10-K/A

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

(Amendment No.1)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file numbers 001-14141 and 333-46983

L-3 COMMUNICATIONS HOLDINGS, INC.

L-3 COMMUNICATIONS CORPORATION

(Exact names of registrants as specified in their charters)

Delaware	13-3937434 and 13-3937436
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Nos.)
600 Third Avenue, New York, NY	10016
(Address of principal executive offices)	(Zip Code)

(212) 697-1111

(Telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered:
L-3 Communications Holdings, Inc. common stock, par value $0.01 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None.

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.	x	Yes  ¨  No
Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act.	¨	Yes  x  No

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.  x  Yes  ¨  No

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).  x  Yes  ¨  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant L-3 Communications Holdings, Inc. is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of ‘large accelerated filer,’ ‘accelerated filer’ and ‘smaller reporting company’ in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x	Accelerated filer  ¨	Non-accelerated filer ¨	Smaller reporting company  ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant L-3 Communications Corporation is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of ‘large accelerated filer,’ ‘accelerated filer’ and ‘smaller reporting company’ in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨	Accelerated filer  ¨	Non-accelerated filer x	Smaller reporting company  ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Act).  ¨  Yes  x  No

The aggregate market value of the L-3 Communications Holdings, Inc. voting stock held by non-affiliates of the Registrants as of June 28, 2013 was approximately $7.6 billion. For purposes of this calculation, the Registrants have assumed that their directors and executive officers are affiliates.

There were 85,847,821 shares of L-3 Communications Holdings, Inc. common stock with a par value of $0.01 outstanding as of the close of business on February 19, 2014.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement to be filed with the Securities and Exchange Commission (“SEC”) pursuant to Regulation 14A relating to the Registrants’ Annual Meeting of Shareholders, to be held on May 6, 2014, will be incorporated by reference in this Form 10-K in response to Items 10,11,12,13 and 14 of Part III. The definitive proxy statement will be filed with the SEC no later than 120 days after the registrants’ fiscal year ended December 31, 2013.

EXPLANATORY NOTE

For convenience purposes in this filing on Form 10-K/A, “L-3 Holdings” refers to L-3 Communications Holdings, Inc., and “L-3 Communications” refers to L-3 Communications Corporation, a wholly-owned operating subsidiary of L-3 Holdings. “L-3”, “Company”,“we”, “us” and “our” refer to L-3 Holdings and its subsidiaries, including L-3 Communications.

We are filing this Amendment No. 1 (this “Amendment” or “Form 10-K/A”) to our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 following the completion of the internal review of our Aerospace Systems segment, which is discussed below. Our Annual Report on Form 10-K for the year ended December 31, 2013 (the “Form 10-K”) was originally filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2014, and subsequently updated for the re-alignment of our segments that occurred in the first quarter of 2014 and reported in our Current Report on Form 8-K filed with the SEC on May 2, 2014 (the “Form 8-K” and, together with the Form 10-K, the “Original Form 10-K”). At the time of filing our Form 10-K, we determined that our disclosure controls and procedures (“DC&P”) and our internal controls over financial reporting (“ICFR”) were each effective as of December 31, 2013.

This Amendment revises Part II, Item 9A, Controls and Procedures, as it relates to our conclusions regarding the effectiveness of our DC&P and our report on ICFR. As disclosed in our Current Report on Form 8-K filed with the SEC on September 26, 2014, as part of the findings from the internal review of the Aerospace Systems segment, we identified certain material weaknesses in our ICFR that existed as of December 31, 2013. Solely as a result of these material weaknesses, we have concluded that our DC&P and ICFR were not effective as of December 31, 2013.

In addition to the revision in Part II, Item 9A described above, this Amendment revises previously issued financial statements for: (1) accounting adjustments due to the internal review at our Aerospace Systems segment, (2) accounting error related to a sales-type lease transaction for flight simulator systems within our Electronic Systems segment, and (3) previously identified immaterial errors already recognized in our financial statements but not recorded in the appropriate periods. The accounting errors related to the sales-type lease transaction and immaterial out of period amounts are not related to the internal review at our Aerospace Systems segment.

See “Items Amended by this Filing” below for a description of the items of the Form 10-K that are being amended pursuant to this Amendment. Concurrently with the filing of this Amendment, we are also filing an amendment to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 28, 2014 (“2014 First Quarter 10-Q/A”), which revises that report for the items discussed above.

Controls and Procedures: As part of the internal review of our Aerospace Systems segment, discussed below, we identified material weaknesses in our ICFR. The material weaknesses, further discussed in Item 9A, Controls and Procedures, on page 73, are: (1) the Company did not maintain an effective control environment at its Aerospace Systems segment with respect to: (i) inadequate execution of existing controls around the annual review and approval of contract (revenue arrangement) estimates; (ii) not following established Company accounting policies, controls and procedures, and (iii) intentional override of numerous transactional and monitoring internal controls at our Army Sustainment division; and (2) Company personnel did not perform reviews of certain employee concerns regarding violations of our accounting policies and ICFR in a sufficient and effective manner.

Internal Review of Aerospace Systems Segment: We conducted an internal review related to instances of misconduct and accounting errors at our Aerospace Systems segment. This review was conducted with the assistance of outside legal and accounting advisors, and has been completed. As a result of the internal review, we identified and recorded aggregate pre-tax charges as follows: (1) $60 million for 2013, (2) $25 million for 2012, (3) $5 million for 2011, and (4) $4 million for periods prior to 2011. Furthermore, our quarterly report on Form 10-Q for the three and six month periods ended June 27, 2014 and the 2014 First Quarter 10-Q/A also include aggregate pre-tax charges related to the internal review of Aerospace Systems segment. The aggregate pre-tax charge related to the internal review of Aerospace Systems segment for the three months ended

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March 28, 2014 is approximately $20 million and for the three months ended June 27, 2014 is approximately $55 million.

The adjustments related to the internal review only affected the Logistics Solutions and Platform Systems sectors of the Aerospace Systems segment. The cumulative aggregate adjustments attributable to the Logistics Solutions sector are approximately $117 million, and at the Platform Systems sector are approximately $52 million. The Logistics Solutions sector adjustments relate to: (1) losses of $69 million with respect to the U.S. Army C-12 fixed-price maintenance and logistics support contract due to cost overruns inappropriately deferred, sales invoices inappropriately prepared, and the failure to timely and accurately perform contract estimates at completion and valuation assessments of inventories and receivables, at our Army Sustainment Division, and (2) accounting errors of $48 million in connection with the valuation of inventories and receivables, as well as the correction for certain accruals on other logistics support contracts. The Platform Systems sector adjustments are primarily due to: (1) losses of $37 million on two aircraft modification contracts and two contracts for rotary wing sub-assemblies and parts, and (2) write-offs of deferred costs of $15 million to design and test aerostructures for a new commercial aircraft.

Sales-Type Lease Transaction: We routinely perform on-site accounting and internal control review procedures on a rotational basis. As part of a previously planned review of our Simulation & Training business in the Electronic Systems segment and unrelated to the internal review at the Aerospace Systems segment, we evaluated the accounting treatment related to a sales-type lease transaction with the U.S. Army for rotary wing flight simulator systems. The period of performance under this contract began in 2004 and ends in 2023. Based on the results of this evaluation, we have adjusted our previously issued financial statements to: (1) increase interest income accretion on the net investment related to this sales-type lease transaction by an estimated aggregate amount of approximately $5 million for 2013, $3 million for each of 2012 and 2011 and $12 million for periods prior to 2011, and (2) decrease sales by approximately $7 million for 2013 and decrease cost of sales by approximately $7 million for 2013 and $5 million for periods prior to 2011. Furthermore, our quarterly report on Form 10-Q for the three and six month periods ended June 27, 2014 and the 2014 First Quarter 10-Q/A also include an increase in interest income accretion of $2 million and a decrease in sales of approximately $8 million and related decrease in cost of sales by approximately $7 million.

Out of Period Amounts: We had identified various out of period amounts included in our previously issued financial statements that were deemed to be immaterial individually and in the aggregate. In prior periods, in accordance with Accounting Standards Codification (“ASC”) 650-10-S99 and S55 (formerly Staff Accounting Bulletins (“SAB”) No. 99 and No. 108), Accounting Changes and Error Corrections, we concluded that these errors were, individually, and in the aggregate, not material, quantitatively or qualitatively, to the financial statements in the period recorded or to the relevant prior periods. Accordingly, we recorded these errors in our financial statements in the period that the error was identified. We are, on a voluntary basis, revising our previously issued financial statements to correct for these errors already recognized in our financial statements but not recorded in the appropriate periods to reflect them in the appropriate period. These out of period amounts were not discovered as part of the internal review of the Aerospace Systems segment discussed above, but rather represent previously identified errors “resulting from mathematical mistakes, mistakes in application of generally accepted accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared,” as defined in ASC 250-10-20 Accounting Changes and Error Corrections. We are, therefore, not treating these amounts as changes in estimates. These errors consist of: (1) increases in development and material costs related to Broadband Communication Systems that were recorded in the first quarter of 2013 but should have been recorded in the fourth quarter of 2012, (2) a sub-contractor subscription deposit that was recorded as sales and income in the fourth quarter of 2012 but should have been amortized to sales and income during 2013, (3) costs accrued in the fourth quarter of 2012 for goods or services received in the first quarter of 2013, (4) several unrecorded liabilities that were recorded in the first quarter of 2013 but should have been recorded in the fourth quarter of 2012, (5) a correction of accrued vacation that was recorded in the fourth quarter of 2013 but should have been recorded in the fourth quarter of 2012 and the first, second and third quarters of 2013, and (6) a warranty reserve reduction recorded in the third quarter of 2012 that should have been recorded in the fourth quarter of 2011.

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With respect to each of the immaterial out of period amounts included in the Company’s previously issued financial statements, the table below presents the: (1) nature of the adjustments, (2) applicable segment, (3) amount of increase (or decrease) to sales and operating income, (4) period recorded and (5) correct period.

		2013					2012						2011
Nature of Adjustment	Applicable Segment	Sales			Operating Income		Sales			Operating Income			Sales			Operating Income		Period Recorded		Correct Period
		($ in millions)
Higher development and material costs for networked communications systems	Communication Systems	$	10		$	10	$	(10	)	$	(10	)	$	—		$	—		1Q 2013	4Q 2012
Sub-contractor subscription deposit	Aerospace Systems		26			2		(26	)		(2	)		—			—		4Q 2012	1Q, 2Q, 3Q & Q4 2013
Costs accruals for goods/services received	Aerospace Systems		5			1		(5	)		(1	)		—			—		4Q 2012	1Q 2013
Unrecorded liabilities	Aerospace Systems		(2	)		—		2			—			—			—		1Q 2013	4Q 2012
Accrued vacation	Aerospace Systems		—			1		—			(1	)		—			—		4Q 2013	4Q 2012, 1Q, 2Q & 3Q 2013
Warranty reserve	Electronic Systems		—			—		3			(4	)		(3	)		4		3Q 2012	4Q 2011
Total		$	39		$	14	$	(36	)	$	(18	)	$	(3	)	$	4

The table below presents the impact of the matters discussed above on sales and pre-tax income in total, for the six month period ended June 27, 2014, years ended December 31, 2013, 2012 and 2011, and for the years ended prior to December 31, 2011.

	Total				Six Months 2014				2013				2012				2011				Prior to 2011
	Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income
	(in millions)
Army C-12 Contract	$	(32)	$	(69)	$	(3)	$	(15)	$	(25)	$	(35)	$	(3)	$	(16)	$	(1)	$	(3)		—		—
Other Logistics Support Contracts		(5)		(48)		—		(20)		(2)		(11)		(2)		(11)		—		(2)		(1)		(4)
Logistics Solutions	$	(37)	$	(117)	$	(3)	$	(35)	$	(27)	$	(46)	$	(5)	$	(27)	$	(1)	$	(5)	$	(1)	$	(4)
Platform Systems		(21)		(52)		(12)		(40)		(12)		(14)		3		2		—		—		—		—
Total Internal Review of Aerospace Systems Segment	$	(58)	$	(169)	$	(15)	$	(75)	$	(39)	$	(60)	$	(2)	$	(25)	$	(1)	$	(5)	$	(1)	$	(4)
Sales-Type Lease Transaction		(15)		29		(8)		1		(7)		5		—		3		—		3		—		17
Out of Period Amounts		—		—		—		—		39		14		(36)		(18)		(3)		4		—		—
Total Revisions	$	(73)	$	(140)	$	(23)	$	(74)	$	(7)	$	(41)	$	(38)	$	(40)	$	(4)	$	2	$	(1)	$	13

For additional information regarding the effect the adjustments above had on previously issued financial statements, see Note 3, on page F-15.

In accordance with ASC 650-10-S99 and S55, we performed an analysis to determine if the impact of the amounts disclosed above were material to previously issued financial statements. Based on that analysis, we believe that previously issued financial statements are not materially misstated on either a quantitative or qualitative basis. However, we believe that correcting these errors in the quarterly report on Form 10-Q for the second quarter of 2014 would, in the aggregate, cause a material misstatement to forecasted pre-tax income and net income for the fiscal year ending December 31, 2014. Accordingly, we are correcting these errors by revising our previously issued financial statements to record all the adjustments in the table above in the appropriate period.

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Items Amended by this Filing

The following items of the Original Form 10-K are being amended:

• Part I — Item 1. Business

• Part I — Item 1A. Risk Factors

• Part II — Item 6. Selected Financial Data

• Part II — Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

• Part II — Item 8. Financial Statements and Supplementary Data

• Part II — Item 9A. Controls and Procedures

• Part IV — Item 15. Exhibits and Financial Statement Schedules

Other than this Amendment and the 2014 First Quarter 10-Q Amendment, we do not intend to file any other amended Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q for periods affected by the revisions. Future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q will reflect the revisions for financial information included in this Amendment and the 2014 First Quarter 10-Q Amendment, as applicable.

This Amendment includes the updates for the matters discussed above. However, this Amendment does not reflect other subsequent information or events that have occurred after the filing date of the Form 10-K. Accordingly, this Amendment should be read in conjunction with our other filings with the SEC subsequent to the filing of the Form 10-K.

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L-3 COMMUNICATIONS HOLDINGS, INC.

L-3 COMMUNICATIONS CORPORATION

INDEX TO ANNUAL REPORT ON FORM 10-K/A

For the Year Ended December 31, 2013

PART I
Item 1:	Business	1
Item 1A:	Risk Factors	19
Item 1B:	Unresolved Staff Comments	29
Item 2:	Properties	30
Item 3:	Legal Proceedings	30
Item 4:	Mine Safety Disclosures	30
PART II
Item 5:	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	31
Item 6:	Selected Financial Data	33
Item 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A:	Quantitative and Qualitative Disclosures about Market Risk	73
Item 8:	Financial Statements and Supplementary Data	73
Item 9:	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A:	Controls and Procedures	73
Item 9B:	Other Information	75
PART III
Item 10:	Directors, Executive Officers and Corporate Governance	76
Item 11:	Executive Compensation	76
Item 12:	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	76
Item 13:	Certain Relationships and Related Transactions, and Director Independence	76
Item 14:	Principal Accountant Fees and Services	76
PART IV
Item 15:	Exhibits and Financial Statement Schedules	77
Signatures		83

PART I

Item 1. Business

Overview

L-3 Holdings, a Delaware corporation organized in April 1997, derives all of its operating income and cash flows from its wholly-owned subsidiary, L-3 Communications. L-3 Communications, a Delaware corporation, is a prime contractor in aerospace systems and national security solutions. L-3 is also a leading provider of a broad range of communication and electronic systems and products used on military and commercial platforms. Our customers include the United States (U.S.) Department of Defense (DoD) and its prime contractors, U.S. Government intelligence agencies, the U.S. Department of Homeland Security (DHS), U.S. Department of State (DoS), allied international governments, and domestic and international commercial customers.

In the first quarter of 2014, we reorganized our business segments to better align our organizational structure with customer priorities and increase operational efficiencies. After the realignment, L-3’s structure consists of the following four segments: Aerospace Systems, Electronic Systems, Communication Systems and National Security Solutions, as further described below.

Aerospace Systems: combines the operations of the former Platform & Logistics Solutions (P&LS) segment with Intelligence, Surveillance and Reconnaissance (ISR) Systems. ISR Systems was part of the former Command, Control, Communications, Intelligence, Surveillance and Reconnaissance (C³ISR) segment. Aerospace Systems delivers integrated solutions for the global ISR market and provides modernization, upgrade, sustainment, and maintenance and logistics support for a wide variety of aircraft and ground systems. Aerospace Systems had 2013 net sales of approximately $4,551 million.

Electronic Systems: includes all of its previous businesses historically included in this segment except the Microwave Products businesses, which are now part of Communication Systems. Electronic Systems provides a broad range of components, products, subsystems, systems and related services for military and commercial customers. Electronic Systems had 2013 net sales of approximately $4,598 million.

Communication Systems: combines the operations of the Microwave Products businesses, which were previously part of the Electronic Systems segment, with the operations of the Networked and Secure Communications Products businesses, previously part of the former C³ISR segment. Communication Systems delivers products and services for the global communications market, specializing in strategic and tactical airborne, space, ground and sea-based communication systems. Communication Systems had 2013 net sales of approximately $2,178 million.

National Security Solutions: remains unchanged. National Security Solutions will continue to provide cybersecurity solutions, high-performance computing, enterprise information technology (IT) services, analytics and intelligence analysis. National Security Solutions had 2013 net sales of approximately $1,295 million.

We have made certain reclassifications for matters specific to the segment realignment discussed above. Financial information for our segments, including sales by geographic area, is included in “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Note 23 to our audited consolidated financial statements.

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For the year ended December 31, 2013, we generated sales of $12,622 million, operating income of $1,212 million and net cash from operating activities from continuing operations of $1,263 million. The table below presents a summary of our 2013 sales by major category of end customer. For a more detailed presentation of our sales by end customer, see “Major Customers” within this Business section.

	2013 Sales		% of Total Sales
	(in millions)
DoD	$	8,589		68%
Other U.S. Government		597		5
Total U.S. Government	$	9,186		73%
International (foreign governments)		1,747		14
Commercial — international		1,067		8
Commercial — domestic		622		5
Total sales	$	12,622		100%

Business Strategy

The goal of our strategy is to build and sustain strong businesses with durable competitive discriminators and number one or number two market positions. Our business strategy is customer-focused and aims to increase shareholder value by expanding our strong positions in aerospace systems, electronic systems, communication systems and national security solutions by leveraging our customer relationships and pursuing adjacent market opportunities. We intend to gain market share with innovative and affordable solutions, collaboration across L-3’s business units and demonstrated past performance that address customer imperatives. We will continue shifting our business portfolio to emphasize products, systems and proprietary services. Financially, our emphasis is on growing earnings per share and cash flow. Our strategy involves a flexible and balanced combination of organic growth, cost reductions, and select business acquisitions and divestitures, enabling us to grow the company and also return cash to our shareholders in a balanced and disciplined manner. Our strategy includes the elements discussed below.

Maintain an Entrepreneurial, Accountable, Ethical and Results-Driven Culture. A key part of L-3’s strategy is our entrepreneurial, accountable, and results-driven culture that focuses on meeting our customers’ needs and on achieving L-3’s strategic goals and growth objectives. L-3’s culture is made up of diverse people providing creative, innovative and affordable solutions and ideas in an environment that fosters teamwork and collaboration across our business units. Operating with integrity and a commitment to the highest standards of ethical conduct and maintaining strong internal controls are foundational elements of our strategy to build and maintain the trust of our customers, shareholders, employees, suppliers and communities where we live and work.

Strengthen and Expand Our Market Positions. We intend to use our existing prime contractor and supplier positions and internal investments to increase our market share, grow our sales organically and continue to build strong businesses with durable discriminators that have a number one or number two market position. We intend to expand our prime contractor roles in select business areas where we have domain expertise, including aerospace systems and national security solutions. We expect to benefit from and expand our supplier positions to multiple bidders by leveraging our customer relationships and pursuing adjacent market opportunities. As an independent supplier of a broad range of products, subsystems and systems in several key business areas, our growth will partially be driven by expanding our share of existing programs and participating in new programs. Teaming arrangements with other prime contractors and platform original equipment manufacturers is one way we intend to pursue select new business opportunities and expand our content on select platforms. We plan to maintain our diversified and broad business mix with limited reliance on any single contract, follow-on or new business opportunity. While sales to the U.S. Government, especially the DoD, will remain an integral part of L-3’s business, we also intend to continue to increase our sales from international and commercial businesses. We expect to continue to supplement our organic sales growth by acquiring, on a select basis, businesses that provide

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attractive returns on investment and add new products, technologies, programs and contracts, or provide access to select DoD, other U.S. Government, international and/or commercial customers.

Collaborate to Increase Growth Opportunities. We intend to deepen the collaboration among our diversified businesses to develop new business opportunities, combine our leading technologies and deliver the right solutions to our customers quickly. We expect that our core strengths of agility, responsiveness and cost-effectiveness will allow us to continue to provide exceptional performance to our customers. We intend to continue our shift from a “black box” provider to a complete national security solutions provider.

Leverage Our Excellent Customer Relationships. We will maintain and expand our excellent customer relationships. We also intend to continue to leverage our customer relationships and our capabilities, including proprietary technologies, to expand the scope of our products to existing and new customers. We also intend to continue to align our products, services, investments in research and development and business acquisitions to proactively address customer priorities and requirements and invest in growth areas such as aerospace systems, sensor systems, special operations, cyber security and intelligence support.

Proactively Manage Our Cost Structure and Optimize Our Business Portfolio. We intend to continue to increase productivity and to reduce our direct contract costs and overhead costs, including general and administrative costs. Our effective management of labor, material, subcontractor and other direct costs is an important element of cost control and favorable contract performance. We believe that proactively re-sizing our businesses to their anticipated sales, combined with continuous cost improvement will enable us to increase our cost competitiveness, and to selectively invest in new product development, business acquisitions, bids and proposals and other business development activities to increase our market share.

Achieve Outstanding Program Performance. We believe that outstanding performance on our existing programs and contracts in terms of on-budget, on-schedule and satisfying and exceeding technical and other contractual performance requirements, is the foundation for expanding L-3’s prime contractor and supplier positions and growing market share. We believe that a prerequisite for growing and winning new business is to retain our existing business by successfully meeting the performance criteria included in our contracts. We will continue to focus on delivering superior contract performance with affordable prices to our customers in order to maintain our reputation as an agile and responsive contractor and to differentiate ourselves from our competitors.

Attract and Retain Skilled Personnel. The success of our businesses is, to a large extent, dependent upon the knowledge and skills of our employees. We intend to continue to attract and retain employees who have management, contracting, engineering and technical skills and who have U.S. Government security clearances, particularly those with clearances of top-secret and above.

Business Acquisitions and Divestitures

During the years ended December 31, 2013, 2012 and 2011, we used net cash of $62 million, $348 million and $20 million for business acquisitions, respectively. Additionally, we completed the spin-off of our subsidiary, Engility Holdings, Inc. (Engility), to our shareholders on July 17, 2012. See “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Business Acquisitions and Divestitures” for additional information regarding our business acquisitions and divestitures, including the spin-off of Engility.

Products and Services

Our four reportable segments provide a wide range of products and services to various customers and are described below. See “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Reportable Segment Results of Operations” and Note 23 to our audited consolidated financial statements for financial information about each segment.

Aerospace Systems Reportable Segment

In 2013, Aerospace Systems net sales of $4,551 million represented 36% of our total net sales. The businesses in this reportable segment provide products and services for the global ISR market, specializing in signals

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intelligence (SIGINT) and communications intelligence (COMINT) systems. These products and services provide the warfighter with the ability to collect and analyze data from command centers, communication nodes and air defense systems for real-time situational awareness and response. The businesses in this reportable segment provide Command, Control and Communications (C³) systems products for military and other U.S. Government and allied international government intelligence, reconnaissance and surveillance applications. We believe that these products and services are critical elements for a substantial number of major command, control and communication and intelligence gathering systems. The businesses in this reportable segment also provide modernization, upgrades and sustainment, maintenance and logistics support solutions for military and various government aircraft and other platforms. We sell these services primarily to the DoD, the Canadian Department of National Defence (DND) and other allied international governments. Major products and services for this reportable segment include:

• highly specialized fleet management sustainment and support services, including procurement, systems integration, sensor development, modifications and periodic depot maintenance for ISR and special mission aircraft and airborne systems;

• strategic and tactical SIGINT systems that detect, collect, identify, analyze and disseminate information;

• engineering, modification, maintenance, logistics and upgrades for aircraft, ground vehicles and personnel equipment;

• turnkey aviation life cycle management services that integrate custom developed and commercial off-the-shelf products for various military fixed and rotary wing aircraft, including heavy maintenance and structural modifications and interior modifications and construction; and

• aerospace and other technical services related to large fleet support, such as aircraft and vehicle modernization, maintenance, repair and overhaul, logistics, support and supply chain management, primarily for military training, tactical, cargo and utility aircraft.

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The table below provides additional information for the systems, products and services; selected applications; and selected platforms or end users of our Aerospace Systems reportable segment.

Systems/Products/Services	Selected Applications	Selected Platforms/End Users
ISR Systems
•    Prime mission systems integration, sensor development and operations and support	•    Signal processing, airborne SIGINT applications, antenna technology, real-time process control and software development	•    U.S. Air Force (USAF), United Kingdom Ministry of Defence (U.K.MoD), and other allied international military ISR aircraft platforms and ground systems
•    Fleet management of special mission aircraft, including avionics and mission system upgrades and logistics support	•    Measurement collection and signal intelligence, special missions	•    DoD and classified customers within the U.S. Government
•    ISR operations and support	•    Data link support and services, special applications, classified projects, spares and repairs	•    USAF and U.S. Army ISR aircraft platforms and ground systems
Logistics Solutions
•    Logistics support, maintenance and refurbishment	•    Aircraft maintenance repair and overhaul, flight operations support for training, cargo and special mission aircraft	•    U.S. Army, USAF, U.S. Navy (USN), Canadian Department of National Defence (DND) and other allied international militaries
•    Contract Field Teams (CFT)	•    Deployment of highly mobile, quick response field teams to customer locations to supplement the customer’s resources for various ground vehicles and aircraft	•    U.S. Army, USAF, USN and U.S. Marine Corps (USMC)
•    Contractor Operated and Managed Base Supply (COMBS)	•    Inventory management activities relating to flight support and maintenance, including procurement and field distribution	•    Military training and cargo aircraft
Platform Systems
•    Modernization and life extension maintenance upgrades and support	•    Aircraft structural modifications and inspections, installation of mission equipment, navigation and avionics products, interior modifications	•    USN, USAF, Canadian DND, Royal Australian Air Force, other allied international governments, original equipment manufacturers (OEMs), VIP and HOS aircraft, and various military fixed and rotary wing aircraft
•    Fabrication and assembly of fixed and rotary wing aeronautical structures	•    Rotary wing cabin assemblies, new and modified wings and subassemblies, and parts fabrication for OEMs	•    U.S. Army, USN, USMC, Canadian DND and OEMs

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Electronic Systems Reportable Segment

In 2013, Electronic Systems net sales of $4,598 million represented 36% of our total net sales. The businesses in this reportable segment provide a broad range of products and services, including components, products, subsystems, systems and related services to military and commercial customers in several niche markets. The table below provides a summary of the segment’s business areas and the percentage that each contributed to Electronic Systems’ net sales in 2013.

Business Area	% of 2013 Segment Sales
Precision Engagement & Training		23%
Sensor Systems		21
Power & Propulsion Systems		19
Marine Systems International		11
Aviation Products		10
Warrior Systems		10
Security & Detection Systems		6
Total Electronic Systems		100%

The table below provides additional information for the systems, products and services; selected applications; and selected platforms or end users of our Electronic Systems reportable segment.

Systems/Products/Services	Selected Applications	Selected Platforms/End Users
Precision Engagement & Training
•   Military and commercial aircraft flight simulators, reconfigurable training devices, distributed mission training suites	•   Advanced simulation technologies and training for pilots, navigators, flight engineers, gunners and operators	•   Fixed and rotary winged aircraft and ground vehicles for USAF, USN, U.S. Army, Canadian DND, allied international militaries, commercial airlines and aircraft OEMs
•   Training services, courseware integrated logistics support and maintenance	•   Systems management, operations, and maintenance	•   Various DoD and allied international military customers
•   Vehicle driver training and courseware	•   Drive safety, efficiency, and productivity training	•   Various commercial transport companies
•   Unmanned systems and components	•   Tactical unmanned air systems (UAS), medium altitude long endurance (MALE) UAS, small expendable UAS, flight controls, sensors and remote viewing systems	•   U.S. DoD and allied international ministries of defense
•   Radar-based sensors and systems	•   Electronic warfare, unmanned systems, ISR and precision-guided munitions	•   U.S. DoD and DHS

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Systems/Products/Services	Selected Applications	Selected Platforms/End Users
•   Global Positioning System (GPS) receivers	•   Location tracking	•   Guided projectiles and precision munitions
•   Fuzing and ordnance systems	•   Precision munitions, fuzes, and electronic and electro safety arming devices (ESADs)	•   Various DoD and allied international military customers
•   Remote viewing video and exploitation systems	•   Portable situational awareness and video exploitation software and hardware for soldiers, ships and vehicles	•   USMC, USN and various DoD
•   Lightweight man portable computer/displays for dismounted soldiers	•   Situational awareness and connectivity for dismounted soldiers	•   U.K. MoD
•   Navigation systems and positioning navigation units	•   Satellite launch and orbiting navigation and navigation for ground vehicles and fire control systems	•   USAF, U.S. Army, USMC and NASA
Sensor Systems
•   Targeted stabilized camera systems with integrated sensors and wireless communication systems	•   Intelligence data collection and surveillance and reconnaissance	•   DoD, intelligence and security agencies, law enforcement, manned/unmanned platforms
•   Submarine photonic systems and periscopes	•   Virginia class submarines	•   USN
•   Airborne and ground based high energy laser beam directors, laser designators and high tracking rate telescopes	•   Directed energy systems, space surveillance, satellite laser ranging and laser communications, airborne and ground target designation/illumination	•   USAF and National Aeronautics Space Administration (NASA)
•   Improvised Explosive Device (IED) Defense Systems	•   Vehicle based and manpack IED detection and jamming systems	•   U.K. MoD and international allies
•   Force protection, electronic warfare and satellite monitoring	•   Counter IED systems, jamming and satellite monitoring	•   U.K. MoD and other international security agencies and ministries of defense

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Systems/Products/Services	Selected Applications	Selected Platforms/End Users
Power & Propulsion Systems
•   Naval power delivery, conversion and switching products, and hybrid electric drives	•   Switching, distribution and protection, frequency and voltage conversion, propulsion motors and drive units	•   Naval submarines, surface ships and aircraft carriers
•   Automation, navigation, communications, and sensors and integrated Command, Control, Communications, Computers and Navigation (C4N) solutions	•   Vessel bridge and machinery plant platform management systems, and C4N systems	•   USN and allied international navies and other government agencies
•   Power plant simulation, modeling, computer systems, and training services	•   Submarines, nuclear and other power plants	•   Allied international navies, nuclear and other power plant companies
•   Airborne dipping sonars, submarine and surface ship towed arrays	•   Submarine and surface ship detection and localization	•   USN and allied international navies
•   Underwater sensor ranges	•   Monitor nuclear testing, track submarines and surface vessels	•   U.S. and international military and commercial customers
•   Service life extensions	•   Landing craft air cushion amphibious vehicle	•   USN
•   In-service engineering, ship repair, overhaul, upgrades and maintenance, and battle force tactical training	•   Embedded shipboard training systems, towed arrays, navigation systems, radar systems and electronic warfare systems	•   USN, U.S. Coast Guard (USCG), U.S. Army and commercial shipowners
•   Ballistic missile targets	•   Targets for ground based ballistic missile intercept systems	•   U.S. Missile Defense Agency (MDA)
•   Heavy fuel engines, cross drive variable transmissions, turret drive systems, vehicle suspension, advanced drive systems and auxiliary power generators	•   Power trains and suspension systems for military vehicles, power and energy management for military hybrid electric vehicles, non-portable and under armor auxiliary power units, and heavy fueled engines for unmanned systems	•   U.S. Army, USMC and allied international ministries of defense, manned/unmanned military platforms
•   High power microwave sources, systems & effects, pulse power systems and electromagnetics hardened construction	•   Forensic analysis of weapons of mass destruction, and active detection of special nuclear material.	•   U.K. MoD, U.S. Defense Threat Reduction Agency, U.S. Army and USAF

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Systems/Products/Services	Selected Applications	Selected Platforms/End Users
Marine Systems International
•   Integrated electrical power and electric propulsion packages, integrated automation, navigation, communication, and dynamic positioning systems, and audio/visual solutions and safety systems	•   Surface ships ranging from shipping vessels, container carriers, environmental, research and offshore construction ships, naval frigates, ferries, cruise liners and mega yachts	•   Commercial shipbuilders and shipowners and allied international navies
Aviation Products
•   Solid state crash protected cockpit voice and flight data recorders	•   Aircraft voice and flight data recorders that continuously record voice and sounds from cockpit and aircraft intercommunications	•   Commercial transport, business, regional and military aircraft
•   Airborne traffic and collision avoidance systems, terrain awareness warning systems	•   Reduce the potential for midair aircraft collisions and crashes into terrain by providing visual and audible warnings and maneuvering instructions to pilots	•   Commercial transport, business, regional and military aircraft
•   Advanced cockpit avionics	•   Pilot safety, navigation and situation awareness products	•   Commercial transport, business, regional and military aircraft
•   Cockpit and mission displays	•   High performance, ruggedized flat panel and cathode ray tube displays and processors	•   Various military aircraft
Warrior Systems
•   Enhanced vision and weapon sights products	•   Image intensified night vision goggles/sights, holographic weapon sights, thermal sights and images, and driver viewers for special forces, pilots and aircrews, soldiers, marines, sailors and law enforcement personnel	•   U.S. Army, USN, USMC, DHS, allied international militaries and law enforcement agencies
•   Laser designation and range finder systems	•   Airborne and ground target designation/illumination	•   DoD, law enforcement and allied international customers
•   Weapons Training Systems	•   Laser marksmanship training systems and advanced integrated technologies for security products and services	•   DoD and law enforcement agencies

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Systems/Products/Services	Selected Applications	Selected Platforms/End Users
Security & Detection Systems
•   Airport security systems, explosives detection systems and whole body imaging systems	•   Rapid scanning of passenger checked baggage and carry-on luggage, scanning of large cargo containers	•   DHS, including the U.S. Transportation Security Administration (TSA), domestic and international airports and state and local governments
•   Non-invasive security systems and portals, and sophisticated sensors with threat detection capabilities	•   Aviation, rail and border crossing security	•   TSA, U.S. Customs and Border Protection agency, various regulatory authorities and private security companies

Communication Systems Reportable Segment

In 2013, Communication Systems net sales of $2,178 million represented 18% of our total net sales. The businesses in this reportable segment provide networked communication systems, secure communications products, radio frequency components, satellite communication terminals, and space, microwave and telemetry products. These products are used to connect a variety of space, airborne, ground and sea-based communication systems and are used in the transmission, processing, recording, monitoring, and dissemination functions of these communication systems. Major products and services for this reportable segment include:

• microwave products, including passive and active microwave components and subsystems, radar antennas and radomes, power devices and mobile and ground-based satellite communications systems;

• secure data links that enable real-time information collection and dissemination to users of networked communications for airborne, satellite, ground and sea-based remote platforms, both manned and unmanned;

• secure terminal and communication network equipment and encryption management; and

• communication systems for surface and undersea vessels and manned space flights.

