Acquisitions, Divestitures and Discontinued Operations (Tables)

6 Months Ended

Jun. 29, 2018

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Components of Pre-tax (Loss) Gain Recognized, Proceeds Received and Net Sales Included in Continuing Operations from Business Divestitures Of Business Divestitures

The table below presents pre-tax (loss) gain recognized, the proceeds received and net sales included in continuing operations from these divestitures.

	First Half Ended June 30, 2017
	Pre-Tax (Loss) gain			Proceeds Received		Net Sales
	(in millions)
Aviation Jet Services divestiture	$	(5	)	$	1	$	1
Coleman divestiture	(3		)	17		9
Display Product Line divestiture	4			7		—
Total	$	(4	)	$	25	$	10

Unaudited Pro Forma Statements of Operations Data

The following unaudited pro forma Statements of Operations data present the combined results of the Company and its business acquisitions completed during the first half period ended June 29, 2018 and the year ended December 31, 2017, assuming that the business acquisitions completed during 2018 and 2017 had occurred on January 1, 2017 and January 1, 2016, respectively. The unaudited pro forma Statements of Operations data below include adjustments for additional amortization expense related to acquired intangible assets and depreciation assuming the 2018 and 2017 acquisitions had occurred on January 1, 2017 and January 1, 2016, respectively.

	Second Quarter Ended				First Half Ended
	June 29, 2018		June 30, 2017		June 29, 2018		June 30, 2017
	(in millions, except per share data)
Pro forma net sales	$	2,592	$	2,413	$	4,973	$	4,765
Pro forma income from continuing operations attributable to L3	$	187	$	189	$	375	$	343
Pro forma net income attributable to L3	$	377	$	201	$	581	$	366
Pro forma diluted earnings per share from continuing operations	$	2.36	$	2.38	$	4.71	$	4.32
Pro forma diluted earnings per share	$	4.75	$	2.53	$	7.30	$	4.61

Disposal Groups, Including Discontinued Operations

As discussed in Note 1, on June 29, 2018, the Company completed the sale of its Vertex Aerospace business. The table below presents the statements of operations data for Vertex Aerospace. The amounts presented in discontinued operations include allocated interest expenses for debt not directly attributable or related to L3’s other operations. Interest expense was allocated in accordance with the accounting standards for discontinued operations and were based on the ratio of Vertex Aerospace’s net assets to the sum of: (1) L3 consolidated total net assets and (2) L3 consolidated total debt.

	Second Quarter Ended						First Half Ended
	June 29, 2018			June 30, 2017			June 29, 2018			June 30, 2017
	(in millions)
Net sales	$	226		$	351		$	597		$	703
Operating costs and expenses (1)	(212		)	(332		)	(561		)	(667		)
Operating income from discontinued operations	14			19			36			36
Interest expense allocated to discontinued operations	—			—			(1		)	(1		)
Gain on sale of businesses	237			—			237			—
Income from discontinued operations before income taxes	251			19			272			35
Income tax expense	(61		)	(7		)	(66		)	(12		)
Income from discontinued operations, net of income taxes	$	190		$	12		$	206		$	23

__________________

⁽¹⁾  For the quarterly and first half periods ended June 29, 2018, the Company recognized $3 million of trailing expenses related to the sale of NSS.

The major classes of assets and liabilities that were included in discontinued operations related to Vertex Aerospace are presented in the table below. These balances were classified as current at December 31, 2017 as the sale was expected to be completed within one year and the proceeds are not expected to be used to pay down long-term debt.

	December 31, 2017
	(in millions)
Assets
Current assets	$	284
Property, plant and equipment, net	13
Other intangible assets	7
Other assets	2
Total assets of discontinued operations	$	306
Liabilities
Accounts payable, trade	$	63
Other current liabilities	131
Current liabilities	194
Long-term liabilities	32
Total liabilities of discontinued operations	$	226

Schedule Of Results Of Operations Of Business Divestitures

Net sales and income before income taxes for Aviation Jet Services, Coleman and the Display Product Line, included in L3’s consolidated statements of operations, are presented in the table below on an aggregate basis and are included in income from continuing operations for all periods presented.

	First Half Ended
	June 30, 2017
	(in millions)
Net sales	$	10
Income before income taxes	$	2

Assets Held for Sale [Member]

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Components of Pre-tax (Loss) Gain Recognized, Proceeds Received and Net Sales Included in Continuing Operations from Business Divestitures Of Business Divestitures

The table below presents Crestview & TCS Businesses’ results of operations and is included in continuing operations.

	First Half Ended
	June 29, 2018
	(in millions)
Net Sales	$	64
Gain on sale of businesses	$	48
Income from continuing operations before income taxes	$	3

Disposal Groups, Including Discontinued Operations

The major classes of assets and liabilities included as held for sale related to the Crestview & TCS Businesses are presented in the table below.

	December 31, 2017
	(in millions)
Assets
Billed receivables	$	14
Contracts in process	33
Total current assets	47
Property, plant and equipment, net	34
Goodwill	52
Identifiable intangible assets	2
Total assets classified as held for sale	$	135
Liabilities
Accounts payable, trade	$	3
Accrued employment costs	2
Accrued expenses	3
Other current liabilities	5
Total current liabilities	13
Deferred income taxes	4
Total liabilities classified as held for sale	$	17