Focused on the Future
2013 Annual and Corporate Responsibility Report
FINANCIAL HIGHLIGHTS
Year Ended December 31
(In millions, except per share amounts)
2013
2012
2011
$5,839
$4,816
$5,522
Operating income
476
561
535
Net income
281
330
326
Total revenue
Adjusted net income(a)
288
349
371
Diluted earnings per share
1.46
1.75
1.75
Adjusted net income per diluted share(a)
1.50
1.85
1.99
Cash dividends declared per share
Total assets
0.41
0.41
0.10
4,884
5,212
5,099
Total liabilities
3,232
4,196
4,206
Total shareholders equity
1,652
1,016
893
Weighted average common shares outstanding — diluted
192.0
188.6
186.7
310
385
334
Net cash provided by operating activities
(a) Adjusted amounts are non-GAAP measures. Adjusted amounts exclude charges related to the planned spin-off of our current Mission Systems business and the
October 31, 2011 spin-off of Exelis from ITT Corporation. Adjusted amounts are reconciled to reported amounts in the Key Performance Indicators and Non-GAAP
Measures section in Item 7 of the Form 10-K.
STOCK PERFORMANCE
$100 invested in Exelis on November 1, 2011
was worth $176.28 on December 31, 2013
$200
$150
$100
$50
$0
Nov. 1, 2011
Dec. 31, 2013
Exelis (XLS)
S&P 500 Index
Letter from the CEO & President
Exelis is very different today than it was just
one year ago — and that is by design. As a
leading aerospace and defense company, we
operate in a dynamic market environment and
understand how vital it is to be focused on the
future. With forward thinking, we can better
position our business to meet the evolving needs
of our customers and the market — and we
demonstrated this during the past year.
David F. Melcher
Chief Executive Officer and President, Exelis Inc.
In 2013, we proactively — and significantly — reshaped our
business operations to concentrate on the emerging needs
of customers in the C4ISR (Command, Control, Communication,
Computers, Intelligence, Surveillance and Reconnaissance),
aerospace and information solutions sectors. We further
sharpened our focus in late 2013 when — after extensive
analysis — we announced plans to spin off our Mission
Systems business into a standalone public company as a
pure-play military and government services provider. We
expect to complete this transaction in the summer of 2014.
reported $476 million in operating income. Free cash flow
was $234 million. Our book-to-bill ratio was 1.1x, and we
ended the year with $5.3 billion in orders, up 10 percent
from 2012. Our international orders increased by more than
50 percent year-over-year.
Having taken the important steps above, we are now
focusing our resources, business development activities and
growth around four Strategic Growth Platforms (SGPs):
Critical Networks; Intelligence, Surveillance, Reconnaissance
(ISR) & Analytics; Electronic Warfare; and Aerostructures.
Focus requires choices, and in 2013, Exelis restructured —
through headcount reductions, facility consolidations and
the disposition of our Specialty Plastics business — with the
intent of making the company more competitive, productive
and successful for the future.
In 2013, we earned significant new business within our four
Strategic Growth Platforms, extended key existing contracts
and generated consistent orders in our more mature
business areas.
FOCUSED ON > OUR PERFORMANCE
2013 was a year of change for our company, as well as a
year full of market challenges, including U.S. government
customer uncertainty, looming spending cuts that delayed
or cancelled key contracts, a government shutdown and the
ongoing decline in government spending. However, this did not
impact our commitments to our customers and shareholders.
In 2013, the majority of our financial results were in line
with expectations. For the year, we generated $4.8 billion
in revenues, which was down 13 percent from 2012, and
We also took significant steps to control expenses and
manage our bottom-line performance, including freezing our
pension plan, effective December 31, 2016.
FOCUSED ON > MEETING OUR CUSTOMERS’ NEEDS
> The Jet Propulsion Laboratory extended our contract
to provide maintenance, operations and engineering
services for NASA’s Deep Space Network. Under this
contract, we will support the critical communications
networks that make exploration of the universe possible.
> South Korea awarded Exelis a contract to provide an
advanced geostationary weather imager to support the
country’s forecasting capabilities. Scheduled for launch
in 2017, our Advanced Meteorological Imager will
provide more data more often and at higher resolution,
enabling improved forecasting and observation of
severe weather for this international customer.
> The Royal Australian Navy chose our electronic support
measure (ESM) suite to provide situational awareness,
targeting, self-protection and surveillance for several
classes of ships, positioning our company as a premier
supplier of ESM systems in the Asia Pacific region.
2013 ANNUAL AND CORPORATE RESPONSIBILITY REPORT | 1
> The U.S. Navy awarded Exelis a $125 million contract to
provide a second production lot of the AN/ALQ-214
jammer, a key electronic warfare subsystem on U.S. and
Australian F/A-18 aircraft.