The table below provides additional information for the systems, products and services; selected applications; and selected platforms or end users of our Communication Systems reportable segment.

Systems/Products/Services	Selected Applications	Selected Platforms/End Users
Space & Power Systems
•   Passive and active microwave components and subsystems and non-ionizing radiation monitoring equipment	•   Radio transmission, switching and conditioning, transponder control, channel and frequency separation, ground vehicles, aircraft and satellites	•   DoD and OEMs, satellite communications (SATCOM) for DoD and various government agencies

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Systems/Products/Services	Selected Applications	Selected Platforms/End Users
•   Traveling wave tubes, power modules, klystrons and digital broadcast	•   Microwave vacuum electron devices and power modules	•   DoD and allied international military manned/unmanned platforms, including satellites, radar systems, communication systems, unmanned aerial vehicles (UAVs), missile defense systems, various missile programs and commercial broadcast
•   Telemetry and instrumentation systems	•   Spacecraft telemetry tracking and control, encryption and high data rate transmitters, satellite command and control software, airborne and ground test telemetry systems, and tactical intelligence receivers	•   Aircraft, missiles and satellites
Tactical Satellite Communications Products
•   Quick-deploy flyaway very small aperture terminals (VSAT) and vehicular satellite systems	•   Satellite communication systems	•   U.S. Army, USAF and various DoD agencies
•   Ultra-wide frequency and advanced radar antennas and radomes	•   Surveillance and radar detection	•   Military fixed and rotary winged aircraft, SATCOM
Broadband Communication Systems
•   Airborne, space and surface data link terminals, ground stations, and transportable tactical SATCOM systems	•   High performance, wideband secure communication links for relaying of intelligence and reconnaissance information	•   Manned aircraft, UAVs, naval ships, ground vehicles and satellites for the DoD
•   Multi-band Manpack Receivers	•   Portable, ruggedized terminals used for receiving reconnaissance video and sensor data from multiple airborne platforms	•   U.S. Special Operations Command (USSOCOM), USAF and other DoD customers
COMSEC & Specialty RF Products
•   Secure communications terminals and equipment, and secure network encryption products	•   Secure and non-secure voice, data and video communication for office, battlefield and secure internet protocol (IP) network applications	•   DoD and U.S. Government intelligence agencies

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Systems/Products/Services	Selected Applications	Selected Platforms/End Users
•   Ground-based satellite communications terminals and payloads	•   Interoperable, transportable ground terminals	•   DoD and U.S. Government intelligence agencies
•   Shipboard communications systems	•   Internal and external communications (radio rooms)	•   USN, USCG and allied international navies
•   High dynamic small aperture Ku/Ka-band receive/transmit systems	•   Off road use on military vehicles, watercraft, and airborne platforms to provide two-way broadband connectivity while on the move	•   U.S. Army and various DoD agencies
•   Tactical ground based signal intercept and direction finding systems	•   Man portable and military vehicle mounted tactical signal intercept/exploitation and direction finding systems	•   U.S. Army and other DoD/U.S. intelligence agencies
•   Managed satellite networks and integrated remote VSAT satellite systems	•   Deployment and support of global communication networks for tactical and enterprise applications	•   U.S. Army, DoD/U.S. intelligence agencies, allied forces and commercial contractors
•   Multi-frequency time division multiple access modems and terminals that support SATCOM on the move using X, Ku, and Ka bands	•   On the move SATCOM and other tactical communications systems utilizing small aperture terminals	•   U.S. Army, USMC, and select international allies

National Security Solutions (NSS) Reportable Segment

In 2013, NSS net sales of $1,295 million represented 10% of our total net sales. The businesses in this reportable segment provide full-spectrum cyber operations support, enterprise and mission IT solutions, intelligence operations support, and operational infrastructure solutions to the DoD, U.S. Government intelligence agencies, federal civilian agencies and allied international governments. Major services, solutions and systems for this reportable segment include:

• providing solutions and systems for secure communications, information systems networks and mobile devices and ensuring the integrity of information to enable trusted, interconnected, and resilient networks;

• providing operational enterprise IT solutions that help keep our customers relevant in their dynamic mission environment;

• developing solutions and systems for our customers that enable available data to be used more effectively to provide assessments, gain and maintain situation awareness, support decision-making, improve operations, and bring about customers’ desired effects;

• supporting intelligence collection, tasking, exploitation, analysis, dissemination, training, situational awareness, visualization, normalization, minimization and outcome assurance; and

• developing next-generation solutions and systems that help our customers solve operational, informational, and physical security challenges that can place facilities, infrastructure, installations, borders and perimeters, and transportation environments at risk.

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The table below provides additional information for the solutions, systems and services; selected applications and capabilities; and selected end users of our NSS reportable segment.

Solutions/Systems/Services	Selected Applications/Capabilities	Selected End Users
•   Full-Spectrum Cyber Operations Support	•   High-performance computing, dynamic network protection, advanced forensics and exploitation, modeling, simulation and wargaming, cloud and mobile security, and network virtualization	•   USAF, U.S. Government intelligence agencies, U.S. Combatant Commands and Defense Information Systems Agency
•   Enterprise and Mission IT	•   Enterprise architecture and systems engineering, systems integration and development, operations and maintenance (O&M) transformations for efficiencies and cost reductions, performance-based managed services, agile software engineering and development, space communications and launch support	•   U.S. Army, USAF, U.S. Navy, USSOCOM, U.S. Government intelligence agencies, U.K. MoD, Department of the Interior, DoS, NASA, and state and local government agencies
•   Intelligence Operations Support	•   Data fusion and analytics, visualization and decision-making, training and workforce development, mission engineering and operations support, mission-essential staffing and knowledge management	•   U.S. Army, USAF, USN, U.S. Combatant Commands, DoS, U.S. Government intelligence agencies, and U.K. MoD
•   Operational Infrastructure Support	•   Risk, threat and vulnerability assessment, complex systems architecture, enterprise-level command and control systems, intelligent surveillance, logistics and integrated sustainment, and surveillance, detection and response systems	•   USAF, USN, U.S. MDA, U.S. Strategic Command, DHS, National Oceanic and Atmospheric Administration (NOAA), and international governments

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Funded Backlog and Orders

We define funded backlog as the value of funded orders received from customers, less the cumulative amount of sales recognized on such orders. We define funded orders as the value of contract awards received from the U.S. Government, for which the U.S. Government has appropriated funds, plus the value of contract awards and orders received from customers other than the U.S. Government. The table below presents our funded backlog, percentage of funded backlog at December 31, 2013 expected to be recorded as sales in 2014 and funded orders for each of our reportable segments and on a consolidated basis.

	Funded Backlog at December 31,				Percentage of Funded Backlog at December 31, 2013 Expected to be Recorded as      Sales in 2014		Funded Orders
	2013		2012				2013		2012
	(in millions)						(in millions)
Reportable Segment:
Aerospace Systems	$	3,498	$	3,758		69%	$	4,304	$	5,024
Electronic Systems		4,421		4,407		59%		4,594		4,714
Communication Systems		1,867		2,054		68%		1,991		2,629
NSS		582		710		89%		1,167		1,431
Consolidated	$	10,368	$	10,929		66%	$	12,056	$	13,798

Our funded backlog does not include the full potential value of our contract awards, including those pertaining to multi-year, cost-plus type contracts, which are generally funded on an annual basis. Funded backlog also excludes the potential future orders and related sales from unexercised priced contract options that may be exercised by customers under existing contracts and the potential future orders and related sales of purchase orders that we may receive in the future under indefinite quantity contracts or basic ordering agreements during the term of such agreements.

Major Customers

The table below presents a summary of our sales by end customer and the percent contributed by each to our total sales. For additional information regarding domestic and international sales, see Note 23 to our audited consolidated financial statements.

	2013 Sales		2013 % of Total Sales		2012 Sales		2012 % of       Total Sales
	(in millions)				(in millions)
Air Force	$	3,393		27%	$	3,570		27%
Army		2,376		19		2,811		21
Navy/Marines		1,794		14		1,896		15
Other Defense		1,026		8		1,059		8
Total DoD	$	8,589		68%	$	9,336		71%
Other U.S. Government		597		5		650		5
Total U.S. Government	$	9,186		73%	$	9,986		76%
International (foreign governments)		1,747		14		1,463		11
Commercial — international		1,067		8		986		8
Commercial — domestic		622		5		672		5
Total sales	$	12,622		100%	$	13,107		100%

Direct sales to the end customer represented approximately 68% of our consolidated 2013 sales, and sales as a subcontractor or supplier represented the remaining 32%. Additionally, approximately 69% of our DoD sales for 2013 were direct to the customer, and approximately 31% were indirect through other prime system contractors and subcontractors of the DoD.

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Our sales are predominantly derived from contracts with agencies of, and prime system contractors to, the U.S. Government. Various U.S. Government agencies and contracting entities exercise independent and individual purchasing decisions, subject to annual appropriations by the U.S. Congress. For the year ended December 31, 2013, our five largest contracts (revenue arrangements) generated 12% of our consolidated sales and our largest contract (revenue arrangement) in terms of annual sales was the Fort Rucker Maintenance Support contract with the U.S. Army Aviation and Missile Life Cycle Management Command (AMCOM), which is included in our Aerospace Systems segment. Under this contract, which generated approximately 4% of our 2013 sales, we provide maintenance, logistics and other related sustainment support services for rotary wing aircraft assigned to Fort Rucker and satellite units in Alabama. Our period of performance, including unexercised annual options, continues through September 30, 2017.

Research and Development

We conduct research and development activities that consist of projects involving applied research, new product and systems development and select concept studies. We employ scientific, engineering and other personnel to improve our existing product-lines and systems and develop new products, technologies, and systems. As of December 31, 2013, we employed approximately 11,400 engineers, substantially all of whom hold advanced degrees, who work on company-sponsored research and development efforts and customer funded research and development contracts.

Company-sponsored (Independent) research and development costs for our businesses that are U.S. Government contractors are allocated to U.S. Government contracts and are charged to cost of sales when the related sales are recognized as revenue. Research and development costs for our commercial businesses are expensed as incurred and are also charged to cost of sales. The table below presents company-sponsored (Independent) research and development expenses incurred for the years ended December 31, 2013, 2012 and 2011 for our U.S. Government businesses and our commercial businesses.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Company-Sponsored Research and Development Costs:
U.S. Government Contractor Businesses	$	184	$	196	$	206
Commercial Businesses		74		88		73
Total	$	258	$	284	$	279

Customer-funded research and development costs pursuant to contracts (revenue arrangements) are not included in the table above because they are direct contract costs and are charged to cost of sales when the corresponding revenue is recognized. See Note 2 to our audited consolidated financial statements for additional information regarding research and development.

Competition

Our businesses generally encounter significant competition. We believe that we are a major provider for many of the products and services we offer to our DoD, government and commercial customers.

Our ability to compete for existing and new business depends on a variety of factors, including:

• the effectiveness and innovation of our technologies, systems and research and development programs;

• our ability to offer superior program performance at an affordable and competitive cost;

• historical, technical, cost and schedule performance;

• our ability to attain supplier positions on contracts;

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• our ability to maintain an effective supplier and vendor base;

• our ability to retain our employees and hire new ones, particularly those who have U.S. Government security clearances;

• the capabilities of our facilities, equipment and personnel to undertake the business for which we compete; and

• our ability to quickly and flexibly meet customer requirements and priorities.

L-3 is an aerospace and defense contractor with a broad and diverse portfolio of products and services. We are primarily a non-platform prime contractor and have diverse subcontractor positions. We supply our products and services to other prime system contractors. However, we also compete directly with other large prime system contractors for: (1) certain products, subsystems and systems, where they have vertically integrated businesses and (2) niche areas where we are a prime contractor. We also compete with numerous other aerospace, defense and government technical services contractors, which generally provide similar products, subsystems, systems or services.

In addition, our ability to compete for select contracts may require us to “team” with one or more of the other prime system contractors that bid and compete for major platform programs, and our ability to “team” with them is often dependent upon the outcome of a competition for subcontracts they award.

Patents and Licenses

Generally, we do not believe that our patents, trademarks and licenses are material to our operations. Furthermore, most of our U.S. Government contracts generally permit us to use patents owned by other U.S. Government contractors. Similar provisions in U.S. Government contracts awarded to other companies make it impossible for us to prevent the use of our patents in most DoD work performed by other companies for the U.S. Government.

Raw Materials

Although we generated 57% of our 2013 sales from products and systems, our businesses are generally engaged in limited manufacturing activities and have minimal exposure to fluctuations in the supply of raw materials. For those businesses that manufacture and sell products and systems, most of the value that we provide is labor oriented, such as design, engineering, assembly and test activities. In manufacturing our products, we use our own production capabilities as well as a diverse base of third party suppliers and subcontractors. Although certain aspects of our manufacturing activities require relatively scarce raw materials, we have not experienced difficulty in our ability to procure raw materials, components, sub-assemblies and other supplies required in our manufacturing processes.

Contracts

Generally, the sales price arrangements for our contracts are either fixed-price, cost-plus or time-and-material type. Generally, a fixed-price type contract offers higher profit margin potential than a cost-plus type or time-and-material type contract due to the greater levels of risk we assume on a fixed-price type contract.

On a fixed-price type contract (revenue arrangement), we agree to perform the contractual statement of work for a predetermined sales price. Although a fixed-price type contract generally permits us to retain profits if the total actual contract costs are less than the estimated contract costs, we bear the risk that increased or unexpected costs may reduce our profit or cause us to sustain losses on the contract. Accounting for the sales on a fixed-price type contract that is covered by contract accounting standards requires the preparation of estimates for: (1) the total contract revenue, (2) the total costs at completion, which is equal to the sum of the actual incurred costs to date on the contract and the estimated costs to complete the contract’s statement of work, and (3) the measurement of progress towards completion. Adjustments to original estimates for a contract’s revenue, estimated costs at completion and estimated total profit or loss are often required as work progresses under a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change.

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On a cost-plus type contract (revenue arrangement), we are paid our allowable incurred costs plus a profit which can be fixed or variable depending on the contract’s fee arrangement up to predetermined funding levels determined by our customers. Cost-plus type contracts with award and incentive fee provisions are our primary variable contract fee arrangement. Award fees provide for a fee based on actual performance relative to contractually specified performance criteria. Incentive fees provide for a fee based on the relationship which total allowable costs bear to target cost. The tables below present our sales from cost-plus type contracts with award fees and incentive fees and the percentage of available performance-based award fees we achieved.

	Year Ended December 31,
	2013		2012		2011
Sales from Cost-Plus Contracts with:	(in millions)
Award fees	$	556	$	621	$	663
Incentive fees		557		711		842
Performance based fees	$	1,113	$	1,332	$	1,505

	Year Ended December 31,
	2013		2012		2011
Percentage of Available Performance Based Award Fees Achieved		91%		91%		91%

On a time-and-material type contract (revenue arrangement), we are paid on the basis of direct labor hours expended at specified fixed-price hourly rates (that include wages, overhead, allowable general and administrative expenses and profit) and materials at cost. Therefore, on cost-plus type and time-and-material type contracts we do not bear the risks of unexpected cost overruns, provided that we do not incur costs that exceed the predetermined funded amounts.

Substantially all of our cost-plus type contracts and time-and-material type contracts are with U.S. Government customers while sales to commercial customers are transacted under fixed-price sales arrangements and are included in our fixed-price contract type sales. The table below presents the percentage of our total sales generated from each contract type for the years ended December 31, 2013, 2012 and 2011.

Contract Type	Year Ended December 31,
	2013		2012		2011
Fixed-price		71%		71%		69%
Cost-plus		24%		24%		23%
Time-and-material		5%		5%		8%
Total sales		100%		100%		100%

Regulatory Environment

Most of our revenue arrangements with agencies of the U.S. Government, including the DoD, are subject to unique procurement and administrative rules. These rules are based on both laws and regulations, including the U.S. Federal Acquisition Regulation, that: (1) impose various profit and cost controls, (2) regulate the allocations of costs, both direct and indirect, to contracts and (3) provide for the non-reimbursement of unallowable costs. Unallowable costs include, but are not limited to, lobbying expenses, interest expenses and certain costs related to business acquisitions, including, for example, the incremental depreciation and amortization expenses arising from fair value increases to the historical carrying values of acquired assets. Our contract administration and cost accounting policies and practices are also subject to oversight by government inspectors, technical specialists and auditors. See “Part I — Item 1A — Risk Factors” for a discussion of certain additional business risks specific to our government contracts.

Our U.S. Government contracts are subject to extensive legal and regulatory requirements and, from time to time, agencies of the U.S. Government investigate whether our operations are being conducted in accordance

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with these requirements. Investigations could result in administrative, civil, or criminal liabilities, including repayments, disallowance of certain costs, or fines and penalties. As is common in the U.S. defense industry, we are subject to business risks, including changes in the U.S. Government’s procurement policies (such as greater emphasis on competitive procurement), governmental appropriations, national defense policies or regulations, service modernization plans, and availability of funds. A reduction in expenditures by the U.S. Government for products and services of the type we manufacture and provide, lower margins resulting from increasingly competitive procurement policies, a reduction in the volume of contracts or subcontracts awarded to us or the incurrence of substantial contract cost overruns could materially adversely affect our business.

In 2013, sales under foreign military sales (FMS) agreements, which are included in the international (foreign governments) category in the “Major Customers” table above, were $608 million, or 5% of our total consolidated sales. FMS agreements are made directly between the U.S. Government and allied international governments. In such cases, because we serve only as the supplier, we do not have unilateral control over the terms of the agreements. Certain of our sales are direct commercial sales to allied international governments. These sales are subject to U.S. Government approval and licensing under the Arms Export Control Act. Legal restrictions on sales of sensitive U.S. technology also limit the extent to which we can sell our products to allied international governments or private parties.

All of our U.S. Government contracts can be terminated by the U.S. Government either for its convenience or if we default by failing to perform under the contract. Termination for convenience provisions provide only for our recovery of costs incurred or committed settlement expenses and profit on the work completed prior to termination. Termination for default provisions provide for the contractor to be liable for excess costs incurred by the U.S. Government in procuring undelivered items from another source. Our contracts with international governments generally contain similar provisions relating to termination at the convenience of the customer.

Environmental Matters

Our operations are subject to various environmental laws and regulations relating to the discharge, storage, treatment, handling, disposal and remediation of certain materials, substances and wastes used in our operations. We continually assess our obligations and compliance with respect to these requirements.

We have also assessed the risk of environmental contamination for our various manufacturing facilities, including our acquired businesses and, where appropriate, have obtained indemnification, either from the sellers of those acquired businesses or through pollution liability insurance. We believe that our current operations are in substantial compliance with all existing applicable environmental laws and permits. We believe our current expenditures will allow us to continue to be in compliance with applicable environmental laws and regulations. While it is difficult to determine the timing and ultimate cost to be incurred in order to comply with these laws, based upon available internal and external assessments, with respect to those environmental loss contingencies of which we are aware, we believe there are no environmental loss contingencies that, individually or in the aggregate, would be material to our consolidated results of operations, financial position or cash flows.

Employees

As of December 31, 2013, we employed approximately 48,000 full-time and part-time employees, 83% of whom were located in the United States. Of these employees, approximately 20% are covered by approximately 180 separate collective bargaining agreements with various labor unions. The success of our business is, to a large extent, dependent upon the knowledge of our employees and on the management, contracting, engineering and technical skills of our employees. In addition, our ability to grow our businesses, obtain additional orders for our products and services and to satisfy contractual obligations under certain of our existing revenue arrangements is largely dependent upon our ability to attract and retain employees who have U.S. Government security clearances, particularly those with clearances of top-secret and above. Historically, we have renegotiated labor agreements without significant disruptions to operating activities and we believe that relations with our employees are positive.

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L-3 Holdings Obligations

The only obligations of L-3 Holdings at December 31, 2013 were: (1) its 3% Convertible Contingent Debt Securities (CODES) due 2035, which were issued by L-3 Holdings on July 29, 2005, (2) its guarantee of borrowings under the revolving credit facility of L-3 Communications and (3) its guarantee of other contractual obligations of L-3 Communications and its subsidiaries. L-3 Holdings’ obligations relating to the CODES have been jointly, severally, fully and unconditionally guaranteed by L-3 Communications and certain of its 100% owned domestic subsidiaries. In order to generate the funds necessary to repurchase its common stock and pay dividends declared and principal and interest on its outstanding indebtedness, if any, L-3 Holdings relies on dividends and other payments from its subsidiaries.

Available Information

We are subject to the informational requirements of the Securities Exchange Act of 1934 and, in accordance therewith, file reports, including annual, quarterly and current reports, proxy statements and other information with the SEC. Such reports and other information can be inspected and copied at the Public Reference Room of the SEC located at 100 F Street, N.E., Washington, D.C. 20549. Copies of such material can be obtained from the Public Reference Room of the SEC at prescribed rates. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Such material may also be accessed electronically by means of the SEC’s home page on the Internet at http://www.sec.gov.

You may also obtain a free copy of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statement for the annual shareholders’ meeting, as well as any amendments to those reports as soon as reasonably practicable after electronic filing with the SEC through our website on the Internet at http://www.L-3com.com.

We also have a Corporate Governance webpage. You can access our Corporate Governance Guidelines and charters for the audit, compensation and nominating/corporate governance committees of our Board of Directors through our website, http://www.L-3com.com, by clicking on the “Corporate Governance” link under the heading “Investor Relations.” We post our Code of Ethics and Business Conduct on our Code of Ethics webpage under the link “Code of Ethics and Business Conduct.” Our Code of Ethics and Business Conduct applies to all directors, officers and employees, including our chairman, president and chief executive officer, our senior vice president and chief financial officer, and our vice president, controller and principal accounting officer. We will post any amendments to the Code of Ethics and Business Conduct, and any waivers that are required to be disclosed by the rules of either the SEC or the New York Stock Exchange, Inc. (“NYSE”), on our website within the required periods. The information on our website is not incorporated by reference into this report.

To learn more about L-3, please visit our website at http://www.L-3com.com. From time to time we use our website as a channel of distribution of material company information. Financial and other material information regarding L-3 is routinely posted on our website and is readily accessible.

Item 1A. Risk Factors

You should carefully consider the following risk factors and other information contained in this Form 10-K, including “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Any of these risks could materially affect our business and our financial condition, results of operations and cash flows, which could in turn materially affect the price of our common stock.

We have determined that material weaknesses exist in our internal control over financial reporting which could, if not remediated, have a material adverse impact on our ability to produce timely and accurate financial statements.

We are responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. As discussed in Item 9A on page 73, we identified material weaknesses in our internal control over financial reporting as of December 31, 2013. Solely as a result

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of these material weaknesses, we concluded that our internal control over financial reporting were not effective as of December 31, 2013 and that our disclosure controls and procedures were not effective as of December 31, 2013.

A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Although we continue to devote significant time and attention to remedy the identified material weaknesses in internal control over financial reporting, we do not expect that our internal control over financial reporting will be considered effective as of December 31, 2014 because we do not expect to complete our testing of the remediated controls by such time. See Item 9A beginning on page 73 for a description of the identified material weaknesses and related remediation plan. In addition, our remedial efforts may not be successful. Until our remediation plan is fully implemented, our management will continue to devote significant time and attention to these efforts. If we do not complete our remediation in a timely fashion, or at all, or if our remediation plan is inadequate or we encounter difficulties in the implementation or maintenance of our internal control over financial reporting or disclosure controls and procedures, there will continue to be an increased risk that we will be unable to timely file future periodic reports with the SEC and/or remain in compliance with certain covenants included in our outstanding debt agreements. In addition, any failure to implement or any difficulties we encounter with our remediation plan could result in additional material weaknesses or deficiencies in our internal control or future material misstatements in our annual or interim consolidated financial statements.

Our contracts (revenue arrangements) with U.S. Government customers entail certain risks.

A decline in or a redirection of the U.S. defense budget could result in a material decrease in our sales, results of operations and cash flows.

Our government contracts and sales are highly correlated and dependent upon the U.S. defense budget which is subject to the congressional budget authorization and appropriations process. Congress usually appropriates funds for a given program on a September 30 fiscal year basis, even though contract periods of performance may extend over many years. Consequently, at the beginning of a major program, the contract is usually partially funded, and additional monies are normally committed to the contract by the procuring agency only as appropriations are made by Congress in future fiscal years. DoD budgets are a function of factors beyond our control, including, but not limited to, changes in U.S. procurement policies, budget considerations, current and future economic conditions, presidential administration priorities, changing national security and defense requirements, geopolitical developments and actual fiscal year congressional appropriations for defense budgets. Any of these factors could result in a significant decline in, or redirection of, current and future DoD budgets and impact our future results of operations, including our sales and operating income growth rates.

The DoD budget peaked in the fiscal year ended September 30, 2010 (FY 2010) at $690 billion and has declined since. The total DoD enacted budget for the FY 2014 is $583 billion and complies with the sequestration cuts required by the Budget Control Act of 2011 (BCA), as amended by The American Taxpayer Relief Act (ATRA), which was enacted on January 2, 2013. ATRA delayed the effective date of the BCA sequester cuts by two months to March 1, 2013 and reduced the sequester cuts to the FY 2013 budget by $9 billion to approximately $41 billion. After ATRA, the sequestration cuts for the FY 2014 DoD budget were supposed to be $46 billion and approximately $52 billion per year from FY 2015 to FY 2018. On December 26, 2013, President Obama signed the Bipartisan Budget Act of 2013 (BBA) into law, which reduced DoD budget uncertainty for FY 2014 and FY 2015 by increasing BCA spending caps and lowering sequester cuts to the DoD base budget by $22 billion for FY 2014 and $9 billion for FY 2015. Additionally, Congress also increased the FY 2014 Overseas Contingency Operations budget by $6 billion more than the amount included in the FY 2014 Proposed Budget Request. The declining DoD budgets will reduce funding for some of our revenue arrangements and generally will have a negative impact on our sales, results of operations and cash flows.

In addition, in the event that the federal debt limit is met, we may be required to continue to perform for some period of time on certain of our U.S Government contracts even if the U.S Government is unable to make timely payments. Furthermore, such limits could also potentially delay program/contract start dates or the U.S

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Government may issue a stop work order and choose to either resume the work or terminate the contract altogether. Any of these events would likely result in a material adverse effect on our financial position, results of operations and cash flows.

We rely predominantly on sales to U.S. Government entities, and the loss or delay of a significant number of our contracts would have a material adverse effect on our results of operations and cash flows.

Our sales are predominantly derived from contracts (revenue arrangements) with agencies of, and prime system contractors to, the U.S. Government. The loss or delay of all or a substantial portion of our sales to the U.S. Government would have a material adverse effect on our results of operations and cash flows. Approximately 73%, or $9.2 billion, of our sales for the year ended December 31, 2013 were made directly or indirectly to U.S. Government agencies, including 68% to the DoD. Aggregate sales for our five largest contracts (revenue arrangements) amounted to approximately $1.6 billion, or 12% of our sales for the year ended December 31, 2013. Our largest contract (revenue arrangement) in terms of annual sales for the year ended December 31, 2013 was the Fort Rucker Maintenance Support contract with AMCOM, which is included in our Aerospace Systems segment and generated approximately 4% of our 2013 sales.

A substantial majority of our total sales are for products and services under contracts with various agencies and procurement offices of the DoD or with prime contractors to the DoD. Although these various agencies, procurement offices and prime contractors are subject to common budgetary pressures and other factors, our customers exercise independent purchasing decisions. Because of this concentration of contracts, if a significant number of our DoD contracts and subcontracts are simultaneously delayed or cancelled for budgetary, performance or other reasons, it would have a material adverse effect on our results of operations and cash flows.

In addition to contract cancellations and declines in agency budgets, our backlog and future financial results may be adversely affected by:

• curtailment of the U.S. Government’s use of technology or other services and product providers, including curtailment due to government budget reductions and related fiscal matters;

• developments in Afghanistan or other geopolitical developments that affect demand for our products and services;

• our ability to hire and retain personnel to meet increasing demand for our services; and

• technological developments that impact purchasing decisions or our competitive position.

The DoD’s wide-ranging efficiency and better buying power initiatives, which target affordability and cost growth, could have a material effect on the procurement process and may adversely affect our existing contracts and the award of new contracts.

The DoD has implemented best practices to the procurement process that are intended to control cost growth throughout the acquisition cycle by developing a competitive strategy for each program. As a result, the Company has and continues to engage in more frequent negotiations and re-competitions on a cost or price analysis basis with every competitive bid in which it participates. This initiative is organized into seven focus areas: affordability, cost control, productivity incentives and innovation, competition, services acquisition, and improved professionalism. This initiative significantly changed the way the U.S. Government solicits, negotiates and manages its contracts and could result in a reduction in expenditures for the type of products we manufacture for, and services we provide to, the U.S. Government, which could have a material negative impact on our future sales, earnings and cash flows.

In addition, the FY 2013 DoD budget reduced contractor support services and consolidation of enterprise IT systems as part of an effort to achieve another $60 billion of efficiency savings over the five fiscal years FY 2013 through FY 2017. This initiative primarily affects our businesses within the National Security Solutions reportable segment and could result in the loss of certain of our existing contracts (revenue arrangements) depending on how the DoD implements this initiative.

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Our government contracts contain unfavorable termination provisions and are subject to audit and modification. If a termination right is exercised by the government, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Companies engaged primarily in supplying defense-related equipment and services to U.S. Government agencies are subject to certain business risks peculiar to the defense industry. These risks include the ability of the U.S. Government to unilaterally:

• suspend us from receiving new contracts pending resolution of alleged violations of procurement laws or regulations;

• terminate existing contracts;

• reduce the value of existing contracts; and

• audit our contract-related costs and fees, including allocated indirect costs.

All of our U.S. Government contracts can be terminated by the U.S. Government either for its convenience or if we default by failing to perform under the contract. Termination for convenience provisions provide only for our recovery of costs incurred or committed settlement expenses and profit on the work completed prior to termination. Termination for default provisions provide for the contractor to be liable for excess costs incurred by the U.S. Government in procuring undelivered items from another source. Our contracts with international governments generally contain similar provisions relating to termination at the convenience of the customer.

U.S. Government agencies, including the Defense Contract Audit Agency and various agency Inspectors General, routinely audit and investigate our costs and performance on contracts, as well as our accounting and general business practices. Based on the results of such audits, the U.S. Government may adjust our contract related costs and fees, including allocated indirect costs. In addition, under U.S. Government purchasing regulations, some of our costs, including certain business acquisition costs, most financing costs, portions of research and development costs, and certain marketing expenses may not be reimbursable under U.S. Government contracts.

We currently have a backlog of funded orders, primarily under contracts with the U.S. Government. Our total funded backlog was $10,368 million at December 31, 2013. As described above, the U.S. Government may unilaterally modify or terminate its contracts with us. Accordingly, most of our backlog could be modified or terminated by the U.S. Government, which would negatively impact our future sales, results of operations and cash flows.

We may not be able to win competitively awarded contracts or receive required licenses to export our products, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and future prospects.

Our government contracts are subject to competitive bidding. We obtain many of our U.S. Government contracts through a competitive bidding process. We may not be able to continue to win competitively awarded contracts. In addition, awarded contracts may not generate sales sufficient to result in our profitability. We are also subject to risks associated with the following:

• the frequent need to bid on programs in advance of the completion of their design, which may result in unforeseen technological difficulties and/or cost overruns;

• the substantial time, effort and experience required to prepare bids and proposals for competitively awarded contracts that may not be awarded to us;

• design complexity and rapid technological obsolescence; and

• the constant need for design improvement.

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In addition to these U.S. Government contract risks, we are not permitted to export some of our products and are also required to obtain licenses from U.S. Government agencies to export many of our products and systems. Failure to receive required licenses would eliminate our ability to sell our products and systems outside the United States.

Intense competition and bid protests may adversely affect our sales, results of operations and cash flows.

The defense and commercial industries in which our businesses operate are highly competitive. We expect that the DoD’s increased use of commercial off-the-shelf products and components in military equipment will continue to encourage new competitors to enter the market. We also expect increased competition for our products and services from other providers due to the uncertainty of future U.S. defense budgets. Furthermore, the current competitive environment has resulted in an increase of bid protests from unsuccessful bidders, which typically extends the time until work on a contract can begin. Additionally, some of our competitors are larger than we are and have more financial and other resources than we have. For more information concerning the factors that affect our ability to compete, see “Part I — Item 1 — Business — Competition.”

We are subject to government investigations, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and future prospects.

U.S. Government contracts are subject to extensive legal and regulatory requirements, and from time to time agencies of the U.S. Government investigate whether such contracts were and are being conducted in accordance with these requirements. As discussed in Note 20 to our audited consolidated financial statements, we are currently cooperating with the U.S. Government on several investigations. Under U.S. Government regulations, an indictment of the Company by a federal grand jury, or an administrative finding against us as to our present responsibility to be a U.S. Government contractor or subcontractor, could result in us being suspended for a period of time from eligibility for awards of new government contracts or task orders or in a loss of export privileges. A conviction, or an administrative finding against us that satisfies the requisite level of seriousness, could result in debarment from contracting with the federal government for a specific term.

We are subject to the risks of current and future legal proceedings, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and future prospects.

At any given time, we are a defendant in various material legal proceedings and litigation matters arising in the ordinary course of business, including litigation, claims and assessments that have been asserted against acquired businesses, which we have assumed. Although we maintain insurance policies, these policies may not be adequate to protect us from all material judgments and expenses related to current or future claims and may not cover the conduct that is the subject of the litigation. Desired levels of insurance may not be available in the future at economical prices or at all. In addition, we believe that while we have valid defenses with respect to legal matters pending against us, the results of litigation can be difficult to predict, including those involving jury trials. Accordingly, our current judgment as to the likelihood of our loss (or our current estimate as to the potential range of loss, if applicable) with respect to any particular litigation matter may turn out to be wrong. A significant judgment against us, arising out of any of our current or future legal proceedings and litigation, could have a material adverse effect on our business, financial condition, results of operations, cash flows and future prospects. For a discussion of material litigation to which we are currently a party, see Note 20 to our audited consolidated financial statements.

If we are unable to keep pace with rapidly evolving products and service offerings and technological change, there could be a material adverse effect on our business, financial condition, results of operations, cash flows and future prospects.

The rapid change of technology is a key feature of most of the markets in which our products, services and systems oriented businesses operate. To succeed in the future, we will need to continue to design, develop, manufacture, assemble, test, market and support new products and enhancements on a timely and cost-effective basis. Historically, our technology has been developed through customer-funded and internally funded research and development and through certain business acquisitions. We may not be able to continue to maintain

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comparable levels of research and development or successfully complete such acquisitions. In the past, we have allocated substantial funds to capital expenditures, programs and other investments. This practice will continue to be required in the future. Even so, we may not be able to successfully identify new opportunities and may not have the necessary financial resources to develop new products and systems in a timely or cost-effective manner. At the same time, products and technologies developed by others may render our products, services and systems obsolete or non-competitive.

Goodwill represents a significant asset on our balance sheet and may become impaired.

Goodwill represents the largest asset on our balance sheet, with an aggregate balance of $7,796 million at December 31, 2013. We review goodwill and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable, and also review goodwill annually in accordance with the accounting standards for goodwill and intangible assets. The annual impairment test requires us to determine the fair value of our reporting units in comparison to their carrying values. A decline in the estimated fair value of a reporting unit could result in a goodwill impairment, and a related non-cash impairment charge against earnings, if estimated fair value for the reporting unit is less than the carrying value of the net assets of the reporting unit, including its goodwill.

