Financial Information of L-3 Communications and Its Subsidiaries

12 Months Ended

Dec. 31, 2011

Financial Information of L-3 Communications and Its Subsidiaries [Abstract]

Financial Information of L-3 Communications and Its Subsidiaries

25. Financial Information of L-3 Communications and Its Subsidiaries

Total shareholders’ equity for L-3 Communications equals that of L-3 Holdings, but the components (common stock, additional paid-in capital, treasury stock and retained earnings) are different. The table below presents information regarding the balances and changes in common stock, additional paid-in capital, treasury stock and retained earnings of L-3 Communications for each of the three years ended December 31, 2011.

	L-3 Communications Common Stock				Additional Paid-in Capital							Accumulated Other Comprehensive (Loss) Income
	Shares Issued		Par Value				Treasury Stock		Retained Earnings						Total
			(in millions)
Balance at December 31, 2008	$	100	$	—	$	4,136	$	—	$	2,054		$	(332	)	$	5,858
Net income attributable to L-3		—		—		—		—		901			—			901
Contributions from L-3 Holdings		—		—		313		—		—			—			313
Dividends to L-3 Holdings		—		—		—		—		(670	)		—			(670	)
Comprehensive income		—		—		—		—		—			166			166
Other		—		—		—		—		(1	)		—			(1	)
Balance at December 31, 2009		100		—		4,449		—		2,284			(166	)		6,567
Net income attributable to L-3		—		—		—		—		955			—			955
Contributions from L-3 Holdings		—		—		352		—		—			—			352
Dividends to L-3 Holdings		—		—		—		—		(1,018	)		—			(1,018	)
Comprehensive loss		—		—		—		—		—			(90	)		(90	)
Other		—		—		—		—		(2	)		—			(2	)
Balance at December 31, 2010		100		—		4,801		—		2,219			(256	)		6,764
Net income attributable to L-3		—		—		—		—		956			—			956
Contributions from L-3 Holdings		—		—		263		—		—			—			263
Dividends to L-3 Holdings		—		—		—		—		(1,157	)		—			(1,157	)
Comprehensive loss		—		—		—		—		—			(198	)		(198	)
Other		—		—		—		—		7			—			7
Balance at December 31, 2011	$	100	$	—	$	5,064	$	—	$	2,025		$	(454	)	$	6,635

The net proceeds received by L-3 Holdings from (i) the sale of its common stock, (ii) exercise of L-3 Holdings’ employee and director stock options, and related tax benefits, and (iii) L-3 Holdings’ common stock contributed to the Company’s savings plans are contributed to L-3 Communications. The amounts paid by L-3 Holdings for dividends and share repurchases are generated from dividends received from L-3 Communications.

L-3 Communications is a wholly-owned subsidiary of L-3 Holdings. The debt of L-3 Communications, including the Senior Notes, Senior Subordinated Notes and borrowings under amounts drawn against the Amended and Restated Revolving Credit Facility are guaranteed, on a joint and several, full and unconditional basis, by certain of its domestic subsidiaries (the “Guarantor Subsidiaries”). The debt of L-3 Holdings, including the CODES are guaranteed on a joint and several, full and unconditional basis, by L-3 Communications and certain of its domestic subsidiaries. See Note 10. The foreign subsidiaries and certain domestic subsidiaries of L-3 Communications (the “Non-Guarantor Subsidiaries”) do not guarantee the debt of L-3 Communications or L-3 Holdings. None of the debt of L-3 Communications has been issued by its subsidiaries. There are no restrictions on the payment of dividends from the Guarantor Subsidiaries to L-3 Communications.

