Financial Information of L3 and Its Subsidiaries (Tables)

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Disclosure [Abstract]

The following condensed combining financial information presents the results of operations, financial position and cash flows of: (1) L3 excluding its consolidated subsidiaries (the Parent), (2) the Guarantor Subsidiaries, (3) the Non-Guarantor Subsidiaries and (4) the eliminations to arrive at the information for L3 on a consolidated basis.



	L3		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated L3
	(in millions)
Condensed Combining Balance Sheets:
At December 31, 2018:
Current assets:
Cash and cash equivalents	$	756	$	21	$	306	$	(17	)	$	1,066
Billed receivables, net	291		341		287		—			919
Contract assets	562		833		195		—			1,590
Inventories	378		258		243		—			879
Prepaid expenses and other current assets	127		166		63		—			356
Total current assets	2,114		1,619		1,094		(17		)	4,810
Goodwill	2,124		3,009		1,675		—			6,808
Other assets	690		765		445		—			1,900
Investment in and amounts due from consolidated subsidiaries	5,931		6,912		—		(12,843		)	—
Total assets	$	10,859	$	12,305	$	3,214	$	(12,860	)	$	13,518
Current liabilities	$	821	$	955	$	688	$	(17	)	$	2,447
Amounts due to consolidated subsidiaries	—		—		417		(417		)	—
Other long-term liabilities	878		804		161		—			1,843
Long-term debt	3,321		—		—		—			3,321
Total liabilities	5,020		1,759		1,266		(434		)	7,611
L3 shareholders’ equity	5,839		10,546		1,948		(12,494		)	5,839
Noncontrolling interests	—		—		—		68			68
Total equity	5,839		10,546		1,948		(12,426		)	5,907
Total liabilities and equity	$	10,859	$	12,305	$	3,214	$	(12,860	)	$	13,518



	L3		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated L3
	(in millions)
At December 31, 2017:
Current assets:
Cash and cash equivalents	$	432	$	16	$	285	$	(71	)	$	662
Billed receivables, net	266		244		213		—			723
Contracts in process	706		912		315		—			1,933
Prepaid expenses and other current assets	330		235		124		—			689
Assets held for sale	—		135		—		—			135
Assets of discontinued operations	306		—		—		—			306
Total current assets	2,040		1,542		937		(71		)	4,448
Goodwill	2,099		2,932		1,584		—			6,615
Other assets	658		687		321		—			1,666
Investment in and amounts due from consolidated subsidiaries	5,662		6,310		—		(11,972		)	—
Total assets	$	10,459	$	11,471	$	2,842	$	(12,043	)	$	12,729
Current liabilities	$	811	$	832	$	564	$	(71	)	$	2,136
Liabilities held for sale	—		17		—		—			17
Liabilities of discontinued operations	226		—		—		—			226
Amounts due to consolidated subsidiaries	—		—		391		(391		)	—
Other long-term liabilities	1,009		729		131		—			1,869
Long-term debt	3,330		—		—		—			3,330
Total liabilities	5,376		1,578		1,086		(462		)	7,578
L3 shareholders’ equity	5,083		9,893		1,756		(11,649		)	5,083
Noncontrolling interests	—		—		—		68			68
Total equity	5,083		9,893		1,756		(11,581		)	5,151
Total liabilities and equity	$	10,459	$	11,471	$	2,842	$	(12,043	)	$	12,729

Condensed Combining Statements of Operations



	L3			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated L3
	(in millions)
Condensed Combining Statements of Operations:
For the year ended December 31, 2018:
Total net sales	$	3,626		$	5,259		$	1,806		$	(447	)	$	10,244
Total operating costs and expenses	(3,180		)	(4,943		)	(1,462		)	447			(9,138		)
Gain on sale of Crestview & TCS Businesses	—			42			—			—			42
Merger and acquisition related expenses	(28		)	—			—			—			(28		)
Operating income	418			358			344			—			1,120
Interest expense	(163		)	—			(1		)	—			(164		)
Interest and other income, net	31			3			3			—			37
Debt retirement charges	(69		)	—			—			—			(69		)
Income from continuing operations before income taxes	217			361			346			—			924
Provision for income taxes	(24		)	(40		)	(39		)	—			(103		)
Equity in net income of consolidated subsidiaries	607			184			—			(791		)	—
Income from continuing operations	800			505			307			(791		)	821
Income from discontinued operations, net of income tax	205			—			—			—			205
Net income	1,005			505			307			(791		)	1,026
Net income attributable to noncontrolling interests	—			—			—			(21		)	(21		)
Net income attributable to L3	$	1,005		$	505		$	307		$	(812	)	$	1,005
Comprehensive income attributable to L3	$	971		$	427		$	226		$	(653	)	$	971

For the year ended December 31, 2017:
Total net sales	$	3,520		$	4,852		$	1,581		$	(380	)	$	9,573
Total operating costs and expenses	(3,169		)	(4,446		)	(1,307		)	380			(8,542		)
Operating income	351			406			274			—			1,031
Interest expense	(168		)	—			(1		)	—			(169		)
Interest and other income (loss), net	6			(8		)	11			—			9
Income from continuing operations before income taxes	189			398			284			—			871
Provision for income taxes	(22		)	(47		)	(33		)	—			(102		)
Equity in net income of consolidated subsidiaries	586			144			—			(730		)	—
Income from continuing operations	753			495			251			(730		)	769
Loss from discontinued operations, net of income tax	(76		)	—			—			—			(76		)
Net income	677			495			251			(730		)	693
Net income attributable to noncontrolling interests	—			—			—			(16		)	(16		)
Net income attributable to L3	$	677		$	495		$	251		$	(746	)	$	677
Comprehensive income attributable to L3	$	712		$	604		$	378		$	(982	)	$	712

