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Basis of Presentation (Tables)
 6 Months Ended
Jun. 29, 2018
Accounting Policies [Abstract]  
Aggregate Impact of Net Changes in Contract Estimates
The aggregate impact of net changes in contract estimates is presented in the table below.
 
Second Quarter Ended
 
First Half Ended
 
June 29,
2018
 
June 30,
2017
 
June 29,
2018
 
June 30,
2017
 
(in millions, except per share data)
Operating income
$
64

 
$
42

 
$
128

 
$
84

Diluted earnings per share
$
0.61

 
$
0.35

 
$
1.22

 
$
0.67
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 first half period ended June 29, 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 is presented in the table below.
 
Second Quarter Ended
 
First Half Ended
 
June 29,
2018
 
June 30,
2017
 
June 29,
2018
 
June 30,
2017
 
(in millions, except per share data)
Operating income
$
64

 
$
42

 
$
128

 
$
84

Diluted earnings per share
$
0.61

 
$
0.35

 
$
1.22

 
$
0.67

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 tables below present the impact of the adoption of ASC 606 on the Company's statement of operations.
 
Second Quarter Ended June 29, 2018
STATEMENT OF OPERATIONS
Under
ASC 605
 
Effect of
ASC 606
 
As Reported
Under ASC 606
 
 
 
(in millions)
 
 
Net Sales:
 
 
 
 
 
Products
$
1,741

 
$
45

 
$
1,786

Services
797

 
—

 
797

Total
2,538

 
45

 
2,583

 
 
 
 
 
 
Operating costs and expenses:
 
 
 
 
 
Cost of sales — Products
$
(1,316
)
 
$
(33
)
 
$
(1,349
)
Cost of sales — Services
(561
)
 
(17
)
 
(578
)
 General and administrative expenses
(387
)
 
4

 
(383
)
 Gain on sale of the Crestview & TCS Businesses
47

 
1

 
48

Operating income
321

 
—

 
321

Income from continuing operations before income taxes
237

 
—

 
237

Provision for income taxes
(48
)
 
—

 
(48
)
Income from continuing operations
189

 
—

 
189

Income from discontinued operations, net of income taxes
191

 
(1
)
 
190

Net income
380

 
(1
)
 
379

Net income attributable to L3
$
376

 
$
(1
)
 
$
375

 
 
 
 
 
 
Basic earnings per share attributable to common shareholders:
 
 
 
 
 
Continuing operations
$
2.36

 
$
—

 
$
2.36

Discontinued operations
2.44

 
(0.02
)
 
2.42

Basic earnings per share
$
4.80

 
$
(0.02
)
 
$
4.78

Diluted earnings per share attributable to common shareholders:
 
 
 
 
 
Continuing operations
$
2.33

 
$
—

 
$
2.33

Discontinued operations
2.41

 
(0.02
)
 
2.39

Diluted earnings per share
$
4.74

 
$
(0.02
)
 
$
4.72

 
First Half Ended June 29, 2018
STATEMENT OF OPERATIONS
Under
ASC 605
 
Effect of
ASC 606
 
As Reported
Under ASC 606
 
 
 
(in millions)
 
 
Net Sales:
 
 
 
 
 
Products
$
3,315

 
$
117

 
$
3,432

Services
1,518

 
4

 
1,522

Total
4,833

 
121

 
4,954

 
 
 
 
 
 
Operating costs and expenses:
 
 
 
 
 
Cost of sales — Products
$
(2,461
)
 
$
(79
)
 
$
(2,540
)
Cost of sales — Services
(1,089
)
 
(21
)
 
(1,110
)
 General and administrative expenses
(777
)
 
(3
)
 
(780
)
 Gain on sale of the Crestview & TCS Businesses
47

 
1

 
48

Operating income
553

 
19

 
572

Income from continuing operations before income taxes
434

 
19

 
453

Provision for income taxes
(67
)
 
(5
)
 
(72
)
Income from continuing operations
367

 
14

 
381

Income from discontinued operations, net of income taxes
206

 
—

 
206

Net income
573

 
14

 
587

Net income attributable to L3
$
564

 
$
14

 
$
578

 
 
 
 
 
 
Basic earnings per share attributable to common shareholders:
 
 
 
 
 
Continuing operations
$
4.57

 
$
0.18

 
$
4.75

Discontinued operations
2.63

 
—

 
2.63

Basic earnings per share
$
7.20

 
$
0.18

 
$
7.38

Diluted earnings per share attributable to common shareholders:
 
 
 
 
 
Continuing operations
$
4.50

 
$
0.17

 
$
4.67

Discontinued operations
2.59

 
—

 
2.59

Diluted earnings per share
$
7.09

 
$
0.17

 
$
7.26

The following table quantifies the impact of adopting ASC 606 on segment net sales and segment operating income for the quarterly and first half periods ended June 29, 2018.
 
Effect of ASC 606
 
Second Quarter Ended June 29, 2018
 
First Half Ended June 29, 2018
 
Sales
 
Operating Income
 
Sales
 
Operating Income
 
(in millions)
Electronic Systems
$
14

 
$
4

 
$
44

 
$
7

Aerospace Systems
(2
)
 
(7
)
 
2

 
(6
)
Communication Systems
21

 
(1
)
 
41

 
3

Sensor Systems
12

 
3

 
34

 
14

Segment totals
$
45

 
$
(1
)
 
$
121

 
$
18

The table below presents the impact of the adoption of ASC 606 on the Company's balance sheet.
 
June 29, 2018
BALANCE SHEET
Under
ASC 605
 
Effect of
ASC 606
 
As Reported
Under ASC 606
 
 
 
(in millions)
 
 
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Contract assets
$
—

 
$
1,611

 
$
1,611

Contracts in process
2,185

 
(2,185
)
 
—

Inventories
405

 
529

 
934

Prepaid expenses and other current assets
316

 
16

 
332

Assets held for sale
—

 
—

 
—

Assets of discontinued operations
—

 
—

 
—

Total current assets
5,135

 
(29
)
 
5,106

Other assets
300

 
48

 
348

Total assets
$
13,511

 
$
19

 
$
13,530

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accrued expenses
$
279

 
$
(15
)
 
$
264

Contract liabilities
—

 
554

 
554

Advance payments and billings in excess of costs incurred
522

 
(522
)
 
—

Other current liabilities
384

 
(46
)
 
338

Total current liabilities
2,832

 
(29
)
 
2,803

Deferred income taxes
181

 
9

 
190

Other liabilities
402

 
14

 
416

Total liabilities
8,024

 
(6
)
 
8,018

Shareholders' Equity
 
 
 
 
 
Retained earnings
7,101

 
25

 
7,126

Total equity
$
5,487

 
$
25

 
$
5,512