11-K 1 acss201711-k.htm 2017 ACSS 11-K Document

 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 

FORM 11-K

 
(Mark one)

☒ ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2017
 
OR
 
☐ TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from               to                
 
Commission file number 001-37975
 
AVIATION COMMUNICATION &
SURVEILLANCE SYSTEMS 401(K) PLAN
 
(Full title of the plan and the address of the plan, if different from that of the issuer named below)
 
L3 TECHNOLOGIES, INC.
600 Third Avenue
New York, NY 10016
 
(Name of issuer of the securities held pursuant to the plan and the address of its principal executive office)
 
 




AVIATION COMMUNICATION & SURVEILLANCE SYSTEMS 401(K) PLAN
Index to Financial Statements and Supplemental Schedule

*
Refers to item number in Form 5500 (“Annual Return/Report of Employee Benefit Plan”) filed with the Department of Labor for the plan year ended December 31, 2017
Other schedules required by 29 CFR 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted as the conditions under which they are required are not present.


Report of Independent Registered Public Accounting Firm


Plan Administrator and Plan Participants
Aviation Communication & Surveillance Systems 401(k) Plan:

Opinion on the financial statements

We have audited the accompanying statements of net assets available for benefits of the Aviation Communication & Surveillance Systems 401(k) Plan (the “Plan”) as of December 31, 2017, the related statement of changes in net assets available for benefits for the year ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2017, and the changes in net assets available for benefits for the year ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America.
Basis for opinion
 
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.
Supplemental information
 
The supplemental information in the accompanying schedule of assets (held at year end) as of December 31, 2017 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is presented for purposes of additional analysis and is not a required part of the basic financial statements but include supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the basic financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedule, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information referred to above is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

/s/ Grant Thornton LLP
 
Grant Thornton LLP
 
 
 
We have served as the Plan’s auditor since 2017.
 
 
 
New York, New York
 
June 21, 2018
 


2

Report of Independent Registered Public Accounting Firm
To the Administrator of
the L3 Technologies Master Savings Plan:


In our opinion, the accompanying statement of net assets available for benefits presents fairly, in all material respects, the net assets available for benefits of Aviation Communication & Surveillance Systems 401(k) Plan (the “Plan”) as of December 31, 2016 in conformity with accounting principles generally accepted in the United States of America. The statement of net assets available for benefits is the responsibility of the Plan’s management. Our responsibility is to express an opinion on the statement of net assets available for benefits based on our audit. We conducted our audit of the statement of net assets available for benefits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of net assets available for benefits is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and significant estimates made by management, and evaluating the overall statement of net assets available for benefits presentation. We believe that our audit provides a reasonable basis for our opinion.


/s/ PricewaterhouseCoopers LLP
 
PricewaterhouseCoopers LLP
 
New York, New York
 
June 26, 2017
 


3
AVIATION COMMUNICATION & SURVEILLANCE SYSTEMS 401(K) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2017 AND 2016
(in thousands)


 
 
2017
 
2016
Assets:
 
 
 
 
Interest in Master Trust
 
$
58,491

 
$
49,451

Receivables:
 
 

 
 

Employer contributions
 
127

 
121

Participant contributions
 
164

 
152

Notes receivable from participants
 
826

 
844

Total receivables
 
1,117

 
1,117

Net assets available for benefits
 
$
59,608

 
$
50,568


See accompanying notes to financial statements.
4
AVIATION COMMUNICATION & SURVEILLANCE SYSTEMS 401(K) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2017
(in thousands)

Additions:
 
Contributions:
 
Employer
$
1,989

Participant
2,501

Rollover
217

Total contributions
4,707

Plan interest in the Master Trust net investment gain
10,014

Interest income on notes receivable from participants
35

Total additions
14,756

Deductions:
 

Benefit payments
(5,711
)
Administrative expenses
(5
)
Total deductions
(5,716
)
Net increase
9,040