Our annual impairment tests at November 30, 2013 and 2012 did not result in impairments to goodwill; we did record a non-cash goodwill impairment charge of $43 million as a result of our annual impairment test at November 30, 2011. The fair value of four of our reporting units exceeded the carrying value of the net assets of those reporting units by 20% or less at November 30, 2013, the date of our annual impairment assessment. These four reporting units had aggregate goodwill of approximately $2,861 million. The estimated fair values of our reporting units could be negatively impacted by potential additional reductions to the DoD budget that impact our programs, including how sequestration cuts will be implemented in FY 2015 and future fiscal year DoD budgets. A decline in the estimated fair value of one or more of our reporting units could potentially trigger goodwill impairment charges and a material adverse effect on our results of operations. See “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Goodwill and Identifiable Intangible Assets” for further discussion.

Our results of operations and cash flows are substantially affected by our mix of fixed-price, cost-plus and time-and-material type contracts.

Our sales are transacted using written revenue arrangements, or contracts, which are generally fixed-price, cost-plus or time-and-material. For a description of our revenue recognition policies, see “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies.” The table below presents the percentage of our total sales generated from each contract type.

	Year Ended December 31,
Contract Type	2013		2012		2011
Fixed-price		71%		71%		69%
Cost-plus		24%		24%		23%
Time-and-material		5%		5%		8%
Total sales		100%		100%		100%

Substantially all of our cost-plus and time-and-material type contracts are with the U.S. Government, primarily the DoD. Substantially all of our sales to commercial customers are transacted under fixed-price sales arrangements and are included in our fixed-price type contract sales.

On a fixed-price type contract (revenue arrangement), we agree to perform the contractual statement of work for a predetermined sales price. Although a fixed-price type contract generally permits us to retain profits if the total actual contract costs are less than the estimated contract costs, we bear the risk that increased or unexpected costs may reduce our profit or cause us to sustain losses on the contract.

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On a cost-plus type contract (revenue arrangement), we are paid our allowable incurred costs plus a profit, which can be fixed or variable depending on the contract’s fee arrangement up to predetermined funding levels established by our customers. On a time-and-material type contract (revenue arrangement), we are paid on the basis of direct labor hours expended at specified fixed-price hourly rates (that include wages, overhead, allowable general and administrative expenses and profit) and materials at cost. Therefore, on cost-plus and time-and-material type contracts, we do not bear the risks of unexpected cost overruns, provided that we do not incur costs that exceed the predetermined funded amounts.

Additionally, the impact of revisions in profit or loss estimates for all types of contracts subject to percentage of completion accounting are recognized on a cumulative catch-up basis in the period in which the revisions are made. Provisions for anticipated losses on contracts are recorded in the period in which they become evident. Amounts representing contract change orders or claims are included in sales only when they can be reliably estimated and their realization is reasonably assured. The revisions in contract estimates, if significant, can materially affect our results of operations and cash flows, as well as reduce the valuations of receivables and inventories; and in some cases, result in liabilities to complete contracts in a loss position.

Pension expense and funding may fluctuate significantly because of changes in key estimates and assumptions, including discount rates and assumed long-term rate of return on assets, as well as our actual investment returns and regulatory actions, which could negatively impact our results of operations, cash flows and financial condition.

Determining our pension expense requires significant judgment, particularly with respect to our discount rates, assumed long-term rate of return on assets and other actuarial assumptions. If our assumptions change significantly due to changes in economic, legislative, demographic experience and/or circumstances, our pension expense, the funded status of our plans and our cash contributions to such plans would be impacted, which could negatively affect our results of operations, cash flows and financial condition. In addition, differences between our actual investment returns and our assumed long-term rate of return on assets could also impact our pension expense, the funded status of our plans and our required cash contributions to the plans. Further, our pension expense and the funded status of our plans, including required cash contributions to the Plans, may be impacted by regulatory actions in any given year.

Additionally, pension plan cost recoveries under Cost Accounting Standards (CAS) for our U.S. Government contracts occur in different periods from when pension expense is recognized under accounting principles generally accepted in the U.S. or when cash contributions are made. Although CAS has been revised to better align the minimum required contributions under the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Pension Protection Act of 2006, and pension plan cost recoveries under CAS, timing differences could have a material adverse effect on our cash flow.

Our business could be negatively impacted by security threats and other disruptions.

As a U.S. defense contractor, we face various security threats, including threats to the physical security of our facilities and employees, cyber security attacks to our information technology infrastructure and attempts to gain access to our proprietary or classified information as well as the proprietary or classified information of our customers. Although we utilize various procedures and controls to monitor, deter and mitigate these threats, these procedures and controls may not be sufficient to prevent disruptions in mission critical systems, the unauthorized release of confidential, sensitive or classified information and the corruption of data. Accordingly, any significant operational delays, or any destruction, manipulation or improper use of our data or of our customers, information systems or networks could adversely affect our financial results and damage the reputation for our products and services.

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Our sales to certain international customers expose us to risks associated with operating internationally.

For the year ended December 31, 2013, sales to international customers, excluding our international sales made under FMS agreements directly between the U.S. Government and allied international governments, represented approximately 17% of our consolidated sales. Consequently, our businesses are subject to a variety of risks that are specific to international operations, including the following:

• export regulations that could erode profit margins or restrict exports;

• compliance with the U.S. Foreign Corrupt Practices Act and similar non-U.S. regulations;

• the burden and cost of compliance with foreign laws, treaties and technical standards and changes in those regulations;

• contract award and funding delays;

• potential restrictions on transfers of funds;

• currency fluctuations;

• import and export duties and value added taxes;

• transportation delays and interruptions;

• uncertainties arising from international local business practices and cultural considerations; and

• potential military conflicts and political risks.

While we have and will continue to adopt measures to reduce the potential impact of losses resulting from the risks of our international business, we cannot ensure that such measures will be adequate.

If we are unable to attract and retain key management and personnel, we may become unable to operate our business effectively.

Our future success depends to a significant degree upon the continued contributions of our management, and our ability to attract and retain highly qualified management and technical personnel, including employees who have U.S. Government security clearances, particularly clearances of top-secret and above. We do not maintain any key person life insurance policies for members of our management. We face competition for management and technical personnel from other companies and organizations. Failure to attract and retain such personnel would damage our future prospects.

Environmental laws and regulations may subject us to significant liability.

Our operations are subject to various U.S. federal, state and local as well as certain foreign environmental laws and regulations within the countries in which we operate relating to the discharge, storage, treatment, handling, disposal and remediation of certain materials, substances and wastes used in our operations.

New laws and regulations, stricter enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new clean-up requirements may require us to incur a significant amount of additional costs in the future and could decrease the amount of cash flow available to us for other purposes, including capital expenditures, research and development and other investments and could have a material adverse effect on our business, financial condition, results of operations, cash flows and future prospects.

Our business acquisition strategy involves risks, and we may not successfully implement our strategy.

We opportunistically seek to acquire businesses that enhance our capabilities and add new technologies, products, services, programs, contracts, and customers to our existing businesses. We may not be able to

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continue to identify acquisition candidates on commercially reasonable terms or at all. If we make additional business acquisitions, we may not realize the benefits anticipated from these acquisitions, including sales growth, cost synergies and improving margins. Furthermore, we may not be able to obtain additional financing for business acquisitions, since such additional financing could be restricted or limited by the terms of our debt agreements or due to unfavorable capital market conditions.

The process of integrating the operations of acquired businesses into our existing operations may result in unforeseen difficulties and may require significant financial and managerial resources that would otherwise be available for the ongoing development or expansion of our existing operations. Possible future business acquisitions could result in the incurrence of additional debt and related interest expense and contingent liabilities, each of which could result in an increase to our already significant level of outstanding debt, as well as more restrictive covenants.

We consider and may enter into strategic business acquisitions on an ongoing basis and may be evaluating acquisitions or engaging in acquisition negotiations at any given time. We regularly evaluate potential acquisitions and joint venture transactions and have not entered into any agreements with respect to any material transactions at this time. Furthermore, in certain of our business acquisitions we have assumed all claims against and liabilities of the acquired business, including both asserted and unasserted claims and liabilities.

Our Amended and Restated Revolving Credit Facility and Senior Notes restrict our ability to finance our future operations and, if we are unable to meet our financial ratios, could cause our existing debt to be accelerated.

Our Amended and Restated Revolving Credit Facility and Senior Notes contain certain significant covenants that, among other things, include, depending on the debt instrument, restrictions on our ability to:

• sell assets;

• incur more indebtedness;

• create liens;

• make certain investments or business acquisitions;

• engage in business mergers or consolidations; and

• engage in certain transactions with subsidiaries and affiliates.

These restrictions could impair our ability to finance our future operations or capital needs or engage in other business activities that may be in our interest. In addition, our Amended and Restated Revolving Credit Facility also requires us to maintain compliance with certain financial ratios, including (1) total consolidated earnings before interest, taxes, depreciation and amortization to total consolidated cash interest expense, (2) total consolidated funded indebtedness less designated cash balances to total consolidated earnings before interest, taxes, depreciation and amortization, and (3) consolidated senior indebtedness less designated cash balances to consolidated earnings before interest, taxes, depreciation and amortization. Our ability to comply with these ratios and covenants may be affected by events beyond our control. A breach of any of these agreements or our inability to comply with the required financial ratios or covenants could result in a default under those debt agreements. In the event of any such default, the lenders under those debt agreements could elect to declare all outstanding debt, accrued interest and fees to be due and immediately payable.

For further discussion of our financial ratios, debt agreements and other payment restrictions, see Note 11 to our audited consolidated financial statements.

Our significant level of debt and our ability to make payments on or service our indebtedness may adversely affect our financial and operating activities or our ability to incur additional debt.

At December 31, 2013, we had approximately $3,639 million in aggregate principal amount of outstanding debt and the availability of substantially all of our Amended and Restated Revolving Credit Facility which

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expires on February 3, 2017. In the future, we may increase our borrowings, subject to any limitations imposed on us by our debt agreements. The first scheduled maturity of our existing debt is our $500 million aggregate principal amount of our 3.95% Senior Notes maturing November 15, 2016. See “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Debt” and Note 11 to our audited consolidated financial statements.

Our ability to make scheduled payments of principal and interest on our indebtedness and to refinance our existing debt depends on our future financial performance as well as our ability to access the capital markets, and the relative attractiveness of available financing terms. We do not have complete control over our future financial performance because it is subject to economic, political, financial (including credit market conditions), competitive, regulatory and other factors affecting the aerospace and defense industry, as well as commercial industries in which we operate. It is possible that in the future our businesses may not generate sufficient cash flow from operations to allow us to service our debt and make necessary capital expenditures. If this situation occurs, we may have to reduce costs and expenses, sell assets, restructure debt or obtain additional equity capital. We may not be able to do so in a timely manner or upon acceptable terms in accordance with the restrictions contained in our debt agreements. Our level of indebtedness has important consequences to us. These consequences may include:

• requiring a substantial portion of our net cash flow from operations to be used to pay interest and principal on our debt and therefore be unavailable for other purposes, including acquisitions, capital expenditures, paying dividends to our shareholders, repurchasing shares of our common stock, research and development and other investments;

• limiting our ability to obtain additional financing for acquisitions, working capital, investments or other expenditures, which, in each case, may limit our ability to carry out our acquisition strategy;

• increasing interest expense due to higher interest rates on our Amended and Restated Revolving Credit Facility as it has a variable interest rate;

• heightening our vulnerability to downturns in our business or in the general economy and restricting us from making acquisitions, introducing new technologies and products or exploiting business opportunities; and

• impacting debt covenants that limit our ability to borrow additional funds or dispose of assets. Failure to comply with such covenants could result in an event of default which, if not cured or waived, could result in the acceleration of our outstanding indebtedness.

Additionally, on December 31, 2013, we had $8,181 million of contractual obligations (including outstanding indebtedness). For a detailed listing of the components of our contractual obligations, see “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations.”

The Company’s spin-off of Engility could result in substantial tax liability to the Company and its shareholders.

We received an Internal Revenue Service (IRS) Ruling stating that L-3 and its shareholders would not recognize any taxable income, gain or loss for U.S. federal income tax purposes as a result of the spin-off of Engility. In addition, we received an opinion of counsel that the spin-off satisfies certain requirements for tax-free treatment that are not covered in the IRS Ruling; however, an opinion of counsel is not binding on the IRS. Accordingly, the IRS or the courts may reach conclusions with respect to the spin-off that are different from the conclusions reached in the opinion of counsel. Moreover, both the IRS Ruling and the opinion of counsel are based on certain factual statements and representations made by us, which, if incomplete or untrue in any material respect, could invalidate the IRS Ruling or opinion of counsel.

If, notwithstanding receipt of the IRS Ruling and opinion of counsel, the spin-off and certain related transactions were determined to be taxable, then we would be subject to a substantial tax liability. In addition, if

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the spin-off were taxable, each holder of our common stock who receives shares of Engility would generally be treated as receiving a taxable distribution of property in an amount equal to the fair market value of the shares of Engility received.

Item 1B. Unresolved Staff Comments

None.

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Item 2. Properties

At December 31, 2013, we operated in 374 locations consisting of manufacturing facilities, administration, research and development and other properties throughout the United States and internationally. Of these, we owned 35 locations consisting of approximately 5.6 million square feet and leased space at 339 locations consisting of approximately 14.7 million square feet.

Our reportable segments have major operations at the following locations:

• Aerospace Systems — Huntsville, Alabama; Crestview, Florida; Madison, Mississippi; Greenville, Rockwall and Waco, Texas; and Quebec, Canada.

• Electronic Systems — Phoenix and Tempe, Arizona; Anaheim, San Leandro and Sylmar, California; Orlando, Sarasota and St. Petersburg, Florida; Northampton, Massachusetts; Grand Rapids and Muskegon, Michigan; Londonderry, New Hampshire; Budd Lake, New Jersey; Albuquerque, New Mexico; Binghamton, New York; Cincinnati and Mason, Ohio; Tulsa, Oklahoma; Philadelphia and Pittsburgh, Pennsylvania; Arlington, Carrollton, Garland and Plano, Texas; Norfolk, Virginia; Ontario, Canada; Elmenhorst and Hamburg, Germany; Bologna, Italy; and Crawley and Tewkesbury, U.K.

• Communication Systems — Ayer, Massachusetts; Camden, New Jersey; Hauppauge, New York; Salt Lake City, Utah; San Carlos, San Diego, Simi Valley and Torrance, California; and Williamsport, Pennsylvania.

• NSS — Annapolis, Maryland; and Reston, Virginia.

• Corporate and other locations — New York, New York; and Arlington, Virginia.

A summary of square footage by reportable segment as of December 31, 2013 is presented below.

	Leased		Owned		Total
	(Square feet in millions)
Aerospace Systems		4.4		1.7		6.1
Electronic Systems		6.1		3.3		9.4
Communication Systems		3.3		0.6		3.9
NSS		0.8		—		0.8
Corporate		0.1		—		0.1
Total		14.7		5.6		20.3

Management believes all of our properties have been well maintained, are in good condition, and are adequate to meet our current contractual requirements.

Item 3. Legal Proceedings

The information required with respect to this item can be found in Note 20 to our audited consolidated financial statements and is incorporated by reference into this Item 3.

Item 4. Mine Safety Disclosures

None.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The common stock of L-3 Holdings is traded on the New York Stock Exchange (NYSE) under the symbol “LLL”. On February 14, 2014, the number of holders of L-3 Holdings’ common stock was approximately 27,917. On February 19, 2014 the closing price, as reported by the NYSE, was $113.67 per share.

The table below sets forth the high and low closing price of L-3 Holdings’ common stock as reported on the NYSE and the amount of dividends paid per share during the past two calendar years.

	Dividends Paid				Closing Price (High-Low)
	2013		2012		2013		2012
Common Stock — Dividends Paid and Market Prices(1)
First Quarter	$	0.55	$	0.50	$	81.21  — $74.86	$	71.34 — $66.91
Second Quarter		0.55		0.50		87.37  —   80.03		74.01 —   67.11
Third Quarter		0.55		0.50		96.09  —   85.06		74.45 —   68.27
Fourth Quarter		0.55		0.50		107.13  —   91.94		77.91 —   72.10
Year Ended December 31	$	2.20	$	2.00	$	107.13  — $74.86	$	77.91 — $66.91

⁽¹⁾  The stock prices in the table above on or prior to July 17, 2012, the date of the Engility spin-off, have not been adjusted for the impact of the spin-off.

On February 11, 2014, L-3 Holdings announced that its Board of Directors increased L-3 Holdings’ regular quarterly cash dividend by 9% to $0.60 per share, payable on March 17, 2014, to shareholders of record at the close of business on March 3, 2014. L-3 Holdings relies on dividends received from L-3 Communications to generate the funds necessary to pay dividends on L-3 Holdings’ common stock.

Issuer Purchases of Equity Securities

The following table provides information about 2013 fourth quarter repurchases of L-3 Holdings’ common stock that are registered pursuant to Section 12 of the Exchange Act. Repurchases are made from time to time at management’s discretion in accordance with applicable federal securities laws. All share repurchases of L-3 Holdings’ common stock have been recorded as treasury shares.

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under The Plan or Program(1)
							(in millions)
September 28 — October 31, 2013		713,209	$	94.40		713,209	$	1,197
November 1 — 30, 2013		1,053,949		101.50		1,053,949	$	1,090
December 1 — 31, 2013		2,156,570		102.77		2,156,570	$	868
Total		3,923,728	$	100.91		3,923,728

⁽¹⁾  The share repurchases described in the table above were made pursuant to the $1.5 billion share repurchase program authorized by L-3 Holdings’ Board of Directors on February 5, 2013, which expires on June 30, 2015.

L-3 Holdings repurchased 928,040 shares of its common stock at an average price of $107.52 per share for an aggregate amount of approximately $100 million from January 1, 2014 through February 19, 2014.

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The graph below compares the cumulative total returns of our common stock with the cumulative total return of the Standard & Poor’s 500 Composite Stock Index and the Standard & Poor’s 1500 Aerospace & Defense Index, for the period from December 31, 2008 to December 31, 2013. These figures assume that all dividends paid over the performance period were reinvested. On July 17, 2012, we completed the Engility spin-off. Our shareholders received one share of Engility common stock for every six shares of our common stock held on the record date (July 16, 2012). The effect of the spin-off is reflected in the cumulative total return as a reinvested dividend for the year ended December 31, 2012. The figures also assume that the starting value of each index and the investment in our common stock was $100 on December 31, 2008.

We are one of the companies included in the Standard & Poor’s 1500 Aerospace & Defense Index and the Standard & Poor’s 500 Composite Stock Index. The starting point for the measurement of our common stock cumulative total return was our stock price of $73.78 per share on December 31, 2008. The graph is not, and is not intended to be, indicative of future performance of our common stock.

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Item 6. Selected Financial Data

The selected financial data presented below is derived from our audited consolidated financial statements and has been adjusted to reflect the spin-off of Engility and related classification of its assets, liabilities, results of operations and cash flows as discontinued operations. As discussed in the Explanatory Note to this Form 10-K/A, we are revising our audited consolidated financial statements for the fiscal years ended December 31, 2013, 2012 and 2011, and the information below with respect to such fiscal years reflects these revisions. See Note 3 to our audited consolidated financial statements for information regarding these revisions. In addition, we have determined that certain of these revisions are also applicable to fiscal years ended December 31, 2010 and 2009, and, accordingly, are also included in the revised selected financial data below.

	Year Ended December 31,
	2013		2012		2011(1)		2010		2009
	(in millions, except per share data)
Statement of Operations Data:
Net sales	$	12,622	$	13,107	$	13,154	$	13,389	$	13,146
Operating income	$	1,212	$	1,308	$	1,398	$	1,483	$	1,366
Goodwill impairment charge		—		—		43		—		—
Segment operating income	$	1,212	$	1,308	$	1,441	$	1,483	$	1,366
Operating margin		9.6%		10.0%		10.6%		11.1%		10.4%
Segment operating margin		9.6%		10.0%		11.0%		11.1%		10.4%
Interest expense	$	(177)	$	(184)	$	(204)	$	(236)	$	(245)
Interest and other income, net	$	20	$	11	$	3	$	25	$	23
Debt retirement charge	$	—	$	(13)	$	(35)	$	(18)	$	(10)
Income from continuing operations before income taxes	$	1,055	$	1,122	$	1,162	$	1,254	$	1,134
Provision for income taxes		(295)		(360)		(296)		(429)		(376)
Income from continuing operations		760		762		866		825		758
Income from discontinued operations, net of income tax		—		32		104		142		154
Net income		760		794		970		967		912
Net income attributable to noncontrolling interests		(9)		(10)		(12)		(11)		(10)
Net income attributable to L-3	$	751	$	784	$	958	$	956	$	902
Earnings per share allocable to L-3 Holdings’ common shareholders:
Basic:
Continuing operations	$	8.40	$	7.85	$	8.19	$	7.10	$	6.34
Discontinued operations		—		0.29		0.97		1.22		1.31
Basic earnings per share	$	8.40	$	8.14	$	9.16	$	8.32	$	7.65
Diluted:
Continuing operations	$	8.24	$	7.74	$	8.10	$	7.05	$	6.31
Discontinued operations		—		0.29		0.95		1.21		1.31
Diluted earnings per share	$	8.24	$	8.03	$	9.05	$	8.26	$	7.62
L-3 Holdings’ weighted average common shares outstanding:
Basic		89.4		96.3		104.4		114.3		116.8
Diluted		91.1		97.6		105.6		115.1		117.4
Cash dividends paid per common share	$	2.20	$	2.00	$	1.80	$	1.60	$	1.40

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⁽¹⁾  The year ended December 31, 2011 includes: (1) a tax benefit of $78 million, or $0.74 per diluted share, for a net reversal of amounts previously accrued related to tax years for which the statutes of limitations has expired, (2) a non-cash goodwill impairment charge of $43 million ($42 million after income taxes, or $0.40 per diluted share), due to a decline in the estimated fair value of our Marine Services business, and (3) $14 million ($8 million after income taxes, or $0.08 per diluted share), for our portion of an impairment charge for long-lived assets at an equity method investment. The goodwill impairment charge is included in consolidated operating income, but excluded from segment operating income because the charge was excluded by management for purposes of assessing segment operating performance.

	Year Ended December 31,
	2013		2012		2011		2010		2009
	(in millions)
Balance Sheet Data (at year end):
Working capital(1)	$	2,060	$	1,921	$	2,403	$	2,156	$	2,402
Total assets		13,988		13,800		15,520		15,463		14,886
Long-term debt		3,630		3,629		4,125		4,126		4,112
Equity		6,056		5,527		6,733		6,772		6,573
Cash Flow Data:
Net cash from operating activities from continuing operations	$	1,263	$	1,231	$	1,231	$	1,270	$	1,147
Net cash used in investing activities from continuing operations		(261)		(200)		(199)		(944)		(262)
Net cash used in financing activities from continuing operations		(849)		(1,527)		(1,119)		(917)		(1,004)

⁽¹⁾  Based on continuing operations.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview and Outlook

Explanatory Note

We are filing this Amendment No. 1 (this “Amendment” or “Form 10-K/A”) to our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 following the completion of the internal review of our Aerospace Systems segment, which is discussed below. Our Annual Report on Form 10-K for the year ended December 31, 2013 (the “Form 10-K”) was originally filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2014, and subsequently updated for the re-alignment of our segments that occurred in the first quarter of 2014 and reported in our Current Report on Form 8-K filed with the SEC on May 2, 2014 (the “8-K” and, together with the Form 10-K, the “Original Form 10-K”). At the time of filing our Form 10-K, we determined that our disclosure controls and procedures (“DC&P”) and our internal controls over financial reporting (“ICFR”) were each effective as of December 31, 2013.

This Amendment revises Part II, Item 9A, Controls and Procedures, as it relates to our conclusions regarding the effectiveness of our DC&P and our report on ICFR. As disclosed in our Current Report on Form 8-K filed with the SEC on September 26, 2014, as part of the findings from the internal review of the Aerospace Systems segment we identified certain material weaknesses in our ICFR that existed as of December 31, 2013. Solely as a result of these material weaknesses, we have concluded that our DC&P and ICFR were not effective as of December 31, 2013.

In addition to the revision in Part II, Item 9A described above, this Amendment revises previously issued financial statements for: (1) accounting adjustments due to the internal review at our Aerospace Systems segment, (2) accounting error related to a sales-type lease transaction for flight simulator systems within our Electronic Systems segment, and (3) previously identified immaterial errors already recognized in our financial statements but not recorded in the appropriate periods. The accounting errors related to the sales-type lease transaction and immaterial out of period amounts are not related to the internal review at our Aerospace Systems segment.

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Controls and Procedures: As part of the internal review of our Aerospace Systems segment, discussed below, we identified material weaknesses in our ICFR. The material weaknesses, further discussed in Item 9A, Controls and Procedures, on page 73, are: (1) the Company did not maintain an effective control environment at its Aerospace Systems segment, with respect to: (i) inadequate execution of existing controls around the annual review and approval of contract (revenue arrangement) estimates; (ii) not following established Company accounting policies, controls and procedures, and (iii) intentional override of numerous transactional and monitoring internal controls at our Army Sustainment division; and (2) Company personnel did not perform reviews of certain employee concerns regarding violations of our accounting policies and ICFR in a sufficient and effective manner.

Internal Review of Aerospace Systems Segment: We conducted an internal review related to instances of misconduct and accounting errors at our Aerospace Systems segment. This review was conducted with the assistance of outside legal and accounting advisors, and has been completed. As a result of the internal review, we identified and recorded aggregate pre-tax charges as follows: (1) $60 million for 2013, (2) $25 million for 2012, (3) $5 million for 2011, and (4) $4 million for periods prior to 2011. Furthermore, our quarterly report on Form 10-Q for the three and six month periods ended June 27, 2014 and the 2014 First Quarter 10-Q/A also include aggregate pre-tax charges related to the internal review of Aerospace Systems segment. The aggregate pre-tax charge related to the internal review of Aerospace Systems segment for the three months ended March 28, 2014 is approximately $20 million and for the three months ended June 27, 2014 is approximately $55 million.

The adjustments related to the internal review only affected the Logistics Solutions and Platform Systems sectors of the Aerospace Systems segment. The cumulative aggregate adjustments attributable to the Logistics Solutions sector are approximately $117 million, and at the Platform Systems sector are approximately $52 million. The Logistics Solutions sector adjustments relate to: (1) losses of $69 million with respect to the U.S. Army C-12 fixed-price maintenance and logistics support contract due to cost overruns inappropriately deferred, sales invoices inappropriately prepared, and the failure to timely and accurately perform contract estimates at completion and valuation assessments of inventories and receivables, at our Army Sustainment Division, and (2) accounting errors of $48 million in connection with the valuation of inventories and receivables, as well as the correction for certain accruals on other logistics support contracts. The Platform Systems sector adjustments are primarily due to: (1) losses of $37 million on two aircraft modification contracts and two contracts for rotary wing sub-assemblies and parts, and (2) write-offs of deferred costs of $15 million to design and test aerostructures for a new commercial aircraft.

Sales-Type Lease Transaction: We routinely perform on-site accounting and internal control review procedures on a rotational basis. As part of a previously planned review of our Simulation & Training business in the Electronic Systems segment and unrelated to the internal review at the Aerospace Systems segment, we evaluated the accounting treatment related to a sales-type lease transaction with the U.S. Army for rotary wing flight simulator systems. The period of performance under this contract began in 2004 and ends in 2023. Based on the results of this evaluation, we have adjusted our previously issued financial statements to: (1) increase interest income accretion on the net investment related to this sales-type lease transaction by an estimated aggregate amount of approximately $5 million for 2013, $3 million for each of 2012 and 2011 and $12 million for periods prior to 2011, and (2) decrease sales by approximately $7 million for 2013 and decrease cost of sales by approximately $7 million for 2013 and $5 million for periods prior to 2011. Furthermore, our quarterly report on Form 10-Q for the three and six month periods ended June 27, 2014 and the 2014 First Quarter 10-Q/A also include an increase in interest income accretion of $2 million and a decrease in sales of approximately $8 million and related decrease in cost of sales by approximately $7 million.

Out of Period Amounts: We had identified various out of period amounts included in our previously issued financial statements that were deemed to be immaterial individually and in the aggregate. In prior periods, in accordance with Accounting Standards Codification (“ASC”) 650-10-S99 and S55 (formerly Staff Accounting Bulletins (“SAB”) No. 99 and No. 108), Accounting Changes and Error Corrections, we concluded that these errors were, individually, and in the aggregate, not material, quantitatively or qualitatively, to the financial

35

statements in the period recorded or to the relevant prior periods. Accordingly, we recorded these errors in our financial statements in the period that the error was identified. We are, on a voluntary basis, revising our previously issued financial statements to correct for these errors already recognized in our financial statements but not recorded in the appropriate periods to reflect them in the appropriate period. These out of period amounts were not discovered as part of the internal review of the Aerospace Systems segment discussed above, but rather represent previously identified errors “resulting from mathematical mistakes, mistakes in application of generally accepted accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared,” as defined in ASC 250-10-20 Accounting Changes and Error Corrections. We are, therefore, not treating these amounts as changes in estimates. These errors consist of: (1) increases in development and material costs related to Broadband Communication Systems that were recorded in the first quarter of 2013 but should have been recorded in the fourth quarter of 2012, (2) a sub-contractor subscription deposit that was recorded as sales and income in the fourth quarter of 2012 but should have been amortized to sales and income during 2013, (3) costs accrued in the fourth quarter of 2012 for goods or services received in the first quarter of 2013, (4) several unrecorded liabilities that were recorded in the first quarter of 2013 but should have been recorded in the fourth quarter of 2012, (5) a correction of accrued vacation that was recorded in the fourth quarter of 2013 but should have been recorded in the fourth quarter of 2012 and the first, second and third quarters of 2013, and (6) a warranty reserve reduction recorded in the third quarter of 2012 that should have been recorded in the fourth quarter of 2011.

With respect to each of the immaterial out of period amounts included in the Company’s previously issued financial statements, the table below presents the: (1) nature of the adjustments, (2) applicable segment, (3) amount of increase (or decrease) to sales and operating income, (4) period recorded and (5) correct period.

		2013					2012						2011
Nature of Adjustment	Applicable Segment	Sales			Operating Income		Sales			Operating Income			Sales			Operating Income		Period Recorded	Correct Period
		($ in millions)
Higher development and material costs for networked communications systems	Communication Systems	$	10		$	10	$	(10	)	$	(10	)	$	—		$	—	1Q 2013	4Q 2012
Sub-contractor subscription deposit	Aerospace Systems		26			2		(26	)		(2	)		—			—	4Q 2012	1Q, 2Q, 3Q & Q4 2013
Costs accruals for goods/services received	Aerospace Systems		5			1		(5	)		(1	)		—			—	4Q 2012	1Q 2013
Unrecorded liabilities	Aerospace Systems		(2	)		—		2			—			—			—	1Q 2013	4Q 2012
Accrued vacation	Aerospace Systems		—			1		—			(1	)		—			—	4Q 2013	4Q 2012, 1Q, 2Q & 3Q 2013
Warranty reserve	Electronic Systems		—			—		3			(4	)		(3	)		4	3Q 2012	4Q 2011
Total		$	39		$	14	$	(36	)	$	(18	)	$	(3	)	$	4

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The table below presents the impact of the revisions discussed above on sales and pre-tax income in total, for the six month period ended June 27, 2014, years ended December 31, 2013, 2012 and 2011, and for the years ended prior to December 31, 2011.

	Total				Six months 2014				2013				2012				2011				Prior to 2011
	Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income
	(in millions)
Army C-12 Contract	$	(32)	$	(69)	$	(3)	$	(15)	$	(25)	$	(35)	$	(3)	$	(16)	$	(1)	$	(3)		—		—
Other Logistics Support Contracts		(5)		(48)		—		(20)		(2)		(11)		(2)		(11)		—		(2)		(1)		(4)
Logistics Solutions	$	(37)	$	(117)	$	(3)	$	(35)	$	(27)	$	(46)	$	(5)	$	(27)	$	(1)	$	(5)	$	(1)	$	(4)
Platform Systems		(21)		(52)		(12)		(40)		(12)		(14)		3		2		—		—		—		—
Total Internal Review of Aerospace Systems Segment	$	(58)	$	(169)	$	(15)	$	(75)	$	(39)	$	(60)	$	(2)	$	(25)	$	(1)	$	(5)	$	(1)	$	(4)
Sales-Type Lease Transaction		(15)		29		(8)		1		(7)		5		—		3		—		3		—		17
Out of Period Amounts		—		—		—		—		39		14		(36)		(18)		(3)		4		—		—
Total Revisions	$	(73)	$	(140)	$	(23)	$	(74)	$	(7)	$	(41)	$	(38)	$	(40)	$	(4)	$	2	$	(1)	$	13

For additional information regarding the effect the adjustments above had on previously issued financial statements, see Note 3 on page F-15.

In accordance with ASC 650-10-S99 and S55, we performed an analysis to determine if the impact of the amounts disclosed above were material to previously issued financial statements. Based on that analysis, we believe that previously issued financial statements are not materially misstated on either a quantitative or qualitative basis. However, we believe that correcting these errors in the quarterly report on Form 10-Q for the second quarter of 2014 would, in the aggregate, cause a material misstatement to forecasted pre-tax income and net income for the fiscal year ending December 31, 2014. Accordingly, we are correcting these errors by revising our previously issued financial statements to record all the adjustments in the table above in the appropriate period.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations gives effect to the revisions for the years ended December 31, 2013, 2012 and 2011. See Note 3, “Revisions to Previously Issued Financial Statements” to our consolidated financial statements contained in this annual report, which accompany the financial statements in Part II, Item 8 of this Form 10-K/A for further detail. In addition, for information regarding findings with respect to our disclosure controls and procedures and internal control over financial reporting and related remedial actions, see Part II, Item 9A, “Controls and Procedures” of this Form 10-K/A.

L-3’s Business

L-3 is a prime contractor in aerospace systems and national security solutions. L-3 is also a leading provider of a broad range of communication and electronic systems and products used on military and commercial platforms. Our customers include the United States (U.S.) Department of Defense (DoD) and its prime contractors, U.S. Government intelligence agencies, the U.S. Department of Homeland Security (DHS), U.S. Department of State (DoS), allied international governments, and domestic and international commercial customers.

In the first quarter of 2014, we reorganized our business segments to better align our organizational structure with customer priorities and increase operational efficiencies. After the realignment, L-3’s structure consists of the following four segments: Aerospace Systems, Electronic Systems, Communication Systems and National Security Solutions, as further described below.

Aerospace Systems: combines the operations of the former Platform & Logistics Solutions (P&LS) segment with Intelligence, Surveillance and Reconnaissance (ISR) Systems. ISR Systems was part of the former Command, Control, Communications, Intelligence, Surveillance and Reconnaissance (C³ISR) segment. Aerospace Systems delivers integrated solutions for the global ISR market and provides modernization, upgrade, sustainment, and maintenance and logistics support for a wide variety of aircraft and ground systems. Aerospace Systems had 2013 net sales of $4,551 million.