> Boeing awarded Exelis a long-term commercial
agreement to produce the composite airframe
substructure for the 787 Dreamliner, and to continue
producing composite tanks for several of its aircraft
series. Our Aerostructures business also expanded its
content with Sikorsky to produce tail rotor assemblies
for the S-76 helicopter and with Lockheed Martin for
missile body and F-35 aircraft components.
> Exelis received nearly $300 million in orders for night
vision and communications equipment from a variety
of international customers.
FOCUSED ON > BUILDING MOMENTUM
Exelis forward momentum for the year was evident in many
areas. We added an acquisition — C4i in Australia — that
strengthens the capabilities in our Critical Networks Strategic
Growth Platform. We had the strongest year for international
awards since 2009. And we named a respected defense
industry veteran, Dr. Pamela Drew, to lead our Information
Systems business.
FOCUSED ON > OUR STRATEGY
The anticipated spin-off of our Mission Systems business
will position the resulting new company as a strong
pure-play government services business under the
leadership of Ken Hunzeker, while further focusing Exelis on
our Strategic Growth Platforms. All levels of our customer
base in the Department of Defense, NASA, Federal Aviation
Administration and the intelligence community have clearly
indicated that they plan to put more emphasis on these
areas in the coming years, and they can trust Exelis to
anticipate their needs, determine requirements and deliver
affordable differentiated solutions.
After the spin-off is finalized, the percentage of Exelis
revenue from customers outside the U.S. military services
will increase from 30 percent to nearly 50 percent, helping to
balance the future Exelis customer base among U.S. military,
U.S. civil government, international and commercial business.
Overall, our strategy is focused on growth, profitability, our
portfolio and our people. Our Strategic Growth Platforms,
and our mature business areas such as night vision and
networked communications, are aligned with the needs of
our current and future customers. As we execute against our
strategy, we will continue to:
In November, we officially transitioned our corporate
identity to Exelis, removing the “ITT” from our name on the
two-year anniversary of our separation from our former
parent company.
> Develop a focused, coherent and complementary C4ISR
and networks portfolio
While we are optimistic about the prospects for Exelis,
we realize that we must retain our focus and execute
effectively to keep competing at high levels in the current
environment. Evolving geopolitical challenges and budget
uncertainties will continue in our industry, and the
companies that survive and thrive will be the strategic
thinkers who know — and do — what it takes to navigate
successfully through these market conditions.
> Grow our international and commercial positions
> Position our company for sustainable growth through
the Strategic Growth Platforms
> Optimize our workforce and cost structure for
increased competitiveness
> Manage our pension liability
FOCUSED ON > DOING WELL BY DOING GOOD
In parallel with our business performance goals, we are also
working to be the best corporate citizen our business can be.
We will create value through...
GROWTH
PORTFOLIO
PROFITABILITY
PEOPLE
> Drive the Strategic
Growth Platforms (SGPs)
> Manage and optimize
our portfolio
> Expand international
market presence
> Partner or acquire to
develop and augment
capabilities aligned to
our Strategic Growth
Platforms
> Focus on operational
efficiencies and
carefully manage
enterprise-wide costs
> Cultivate inclusion
and diversity across
the organization
> Diversify into
commercial markets
> Differentiate
investments
2 | EXELIS
> Continue to actively
manage pension
liability
> Implement targeted
programs to develop
the next generation
of Exelis leaders
I’ve said it before, but it bears repeating, that corporate
responsibility is not something else we do while we are
growing and evolving our business; it is a key element of our
ongoing success at Exelis. We take great pride in our ethical
culture and in our unwavering commitment to conducting
business in full compliance with all applicable regulations,
including international trade and anti-corruption laws.
This report provides insights into the corporate responsibility
work we are doing all around the world, and shows the
progress we continue to make as an ethical business, fair
employer, environmental steward and caring company.
From using less energy at our sites to helping hundreds of
thousands of veterans, military service members and their
families through our signature corporate volunteer program,
Exelis Action Corps, our people are dedicated to making sure
our company succeeds the right way.
In addition to our conservation and community service,
Exelis technologies also play critical roles in broader
sustainability and environmental responsibility efforts. For
example, Exelis payloads are the heart of GPS satellites and
the backbone of our Automated Dependent SurveillanceBroadcast (ADS-B) system. As the FAA’s NextGen air traffic
management modernization program, ADS-B will significantly
reduce fuel consumption and emissions from commercial
aircraft operating in U.S. airspace.
It’s not always easy to find better ways of doing business
and to have the courage to break away from the status quo.
But that doesn’t deter anyone at Exelis. Tackling change and
solving challenges are a way of life for all of us.
We’ve established a solid foundation in the two years we’ve
been an independent company. That includes the huge
strides we made in 2013 through a strategic plan that better
aligns us with our current and future customers’ needs and
unlocks value for shareholders.
The Exelis Strategic Growth Platforms
are specific market areas where we see
opportunity to develop differentiated,
sustainable leadership positions.