Net assets available for benefits, beginning of year
50,568

Net assets available for benefits, end of year
$
59,608


See accompanying notes to financial statements.
5


AVIATION COMMUNICATION & SURVEILLANCE SYSTEMS 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS

1. Plan Description
General
On December 31, 2016, following the merger of L-3 Communications Holdings, Inc. (“L-3 Holdings”) with and into L-3 Communications Corporation, L-3 Communications Corporation changed its name to L3 Technologies, Inc. (“L3”). The Aviation Communication & Surveillance Systems 401(k) Plan (the “Plan”) was established effective June 1, 2001. Aviation Communication & Surveillance Systems, LLC (the “Company”), a wholly-owned subsidiary of L3, maintains the Plan for its eligible employees. The following description of the Plan provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.
The Plan is a defined contribution 401(k) plan and is administered by the Benefit Plan Committee (“Plan Administrator”) appointed by L3. The Plan is designed to provide eligible employees with tax advantaged long-term savings for retirement. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended. Participants may direct their investment to a combination of different funds, which are held in the L3 Technologies, Inc. Master Trust (the “Master Trust”), managed by Fidelity Management Trust Company (“FMTC”), as Trustee.
Participant Contributions
Generally, all eligible employees can participate in the Plan, as of their date of hire, and may contribute from 1% to 25% of total compensation, as defined in the plan document. The Company has authority to limit certain highly compensated employees to contributions from 1% to 8% of total compensation, if needed to help the Plan pass discrimination testing. A participant may elect to increase, decrease, suspend or resume contributions at any time. The election will become effective as of the first day of the payroll period elected. The Internal Revenue Code (“IRC”) limited the maximum amount an employee may contribute on a pre-tax basis in 2017 to $18,000 for participants under 50 years of age and $24,000 for participants 50 years of age and over. Participants are 100% vested in their individual contributions and earnings thereon. Participants have the option of investing employee contributions in the L3 Stock Fund, as well as other available investment options offered by the Master Trust.
Each newly hired employee of the Company will be deemed to have elected to contribute 3% per pay period to the Plan. The contribution will commence on or after the 60th day following the employee’s date of hire. An employee may elect to opt out of the automatic enrollment before the 60th day after the employee’s date of hire or change the contribution amount.
An employee who is automatically enrolled in the Plan will have his or her pre-tax contributions invested in an investment fund designated by the Plan Administrator as the qualified default investment alternative (“QDIA”). The QDIA for the Plan is the appropriate age-based Fidelity Freedom K Fund.
Vesting 
Company contributions for Plan participants hired on or after July 1, 2007 are 100% vested in Company contributions immediately. Company contributions for Plan participants hired before July 1, 2007 are also 100% vested based on five years vesting. Participants will also become fully vested in Company contributions and net earnings thereon upon 1) disability, 2) death or 3) the participants’ 65 th birthday if the participant is actively employed by the Company.
Participant Accounts
Each participant’s account is credited with the participant’s contributions and allocations of (a) the Company’s contributions and (b) the Plan’s interest in the Master Trust net investment gain (loss), and may be charged with certain administrative expenses.
Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.


6


AVIATION COMMUNICATION & SURVEILLANCE SYSTEMS 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (continued)

Employer Contributions
Generally, employer contributions are made in the L3 Stock Fund, as described below under Note 2. A participant may make an investment election to transfer employer contributions to other investment options.
The Company matches 75% (50% for employees hired before July 1, 2007) of participants’ contributions up to a maximum participant elected contribution percentage of 8% of total compensation, which increases to 100% of participants’ contributions, up to 8% of total compensation after five years of service. All Company matching contributions are made in the L3 Stock Fund with L3 common stock. A participant has the right to transfer his or her employer matching contribution into one or more of the available investment funds immediately after deposit to their account.
2. Summary of Significant Accounting Policies
Interest in Master Trust
Investment assets of the Plan are maintained in the Master Trust administered by FMTC, as Trustee. The Plan participates in the Master Trust along with the L3 Technologies Master Savings Plan, and these plans together are collectively referred to as the Participating Plans.
The interest in the Master Trust represents the Plan’s specific interest in the assets of the Master Trust. The assets consist of units of funds that are maintained by FMTC. Contributions, benefit payments and certain administrative expenses are specifically identified and charged to the Plan.
Valuation of Investments
The investment in the Master Trust is stated at fair value. Investments in mutual funds are valued at quoted market prices, which represent the net asset value per share as reported by Fidelity Management and Research Company. Refer to Note 4 for additional information and disclosure provided for the fair value of the Plan’s investments.
The L3 Stock Fund is a unitized fund as of December 31, 2017 and 2016. As a unitized fund, the L3 Stock Fund’s value is determined by its underlying assets consisting of shares of L3 common stock and the Fidelity Institutional Money Market Fund, sufficient to meet the L3 Stock Fund’s daily cash requirements. The L3 Stock Fund’s unit price is computed daily by the Trustee.
Shares of common stock held in the L3 Stock Fund as of December 31, 2017 and 2016 are valued at the last reported quoted market price of a share on the last trading day of the year. The money market fund is valued at cost plus accrued interest, which approximates fair value.
The Fidelity Managed Income Portfolio II – Class 3 (“MIP Fund”), a common/collective trust fund investment, is stated at fair value. The beneficial interest in the net assets of the MIP Fund is represented by units.
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of accounting.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosures of contingent assets and liabilities. Actual results will differ from these estimates. The most significant estimates relate to valuations of investments in the Master Trust.
The Plan’s investments are stated at fair value. Refer to Note 4 for additional information and disclosures provided for the fair value of the Plan’s investments.