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Electronic Systems: includes all of its previous businesses historically included in this segment except the Microwave Products businesses, which are now part of Communication Systems. Electronic Systems provides a broad range of components, products, subsystems, systems and related services for military and commercial customers in several niche markets across several business areas. These businesses include marine & power systems, marine systems international, sensor systems, precision engagement and training, aviation products, warrior systems, security & detection and space & propulsion. Electronic Systems had 2013 net sales of $4,598 million.

Communication Systems: combines the operations of the Microwave Products businesses, which were previously part of the Electronic Systems segment, with the operations of the Networked and Secure Communications Products businesses, previously part of the former C³ISR segment. Communication Systems delivers products and services for the global communications market, specializing in strategic and tactical airborne, space, ground and sea-based communication systems. Communication Systems had 2013 net sales of $2,178 million.

National Security Solutions: remains unchanged. National Security Solutions will continue to provide cybersecurity solutions, high-performance computing, enterprise IT services, analytics and intelligence analysis. National Security Solutions had 2013 net sales of $1,295 million.

We have made certain reclassifications for matters specific to the segment realignment discussed above. Financial information with respect to each of the Company’s segments is included in Note 23 to our audited consolidated financial statements.

On July 17, 2012, L-3 completed the spin-off of its subsidiary, Engility Holdings, Inc. (Engility) to L-3’s shareholders. As a result of the spin-off, the results of operations and cash flows of the Engility businesses have been classified as discontinued operations for the years ended December 31, 2012 and 2011. References to financial data are to L-3’s continuing operations, unless specifically noted. See “Spin-off of Engility” within this section for additional information.

We generated sales of $12,622 million and $13,107 million for the years ended December 31, 2013 and 2012 and our primary customer was the DoD. The table below presents a summary of our sales by end customer and the percent contributed by each to our total sales.

	2013 Sales		2013 % of          Total Sales		2012 Sales		2012 % of          Total Sales
	(in millions)				(in millions)
Air Force	$	3,393		27%	$	3,570		27%
Army		2,376		19		2,811		21
Navy/Marines		1,794		14		1,896		15
Other Defense		1,026		8		1,059		8
Total DoD	$	8,589		68%	$	9,336		71%
Other U.S. Government		597		5		650		5
Total U.S. Government	$	9,186		73%	$	9,986		76%
International (foreign governments)		1,747		14		1,463		11
Commercial — international		1,067		8		986		8
Commercial — domestic		622		5		672		5
Total sales	$	12,622		100%	$	13,107		100%

Most of our contracts (revenue arrangements) with the U.S. Government are subject to U.S. Defense Contract Audit Agency audits and various cost and pricing regulations, and include standard provisions for termination for the convenience of the U.S. Government. Multiyear U.S. Government contracts and related orders are subject to cancellation if funds for contract performance for any subsequent year become unavailable. International government contracts generally include comparable provisions relating to termination for the convenience of the relevant international government.

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Business Environment

U.S. Government Markets. Sales to U.S. Government customers represented 73% of our 2013 sales, and were primarily to DoD customers, which comprised 68% of our sales. Therefore, our annual sales are generally highly correlated to changes in U.S. Government spending levels, especially DoD budget levels.

The DoD budget peaked in the fiscal year ended September 30, 2010 (FY 2010) at $690 billion and has declined since. The total DoD budget for FY 2013 was $584 billion, which declined 10% compared to the FY 2012 budget, with the base budget 5% lower than FY 2012 and the Overseas Contingency Operations (OCO) budget 29% lower than FY 2012. The total DoD enacted budget for FY 2014 is $583 billion, which is $1 billion lower than FY 2013.

The enacted FY 2013 and FY 2014 DoD budgets comply with the sequestration cuts required by the Budget Control Act of 2011 (BCA), as amended by The American Taxpayer Relief Act (ATRA), which was enacted on January 2, 2013. ATRA delayed the effective date of the BCA sequester cuts by two months to March 1, 2013 and reduced the sequester cuts to the FY 2013 DoD budget by $9 billion to approximately $41 billion. The actual FY 2013 sequester cuts announced by the DoD in June 2013 were further reduced by the Administration to approximately $37 billion, with $6 billion of such reductions applied to prior-year unobligated DoD budget balances. This resulted in a $31 billion sequester cut to the total enacted DoD budget for FY 2013 as compared to the FY 2013 Proposed Budget Request (PBR), submitted to Congress in February 2012, and also compares favorably to the originally anticipated $50 billion sequester cut to the FY 2013 DoD budget. After ATRA, the sequestration cuts for the FY 2014 DoD budget were supposed to be $46 billion and approximately $52 billion per year from FY 2015 to FY 2018.

On December 26, 2013, President Obama signed the Bipartisan Budget Act of 2013 (BBA) into law, which reduced DoD budget uncertainty for FY 2014 and FY 2015 by increasing BCA spending caps, and lowering sequester cuts to the DoD base budget by $22 billion for FY 2014 and $9 billion for FY 2015. Additionally, Congress also increased the FY 2014 OCO budget by $6 billion more than the amount included in the FY 2014 PBR.

The table below presents the FY 2011 through FY 2014 enacted DoD budgets, the FY 2015 DoD budget adjusted for the BBA, and the Administration’s DoD budget projections for FY 2016 to FY 2018, as provided in the FY 2014 PBR. The PBR, submitted to Congress in April 2013, reduced the annual sequestration cuts by approximately $52 billion each year for FY 2015 through FY 2018.

	DoD Budget (includes Sequestration Cuts/BBA)						Annual Total Budget      Change
Fiscal Year (Ending September 30)	Base		OCO		Total
	(in billions)
2011	$	528	$	159	$	687		0%
2012	$	531	$	115	$	646		-6%
2013	$	502	$	82	$	584		-10%
2014	$	498	$	85	$	583		0%
2015	$	499	$	37	$	536		-8%
2016	$	499	$	37	$	536		0%
2017	$	508	$	37	$	545		+2%
2018	$	517	$	37	$	554		+2%

While we believe that L-3 is well positioned to benefit from several of the DoD’s focus areas, declining DoD budgets will generally pressure and possibly reduce funding for some of our contracts, which could reduce our sales and operating income and negatively impact our results of operations and cash flows. Uncertainty continues to exist, even with the recent passage of the BBA, regarding how sequestration cuts will be implemented in future fiscal year DoD budgets and what challenges this may present for the defense industry, including L-3, our customers and suppliers. Furthermore, while members of Congress and the Administration continue to discuss

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various options to address sequestration and the U.S. Government’s overall fiscal challenges, we cannot predict the outcome of these efforts. We do not believe the FY 2014 sequester cuts to the DoD budget will have a significant negative impact on our results of operations or cash flows for the year ending December 31, 2014. However, depending on how future sequestration cuts are implemented, we believe that sequestration could have a material, negative impact on our results of operations and cash flows in the future. In addition, declining DoD budgets due to sequestration or other reductions could also potentially trigger non-cash goodwill impairment charges depending on how these reductions impact each of our reporting units. See “Critical Accounting Policies — Goodwill and Identifiable Intangible Assets” within this section.

International and Commercial Markets. Sales to end customers other than the U.S. Government represented 27% of our 2013 sales. These sales are generally affected by international government security and military priorities, as well as the fiscal situations of our international government end customers, global economic conditions for our commercial end markets and our competitive success in winning new business and increasing market share.

Key Performance Measures

The primary financial performance measures that we use to manage our businesses and monitor results of operations are sales and operating income trends. Management believes that these financial performance measures are the primary growth drivers for our earnings and cash flow per common share. Generally, in evaluating our businesses and contract performance, we focus on net sales, operating income and operating margin, and not by type or amount of operating costs.

One of our primary business objectives is to increase sales from organic growth and select business acquisitions. We define organic sales growth as the increase or decrease in sales for the current period compared to the prior period, excluding sales in the: (1) current period from business acquisitions that are included in our actual results of operations for less than twelve months, and (2) prior period from business and product line divestitures that are included in our actual results of operations for the twelve-month period prior to the divestiture date. We expect to supplement, strengthen and enhance our existing businesses by selectively acquiring businesses that: (1) add important new technologies and products, (2) provide access to select customers, programs and contracts and (3) provide attractive returns on investment. Another important financial performance measure that we use is operating margin, which we define as operating income as a percentage of sales, because sales growth combined with operating margin levels determine our operating income levels.

Sales Trends. For the year ended December 31, 2013, consolidated net sales of $12,622 million declined by 3.7%, comprised of organic sales decline of 4.3%, partially offset by net sales from business acquisitions of 0.6%, compared to the year ended December 31, 2012. Our average annual sales growth for the five years ended December 31, 2013 was 0.8%, as average annual organic sales declined by approximately 0.3% and average annual sales growth from business acquisitions, net of divestitures, was approximately 1.1%. See “Results of Operations”, including segment results below for further discussion of sales.

For the years ended December 31, 2013, 2012, and 2011, our largest contract (revenue arrangement) in terms of annual sales was the Fort Rucker Maintenance Support contract with the U.S. Army Aviation and Missile Life Cycle Management Command (AMCOM), which is included in our Aerospace Systems segment. Under this contract, which generated approximately 4% of our 2013, 2012 and 2011 sales, we provide maintenance, logistics and other related sustainment support services for rotary wing aircraft assigned to Fort Rucker and satellite units in Alabama. Our period of performance, including unexercised annual options, continues through September 30, 2017.

We derived approximately 68% of our 2013 sales from DoD customers and, as a result, our sales are highly correlated to DoD budget levels. DoD budgets are a function of several factors and uncertainties beyond our control, including, but not limited to, changes in U.S. procurement policies, budget considerations, current and future economic conditions, presidential administration priorities, U.S. military engagements, changing national security and defense requirements, geo-political developments, actual fiscal year congressional appropriations for

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defense budgets, and sequestration and other DoD budget reductions. Any of these factors could result in a significant increase, decrease or redirection of DoD budgets and impact L-3’s future results of operations, including our sales and operating income growth rates. Additionally, L-3’s future results of operations will be affected by our ability to retain our existing business, including our revenue arrangements with DoD customers, and to successfully re-compete for existing business and compete for new business, which largely depends on: (1) our successful performance on existing contracts, (2) the effectiveness and innovation of our technologies and research and development activities, (3) our ability to offer better program performance than our competitors at an affordable cost, and (4) our ability to retain our employees and hire new ones, particularly those employees who have U.S. Government security clearances. We expect our 2014 consolidated sales to decline by approximately 5% compared to 2013, primarily due to the declines in DoD budgets.

Segment Operating Income Trends. For the year ended December 31, 2013, our segment operating income was $1,212 million, a decrease of 7.3% from $1,308 million for the year ended December 31, 2012. Our segment operating income as a percentage of sales (segment operating margin) was 9.6% for the year ended December 31, 2013, a decrease of 40 basis points from 10.0% for the year ended December 31, 2012. See “Results of Operations”, including segment results below for a discussion of operating margin.

While we continue to undertake cost management actions, such as reducing our indirect costs, resizing select business units, and improving our productivity and contract performance in an effort to maintain or even increase operating margin, these efforts may not be successful. Changes in the competitive environment and DoD procurement practices, reductions to the DoD budget, lower consolidated sales, and changes in our annual pension expense and severance costs could result in lower operating margin. Furthermore, select business acquisitions and select new business, including contract renewals and new contracts, could have lower operating margins than L-3’s operating margins on existing business and contracts. While our 2013 consolidated operating margin declined compared to 2012, we expect our 2014 annual consolidated operating margin to increase as compared to 2013, primarily due to lower expected pension expense.

Other Events

Spin-off of Engility. On July 17, 2012, L-3 completed the spin-off of its subsidiary, Engility, to L-3’s shareholders. The spin-off was a tax-free distribution to L-3 shareholders for U.S. federal tax purposes, except for cash received in lieu of fractional shares. L-3 shareholders of record on July 16, 2012 (the record date) received one share of Engility common stock for every six shares of L-3 common stock held on the record date. Engility began trading as an independent publicly traded company on the New York Stock Exchange on July 18, 2012.

In connection with the spin-off, Engility made a cash distribution of $335 million to L-3. We used a portion of the proceeds to redeem $250 million of our 6 ³/₈% Senior Subordinated Notes due 2015 (6 ³/₈% 2015 Notes) on July 26, 2012 and the remaining proceeds were used primarily to repurchase outstanding shares of our common stock. There was no gain or loss recognized by us as a result of the spin-off transaction.

Prior to the completion of the spin-off, L-3 and Engility entered into a Distribution Agreement dated July 16, 2012 and several other agreements that govern certain aspects of our relationship with Engility following the spin-off. These agreements generally provide that each party is responsible for its respective assets, liabilities and obligations, including employee benefits, insurance and tax-related assets and liabilities, following the spin-off, whether accrued or contingent. The agreements also describe certain services that L-3 provided to Engility that were substantially completed by December 31, 2013.

As a result of the spin-off, the assets, liabilities, non-controlling interest, results of operations and cash flows of the Engility businesses have been classified as discontinued operations for all periods presented. We incurred transaction expenses in connection with the spin-off of $19 million ($14 million after income taxes) for the year ended December 31, 2012 and $9 million ($7 million after income taxes) for the year ended December 31, 2011, which have been included in discontinued operations. In addition, we allocated interest expense for debt not directly attributable or related to L-3’s other operations of $14 million and $31 million to discontinued operations

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for the years ended December 31, 2012 and 2011, respectively. Interest expense was allocated in accordance with the accounting standards for discontinued operations and was based on the ratio of Engility net assets to the sum of: (1) total L-3 consolidated net assets and (2) L-3 consolidated total debt.

Engility’s statement of operations data, which has been classified as discontinued operations, is provided in the table below. See Note 5 to the audited consolidated financial statements for additional information.

	January 1 to July 17, 2012		Year Ended December 31, 2011
	(in millions)
Product and service revenues	$	911	$	2,011
Operating income from discontinued operations before income taxes		68		199
Interest expense allocated to discontinued operations		(14)		(31)
Income from discontinued operations before income taxes	$	54	$	168
Income tax expense		(22)		(64)
Income from discontinued operations, net of income taxes	$	32	$	104
Net income from discontinued operations attributable to noncontrolling interests		(4)		(3)
Net income from discontinued operations attributable to L-3	$	28	$	101

2012 Amended and Restated Revolving Credit Facility. On February 3, 2012, we amended and restated our $1 billion Revolving Credit Facility, which extended the expiration date to February 3, 2017. The terms of the Amended and Restated Revolving Credit Facility are substantially consistent with the terms of this facility prior to its amendment and restatement except that: (1) provisions that previously limited the ability of L-3 Communications to pay dividends, repurchase L-3 Holdings’ common stock and make other distributions with respect to any capital stock were eliminated, (2) a provision that previously limited the ability of L-3 Communications to make investments in L-3 Holdings was made less restrictive and (3) the cost of borrowings, loan commitment fees and letter of credit fees were reduced. In addition, the Amended and Restated Revolving Credit Facility provides for uncommitted incremental revolving facilities and additional term loan facilities in an aggregate principal amount of up to $500 million. See Note 11 of our audited consolidated financial statements for additional information regarding the amendment of our $1 billion Amended and Restated Revolving Credit Facility.

Debt Repurchases, Issuances and Redemptions. On July 26, 2012, (the redemption date), L-3 Communications used a portion of the proceeds from the spin-off of Engility to redeem $250 million of L-3 Communications’ 6 ³/₈% Senior Subordinated Notes due 2015 (6 ³/₈% 2015 Notes) at a redemption price of 102.125%, plus accrued and unpaid interest, up to but not including the redemption date. In connection with the redemption of the 6 ³/₈% 2015 Notes, the Company recorded a debt retirement charge of $8 million ($5 million after income tax, or $0.05 per diluted share).

On October 15, 2012 (the redemption date), L-3 Communications redeemed the remaining outstanding $250 million of its 6 ³/₈% 2015 Notes at a redemption price of 101.063%, plus accrued and unpaid interest, up to but not including the redemption date. In connection with the redemption, the Company recorded a debt retirement charge of approximately $5 million ($3 million after income tax, or $0.03 per diluted share).

On February 2, 2011, we repurchased approximately $11 million of our CODES as a result of the exercise by the holders of their contractual right to require us to repurchase their CODES.

On February 7, 2011, L-3 Communications issued $650 million in principal amount of 4.95% Senior Notes that mature on February 15, 2021 (2021 Senior Notes). The 2021 Senior Notes were issued at a discount of $4 million. On March 9, 2011, the net cash proceeds from this offering, together with cash on hand, were used to redeem L-3 Communications’ $650 million 5 ⁷/₈% Senior Subordinated Notes due January 15, 2015 (5 ⁷/₈% 2015

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Notes). In connection with the redemption of the 5 ⁷/₈% 2015 Notes, we recorded a debt retirement charge of $18 million ($11 million after income taxes, or $0.10 per diluted share).

On November 22, 2011, L-3 Communications issued $500 million in principal amount of 3.95% Senior Notes that mature on November 15, 2016 (2016 Senior Notes). The 2016 Senior Notes were issued at a discount of $4 million. On December 22, 2011, the net proceeds from this offering, together with cash on hand, were used to redeem $500 million of L-3 Communications’ 6 ³/₈% 2015 Notes. In connection with the redemption of the 6 ³/₈% 2015 Notes, we recorded a debt retirement charge of $17 million ($10 million after income tax, or $0.10 per diluted share).

Q4 2011 Items. Our 2011 results were impacted by the items discussed below, which increased net income attributable to L-3 by $28 million and diluted earnings per share by $0.26 (collectively referred to as the Q4 2011 Items):

• A tax benefit of $78 million, or $0.74 per diluted share, for a net reversal of amounts previously accrued related to tax years for which the statutes of limitations has expired; and

• Non-cash impairment charges of $57 million ($50 million after income taxes), or $0.48 per diluted share. The impairment charges include: (1) a goodwill impairment charge of $43 million, ($42 million after income taxes, or $0.40 per diluted share), which is included in operating income, and (2) $14 million, ($8 million after income taxes, or $0.08 per diluted share), which is included in interest and other income, net, for our portion of an impairment charge for long-lived assets at an equity method investment. The goodwill impairment charge was due to a decline in the estimated fair value of the Marine Services business, which is part of the Electronic Systems segment, as a result of a decline in its projected future cash flows.

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Business Acquisitions and Divestitures

As discussed above, one aspect of our strategy is to selectively acquire businesses that add new products and technologies, or provide access to select customers, programs and contracts. We intend to continue acquiring select businesses for reasonable valuations that will provide attractive returns to L-3. Our business acquisitions, depending on their contract-type, sales mix or other factors, could reduce L-3’s consolidated operating margin while still increasing L-3’s operating income, earnings per share, and net cash from operating activities. In addition, we may also dispose of certain businesses if we determine that they no longer fit into L-3’s overall business strategy and we are able to receive an attractive price.

Acquisitions. The table below summarizes the acquisitions that we have completed during the years ended December 31, 2011, 2012, and 2013 referred to herein as business acquisitions. See Note 5 to our audited consolidated financial statements for further information regarding our business acquisitions. During the year ended December 31, 2013, we used net cash of $62 million primarily for business acquisitions, including an earnout payment and a purchase price adjustment for acquisitions completed prior to January 1, 2013.

Business Acquisitions	Date Acquired		Segment		Purchase        Price(1)
					(in millions)
2011
Communications and engineering business of ComHouse Wireless L.P.		July 1, 2011		Communication Systems	$	13
Cargo radiation screening business of Detector Network International (DNI)		October 28, 2011		Electronic Systems		5(2)
Total 2011					$	18
2012
L-3 KEO		February 6, 2012		Electronic Systems	$	205
MAVCO, Inc.		April 13, 2012		Electronic Systems		10
Link Simulation & Training U.K. Limited		August 6, 2012		Electronic Systems		134(3)
Total 2012					$	349
2013
Mustang Technology Group, L.P. (Mustang)		December 19, 2013		Electronic Systems		54
Total 2013					$	54

⁽¹⁾  The purchase price represents the contractual consideration for the acquired business, excluding adjustments for net cash acquired and acquisition transaction costs.

⁽²⁾  Excludes additional purchase price, not to exceed $10 million, which is contingent upon the post acquisition financial performance of DNI through December 31, 2014. See Note 5 to our audited consolidated financial statements for additional information on the additional purchase price for this acquisition.

⁽³⁾  Excludes additional purchase price of $6 million for a final net working capital adjustment. See Note 5 to our consolidated financial statements for additional information on the final net working capital adjustment.

All of our business acquisitions are included in our consolidated results of operations from their dates of acquisition. We regularly evaluate potential business acquisitions.

Divestitures. On February 22, 2011, we divested the MOI business of Microdyne Corporation (Microdyne), which was within the Electronic Systems segment. This divestiture transaction resulted in a pre-tax loss of approximately $2 million. Microdyne’s annual revenues (approximately $8 million), pre-tax income and net assets were not material for any period presented, and, therefore, these divestitures are not reported as discontinued operations.

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Spin-off of Engility: On July 17, 2012, we completed the spin-off of our subsidiary, Engility Holdings, Inc. See “Spin-off of Engility” within this section for further discussion of the spin-off, distribution of proceeds and impact on our financial results and financial position.

Critical Accounting Policies

Our significant accounting policies are described in Note 2 to our audited consolidated financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and cost of sales during the reporting period. The most significant of these estimates and assumptions relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, market values for inventories reported at lower of cost or market, pension and post-retirement benefit obligations, stock-based employee compensation expense, income taxes, including the valuations of deferred tax assets, litigation reserves and environmental obligations, accrued product warranty costs and the recoverability, useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill. Changes in estimates are reflected in the period during which they become known. Actual amounts will differ from these estimates and could differ materially. We believe that our critical accounting estimates have the following attributes: (1) we are required to make assumptions about matters that are uncertain and require judgment at the time of the estimate; (2) use of reasonably different assumptions could have changed our estimates, particularly with respect to estimates of contract revenues and costs, and recoverability of assets, and (3) changes in the estimate could have a material effect on our financial condition or results of operations. We believe the following critical accounting policies contain the more significant judgments and estimates used in the preparation of our financial statements.

Contract Revenue Recognition and Contract Estimates. Approximately 47% of our consolidated net sales are generated from contracts (revenue arrangements) that require us to design, develop, manufacture, modify, upgrade, test and integrate complex aerospace and electronic equipment, and to provide related engineering and technical services according to the buyer’s specifications. These revenue arrangements or contracts are generally fixed-price, cost-plus, or time-and-material type and are covered by accounting standards for construction-type and production-type contracts and federal government contractors. Substantially all of our cost-plus type and time-and-material type contracts are with the U.S. Government, primarily the DoD. Certain of our contracts with the U.S. Government are multi-year contracts that are funded annually by the customer, and sales on these multi-year contracts are based on amounts appropriated (funded) by the U.S. Government. Our remaining sales are accounted for in accordance with accounting standards for revenue arrangements with commercial customers.

Sales and profits on fixed-price type contracts that are covered by accounting standards for construction-type and production-type contracts and federal government contractors are substantially recognized using percentage-of-completion (POC) methods of accounting. Sales on such contracts represent approximately 38% of our consolidated net sales. Sales and profits on fixed-price production contracts under which units are produced and delivered in a continuous or sequential process are recorded as units are delivered based on their contractual selling prices (the “units-of-delivery” method). Sales and profits on each fixed-price production contract under which units are not produced and delivered in a continuous or sequential process, or under which a relatively few number of units are produced, are recorded based on the ratio of actual cumulative costs incurred to total estimated costs at completion of the contract multiplied by the total estimated contract revenue, less cumulative sales recognized in prior periods (the “cost-to-cost” method). Under both POC methods of accounting, a single estimated total profit margin is used to recognize profit for each contract over its entire period of performance, which can exceed one year.

Accounting for the sales on these fixed-price contracts requires the preparation of estimates of: (1) total contract revenue, (2) total costs at completion, which is equal to the sum of the actual incurred costs to date on the contract and the estimated costs to complete the contract’s statement of work, and (3) measurement of progress towards completion. The estimated profit or loss at completion on a contract is equal to the difference between the total estimated contract revenue and the total estimated cost at completion. Under the units-of-delivery method,

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sales on a fixed-price type contract are recorded as the units are delivered during the period based on their contractual selling prices. Under the cost-to-cost method, sales on a fixed-price type contract are recorded at amounts equal to the ratio of actual cumulative costs incurred divided by total estimated costs at completion, multiplied by (i) the total estimated contract revenue, less (ii) the cumulative sales recognized in prior periods. The profit recorded on a contract in any period using either the units-of-delivery method or cost-to-cost method is equal to (i) the current estimated total profit margin multiplied by the cumulative sales recognized, less (ii) the amount of cumulative profit previously recorded for the contract. In the case of a contract for which the total estimated costs exceed the total estimated revenues, a loss arises, and a provision for the entire loss is recorded in the period that the loss becomes evident. The unrecoverable costs on a loss contract that are expected to be incurred in future periods are recorded as a component of other current liabilities entitled “Estimated cost in excess of estimated contract value to complete contracts in process in a loss position.”

Adjustments to estimates for a contract’s revenue, estimated costs at completion and estimated profit or loss are often required as work progresses under a contract, as experience is gained and more information is obtained, even though the scope of work required under the contract may not change, or if contract modifications occur. The impact of revisions in profit (loss) estimates for all types of contracts subject to percentage-of-completion accounting are recognized on a cumulative catch-up basis in the period in which the revisions are made. Amounts representing contract change orders or claims are included in sales only when they can be reliably estimated and their realization is reasonably assured. The revisions in contract estimates, if significant, can materially affect our results of operations and cash flows, as well as reduce the valuations of receivables and inventories, and in some cases result in liabilities to complete contracts in a loss position. Aggregate net changes in contract estimates increased operating income by $114 million, or 9%, for the year ended December 31, 2013, $72 million, or 6%, for the year ended December 31, 2012, and $73 million, or 5%, for the year ended December 31, 2011.

Sales and profits on cost-plus type contracts that are covered by accounting standards for government contractors are recognized as allowable costs are incurred on the contract, at an amount equal to the allowable costs plus the estimated profit on those costs. Sales on such contracts represent approximately 9% of our consolidated net sales. The estimated profit on a cost-plus contract is fixed or variable based on the contractual fee arrangement. Incentive and award fees are our primary variable fee contractual arrangement. Incentive and award fees on cost-plus type contracts are included as an element of total estimated contract revenues and recorded to sales when a basis exists for the reasonable prediction of performance in relation to established contractual targets and we are able to make reasonably dependable estimates for them. Sales and profits on time-and-material type contracts are recognized on the basis of direct labor hours expended multiplied by the contractual fixed rate per hour, plus the actual costs of material and other direct non-labor costs. On a time-and-material type contract, the fixed hourly rates include amounts for the cost of direct labor, indirect contract costs and profit. Cost-plus type or time-and-material type contracts generally contain less estimation risks than fixed-price type contracts.

Sales on arrangements for (1) fixed-price type contracts that require us to perform services that are not related to production of tangible assets (Fixed-Price Service Contracts), and (2) certain commercial customers are recognized in accordance with accounting standards for revenue arrangements with commercial customers. Sales for our businesses whose customers are primarily commercial business enterprises are substantially generated from single element revenue arrangements. Sales are recognized when there is persuasive evidence of an arrangement, delivery has occurred or services have been performed, the selling price to the buyer is fixed or determinable and collectability is reasonably assured. Sales for Fixed-Price Service Contracts that do not contain measurable units of work performed are generally recognized on a straight-line basis over the contractual service period, unless evidence suggests that the revenue is earned, or obligations fulfilled, in a different manner. Sales for Fixed-Price Service Contracts that contain measurable units of work performed are generally recognized when the units of work are completed. Sales and profit on cost-plus and time-and-material type contracts within the scope of revenue recognition accounting standards for revenue arrangements with commercial customers are recognized in the same manner as those within the scope of contract accounting standards, except for incentive and award fees. Cost-based incentive fees are recognized when they are realizable in the amount that would be due under the contractual termination provisions as if the contract was terminated. Performance based incentive fees and award fees are recorded as sales when awarded by the customer.

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For contracts with multiple deliverables, we apply the separation and allocation guidance under the accounting standard for revenue arrangements with multiple deliverables, unless all the deliverables are covered by contract accounting standards, in which case we apply the separation and allocation guidance under contract accounting standards. Revenue arrangements with multiple deliverables are evaluated to determine if the deliverables should be separated into more than one unit of accounting. We recognize revenue for each unit of accounting based on the revenue recognition policies discussed above.

Sales and profit in connection with contracts to provide services to the U.S. Government that contain collection risk because the contracts are incrementally funded and subject to the availability of funds appropriated, are deferred until the contract modification is obtained, indicating that adequate funds are available to the contract or task order.

Goodwill and Identifiable Intangible Assets. In accordance with the accounting standards for business combinations, we record the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition (commonly referred to as the purchase price allocation). Identifiable intangible assets are recognized as assets apart from goodwill if they arise from contractual or other legal rights, or if they are capable of being separated or divided from the acquired business and sold, transferred, licensed, rented or exchanged. However, we do not recognize separate intangible assets for the assembled workforces of our business acquisitions.

Generally, the largest separately identifiable intangible asset from the businesses that we acquire is the value of their assembled workforces, which includes the human capital of the management, administrative, marketing and business development, scientific, engineering and technical employees of the acquired businesses. The success of our businesses, including their ability to retain existing business (revenue arrangements) and to successfully compete for and win new business (revenue arrangements), is primarily dependent on the management, marketing and business development, contracting, engineering and technical skills and knowledge of our employees, rather than on productive capital (plant and equipment, and technology and intellectual property). Additionally, for a significant portion of our businesses, our ability to attract and retain employees who have U.S. Government security clearances, particularly those with top-secret and above clearances, is critical to our success, and is often a prerequisite for retaining existing revenue arrangements and pursuing new ones. Generally, patents, trademarks and licenses are not material for our acquired businesses. Furthermore, our U.S. Government contracts (revenue arrangements) generally permit other companies to use our patents in most domestic work performed by such other companies for the U.S. Government. Therefore, because intangible assets for assembled workforces are part of goodwill, the substantial majority of the intangible assets for our acquired business acquisitions are recognized as goodwill. Additionally, the value assigned to goodwill for our business acquisitions also includes the value that we expect to realize from cost reduction measures that we implement for our acquired businesses. Goodwill equals the amount of the purchase price of the business acquired in excess of the sum of the fair value of identifiable acquired assets, both tangible and intangible, less the fair value of liabilities assumed. At December 31, 2013, we had goodwill of $7,796 million and identifiable intangible assets of $285 million.

The most significant identifiable intangible asset that is separately recognized in accordance with U.S. GAAP for our business acquisitions is customer contractual relationships. All of our customer relationships are established through written customer contracts (revenue arrangements). The fair value for customer contractual relationships is determined, as of the date of acquisition, based on estimates and judgments regarding expectations for the estimated future after-tax earnings and cash flows (including cash flows from working capital) arising from the follow-on sales on contract (revenue arrangement) renewals expected from customer contractual relationships over their estimated lives, including the probability of expected future contract renewals and sales, less a contributory asset charge, all of which is discounted to present value. All identifiable intangible assets are amortized over their estimated useful lives as the economic benefits are consumed. We review customer contractual relationships for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with the accounting standards for long-lived assets. If any such event or change in circumstances occurs, and, if our revised estimates of future after-tax cash flows are

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significantly lower than our estimates at the date we acquired the customer contractual relationships, we may be required to record an impairment charge to write-down these intangible assets to their realizable values. We also review and update our estimates of the duration of our customer contractual relationships, at least annually. If such estimates indicate that the duration of our customer contractual relationships has decreased compared to the estimates made as of the date we acquired these intangible assets, then we accelerate the amortization period for our customer contractual relationships over their remaining useful economic lives.

We review goodwill for impairment annually as of November 30 and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The accounting standards for goodwill allow for the assessment of qualitative factors, such as macroeconomic conditions, industry and market conditions and entity relevant events or circumstances to determine whether it is more likely or not that the fair value of a reporting unit is less than its carrying amount. L-3 did not utilize a qualitative assessment approach for the November 30, 2013 goodwill impairment test, as we chose instead to complete the quantitative two-step testing process for each reporting unit.

A reporting unit is an operating segment, as defined by the segment reporting accounting standards, or a component of an operating segment. A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and is reviewed by operating segment management. Two or more components of an operating segment may be aggregated and deemed a single reporting unit for goodwill impairment testing purposes if the components have similar economic characteristics.

L-3 had 13 reporting units at December 31, 2013 (and at November 30, 2013 when our annual goodwill impairment assessment was completed) compared to 15 reporting units at December 31, 2012. The reduction in the number of our reporting units was due to a change in L-3’s management and reporting structure that resulted in the consolidation of three reporting units into a single reporting unit. The reporting units that were consolidated had fair values in excess of their carrying values at the time of the realignments and the related goodwill for each was included in the current reporting unit.

As previously discussed, during the quarter ended March 28, 2014, L-3 realigned its business segments. After the realignment, L-3’s structure consists of four reportable segments: (1) Aerospace Systems, (2) Electronic Systems, (3) Communication Systems, and (4) National Security Solutions. As a result of the reorganization and related changes to L-3’s operating segments, L-3 now has 12 reporting units compared to 13 as of December 31, 2013. Four reporting units were consolidated into two reporting units and one reporting unit was separated into two. The reporting units that were consolidated consisted of the: (1) Communication Systems and Microwave Products reporting units, and (2) Precision Engagement and Training & Simulation reporting units. The Marine Systems International reporting unit was separated from the Marine & Power Systems reporting unit. The following discussion of goodwill and our annual impairment assessment reflects the current reporting structure and number of reporting units.

L-3’s aggregate balance of goodwill increased by $20 million to $7,796 million at December 31, 2013 from $7,776 million at December 31, 2012 due to $44 million for business acquisitions, offset by reductions of $22 million for foreign currency translation adjustments and $2 million for a business disposition. The table below presents the number of reporting units and the associated goodwill at December 31, 2013 for each of our reportable segments.

Reportable Segment	Number of  Reporting Units		Aggregate      Goodwill
			(in millions)
Aerospace Systems		2	$	1,751
Electronic Systems		8		4,085
Communication Systems		1		992
NSS		1		968
Total		12	$	7,796

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The first step in the process of testing goodwill for potential impairment is to compare the carrying value of the reporting unit to its fair value. If a potential impairment is identified, the second step is to measure the impairment loss by comparing the implied fair value of goodwill with the carrying value of goodwill of the reporting unit. Our methodology for determining the fair value of a reporting unit is estimated using a discounted cash flow (DCF) valuation approach, and is dependent on estimates for future sales, operating income, depreciation and amortization, income tax payments, working capital changes, and capital expenditures, as well as expected long-term growth rates for cash flows. All of these factors are affected by economic conditions related to the industries in which we operate (predominantly the U.S. defense industry), as well as, conditions in the U.S. capital markets.

The more significant assumptions used in our DCF valuations to determine the fair values of our reporting units in connection with the goodwill valuation assessment at November 30, 2013 were: (1) detailed three-year cash flow projections for each of our reporting units, which are based primarily on our estimates of future sales, operating income, and cash flows, (2) the expected long-term cash flow growth rates for each of our reporting units (commonly known as Terminal Growth Rates), which approximate the expected long-term nominal growth rate for the U.S. DoD budget, U.S. economy and the respective industries in which the reporting units operate, expected inflation rates, and specific circumstances for each reporting unit, including contracts or programs ending and expected new business, and (3) risk adjusted discount rates, which represent the weighted average cost of capital (WACC) for each reporting unit and include the estimated risk-free rate of return that is used to discount future cash flow projections to their present values. There were no changes to the underlying methods used in 2013 as compared to the prior year DCF valuations of our reporting units.