Under the terms of the indentures governing the Senior Notes and Senior Subordinated Notes, the guarantees of the Senior Notes and the Senior Subordinated Notes will automatically and unconditionally be released and discharged: (1) upon the release of all guarantees of all other outstanding indebtedness of L-3 Communications Corporation, or (2) upon the determination that such guarantor is no longer a “domestic subsidiary,” in the case of the Senior Notes, or upon the designation of such guarantor as an “unrestricted subsidiary,” in the case of the Senior Subordinated Notes. In addition, the guarantees of the Senior Notes and the Senior Subordinated Notes will automatically and unconditionally be released and discharged in the event of a sale or other disposition of all of the assets of any guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of such guarantor (provided that, in the case of the Senior Subordinated Notes, in the event of a sale or other disposition of all of the assets of any guarantor, the net proceeds of such sale or disposition are applied in accordance with any applicable provisions of the senior subordinated indenture).

In lieu of providing separate audited financial statements for the Guarantor Subsidiaries, the Company has included the accompanying condensed combining financial statements based on Rule 3-10 of SEC Regulation S-X. The Company does not believe that separate financial statements of the Guarantor Subsidiaries are material to users of the financial statements.

The following condensed combining financial information presents the results of operations, financial position and cash flows of (1) L-3 Holdings, excluding L-3 Communications and its consolidated subsidiaries (the “Parent”), (2) L-3 Communications, excluding its consolidated subsidiaries, (3) the Guarantor Subsidiaries, (4) the Non-Guarantor Subsidiaries and (5) the eliminations to arrive at the information for L-3 on a consolidated basis.

	L-3 Holdings (Parent)		L-3 Communications		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			Consolidated L-3
	(in millions)
Condensed Combining Balance Sheets:
At December 31, 2011:
Current assets:
Cash and cash equivalents	$	—	$	644	$	2	$	229	$	(111	)	$	764
Billed receivables, net		—		377		639		224		—			1,240
Contracts in process		—		866		1,463		300		—			2,629
Other current assets		—		281		135		195		—			611
Total current assets		—		2,168		2,239		948		(111	)		5,244
Goodwill		—		1,850		5,575		1,272		—			8,697
Other assets		—		678		685		193		—			1,556
Investment in and amounts due from consolidated subsidiaries		7,324		8,552		3,037		—		(18,913	)		—
Total assets	$	7,324	$	13,248	$	11,536	$	2,413	$	(19,024	)	$	15,497
Current liabilities	$	—	$	865	$	1,352	$	584	$	(111	)	$	2,690
Amounts due to consolidated subsidiaries		—		—		—		294		(294	)		—
Other long-term liabilities		—		1,623		234		101		—			1,958
Long-term debt		689		4,125		—		—		(689	)		4,125
Total liabilities		689		6,613		1,586		979		(1,094	)		8,773
L-3 shareholders’ equity		6,635		6,635		9,950		1,434		(18,019	)		6,635
Noncontrolling interests		—		—		—		—		89			89
Total equity		6,635		6,635		9,950		1,434		(17,930	)		6,724
Total liabilities and equity	$	7,324	$	13,248	$	11,536	$	2,413	$	(19,024	)	$	15,497
At December 31, 2010:
Current assets:
Cash and cash equivalents	$	—	$	257	$	3	$	482	$	(135	)	$	607
Billed receivables, net		—		387		680		232		—			1,299
Contracts in process		—		801		1,525		222		—			2,548
Other current assets		—		295		161		168		—			624
Total current assets		—		1,740		2,369		1,104		(135	)		5,078
Goodwill		—		1,796		5,653		1,281		—			8,730
Other assets		—		693		763		187		—			1,643
Investment in and amounts due from consolidated subsidiaries		7,462		8,973		2,356		—		(18,791	)		—
Total assets	$	7,462	$	13,202	$	11,141	$	2,572	$	(18,926	)	$	15,451
Current portion of long-term debt	$	11	$	11	$	—	$	—	$	(11	)	$	11
Other current liabilities		—		898		1,388		571		(135	)		2,722
Amounts due to consolidated subsidiaries		—		—		—		439		(439	)		—
Other long-term liabilities		—		1,403		235		99		—			1,737
Long-term debt		687		4,126		—		—		(687	)		4,126
Total liabilities		698		6,438		1,623		1,109		(1,272	)		8,596
L-3 shareholders’ equity		6,764		6,764		9,518		1,463		(17,745	)		6,764
Noncontrolling interests		—		—		—		—		91			91
Total equity		6,764		6,764		9,518		1,463		(17,654	)		6,855
Total liabilities and equity	$	7,462	$	13,202	$	11,141	$	2,572	$	(18,926	)	$	15,451