7


AVIATION COMMUNICATION & SURVEILLANCE SYSTEMS 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (continued)

Investment Transactions and Investment Income/Loss
Investment transactions by the Master Trust are accounted for on a trade-date basis. Dividend income is recorded on the ex-dividend date. Interest income is recorded on an accrual basis. Gains and losses on sales of investment securities are determined based on the average cost method. Net appreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
Forfeited Contributions
Non-vested Company contributions are forfeited upon a participant’s five year break in service or withdrawal of a participant’s vested balance, if earlier. Forfeited contributions are used to reduce future Company contributions and to pay plan expenses. Forfeited contributions utilized during 2017 were $899. Forfeited contributions available for future use were $1,238 and $127 as of December 31, 2017 and 2016, respectively.
Benefit Payments
Benefit payments are recorded when paid.
Plan Expenses
The Plan provides for the payment of all administrative expenses including trustee, record keeping, consulting from available forfeited contributions. Loan administration fees are charged to participants. In the event that forfeited contributions are not available, the Company pays for administrative expenses. Taxes and investment fees related to the stock or mutual funds are paid from the net assets of such funds.
Risks and Uncertainties
The Plan provides for various investment fund options, which in turn invest in a combination of stocks, bonds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Statement of Net Assets Available for Benefits and the Statement of Changes in Net Assets Available for Benefits.
New Accounting Standards Implemented
In February 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-06, which requires plans to disclose: (1) the plan’s interest in the master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively, (2) the dollar amount of their interest in each of those general types of investments, which supplements the existing requirement to disclose the master trust’s balances in each general type of investment and (3) their master trust’s other asset and liability balances and the dollar amount of the plan’s interest in each of those balances.  ASU 2017-06 also removes the requirement to disclose the percentage interest in the master trust for plans with divided interests. This update is effective for fiscal periods beginning after December 15, 2018, and early adoption is permitted. The Plan has elected to early adopt ASU 2017-06 for the year ended December 31, 2016. The adoption of this standard did not impact, other than the disclosure requirements noted above, the Plan’s statements of net assets available for benefits or statement of changes in net assets available for benefits. See Note 3 for additional information.


8


AVIATION COMMUNICATION & SURVEILLANCE SYSTEMS 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (continued)

3. Master Trust
The fair value of the assets, liabilities and investments of the Master Trust held by the Trustee and the Plan’s portion of the fair value as of December 31, 2017 and 2016 are presented in the table below.
 
 
Master Trust
 
Plan’s Portion
Fund
 
2017
 
2016
 
2017
 
2016
 
 
(in thousands)
Investments at Fair Value as Determined by Quoted Market Prices:
 
 
 
 
 
 
 
 
Mutual Funds
 
$
3,705,036

 
$
3,147,009

 
$
36,030

 
$
31,101

L3 Common Stock
 
1,505,707

 
1,176,029

 
17,543

 
13,578

Money Market Fund
 
28,023

 
23,843

 
327

 
275

 
 
5,238,766

 
4,346,881

 
53,900

 
44,954

Investments at Net Asset Value:
 
 

 
 

 
 

 
 
Common/Collective Trust Fund
 
554,421

 
581,673

 
4,591

 
4,497

 
 
$
5,793,187

 
$
4,928,554

 
$
58,491

 
$
49,451

The net investment gain of the Master Trust and the Plan’s portion of the net investment gain for the year ended December 31, 2017 are presented in the table below.
 
 
Master Trust
 
Plan’s Portion
 
 
(in thousands)
Net investment Gain:
 
 
 
 
Net appreciation in investments
 
$
741,192

 
$
7,814

Interest and dividend income
 
231,822

 
2,200

Net investment gain
 
$
973,014

 
$
10,014

Net appreciation in the fair value of the Plan’s investment, consists of the Plan’s specific share of realized gains or losses and unrealized appreciation or depreciation on those investments. The net appreciation and interest and dividends are allocated to the Participating Plans based upon participant Plan account balances.
4. Fair Value Measurements
The Plan applies the accounting standards for fair value measurement to all of the Plan’s investments that are measured and recorded at fair value. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants. The three levels of the fair value hierarchy defined by the standard are described below.
Level 1:
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. The Plan’s Level 1 investments include mutual funds, whose fair values are derived from quoted market prices.
 
 
Level 2:
Pricing inputs, other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable. The Plan does not have any Level 2 investments.
 