For the year ended December 31, 2016:
Total net sales	$	3,351		$	4,842		$	1,348		$	(331	)	$	9,210
Total operating costs and expenses	(3,064		)	(4,406		)	(1,113		)	331			(8,252		)
Operating income	287			436			235			—			958
Interest expense	(164		)	—			—			—			(164		)
Interest and other income (loss), net	9			(3		)	11			—			17
Debt retirement charges	(7		)	—			—			—			(7		)
Income from continuing operations before income taxes	125			433			246			—			804
Provision for income taxes	(26		)	(92		)	(53		)	—			(171		)
Equity in net income of consolidated subsidiaries	520			130			—			(650		)	—
Income from continuing operations	619			471			193			(650		)	633
Income from discontinued operations, net of income tax	91			—			—			—			91
Net income	710			471			193			(650		)	724
Net income attributable to noncontrolling interests	—			—			—			(14		)	(14		)
Net income attributable to L3	$	710		$	471		$	193		$	(664	)	$	710
Comprehensive income attributable to L3	$	558		$	409		$	116		$	(525	)	$	558

Condensed Combining Statements of Cash Flows



	L3			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated L3
	(in millions)
Condensed Combining Statements of Cash Flows:
For the year ended December 31, 2018:
Operating activities:
Net cash from operating activities from continuing operations	$	555		$	238		$	256		$	(7	)	$	1,042
Investing activities:
Business acquisitions, net of cash acquired	(193		)	—			(176		)	—			(369		)
Proceeds from sale of businesses, net of closing date cash balances	360			175			—			—			535
Other investing activities	(119		)	(90		)	(48		)	—			(257		)
Net cash from (used in) investing activities from continuing operations	48			85			(224		)	—			(91		)
Financing activities:
Proceeds from sale of senior notes	1,798			—			—			—			1,798
Repurchases and redemptions of senior notes	(1,865		)	—			—			—			(1,865		)
Common stock repurchased	(322		)	—			—			—			(322		)
Dividends paid	(254		)	—			—			—			(254		)
Other financing activities	376			(318		)	4			61			123
Net cash (used in) from financing activities from continuing operations	(267		)	(318		)	4			61			(520		)
Effect of foreign currency exchange rate changes on cash	—			—			(15		)	—			(15		)
Net decrease in cash and cash equivalents of discontinued operations	(12		)	—			—			—			(12		)
Net increase in cash	324			5			21			54			404
Cash and cash equivalents, beginning of the year	432			16			285			(71		)	662
Cash and cash equivalents, end of the year	$	756		$	21		$	306		$	(17	)	$	1,066

For the year ended December 31, 2017:
Operating activities:
Net cash from operating activities from continuing operations	$	374		$	426		$	263		$	(78	)	$	985
Investing activities:
Business acquisitions, net of cash acquired	(316		)	—			—			—			(316		)
Proceeds from sale of businesses, net of closing date cash balances	17			—			1			—			18
Other investing activities	(92		)	(38		)	(25		)	—			(155		)
Net cash used in investing activities from continuing operations	(391		)	(38		)	(24		)	—			(453		)
Financing activities:
Common stock repurchased	(180		)	—			—			—			(180		)
Dividends paid	(236		)	—			—			—			(236		)
Other financing activities	490			(377		)	(177		)	114			50
Net cash from (used in) financing activities from continuing operations	74			(377		)	(177		)	114			(366		)
Effect of foreign currency exchange rate changes on cash	—			—			20			—			20
Net increase in cash and cash equivalents of discontinued operations	113			—			—			—			113
Net increase in cash	170			11			82			36			299
Cash and cash equivalents, beginning of the year	262			5			203			(107		)	363
Cash and cash equivalents, end of the year	$	432		$	16		$	285		$	(71	)	$	662



	L3			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated L3
	(in millions)
For the year ended December 31, 2016:
Operating activities:
Net cash from operating activities from continuing operations	$	440		$	509		$	259		$	(186	)	$	1,022
Investing activities:
Business acquisitions, net of cash acquired	(388		)	—			—			—			(388		)
Proceeds from sale of businesses, net of closing date cash balances	563			—			(2		)	—			561
Other investing activities	(63		)	(77		)	(43		)	—			(183		)
Net cash from (used in) investing activities from continuing operations	112			(77		)	(45		)	—			(10		)
Financing activities:
Proceeds from sale of senior notes	547			—			—			—			547
Redemption of senior notes	(856		)	—			—			—			(856		)
Common stock repurchased	(373		)	—			—			—			(373		)
Dividends paid	(220		)	—			—			—			(220		)
Other financing activities	490			(427		)	(163		)	146			46
Net cash used in financing activities from continuing operations	(412		)	(427		)	(163		)	146			(856		)
Effect of foreign currency exchange rate changes on cash	—			—			(13		)	—			(13		)
Net increase in cash and cash equivalents of discontinued operations	13			—			—			—			13
Net increase in cash	153			5			38			(40		)	156
Cash and cash equivalents, beginning of the year	109			—			165			(67		)	207
Cash and cash equivalents, end of the year	$	262		$	5		$	203		$	(107	)	$	363