CRITICAL NETWORKS
> Enterprise-level networks in support of missioncritical customer solutions.
> Key Actions: Expand leadership position in space
and airborne networks; grow offerings into
adjacent U.S. government markets; grow global
position in air traffic management.
ELECTRONIC WARFARE
> Mission-enabling solutions that support the
detection, defense and defeat of threats in the
electromagnetic spectrum.
> Key Actions: Expand core business with the
U.S. Navy, U.S. Army and U.S. Special Operations
Command; position for next generation of
networked electronic warfare systems.
INTELLIGENCE, SURVEILLANCE,
RECONNAISSANCE (ISR) & ANALYTICS
To me, each and every member of the Exelis team is vital to
ensuring that our strategy will become reality and that we
will realize our vision of becoming the most agile C4ISR,
aerospace and information solutions provider in the industry.
I’m looking forward to leading this company into the future
and to enabling our employees to deliver the “Power of
Ingenuity” to all of our customers and partners.
> Products and services that create, process, store,
exploit and disseminate data and information.
Sincerely,
AEROSTRUCTURES
> Key Actions: Protect and expand leadership
position in space and airborne sensors and GPS;
grow analytical tools to address “big data”
challenges; expand into adjacent markets.
> High-performance composite structures and
assemblies with short lead-times in both
development and production.
David F. Melcher
Chief Executive Officer and President,
Exelis Inc.
> Key Actions: Perform on current platform
positions; win commercial aerostructures orders;
solidify position as a trusted partner for aircraft
manufacturers.
2013 ANNUAL AND CORPORATE RESPONSIBILITY REPORT | 3
OUR VISION
We will be the most agile
C4ISR, aerospace and
information solutions
provider by leveraging deep
customer knowledge and
technology expertise to
deliver affordable, missioncritical products and services
for our global customers.
OUR VALUES
We are building a strong
and deep culture of
corporate responsibility at
Exelis. Every aspect of this
culture is based on the solid
foundation of our values:
EXELIS AT A GLANCE
C4ISR ELECTRONICS & SYSTEMS (C4ISR)
Electronic Systems
Aerostructures
Providing Customers With:
Providing Customers With:
The ability to sense and deny threats to
manned and unmanned aircraft, ships,
submarines, ground vehicles and
personnel, and to provide warfighters
with enhanced situational awareness.
Aerospace composite tanks,
fiberglass, marine and multi-angle
piping systems, primary airframe
structures and space structures.
Geospatial Systems
Night Vision &
Communications Solutions
RESPECT
We are: fair and courteous,
collaborative and helpful,
open-minded and inclusive.
RESPONSIBILITY
We are: accountable for our
words and actions, committed
to quality and safety, caring
for our communities.
INTEGRITY
We are: ethical and honest,
trustworthy and consistent,
candid and courageous
communicators.
4 | EXELIS
Providing Customers With:
Providing Customers With:
Next-generation positioning,
navigation, timing and imaging that
integrates space and airborne sensors
into broader, coordinated systems.
Networked communications systems,
night vision systems and test and
support systems.
INFORMATION & TECHNICAL SERVICES (I&TS)
Information Systems
Mission Systems
Providing Customers With:
Providing Customers With:
Data fusion, network integration and
critical decision support services.
A broad range of critical service,
support and logistics solutions that
enable efficient operations in the
most demanding environments.
GOVERNANCE & ETHICS
Our business is governed by high standards of fairness, transparency and accountability.
For Exelis, corporate governance begins with living our values and having an
unwavering commitment to ethics and compliance. Doing what’s legally and morally
right is the only way to run a successful and sustainable business.
At Exelis, governance begins with our board of directors. As our highest governing
authority, the board provides oversight of the company’s overall risk profile and
management controls, including the risk assessment program and risk mitigation
processes. To ensure that we are getting an objective and informed view of our
company, eight of our nine board members are independent.
In 2013, we continued to update and improve our risk assessment program and
undertook an in-depth study of the most significant non-financial risks facing our
company — from anti-corruption to information security — to ensure that we are taking
actions or have plans in place to mitigate our exposure.
In 2013, we continued to update
and improve our risk assessment
program and undertook an
in-depth study of the most
significant non-financial risks
facing our company — from
anti-corruption to information
security — to ensure that we are
taking actions or have plans in
place to mitigate our exposure.
Ethics and Compliance
Our Ethics and Compliance Program provides employees with easy access to our Code
of Conduct, regular and meaningful training and communications, confidential reporting
mechanisms and a dedicated ethics and compliance team. Last year, based on findings
from our 2012 Exelis Employee Ethics Survey, we made improvements to this program
at the local level.
Most locations organized Compliance Week events, and a number of our businesses
added more ethics and compliance training for both employees and managers. Since
transparent communication is a key to ethics and compliance, we also put more
emphasis on “management by walking around,” and instituted more regular, two-way
communications between employees and senior leaders.
