Financial Information of L3 and Its Subsidiaries (Tables)

12 Months Ended

Dec. 31, 2017

Financial Information of L3 and Its Subsidiaries [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, 2017:
Current assets:
Cash and cash equivalents	$	432	$	14	$	287	$	(71	)	$	662
Billed receivables, net		266		232		225		—			723
Contracts in process		706		891		336		—			1,933
Prepaid expenses and other current assets		330		231		128		—			689
Assets held for sale		—		118		17		—			135
Assets of discontinued operations		—		306		—		—			306
Total current assets		1,734		1,792		993		(71	)		4,448
Goodwill		2,248		2,652		1,715		—			6,615
Other assets		658		556		452		—			1,666
Investment in and amounts due from consolidated subsidiaries		5,593		5,270		—		(10,863	)		—
Total assets	$	10,233	$	10,270	$	3,160	$	(10,934	)	$	12,729
Current liabilities	$	811	$	800	$	596	$	(71	)	$	2,136
Liabilities held for sale		—		16		1		—			17
Liabilities of discontinued operations		—		226		—		—			226
Amounts due to consolidated subsidiaries		—		—		352		(352	)		—
Other long-term liabilities		1,009		714		146		—			1,869
Long-term debt		3,330		—		—		—			3,330
Total liabilities		5,150		1,756		1,095		(423	)		7,578
L3 shareholders’ equity		5,083		8,514		2,065		(10,579	)		5,083
Noncontrolling interests		—		—		—		68			68
Total equity		5,083		8,514		2,065		(10,511	)		5,151
Total liabilities and equity	$	10,233	$	10,270	$	3,160	$	(10,934	)	$	12,729

	L3		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated L3
	(in millions)
At December 31, 2016:
Current assets:
Cash and cash equivalents	$	291	$	1	$	207	$	(136	)	$	363
Billed receivables, net		261		254		185		—			700
Contracts in process		694		928		236		—			1,858
Prepaid expenses and other current assets		236		144		125		—			505
Assets of discontinued operations		—		481		—		—			481
Total current assets		1,482		1,808		753		(136	)		3,907
Goodwill		2,258		2,613		1,503		—			6,374
Other assets		705		567		312		—			1,584
Investment in and amounts due from consolidated subsidiaries		5,721		5,272		—		(10,993	)		—
Total assets	$	10,166	$	10,260	$	2,568	$	(11,129	)	$	11,865
Current liabilities	$	789	$	846	$	460	$	(136	)	$	1,959
Liabilities of discontinued operations		—		235		—		—			235
Amounts due to consolidated subsidiaries		—		—		763		(763	)		—
Other long-term liabilities		1,499		191		32		—			1,722
Long-term debt		3,325		—		—		—			3,325
Total liabilities		5,613		1,272		1,255		(899	)		7,241
L3 shareholders’ equity		4,553		8,988		1,313		(10,301	)		4,553
Noncontrolling interests		—		—		—		71			71
Total equity		4,553		8,988		1,313		(10,230	)		4,624
Total liabilities and equity	$	10,166	$	10,260	$	2,568	$	(11,129	)	$	11,865

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, 2017:
Total net sales	$	3,519		$	4,748		$	1,690		$	(384	)	$	9,573
Total cost of sales		(3,179	)		(4,350	)		(1,408	)		384			(8,553	)
Operating income		340			398			282			—			1,020
Interest expense		(168	)		—			(1	)		—			(169	)
Interest and other income, net		17			—			3			—			20
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		511			—			—			(511	)		—
Income from continuing operations		678			351			251			(511	)		769
Loss from discontinued operations, net of income tax		(1	)		(75	)		—			—			(76	)
Net income		677			276			251			(511	)		693
Net income attributable to noncontrolling interests		—			—			—			(16	)		(16	)
Net income attributable to L3	$	677		$	276		$	251		$	(527	)	$	677
Comprehensive income attributable to L3	$	712		$	278		$	378		$	(656	)	$	712
For the year ended December 31, 2016:
Total net sales	$	3,350		$	4,809		$	1,381		$	(330	)	$	9,210
Total cost of sales		(3,069	)		(4,378	)		(1,136	)		330			(8,253	)
Operating income		281			431			245			—			957
Interest expense		(164	)		—			—			—			(164	)
Interest and other income, net		15			—			3			—			18
Debt retirement charges		(7	)		—			—			—			(7	)
Income from continuing operations before income taxes		125			431			248			—			804
Provision for income taxes		(26	)		(92	)		(53	)		—			(171	)
Equity in net income of consolidated subsidiaries		611			—			—			(611	)		—
Income from continuing operations		710			339			195			(611	)		633
Income from discontinued operations, net of income tax		—			91			—			—			91
Net income		710			430			195			(611	)		724
Net income attributable to noncontrolling interests		—			—			—			(14	)		(14	)
Net income attributable to L3	$	710		$	430		$	195		$	(625	)	$	710
Comprehensive income attributable to L3	$	558		$	440		$	118		$	(558	)	$	558
For the year ended December 31, 2015:
Total net sales	$	3,267		$	4,866		$	1,449		$	(351	)	$	9,231
Total cost of sales		(3,031	)		(4,441	)		(1,248	)		351			(8,369	)
Goodwill impairment charges		—			(26	)		(20	)		—			(46	)
(Loss) gain related to business divestitures		(13	)		(31	)		13			—			(31	)
Operating income		223			368			194			—			785
Interest expense		(161	)		(1	)		—			—			(162	)
Interest and other income, net		17			—			—			—			17
Debt retirement charge		(1	)		—			—			—			(1	)
Income from continuing operations before income taxes		78			367			194			—			639
Provision for income taxes		(16	)		(76	)		(40	)		—			(132	)
Equity in net loss of consolidated subsidiaries		(302	)		—			—			302			—
(Loss) income from continuing operations		(240	)		291			154			302			507
Loss from discontinued operations, net of income tax		—			(732	)		—			—			(732	)
Net (loss) income		(240	)		(441	)		154			302			(225	)
Net income attributable to noncontrolling interests		—			—			—			(15	)		(15	)
Net (loss) income attributable to L3	$	(240	)	$	(441	)	$	154		$	287		$	(240	)
Comprehensive (loss) income attributable to L3	$	(230	)	$	(445	)	$	43		$	402		$	(230	)