Each reporting unit WACC was comprised of: (1) an estimated required rate of return on equity, based on publicly traded companies with business and economic risk characteristics comparable to each of L-3’s reporting units (Market Participants), including a risk free rate of return of 3.82% on the 30 year U.S. Treasury Bond as of November 29, 2013 (2.81% as of November 30, 2012) and an equity risk premium of 5% (6% as of November 30, 2012) and (2) an after-tax rate of return on Market Participants’ debt, each weighted by the relative market value percentages of Market Participants’ equity and debt. The WACC assumptions for each reporting unit are based on a number of market inputs that are outside of our control and are updated annually to reflect changes to such market inputs as of the date of our annual goodwill impairment assessments, including changes to: (1) the estimated required rate of return on equity based on historical returns on common stock securities of Market Participants and the Standard & Poor’s 500 Index over the prior two-year period, (2) the risk free rate of return based on the prevailing market yield on the 30 year U.S. Treasury Bond, (3) the rate of return of Market Participants’ publically traded debt securities, and (4) the relative market value percentages of Market Participants’ equity and debt.

The table below presents the weighted average risk adjusted discount rate assumptions in WACC, used in our DCF valuation for each of our reportable segments for our goodwill impairment assessments at November 30, 2013 and 2012.

	WACC
Reportable Segments	2013		2012
Aerospace Systems(1)		7.42%		6.56%
Electronic Systems(2)		7.57%		6.73%
Communication Systems		7.57%		6.76%
NSS		8.09%		6.94%

⁽¹⁾  Both reporting units within the Aerospace Systems reportable segment used the risk adjusted discount rate in WACC as presented in the table above.

⁽²⁾  The weighted average risk adjusted discount rate in WACC for the Electronic Systems reportable segment is comprised of separate discount rates for each reporting unit within the segment that range from 7.42% to 8.03% for 2013 and 6.56% to 7.33% for 2012.

As presented in the table below, L-3’s historical three-year average annual cash flow growth rates for 2013, 2012 and 2011 for our reportable segments ranged from a negative 4% to a positive 64%. The annual cash flows generated by each of our reporting units varies from year to year, and, therefore, the annual cash flow growth

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rates do not result in linear trends, due to a number of factors, including, but not limited to: (1) variability of annual sales volume and sales growth rates, (2) increases and decreases in working capital, including customer advance payments and billings on multi-year contracts (revenue arrangements) with long-term performance periods (exceeding one year), (3) the timing of invoicing and cash collections between fiscal years from receivables due from customers on multi-year contracts (revenue arrangements), (4) the timing of increases and decreases of select inventories procured and produced in anticipation of future product sales, which frequently overlap the ending and beginning of fiscal years, (5) the timing of the receipt of award fee and incentive fee payments from customers on contracts (revenue arrangements), (6) variability in annual cash outlays for research and development costs, (7) changes in cash outlays for capital expenditures for property, plant and equipment, and (8) increases in annual sales and costs and expense volumes of a reporting unit resulting from business acquisitions. As a result of the factors discussed above and the varying sizes of our reporting units, the annual cash flow levels and growth rates at the reporting unit level tend to fluctuate significantly from year to year.

The 2013 cash flow amount and the cash flow growth rate for each of the last three years for each of our segments are presented in the following table.

Reportable Segment	Estimated 2013  Cash Flow(1)		Estimated Average Annual Cash Flow Growth Rate(1)
	(in millions)		2013		2012		2011		3 Yr. Average
Aerospace Systems(2)	$	382		12%		(6)%		6%		4%
Electronic Systems(3)	$	410		5%		(16)%		(2)%		(4)%
Communication Systems(4)	$	153		(9)%		33%		29%		18%
NSS(5)	$	83		(43)%		20%		214%		64%

⁽¹⁾  Reportable segment estimated cash flow excludes interest payments on debt and other corporate cash flows.

⁽²⁾  The increase in 2013 cash flow for Aerospace Systems was due to small ISR aircraft sales to the DoD and a decrease in tax payments as a result of lower operating income and a lower effective tax rate. The decrease in 2012 cash flow was primarily due to higher working capital requirements, primarily for inventory on new contracts that began in 2012 and an increase in estimated tax payments, partially offset by higher operating income and an increase in advance payments. The increase in 2011 cash flow was due to growth in operating income and an increase in advance payments.

⁽³⁾  The increase in 2013 cash flows for Electronic Systems was primarily due to a decrease in tax payments as a result of lower operating income and a lower effective tax rate, as well as working capital improvements at Precision Engagement & Training. The decrease in 2012 cash flows was primarily due to lower operating income compared to 2011 for Space & Propulsion Systems, Marine Systems International, and Power & Control Systems. The decrease in 2011 cash flows was primarily due to lower operating income compared to 2010 for Warrior Systems, Precision Engagement & Training, and Space & Propulsion Systems, partially offset by lower working capital requirements at Warrior Systems.

⁽⁴⁾  The decrease in 2013 cash flow for Communication Systems was due to lower operating income, partially offset by lower capital expenditures and working capital requirements. The increase in 2012 cash flow was primarily due to the timing of billings and cash receipts and an increase in advance payments. The increase in 2011 cash flow was primarily due to working capital improvements, and timing of billings and cash receipts on fixed-price contracts, partially offset by lower operating income and liquidation of advance payments.

⁽⁵⁾  The decrease in 2013 cash flow for NSS was primarily due to lower sales, as well as 2012 cash inflows that did not recur, including collections of billed receivables and customer advance payments. The increase in 2012 cash flow was primarily due to the timing of billings and cash receipt and an increase in advance payments. The increase in 2011 cash flow was primarily due to working capital reductions due to lower sales volume and a decrease in tax payments.

We consistently consider several factors to determine expected future annual cash flows for our reporting units, including, historical multi-year average cash flow trends by reporting unit and the expected future cash flow growth rates for each of our reporting units primarily based on our estimates of future sales, operating income, and working capital changes. Furthermore, the substantial majority of our reporting units are primarily dependent upon the DoD budget and spending. Sales from DoD customers generate a significant portion of our annual sales and have historically represented approximately 70% or more of our total sales. Accordingly, to determine expected future annual cash flows for our reporting units we also consider: (1) the DoD budget and spending priorities, (2) expansion into new markets, (3) changing conditions in existing markets for our products, systems, and services, (4) possible termination of certain government contracts, (5) expected success in new

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business competitions and re-competitions on existing business, and (6) anticipated operating margins and working capital requirements, which vary significantly depending on the stage of completion (early, mature, ending) of contracts (revenue arrangements). We closely monitor changes in these factors and their impact on the expected cash flow of our reporting units. In addition to these factors that were relevant and specific to each of our reporting units, our goodwill impairment assessments as of November 30, 2013 assumed a declining DoD base budget through FY 2014, a flat base budget in both FY 2015 and FY 2016, and 2% nominal growth in the base budget beginning with FY 2017, consistent with our discussion of the business environment.

Additionally, our actual cash flows may be higher than our projections and the DCF valuation does not reflect actions that we may take to increase the profitability and cash flows of our reporting units, including our four reporting units with fair value cushions of at least 20% in the second table below. Actions we may take include consolidating and streamlining select business operations, creating future synergies with other L-3 businesses, or pursuing incremental targeted growth opportunities. Additionally, the DCF valuations do not assume future business acquisitions or divestitures.

The table below presents the estimated: (1) 2014 cash flow amount, (2) average annual cash flow growth rates for 2014 – 2016, and (3) weighted average annual cash flow growth rates after 2016 for each of our reportable segments.

Reportable Segment	Estimated 2014 Cash Flow		Estimated Average Annual Cash Flow Growth Rates
	(in millions)		3 Yr. Average 2014 – 2016		2017-2018		After 2018 Terminal Growth Rate
Aerospace Systems(1)	$	286(1)		(5)%		2%		2%
Electronic Systems(2)	$	272(2)		5%		2%		2%
Communications Systems(3)	$	154(3)		2%		2%		2%
NSS(4)	$	71(4)		(5)%		2%		2%

⁽¹⁾  Aerospace Systems projected cash flow is expected decrease by $97 million from $383 million in 2013 to $286 million in 2014. The decrease is mainly due to small ISR aircraft sales to the DoD in 2013 that will not recur in 2014.

⁽²⁾  Electronic Systems projected cash flow is expected to decrease by $138 million from $410 million in 2013 to $272 million in 2014. The decrease is mainly due to lower sales and operating income and liquidations of advance payments received in 2013 at Marine & Power Systems, and higher capital expenditures and working capital requirements at Precision Engagement & Training.

⁽³⁾  Communications Systems projected cash flow is expected to increase by $1 million from $153 million in 2013 to $154 million in 2014. The increase is primarily due to higher expected operating income and lower working capital requirements and capital expenditures at Broadband Communication Systems offset by lower sales and operating income at Tactical Satellite Communications Products and COMSEC & Specialty RF Products.

⁽⁴⁾  NSS projected cash flow is expected to decrease by $12 million from $83 million in 2013 to $71 million in 2014. The expected decrease is primarily due to 2013 working capital improvements, primarily due to timing of payments to vendors, not expected to recur in 2014. Projected 2014 sales and operating income are also expected to decline as compared to 2013, although at a slower rate, which will also contribute to the decline in 2014 cash flow.

A decline in the estimated fair value of a reporting unit could result in a goodwill impairment, and a related non-cash impairment charge against earnings, if the estimated fair value for the reporting unit is less than the carrying value of the net assets of the reporting unit, including its goodwill. A large decline in estimated fair value of a reporting unit could result in an adverse effect on our financial condition and results of operations.

As discussed above, the more significant assumptions used in our DCF valuations for each of our reporting units were detailed three-year undiscounted cash flow projections, risk adjusted discount rates, or WACC, used to discount the cash flow projections to their present value and expected Terminal Growth Rates. The current year (2014-2016) consolidated three-year undiscounted cash flow projections remained substantially the same compared to the prior year (2013-2015), although the changes by each reporting unit ranged from a decline of 78% to an increase of 23%. The risk adjusted discount rate, or WACC, increased by an average of 80 basis points compared to the prior year valuations primarily due to an increase of approximately 100 basis points in the risk free rate of return and higher equity to debt ratio as a result of higher equity values among Market Participants within each peer group. The expected Terminal Growth Rates utilized in the current year valuations were higher than those utilized in the prior year valuations by an average of approximately 100 basis points. The expected Terminal Growth Rates utilized in the prior year valuations

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were approximately 1% compared to approximately 2% utilized in the current year valuations. The increase in the terminal growth rates assumption was based on several factors, including but not limited to: (1) an increase in the expected inflation rate and economic growth rate, (2) an increase in interest rate levels during 2013 from 2012, consistent with the increase in the risk free rate, (3) an improved outlook for DoD budgets with smaller than BCA required sequestration cuts legislated by Congress for FY 2013, FY 2014 and FY 2015, and a return to a nominal annual growth rate of 2% by FY 2017, and (4) multi-year and Indefinite Delivery/Indefinite Quantity contract wins during 2013 that are expected to generate sales growth at select reporting units.

We evaluated the sensitivity of the DCF fair value estimates for each reporting unit, which were used for our goodwill impairment assessment, by separately assessing the impact on the estimated fair value of each reporting unit by: (1) increasing the risk adjusted discount rate (WACC) by 50 basis points, or (2) reducing the Terminal Growth Rate by 50 basis points, compared to those used in our estimated fair value calculations, while holding all other assumptions unchanged. All of our reporting units would have had a fair value in excess of their carrying value, except for the NSS reporting unit under both scenarios. In each of the two scenarios, the fair value of the NSS reporting unit would have been less than its carrying value and step two of the impairment assessment would have been required. In addition, we applied hypothetical decreases to the estimated fair values of each of our reporting units. We determined that a decrease in fair value of at least 20% would be required before any reporting unit, with the exception of four reporting units presented in the table below, would have a carrying value in excess of its fair value. The table below presents the: (1) risk adjusted discount rates, (2) annual cash flow and three-year average growth rate, (3) 2013 cash flow, (4) goodwill balance, and (5) excess fair value percentage and dollar amount, for each of these four reporting units.

Reporting Unit	Risk Adjusted Discount Rates		Estimated Annual Cash Flow Growth Rate(1)								Estimated 2013 Cash Flows(1)		Goodwill Balance(2)		Excess Fair Value(3)
			2013		2012		2011		3-Year Average
($ in millions)
NSS(4)		8.09%		(43)%		20%		214%		63%	$	83	$	968		5%	$	55
Space & Propulsion Systems(5)		7.42%		(268)%		(111)%		(46)%		(142)%	$	5	$	240		9%	$	32
Warrior Systems(6)		7.49%		(34)%		84%		(40)%		6%	$	28	$	605		16%	$	177
Marine & Power Systems(7)		7.42%		36%		(59)%		(2)%		(8)%	$	57	$	840		19%	$	191

⁽¹⁾  Reporting unit cash flow excludes interest payments on debt and other corporate cash flows.

⁽²⁾  The goodwill balance is as of November 30, 2013, our goodwill impairment testing date.

⁽³⁾  The excess fair value represents the percentage and dollar amount by which the fair value of a reporting unit must decline before a potential impairment is identified and would require the second step of the goodwill impairment assessment to be performed.

⁽⁴⁾  Our DCF valuation for this reporting unit assumed lower projected cash flow of approximately 15% in 2014 compared to 2013 due to lower expected sales and operating income, as well as the timing of payments to vendors in 2013. In addition, our DCF valuation assumed that projected cash flow will remain approximately 15% below 2013 levels in 2015 and 2016 due to continued constraints on DoD budgets, particularly for services. Projected cash flows are expected grow 2% starting in 2017.

⁽⁵⁾  Our DCF valuation for this reporting unit assumed cash used of $3 million in 2014 compared to cash flows of $5 million in 2013 due to the liquidation of a customer advance in 2014 on a large international contract that was received in 2013. In 2015, cash flows are assumed to increase to $18 million due to increased sales and operating income, as well as lower working capital requirements, primarily for inventory levels. In 2016, cash flows decrease $23 million to cash used of $5 million due to the liquidation of the customer advance on the large international contract received in 2013. Projected cash flows are expected to grow 2% annually beginning in 2017.

⁽⁶⁾  Our DCF valuation for this reporting unit assumed higher projected cash flow of approximately 81% in 2014 compared to 2013 due higher sales and operating income and lower working capital requirements, primarily for inventory. In addition, our DCF valuation assumed that projected cash flow in 2015 and 2016 will grow 129% and 164% above 2013 levels (growth of 51% and 74% above 2012 levels), primarily due to increased international sales at higher margins and associated customer advance payments, and higher margins on domestic programs due to improved performance. Projected cash flows are expected to grow 2% starting in 2017.

⁽⁷⁾  Our DCF valuation for this reporting unit assumed that cash flows would decrease approximately 61% in 2014 compared to 2013, before increasing in 2015 and 2016. Cash flow levels for 2014, 2015 and 2016 are projected to be at 40%, 102% and 114% of the 2013 cash flow level. Cash flows decline in 2014 primarily due to the liquidation of the customer advances received in 2013, as well as lower sales and operating income. The increase in cash flows in 2015 and 2016, as compared to 2014, is due to increasing sales and operating income as well as the timing of customer advances on new and follow-on contracts with international customers. Projected cash flows are expected to grow 2% annually beginning in 2017.

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As discussed previously, in addition to the annual goodwill impairment assessment, we review goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount of a reporting unit’s goodwill may not be recoverable. As such, listed below are certain circumstances, depending on their outcomes, that may require us to review goodwill for impairment for one or more of the four reporting units in the table above prior to the next annual assessment (November 30, 2014):

• lower than expected annual sales from our contracts with the DoD, arising from unanticipated changes or reductions to future DoD budgets;

• the ability of the reporting units to achieve: (1) 2014 projected sales, operating income and cash flow and (2) the win-loss experience on 2014 contract re-competitions and new business pursuits;

• the ability of NSS to successfully win re-competes and new business, particularly its largest contract in terms of annual sales, which is scheduled for re-competition in the middle of 2014; and

• the ability of Space & Propulsion Systems to achieve projected award fees over the five year life of the Missile Defense Agency Medium-Range Ballistic Missile target vehicle contract.

Pension Plan and Postretirement Benefit Plan Obligations. The obligations for our pension plans and postretirement benefit plans and the related annual costs of employee benefits are calculated based on several long-term assumptions, including discount rates and expected mortality for employee benefit liabilities, and rates of return on plan assets, and expected annual rates for salary increases for employee participants in the case of pension plans, and expected annual increases in the costs of medical and other health care benefits in the case of postretirement benefit obligations. These long-term assumptions are subject to revision based on changes in interest rates, financial market conditions, expected versus actual returns on plan assets, expected participant mortality and other actuarial assumptions, including future rates of salary increases, benefit formulas and levels, and rates of increase in the costs of benefits. Changes in the assumptions, if significant, could materially affect the amount of annual net periodic benefit costs recognized in our results of operations from one year to the next, the liabilities for the pension plans and postretirement benefit plans, and our annual cash requirements to fund these plans. Our pension expense for 2014 is expected to decrease by $101 million to $80 million from $181 million in 2013. Our discount rate assumption increased from a weighted average rate of 4.15% in 2012 to 5.03% in 2013. The expected decrease in our 2014 pension expense is primarily due to the increase in the weighted average discount rate and the increase in our actual asset return. See “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Pension Plans” for a further discussion of our estimated 2014 pension expense.

Discount rates are used to determine the present value of our pension obligations and also affect the amount of pension expense in any given period. The discount rate assumptions used to determine our pension and postretirement benefit obligations at December 31, 2013 and 2012 were based on a hypothetical AA yield curve represented by a series of annualized individual discount rates. Each bond issue underlying the yield curve is required to have a rating of AA or better by Moody’s Investors Service, Inc. and/or Standard & Poor’s. The resulting discount rate reflects the matching of plan liability cash flows to the yield curve. For a sensitivity analysis projecting the impact of a change in the discount rate on our projected benefit obligation and pension expense, see “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Pension Plans.”

Valuation of Deferred Income Tax Assets and Liabilities. At December 31, 2013, we had deferred tax assets of $549 million, deferred tax liabilities of $1,015 million and a valuation allowance of $22 million. The deferred tax assets include $24 million for loss carryforwards and $7 million for tax credit carryforwards which are subject to various limitations and will expire if unused within their respective carryforward periods. Deferred income taxes are determined separately for each of our tax-paying entities in each tax jurisdiction. The future realization of our deferred income tax assets ultimately depends on our ability to generate sufficient taxable income of the appropriate character (for example, ordinary income or capital gains) within the carryback and carryforward periods available under the tax law and, to a lesser extent, our ability to execute successful tax planning

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strategies. Based on our estimates of the amounts and timing of future taxable income and tax planning strategies, we believe that we will be able to realize our deferred tax assets, except for capital losses and certain U.S. Federal, foreign and state net operating losses. A change in the ability of our operations to continue to generate future taxable income, or our ability to implement desired tax planning strategies, could affect our ability to realize the future tax deductions underlying our deferred tax assets, and require us to provide a valuation allowance against our deferred tax assets. The recognition of a valuation allowance would result in a reduction to net income and, if significant, could have a material impact on our effective tax rate, results of operations and financial position in any given period.

Liabilities for Pending and Threatened Litigation. We are subject to litigation, government investigations, proceedings, claims or assessments and various contingent liabilities incidental to our business or assumed in connection with certain business acquisitions. In accordance with the accounting standards for contingencies, we accrue a charge for a loss contingency when we believe it is both probable that a liability has been incurred, and the amount of the loss can be reasonably estimated. If the loss is within a range of specified amounts, the most likely amount is accrued, and we accrue the minimum amount in the range if no amount within the range represents a better estimate. Generally, we record the loss contingency at the amount we expect to pay to resolve the contingency and the amount is generally not discounted to the present value. Amounts recoverable under insurance contracts are recorded as assets when recovery is deemed probable. Contingencies that might result in a gain are not recognized until realizable. Changes to the amount of the estimated loss, or resolution of one or more contingencies could have a material impact on our results of operations, financial position and cash flows. See Note 20 to our audited consolidated financial statements for further discussion of our litigation matters.

Valuation of Long-Lived Assets. In addition to goodwill and identifiable intangible assets recognized in connection with our business acquisitions, our long-lived assets also include property, plant and equipment, capitalized software development costs for software to be sold, leased or otherwise marketed, and certain long-term investments. As of December 31, 2013, the consolidated carrying values of our property, plant and equipment were $1,042 million, certain long-term investments were $12 million, and capitalized software development costs were $52 million. As of December 31, 2013, the carrying value of our property, plant and equipment represented 7% of total assets and the carrying value of our capitalized software development costs and certain long-term investments each represented less than 1% of total assets. We review the valuation of our long-lived assets whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset exceeds its fair value or net realizable value expected to result from the asset’s use and eventual disposition. We use a variety of factors to assess valuation, depending upon the asset. Long-lived assets are evaluated based upon the expected period the asset will be utilized, and other factors depending on the asset, including estimated future sales, profits and related cash flows, estimated product acceptance and product life cycles, changes in technology and customer demand, and the performance of invested companies and joint ventures. Changes in estimates and judgments on any of these factors could have a material impact on our results of operations and financial position.

Results of Operations

The following information should be read in conjunction with our audited consolidated financial statements. The following information has been adjusted to reflect the spin-off of Engility and related classification of results of operations and cash flows as discontinued operations. Also, our results of operations for the periods presented are affected by our business acquisitions. See Note 5 to our audited consolidated financial statements for a discussion of our business acquisitions.

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Consolidated Results of Operations

The table below provides selected financial data, excluding discontinued operations, for the years ended December 31, 2013, 2012 and 2011.

	Year Ended December 31,				Increase/ (decrease)		Year Ended December 31,				Increase/ (decrease)
(in millions, except per share data)	2013		2012				2012		2011(1)
Net sales	$	12,622	$	13,107		(3.7)%	$	13,107	$	13,154		(0.4)%
Operating income	$	1,212	$	1,308		(7.3)%	$	1,308	$	1,398		(6.4)%
Goodwill impairment charge		—		—		—		—		43		nm
Segment operating income	$	1,212	$	1,308		(7.3)%	$	1,308	$	1,441		(9.2)%
Operating margin		9.6%		10.0%		(40) bpts		10.0%		10.6%		(60)bpts
Goodwill impairment charge		—%		—%		—		—%		0.4%		(40)bpts
Segment operating margin		9.6%		10.0%		(40) bpts		10.0%		11.0%		(100)bpts
Interest expense	$	177	$	184		(3.8)%	$	184	$	204		(9.8)%
Interest and other income, net	$	20	$	11		nm	$	11	$	3		nm
Debt retirement charge	$	—	$	13		nm	$	13	$	35		nm
Effective income tax rate		28.0%		32.1%		(410) bpts		32.1%		25.5%		660bpts
Net income from continuing operations attributable to L-3	$	751	$	756		(0.7)%	$	756	$	857		(11.8)%
Q4 2011 Items		—		—		—		—		(28)		nm
Net income from continuing operations attributable to L-3, excluding Q4 2011 Items	$	751	$	756		(0.7)%	$	756	$	829		(8.8)%
Diluted earnings per share from continuing operations	$	8.24	$	7.74		6.5%	$	7.74	$	8.10		(4.4)%
Q4 2011 Items		—		—		—		—		(0.26)		nm
Diluted earnings per share from continuing operations, excluding Q4 2011 Items	$	8.24	$	7.74		6.5%	$	7.74	$	7.84		(1.3)%
Diluted weighted average common shares outstanding		91.1		97.6		(6.7)%		97.6		105.6		(7.6)%

(1) The year ended December 31, 2011 includes: (1) a tax benefit of $78 million, or $0.74 per diluted share, for a net reversal of amounts previously accrued related to tax years for which the statutes of limitations has expired, (2) a non-cash goodwill impairment charge of $43 million ($42 million after income taxes), or $0.40 per diluted share due to a decline in the estimated fair value of our Marine Services business, and (3) $14 million ($8 million after income taxes), or $0.08 per diluted share for our share of an impairment charge for long-lived assets at an equity method investment. These items are collectively referred to as the Q4 2011 Items.

The company believes that the Q4 2011 Items affect the comparability of the results of operations of the 2012 full year to the results of operations for the 2011 full year. The company also believes that disclosing net income and diluted earnings per share excluding the Q4 2011 Items will allow financial statement users to more easily compare the 2012 full year results to the 2011 full year results. Further, the goodwill impairment charge was included in consolidated operating income, but excluded from segment operating income because the charge was excluded by management for purposes of assessing segment operating performance.

nm – not meaningful

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2013 Compared with 2012

Net Sales: For the year ended December 31, 2013, consolidated net sales of $12.6 billion decreased $485 million, or 4%, compared to the year ended December 31, 2012 as lower sales to the DoD caused by declining budgets, sequestration cuts and the continuing U.S. military drawdown from Afghanistan impacted each segment. Acquired businesses, which are all included in the Electronic Systems segment, added $81 million to net sales in the year ended December 31, 2013. Net sales to international government and commercial customers increased 10%, or $315 million, to $3,436 million in the year ended December 31, 2013, including $74 million from acquired businesses, compared to $3,121 million in the year ended December 31, 2012. Net sales to international and commercial customers, as a percentage of consolidated net sales, increased to 27% for the year ended December 31, 2013 compared to 24% for the year ended December 31, 2012.

Sales from products decreased by $397 million to $7,189 million for the year ended December 31, 2013, compared to $7,586 million for the year ended December 31, 2012. Product sales represented 57% and 58% of consolidated net sales for the years ended December 31, 2013 and 2012, respectively. Sales of products declined for: (1) Broadband Communication Systems primarily due to lower U.S. Army demand for remote video terminals due to the U.S. military drawdown from Afghanistan, and lower volume due to contracts nearing completion and declining demand caused by sequestration and other DoD budget reductions, (2) Space & Power Systems due to reduced deliveries of power devices for commercial satellite communication systems, (3) Tactical Satellite Communications Products mobile and ground-based satellite communication systems for the U.S. military as programs ended, (4) Precision Engagement & Training primarily due to programs for ordnance products ending, and (5) Sensor Systems due to lower volume primarily for airborne electro-optic infrared (EO/IR) turrets for the U.S. Army Persistent Threat Detection System (PTDS) contract due to the U.S. military drawdown from Afghanistan. The decrease in product sales was also due to sales volume declines for Security & Detection Systems. These decreases were partially offset by sales from the recently acquired Link U.K. business and organic sales growth for: (1) Platform Systems due to increased volume for modifications for the U.S. Air Force (USAF) EC-130 aircraft and (2) Warrior Systems due to increased demand for holographic weapon sights for the commercial sporting and recreation markets.

Sales from services, decreased by $88 million to $5,433 million for the year ended December 31, 2013, compared to $5,521 million for the year ended December 31, 2012. Service sales represented 43% and 42% of consolidated net sales for the years ended December 31, 2013 and 2012, respectively. Sales from services decreased due to: (1) lower volume for small ISR aircraft systems due to the U.S. military drawdown from Afghanistan and (2) lower volume for Logistics Solutions, primarily due to the competitive loss of a task order for U.S. Army contract field team support services in Southwest Asia and reduced fleet management services due to the loss of the Joint Primary Aircraft Training Systems (JPATS) contract for the USAF and (3) lower demand for technical support for a U.S. Government agency and information technology (IT) support services for the U.S. Special Operations Command (USSOCOM). See the reportable segment results for additional discussion of our segment sales trends.

Operating income and operating margin: Operating income for the year ended December 31, 2013 of $1,212 million decreased $96 million, or 7%, as compared to the year ended December 31, 2012. Operating margin decreased by 40 basis points to 9.6% for the year ended December 31, 2013, compared to 10.0% for the year ended December 31, 2012. The decrease in operating margin is primarily due to higher production costs and reduced productivity for the Communication Systems segment. Higher pension expense of $11 million ($7 million after income taxes, or $0.08 per diluted share) reduced operating margin by 10 basis points. Additionally, the years ended December 31, 2013 and 2012 included severance charges that reduced operating income. In 2013, the severance charges were $29 million ($18 million after income taxes, or $0.20 per diluted share) compared to $23 million ($14 million after income taxes, or $0.14 per diluted share) for 2012. See the reportable segment results for additional discussion of segment operating margin trends.

Interest expense: Interest expense for the year ended December 31, 2013 declined by $7 million compared to the year ended December, 31, 2012, due to lower outstanding debt, which reduced interest expense by $21 million, partially offset by $14 million of interest expense that was allocated to discontinued operations in 2012.

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Interest and other income: Interest and other income, net, for the year ended December 31, 2013 increased by $9 million primarily due to a $5 million non-cash impairment charge recorded in 2012 for the dissolution of an unconsolidated joint venture and increased interest income accretion related to the net investment in sales-type leases of flight simulator systems.

Effective income tax rate: The effective tax rate for the year ended December 31, 2013 decreased to 28.0% from 32.1% for the same period last year. The decrease is primarily due to tax benefits in the year ended December 31, 2013 of: (1) $33 million ($0.36 per diluted share) for the U.S. Federal research and experimentation tax credit (R&E Credit) retroactively reinstated in 2013, of which $17 million ($0.19 per diluted share) relates to 2012, and (2) $8 million related to deferred tax benefits.

Net income from continuing operations attributable to L-3 and diluted earnings per share from continuing operations: Net income from continuing operations attributable to L-3 in the year ended December 31, 2013 decreased 1% to $751 million compared to the year ended December 31, 2012, and diluted earnings per share (EPS) from continuing operations increased 7% to $8.24 from $7.74.

Diluted weighted average common shares outstanding: Diluted weighted average common shares outstanding for the year ended December 31, 2013 declined by 7% compared to the year ended December 31, 2012 due to repurchases of L-3 common stock in connection with our share repurchase programs authorized by our Board of Directors, partially offset by additional shares issued in connection with various employee stock-based compensation programs and contributions to employee savings plans made in common stock.

2012 Compared with 2011

Net Sales: For the year ended December 31, 2012, consolidated net sales of $13.1 billion decreased by $47 million, or 0.4%, compared to the year ended December 31, 2011. Higher sales from the Aerospace Systems and Communication Systems segments were offset by lower sales from the NSS and Electronic Systems segments. Acquired businesses, which are all included in the Electronic Systems segment, added $196 million to net sales in the year ended December 31, 2012. Net sales to international government and commercial customers grew 15% to $3,121 million for the year ended December 31, 2012 compared to $2,716 million for the year ended December 31, 2011.

Sales from products increased by $37 million to $7,586 million for the year ended December 31, 2012 compared to $7,549 million for the year ended December 31, 2011, representing 58% and 57% of consolidated net sales for the years ended December 31, 2012 and 2011, respectively. The increase in product sales was due to sales from the L-3 KEO and Link U.K. business acquisitions and organic sales growth primarily for: (1) Platform Systems for new contracts, (2) airborne ISR systems, (3) Tactical Satellite Communications Products, and (4) Space & Power Systems. These increases were partially offset by sales volume declines primarily related to Power & Propulsion Systems, Warrior Systems, Broadband Communication Systems, and Marine Systems International.

Sales from services decreased by $84 million to $5,521 million for the year ended December 31, 2012 compared to $5,605 million for the year ended December 31, 2011, representing 42% and 43% of consolidated net sales for the years ended December 31, 2012 and 2011, respectively. Sales from services decreased primarily due to: (1) less demand from the USSOCOM IT support services due to our previous single-award contract converting to several multiple-award contracts, (2) a decline in IT support services for select non-DoD U.S. Government agencies and (3) lower demand for intelligence support services due to the drawdown of U.S. military forces from Iraq. These decreases were partially offset by higher sales primarily due to sales growth primarily from airborne ISR logistics support and fleet management services, networked communications systems and Sensor Systems. See the reportable segment results for additional discussion of our segment sales trends.

Segment operating income and operating margin: Segment operating income for the year ended December 31, 2012 decreased by $133 million, or 9%, compared to the year ended December 31, 2011. Segment operating margin decreased by 100 basis points to 10.0% for the year ended December 31, 2012 compared to 11.0% for the

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year ended December 31, 2011. Higher pension expense of $38 million ($24 million after income tax, or $0.25 per diluted share) reduced segment operating margin by 30 basis points. The remaining decrease in segment operating margin was primarily due to the write-off of unbilled and contract inventory assets in the Aerospace Systems segment, sales mix changes and unfavorable contract performance in the Communication Systems segment, and $9 million of legal fees and inventory write-downs related to security and safety equipment in the NSS segment. See the reportable segment results for additional discussion of segment operating margin trends.

Interest expense: Interest expense declined by $20 million due to lower interest rates on outstanding fixed rate debt, partially offset by higher interest expense allocated to discontinued operations in 2011.

Interest and other income: Interest and other income, net, increased by $8 million for the year ended December 31, 2012, compared to the year ended December 31, 2011 primarily due to a 2011 fourth quarter impairment charge of $14 million for long-lived assets at an equity method investment.

Debt retirement charge: During 2012, we redeemed $500 million of our 6 ³⁄₈% 2015 Notes and recorded related debt retirement charges of $13 million. During 2011, we redeemed $650 million of our 5 ⁷⁄₈% 2015 Notes and $500 million of our 6 ³⁄₈% 2015 Notes and recorded related debt retirement charges of $35 million.

Effective income tax rate: The effective tax rate for the year ended December 31, 2012 increased to 32.1% from 25.5% for the year ended December 31, 2011. Excluding the Q4 2011 Items, the effective tax rate for the year ended December 31, 2011 would have been 31.2%. The increase in the effective tax rate was primarily due to the expiration of the R&E Credit on December 31, 2011. The American Taxpayer Relief Act of 2012, which was enacted on January 2, 2013, retroactively reinstated and extended the R&E Credit for all of 2012 and 2013. As a result, the 2012 impact was recorded in the 2013 first quarter.

Net income from continuing operations attributable to L-3 and diluted earnings per share from continuing operations: Net income from continuing operations attributable to L-3 in the year ended December 31, 2012 decreased 12% to $756 million compared to the year ended December 31, 2011, and diluted EPS from continuing operations decreased to $7.74 from $8.10. Excluding the Q4 2011 Items, net income from continuing operations attributable to L-3 decreased 9% and diluted EPS decreased 1%.

Diluted weighted average common shares outstanding: Diluted weighted average common shares outstanding for the year ended December 31, 2012 declined by 8% compared to the year ended December 31, 2011 due to repurchases of L-3 common stock in connection with our share repurchase programs authorized by our Board of Directors, partially offset by additional shares issued in connection with various employee stock-based compensation programs and contributions to employee savings plans made in common stock.

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Reportable Segment Results of Operations. The table below presents selected data by reportable segment reconciled to consolidated totals. See Note 23 to our audited consolidated financial statements for additional reportable segment data.

	Year Ended December 31,
	2013		2012		2011
	(dollars in millions)
Net sales:(1)
Aerospace Systems	$	4,551	$	4,595	$	4,432
Electronic Systems		4,598		4,627		4,673
Communication Systems		2,178		2,500		2,439
NSS		1,295		1,385		1,610
Consolidated net sales	$	12,622	$	13,107	$	13,154
Operating income:
Aerospace Systems	$	426	$	437	$	451
Electronic Systems		533		569		624
Communication Systems		168		223		265
NSS		85		79		101
Total segment operating income	$	1,212	$	1,308	$	1,441
Goodwill impairment charge		—		—		(43)
Consolidated operating income		1,212		1,308		1,398
Operating margin:
Aerospace Systems		9.4%		9.5%		10.2%
Electronic Systems		11.6%		12.3%		13.4%
Communication Systems		7.7%		8.9%		10.9%
NSS		6.6%		5.7%		6.2%
Total segment operating margin		9.6%		10.0%		11.0%
Goodwill impairment charge		—%		—%		(0.4)%
Consolidated operating margin		9.6%		10.0%		10.6%

⁽¹⁾  Net sales are after intercompany eliminations.