Anti-Corruption
In 2013, we added new elements to our anti-corruption program, which already
included an anti-corruption manual, policies and training. A new international partner
questionnaire was developed to enable rigorous due diligence on third parties with
whom we do business.
We also introduced a self-assessment tool that helps our ethics and compliance managers
check the propriety of payments to our foreign partners. By using this 50-question
due-diligence checklist, we can more quickly spot warning signals, such as unreasonably
high business expenses that could be indicative of a bribe.
Finally, in 2013, we rolled out an enhanced anti-trust policy and some simple-to-follow
rules to ensure our company avoids any hints of improper anti-competitive behavior.
We are now conducting training on competition law and issues as part of our larger
anti-corruption program.
2013 ANNUAL AND CORPORATE RESPONSIBILITY REPORT | 5
ENVIRONMENTAL SUSTAINABILITY
As we work to grow our business, we are simultaneously striving to minimize our
environmental footprint. It can be a challenge, requiring our employees to use fewer
natural resources and safer raw materials in their jobs and in our products. But the
search for responsible, sustainable solutions reinforces our core strategies and
provides another way we can bring “The Power of Ingenuity” to life.
At Exelis, we develop a wide range of technologies that address environmental issues,
from systems that measure aircraft emissions and forest health to our satellite
payloads that provide data about weather, climate and environmental conditions.
There are many more examples, each a meaningful part of our effort to create these
eco-technologies in an environmentally responsible way. Our goal is to contribute to
the planet’s health both through our products and our processes.
Global Standards and Stretch Goals
Throughout Exelis, we deploy an environmental management system (EMS) that
provides a set of processes and practices that reduce our environmental impact and
increase our operating efficiency. Our EMS was developed using IS0 14001:2004,
which outlines global best practices for designing and implementing an effective EMS,
and the goal at all of our sites is to meet and exceed ISO 14001 standards. In 2013,
11 Exelis sites earned or renewed their ISO 14001:2004 certification, and we incurred
no significant spills and had no significant fines for non-compliance with environmental
laws and regulations.
Guided by our core values, Exelis employees are accountable for advancing our
company’s commitment to environmental responsibility and sustainability. In 2013,
essentially all of our targeted employee population took part in training designed to
heighten awareness about their role in helping us achieve our environmental metrics,
and were provided with tools and tactics they can use to make environmental
management practices part of their everyday jobs.
Another way we support our employees is through a network of over 100 Environment,
Safety & Health (ESH) professionals. These ESH team members are embedded at our
global sites — and at our corporate and division headquarters — to implement new
programs and manage and track our progress.
Our company has been through some significant reorganizational changes in the past
few years, but through it all we have retained the same stretch goals for environmental
improvement. In all the key performance areas that we track — energy use, water use,
waste and hazardous waste disposal — our goal is a 5 percent year-over-year improvement.
In 2013, we surpassed the stretch goals we set for ourselves in every area.
6 | EXELIS
TOTAL ENERGY USE (in MBTUs)
897
2010
857
2011
776
2012
2013
524
WATER USE (in million gallons)
171
2010
152
2011
2012
2013
131
119
Energy Use
While Exelis is not a major consumer of natural resources, and therefore not a major
producer of carbon dioxide (CO2), we understand that we need to do whatever we can
to minimize our impact on the atmosphere. We continue to take steps to make our
offices, manufacturing operations and company vehicles more energy efficient. The
level of commitment to energy efficiency at Exelis is showcased at our facility in North
Amityville, New York, which replaced its air compressors and air conditioners with new
units that use 30 percent less energy, and our Clifton, New Jersey, site, which installed
nearly 500 energy-efficient lighting fixtures in its parking garage and reduced energy
usage by 33 percent.
HAZARDOUS WASTE
DISPOSAL AND RECYCLING
(in million pounds)
2010
0.5
2011
0.5
0.6
2012
0.4
2013
Through these types of actions — and primarily through our overall physical footprint
changes — we reduced total energy use at Exelis by 33 percent in 2013, reducing our
greenhouse gas emissions and lessening our impact on climate change.
27% of 0.4 million
pounds recycled
Water Usage
This year, the World Economic Forum listed “water crises” as one of the top three
risks to the global economy, just behind debt crises in key countries and persistent
unemployment. Obviously, water is no longer seen as solely an environmental issue.
The repercussions of reckless water use have a ripple effect on all parts of our lives,
and at Exelis we understand this reality and are working hard to ensure that we act
as responsible stewards of our water supplies.
In 2013, we saw a decrease of more than 9 percent in water use company-wide,
primarily due to production changes and facility closures.
