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.
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(preliminary and unaudited)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)		Year ended December 31,
		2012		2011			2010
Product revenue	$	2,487		$	2,817		$	3,596
Service revenue		3,035			3,022			2,295
Total revenue		5,522			5,839			5,891
Costs of product revenue		1,726			1,933			2,491
Costs of service revenue		2,633			2,683			2,032
Selling, general and administrative expenses		516			566			525
Research and development expenses		67			99			119
Restructuring and asset impairment charges, net		19			23			35
Operating income		561			535			689
Interest expense, net		37			10			—
Other expense (income), net		3			(12)			(7)
Income from continuing operations before income tax expense		521			537			696
Income tax expense		191			211			248
Income from continuing operations		330			326			448
Income from discontinued operations, net of tax		—			—			139
Net income	$	330		$	326		$	587
Earnings Per Share
Basic
Continuing operations	$	1.76		$	1.75		$	2.41
Discontinued operations		—			—			0.75
Net income	$	1.76		$	1.75		$	3.15
Diluted
Continuing operations	$	1.75		$	1.75		$	2.39
Discontinued operations		—			—			0.74
Net income	$	1.75		$	1.75		$	3.14
Weighted average common shares – basic		187.4			186.2			186.2
Weighted average common shares – diluted		188.6			186.7			187.1
Cash dividends declared per common share	$	0.41		$	0.10		$	—

EXELIS INC.
CONSOLIDATED BALANCE SHEETS
(preliminary and unaudited)
(IN MILLIONS)			December 31,
			2012		2011
Assets
Current assets
Cash and cash equivalents		$	292		$	116
Receivables, net			995			1,061
Inventories, net			283			337
Deferred tax asset			85			106
Other current assets			58			49
Total current assets			1,713			1,669
Plant, property and equipment, net			512			494
Goodwill			2,180			2,154
Other intangible assets, net			184			211
Deferred tax asset			556			507
Other non-current assets			67			64
Total non-current assets			3,499			3,430
Total assets		$	5,212		$	5,099
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable		$	444		$	447
Advance payments and billings in excess of costs			322			378
Compensation and other employee benefits			246			250
Other accrued liabilities			203			199
Total current liabilities			1,215			1,274
Defined benefit plans			2,203			2,149
Long-term debt			649			649
Deferred tax liability			1			1
Other non-current liabilities			128			133
Total non-current liabilities			2,981			2,932
Total liabilities			4,196			4,206
Commitments and contingencies
Shareholders' equity
Common stock			2			2
Additional paid-in capital			2,575			2,523
Retained earnings			274			23
Accumulated other comprehensive loss			(1,835)			(1,655)
Total shareholders' equity			1,016			893
Total liabilities and shareholders' equity		$	5,212		$	5,099

EXELIS INC.
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(preliminary and unaudited)
(IN MILLIONS)		Year Ended December 31,
		2012			2011			2010
Operating activities
Net income		$	330		$	326		$	587
Less income from discontinued operations			—			—			(139)
Income from continuing operations			330			326			448
Adjustments to reconcile income from continuing operations to cash provided by operating activities:
Depreciation and amortization			130			133			139
Stock-based compensation			24			18			15
Restructuring and asset impairment charges, net			19			23			35
Payments for restructuring			(20)			(19)			(21)
Defined benefit plans expense			43			46			7
Defined benefit plans payments			(290)			(87)			(6)
Change in assets and liabilities
Change in receivables			41			(106)			(100)
Change in inventories			56			(99)			131
Change in other assets			(11)			(27)			6
Change in accounts payable			(2)			122			(37)
Change in advance payments and billings in excess of costs			(58)			(49)			36
Change in deferred taxes			112			64			(1)
Change in other liabilities			9			(13)			(12)
Other, net			2			2			1
Net cash provided by operating activities			385			334			641
Investing activities
Capital expenditures			(119)			(95)			(108)
Proceeds from the sale of assets			2			14			251
Acquisitions, net of cash acquired			(43)			—			(29)
Other, net			1			(4)			—
Net cash (used in) provided by investing activities			(159)			(85)			114
Financing activities
Short-term borrowing under credit facility			—			240			—
Repayments under credit facility			—			(240)			—
Proceeds from the issuance of debt, net			—			649			—
Payment of debt issuance costs			—			(6)			—
Dividend paid			(77)			(19)			—
Proceeds from the exercise of stock options			19			—			—
Transfers to parent, net			—			(775)			(747)
Other, net			1			4			(28)
Net cash used in financing activities			(57)			(147)			(775)
Exchange rate effects on cash and cash equivalents			7			(4)			—
Net cash from discontinued operations			—			—			4
Net change in cash and cash equivalents			176			98			(16)
Cash and cash equivalents – beginning of year			116			18			34
Cash and cash equivalents – end of year		$	292		$	116		$	18
Supplemental disclosures of cash flow information
Cash paid during the year for
Income taxes (net of refunds received)		$	28		$	86		$	206
Interest		$	37		$	—		$	—

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