	L-3 Holdings (Parent)			L-3 Communications		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated L-3
	(in millions)
Condensed Combining Statements of Operations:
For the year ended December 31, 2011:
Net sales	$	—		$	3,812	$	9,179		$	2,538	$	(360	)	$	15,169
Cost of sales		64			3,383		8,315			2,190		(424	)		13,528
Impairment charge		—			43		—			—		—			43
Operating (loss) income		(64	)		386		864			348		64			1,598
Interest and other income (expense), net		—			123		(15	)		4		(112	)		—
Interest expense		23			233		109			5		(135	)		235
Debt retirement charge		—			35		—			—		—			35
(Loss) income before income taxes		(87	)		241		740			347		87			1,328
(Benefit) provision for income taxes		(24	)		66		200			94		24			360
Equity in net income of consolidated subsidiaries		1,019			781		—			—		(1,800	)		—
Net income		956			956		540			253		(1,737	)		968
Net income attributable to noncontrolling interests		—			—		—			—		12			12
Net income attributable to L-3	$	956		$	956	$	540		$	253	$	(1,749	)	$	956
For the year ended December 31, 2010:
Net sales	$	—		$	3,831	$	10,013		$	2,130	$	(294	)	$	15,680
Cost of sales		82			3,309		9,077			1,837		(375	)		13,930
Operating (loss) income		(82	)		522		936			293		81			1,750
Interest and other income, net		—			132		—			3		(114	)		21
Interest expense		46			268		110			6		(161	)		269
Debt retirement charge		—			18		—			—		—			18
(Loss) income before income taxes		(128	)		368		826			290		128			1,484
(Benefit) provision for income taxes		(45	)		129		288			101		45			518
Equity in net income of consolidated subsidiaries		1,038			716		—			—		(1,754	)		—
Net income		955			955		538			189		(1,671	)		966
Net income attributable to noncontrolling interests		—			—		—			—		11			11
Net income attributable to L-3	$	955		$	955	$	538		$	189	$	(1,682	)	$	955
For the year ended December 31, 2009:
Net sales	$	—		$	3,419	$	10,397		$	1,929	$	(130	)	$	15,615
Cost of sales		74			2,987		9,413			1,689		(204	)		13,959
Operating (loss) income		(74	)		432		984			240		74			1,656
Interest and other income, net		—			128		3			2		(114	)		19
Interest expense		45			277		110			6		(159	)		279
Debt retirement charge		—			10		—			—		—			10
(Loss) income before income taxes		(119	)		273		877			236		119			1,386
(Benefit) provision for income taxes		(37	)		119		275			81		37			475
Equity in net income of consolidated subsidiaries		983			747		—			—		(1,730	)		—
Net income		901			901		602			155		(1,648	)		911
Net income attributable to noncontrolling interests		—			—		—			—		10			10
Net income attributable to L-3	$	901		$	901	$	602		$	155	$	(1,658	)	$	901