NON-HAZARDOUS WASTE
DISPOSAL AND RECYCLING
(in million pounds)
At Exelis, we are taking a three-pronged approach to waste management: reduce our
overall waste amounts; generate less hazardous waste; and increase the percentage of
recycling in both waste streams. In 2013, we achieved our goals in all three areas,
lowering our non-hazardous waste by 17 percent, our hazardous waste by 33 percent
and recycling more of both kinds of waste.
2.7
2011
2012
Waste Management
4.7
2010
2013
2.4
2.0
54% of 2 million
pounds recycled
At our Ft. Wayne, Indiana, facility, the operations team installed a vapor phase solder
reflow system that reclaims — and allows the team to reuse — an environmentally
friendly solvent called Galden Fluoinert. Where that facility previously discarded nearly
1,000 pounds of the chemical each year, the new system allowed us to eliminate that
waste stream in 2013.
2013 ANNUAL AND CORPORATE RESPONSIBILITY REPORT | 7
CITIZENSHIP & COMMUNITY
They don’t think of themselves as “action heroes,” but thousands of Exelis Action Corps
volunteers are saving the day — or at least making life better for deserving service
members, veterans and their family members.
In 2013, Exelis Action Corps took root — and took off at the same time. This was the
first full year of activity for our corporate citizenship program, which aims to provide
Exelis employees with large-scale, team and individual activities that support military
service members, veterans and their families in local communities across the country.
Everyone at Exelis — from company leaders to employees at our most remote sites —
found ways to get involved. We made it easy by organizing and communicating many
different Exelis Action Corps volunteer opportunities, but increasingly Exelis employees
took the initiative to create their own grassroots projects. This is the sign of a robust
citizenship program, which resonates with employees and impels them to get involved
because it matters to them and to the people they are helping.
The scope of our Exelis Action Corps projects in 2013 reflects the program’s growing
relevance within our company and in our communities.
Everyone is Part of Exelis Action Corps
On one notable day — Sept. 11 — the top 35 leaders at Exelis took part in three
different service projects in the Washington, D.C., area. One group, including Exelis CEO
and President Dave Melcher, visited Arlington National Cemetery to participate in a
wreath-laying ceremony at the Tomb of the Unknowns. Another leadership team
assembled job readiness kits and prepared evening meals for staff members and
residents at transitional housing operated by Veterans on the Rise, an organization
dedicated to ending homelessness for veterans and their families. The third group led a
workshop for transitioning senior military officers, providing advice — including
personalized counseling sessions — about how they can best prepare themselves for a
new chapter in their professional careers.
To mark another meaningful day — Veterans Day — 350 Exelis Action Corps volunteers
from around the country participated in 18 different projects, donating nearly 1,400
hours of their time to deliver much-needed services to the people who have served
our country.
Working side-by-side with veterans in Virginia, volunteers built donated desks and
coffee tables for former service members who are moving from transitional housing to
permanent homes. In Indiana, they put up holiday decorations at Shepherd’s House, a
42-bed facility for homeless military veterans dealing with post-traumatic stress
disorder and other medical issues. And in New York, they performed a fall cleanup of
8 | EXELIS
the yard and basement of the Nucor House, a home for veterans diagnosed with
traumatic brain injury.
Exelis also provides toolkits and mini-grants — up to $2,500 per project — to help
employees jumpstart their own personal Exelis Action Corps projects. In one case,
Exelis employee Nick Stockton applied for a mini-grant to support Wreaths Across
America at Arlington National Cemetery. With the funds, the nonprofit purchased
100 wreaths and Stockton recruited more than 80 volunteers to lay wreaths at the
graves of veterans during the holidays.
OUR IMPACT IN 2013
73
PROJECTS
Job Readiness for Veterans is Becoming Job Number One
Many of our Exelis Action Corps projects are part of the larger Points of Light initiative
to bring together volunteers from multiple companies, communities and organizations
to achieve a greater good. Our company’s five-year, $5 million commitment to Points
of Light to help administer the Exelis Action Corps is a tangible example of our
company’s values in action and an extension of the work we do to safeguard the men
and women who wear the uniform of our country.
In June, we sponsored the annual Points of Light National Conference on Volunteering
and Service. More than 5,000 volunteer and service leaders from the nonprofit,
corporate and government sectors attended the 2013 event. As part of the larger
event, we hosted a Military Summit for more than 200 attendees that focused on
developing and sharing better ideas to support our nation’s veterans and military
families. One of the summit highlights was the keynote speech by U.S. Army General
Martin Dempsey, Chairman of the Joint Chiefs of Staff, who pointed to Community
Blueprint — a national, community-based program led by Points of Light, Exelis and
the Corporation for National and Community Service — as having “the power to make
real change in service members’ lives.”
1,662
VOLUNTEERS
5,617
HOURS
111,137
VETERANS SERVED
$700,000
COMMUNITY IMPACT
In 2014, as we increase the number of volunteer projects that take place under the
Exelis Action Corps banner, we are putting increased emphasis on job readiness for
veterans and job placement for them and their spouses. You can read more about
what we are doing in this area in the Employees and Workplace section of this report.