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, 2017:
Operating activities:
Net cash from operating activities from continuing operations	$	374		$	438		$	251		$	(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		(84	)		(41	)		(30	)		—			(155	)
Net cash used in investing activities from
continuing operations		(383	)		(41	)		(29	)		—			(453	)
Financing activities:
Common stock repurchased		(180	)		—			—			—			(180	)
Dividends paid on L3’s common stock		(236	)		—			—			—			(236	)
Other financing activities		565			(496	)		(162	)		143			50
Net cash from (used in) financing activities from continuing operations		149			(496	)		(162	)		143			(366	)
Effect of foreign currency exchange rate changes on cash		—			—			20			—			20
Net increase in cash and cash equivalents of discontinued operations		1			112			—			—			113
Net increase in cash		141			13			80			65			299
Cash and cash equivalents, beginning of the year		291			1			207			(136	)		363
Cash and cash equivalents, end of the year	$	432		$	14		$	287		$	(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	$	441		$	509		$	258		$	(186	)	$	1,022
Investing activities:
Business acquisitions, net of cash acquired		(388	)		—			—			—			(388	)
Proceeds from sale of businesses, net of closing date cash cash balances		563			—			(2	)		—			561
Other investing activities		(60	)		(80	)		(43	)		—			(183	)
Net cash from (used in) investing activities from continuing operations		115			(80	)		(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 on L3’s common stock		(220	)		—			—			—			(220	)
Other financing activities		496			(441	)		(158	)		149			46
Net cash used in financing activities from continuing operations		(406	)		(441	)		(158	)		149			(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		150			1			42			(37	)		156
Cash and cash equivalents, beginning of the year		141			—			165			(99	)		207
Cash and cash equivalents, end of the year	$	291		$	1		$	207		$	(136	)	$	363
For the year ended December 31, 2015:
Operating activities:
Net cash from operating activities from continuing operations	$	634		$	425		$	161		$	(185	)	$	1,035
Investing activities:
Business acquisitions, net of cash acquired		(320	)		—			—			—			(320	)
Proceeds from sale of businesses, net of closing date cash balances		14			28			276			—			318
Other investing activities		(75	)		(78	)		(35	)		—			(188	)
Net cash (used in) from investing activities from continuing operations		(381	)		(50	)		241			—			(190	)
Financing activities:
Repurchases of senior notes		(297	)		—			—			—			(297	)
Common stock repurchased		(740	)		—			—			—			(740	)
Dividends paid on L3's common stock		(214	)		—			—			—			(214	)
Other financing activities		781			(463	)		(420	)		148			46
Net cash used in financing activities from continuing operations		(470	)		(463	)		(420	)		148			(1,205	)
Effect of foreign currency exchange rate changes on cash		—			—			(19	)		—			(19	)
Net increase in cash and cash equivalents of discontinued operations		—			83			—			—			83
Change in cash balance in assets held for sale		—			1			60			—			61
Net (decrease) increase in cash		(217	)		(4	)		23			(37	)		(235	)
Cash and cash equivalents, beginning of the year		358			4			142			(62	)		442
Cash and cash equivalents, end of the year	$	141		$	—		$	165		$	(99	)	$	207