Aerospace Systems

	Year Ended December 31,				Increase/ (decrease)		Year Ended December 31,				Increase/ (decrease)
	2013		2012				2012		2011
	(dollars in millions)
Net sales	$	4,551	$	4,595		(1.0)%	$	4,595	$	4,432		3.7%
Operating income		426		437		(2.5)%		437		451		(3.1)%
Operating margin		9.4%		9.5%		(10) bpts		9.5%		10.2%		(70) bpts

2013 Compared with 2012

Aerospace Systems net sales for the year ended December 31, 2013 decreased by $44 million, or 1%, compared to the year ended December 31, 2012. Sales declines of $66 million for Logistics Solutions and $10 million for Platform Systems were partially offset by a sales increase of $32 million for ISR Systems. The decrease in sales for Logistics Solutions was primarily due to the competitive loss of a task order for U.S. Army contract field team support services in Southwest Asia, which was completed in 2012, reduced fleet management services due to the loss of the JPATS contract for the USAF and lower volume for field maintenance and sustainment services for U.S. Army C-12 aircraft. These decreases were partially offset by increased volume for field maintenance and sustainment services for USAF training aircraft. Platform Systems sales decreased

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primarily due to lower volume for U.S. Navy maritime patrol aircraft and Joint Cargo Aircraft (JCA), as well as reduced deliveries of aircraft cabin assemblies, partially offset by higher volume on USAF EC-130 and international head of state aircraft, and aircraft maintenance for the Canadian Department of National Defence. The increase in sales for ISR Systems was primarily due to $78 million of higher volume on ISR platforms for foreign military customers and $50 million of small ISR aircraft sales to the DoD. These increases were partially offset by $96 million of lower volume primarily for small ISR aircraft systems due to the U.S. military drawdown from Afghanistan.

Aerospace Systems operating income for the year ended December 31, 2013 of $426 million, which included severance charges of $2 million, decreased by $11 million, or 3%, compared to the year ended December 31, 2012. Operating margin decreased by 10 basis points to 9.4%. Operating margin decreased by 60 basis points primarily due to write-offs of unbilled receivables and contract inventory assets related primarily to cost overruns on the U.S. Army C-12 contract and design and test expenses for aerostructures on a new commercial aircraft, which were identified as part of the Aerospace Systems internal review. Higher pension expense of $12 million reduced operating margin by 30 basis points. These decreases were partially offset by 80 basis points primarily due to improved productivity on certain contracts.

2012 Compared with 2011

Aerospace Systems net sales for the year ended December 31, 2012 increased by $163 million, or 4%, compared to the year ended December 31, 2011. Sales increases of $136 million for Platform Systems and $121 million for ISR Systems were partially offset by a decrease of $94 million for Logistics Solutions. The Platform Systems increase was due primarily to volume on new contracts, including the Australia C-27J and international head-of-state aircraft modification contracts and increased scope on the USAF EC-130 aircraft. These increases were partially offset by lower JCA volume for the USAF. The increase in sales for ISR Systems was primarily due to higher demand for airborne ISR systems for U.S. government and international military customers. Logistics Solutions decreased due primarily to the loss of a task order for U.S. Army contract field team support services in Southwest Asia, partially offset by increased demand for field maintenance and sustainment services on a U.S. Army rotary wing aircraft contract that was competitively won in September 2011 and for U.S. Army C-12 aircraft, which began in December 2010.

Aerospace Systems operating income for the year ended December 31, 2012 decreased by $14 million, or 3%, compared to the year ended December 31, 2011. Operating margin decreased by 70 basis points to 9.5%. Operating margin decreased by 60 basis points due to higher pension expense of $27 million and 50 basis points due to the write-off of unbilled receivables, contract inventory assets and the correction of certain accruals, which primarily related to cost overruns on the U.S. Army C-12 contract and were identified as part of the Aerospace Systems internal review. These decreases were partially offset by 40 basis points primarily due to unfavorable contract performance in 2011 for JCA.

Electronic Systems

	Year Ended December 31,				Decrease		Year Ended December 31,				Decrease
	2013		2012				2012		2011
	(dollars in millions)
Net sales	$	4,598	$	4,627		(0.6)%	$	4,627	$	4,673		(1.0)%
Operating income		533		569		(6.3)%		569		624		(8.8)%
Operating margin		11.6%		12.3%		(70) bpts		12.3%		13.4%		(110) bpts

2013 Compared with 2012

Electronic Systems net sales for the year ended December 31, 2013 decreased by $29 million, or 0.6%, compared to the year ended December 31, 2012. Sales declines of: (1) $39 million for Sensor Systems due to lower volume primarily for airborne EO/IR turrets for the U.S. Army PTDS contract due to the U.S. military drawdown from Afghanistan, (2) $38 million for Precision Engagement & Training primarily due to contracts for ordnance products nearing completion, partially offset by an increase in sales for upgrades for F/A-18 flight

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simulator trainers and volume on new commercial aircraft simulation contracts, (3) $35 million for Security & Detection Systems due to lower orders from the Transportation Security Administration caused by U.S. Government sequestration cuts and the completion of certain international contracts, and (4) $23 million for Power & Propulsion Systems due to certain funding constraints for the Missile Defense Agency’s air-launched target programs. These decreases were partially offset by a sales increase of $25 million primarily for Warrior Systems due to increased demand for holographic weapon sights for the commercial sporting and recreation markets. Sales also increased by $81 million primarily due to the Link U.K. and L-3 KEO acquisitions.

Electronic Systems operating income for the year ended December 31, 2013 of $533 million, which included severance charges of $16 million, decreased by $36 million, or 6%, compared to the year ended December 31, 2012. Operating margin decreased by 70 basis points to 11.6%. Sales declines and mix changes reduced operating margin by 70 basis points, sales from acquired businesses reduced operating margin by 20 basis points and higher severance charges reduced operating margin by 10 basis points. These declines were partially offset by improved contract performance across several business areas, primarily Power & Propulsion Systems, which increased operating margin by 30 basis points.

2012 Compared with 2011

Electronic Systems net sales for the year ended December 31, 2012 decreased by $46 million, or 1%, compared to the year ended December 31, 2011. Sales declined: (1) $82 million for Warrior Systems due to reduced U.S. Army requirements for night vision and illumination products, (2) $61 million for Power & Propulsion Systems due to reduced shipments of tactical quiet generators for the U.S. Army, which reduced sales by $92 million, partially offset by an increase of $31 million primarily due to the landing craft air cushion vehicle service life extension program, and (3) $60 million for Marine Systems International due to negative foreign currency translation of $41 million and lower demand for commercial shipbuilding products. These decreases were partially offset by: (1) $125 million for Sensor Systems primarily for the L-3 KEO acquisition, and (2) $32 million for Precision Engagement & Training of which $49 million was from the Link U.K. acquisition and $23 million was primarily due to increased deliveries of U.S. Army rotary wing training systems for the Flight School XXI program, partially offset by lower volume for guidance products of $40 million due to completed contracts.

Electronic Systems operating income for the year ended December 31, 2012 decreased by $55 million, or 9%, compared to the year ended December 31, 2011. Operating margin decreased by 110 basis points to 12.3%. Operating margin declined by 100 basis points primarily due to lower sales for Marine Systems International and Power & Propulsion Systems and 10 basis points due to higher pension expense of $4 million.

Communication Systems

	Year Ended December 31,				Decrease		Year Ended December 31,				Increase/        (decrease)
	2013		2012				2012		2011
	(dollars in millions)
Net sales	$	2,178	$	2,500		(12.9)%	$	2,500	$	2,439		2.5%
Operating income		168		223		(24.7)%		223		265		(15.8)%
Operating margin		7.7%		8.9%		(120) bpts		8.9%		10.9%		(200) bpts

2013 Compared with 2012

Communication Systems net sales for the year ended December 31, 2013 decreased by $322 million, or 13%, compared to the year ended December 31, 2012. Sales decreased $183 million for Broadband Communication Systems, $77 million for Space & Power Systems and $62 million primarily for Tactical Satellite Communications Products. The decrease in sales for Broadband Communication Systems was due to: (1) lower U.S. Army demand for remote video terminals due to the U.S. military drawdown from Afghanistan, (2) lower volume primarily for airborne and ground-based systems and vehicle mounted satellite communication ground stations due to contracts nearing completion and declining demand caused by sequestration and other DoD budget reductions, and (3) lower productivity due to the implementation of new enterprise resource planning (ERP) systems during the 2013 third quarter, which caused sales volume to decline by $45 million. The decrease

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in sales for Space & Power Systems and Tactical Satellite Communications Products was primarily due to reduced deliveries of power devices for commercial satellite communication systems and mobile and ground-based satellite communication systems for the U.S. military as programs ended, respectively.

Communication Systems operating income for the year ended December 31, 2013 of $168 million, which included severance charges of $11 million, decreased by $55 million, or 25%, compared to the year ended December 31, 2012. Operating margin decreased by 120 basis points to 7.7%. Operating margin declined by: (1) 140 basis points primarily due to higher production costs and unfavorable contract performance for Broadband Communication Systems, (2) 50 basis points for higher costs and lower productivity due to the implementation of new ERP systems at Broadband Communication Systems, and (3) 10 basis points due to higher severance charges of $3 million. These decreases were partially offset by 80 basis points primarily due to improved contract performance for Space & Power Systems.

2012 Compared with 2011

Communication Systems net sales for the year ended December 31, 2012 increased by $61 million, or 3%, compared to the year ended December 31, 2011. Sales increased $48 million for Tactical Satellite Communications Products and $36 million primarily for Space & Power Systems. These increases were partially offset by a sales decline of $23 million for Broadband Communication Systems. The increase in sales for Tactical Satellite Communications Products was primarily due to higher deliveries of mobile and ground-based satellite communication systems for the U.S. military. Higher deliveries of power devices for commercial satellite communication systems increased sales for Space & Power Systems. The decrease in sales for Broadband Communication Systems was primarily due to lower volume for: (1) the Hawklink contract due to development and low rate initial production work nearing completion and (2) remote video terminals due to lower U.S. Army demand.

Communication Systems operating income for the year ended December 31, 2012 decreased by $42 million, or 16%, compared to the year ended December 31, 2011. Operating margin decreased by 200 basis points to 8.9%. Operating margin declined by: (1) 90 basis points primarily due to unfavorable contract performance, including higher design and production costs for Broadband Communication Systems, (2) 80 basis points due to sales mix changes, and (3) 30 basis points due to higher pension expense of $7 million.

National Security Solutions (NSS)

	Year Ended December 31,				Increase/        (decrease)		Year Ended December 31,				Decrease
	2013		2012				2012		2011
	(dollars in millions)
Net sales	$	1,295	$	1,385		(6.5)%	$	1,385	$	1,610		(14.0)%
Operating income		85		79		7.6%		79		101		(21.8)%
Operating margin		6.6%		5.7%		90 bpts		5.7%		6.2%		(50) bpts

2013 Compared with 2012

NSS net sales for the year ended December 31, 2013 decreased by $90 million, or 7%, compared to the year ended December 31, 2012 primarily due to lower demand for a technical support contract for a U.S. Government agency due to U.S. Government sequestration cuts, and less demand for USSOCOM IT support services, as our previous single-award contract converted to several multiple-award contracts, which reduced our workshare.

NSS operating income for the year ended December 31, 2013 of $85 million increased by $6 million, or 8%, compared to the year ended December 31, 2012. Operating margin increased by 90 basis points to 6.6%. Operating margin increased by: (1) 70 basis points due to legal fees of $5 million related to a supplier dispute and a $4 million inventory write-down of security and safety equipment in 2012, which did not recur in 2013, (2) 50 basis points due to lower operating costs, and (3) 40 basis points for improved contract performance. These increases were partially offset by 70 basis points primarily due to lower sales and mix changes.

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2012 Compared with 2011

NSS net sales for the year ended December 31, 2012 decreased by $225 million, or 14%, compared to the year ended December 31, 2011. Less demand for USSOCOM IT support services, due to our previous single-award contract converting to several multiple-award contracts, which reduced our work share, lowered sales by $82 million. A decline in IT support services for select non-DoD U.S. Government agencies lowered sales by $93 million comprised of: (1) $38 million due to customer IT spending reductions, and (2) $55 million due to contract losses in 2011 and 2012. Sales also declined by $50 million for intelligence support services due to the drawdown of U.S. military forces in Iraq.

NSS operating income for the year ended December 31, 2012 decreased by $22 million, or 22%, compared to the year ended December 31, 2011. Operating margin decreased by 50 basis points to 5.7%. The decrease in operating margin was due primarily to legal fees of $5 million related to a supplier dispute, which reduced operating margin by 40 basis points, and a $4 million inventory write-down for security and safety equipment, which reduced operating margin by 30 basis points. These decreases were partially offset by reduced overhead costs, which increased operating margin by 20 basis points.

Liquidity and Capital Resources

Anticipated Sources and Uses of Cash Flow

At December 31, 2013, we had total cash and cash equivalents of $500 million. While no amounts of the cash and cash equivalents are considered restricted, $251 million was held by the Company’s foreign subsidiaries. The repatriation of cash held in non-U.S. jurisdictions is subject to local capital requirements, as well as income tax considerations. Our primary source of liquidity is cash flow generated from operations. We generated $1,263 million of cash from operating activities from continuing operations during the year ended December 31, 2013. Significant cash uses during the year ended December 31, 2013 included $800 million to repurchase shares of our common stock, $209 million for capital expenditures, $199 million for dividends and $62 million for business acquisitions.

As of December 31, 2013, we had the availability of substantially all of our $1 billion Amended and Restated Revolving Credit Facility, which expires on February 3, 2017. We currently believe that our cash from operating activities together with our cash on hand, and available borrowings under our Amended and Restated Revolving Credit Facility will be adequate for the foreseeable future to meet our anticipated requirements for working capital, capital expenditures, defined benefit plan contributions, commitments, contingencies, research and development expenditures, business acquisitions (depending on the size), contingent purchase price payments on previous business acquisitions, program and other discretionary investments, interest payments, income tax payments, L-3 Holdings’ dividends and share repurchases.

Our business may not continue to generate cash flow at current levels and, if we are unable to generate sufficient cash flow from operations to service our debt, we may be required to reduce costs and expenses, sell assets, reduce capital expenditures, reduce dividend payments, refinance all or a portion of our existing debt or obtain additional financing. We may not be able complete these initiatives on a timely basis, on satisfactory terms, or at all. Our ability to make scheduled principal payments or to pay interest on or to refinance our indebtedness depends on our future performance and financial results, which, to a certain extent, are subject to general conditions in or affecting the U.S. defense industry and to general economic, political, financial, competitive, legislative and regulatory factors beyond our control.

Balance Sheet

Billed receivables increased by $23 million to $991 million at December 31, 2013 from $968 million at December 31, 2012 due to the timing of billings and collections primarily for airborne ISR Systems and Broadband Communication Systems and $5 million from business acquisitions. These increases were partially offset by a decrease due to lower sales primarily for Tactical Satellite Communications Products and timing of billings and collections for Platform Systems.

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Contracts in process decreased by $79 million to $2,431 million at December 31, 2013 from $2,510 million at December 31, 2012. During the year ended December 31, 2013, contracts in process increased $25 million from the transfer of net property, plant and equipment (PP&E) to inventoried contract costs, primarily due to $21 million for a Company owned aircraft that became held for sale. This increase was offset by a decrease of $104 million comprised of:

• Decreases of $80 million in unbilled contract receivables primarily due to billing and liquidations for deliveries of ISR Systems and Broadband Communication Systems, partially offset by an increase due to sales exceeding billings for Sensor Systems; and

• decreases of $24 million in inventoried contract costs due to the timing of deliveries across several business areas, primarily Precision Engagement & Training.

L-3’s receivables days sales outstanding (DSO) was 71 at December 31, 2013, compared with 70 at December 31, 2012. We calculate our DSO by dividing: (1) our aggregate end of period billed receivables and net unbilled contract receivables, by (2) our trailing 12 month sales adjusted, on a pro forma basis, to include sales from business acquisitions and exclude sales from business divestitures that we completed as of the end of the period, multiplied by the number of calendar days in the trailing 12 month period (365 days at December 31, 2013 and 366 days at December 31, 2012). Our trailing 12 month pro forma sales were $12,657 million at December 31, 2013 and $13,201 million at December 31, 2012. The increase in our DSO was primarily due to a greater decline in our trailing 12 month sales as compared to the decline in our aggregate billed receivables and net unbilled contract receivables.

The increase in current deferred income tax assets was primarily due to compensation and benefit items from a tax accounting method change elected in a prior year.

The decrease in other current assets was primarily due to lower short-term receivables for leased training systems. The increase in PP&E was primarily due to capital expenditures, partially offset by depreciation expense.

Goodwill increased by $20 million to $7,796 million at December 31, 2013 from $7,776 million at December 31, 2012. The table below presents the changes in goodwill by segment.

	Aerospace       Systems		Electronic         Systems		Communication       Systems		NSS		Consolidated         Total
	(in millions)
Balance at December 31, 2012	$	1,770	$	4,046	$	992	$	968	$	7,776
Business acquisition(1)		—		44		—		—		44
Business disposition		—		(2)		—		—		(2)
Foreign currency translation(2)		(19)		(3)		—		—		(22)
Balance at December 31, 2013	$	1,751	$	4,085	$	992	$	968	$	7,796

⁽¹⁾  The increase in goodwill for the Electronics Systems segment is due to the Mustang business acquisition.

⁽²⁾  The changes in goodwill from foreign currency translation adjustments are due to fluctuations in the U.S. dollar and foreign currency exchange rates. The decreases in goodwill presented in the Electronic Systems and Aerospace Systems segments during 2013 were primarily due to the strengthening of the U.S. dollar against the Canadian dollar and Australian dollar, partially offset by the weakening of the U.S. dollar against the Euro and British pound.

The decrease in identifiable intangible assets was primarily due to amortization expense, partially offset by the recognition of customer contractual relationships and technology intangibles for the Mustang business acquisition.

The increase in other assets was primarily due to higher long-term receivables for leased training systems and capitalized software costs.

The fluctuation in accounts payable and accrued expenses was primarily due to the timing of when invoices for purchases from third-party vendors and subcontractors were received and payments were made.

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The decrease in advance payments and billings in excess of costs incurred was primarily due to the liquidation of balances on contracts for Sensor Systems, ISR Systems, Platform Systems and Broadband Communication Systems and $2 million of foreign currency translation adjustments. These decreases were partially offset by the collection of milestone payments for Warrior Systems and performance based billings related to contracts with international customers for Marine & Power Systems.

The increase in long-term deferred income tax liabilities was primarily due to the decrease in the deferred tax asset for pension liabilities (due to the reduction in the pension plans’ unfunded status) and the tax amortization of certain goodwill and other identifiable intangible assets during 2013.

Pension Plans

L-3 maintains defined benefit pension plans covering approximately 25% of its employees at certain businesses. At December 31, 2013, L-3’s projected benefit obligation (PBO), which includes accumulated benefits plus the incremental benefits attributable to projected future salary increases for covered employees, was $2,973 million and exceeded the fair value of L-3’s pension plan assets of $2,403 million by $570 million. At December 31, 2012, L-3’s PBO was $3,222 million and exceeded the fair value of L-3’s pension plan assets of $2,026 million by $1,196 million. The $626 million decrease in our unfunded status was primarily due to: (1) the increase in our weighted average discount rate from 4.15% at December 31, 2012 to 5.03% at December 31, 2013, (2) our 2013 actual pension plan asset return of approximately 20%, which was higher than our weighted average expected long-term rate of return assumption of 8.13%, and (3) 2013 employer pension contributions.

The expected long-term return on plan assets assumption represents the average rate that the Company expects to earn over the long-term on the assets of the Company’s benefit plans, including those from dividends, interest income and capital appreciation. The Company utilizes a third-party consultant to assist in the development of the expected long-term return on plan assets, which is based on expectations regarding future long-term rates of return for the plans’ investment portfolio, with consideration given to the allocation of investments by asset class and historical rates of return for each individual asset class. While we also review historical rates of return on our plan assets, the substantial volatility in any one year can result in historical data that is less indicative of future returns. In reviewing our historical returns, we noted that the average annual return on the Company’s pension plan assets for the 10 year period of 2004 through 2013, net of investment management fees and administrative costs, was 7.50%. However, excluding 2008 during which global financial markets experienced the worst financial crisis since the Great Depression, the average annual return was 11.40%, which is higher than the 8.13% weighted average expected long-term rate of return assumption utilized for the year ended December 31, 2013.

We recorded net actuarial gains of $623 million in the year ended December 31, 2013 primarily due to the increase in our weighted average discount rate as noted above, which is reflected in accumulated other comprehensive loss. Actuarial gains and losses in a period represent the difference between actual and actuarially assumed experience, primarily due to discount rates and pension plan asset returns. Actuarial gains and losses that our pension plans experience are not recognized in pension expense in the year incurred, but rather are recorded as a component of accumulated other comprehensive income (loss). The accumulated gains and losses in excess of a corridor, defined as the greater of 10% of the fair value of a plan’s assets and 10% of its projected benefit obligation, are generally amortized to pension expense in future periods over the estimated average remaining service periods of the covered employees. See Note 21 to our audited consolidated financial statements.

Our pension expense for 2013 was $181 million. We currently expect pension expense for 2014 to decrease $101 million to approximately $80 million primarily due to the increase in our weighted average discount rate as noted above and expected asset returns on higher plan assets following our 2013 actual returns and contributions.

Our pension expense for 2014 may be different from our current expectations when finalized due to a number of factors, including the effect of any future business acquisitions for which we assume liabilities for pension benefits, changes in headcount at our businesses that sponsor pension plans, actual pension plan contributions and changes (if any) to our pension assumptions for 2014, including the discount rate, expected long-term return on plan assets and salary increases.

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Our contributions for 2013 were $105 million and we currently expect to contribute between approximately $97 million and $108 million to our pension plans in 2014. Actual 2014 pension contributions could be affected by changes in the funded status of our pension plans during 2013. A substantial portion of our pension plan contributions for L-3’s businesses that are U.S. Government contractors are recoverable as allowable indirect contract costs at amounts generally equal to the annual pension contributions.

Our projected benefit obligation and annual pension expense are significantly affected by, holding all other assumptions constant, certain actuarial assumptions. The following table illustrates the sensitivity of a change in certain assumptions for our pension plans and resulting increase (decrease) to the 2014 expected pension expense and PBO at December 31, 2013.

	Effect on 2014 Pension Expense		Effect on December 31, 2013 PBO
	(in millions)
25 basis point decrease in discount rate	$	11	$	99
25 basis point increase in discount rate		(9)		(94)
25 basis point decrease in expected return on assets		6		N/A
25 basis point increase in expected return on assets		(6)		N/A

Statement of Cash Flows

The table below provides a summary of our cash flows from operating, investing, and financing activities for the periods indicated.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Net cash from operating activities from continuing operations	$	1,263	$	1,231	$	1,231
Net cash used in investing activities from continuing operations		(261)		(200)		(199)
Net cash used in financing activities from continuing operations		(849)		(1,527)		(1,119)

Operating Activities — Continuing Operations

2013 Compared with 2012. We generated $1,263 million of cash from operating activities during the year ended December 31, 2013, an increase of $32 million compared with $1,231 million generated during the year ended December 31, 2012. The increase was due to $110 million of less cash used for changes in operating assets and liabilities primarily due to lower income tax payments and pension plan contributions. This increase was partially offset by a decrease of $76 million, primarily for lower non-cash expenses due to deferred income taxes, and lower income from continuing operations of $2 million. Deferred income taxes were lower during the year ended December 31, 2013 primarily due to a decline in pension contributions and the related impact on income taxes. The net cash from changes in operating assets and liabilities is further discussed above under “Liquidity and Capital Resources — Balance Sheet.”

2012 Compared with 2011. We generated $1,231 million of cash from operating activities during the year ended December 31, 2012, which was unchanged when compared with $1,231 million generated during the year ended December 31, 2011. Operating cash flow increased $158 million due to more cash generated from changes in operating assets and liabilities primarily for collections of billed receivables and advance payments and billings in excess of costs incurred, partially offset by higher tax payments. This increase was offset by $104 million of lower income from continuing operations and $54 million of lower non-cash expenses primarily for a 2011 non-cash goodwill impairment charge of $43 million that did not recur in 2012. The net cash from changes in operating assets and liabilities is further discussed above under “Liquidity and Capital Resources — Balance Sheet.”

Interest Payments. Our cash from operating activities included interest payments on debt of $171 million for the year ended December 31, 2013, $198 million for the year ended December 31, 2012, and $238 million for the year ended December 31, 2011. Our interest expense also included amortization of deferred debt issuance costs and bond discounts, which are non-cash items.

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Investing Activities — Continuing Operations

During 2013, we used $261 million of cash primarily to: (1) acquire a business discussed under “Business Acquisitions and Divestitures” and (2) pay $209 million for capital expenditures. These cash outflows were partially offset by proceeds of $12 million from dispositions of property, plant and equipment.

During 2012, we used $200 million of cash primarily to: (1) acquire three businesses discussed under “Business Acquisitions and Divestitures” and (2) pay $210 million for capital expenditures. These cash outflows were partially offset by $335 million of cash received from the spin-off of Engility and $20 million of cash received from the dissolution of an unconsolidated joint venture.

During 2011, we used $199 million of cash primarily to: (1) acquire two businesses discussed under “Business Acquisitions and Divestitures” and (2) pay $187 million for capital expenditures.

Financing Activities — Continuing Operations

Debt

At December 31, 2013, total outstanding debt was $3,630 million, comprised of $2,941 million of senior debt and $689 million of CODES, compared to $3,629 million at December 31, 2012, of which $2,940 million was senior debt and $689 million was CODES. At December 31, 2013, we had the availability of substantially all of our $1 billion Amended and Restated Revolving Credit Facility. We also had $634 million of other standby letters of credit at December 31, 2013, that may have been drawn upon in the event that we did not perform on certain of our contractual requirements. There were no borrowings outstanding under our Amended and Restated Revolving Credit Facility at December 31, 2013. At December 31, 2013, our outstanding debt matures between November 15, 2016 and August 1, 2035. See Note 11 to our audited consolidated financial statements for the components of our debt at December 31, 2013.

Debt Issuances

The terms of each of the outstanding Senior Notes issued by L-3 Communications during the year ended December 31, 2011 are presented in the table below. There were no debt issuances during the years ended December 31, 2013 and 2012.

Note	Date of Issuance	Amount       Issued		Discount		Net Cash     Proceeds		Effective Interest Rate		Redemption at Treasury Rate+
		($ in millions)
3.95% Senior Notes due November 15, 2016	November 22, 2011	$	500	$	4	$	491		4.11%		50bps
4.95% Senior Notes due February 15, 2021	February 7, 2011	$	650	$	4	$	639		5.02%		25bps

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Debt Repayments

In connection with the spin-off, Engility made a cash distribution of $335 million to L-3. L-3 Communications used a portion of the proceeds to redeem $250 million of the 6 ³⁄₈% 2015 Notes on July 26, 2012. Also, on October 15, 2012, L-3 Communications redeemed the remaining outstanding $250 million of its 6 ³⁄₈% 2015 Notes. Information on the Senior Subordinated Notes we redeemed during the years ended December 31, 2012 and 2011 is presented in the table below. There were no debt repayments during the year ended December 31, 2013.

Note	Redemption Date		Principal Amount   Redeemed		Debt   Retirement   Charge		Redemption Price   % of Principal
			($ in millions)
6 3⁄8% Senior Subordinated Notes due October 15, 2015		October 15, 2012	$	250	$	5		101.063%
6 3⁄8% Senior Subordinated Notes due October 15, 2015		July 26, 2012	$	250	$	8		102.125%
6 3⁄8% Senior Subordinated Notes due October 15, 2015		December 22, 2011	$	500	$	17		102.125%
5 7⁄8% Senior Subordinated Notes due January 15, 2015		March 9, 2011	$	650	$	18		101.958%

On February 2, 2011, we repurchased approximately $11 million of our CODES as a result of the exercise by the holders of their contractual right to require us to repurchase their CODES. The CODES are subject to redemption at the option of L-3 Holdings, in whole or in part, at a cash redemption price (plus accrued and unpaid interest, including contingent interest and additional interest, if any) equal to 100% of the principal amount of CODES. We may, from time to time, make open market purchases of our outstanding debt securities, including the CODES. Whether or not we repurchase any of our outstanding debt securities, including the CODES, the amount of any such repurchases will vary depending on numerous factors, including, without limitation, the trading price of our debt, other market conditions, our ongoing capital allocation planning, the levels of our cash and debt balances, other demands for cash, such as acquisition activity, and general economic conditions.

Debt Covenants and Other Provisions. The Amended and Restated Revolving Credit Facility and Senior Notes contain financial and/or other restrictive covenants. See Note 11 to our audited consolidated financial statements for a description of our debt and related financial covenants, including cross default provisions. We were in compliance with our financial and other restrictive covenants at December 31, 2013 and 2012.

Under select conditions, including if L-3 Holding’s common stock price is more than 120% (currently $108.29) of the then current conversion price (currently $90.24) for a specified period, the conversion feature of the CODES will require L-3 Holdings, upon conversion, to pay the holders of the CODES the principal amount in cash, and if the settlement amount exceeds the principal amount, the excess will be settled in cash or stock or a combination thereof, at our option. See Note 11 to our audited consolidated financial statements for additional information regarding the CODES, including conditions for conversion. L-3 Holdings’ closing stock price of February 19, 2014 was $113.67 per share.

Guarantees. The borrowings under the Amended and Restated Revolving Credit Facility are fully and unconditionally guaranteed by L-3 Holdings and by substantially all of the material 100% owned domestic subsidiaries of L-3 Communications on an unsecured senior basis. The payment of principal and premium, if any, and interest on the Senior Notes is fully and unconditionally guaranteed, on an unsecured senior basis, jointly and severally, by L-3 Communications’ material wholly-owned domestic subsidiaries that guarantee any of its other indebtedness. The payment of principal and premium, if any, and interest on the CODES is fully and unconditionally guaranteed, on an unsecured senior subordinated basis, jointly and severally, by L-3 Communications and its wholly-owned domestic subsidiaries that guarantee any of its other liabilities.

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Subordination. The guarantees of the Amended and Restated Revolving Credit Facility and the Senior Notes rank senior to the guarantees of the CODES and rank pari passu with each other.

Equity

During 2013 and 2012, L-3 Holdings’ Board of Directors authorized the following quarterly cash dividends:

Date Declared	Record Date	Cash Dividends     Per Share		Date Paid	Total Dividends Paid
					(in millions)
2013
February 5	March 1	$	0.55	March 15	$	50
April 30	May 17	$	0.55	June 17	$	49
June 19	August 19	$	0.55	September 16	$	50
October 22	November 18	$	0.55	December 16	$	48
2012
February 7	March 1	$	0.50	March 15	$	49
April 24	May 17	$	0.50	June 15	$	49
June 26	August 17	$	0.50	September 17	$	48
October 24	November 19	$	0.50	December 17	$	46

In addition to the dividends paid as shown in the table above, the Company also paid $2 million and $3 million of previously accrued dividends related to vested employee stock-based awards in 2013 and 2012, respectively. L-3 Holdings repurchased $800 million, or 8.7 million shares, of its common stock during the year ended December 31, 2013 compared to $872 million, or 12.1 million shares, of its common stock during the year ended December 31, 2012.

L-3 Holdings announced, on February 11, 2014, that its Board of Directors had increased L-3 Holdings’ regular quarterly cash dividend by 9% to $0.60 per share, payable on March 17, 2014, to shareholders of record at the close of business on March 3, 2014.

The number of holders of L-3 Holdings’ common stock, on February 14, 2014, was approximately 27,917. On February 19, 2014, the closing price of L-3 Holdings’ common stock, as reported by the NYSE, was $113.67 per share.

Contractual Obligations

The table below presents our estimated total contractual obligations from our continuing operations at December 31, 2013, including the amounts expected to be paid or settled for each of the periods indicated below.

			Payments due by period
	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
	(in millions)
Contractual Obligations
L-3 Communications long-term debt(1)	$	2,950	$	—	$	500	$	—	$	2,450
L-3 Holdings long-term debt(1)(2)		689		—		—		—		689
Interest payments(3)		1,334		163		325		286		560
Non-cancelable operating leases(4)		548		150		168(5)		120		110
Notes payable and capital lease obligations		25		10		13		1		1
Purchase obligations(6)		2,353		1,822		493		11		27
Other long-term liabilities(7)		282		118(8)		104		25		35
Total(9)	$	8,181	$	2,263	$	1,603	$	443	$	3,872

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⁽¹⁾  Represents principal amount of long-term debt and only includes scheduled principal payments.

⁽²⁾  The CODES are convertible into cash and shares of L-3 Holdings’ common stock based on a conversion rate of 11.0813 shares of L-3 Holdings common stock per one thousand dollars in principal amount of the CODES (equivalent to a current conversion price of $90.24 per share). The conversion feature of the CODES may require L-3 Holdings to settle the principal amount with the holders of the CODES if L-3 Holdings common stock price is more than 120% of the then current conversion price (currently $108.29) for a specified period, and if the settlement amount exceeds the principal amount, the excess will be settled in cash or stock or a combination thereof, at our option. Additionally, holders of the CODES may require L-3 Holdings to repurchase the CODES, in whole or in part, on February 1, 2016, February 1, 2021, February 1, 2026 and February 1, 2031 at a cash repurchase price equal to 100% of the principal amount of the CODES (plus accrued and unpaid interest, if any). See Note 11 to our audited consolidated financial statements for additional information regarding the CODES, including conditions for conversion and contingent interest features. L-3 Holdings stock price on February 19, 2014 was $113.67.

⁽³⁾  Represents expected interest payments on L-3’s long-term debt balance as of December 31, 2013 using the stated interest rate on our fixed rate debt, assuming that current borrowings remain outstanding to the contractual maturity date.

⁽⁴⁾  Non-cancelable operating leases are presented net of estimated sublease rental income.

⁽⁵⁾  Includes the residual value guarantee for two real estate lease agreements, expiring on August 31, 2015, that are accounted for as operating leases. We have the right to exercise options under the lease agreements to renew the leases, to purchase both properties for $28 million or sell both properties on behalf of the lessor. If we elect to sell the properties, we must pay the lessor a residual value guarantee of $23 million. See Note 20 to our audited consolidated financial statements for a further description of these leases.

⁽⁶⁾  Represents open purchase orders at December 31, 2013 for amounts expected to be paid for goods or services that are legally binding.

⁽⁷⁾  Other long-term liabilities primarily consist of workers compensation and deferred compensation for the years ending December 31, 2015 and thereafter and also include pension and postretirement benefit plan contributions that we expect to pay in 2014.

⁽⁸⁾  Our pension and postretirement benefit plan funding policy is generally to contribute in accordance with cost accounting standards that affect government contractors, subject to the Internal Revenue Code and regulations thereon. For 2014, we expect to contribute between $97 million and $108 million to our pension plans and approximately $10 million to our postretirement benefit plans. Due to the current uncertainty of the amounts used to compute our expected pension and postretirement benefit plan funding, we believe it is not practicable to reasonably estimate such future funding for periods in excess of one year and we may decide or be required to contribute more than we expect to our pension and postretirement plans.