Service members answer the call to duty, and we are stepping forward to support them
and their families through the Exelis Action Corps.
2013 ANNUAL AND CORPORATE RESPONSIBILITY REPORT | 9
EMPLOYEES & WORKPLACE
At Exelis, we don’t think of employees as assets or resources. They are real people, and
each of them brings their own talents, ideas and drive to our business. In return, we
have a responsibility to create a safe, healthy and engaging work environment that
encourages our people to be their best. When they are at their best, so is Exelis.
We employ more than 17,000 people — from engineers, scientists and technologists to
manufacturing personnel and business leaders — and we’re continually implementing
and improving programs designed to enhance their work lives. When we create a fulfilling
environment, our workforce becomes the driving force behind our business success.
Health and Safety
Our culture-building efforts begin with health and safety initiatives that ensure we are
looking after the physical well-being of our employees. Every Exelis site provides
mandatory safety training, and our manufacturing facilities hold regular safety
meetings. In 2013, we provided employees with an average of three hours of safety
instruction, and the underlying message is always personal accountability.
We can point the way to health and safety — and we do, especially through our
network of Environment, Safety & Health professionals — but employees and their
supervisors have to carry out the actions that will make it happen.
To help employees stay safe on their jobs, we strive for a corporate-wide “Accept Only
Zero” injury goal, use the Exelis Environment, Safety & Health Management System to
establish standards and repeatable processes across all our sites, and provide access
to injury reduction policies, tools and tactics. We believe that positive reinforcement
delivers better results, and measure and promote desired activities such as selfinspections, safety interventions and hazard observations. In 2013, we achieved a
year-over-year reduction in injury severity and incurred a slight increase in injury
frequency that still reflected an overall downward trend over the last several years.
Development Opportunities
With our focus on the future, Exelis empowers employees to reach for new experiences,
develop additional skills and keep moving forward along energizing career paths.
Exelis also offers management and leadership training for our first-line supervisors and
managers, and we conduct regular engagement surveys to ensure that employees feel
they are active partners in our journey. Our next survey will be conducted in May 2014.
To help grow our future leaders, we created the CEO High Potential Leadership
Development Program, designed to provide employees from diverse backgrounds an
opportunity to rotate through various business divisions within Exelis. Exelis also
continued the STAND leadership development program for top company leaders, and
10 | EXELIS
INJURY FREQUENCY
Medical + lost workday cases x
200,000 / number of hours worked
2010
0.87
2011
0.86
2012
2013
0.68
0.77
INJURY SEVERITY
Lost workdays x 200,000 hours /
number of hours worked
2010
8.40
2011
8.33
10.77
2012
2013
7.97
OHSAS CERTIFICATIONS
11 Exelis sites earned or
renewed their Occupational
Health and Safety Assessment
Series (OHSAS) certification
in 2013, meaning their
management system meets
the international standard for
workplace health and safety.
in 2013 we added a community service element to the curriculum. These leaders are
now responsible for creating, planning, managing and recruiting other volunteers for
their own Exelis Action Corps service projects.
Last year, our company — like many others in the challenging defense and aerospace
industry — experienced headcount reductions. To stay competitive, we consolidated
several sites and lowered our overall employee population by about 14 percent. These
were extremely difficult decisions, and we worked with the displaced employees,
offering outplacement services and severance in accordance with policy to help them
with this transition.
Inclusion and Diversity
A key aspect of the Exelis vision is to foster an inclusive culture that promotes the
diverse perspectives, backgrounds and contributions of every employee, and enables
the company to deliver superior business results.
In keeping with this vision, we announced the formation of the Exelis Inclusion and
Diversity Council in January 2014. The council provides a forum for raising important
issues relating to inclusion and diversity across Exelis. Exelis CEO and President David
Melcher serves as the chair of the council, and Chief Inclusion and Diversity Officer
Erica Jeffries serves as executive director. Along with the council, Jeffries is working
on developing an inclusion and diversity scorecard that will allow us to better measure
our progress in quantitative terms and against best-in-class goals.
To introduce our company to a wider audience of potential employees, we continue to
partner with diversity-based professional associations and participated in career fairs
sponsored by these groups throughout 2013.
We also introduced two new programs in 2013 that open new doors to our company
for military veterans and their spouses. Through our Exelis Action Corps citizenship
program, we partnered with global recruiting firm Korn Ferry to launch the Leveraging
Military Leadership Program, which aims to help service members transition from the
military and leverage their military experience for civilian leadership positions.
In addition, we are participating in the Military Spouse Employment Partnership Program.
Because military families move frequently, it’s often difficult for military spouses to
find and keep employment. Through this program, all Exelis job openings will be posted
on the program’s website, allowing us to connect with military spouses who have the
talent and skills that match our diverse business needs.