 
Level 3:
Pricing inputs that are generally unobservable and not corroborated by market data. The Plan does not have any Level 3 investments.


9


AVIATION COMMUNICATION & SURVEILLANCE SYSTEMS 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (continued)

Investments in the Master Trust measured at fair value on a recurring basis consisted of the following types of instruments as of December 31, 2017 and 2016.
 
 
Fair Value Measurements Using Input Type
 
 
2017
 
2016
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(in thousands)
Mutual funds
 
$
36,030

 
$
—

 
$
—

 
$
36,030

 
$
31,101

 
$
—

 
$
—

 
$
31,101

L3 Common Stock
 
17,543

 
—

 
—

 
17,543

 
13,578

 
—

 
—

 
13,578

Money Market Fund
 
327

 
—

 
—

 
327

 
275

 
—

 
—

 
275

Total investments measured at fair value
 
$
53,900

 
$
—

 
$
—

 
$
53,900

 
$
44,954

 
$
—

 
$
—

 
$
44,954

Other investments measured at net asset value (1) (2)
 
 

 
 

 
 

 
4,591

 
 

 
 

 
 

 
4,497

Total investments in the Master Trust
 
 

 
 

 
 

 
$
58,491

 
 

 
 

 
 

 
$
49,451

__________________
(1) 
In accordance with ASU 2015-07, certain investments that are measured at fair value using the net asset value (“NAV”) per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statements of net assets available for benefits.  
(2) 
All of the Plan’s other investments measured using NAV as of December 31, 2017 and 2016, consisted of an investment in a common/collective trust fund, whose fair value was based on the NAV at the end of each month as a practical expedient to estimating fair value.  This practical expedient was not used when it was determined to be probable that the fund would sell the investment for an amount different than the reported NAV.  The NAV was calculated by the fund manager and was based on the fair value of the fund’s holdings determined as of the end of each month.  Issues and redemptions were permitted daily and recorded upon receipt of the holder’s instructions based on the determined NAV.  There were no restrictions on redemption or unfunded commitments as of December 31, 2017 and 2016.
5. Benefit-Responsive Investment Contracts
The Plan, through its Master Trust, holds investments in the MIP Fund. All investment contracts held by the MIP Fund are held directly between the MIP Fund and the issuer of the contract and are nontransferable. The MIP Fund is designed to invest in investment contracts offered by major insurance companies and in fixed income securities. The MIP Fund’s investment objective is to seek preservation of capital and a competitive level of income over time. To achieve its investment objective, the MIP Fund invests in underlying assets (typically fixed-income securities or bond funds and may include derivative instruments such as futures contracts and swap agreements) and enters into wrap contracts issued by third parties, and invests in cash equivalents represented by shares in a money market fund. FMTC seeks to minimize the exposure of the MIP Fund to credit risk through, among other things, diversification of the wrap contracts across an approved group of issuers. The MIP Fund’s ability to receive amounts due pursuant to these contracts is dependent upon the issuers’ ability to meet their financial obligations.
6. Benefit Payments
Upon termination, participants may receive the vested portion of their account balance as soon as practicable, in either a lump sum or in periodic installments as provided for in the Plan document at the participants’ option. Terminated participants who have an account balance in excess of $1,000 may elect to leave their account balance in the Plan and withdraw it at any time up to age 65, but not later than age 70 1/2.
Generally, a penalty will be imposed on participant withdrawals made before the participant reaches age 59 1/2. Participant withdrawals may be made prior to reaching age 59 1/2 without incurring a penalty in the event of financial hardship as determined pursuant to provisions of the Plan and the IRC. In the event of retirement or termination of employment prior to age 59 1/2, funds may be rolled over to another qualified plan or individual retirement account without being subject to income tax or a penalty.


10


AVIATION COMMUNICATION & SURVEILLANCE SYSTEMS 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (continued)

