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Segment Information
 12 Months Ended
Dec. 31, 2017
Segment Information [Abstract]  
Segment Information
21. Segment Information
 
The Company has four reportable segments, which are described in Note 1. The Company evaluates the performance of its operating segments and reportable segments based on their sales, operating income and operating margin. Corporate expenses are allocated to the Company’s operating segments using an allocation methodology prescribed by U.S. Government regulations for government contractors. Accordingly, segment results include all costs and expenses, except for goodwill impairment charges, gains or losses related to business divestitures, and certain other items that are excluded by management for purposes of evaluating the operating performance of the Company’s business segments. Certain Corporate and segment expenses of $32 million for 2017 and $29 million for the years ended December 31, 2016 and 2015, that had previously been allocated to the Vertex Aerospace and NSS businesses were retained by the Company and were allocated to L3’s four reportable segments.
 
The tables below present net sales, operating income, depreciation and amortization, capital expenditures and total assets by reportable segment.
Year Ended December 31,
2017
2016
2015
(in millions)
Net Sales
 
 
 
 
 
 
 
 
 
Products
 
 
 
 
 
 
 
 
 
Electronic Systems
$
2,234
 
$
2,033
 
$
2,102
 
Aerospace Systems
 
1,545
 
 
1,679
 
 
1,679
 
Communication Systems
 
1,745
 
 
1,586
 
 
1,649
 
Sensor Systems
 
1,292
 
 
1,266
 
 
1,298
 
Elimination of intercompany sales
 
(83
)
 
(111
)
 
(128
)
Total products sales
 
6,733
 
 
6,453
 
 
6,600
 
 
 
 
 
 
 
 
 
 
Services
 
 
 
 
 
 
 
 
 
Electronic Systems
$
848
 
$
812
 
$
810
 
Aerospace Systems
 
1,267
 
 
1,270
 
 
1,257
 
Communication Systems
 
510
 
 
488
 
 
441
 
Sensor Systems
 
273
 
 
235
 
 
193
 
Elimination of intercompany sales
 
(58
)
 
(48
)
 
(70
)
Total services sales
 
2,840
 
 
2,757
 
 
2,631
 
Consolidated total
$
9,573
 
$
9,210
 
$
9,231
 

  
Year Ended December 31,
2017
2016
2015
(in millions)
 
 
 
 
 
 
 
 
 
Operating income
 
 
 
 
 
 
 
 
 
Electronic Systems
$
403
 
$
360
 
$
337
 
Aerospace Systems
 
210
 
 
255
 
 
193
 
Communication Systems
 
212
 
 
195
 
 
190
 
Sensor Systems
 
195
 
 
147
 
 
142
 
Segment total
 
1,020
 
 
957
 
 
862
 
Goodwill impairment charges(1)
 
—
 
 
—
 
 
(46
)
Loss related to business divestitures(2)
 
—
 
 
—
 
 
(31
)
Consolidated total
$
1,020
 
$
957
 
$
785
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
 
 
 
Electronic Systems
$
79
 
$
60
 
$
59
 
Aerospace Systems
 
51
 
 
46
 
 
43
 
Communication Systems
 
49
 
 
47
 
 
50
 
Sensor Systems
 
46
 
 
45
 
 
51
 
Consolidated total
$
225
 
$
198
 
$
203
 
Capital Expenditures
 
 
 
 
 
 
 
 
 
Electronic Systems
$
68
 
$
76
 
$
69
 
Aerospace Systems
 
43
 
 
50
 
 
53
 
Communication Systems
 
49
 
 
37
 
 
37
 
Sensor Systems
 
42
 
 
37
 
 
30
 
Corporate
 
22
 
 
10
 
 
6
 
Consolidated total
$
224
 
$
210
 
$
195
 
 
 
 
 
 
 
 
 
 
Total Assets
 
 
 
 
 
 
 
 
 
Electronic Systems
$
4,796
 
$
4,369
 
$
3,968
 
Aerospace Systems
 
2,014
 
 
2,084
 
 
2,190
 
Communication Systems
 
2,063
 
 
2,031
 
 
1,984
 
Sensor Systems
 
2,706
 
 
2,433
 
 
2,458
 
Corporate
 
709
 
 
467
 
 
345
 
Assets held for sale
 
135
 
 
—
 
 
—
 
Assets of discontinued operations
 
306
 
 
481
 
 
1,124
 
Consolidated total
$
12,729
 
$
11,865
 
$
12,069
 
 
 
 
(1)
Represents non-cash goodwill impairment charges recorded during 2015 of $46 million related to a business retained by L3 in connection with the sale of the NSS segment.
 
(2)
See Note 3 for information regarding the Company’s business divestitures.
 
Corporate assets not allocated to the reportable segments primarily include cash and cash equivalents, corporate office fixed assets, and deferred income tax assets.
 
The table below presents property, plant and equipment, net by geographic area.
Year Ended December 31,
2017
2016
(in millions)
United States
$
936
 
$
960
 
All Other
 
174
 
 
147
 
Total
$
1,110
 
$
1,107
 
 
The Company’s sales attributable to U.S. and international customers, based on location of the customer, are summarized in the table below.
Year Ended December 31,
2017
2016
2015
(in millions)
U.S.
$
7,344
 
$
6,947
 
$
6,734
 
International:
 
 
 
 
 
 
 
 
 
United Kingdom
 
335
 
 
331
 
 
336
 
Canada
 
280
 
 
297
 
 
281
 
Australia
 
268
 
 
254
 
 
321
 
China
 
167
 
 
67
 
 
83
 
South Korea
 
134
 
 
127
 
 
207
 
Japan
 
125
 
 
81
 
 
95
 
France
 
84
 
 
75
 
 
62
 
Other
 
836
 
 
1,031
 
 
1,112
 
Total international
 
2,229
 
 
2,263
 
 
2,497
 
Consolidated
$
9,573
 
$
9,210
 
$
9,231
 
 
Net sales to principal customers are summarized in the table below.
Year Ended December 31,
2017
2016
2015
(in millions)
U.S. Government agencies(1)
$
6,697
 
$
6,399
 
$
6,120
 
Commercial
 
1,456
 
 
1,280
 
 
1,373
 
Foreign governments(1)
 
1,420
 
 
1,531
 
 
1,738
 
Consolidated
$
9,573
 
$
9,210
 
$
9,231
 
 
 
 
(1)
Includes sales for which the Company is the prime contractor as well as sales based on the ultimate end customer for which the Company is a subcontractor.