A MILITARY-FRIENDLY
EMPLOYER
Exelis has more than 2,000 Reserve,
National Guard and former military
service members among our
employees. In 2013, we received
a number of recognitions for
our efforts supporting service
members, veterans and military
families, including:
> The Corporation for National &
Community Service National Service
Impact Award, as a sponsor of the
Points of Light Community Blueprint
and Veteran Leader Corps
> Membership in the Military
Spouse Employment Partnership
> Inclusion on the G.I. Jobs list of
“Military Friendly Employers”
> Finalist for the U.S. Chamber of
Commerce Foundation’s Best
Community Improvement
Program Award
PERFORMANCE
ASSESSMENTS
Our Partnership for Performance
(PfP) program encourages career
development by providing
a platform for collaborative
development and review
of employee goals, objectives,
outcomes, behavior and
competencies. In 2013, we
achieved 100 percent completion
of this program across Exelis.
2013 ANNUAL AND CORPORATE RESPONSIBILITY REPORT | 11
Standing (left to right): David F. Melcher, Herman E. Bulls, Paul J. Kern, Patrick J. Moore, R. David Yost, Mark L. Reuss
Seated (left to right): John J. Hamre, Billie I. Williamson, Ralph F. Hake
BOARD OF DIRECTORS
Ralph F. Hake,
Non-Executive Chairman,
Exelis Inc.
Former Chairman and
Chief Executive Officer,
Maytag Corporation
Member of the Audit and
Compensation & Personnel
Committees
Herman E. Bulls
International Director,
Founder and Chairman of
the Public Institutions Group
at Jones Lang LaSalle
Member of the Audit and
Nominating & Governance
Committees
John J. Hamre
Patrick J. Moore
Billie I. Williamson
President and Chief Executive
Officer, Center for Strategic &
International Studies
President and Chief Executive
Officer, PJM Advisors, LLC
Retired Partner,
Ernst & Young, LLP
Chair of the Audit Committee
Financial Expert of the
Audit Committee and
Member of the Nominating
& Governance Committee
Chair of the Nominating
& Governance Committee
Paul J. Kern
Senior Counselor,
The Cohen Group
Chair of the Compensation
& Personnel Committee and
Member of the Nominating
& Governance Committees
Mark L. Reuss
Executive Vice President,
Global Product Development,
Purchasing and Supply Chain,
General Motors Company
Member of the Compensation
& Personnel Committee
R. David Yost
Former Chief Executive Officer,
AmerisourceBergen Corporation
Member of the Compensation
& Personnel Committee
David F. Melcher
Chief Executive Officer
and President, Exelis Inc.
CORPORATE OFFICERS
David F. Melcher
Ann D. Davidson
Nicholas E. Bobay
Gregory P. Kudla
Chief Executive Officer
and President
Senior Vice President,
Chief Legal Officer and
Corporate Secretary
Corporate Vice President
and President of
Night Vision and
Communications Solutions
Corporate Vice President and
Chief Accounting Officer
Peter J. Milligan
Senior Vice President
and Chief Financial Officer
Kenneth W. Hunzeker
Executive Vice President and
President of Mission Systems
Christopher D. Young
Executive Vice President
and President of
Geospatial Systems
12 | EXELIS
Robert E. Durbin
Senior Vice President, Strategy Edward D. Doxer
and Government Relations
Corporate Vice President
and General Auditor
A. John Procopio
Senior Vice President
and Chief Human
Resources Officer
Janet L. McGregor
Corporate Vice President,
Treasurer and Corporate
Development
Richard D. Sorelle
Pamela A. Drew
Corporate Vice President
and President of
Information Systems
Corporate Vice President and
President of Electronic Systems
ABOUT THIS REPORT
Report Boundary
This report covers activities at all Exelis operations, both at our larger locations in the United States and our smaller manufacturing,
service and sales locations in other countries around the globe. Unless otherwise stated, it excludes the impacts and activities of
employees at non-Exelis-controlled facilities, such as military bases and joint venture locations.
Report Frequency
Exelis is committed to publishing an annual report that highlights our financial performance and outlines our corporate responsibility
performance. This year for the first time, we combined the two reports. This combined report, published in March 2014, presents
our financial and corporate responsibility results and progress for the full year 2013. Where stated, it also includes examples and
initiatives from early 2014 that show our continuing commitment to corporate responsibility.
Global Reporting Initiative (GRI) Application Level
The framework for the corporate responsibility portion of this report follows the criteria set out in the Global Reporting Initiative
(GRI) G3 guidelines. GRI provides indicators and benchmarks that allow companies to measure their reporting depth and quality of
reporting. This year, we are reporting at a GRI self-declared level C. The “C” rating means that we meet all of GRI’s Profile Disclosure
requirements — including a CEO statement, information about our company and markets, reporting parameters and governance
mechanisms — and we also report on a minimum of 10 Performance Indicators, including at least one from the Economic, Social
and Environmental categories, as outlined in the chart on this page.