⁽⁹⁾  Excludes all income tax obligations, a portion of which represents unrecognized tax benefits in connection with uncertain tax positions taken, or expected to be taken on our income tax returns as of December 31, 2013 since we cannot determine the time period of future tax consequences. For additional information regarding income taxes, see Note 18 to our audited consolidated financial statements.

Off Balance Sheet Arrangements

The table below presents our estimated total contingent commitments and other guarantees at December 31, 2013, including the amounts expected to be paid or settled for each of the periods indicated below.

	Total		Payments due by period
			2014		2015-2016		2017-2018		2019 and thereafter
	(in millions)
Contingent Commitments
Other standby letters of credit(1)	$	634	$	440	$	116	$	66	$	12
Other guarantees(2)		7		—		—		7		—
Contingent commitments for earnout payments on business acquisitions(3)		10		—		10		—		—
Total(4)	$	651	$	440	$	126	$	73	$	12

⁽¹⁾  Represents outstanding letters of credit with financial institutions covering performance and financial guarantees per contractual requirements with certain customers. These letters of credit may be drawn upon in the event of L-3’s nonperformance.

⁽²⁾  Represents the minimum guarantees made by L-3 or the lessee under the purchase option for certain operating leases in which the lease renewal is not exercised (see Note 20 to our audited consolidated financial statements for a description of these guarantees).

⁽³⁾  Represents potential additional contingent purchase payments for business acquisitions that are contingent upon the post-acquisition financial performance or certain other performance conditions of the acquired businesses in accordance with the contractual purchase agreement.

⁽⁴⁾  The total amount does not include residual value guarantees for two real estate lease agreements that are accounted for as operating leases. We have the right to exercise options under the lease agreements to purchase both properties for $28 million on or before August 31, 2015. See Note 20 to our audited consolidated financial statements for a further description of these leases.

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Legal Proceedings and Contingencies

We are engaged in providing products and services under contracts with the U.S. Government and, to a lesser degree, under international government contracts, some of which are funded by the U.S. Government. All such contracts are subject to extensive legal and regulatory requirements, and, periodically, agencies of the U.S. Government investigate whether such contracts were and are being conducted in accordance with these requirements. Under U.S. Government procurement regulations, an indictment by a federal grand jury, or an administrative finding against us as to our present responsibility to be a U.S. Government contractor or subcontractor, could result in the suspension for a period of time from eligibility for awards of new government contracts or task orders or in a loss of export privileges. A conviction, or an administrative finding that satisfies the requisite level of seriousness, could result in debarment from contracting with the federal government for a specified term. We are currently cooperating with the U.S. Government on several investigations, none of which we anticipate will have a material adverse effect on our consolidated financial position, results of operations or cash flows. Also, we have been periodically subject to litigation, government investigations, proceedings, claims or assessments and various contingent liabilities incidental to our business. We accrue for these contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. For a description of our legal proceedings and contingencies, see Note 20 to our audited consolidated financial statements.

We continually assess our obligations with respect to applicable environmental protection laws. While it is difficult to determine the timing and ultimate cost that we will incur to comply with these laws, based upon available internal and external assessments, with respect to those environmental loss contingencies of which we are aware, we believe that even without considering potential insurance recoveries, if any, there are no environmental loss contingencies that, in the aggregate, would be material to our consolidated financial position, results of operations or cash flows.

Derivative Financial Instruments and Other Market Risk

Included in our derivative financial instruments are foreign currency forward contracts. All of our derivative financial instruments that are sensitive to market risk are entered into for purposes other than trading.

Interest Rate Risk. Our Amended and Restated Revolving Credit Facility is subject to variable interest and is therefore sensitive to changes in interest rates. The interest rates on the Senior Notes and CODES are fixed-rate and are not affected by changes in interest rates. Additional data on our debt obligations and our applicable borrowing spreads included in the interest rates we would pay on borrowings under the Amended and Restated Revolving Credit Facility, if any, are provided in Note 11 to our audited consolidated financial statements.

Foreign Currency Exchange Risk. Our U.S. and foreign businesses enter into contracts with customers, subcontractors or vendors that are denominated in currencies other than their functional currencies. To protect the functional currency equivalent cash flows associated with certain of these contracts, we enter into foreign currency forward contracts, which are generally designated and accounted for as cash flow hedges. At December 31, 2013, our foreign currency forward contracts had maturities ranging through 2018, a notional value of $321 million and a corresponding fair value that was an asset of $1 million.

Accounting Standards Issued and Not Yet Implemented

For a discussion of accounting standards issued and not yet implemented, see Note 2 to our audited consolidated financial statements.

Inflation

The effect of inflation on our sales and earnings has not been significant. Although a majority of our sales are made under long-term contracts (revenue arrangements), the selling prices of such contracts, established for deliveries in the future, generally reflect estimated costs to be incurred in these future periods. In addition, some of our contracts provide for price adjustments through cost escalation clauses.

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Forward-Looking Statements

Certain of the matters discussed concerning our operations, cash flows, financial position, economic performance and financial condition, including in particular, the likelihood of our success in developing and expanding our business and the realization of sales from backlog, include forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.

All statements other than historical facts, may be forward-looking statements, such as “may,” “will,” “should,” “likely,” “projects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions are used to identify forward-looking statements. The Company cautions investors that these statements are subject to risks and uncertainties many of which are difficult to predict and generally beyond the Company’s control that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Some of the factors that could cause actual results to differ include, but are not limited to, the following: our dependence on the defense industry; backlog processing and program slips resulting from delayed awards and/or funding from the Department of Defense (DoD) and other major customers; the U.S. Government fiscal situation; changes in DoD budget levels and spending priorities; U.S. Government failure to raise the debt ceiling; our reliance on contracts with a limited number of customers and the possibility of termination of government contracts by unilateral government action or for failure to perform; the extensive legal and regulatory requirements surrounding many of our contracts; our ability to retain our existing business and related contracts; our ability to successfully compete for and win new business; or, identify, acquire and integrate additional businesses; our ability to maintain and improve our operating margin; the availability of government funding and changes in customer requirements for our products and services; our significant amount of debt and the restrictions contained in our debt agreements; our ability to continue to recruit, retain and train our employees; actual future interest rates, volatility and other assumptions used in the determination of pension benefits and equity based compensation, as well as the market performance of benefit plan assets; our collective bargaining agreements, our ability to successfully negotiate contracts with labor unions and our ability to favorably resolve labor disputes should they arise; the business, economic and political conditions in the markets in which we operate; global economic uncertainty; the DoD’s Better Buying Power and other efficiency initiatives; events beyond our control such as acts of terrorism; our ability to perform contracts on schedule; our international operations; our extensive use of fixed-price type revenue arrangements; the rapid change of technology and high level of competition in which our businesses participate; our introduction of new products into commercial markets or our investments in civil and commercial products or companies; the outcome of litigation matters; results of audits by U.S. Government agencies and of on-going governmental investigations; the impact on our business of improper conduct by our employees, agents or business partners; ultimate resolution of contingent matters, claims and investigations relating to acquired businesses, and the impact on the final purchase price allocations; and the fair values of our assets.

In addition, for a discussion of other risks and uncertainties that could impair our results of operations or financial condition, see “Part I — Item 1A — Risk Factors” and Note 20 to our audited consolidated financial statements, in each case included in this Annual Report on Form 10-K for the year ended December 31, 2013.

Readers of this document are cautioned that our forward-looking statements are not guarantees of future performance and the actual results or developments may differ materially from the expectations expressed in the forward-looking statements.

As for the forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent uncertainties of estimates, forecasts and projections and may be better or worse than projected and such differences could be material. Given these uncertainties, you should not place any reliance on these forward-looking statements. These forward-looking statements also represent our estimates and assumptions only as of the date that they were made. We expressly disclaim a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this filing to reflect events or changes in circumstances or changes in expectations or the occurrence of anticipated events.

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Item 7A. Quantitative and Qualitative Disclosures about Market Risk

For data regarding quantitative and qualitative disclosures related to our market risk sensitive financial instruments, see “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Derivative Financial Instruments and Other Market Risk” and Note 15 to our audited consolidated financial statements. See Notes 14 and 16 to our audited consolidated financial statements for the aggregate fair values and notional amounts of our foreign currency forward contracts at December 31, 2013.

Item 8. Financial Statements and Supplementary Data

See our audited consolidated financial statements beginning on page F-1.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934 (“Exchange Act”) related to L-3 Holdings and L-3 Communications is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chairman, President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In connection with the filing of the Form 10-K on February 25, 2014, our Chairman, President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2013. Based upon that evaluation, our Chairman, President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer had concluded that, as of December 31, 2013, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Subsequent to the evaluation made in connection with the filing of the Form 10-K on February 25, 2014, in connection with the internal review of our Aerospace Systems segment and the resulting identified material weaknesses described in Note 3 on page F-15, our Chairman, President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer reevaluated the effectiveness of the design and operation of our disclosure controls and procedures (“DC&P”) as of December 31, 2013. Based upon that evaluation, our Chairman, President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer have concluded that the design and operation of our DC&P were not effective, as of December 31, 2013, to accomplish their objectives. Notwithstanding the material weaknesses described below, management has concluded that the Company’s consolidated financial statements for the periods covered by and included in this Annual Report on Form 10-K/A are fairly stated in all material respects in accordance with generally accepted accounting principles in the United States of America for each of the periods presented herein.

Management’s Report on Internal Control over Financial Reporting (as restated)

As required by the SEC’s rules and regulations for the implementation of Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting (“ICFR”) is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America. Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of L-3, (2) provide reasonable assurance

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that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In connection with the filing of the Form 10-K on February 25, 2014, our management assessed the effectiveness of L-3 Holdings’ and L-3 Communications’ internal control over financial reporting as of December 31, 2013. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (1992) (the “COSO Criteria”). Based on our assessments and those criteria, management had determined that L-3 Holdings and L-3 Communications maintained effective ICFR as of December 31, 2013.

Subsequent to the evaluation made in connection with the filing of the Form 10-K on February 25, 2014, in connection with the internal review of our Aerospace Systems segment and the resulting identified material weaknesses described below, our management reassessed the effectiveness of L-3 Holdings’ and L-3 Communications’ ICFR as of December 31, 2013. Based on our assessments and the COSO Criteria, management determined that L-3 Holdings and L-3 Communications did not maintain effective ICFR as of December 31, 2013.

Description of Material Weaknesses

A material weakness is a deficiency, or a combination of deficiencies, in ICFR, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Based on our assessment following the completion of the internal review of the Aerospace Systems segment discussed in Note 3, on page F-15, management has identified the following material weaknesses in its ICFR as of December 31, 2013.

1. The Company did not maintain an effective control environment at its Aerospace Systems segment with respect to: (a) inadequate execution of existing controls around the annual review and approval of contract (revenue arrangement) estimates, (b) not following established Company accounting policies, controls and procedures, and (c) intentional override of numerous transactional and monitoring internal controls at its Army Sustainment division, with regard to the: (i) valuation of inventories, unbilled contract receivables and billed receivables; (ii) preparation of contract invoices; (iii) preparation, review and approval of contract estimates; (iv) recognition of costs overruns on a fixed-price maintenance and logistics support contract; (v) review and analysis of division quarterly financial statements; (vi) physical counts of inventory; and (vii) preparation, review and approval of journal entries.

2. Company personnel did not perform reviews of certain employee concerns regarding violations of the Company’s accounting policies and ICFR in a sufficient and effective manner, including assigning those matters to the appropriate subject matter experts for resolution, and informing appropriate members of senior management and the audit committee about the nature of the concerns and the scope and results of the reviews.

These material weaknesses resulted in immaterial adjustments of the Company’s billed receivables, unbilled contract receivables, inventories, net sales, cost of sales, income tax expense and net income accounts, as well as earnings per share and related financial statements disclosures. Accordingly, the material weaknesses did not result in any material misstatements of the Company’s financial statements and disclosures for the years ended December 31, 2013, 2012, or 2011. However, these material weaknesses, if not remediated, could result in material misstatements to the Company’s annual financial statements or to the interim consolidated financial statements and related disclosures that would not be prevented or detected.

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The effectiveness of the Company’s ICFR as of December 31, 2013 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report. See page F-2 to our audited consolidated financial statements for their report.

Remediation Plans for Material Weaknesses in Internal Control over Financial Reporting

In response to these identified material weaknesses, our management, with oversight from our audit committee, is dedicating significant resources to improve our ICFR and to address the identified material weaknesses. These efforts are ongoing and are focused on strengthening the Company’s control environment and organizational structure by taking the following actions:

• The Company has terminated four employees at its Aerospace Systems segment and one employee at its Aerospace Systems segment resigned. The Company replaced its Aerospace Systems segment chief financial officer, the Logistics Solutions sector president, the Logistics Solutions sector general counsel, the Army Sustainment division president and the Army Sustainment Division vice president of finance at the time of the misconduct.

• The Company has enhanced and reinforced its quarterly and annual financial statement certification process for the Company’s Aerospace Systems segment and its divisions.

The Company will also improve its policies and procedures by:

• conducting re-training sessions for its financial management at the Aerospace Systems segment and its divisions with regard to the Company’s accounting policies and ICFR for (i) valuation of inventories, unbilled contract receivables and billed receivables; (ii) the preparation of contract invoices; (iii) the preparation, review and approval of contract estimates; (iv) the recognition of incurred costs on fixed-price service contracts; (v) review and analysis of division quarterly financial statements; (vi) physical counts of inventory; and (vii) preparation, review and approval of journal entries. This training will be conducted by senior corporate financial management;

• expanding the testing of the compliance with the Company’s ICFR by the Aerospace Systems segment and its divisions; and

• strengthening the Company’s procedures for the review of employee concerns regarding violations of the Company’s accounting policies and ICFR by designating one or more senior employees that will be responsible for ensuring that such concerns are reviewed in an effective manner, including by (i) when appropriate, assigning these matters to subject matter experts for review and resolution, and (ii) informing the appropriate members of senior management and the audit committee on a timely basis about the nature of the employee concerns and the scope and results of such reviews. These senior employees will report to the Company’s chief executive officer and the audit committee with respect to such employee concerns.

We believe these additional internal controls will be effective in remediating the material weaknesses described above and we will continue to devote significant time and attention to these remedial efforts. However, we do not expect that our ICFR will be considered effective as of December 31, 2014 because we do not expect to complete our testing of remediated controls by such time. As we continue to evaluate and work to improve our ICFR, management may determine to take additional measures to address the material weaknesses or determine to modify the remediation plan described above. Until the remediation steps set forth above are fully implemented, the material weaknesses described above will continue to exist.

Changes in internal control over financial reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the fourth quarter covered by this Annual Report on Form 10-K/A that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The Company posts its Code of Ethics and Business Conduct on the Corporate Governance webpage at its website at http://www.L-3com.com under the link “Code of Ethics and Business Conduct”. The Company’s Code of Ethics and Business Conduct applies to all directors, officers and employees, including our chairman, president and chief executive officer, our senior vice president and chief financial officer, and our corporate controller and principal accounting officer. We will post any amendments to the Code of Ethics and Business Conduct, and any waivers that are required to be disclosed by the rules of either the SEC or the NYSE, on our website within the required periods.

The remaining information called for by Item 10 will be included in the sections captioned “Proposal 1. Election of Directors”, “Continuing Members of the Board of Directors”, “Executives and Certain Other Officers of the Company” and “Section 16(A) Beneficial Ownership Reporting Compliance”, “The Board of Directors and Certain Governance Matters” in the definitive proxy statement (the “Company’s Proxy Statement”) relating to the Company’s 2014 Annual Meeting of Shareholders, to be held on May 6, 2014, and is incorporated herein by reference. L-3 Holdings will file its proxy statement with the SEC pursuant to Regulation 14A within 120 days after the end of the Company’s 2013 fiscal year covered by this Form 10-K.

Item 11. Executive Compensation

The following sections of the Company’s Proxy Statement are incorporated herein by reference: “Compensation Discussion and Analysis”, “Compensation Committee Report”, “Tabular Executive Compensation Disclosure”, “Compensation of Directors” and “Compensation Committee Interlocks and Insider Participation”.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The “Security Ownership of Certain Beneficial Owners”, “Security Ownership of Management”, and “Equity Compensation Plan Information” sections of the Company’s Proxy Statement are incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The “Certain Relationships and Related Transactions” and “The Board of Directors and Certain Governance Matters” sections of the Company’s Proxy Statement are incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The “Independent Registered Public Accounting Firm Fees” section of the Company’s Proxy Statement is incorporated herein by reference.

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PART IV

Item 15. Exhibits, Financial Statement Schedules

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

(a)(1) Financial statements filed as part of this report:

	Page     Number
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2013 and December 31, 2012		F-4
Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011		F-5
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012, and 2011		F-6
Consolidated Statements of Equity for the years ended December 31, 2013, 2012 and 2011		F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011		F-8
Notes to Consolidated Financial Statements		F-9

(a)(2) Financial Statement Schedules

Financial statement schedules are omitted since the required information is either not applicable or is included in our audited consolidated financial statements.

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Exhibits

Exhibit No.		Description of Exhibits
	2.1	Distribution Agreement between L-3 Communications Holdings, Inc. and Engility Holdings, Inc. dated as of July 16, 2012 (incorporated by reference to Exhibit 2.1 to the Registrants’ Quarterly Report on Form 10-Q for the period ended September 28, 2012 (File Nos. 001-14141 and 333-46983)).
	3.1	Amended and Restated Certificate of Incorporation of L-3 Communications Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Registrants’ Current Report on Form 8-K filed on May 2, 2013 (File Nos. 001-14141 and 333-46983)).
	3.2	Amended and Restated By-Laws of L-3 Communications Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Registrants’ Current Report on Form 8-K filed on May 2, 2013 (File Nos. 001-14141 and 333-46983)).
	3.3	Certificate of Incorporation of L-3 Communications Corporation (incorporated by reference to Exhibit 3.1 to L-3 Communications Corporation’s Registration Statement on Form S-4 (File No. 333-31649)).
	3.4	Amended and Restated Bylaws of L-3 Communications Corporation (incorporated by reference to Exhibit 3.2 to the Registrants’ Current Report on Form 8-K filed on December 17, 2007 (File Nos. 001-14141 and 333-46983)).
	4.1	Form of Common Stock Certificate of L-3 Communications Holdings, Inc. (incorporated by reference to Exhibit 4.1 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended June 25, 2010 (File Nos. 001-14141 and 333-46983)).
	4.2	Indenture dated as of July 29, 2005 (CODES Indenture) among L-3 Communications Holdings, Inc., the guarantors named therein and The Bank of New York Mellon (formerly known as The Bank of New York), as Trustee (incorporated by reference to Exhibit 10.70 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 (File Nos. 001-14141 and 333-46983)).
	4.3	Supplemental Indenture dated as of February 3, 2012 among L-3 Communications Holdings, Inc., The Bank of New York Mellon (formerly known as The Bank of New York), as trustee, and the guarantors named therein to the CODES Indenture dated as of July 29, 2005 among L-3 Communications Holdings, Inc., the guarantors named therein and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.5 to the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2011 (File Nos. 001-14141 and 333-46983)).
	4.4	Indenture dated as of October 2, 2009 among L-3 Communications Corporation, the guarantors named therein and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.15 to the Registrants’ Quarterly Report on Form 10-Q for the quarter ended September 25, 2009 (File Nos. 001-14141 and 333-46983)).
	4.5	Supplemental Indenture dated as of February 3, 2012 among L-3 Communications Corporation, The Bank of New York Mellon, as trustee, and the guarantors named therein to the Indenture dated as of October 2, 2009 among L-3 Communications Corporation, the guarantors named therein and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.7 to the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2011 (File Nos. 001-14141 and 333-46983)).
	4.6	Indenture, dated as of May 21, 2010, among L-3 Communications Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the Registrants’ Current Report on Form 8-K dated May 24, 2010 (File Nos. 001-14141 and 333-46983)).
	4.7	First Supplemental Indenture, dated as of May 21, 2010, among L-3 Communications Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.2 to the Registrants’ Current Report on Form 8-K dated May 24, 2010 (File Nos. 001-14141 and 333-46983)).

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Exhibit No.		Description of Exhibits
	4.8	Second Supplemental Indenture, dated as of February 7, 2011, among L-3 Communications Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.2 to the Registrants’ Current Report on Form 8-K dated February 8, 2011 (File Nos. 001-14141 and 333-46983)).
	4.9	Third Supplemental Indenture, dated as of November 22, 2011, among L-3 Communications Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A, as Trustee (incorporated by reference to Exhibit 4.2 to the Registrants’ Current Report on Form 8-K dated November 22, 2011 (File Nos. 001-14141 and 333-46983)).
	4.10	Fourth Supplemental Indenture, dated as of February 3, 2012, among L-3 Communications Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A, as Trustee (incorporated by reference to Exhibit 4.12 to the Registrants’ Annual Report on Form 10-K for the fiscal year ended December 31, 2011 (File Nos. 001-14141 and 333-46983)).
	10.1	Amended and Restated Credit Agreement, dated as of February 3, 2012, among L-3 Communications Corporation, L-3 Communications Holdings, Inc. and certain subsidiaries of the Registrants from time to time party thereto as guarantors, certain lenders from time to time party thereto, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Registrants’ Current Report on Form 8-K dated February 3, 2012 (File Nos. 001-14141 and 333-46983)).
	†10.2	L-3 Communications Holdings, Inc. 1997 Option Plan for Key Employees (incorporated by reference to Exhibit 10.91 to L-3 Communications Holdings, Inc.’s Registration Statement on Form S-1 (File No. 333-46975)).
	†10.3	Form of L-3 Communications Holdings, Inc. 1997 Option Plan for Key Employees Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 10.9 to L-3 Communications Holdings, Inc.’s Registration Statement on Form S-1 (File No. 333-46975)).
	†10.4	L-3 Communications Holdings, Inc. Amended and Restated 1998 Directors Stock Option Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.16 to the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2006 (File Nos. 001-14141 and 333-46983)).
	†10.5	Form of L-3 Communications Holdings, Inc. 1998 Directors Stock Option Plan Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 10.96 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2004 (File Nos. 001-14141 and 333-46983)).
	†10.6	Form of L-3 Communications Holdings, Inc. 1998 Directors Stock Option Plan Nonqualified Stock Option Agreement (2007 Version) (incorporated by reference to Exhibit 10.3 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2008 (File Nos. 001-14141 and 333-46983)).
	†10.7	L-3 Communications Holdings, Inc. Amended and Restated 1999 Long Term Performance Plan (Conformed copy reflecting all amendments through February 11, 2008) (incorporated by reference to Exhibit 10.4 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2008 (File Nos. 001-14141 and 333-46983)).
	†10.8	Form of L-3 Communications Holdings, Inc. 1999 Long Term Performance Plan Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 10.97 of the Registrants’ Quarterly Report on Form 10-Q for the period ended September 30, 2004 (File Nos. 001-14141 and 333-46983)).
	†10.9	Form of L-3 Communications Holdings, Inc. 1999 Long Term Performance Plan Nonqualified Stock Option Agreement (2006 Version) (incorporated by reference to Exhibit 10.64 to the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2006 (File Nos. 001-14141 and 333-46983)).

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Exhibit No.	Description of Exhibits
†*10.10	L-3 Communications Holdings, Inc. 2008 Amended and Restated Long Term Performance Plan.
†10.11	Form of L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Nonqualified Stock Option Agreement (2008 Version) (incorporated by reference to Exhibit 10.2 of the Registrants’ Quarterly Report on Form 10-Q for the period ended June 27, 2008 (File Nos. 001-14141 and 333-46983)).
†10.12	Form of L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Nonqualified Stock Option Agreement (2009 Version) (incorporated by reference to Exhibit 10.1 of the Registrants’ Quarterly Report on Form 10-Q for the period ended June 26, 2009 (File Nos. 001-14141 and 333-46983)).
†10.13	Form of L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Nonqualified Stock Option Agreement (2011 Version) (incorporated by reference to Exhibit 10.12 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2010 (file Nos. 001-14141 and 333-46983)).
†10.14	Form of Amended and Restated L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Nonqualified Stock Option Agreement (2011 and 2012 CEO Version) (incorporated by reference to Exhibit 10.14 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2012 (File Nos. 001-14141 and 333-46983)).
†10.15	Form of Amended and Restated L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Nonqualified Stock Option Agreement (2013 CEO Version) (incorporated by reference to Exhibit 10.4 of the Registrants’ Quarterly Report on Form 10-Q for the period ended March 29, 2013 (File Nos. 001-14141 and 333-46983)).
†10.16	Form of L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Restricted Stock Unit Agreement (2009 Version) (incorporated by reference to Exhibit 10.17 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2008 (File Nos. 001-14141 and 333-46983)).
†10.17	Form of L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Restricted Stock Unit Agreement (2013 CEO Version) (incorporated by reference to Exhibit 10.5 of the Registrants’ Quarterly Report on Form 10-Q for the period ended March 29, 2013 (File Nos. 001-14141 and 333-46983)).
†10.18	Form of L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Restricted Stock Unit Agreement (2013 CEO Direct Report Version) (incorporated by reference to Exhibit 10.6 of the Registrants’ Quarterly Report on Form 10-Q for the period ended March 29, 2013 (File Nos. 001-14141 and 333-46983)).
†10.19	Form of L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Restricted Stock Unit Agreement (Non-Employee Directors Version) (incorporated by reference to Exhibit 10.7 of the Registrants’ Quarterly Report on Form 10-Q for the period ended March 29, 2013 (File Nos. 001-14141 and 333-46983)).
†10.20	Form of L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Performance Unit Agreement (2010 Version) (incorporated by reference to Exhibit 10.17 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2009 (File Nos. 001-14141 and 333-46983)).
†10.21	Form of L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Performance Unit Agreement (2012 Version) (incorporated by reference to Exhibit 10.18 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2011 (File Nos. 001-14141 and 333-46983)).
†10.22	Form of Amended and Restated L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Performance Unit Award Notice (2010 Version) (incorporated by reference to Exhibit 10.18 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2012 (File Nos. 001-14141 and 333-46983)).

80

Exhibit No.	Description of Exhibits
†10.23	Form of Amended and Restated L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Performance Unit Award Notice (2011 Version) (incorporated by reference to Exhibit 10.19 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2012 (File Nos. 001-14141 and 333-46983)).
†10.24	Form of Amended and Restated L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Performance Unit Award Notice (2012 Version) (incorporated by reference to Exhibit 10.20 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2012 (File Nos. 001-14141 and 333-46983)).
†10.25	Form of Amended and Restated L-3 Communications Holdings, Inc. 2008 Long Term Performance Plan Performance Unit Award Notice (2013 Version) (incorporated by reference to Exhibit 10.8 to the Registrants’ Quarterly Report on Form 10-Q for the period ended March 29, 2013 (File Nos. 001-14141 and 333-46983)).
†10.26	L-3 Communications Holdings, Inc. 2012 Cash Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrants’ Quarterly Report on Form 10-Q for the period ended March 30, 2012 (File Nos. 001-14141 and 333-46983)).
†10.27	Form of L-3 Communications Holdings, Inc. 2012 Cash Incentive Plan Performance Cash Award Agreement (2012 version) (incorporated by reference to Exhibit 10.2 of the Registrants’ Quarterly Report on Form 10-Q for the period ended March 30, 2012 (File Nos. 001-14141 and 333-46983)).
†10.28	Form of L-3 Communications Holdings, Inc. 2012 Cash Incentive Plan Performance Cash Award Notice (2012 Version) (incorporated by reference to Exhibit 10.3 of the Registrants’ Quarterly Report on Form 10-Q for the period ended March 30, 2012 (File Nos. 001-14141 and 333-46983)).
†10.29	Form of L-3 Communications Holdings, Inc. 2012 Cash Incentive Plan Performance Cash Award Notice (2013 Version) (incorporated by reference to Exhibit 10.9 of the Registrants’ Quarterly Report on Form 10-Q for the period ended March 29, 2013 (File Nos. 001-14141 and 333-46983)).
†10.30	L-3 Communications Holdings, Inc. Amended and Restated 2008 Directors Stock Incentive Plan (incorporated by reference to Exhibit 10.24 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2012 (File Nos. 001-14141 and 333-46983)).
†10.31	Form of L-3 Communications Holdings, Inc. 2008 Directors Stock Incentive Plan Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.2 of the Registrants’ Quarterly Report on Form 10-Q for the period ended March 27, 2009 (File Nos. 001-14141 and 333-46983)).
†10.32	Global Spin-Off Amendment to Equity Award Agreements dated as of July 18, 2012 (incorporated by reference to Exhibit 10.26 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2012 (File Nos. 001-14141 and 333-46983)).
†10.33	Global Amendment to Non-Employee Director RSU Agreements dated as of April 30, 2013 (incorporated by reference to Exhibit 10.10 of the Registrants’ Quarterly Report on Form 10-Q for the period ended March 29, 2013 (File Nos. 001-14141 and 333-46983)).
†10.34	L-3 Communications Holdings, Inc. Amended and Restated Change in Control Severance Plan (incorporated by reference to Exhibit 10.21 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2008 (File Nos. 001-14141 and 333-46983)).
†10.35	L-3 Communications Corporation Amended and Restated Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.22 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2008 (File Nos. 001-14141 and 333-46983)).

81

Exhibit No.	Description of Exhibits
†10.36	Amendment 2012-2 to the L-3 Communications Corporation Amended and Restated Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.29 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2012 (File Nos. 001-14141 and 333-46983)).
†10.37	L-3 Communications Corporation Deferred Compensation Plan I (incorporated by reference to Exhibit 10.15 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2007 (File Nos. 001-14141 and 333-46983)).
†10.38	Amendment No. 1 to the L-3 Communications Corporation Deferred Compensation Plan I (incorporated by reference to Exhibit 10.16 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2007 (File Nos. 001-14141 and 333-46983)).
†10.39	L-3 Communications Corporation Deferred Compensation Plan II (incorporated by reference to Exhibit 10.25 of the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2008 (File Nos. 001-14141 and 333-46983)).
10.4	Employee Matters Agreement between L-3 Communications Corporation and Engility Corporation dated as of July 16, 2012 (incorporated by reference to Exhibit 10.1 to the Registrants’ Quarterly Report on Form 10-Q for the period ended September 28, 2012 (File Nos. 001-14141 and 333-46983)).
10.41	Tax Matters Agreement between L-3 Communications Holdings, Inc. and Engility Holdings, Inc. dated as of July 16, 2012 (incorporated by reference to Exhibit 10.2 to the Registrants’ Quarterly Report on Form 10-Q for the period ended September 28, 2012 (File Nos. 001-14141 and 333-46983)).
10.42	Transition Services Agreement between L-3 Communications Corporation and Engility Corporation dated as of July 16, 2012 (incorporated by reference to Exhibit 10.3 to the Registrants’ Quarterly Report on Form 10-Q for the period ended September 28, 2012 (File Nos. 001-14141 and 333-46983)).
+10.43	Master Supply Agreement between L-3 Communications Corporation (as Seller) and Engility Corporation (as Buyer) dated as of July 16, 2012 (incorporated by reference to Exhibit 10.4 to the Registrants’ Quarterly Report on Form 10-Q for the period ended September 28, 2012 (File Nos. 001-14141 and 333-46983)).
+10.44	Master Supply Agreement between L-3 Communications Corporation (as Buyer) and Engility Corporation (as Seller) dated as of July 16, 2012 (incorporated by reference to Exhibit 10.5 to the Registrants’ Quarterly Report on Form 10-Q for the period ended September 28, 2012 (File Nos. 001-14141 and 333-46983)).
**11	L-3 Communications Holdings, Inc. Computation of Basic Earnings Per Share and Diluted Earnings Per Common Share.
***12	Ratio of Earnings to Fixed Charges.
*21	Subsidiaries of the Registrant.
***23	Consent of PricewaterhouseCoopers LLP.
***31.1	Certification of Chairman, President and Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
***31.2	Certification of Senior Vice President and Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
***32	Section 1350 Certification
****101.INS	XBRL Instance Document
****101.SCH	XBRL Taxonomy Extension Schema Document
****101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
****101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
****101.LAB	XBRL Taxonomy Extension Label Linkbase Document
****101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

82

* Filed with the Registrants’ original Form 10-K for the year ended December 31, 2013 (File Nos. 001-14140 and 333-46983) filed on February 25, 2014.

** The information required in this exhibit is presented in Note 17 to the consolidated financial statements as of December 31, 2013 in accordance with the provisions of ASC 260, Earnings Per Share.

*** Filed herewith.

**** Filed electronically with this report.

† Represents management contract, compensatory plan or arrangement in which directors and/or executive officers are entitled to participate.

+ Pursuant to a request for confidential treatment, portions of these exhibits have been redacted from the publicly filed document and have been furnished separately to the Securities and Exchange Commission as required by Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

83

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.

L-3 COMMUNICATIONS HOLDINGS, INC.

L-3 COMMUNICATIONS CORPORATION

By:  /s/    RALPH G. D’AMBROSIO                         

Title: Senior Vice President and Chief Financial Officer

Date: October 10, 2014

84

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements as of December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011.