7. Loans
The Plan provides for loans to active participants. Participants may not have more than one loan outstanding at any time and the maximum loan allowed to each participant is the lesser of (1) $50,000 less the highest outstanding loan balance over the prior 12 months or (2) 50% of the vested value of the participant’s account in the Plan. The minimum loan amount is $1,000. The interest rate is based on the prime interest rate plus one percent, and the maximum term of a loan is five years, or thirty years if used to purchase a principal residence. 
Loan repayments are made through payroll deductions, with principal and interest credited to the participants’ fund accounts. Repayment of the entire balance is permitted at any time. Participants who terminate employment may continue to repay their outstanding loans as permitted by the Plan document. Participant loans are collateralized by the participant’s vested account balance. Notes receivable from participants includes both the outstanding principal balance and accrued interest. No allowance for credit losses has been recorded as of December 31, 2017 or 2016.
8. Tax Status
The Internal Revenue Service (“IRS”) has determined and informed the Company by a letter dated April 4, 2011, that the Plan is designed in accordance with applicable sections of the IRC, and thus is exempt from federal income taxes. The Plan Administrator and the Plan’s counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. 
Based on U.S. GAAP requirements, management evaluates tax positions taken by the Plan and recognizes a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan Administrator has analyzed the tax positions by the Plan, and has concluded that as of December 31, 2017 and 2016, there are no uncertain tax positions taken or expected to be taken within twelve months that would require recognition of a liability or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits in progress.
The Plan recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. There were no interest and penalties included in the Plan’s financial statements
9. Related-Party Transactions
Certain Plan investments are shares of mutual funds managed by FMTC and therefore these transactions qualify as party-in-interest. Fees paid by the Company to Fidelity Investments Institutional Operations Company, Inc. for record keeping services were $2,899 for the year ended December 31, 2017. 
The Plan’s specific interest in the L3 Stock Fund includes 88,671 shares of L3 common stock valued at $17,543,482 as of December 31, 2017 and 89,266 shares of L3 common stock valued at $13,578,216 as of December 31, 2016. The Plan received aggregate dividends on the L3 Stock Fund in the amount of $265,973 for the year ended December 31, 2017.
10. Commitments and Contingencies
In August 2014, three separate, putative class actions were filed in the United States District Court for the Southern District of New York against the Company and certain of its officers. A consolidated amended and restated complaint was filed on March 13, 2015, alleging violations of federal securities laws related to misconduct and accounting errors identified by the Company at its Aerospace Systems segment. On March 30, 2016, the court dismissed with prejudice all claims against the Company’s officers and allowed the claim against the Company to proceed to discovery. On December 20, 2016, the parties reached an agreement in principle to resolve this matter for $34.5 million, and the Company’s insurers subsequently paid the settlement amount into an escrow account to fully fund the settlement. On August 16, 2017, the court entered an order granting final approval of the settlement and dismissing the case with prejudice.
The Company engaged Fiduciary Counselors as an independent fiduciary to evaluate the preliminary settlement on behalf of the Plan. On July 19, 2017 L3 was notified that the Plan should neither opt out of the settlement nor object to it. The portion of


11


AVIATION COMMUNICATION & SURVEILLANCE SYSTEMS 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (continued)

the settlement to be received by the Plan and allocated to appropriate Plan participants’ accounts has not yet been determined, but is not expected to be material.
11. Termination Priorities
Although the Company has not expressed intent to do so, the Company can discontinue its contributions and/or terminate the Plan at any time, subject to the provisions of ERISA. In the event of a discontinuance and/or termination of the Plan, plan participants will become 100% vested in Company contributions and the net assets of the Plan will be allocated among the participants and their beneficiaries in accordance with the provisions of ERISA.
12. Subsequent Events
The Company has evaluated subsequent events from December 31, 2017 through the date these financial statements were issued. There were no subsequent events that require recognition or additional disclosure in these financial statements
13. Reconciliation of Financial Statements to Form 5500
The following tables provide a reconciliation of net assets available for benefits per the financial statements and net investment gain per the financial statements to the Form 5500:
 
 
December 31,
 
 
2017
 
2016
 
 
(in thousands)
Net assets available for benefits per the financial statements
 
$
59,608

 
$
50,568

Add: Adjustment from contract value to fair value for common/collective trust fund
 
—

 
16

Net assets available for benefits per the Form 5500
 
$
59,608

 
$
50,584


 
December 31, 2017
 
(in thousands)
Total net investment gain per the financial statements
$
10,014

Add: Adjustment from contract value to fair value for common/collective trust fund
16

Total net investment gain per the Form 5500
$
10,030



12
AVIATION COMMUNICATION & SURVEILLANCE SYSTEMS 401(K) PLAN
SCHEDULE H, LINE 4i – SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2017
(in thousands)

Description of Investment
 
Cost
 
Current Value
Interest in Master Trust
 
—

 
$
58,491

Participant loans*
 
—

 
824

Total
 
—

 
$
59,315

__________________
*
Consists of participant loans with interest rates ranging from 4.25% to 8.50%, maturing through April 2046.


13

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Aviation Communication & Surveillance Systems 401(k) Plan
 
 
Date: June 21, 2018
/s/ Ralph G. D’Ambrosio
 
Name:
Ralph G. D’Ambrosio
 
Title:
Authorized Signatory,
 
 
L-3 Benefit Plan Committee


14