Financial Information of L-3 Communications and Its Subsidiaries (Tables)

12 Months Ended

Dec. 31, 2012

Condensed Combining Statements of Equity

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, 2012.

	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, 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
Net income attributable to L-3		—		—		—		—		810			—			810
Contributions from L-3 Holdings		—		—		250		—		—			—			250
Dividends to L-3 Holdings		—		—		—		—		(1,064	)		—			(1,064	)
Comprehensive loss		—		—		—		—		—			(100	)		(100	)
Net change of equity due to spin-off of Engility										(1,063	)					(1,063	)
Other		—		—		—		—		(5	)		—			(5	)
Balance at December 31, 2012		100	$	—	$	5,314	$	—	$	703		$	(554	)	$	5,463

Condensed Combining Balance Sheets

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, 2012:
Current assets:
Cash and cash equivalents	$	—	$	246	$	—	$	242	$	(139	)	$	349
Billed receivables, net		—		290		441		237		—			968
Contracts in process		—		945		1,351		356		—			2,652
Other current assets		—		248		163		191		—			602
Total current assets		—		1,729		1,955		1,026		(139	)		4,571
Goodwill		—		1,952		4,455		1,337		—			7,744
Other assets		—		734		565		212		—			1,511
Investment in and amounts due from consolidated subsidiaries		6,152		7,245		3,457		—		(16,854	)		—
Total assets	$	6,152	$	11,660	$	10,432	$	2,575	$	(16,993	)	$	13,826
Current liabilities	$	—	$	823	$	1,255	$	658	$	(139	)	$	2,597
Amounts due to consolidated subsidiaries		—		—		—		129		(129	)		—
Other long-term liabilities		—		1,745		210		106		—			2,061
Long-term debt		689		3,629		—		—		(689	)		3,629
Total liabilities		689		6,197		1,465		893		(957	)		8,287
L-3 shareholders’ equity		5,463		5,463		8.967		1,682		(16,112	)		5,463
Noncontrolling interests		—		—		—		—		76			76
Total equity		5,463		5,463		8,967		1,682		(16,036	)		5,539
Total liabilities and equity	$	6,152	$	11,660	$	10,432	$	2,575	$	(16,993	)	$	13,826
At December 31, 2011:
Current assets:
Cash and cash equivalents	$	—	$	644	$	—	$	222	$	(102	)	$	764
Billed receivables, net		—		367		522		204		—			1,093
Contracts in process		—		860		1,269		257		—			2,386
Other current assets		—		313		121		192		—			626
Assets of discontinued operations		—		1,729		—		—		—			1,729
Total current assets		—		3,913		1,912		875		(102	)		6,598
Goodwill		—		1,869		4,455		1,148		—			7,472
Other assets		—		731		522		185		—			1,438
Investment in and amounts due from consolidated subsidiaries		7,324		6,955		1,513		—		(15,792	)		—
Total assets	$	7,324	$	13,468	$	8,402	$	2,208	$	(15,894	)	$	15,508
Current liabilities	$	—	$	838	$	1,181	$	546	$	(102	)	$	2,463
Liabilities of discontinued operations		—		351		—		—		—			351
Amounts due to consolidated subsidiaries		—		—		—		238		(238	)		—
Other long-term liabilities		—		1,519		235		91		—			1,845
Long-term debt		689		4,125		—		—		(689	)		4,125
Total liabilities		689		6,833		1,416		875		(1,029	)		8,784
L-3 shareholders’ equity		6,635		6,635		6,986		1,333		(14,954	)		6,635
Noncontrolling interests		—		—		—		—		89			89
Total equity		6,635		6,635		6,986		1,333		(14,865	)		6,724
Total liabilities and equity	$	7,324	$	13,468	$	8,402	$	2,208	$	(15,894	)	$	15,508

Condensed Combining Statement of Operation

	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, 2012:
Net sales	$	—		$	3,747		$	7,506		$	2,276		$	(383	)	$	13,146
Cost of sales		59			3,434			6,752			1,992			(442	)		11,795
Operating (loss) income		(59	)		313			754			284			59			1,351
Interest and other income (expense), net		—			11			(5	)		2			—			8
Interest expense		(21	)		(183	)		—			(1	)		21			(184	)
Debt retirement charge		—			(13	)		—			—			—			(13	)
(Loss) income from continuing operations before income taxes		(80	)		128			749			285			80			1,162
(Benefit) provision for income taxes		(26	)		39			241			94			26			374
Equity in net income of consolidated subsidiaries		864			689			—			—			(1,553	)		—
Income from continuing operations		810			778			508			191			(1,499	)		788
Income from discontinued operations, net of income tax		—			32			—			—			—			32
Net income		810			810			508			191			(1,499	)		820
Net income attributable to noncontrolling interests		—			—			—			—			10			10
Net income attributable to L-3	$	810		$	810		$	508		$	191		$	(1,509	)	$	810
Comprehensive income attributable to L-3	$	710		$	710		$	510		$	215		$	(1,435	)	$	710
For the year ended December 31, 2011:
Net sales	$	—		$	3,735		$	7,573		$	2,190		$	(340	)	$	13,158
Cost of sales		57			3,335			6,853			1,868			(397	)		11,716
Impairment charge		—			43			—			—			—			43
Operating (loss) income		(57	)		357			720			322			57			1,399
Interest and other income (expense), net		—			14			(15	)		4			(3	)		—
Interest expense		(23	)		(201	)		(1	)		(5	)		26			(204	)
Debt retirement charge		—			(35	)		—			—			—			(35	)
(Loss) income from continuing operations before income taxes		(80	)		135			704			321			80			1,160
(Benefit) provision for income taxes		(20	)		34			180			82			20			296
Equity in net income of consolidated subsidiaries		1,016			751			—			—			(1,767	)		—
Income from continuing operations		956			852			524			239			(1,707	)		864
Income from discontinued operations, net of income tax		—			104			—			—			—			104
Net income		956			956			524			239			(1,707	)		968
Net income attributable to noncontrolling interests		—			—			—			—			12			12
Net income attributable to L-3	$	956		$	956		$	524		$	239		$	(1,719	)	$	956
Comprehensive income attributable to L-3	$	758		$	758		$	514		$	218		$	(1,490	)	$	758
For the year ended December 31, 2010:
Net sales	$	—		$	3,794		$	7,908		$	2,001		$	(313	)	$	13,390
Cost of sales		73			3,310			7,193			1,715			(386	)		11,905
Operating (loss) income		(73	)		484			715			286			73			1,485
Interest and other income (expense), net		—			24			(1	)		3			(5	)		21
Interest expense		(46	)		(235	)		—			(6	)		51			(236	)
Debt retirement charge		—			(18	)		—			—			—			(18	)
(Loss) income from continuing operations before income taxes		(119	)		255			714			283			119			1,252
(Benefit) provision for income taxes		(41	)		87			244			97			41			428
Equity in net income of consolidated subsidiaries		1,033			645			—			—			(1,678	)		—
Income from continuing operations		955			813			470			186			(1,600	)		824
Income from discontinued operations, net of income tax		—			142			—			—			—			142
Net income		955			955			470			186			(1,600	)		966
Net income attributable to noncontrolling interests		—			—			—			—			11			11
Net income attributable to L-3	$	955		$	955		$	470		$	186		$	(1,611	)	$	955
Comprehensive income attributable to L-3	$	865		$	865		$	497		$	220		$	(1,582	)	$	865

