Acquisitions, Divestitures and Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2018

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

Net Sales and Income Before Income Taxes for Kigre, G-Air, Doss Aviation, Adaptive Methods, Open Water Power, OceanServer and ETD Business

Net sales and income before income taxes for ASV Global, C.K. Industrial Engineers, Azimuth Security, Linchpin Labs, Applied Defense Solutions and Latitude Engineering, included in L3’s consolidated statement of operations for the year ended December 31, 2018, are presented in the table below.

	Year Ended December 31, 2018
	(in millions)
Net sales	$	46
Loss before income taxes(1)	$	(7	)

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⁽¹⁾  Includes intangible amortization of $7 million and IRAD expense of $1 million.

Unaudited Pro Forma Statements of Operations Data

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.

	Year Ended December 31,
	2018		2017
	(in millions, except per share data)
Pro forma net sales	$	10,324	$	9,741
Pro forma income from continuing operations attributable to L3	$	805	$	756
Pro forma net income attributable to L3	$	1,010	$	680
Pro forma diluted earnings per share from continuing operations	$	10.11	$	9.50
Pro forma diluted earnings per share	$	12.69	$	8.54

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

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

	Year Ended December 31, 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

Net Sales and Income Before Income Taxes for Aviation Jet Services, Coleman, the Display Product Line, MSI, BSI, the Tinsley Product Line and Klein

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.

	Year Ended December 31,
	2017		2016
	(in millions)
Net sales	$	10	$	59
Income before income taxes	$	2	$	8

Discontinued Operations, 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

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

	Year Ended December 31,
	2018		2017			2016
	(in millions)
Net sales	$	64	$	119		$	166
Gain on sale of businesses	$	42	$	—		$	—
Income from continuing operations before income taxes	$	45	$	(2	)	$	12

Major Classes of Assets and Liabilities Included as Discontinued Operations/Held For Sale

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

Vertex Aerospace and NSS [Member]

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

Major Classes of Assets and Liabilities Included as Discontinued Operations/Held For Sale

The table below presents the statements of operations data for Vertex Aerospace and NSS. 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 their net assets to the sum of: (1) total L3 consolidated net assets and (2) L3 consolidated total debt.

	Year Ended December 31,
	2018			2017			2016
	(in millions)
Net sales	$	597		$	1,429		$	1,402
Operating costs and expenses(1)	(561		)	(1,531		)	(1,357		)
Operating income (loss) from discontinued operations	36			(102		)	45
Interest expense allocated to discontinued operations	(1		)	(2		)	(5		)
Gain on sale of businesses	234			—			64
Income (loss) from discontinued operations before income taxes	269			(104		)	104
Income tax (expense) benefit	(64		)	28			(13		)
Income (loss) from discontinued operations, net of income taxes	$	205		$	(76	)	$	91

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⁽¹⁾  Due to a decline in estimated fair value, the Company recorded a goodwill impairment charge of $187 million during 2017 related to Vertex Ae

Vertex Aerospace [Member]

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

Major Classes of Assets and Liabilities Included as Discontinued Operations/Held For Sale

The major classes of assets and liabilities 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 were not expected to be used to pay down long-term debt. As discussed above, since the sale of NSS was completed on February 1, 2016, the balances below exclude NSS.

	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