena from the Antitrust Division of the DoJ requesting the production of documents relating to information technology services performed for the U.S. Air Force at Hanscom Air Force Base in Massachusetts and Wright-Patterson Air Force Base in Ohio. The Company acquired Titan in July 2005. The Company was recently advised by the DoJ that it has closed this matter without taking action against the Company. </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> <i>CyTerra Government Investigation.</i> Since November 2006, CyTerra has been served with civil and Grand Jury subpoenas by the DoD Office of the Inspector General and the DoJ and has been asked to facilitate employee interviews. The Company is cooperating fully with the U.S. Government. The Company believes that it is entitled to indemnification for any course of defense related to this matter out of, and has made a claim against, a $15 million escrow fund established in connection with the Company’s acquisition of CyTerra in March 2006. </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> <i>Bashkirian Airways.</i> On July 1, 2004, lawsuits were filed on behalf of the estates of 31 Russian children in the state courts of Washington, Arizona, California, Florida, New York and New Jersey against Honeywell, Honeywell TCAS, Thales USA, Thales France, the Company and Aviation Communications & Surveillance Systems (ACSS), which is a joint venture of L-3 and Thales. The suits relate to the crash over southern Germany of Bashkirian Airways Tupelov TU 154M aircraft and a DHL Boeing 757 cargo aircraft. On-board the Tupelov aircraft were 9 crew members and 60 passengers, including 45 children. The Boeing aircraft carried a crew of two. Both aircraft were equipped with Honeywell/ACSS Model 2000, Change 7 Traffic Collision and Avoidance Systems (TCAS). Sensing the other aircraft, the on-board DHL TCAS instructed the DHL pilot to descend, and the Tupelov on-board TCAS instructed the Tupelov pilot to climb. However, the Swiss air traffic controller ordered the Tupelov pilot to descend. The Tupelov pilot disregarded the on-board TCAS and put the Tupelov aircraft into a descent striking the DHL aircraft in midair at approximately 35,000 feet. All crew and passengers of both planes were lost. Investigations by the National Transportation Safety Board after the crash revealed that both TCAS units were performing as designed. The suits allege negligence and strict product liability based upon the design of the units and the training provided to resolve conflicting commands and seek approximately $315 million in damages, including $150 million in punitive damages. The Company’s insurers have accepted defense of this matter and have retained counsel. The matters were consolidated in the U.S. District Court for the District of New Jersey, which has dismissed the actions on the basis of forum non conveniens. The plaintiffs re-filed a complaint on April 23, 2007 with the Barcelona Court’s Registry in Spain. On March 9, 2010, the court ruled in favor of the plaintiffs and entered judgment against ACSS in the amount of approximately $6.7 million, all of which represented compensatory damages. The Company believes that the verdict and the damages awarded are inconsistent with the law and evidence presented. Accordingly, ACSS filed an appeal of this ruling on April 27, 2010. The plaintiffs also filed an appeal of this ruling on the same date. </div> <div style="margin-top: 10pt; font-size: 1pt">  </div> <div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 1%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"> <i>Gol Airlines.</i> A complaint was filed on November 7, 2006 in the U.S. District Court for the Eastern District of New York against ExcelAire, Joseph Lepore, Jan Paul Paladino, and Honeywell. On October 23, 2007, an amended complaint was filed to include Lockheed, Raytheon, Amazon Technologies and ACSS. The complaints relate to the September 29, 2006 airplane crash over Brazil of a Boeing <font style="white-space: nowrap">737-800</font> operated by GOL Linhas Aereas Inteligentes, S.A. and an Embraer 600 business jet operated by ExcelAire. The complaints allege that ACSS designed the TCAS on the ExcelAire jet, and assert claims of negligence, strict products liability and breach of warranty against ACSS based on the design of the TCAS and the instructions provided for its use. The complaints seek unspecified monetary damages, including punitive damages. The Company’s insurers have accepted defense of this matter and have retained counsel. On July 2, 2008, the District Court dismissed the actions on the basis of forum non conveniens on the grounds that Brazil was the location of the accident and is more convenient for witnesses and document availability. On December 2, 2009, the U.S. Court of Appeals for the Second Circuit upheld this decision. Some of the plaintiffs re-filed their complaints in the Lower Civil Court in the Judicial District of Peixoto de Azevedo in Brazil on July 3, 2009. </div> </div>  <!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringIncludes disclosure of commitments and contingencies. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 14 -Paragraph 3 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 5 -Paragraph 9, 10, 11, 12 falsefalseCommitments and Contingencies12Commitments and ContingenciesUnKnownUnKnownUnKnownUnKnownfalsetrue