Acquisitions and Dispositions

6 Months Ended

Jul. 01, 2011

Acquisitions and Dispositions [Abstract]


4.	Acquisitions and Dispositions

All of the business acquisitions discussed below are included in the Company’s results of operations from their respective dates of acquisition.

2011 Business Acquisition and Disposition

On July 1, 2011, the Company acquired the communications and engineering business of ComHouse Wireless L.P. (ComHouse) for $13 million, subject to adjustment based on the closing date actual net assets. The acquired business provides L-3 with cellular wave form modulation technology that can be used to counter improvised explosive devices. Based on the preliminary purchase price allocation, the goodwill recognized for this business acquisition was $9 million and is expected to be deductible for income tax purposes. The goodwill was assigned to the Electronic Systems segment.

On February 22, 2011, the Company divested Microdyne Corporation (Microdyne), which was within the Electronic Systems segment. The divestiture resulted in an after-tax loss of approximately $1 million. Microdyne’s annual revenues (approximately $8 million), operating results and net assets were not material for any period presented and, therefore, this divestiture is not reported as a discontinued operation.

2010 Business Acquisitions and Disposition

During the year ended December 31, 2010, in separate transactions, the Company acquired Insight Technology Incorporated (Insight), Airborne Technologies, Inc. (ATI), 3Di Technologies (3Di), and FUNA International GmbH (FUNA). In addition, the Company divested the InfraredVision Technology Corporation business. See Note 4 to the audited consolidated financial statements for the year ended December 31, 2010, included in the Company’s Annual Report on Form 10-K for additional information regarding these business acquisitions and the disposition.

As of July 1, 2011, the purchase prices for Insight, ATI, and 3Di were finalized and the purchase price allocations were completed with no significant changes from the preliminary amounts. The purchase price for the FUNA business acquisition was finalized as of July 1, 2011 and the purchase price allocation is expected to be completed during the third quarter of 2011 and will be based on final appraisals and other analyses of fair values for acquired assets and assumed liabilities. The Company does not expect the differences between the preliminary and final purchase price allocation for this acquisition to have a material impact on its results of operations or financial position.

Unaudited Pro Forma Statements of Operations Data

The following unaudited pro forma Statement of Operations data presents the combined results of the Company and its business acquisitions completed during the year ended December 31, 2010, assuming that the business acquisitions completed during that period had occurred on January 1, 2010.


	Second Quarter Ended		First Half Ended
	June 25, 2010		June 25, 2010
	(in millions, except per share data)

Pro forma net sales	$	4,002	$	7,720
Pro forma net income attributable to L-3	$	234	$	462
Pro forma diluted earnings per share	$	2.00	$	3.93

The unaudited pro forma results disclosed in the table above are based on various assumptions and are not necessarily indicative of the results of operations that would have occurred had the Company completed these acquisitions on January 1, 2010.