The forward-looking statements in this release are made as of the date hereof and the company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in the Exelis Inc. Form 10-K for the fiscal year ended December 31, 2012, and those described from time to time in our future reports filed with the Securities and Exchange Commission.

Exelis Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)			Three Months Ended September 30,									Nine Months Ended September 30,
			2013				2012					2013				2012
Product revenue			$	498			$	611				$	1,515			$	1,884
Service revenue				643				750					2,062				2,277
Total revenue				1,141				1,361					3,577				4,161
Cost of product revenue				354				434					1,091				1,328
Cost of service revenue				537				649					1,708				1,977
Selling, general and administrative expenses				100				114					337				377
Research and development expenses				11				18					39				48
Restructuring and asset impairment charges, net				6				3					68				5
Operating income				133				143					334				426
Interest expense, net				10				9					28				29
Other expense (income), net				3				(4	)				2				3
Income from continuing operations before income tax expense				120				138					304				394
Income tax expense				40				50					102				150
Net income			$	80			$	88				$	202			$	244
Earnings Per Share
Basic
Net income			$	0.42			$	0.47				$	1.07			$	1.30
Diluted
Net income			$	0.41			$	0.47				$	1.06			$	1.30
Weighted average common shares outstanding – basic				188.5				187.6					188.3				187.3
Weighted average common shares outstanding – diluted				192.8				188.7					191.0				188.3
Cash dividends declared per common share			$	0.10			$	0.10				$	0.31			$	0.31

Exelis Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(IN MILLIONS)			September 30,					December 31,
			2013					2012
Assets
Current assets
Cash and cash equivalents			$	309				$	292
Receivables, net				1,012					995
Inventories, net				288					283
Deferred tax asset				29					85
Other current assets				56					58
Total current assets				1,694					1,713
Plant, property and equipment, net				500					512
Goodwill				2,184					2,180
Other intangible assets, net				173					184
Deferred tax asset				471					556
Other non-current assets				71					67
Total non-current assets				3,399					3,499
Total assets			$	5,093				$	5,212
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable			$	351				$	444
Advance payments and billings in excess of costs				335					322
Compensation and other employee benefits				192					246
Other accrued liabilities				229					203
Total current liabilities				1,107					1,215
Defined benefit plans				1,858					2,203
Long-term debt				649					649
Deferred tax liability				3					1
Other non-current liabilities				129					128
Total non-current liabilities				2,639					2,981
Total liabilities				3,746					4,196
Commitments and contingencies (Note 15)
Shareholders' equity
Common stock				2					2
Additional paid-in capital				2,602					2,575
Treasury stock				(5	)				—
Retained earnings				416					274
Accumulated other comprehensive loss				(1,668	)				(1,835	)
Total shareholders' equity				1,347					1,016
Total liabilities and shareholders' equity			$	5,093				$	5,212

Exelis Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(IN MILLIONS)			Nine Months Ended September 30,
			2013					2012
Operating activities
Net income			$	202				$	244
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization				85					97
Stock-based compensation				25					18
Restructuring and asset impairment charges, net				68					5
Payments for restructuring				(42	)				(14	)
Defined benefit plans expense				69					36
Defined benefit plans payments				(136	)				(293	)
Change in assets and liabilities
Change in receivables				(22	)				(40	)
Change in inventories				(4	)				29
Change in other assets				(5	)				1
Change in accounts payable				(93	)				(53	)
Change in advance payments and billings in excess of costs				13					(14	)
Change in deferred taxes				31					147
Change in other liabilities				(73	)				(66	)
Net cash provided by operating activities				118					97
Investing activities
Capital expenditures				(57	)				(86	)
Proceeds from the sale of assets				9					2
Acquisitions, net of cash acquired				(16	)				(42	)
Other, net				—					(1	)
Net cash used in investing activities				(64	)				(127	)
Financing activities
Proceeds from commercial paper, net				—					134
Dividends paid				(39	)				(39	)
Common stock repurchased				(5	)				—
Proceeds from exercise of stock options				11					14
Other, net				(2	)				(7	)
Net cash (used in) provided by financing activities				(35	)				102
Exchange rate effects on cash and cash equivalents				(2	)				6
Net change in cash and cash equivalents				17					78
Cash and cash equivalents – beginning of year				292					116
Cash and cash equivalents – end of period			$	309				$	194

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