	L-3 Holdings (Parent)			L-3 Communications			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated L-3
	(in millions)
Condensed Combining Statements of Cash Flows:
For the year ended December 31, 2011
Operating activities:
Net cash from operating activities	$	1,157		$	501		$	988		$	252		$	(1,414	)	$	1,484
Investing activities:
Business acquisitions, net of cash acquired		—			(20	)		—			—			—			(20	)
Investments in L-3 Communications		(55	)		—			—			—			55			—
Other investing activities		—			(84	)		(77	)		(22	)		—			(183	)
Net cash used in investing activities		(55	)		(104	)		(77	)		(22	)		55			(203	)
Financing activities:
Proceeds from sale of senior notes		—			1,143			—			—			—			1,143
Redemption of senior subordinated notes and CODES		(11	)		(1,150	)		—			—			—			(1,161	)
Common stock repurchased		(958	)		—			—			—			—			(958	)
Dividends paid on L-3 Holdings common stock		(188	)		—			—			—			—			(188	)
Dividends paid to L-3 Holdings		—			(1,157	)		—			—			1,157			—
Investments from L-3 Holdings		—			55			—			—			(55	)		—
Other financing activities		55			1,099			(912	)		(479	)		281			44
Net cash used in from financing activities		(1,102	)		(10	)		(912	)		(479	)		1,383			(1,120	)
Effect of foreign currency exchange rate changes on cash		—			—			—			(4	)		—			(4	)
Net (decrease) increase in cash		—			387			(1	)		(253	)		24			157
Cash and cash equivalents, beginning of the year		—			257			3			482			(135	)		607
Cash and cash equivalents, end of the year	$	—		$	644		$	2		$	229		$	(111	)	$	764
For the year ended December 31, 2010:
Operating activities:
Net cash from operating activities	$	1,018		$	288		$	953		$	243		$	(1,041	)	$	1,461
Investing activities:
Business acquisitions, net of cash acquired		—			(756	)		—			—			—			(756	)
Investments in L-3 Communications		(116	)		—			—			—			116			—
Other investing activities		—			(79	)		(102	)		(8	)		—			(189	)
Net cash used in investing activities		(116	)		(835	)		(102	)		(8	)		116			(945	)
Financing activities:
Proceeds from sale of senior notes		—			797			—			—			—			797
Redemption of senior subordinated notes		—			(800	)		—			—			—			(800	)
Common stock repurchased		(834	)		—			—			—			—			(834	)
Dividends paid on L-3 Holdings common stock		(184	)		—			—			—			—			(184	)
Dividends paid to L-3 Holdings		—			(1,018	)		—			—			1,018			—
Investments from L-3 Holdings		—			116			—			—			(116	)		—
Other financing activities		116			912			(852	)		(110	)		37			103
Net cash (used in) from financing activities		(902	)		7			(852	)		(110	)		939			(918	)
Effect of foreign currency exchange rate changes on cash		—			—			—			(7	)		—			(7	)
Net (decrease) increase in cash		—			(540	)		(1	)		118			14			(409	)
Cash and cash equivalents, beginning of the year		—			797			4			364			(149	)		1,016
Cash and cash equivalents, end of the year	$	—		$	257		$	3		$	482		$	(135	)	$	607
For the year ended December 31, 2009:
Operating activities:
Net cash from operating activities	$	670		$	132		$	1,093		$	248		$	(736	)	$	1,407
Investing activities:
Business acquisitions, net of cash acquired		—			(90	)		—			—			—			(90	)
Investments in L-3 Communications		(87	)		—			—			—			87			—
Other investing activities		—			(64	)		(103	)		(15	)		—			(182	)
Net cash used in investing activities		(87	)		(154	)		(103	)		(15	)		87			(272	)
Financing activities:
Proceeds from sale of senior notes		—			996			—			—			—			996
Repayment of borrowings under term loan facility		—			(650	)		—			—			—			(650	)
Redemption of senior subordinated notes		—			(750	)		—			—			—			(750	)
Common stock repurchased		(505	)		—			—			—			—			(505	)
Dividends paid on L-3 Holdings common stock		(165	)		—			—			—			—			(165	)
Dividends paid to L-3 Holdings		—			(670	)		—			—			670			—
Investments from L-3 Holdings		—			87			—			—			(87	)		—
Other financing activities		87			1,086			(988	)		(116	)		—			69
Net cash (used in) from financing activities		(583	)		99			(988	)		(116	)		583			(1,005	)
Effect of foreign currency exchange rate changes on cash		—			—			—			19			—			19
Net increase (decrease) in cash		—			77			2			136			(66	)		149
Cash and cash equivalents, beginning of the year		—			720			2			228			(83	)		867
Cash and cash equivalents, end of the year	$	—		$	797		$	4		$	364		$	(149	)	$	1,016