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Basis of Presentation (Tables)
 3 Months Ended
Mar. 30, 2018
Accounting Policies [Abstract]  
Aggregate Impact of Net Changes in Contract Estimates
The aggregate impact of net changes in contract estimates are presented in the table below.
 
First Quarter Ended
 
March 30,
2018
 
March 31,
2017
 
(in millions)
Operating income
$
65

 
$
39

Diluted earnings per share
$
0.63

 
$
0.31
Summary of Net Sales by Revenue Recognition Method as Percentage of Total Net Sales
The following table presents a summary of the Company’s net sales by revenue recognition method as a percentage of total net sales for the quarterly period ended March 30, 2018.
 
% of Total Net Sales
Cost to cost method
76
%
Point in time
18
%
Output method
3
%
Billing method
3
%
Total
100
%
Impact of Adoption of New Accounting Pronouncement
The aggregate impact of net changes in contract estimates are presented in the table below.
 
First Quarter Ended
 
March 30,
2018
 
March 31,
2017
 
(in millions)
Operating income
$
65

 
$
39

Diluted earnings per share
$
0.63

 
$
0.31

The table below presents the cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet due to the adoption of ASC 606.
BALANCE SHEET
December 31, 2017 As Reported Under ASC 605
 
Adjustments Due to ASC 606
 
January 1, 2018 As Adjusted Under ASC 606
 
 
 
(in millions)
 
 
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Contract assets
$
—

 
$
1,349

 
$
1,349

Contracts in process
1,933

 
(1,933
)
 
—

Inventories
389

 
537

 
926

Prepaid expenses and other current assets
300

 
17

 
317

Assets held for sale
135

 
3

 
138

Assets of discontinued operations
306

 
(21
)
 
285

Total current assets
4,448

 
(48
)
 
4,400

Other assets
264

 
49

 
313

Total assets
$
12,729

 
$
1

 
$
12,730

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accrued expenses
$
217

 
$
(13
)
 
$
204

Contract liabilities
—

 
565

 
565

Advance payments and billing in excess of costs incurred
509

 
(509
)
 
—

Other current liabilities
367

 
(49
)
 
318

Liabilities held for sale
17

 
(1
)
 
16

Liabilities of discontinued operations
226

 
(23
)
 
203

Total current liabilities
2,379

 
(30
)
 
2,349

Deferred income taxes
158

 
4

 
162

Other liabilities
398

 
14

 
412

Total liabilities
7,578

 
(12
)
 
7,566

Shareholders' Equity
 
 
 
 
 
Retained earnings
6,659

 
13

 
6,672

Total equity
$
5,151

 
$
13

 
$
5,164

The table below presents the impact of the adoption of ASC 606 on the Company's statement of operations.
 
First Quarter Ended March 30, 2018
STATEMENT OF OPERATIONS
Under
ASC 605
 
Effect of
ASC 606
 
As Reported Under ASC 606
 
 
 
(in millions)
 
 
Net Sales:
 
 
 
 
 
Products
$
1,574

 
$
72

 
$
1,646

Services
721

 
4

 
725

Total
2,295

 
76

 
2,371

 
 
 
 
 
 
Operating costs and expenses:
 
 
 
 
 
Cost of sales — Products
$
(1,145
)
 
$
(46
)
 
$
(1,191
)
Cost of sales — Services
(528
)
 
(4
)
 
(532
)
 General and administrative expenses
(390
)
 
(7
)
 
(397
)
Operating income
$
232

 
$
19

 
$
251

Income from continuing operations before income taxes
197

 
19

 
216

Provision for income taxes
(19
)
 
(5
)
 
(24
)
Income from continuing operations
178

 
14

 
192

Income from discontinued operations, net of income taxes
15

 
1

 
16

Net income
193

 
15

 
208

Net income attributable to L3
$
188

 
$
15

 
$
203

 
 
 
 
 
 
Basic earnings per share attributable to common shareholders:
 
 
 
 
 
Continuing operations
$
2.21

 
$
0.19

 
$
2.40

Discontinued operations
0.19

 
0.01

 
0.20

Basic earnings per share
$
2.40

 
$
0.20

 
$
2.60

Diluted earnings per share attributable to common shareholders:
 
 
 
 
 
Continuing operations
$
2.16

 
$
0.18

 
$
2.34

Discontinued operations
0.19

 
0.01

 
0.20

Diluted earnings per share
$
2.35

 
$
0.19

 
$
2.54

The following table quantifies the impact of adopting ASC 606 on segment net sales and operating income for the quarterly period ended March 30, 2018.
 
Effect of ASC 606
 
Sales
 
Operating Income
 
(in millions)
Electronic Systems
$
30

 
$
3

Aerospace Systems
4

 
1

Communication Systems
20

 
4

Sensor Systems
22

 
11

Consolidated
$
76

 
$
19

The table below presents the impact of the adoption of ASC 606 on the Company's balance sheet.
 
March 30, 2018
BALANCE SHEET
Under
ASC 605
 
Effect of
ASC 606
 
As Reported Under ASC 606
 
 
 
(in millions)
 
 
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Contract assets
$
—

 
$
1,499

 
$
1,499

Contracts in process
2,124

 
(2,124
)
 
—

Inventories
424

 
570

 
994

Prepaid expenses and other current assets
377

 
15

 
392

Assets of discontinued operations
312

 
(25
)
 
287

Total current assets
4,545

 
(65
)
 
4,480

Other assets
296

 
50

 
346

Total assets
$
12,888

 
$
(15
)
 
$
12,873

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accrued expenses
$
218

 
$
(21
)
 
$
197

Contract liabilities
—

 
607

 
607

Advance payments and billings in excess of costs incurred
576

 
(576
)
 
—

Other current liabilities
367

 
(48
)
 
319

Liabilities held for sale
20

 
(1
)
 
19

Liabilities of discontinued operations
181

 
(27
)
 
154

Total current liabilities
2,401

 
(66
)
 
2,335

Deferred income taxes
169

 
8

 
177

Other liabilities
382

 
15

 
397

Total liabilities
7,596

 
(43
)
 
7,553

Shareholders' Equity
 
 
 
 
 
Retained earnings
6,786

 
28

 
6,814

Total equity
$
5,292

 
$
28

 
$
5,320