GLOBAL REPORTING INITIATIVE CONTENT INDEX
PERFORMANCE INDICATOR
DESCRIPTION
EC1
Direct economic value generated and distributed
REPORTED
LOCATION
Fully
Inside Front Cover,
ECONOMIC
Pages 1-3
EC3
Coverage of the organization’s defined benefit plan obligations
Fully
Page 1
EN3
Direct energy by primary energy source
Fully
Pages 6-7
EN5
Energy saved due to conservation and efficiency improvements
Fully
Pages 6-7
EN7
Initiatives to reduce indirect energy consumption and reductions achieved
Partially
Page 7
EN8
Total water withdrawal by source
Fully
Pages 6-7
EN22
Total weight of waste by type and disposal method
Fully
Page 7
EN23
Total number and volume of significant spills
Fully
Page 6
EN24
Weight of hazardous waste, type of disposal and percentage transported
Fully
Page 7
Partially
Page 6
Partially
Page 10
ENVIRONMENT
under terms of Basel Convention
EN28
Monetary fine and non-monetary sanctions for non-compliance
LA1
Total workforce by employment type, employment contract and region,
SOCIAL: LABOR PRACTICES AND DECENT WORK
broken down by gender
LA2
Total number and rate of employee turnovers by age group, gender and region
Partially
Page 11
LA7
Rates of injury, occupational disease, lost days and absenteeism and number
Partially
Page 10
Partially
Page 11
Partially
Page 9
Partially
Page 5
Partially
Page 5
of work-related fatalities by region and gender
LA12
Percentage of employees receiving regular performance and career
development reviews, by gender
SO1
Percentage of operations with implemented local community engagement,
impact assessment and development programs
SO2
Percentage and total number of business units analyzed for risks related
to corruption
SO3
Percentage of employees trained in organization’s anti-corruption policies
and procedures
2013 ANNUAL AND CORPORATE RESPONSIBILITY REPORT | 6
SHAREHOLDER INFORMATION
Corporate Headquarters
Annual Meeting
1650 Tysons Boulevard, Suite 1700
McLean, VA 22102
703-790-6300
The Annual Meeting of Shareholders is
scheduled for 8:00 a.m. EDT on May 7, 2014,
at Exelis Inc. Headquarters, 16th Floor,
McLean, VA 22102. Proxies for the
meeting will be solicited in a separate
Proxy Statement.
Stock Exchange Listing
Exelis Inc. is listed on the New York Stock
Exchange (NYSE) under the ticker symbol XLS.
Company Website
Shareholder Services/Transfer Agent
Questions concerning accounts for registered
stockholders and other matters, including direct
stock purchase, dividend payment information
and dividend reinvestment plan information,
can be directed to our plan administrator and
transfer agent, Computershare Shareholder
Services, via the following methods:
Telephone
United States and Canada:
1-866-416-6111
International Inquiries:
1-201-680-6578
Hearing Impaired (TDD):
1-800-231-5469
Mailing Address
Computershare
P.O. BOX 30170
College Station, TX 77842-3170
Internet
www.bnymellon.com/shareowner/equityaccess
Investor Relations
Questions from shareholders, analysts
and others can be directed to:
Katy Herr
Director, Investor Relations
Phone: 703-790-6300
Email: exelisinvestorrelations@exelisinc.com
Written requests, including requests for
company filings with the U.S. Securities and
Exchange Commission (SEC), should be
directed to:
Additional Exelis information is available
at www.exelisinc.com, including all of the
documents the company files with or
furnishes to the SEC, which are available
for download, free of charge.
Board of Directors
You may communicate with the Exelis Board
of Directors via the Corporate Secretary by
writing a letter sealed in a large envelope OR
emailing using the addresses listed below:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
boardofdirectors@exelisinc.com
Certifications
The company has included, as Exhibits 31.1
and 31.2 to its Annual Report on Form 10-K
for the year ended December 31, 2013 filed
with the SEC, certificates of Exelis’ Chief
Executive Officer and Chief Financial Officer
certifying the quality of the company’s public
disclosure. The Chief Executive Officer has
also submitted to the NYSE a certificate
certifying that he is not aware of any
violations by Exelis of the NYSE Corporate
Governance Listing Standards.
Independent Auditors
Deloitte and Touche, LLP
1750 Tysons Boulevard
McLean, VA 22102
Investor Relations
Exelis Inc.
1650 Tysons Boulevard, Suite 1700
McLean, VA 22102
Exelis is a trademark of Exelis Inc.
Copyright ©2014 Exelis Inc.
Exelis Inc. | 1650 Tysons Boulevard Suite 1700 McLean VA, 22102 | 703-790-6300 | www.exelisinc.com
1 | EXELIS