Condensed Combining Statements of Cash Flows

Condensed Combining Statements of Cash Flows:
For the year ended December 31, 2012:
Operating activities:
Net cash from operating activities from continuing operations	$	1,067		$	252		$	858		$	265		$	(1,211	)	$	1,231
Investing activities:
Business acquisitions, net of cash acquired		—			(348	)		—			—			—			(348	)
Investments in L-3 Communications		(42	)		—			—			—			42			—
Other investing activities		—			225			(59	)		(18	)		—			148
Net cash used in investing activities from continuing operations		(42	)		(123	)		(59	)		(18	)		42			(200	)
Financing activities:
Redemption of senior subordinated notes		—			(500	)		—			—			—			(500	)
Common stock repurchased		(872	)		—			—			—			—			(872	)
Dividends paid on L-3 Holdings common stock		(195	)		—			—			—			—			(195	)
Dividends paid to L-3 Holdings		—			(1,067	)		—			—			1,067			—
Investments from L-3 Holdings		—			42			—			—			(42	)		—
Other financing activities		42			924			(799	)		(234	)		107			40
Net cash used in financing activities from continuing operations		(1,025	)		(601	)		(799	)		(234	)		1,132			(1,527	)
Effect of foreign currency exchange rate changes on cash		—			—			—			7			—			7
Net increase in cash and cash equivalents of discontinued operations		—			74			—			—			—			74
Net (decrease) increase in cash		—			(398	)		—			20			(37	)		(415	)
Cash and cash equivalents, beginning of the year		—			644			—			222			(102	)		764
Cash and cash equivalents, end of the year	$	—		$	246		$	—		$	242		$	(139	)	$	349
For the year ended December 31, 2011:
Operating activities:
Net cash from operating activities from continuing operations	$	1,157		$	476		$	792		$	220		$	(1,414	)	$	1,231
Investing activities:
Business acquisitions, net of cash acquired		—			(20	)		—			—			—			(20	)
Investments in L-3 Communications		(55	)		—			—			—			55			—
Other investing activities		—			(84	)		(75	)		(20	)		—			(179	)
Net cash used in investing activities from continuing operations		(55	)		(104	)		(75	)		(20	)		55			(199	)
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			882			(717	)		(447	)		272			45
Net cash used in financing activities from continuing operations		(1,102	)		(227	)		(717	)		(447	)		1,374			(1,119	)
Effect of foreign currency exchange rate changes on cash		—			—			—			(4	)		—			(4	)
Net increase in cash and cash equivalents of discontinued operations		—			248			—			—			—			248
Net (decrease) increase in cash		—			393			—			(251	)		15			157
Cash and cash equivalents, beginning of the year		—			251			—			473			(117	)		607
Cash and cash equivalents, end of the year	$	—		$	644		$	—		$	222		$	(102	)	$	764
For the year ended December 31, 2010:
Operating activities:
Net cash from operating activities from continuing operations	$	1,018		$	302		$	761		$	230		$	(1,041	)	$	1,270
Investing activities:
Business acquisitions, net of cash acquired		—			(756	)		—			—			—			(756	)
Investments in L-3 Communications		(116	)		—			—			—			116			—
Other investing activities		—			(89	)		(91	)		(8	)		—			(188	)
Net cash used in investing activities from continuing operations		(116	)		(845	)		(91	)		(8	)		116			(944	)
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			751			(671	)		(112	)		20			104
Net cash used in financing activities from continuing operations		(902	)		(154	)		(671	)		(112	)		922			(917	)
Effect of foreign currency exchange rate changes on cash		—			—			—			(7	)		—			(7	)
Net increase in cash and cash equivalents of discontinued operations		—			189			—			—			—			189
Net (decrease) increase in cash		—			(508	)		(1	)		103			(3	)		(409	)
Cash and cash equivalents, beginning of the year		—			759			1			370			(114	)		1,016
Cash and cash equivalents, end of the year	$	—		$	251		$	—		$	473		$	(117	)	$	607