	Page       No.
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2013 and December 31, 2012		F-4
Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011		F-5
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012, and 2011		F-6
Consolidated Statements of Equity for the years ended December 31, 2013, 2012 and 2011		F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011		F-8
Notes to Consolidated Financial Statements		F-9

F-1

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of L-3 Communications Holdings, Inc. and L-3 Communications Corporation:

In our opinion, the consolidated financial statements listed in the accompanying index appearing on page F-1 present fairly, in all material respects, the financial positions of L-3 Communications Holdings, Inc. and L-3 Communications Corporation and their subsidiaries (collectively, the “Company”) at December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. Management and we previously concluded that the Company maintained effective internal control over financial reporting as of December 31, 2013. However, management has subsequently determined that material weaknesses in internal control over financial reporting related to (1) the Company did not maintain an effective control environment at its Aerospace Systems segment with respect to: (a) inadequate execution of existing controls around the annual review and approval of contract (revenue arrangement) estimates, (b) not following established Company accounting policies, controls and procedures, and (c) intentional override of numerous transactional and monitoring internal controls at its Army Sustainment division; and (2) Company personnel did not perform reviews of certain employee concerns regarding violations of the Company’s accounting policies and internal control over financial reporting in a sufficient and effective manner, including assigning those matters to the appropriate subject matter experts for resolution, and informing appropriate members of senior management and the audit committee about the nature of the concerns and the scope and results of the reviews which existed as of that date. Accordingly, management’s report has been restated and our present opinion on the internal control over financial reporting of L-3 Communications Holdings, Inc. and of L-3 Communications Corporation, as presented herein, are different from that expressed in our previous report. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) because material weaknesses in internal control over financial reporting related to (1) the Company did not maintain an effective control environment at its Aerospace Systems segment with respect to: (a) inadequate execution of existing controls around the annual review and approval of contract (revenue arrangement) estimates, (b) not following established Company accounting policies, controls and procedures, and (c) intentional override of numerous transactional and monitoring internal controls at its Army Sustainment division; and (2) Company personnel did not perform reviews of certain employee concerns regarding violations of the Company’s accounting policies and internal control over financial reporting in a sufficient and effective manner, including assigning those matters to the appropriate subject matter experts for resolution, and informing appropriate members of senior management and the audit committee about the nature of the concerns and the scope and results of the reviews which existed as of that date. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses referred to above are described in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audits of the 2013 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements. The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in management’s reports referred to above. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the

F-2

financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP

New York, New York

February 25, 2014, except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of the reportable business segment realignment in Notes 1, 5, 8, 23, 24, and 26, as to which the date is May 1, 2014, and except for the effects of the revision discussed in Note 3 to the consolidated financial statements and the matter described in the fourth paragraph of Management’s Report on Internal Control Over Financial Reporting, as to which the date is October 10, 2014

F-3

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

	December 31,
	2013		2012
ASSETS
Current assets:
Cash and cash equivalents	$	500	$	349
Billed receivables, net of allowances of $26 in 2013 and $33 in 2012		991		968
Contracts in process		2,431		2,510
Inventories		359		358
Deferred income taxes		147		113
Other current assets		166		186
Total current assets		4,594		4,484
Property, plant and equipment, net		1,042		1,023
Goodwill		7,796		7,776
Identifiable intangible assets		285		314
Deferred debt issue costs		24		29
Other assets		247		174
Total assets	$	13,988	$	13,800
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable, trade	$	541	$	505
Accrued employment costs		545		555
Accrued expenses		458		469
Advance payments and billings in excess of costs incurred		576		621
Income taxes		31		21
Other current liabilities		383		392
Total current liabilities		2,534		2,563
Pension and postretirement benefits		727		1,360
Deferred income taxes		635		328
Other liabilities		406		393
Long-term debt		3,630		3,629
Total liabilities		7,932		8,273
Commitments and contingencies (see Note 20)
Equity:
L-3 shareholders’ equity:
L-3 Communications Holdings, Inc.’s common stock: $.01 par value; 300,000,000 shares authorized, 85,828,485 shares outstanding at December 31, 2013 and 90,433,743 shares outstanding at December 31, 2012 (L-3 Communications Corporation’s common stock: $.01 par value, 100 shares authorized, issued and outstanding)		5,653		5,314
L-3 Communications Holdings, Inc.’s treasury stock (at cost), 66,118,406 shares at December 31, 2013 and 57,418,645 shares at December 31, 2012		(5,288)		(4,488)
Retained earnings		5,726		5,175
Accumulated other comprehensive loss		(110)		(550)
Total L-3 shareholders’ equity		5,981		5,451
Noncontrolling interests		75		76
Total equity		6,056		5,527
Total liabilities and equity	$	13,988	$	13,800

See notes to consolidated financial statements.

F-4

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

	Year Ended December 31,
	2013		2012		2011
Net sales:
Products	$	7,189	$	7,586	$	7,549
Services		5,433		5,521		5,605
Total net sales		12,622		13,107		13,154
Cost of sales:
Products		(6,409)		(6,782)		(6,666)
Services		(5,001)		(5,017)		(5,047)
Total cost of sales		(11,410)		(11,799)		(11,713)
Impairment charge		—		—		(43)
Operating income		1,212		1,308		1,398
Interest expense		(177)		(184)		(204)
Interest and other income, net		20		11		3
Debt retirement charge		—		(13)		(35)
Income from continuing operations before income taxes		1,055		1,122		1,162
Provision for income taxes		(295)		(360)		(296)
Income from continuing operations		760		762		866
Income from discontinued operations, net of income tax		—		32		104
Net income	$	760	$	794	$	970
Net income attributable to noncontrolling interests		(9)		(10)		(12)
Net income attributable to L-3	$	751	$	784	$	958
Net income allocable to participating securities		—		—		(2)
Net income allocable to L-3 Holdings’ common shareholders	$	751	$	784	$	956
Basic earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.40	$	7.85	$	8.19
Discontinued operations		—		0.29		0.97
Basic earnings per share	$	8.40	$	8.14	$	9.16
Diluted earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.24	$	7.74	$	8.10
Discontinued operations		—		0.29		0.95
Diluted earnings per share	$	8.24	$	8.03	$	9.05
Cash dividends paid per common share	$	2.20	$	2.00	$	1.80
L-3 Holdings’ weighted average common shares outstanding:
Basic		89.4		96.3		104.4
Diluted		91.1		97.6		105.6

See notes to consolidated financial statements.

F-5

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31, 2013, 2012 and 2011

(in millions)

	Year Ended December 31,
	2013		2012		2011
Net income	$	760	$	794	$	970
Other comprehensive (loss) income:
Foreign currency translation adjustments		(25)		34		(28)
Unrealized (losses) gains on hedging instruments(1)		(2)		3		(10)
Pension and postretirement benefit plans:
Amortization of net loss and prior service cost previously recognized(2)		53		42		30
Net prior service (costs) credit arising during the period(3)		(9)		3		(1)
Net gain (loss) arising during the period(4)		423		(178)		(189)
Net change in pension and postretirement benefit plans		467		(133)		(160)
Total other comprehensive gain (loss)		440		(96)		(198)
Comprehensive income		1,200		698		772
Comprehensive income attributable to noncontrolling interests		(9)		(10)		(12)
Comprehensive income attributable to L-3	$	1,191	$	688	$	760

⁽¹⁾  Net of income tax benefits of $3 million in 2013, income taxes of $2 million in 2012 and income tax benefits of $7 million in 2011

⁽²⁾  Net of income taxes of $30 million in 2013, $26 million in 2012 and $18 million in 2011

⁽³⁾  Net of income tax benefits of $5 million in 2013, income taxes of $2 million in 2012 and income tax benefits of $1 million in 2011

⁽⁴⁾  Net of income taxes of $243 million in 2013 and income tax benefits of $105 million in 2012 and $87 million in 2011

See notes to consolidated financial statements.

F-6

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

For the Years Ended December 31, 2013, 2012 and 2011

(in millions, except per share data)

	L-3 Holdings’ Common Stock				Additional Paid-in Capital		Treasury Stock		Retained   Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity
	Shares   Outstanding		Par   Value
Balance at December 31, 2010		108.6	$	1	$	4,800	$	(2,658)	$	4,884	$	(256)	$	91	$	6,862
Net income										958				12		970
Other comprehensive loss												(198)				(198)
Distributions to noncontrolling interests														(11)		(11)
Cash dividends paid on common stock ($1.80 per share)										(188)						(188)
Shares issued:
Employee savings plans		2.1				137										137
Exercise of stock options		0.4				18										18
Employee stock purchase plan		0.9				46										46
Stock-based compensation expense						64										64
Treasury stock purchased		(13.3)						(958)								(958)
Other		0.3				(2)				(4)				(3)		(9)
Balance at December 31, 2011		99.0		1		5,063		(3,616)		5,650		(454)		89		6,733
Net income										784				10		794
Other comprehensive loss												(96)				(96)
Distributions to noncontrolling interests														(10)		(10)
Cash dividends paid on common stock ($2.00 per share)										(192)						(192)
Shares issued:
Employee savings plans		2.1				141										141
Exercise of stock options		0.4				19										19
Employee stock purchase plan		0.7				39										39
Stock-based compensation expense						60										60
Contribution received from the spin-off of Engility										335						335
Spin-off of Engility										(1,398)				(13)		(1,411)
Treasury stock purchased		(12.1)						(872)								(872)
Other		0.3				(9)				(4)						(13)
Balance at December 31, 2012		90.4		1		5,313		(4,488)		5,175		(550)		76		5,527
Net income										751				9		760
Other comprehensive gain												440				440
Distributions to noncontrolling interests														(10)		(10)
Cash dividends paid on common stock ($2.20 per share)										(197)						(197)
Shares issued:
Employee savings plans		1.5				121										121
Exercise of stock options		1.8				128										128
Employee stock purchase plan		0.5				36										36
Stock-based compensation expense						59										59
Treasury stock purchased		(8.7)						(800)								(800)
Other		0.3				(5)				(3)						(8)
Balance at December 31, 2013		85.8	$	1	$	5,652	$	(5,288)	$	5,726	$	(110)	$	75	$	6,056

See notes to consolidated financial statements.

F-7

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

	Year Ended December 31,
	2013		2012		2011
Operating activities:
Net income	$	760	$	794	$	970
Income from discontinued operations, net of tax		—		(32)		(104)
Income from continuing operations		760		762		866
Depreciation of property, plant and equipment		166		170		167
Amortization of intangibles and other assets		48		58		63
Deferred income tax provision		42		97		123
Stock-based employee compensation expense		59		59		57
Contributions to employee savings plans in L-3 Holdings’ common stock		114		125		113
Amortization of pension and postretirement benefit plans net loss and prior service cost		83		68		48
Amortization of bond discounts and deferred debt issue costs (included in interest expense)		6		7		13
Goodwill impairment charge		—		—		43
Equity in losses of unconsolidated subsidiaries		—		3		12
Other non-cash items		2		9		11
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables		(18)		147		(13)
Contracts in process		104		(67)		(110)
Inventories		2		(35)		(14)
Other assets		(88)		8		(9)
Accounts payable, trade		34		92		(35)
Accrued employment costs		(5)		(10)		(23)
Accrued expenses		(5)		(100)		68
Advance payments and billings in excess of costs incurred		(44)		37		(39)
Income taxes		31		(47)		(16)
Excess income tax benefits related to share-based payment arrangements		(4)		(3)		(2)
Other current liabilities		(4)		(46)		(2)
Pension and postretirement benefits		14		(64)		(83)
All other operating activities		(34)		(39)		(7)
Net cash from operating activities from continuing operations		1,263		1,231		1,231
Investing activities:
Contribution received from the spin-off of Engility		—		335		—
Business acquisitions, net of cash acquired		(62)		(348)		(20)
Proceeds from sale of a business		4		5		1
Capital expenditures		(209)		(210)		(187)
Dispositions of property, plant and equipment		12		5		6
Cash from equity investees		—		20		—
Other investing activities		(6)		(7)		1
Net cash used in investing activities from continuing operations		(261)		(200)		(199)
Financing activities:
Proceeds from sale of senior notes		—		—		1,143
Redemption of senior subordinated notes		—		(500)		(1,150)
Redemption of CODES		—		—		(11)
Borrowings under revolving credit facility		1,893		596		625
Repayment of borrowings under revolving credit facility		(1,893)		(596)		(625)
Common stock repurchased		(800)		(872)		(958)
Dividends paid on L-3 Holdings’ common stock		(199)		(195)		(188)
Proceeds from exercise of stock options		128		19		22
Proceeds from employee stock purchase plan		36		39		46
Debt issue costs		—		(6)		(11)
Excess income tax benefits related to share-based payment arrangements		4		3		2
Other financing activities		(18)		(15)		(14)
Net cash used in financing activities from continuing operations		(849)		(1,527)		(1,119)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(2)		7		(4)
Cash from (used in) discontinued operations:
Operating activities		—		75		253
Investing activities		—		—		(4)
Financing activities		—		(1)		(1)
Cash from discontinued operations		—		74		248
Net (decrease) increase in cash and cash equivalents		151		(415)		157
Cash and cash equivalents, beginning of the year		349		764		607
Cash and cash equivalents, end of the year	$	500	$	349	$	764

See notes to consolidated financial statements.

F-8

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business

L-3 Communications Holdings, Inc. derives all of its operating income and cash flows from its wholly-owned subsidiary, L-3 Communications Corporation (L-3 Communications). L-3 Communications Holdings, Inc. (L-3 Holdings and, together with its subsidiaries, referred to herein as L-3 or the Company) is a prime contractor in aerospace systems and national security solutions. L-3 is also a leading provider of a broad range of communication and electronic systems and products used on military and commercial platforms. The Company’s customers include the United States (U.S.) Department of Defense (DoD) and its prime contractors, U.S. Government intelligence agencies, the U.S. Department of Homeland Security (DHS), U.S. Department of State (DoS), allied international governments, and domestic and international commercial customers.

In the first quarter of 2014, the Company completed a realignment of its segments to better align its organizational structure with customer priorities and increase operational efficiencies. As a result of the realignment, L-3’s structure consists of four segments: (1) Aerospace Systems, (2) Electronic Systems, (3) Communication Systems, and (4) National Security Solutions (NSS). The audited consolidated financial statements have been recast for this segment structure. Aerospace Systems delivers integrated solutions for the global Intelligence, Surveillance and Reconnaissance (ISR) market and provides modernization, upgrade, sustainment, and maintenance and logistics support for a wide variety of aircraft and ground systems. Electronic Systems provides a broad range of components, products, subsystems, systems, and related services for military and commercial customers in several niche markets across several business areas. These business areas include precision engagement & training, power & propulsion systems, sensor systems, marine systems international, aviation products, warrior systems and security & detection. Communication Systems delivers products and services for the global communications market, specializing in strategic and tactical airborne, space, ground and sea-based communication systems. NSS provides cybersecurity solutions, high-performance computing, enterprise information technology (IT) services, analytics and intelligence analysis to the DoD, U.S. Government intelligence agencies, federal civilian agencies and allied international governments. Financial information with respect to each of our segments is included in Note 23 to our audited consolidated financial statements.

2. Summary of Significant Accounting Policies

Basis of Presentation: The accompanying financial statements comprise the consolidated financial statements of L-3 Holdings and L-3 Communications. L-3 Holdings’ only asset is its investment in the common stock of L-3 Communications, its wholly-owned subsidiary, and its only obligations are: (1) the 3% Convertible Contingent Debt Securities (CODES) due 2035, which were issued by L-3 Holdings on July 29, 2005, (2) its guarantee of borrowings under the Amended and Restated Revolving Credit Facility of L-3 Communications and (3) its guarantee of other contractual obligations of L-3 Communications and its subsidiaries. L-3 Holdings’ obligations relating to the CODES have been jointly, severally, fully and unconditionally guaranteed by L-3 Communications and certain of its wholly-owned domestic subsidiaries. Accordingly, such debt has been reflected as debt of L-3 Communications in its consolidated financial statements in accordance with the accounting standards for pushdown accounting. All issuances of and conversions into L-3 Holdings’ equity securities, including grants of stock options, restricted stock, restricted stock units and performance units by L-3 Holdings to employees and directors of L-3 Communications and its subsidiaries, have been reflected in the consolidated financial statements of L-3 Communications. As a result, the consolidated financial positions, results of operations and cash flows of L-3 Holdings and L-3 Communications are substantially the same. See Note 26 for additional information regarding the audited financial information of L-3 Communications and its subsidiaries.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the

F-9

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

financial statements and the reported amounts of sales and costs of sales during the reporting period. The most significant of these estimates and assumptions relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, market values for inventories reported at lower of cost or market, pension and post-retirement benefit obligations, stock-based employee compensation expense, income taxes, including the valuations of deferred tax assets, litigation reserves and environmental obligations, accrued product warranty costs, and the recoverability, useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill. Changes in estimates are reflected in the periods during which they become known. Actual amounts will differ from these estimates and could differ materially.

The audited condensed consolidated balance sheet as of December 31, 2012 has been revised for the final purchase price allocation of the Link Simulation & Training U.K. Limited (Link U.K.) business acquisition. Link U.K is the commercial aircraft simulation business acquired from Thales Group effective August 6, 2012. During 2013, the Company completed the purchase price allocation, which was based on the final appraisals and valuations of the acquired assets and liabilities and estimated final closing date net working capital. The L-3 audited condensed consolidated balance sheet as of December 31, 2012 has been adjusted in accordance with the accounting standards for business combinations. See Note 5 for additional information regarding the final purchase price allocation for Link U.K. and resulting adjustments.

Certain other reclassifications have been made to conform prior-year amounts to the current-year presentation.

Principles of Consolidation: The consolidated financial statements of the Company include all wholly-owned and majority-owned subsidiaries. All significant intercompany transactions are eliminated in consolidation. Investments in equity securities, joint ventures and limited liability corporations over which the Company has significant influence but does not have voting control are accounted for using the equity method. Investments over which the Company does not have significant influence are accounted for using the cost method.

Revenue Recognition: Substantially all of the Company’s sales are generated from written contractual (revenue) arrangements. The sales price for the Company’s revenue arrangements are either fixed-price, cost-plus or time-and-material type. Depending on the contractual scope of work, the Company utilizes either contract accounting standards or accounting standards for revenue arrangements with commercial customers to account for these contracts. Approximately 47% of the Company’s 2013 sales were accounted for under contract accounting standards, of which approximately 38% were fixed-price type contracts and approximately 9% were cost-plus type contracts. For contracts that are accounted for under contract accounting standards, sales and profits are recognized based on: (1) a Percentage-of-Completion (POC) method of accounting (fixed-price contracts), (2) allowable costs incurred plus the estimated profit on those costs (cost-plus contracts), or (3) direct labor hours expended multiplied by the contractual fixed rate per hour plus incurred costs for material (time-and-material contracts). Aggregate net changes in contract estimates increased operating income by $114 million, or 9%, for the year ended December 31, 2013, $72 million, or 6%, for the year ended December 31, 2012, and $73 million, or 5%, for the year ended December 31, 2011.

Sales and profits on fixed-price type contracts covered by contract accounting standards are substantially recognized using POC methods of accounting. Sales and profits on fixed-price production contracts under which units are produced and delivered in a continuous or sequential process are recorded as units are delivered based on their contractual selling prices (the “units-of-delivery” method). Sales and profits on each fixed-price production contract under which units are not produced and delivered in a continuous or sequential process, or under which a relatively few number of units are produced, are recorded based on the ratio of actual cumulative costs incurred to the total estimated costs at completion of the contract, multiplied by the total estimated contract revenue, less cumulative sales recognized in prior periods (the “cost-to-cost” method). Under both POC methods of accounting, a single estimated total profit margin is used to recognize profit for each contract over its entire

F-10

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

period of performance, which can exceed one year. Losses on contracts are recognized in the period in which they become evident. The impact of revisions of contract estimates, which may result from contract modifications, performance or other reasons, are recognized on a cumulative catch-up basis in the period in which the revisions are made.

Sales and profits on cost-plus type contracts covered by contract accounting standards are recognized as allowable costs are incurred on the contract, at an amount equal to the allowable costs plus the estimated profit on those costs. The estimated profit on a cost-plus type contract is fixed or variable based on the contractual fee arrangement. Incentive and award fees are the primary variable fee contractual arrangements. Incentive and award fees on cost-plus type contracts are included as an element of total estimated contract revenues and are recorded as sales when a basis exists for the reasonable prediction of performance in relation to established contractual targets and the Company is able to make reasonably dependable estimates for them.

Sales and profits on time-and-material type contracts are recognized on the basis of direct labor hours expended multiplied by the contractual fixed rate per hour, plus the actual costs of materials and other direct non-labor costs.

Sales on arrangements for (1) fixed-price type contracts that require us to perform services that are not related to the production of tangible assets (Fixed-Price Service Contracts) and (2) certain commercial customers are recognized in accordance with accounting standards for revenue arrangements with commercial customers. Sales for the Company’s businesses whose customers are primarily commercial business enterprises are substantially all generated from single element revenue arrangements. Sales are recognized when there is persuasive evidence of an arrangement, delivery has occurred or services have been performed, the selling price to the buyer is fixed or determinable and collectability is reasonably assured. Sales for Fixed-Price Service Contracts that do not contain measurable units of work performed are generally recognized on a straight-line basis over the contractual service period, unless evidence suggests that the revenue is earned, or obligations fulfilled, in a different manner. Sales for Fixed-Price Service Contracts that contain measurable units of work performed are generally recognized when the units of work are completed. Sales and profit on cost-plus and time-and-material type contracts to perform services are recognized in the same manner as those within the scope of contract accounting standards, except for incentive and award fees. Cost-based incentive fees are recognized when they are realizable in the amount that would be due under the contractual termination provisions as if the contract was terminated. Performance based incentive fees and award fees are recorded as sales when awarded by the customer.

For contracts with multiple deliverables, the Company applies the separation and allocation guidance under the accounting standard for revenue arrangements with multiple deliverables, unless all the deliverables are covered by contract accounting standards, in which case the Company applies the separation and allocation guidance under contract accounting standards. Revenue arrangements with multiple deliverables are evaluated to determine if the deliverables should be separated into more than one unit of accounting. The Company recognizes revenue for each unit of accounting based on the revenue recognition policies discussed above.

Sales and profit in connection with contracts to provide services to the U.S. Government that contain collection risk because the contracts are incrementally funded and subject to the availability of funds appropriated, are deferred until a contract modification is obtained, indicating that adequate funds are available to the contract or task order.

Research and Development: Independent research and development (IRAD) costs sponsored by the Company and bid and proposal (B&P) costs relate to both U.S. Government contracts and those for international and commercial customers. The IRAD and B&P costs for certain of the Company’s businesses that are U.S. Government contractors are recoverable indirect contract costs that are allocated to U.S. Government

F-11

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

contracts in accordance with U.S. Government procurement regulations, and are specifically excluded from research and development accounting standards. The Company includes the recoverable IRAD and B&P costs allocated to U.S. Government contracts in inventoried contract costs, and charges them to costs of sales when the related contract sales are recognized as revenue. Research and development costs that are not recoverable on U.S. Government contracts are accounted for in accordance with research and development accounting standards and are expensed to cost of sales as incurred.

Customer-funded research and development costs are incurred pursuant to contracts (revenue arrangements) to perform research and development activities according to customer specifications. These costs are not accounted for as research and development expenses, and are also not indirect contract costs. Instead, these costs are direct contract costs and are expensed to cost of sales when the corresponding revenue is recognized, which is generally as the research and development services are performed. Customer-funded research and development costs are substantially all incurred under cost-plus type contracts with the U.S. Government.

Product Warranties: Product warranty costs are accrued when revenue is recognized for the covered products. Product warranty expense is recognized based on the terms of the product warranty and the related estimated costs. Accrued warranty costs are reduced as product warranty costs are incurred.

The table below presents the changes in the Company’s accrued product warranty costs.

	Year Ended December 31,
	2013		2012
	(in millions)
Accrued product warranty costs(1):
Balance at January 1	$	99	$	94
Acquisitions during this period		2		7
Accruals for product warranties issued during the period		71		78
Changes to accruals for product warranties existing before January 1		3		(3)
Foreign currency translation adjustments		—		1
Settlements made during the period		(76)		(78)
Balance at December 31	$	99	$	99

⁽¹⁾  Warranty obligations incurred in connection with long-term production contracts that are accounted for under the POC cost-to-cost method are included within the contract estimates at completion and are excluded from the above amounts. The balances above include both the current and non-current amounts.

Deferred Debt Issue Costs: Costs to issue debt are capitalized and deferred when incurred, and subsequently amortized to interest expense over the term of the related debt using the effective interest rate method.

Stock-Based Compensation: The Company follows the fair value based method of accounting for stock-based employee compensation, which requires the Company to expense all stock-based employee compensation. Stock-based employee compensation is primarily a non-cash expense because the Company settles these obligations by issuing shares of L-3 Holdings common stock instead of settling such obligations with cash payments, except for certain performance unit awards that are payable in cash.

Compensation expense for all restricted stock unit and stock option awards is recognized on a straight-line basis over the requisite service period for the entire award based on the grant date fair value. All of the stock options granted to employees by the Company are non-qualified stock options under U.S. income tax regulations. Compensation expense for performance units payable in L-3 Holdings common stock is based on the fair value of the units at the grant date (measurement date), adjusted each reporting period for progress towards the target

F-12

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

award, and recognized on a straight line basis over the requisite service period. Compensation expense for performance units that are payable in cash is based on a binomial valuation technique (the Monte Carlo valuation model) adjusted for historical performance each reporting period and recognized on a straight-line basis over the requisite service period.

Income Taxes: The Company provides for income taxes using the liability method. Deferred income tax assets and liabilities reflect tax carryforwards and the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes, as determined under enacted tax laws and rates. The effect of changes in tax laws or rates is accounted for in the period of enactment. Valuation allowances for deferred tax assets are provided when it is more likely than not that the assets will not be realized, considering, when appropriate, tax planning strategies.

Income tax accounting standards prescribe: (1) a minimum recognition threshold that an income tax benefit arising from an uncertain income tax position taken, or expected to be taken, on an income tax return is required to meet before being recognized in the financial statements and (2) the measurement of the income tax benefits recognized from such positions. The Company’s accounting policy is to classify uncertain income tax positions that are not expected to be resolved in one year as non-current income tax liabilities and to classify potential interest and penalties on uncertain income tax positions as elements of the provision for income taxes on its financial statements.

Cash and Cash Equivalents: Cash equivalents consist of highly liquid investments with an original maturity of three months or less at the time of purchase.

Contracts in Process: Contracts in process include unbilled contract receivables and inventoried contract costs for which sales and profits are recognized primarily using a POC method of accounting. Unbilled Contract Receivables represent accumulated incurred costs and earned profits on contracts in process that have been recorded as sales, primarily using the cost-to-cost method, but have not been billed to customers. Inventoried Contract Costs primarily represent incurred costs on contracts using the units-of-delivery method of accounting and include direct costs and indirect costs, including overhead costs, and materials acquired for U.S. Government service contracts. As discussed in Note 6, the Company’s inventoried contract costs for U.S. Government contracts, and contracts with prime contractors or subcontractors of the U.S. Government include allocated general and administrative costs (G&A), IRAD costs and B&P costs. Contracts in Process contain amounts relating to contracts and programs with long performance cycles, a portion of which may not be realized within one year. For contracts in a loss position, the unrecoverable costs expected to be incurred in future periods are recorded in Estimated Costs in Excess of Estimated Contract Value to Complete Contracts in Process in a Loss Position, which is a component of Other Current Liabilities. Under the terms of certain revenue arrangements (contracts) with the U.S. Government, the Company is entitled to receive progress payments as costs are incurred or milestone payments as work is performed. The U.S. Government has a security interest in the Unbilled Contract Receivables and Inventoried Contract Costs to which progress payments have been applied, and such progress payments are reflected as a reduction of the related amounts. Milestone payments that have been received in excess of contract costs incurred and related estimated profits are reported on the Company’s balance sheet as Advance Payments and Billings in Excess of Costs Incurred.

The Company values its acquired contracts in process in connection with business acquisitions on the date of acquisition at contract value less the Company’s estimated costs to complete the contract and a reasonable profit allowance on the Company’s completion effort commensurate with the profit margin that the Company earns on similar contracts.

Inventories: Inventories, other than Inventoried Contract Costs, are stated at cost (first-in, first-out or average cost), but not in excess of realizable value. A provision for excess or inactive inventory is recorded based upon an analysis that considers current inventory levels, historical usage patterns and future sales expectations.

F-13

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Property, Plant and Equipment: Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed by applying principally the straight-line method to the estimated useful lives of the related assets. Useful lives range substantially from 10 to 40 years for buildings and improvements and three to 10 years for machinery, equipment, furniture and fixtures. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. When property or equipment is retired or otherwise disposed of, the net book value of the asset is removed from the Company’s balance sheet and the net gain or loss is included in the determination of operating income. Property, plant and equipment acquired as part of a business acquisition is valued at fair value.

Goodwill: The carrying value of goodwill and indefinite lived identifiable intangible assets are not amortized, but are tested for impairment annually as of November 30 and, additionally on an interim basis, whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The accounting standards for goodwill allow for the assessment of qualitative factors to determine whether it is more likely or not that the fair value of a reporting unit is less than its carrying amount. L-3 did not utilize a qualitative assessment approach for the November 30, 2013 goodwill impairment test, as we chose instead to complete the quantitative two-step testing process for each reporting unit. The first step in the process is to identify any potential impairment by comparing the carrying value of a reporting unit to its fair value. The Company determines the fair value of its reporting units using a discounted cash flows valuation approach. If a potential impairment is identified, the second step is to measure the impairment loss by comparing the implied fair value of goodwill with the carrying value of goodwill of the reporting unit. There were no impairment charges that resulted from the annual impairment assessment or change in circumstances during the years ended December 31, 2013 and 2012. The Company recorded a goodwill impairment charge of $43 million during the year ended December 31, 2011. See Note 8 for additional information on the goodwill impairment charge.

Identifiable Intangible Assets: Identifiable intangible assets represent assets acquired as part of the Company’s business acquisitions and include customer contractual relationships, technology, favorable leasehold interests and trade names. The initial measurement of these intangible assets is based on their fair values. Identifiable intangible assets are: (1) tested for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable and (2) amortized over their estimated useful lives as the economic benefits are consumed. The Company reviews and updates its estimates of the duration of its customer contractual relationships. If such estimates indicate that the duration of the Company’s customer contractual relationships has decreased compared to the estimates made as of the date the Company acquired these intangible assets, then the Company accelerates the amortization period for its customer contractual relationships over their remaining useful economic life.

Derivative Financial Instruments: The Company’s derivative financial instruments include foreign currency forward contracts, which are entered into for risk management purposes, and an embedded derivative representing the contingent interest payment provision related to the CODES.

The Company’s U.S. and foreign businesses enter into contracts with customers, subcontractors or vendors that are denominated in currencies other than their functional currencies. To protect the functional currency equivalent cash flows associated with certain of these contracts, the Company enters into foreign currency forward contracts. The Company’s activities involving foreign currency forward contracts are designed to hedge the changes in the functional currency equivalent cash flows due to movements in foreign exchange rates compared to the functional currency. The foreign currencies hedged are primarily the Canadian dollar, the U.S. dollar, the Euro and the British pound. The Company manages exposure to counterparty non-performance credit risk by entering into foreign currency forward contracts only with major financial institutions that are expected to fully perform under the terms of such contracts. Foreign currency forward contracts are recorded in the Company’s balance sheets at fair value and are generally designated and accounted for as cash flow hedges in

F-14

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

accordance with the accounting standards for derivative instruments and hedging activities. Gains and losses on designated foreign currency forward contracts that are highly effective in offsetting the corresponding change in the cash flows of the hedged transactions are recorded net of income taxes in accumulated other comprehensive income (loss) (accumulated OCI) and then recognized in income when the underlying hedged transaction affects income. Gains and losses on foreign currency forward contracts that do not meet hedge accounting criteria are recognized in income immediately.

The embedded derivative related to the issuance of the CODES is recorded at fair value with changes reflected in the Consolidated Statements of Operations.

Translation of Foreign Currency and Foreign Currency Transactions: Transactions in foreign currencies are translated into the local (functional) currency of the respective business at the approximate prevailing rate at the time of the transaction. Foreign exchange transaction gains and losses in the years ended December 31, 2013, 2012 and 2011 are not material to the Company’s results of operations. The operations of the Company’s foreign subsidiaries are translated from the local (functional) currencies into U.S. dollars using weighted average rates of exchange during each reporting period. The rates of exchange at each balance sheet date are used for translating the assets and liabilities of the Company’s foreign subsidiaries. Gains or losses resulting from these translation adjustments are included in the balance sheets as a component of accumulated other comprehensive income (loss).

Accounting Standards Issued and Not Yet Implemented: In July 2013, the FASB issued amendments to an accounting standard which requires an unrecognized tax benefit or portion of an unrecognized tax benefit to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward except when certain conditions exist. The amendments are effective for the Company for fiscal years beginning after December 15, 2013, including that year’s interim periods. The adoption of this standard will not impact the Company’s financial position, results of operations or cash flows.

3. Revisions to Previously Issued Financial Statements

The Company is revising its previously issued financial statements to update for: (1) accounting adjustments due to the internal review at its Aerospace Systems segment, (2) accounting related to a sales-type lease transaction for flight simulator systems within its Electronic Systems segment, and (3) previously identified immaterial errors already recognized in its financial statements but not recorded in the appropriate periods. The accounting errors related to the sales-type lease transaction and immaterial out of period amounts are not related to the internal review at its Aerospace Systems segment.

Internal Review of Aerospace Systems Segment: The Company conducted an internal review related to instances of misconduct and accounting errors at its Aerospace Systems segment. This review was conducted with the assistance of outside legal and accounting advisors, and has been completed. As a result of the internal review, the Company identified and recorded aggregate pre-tax charges as follows: (1) $60 million for 2013, (2) $25 million for 2012, (3) $5 million for 2011, and (4) $4 million for periods prior to 2011.

The adjustments related to the internal review only affected the Logistics Solutions and Platform Systems sectors of the Aerospace Systems segment. The cumulative aggregate adjustments attributable to the Logistics Solutions sector are approximately $82 million, and at the Platform Systems sector are approximately $12 million through 2013. The Logistics Solutions sector adjustments relate to: (1) losses of $54 million through 2013 with respect to the U.S. Army C-12 fixed-price maintenance and logistics support contract due to cost overruns inappropriately deferred, sales invoices inappropriately prepared, and the failure to timely and accurately perform contract estimates at completion and valuation assessments of inventories and receivables at the Army Sustainment Division, and (2) accounting errors of $28 million through 2013 in connection with the

F-15

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

valuation of inventories and receivables, as well as the correction for certain accruals on other logistics support contracts. The Platform Systems sector adjustments are primarily due to: (1) losses of $2 million on two aircraft modification contracts and two contracts for rotary wing sub-assemblies and parts, and (2) write-offs of deferred costs of $10 million to design and test aerostructures for a new commercial aircraft.

Sales-Type Lease Transaction: The Company routinely performs on-site accounting and internal control review procedures on a rotational basis. As part of a previously planned review of the Simulation & Training business in its Electronic Systems segment and unrelated to the internal review at its Aerospace Systems segment, the Company evaluated the accounting treatment related to a sales-type lease transaction with the U.S. Army for rotary wing flight simulator systems. The period of performance under this contract began in 2004 and ends in 2023. Based on the results of this evaluation, the Company has adjusted its previously issued financial statements to: (1) increase interest income accretion on the net investment related to this sales-type lease transaction by an estimated aggregate amount of approximately $5 million for 2013, $3 million for each of 2012 and 2011 and $12 million for periods prior to 2011, and (2) decrease sales by approximately $7 million for 2013 and decrease cost of sales by approximately $7 million for 2013 and $5 million for periods prior to 2011.

Out of Period Amounts: The Company has identified various out of period amounts included in its previously issued financial statements that were deemed to be immaterial individually and in the aggregate. In prior periods, in accordance with Accounting Standards Codification (“ASC”) 650-10-S99 and S55 (formerly Staff Accounting Bulletins (“SAB”) No. 99 and No. 108), Accounting Changes and Error Corrections, the Company concluded that these errors were, individually, and in the aggregate, not material, quantitatively or qualitatively, to the financial statements in the period recorded or to the relevant prior periods. Accordingly, the Company recorded these errors in its financial statements in the period that the error was identified. The Company is, on a voluntary basis, revising its previously issued financial statements to correct for these errors already recognized in its financial statements but not recorded in the appropriate periods to reflect them in the appropriate period. These out of period amounts were not discovered as part of the internal review of the Aerospace Systems segment discussed above, but rather represent previously identified errors “resulting from mathematical mistakes, mistakes in application of generally accepted accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared,” as defined in ASC 250-10-20 Accounting Changes and Error Corrections. The Company, therefore, is not treating these amounts as changes in estimates. These errors consist of: (1) increases in development and material costs related to Broadband Communication Systems that were recorded in the first quarter of 2013 but should have been recorded in the fourth quarter of 2012, (2) a sub-contractor subscription deposit that was recorded as sales and income in the fourth quarter of 2012 but should have been amortized to sales and income during 2013, (3) costs accrued in the fourth quarter of 2012 for goods or services received in the first quarter of 2013, (4) several unrecorded liabilities that were recorded in the first quarter of 2013 but should have been recorded in the fourth quarter of 2012, (5) a correction of accrued vacation that was recorded in the fourth quarter of 2013 but should have been recorded in the fourth quarter of 2012 and the first, second and third quarters of 2013, and (6) a warranty reserve reduction recorded in the third quarter of 2012 that should have been recorded in the fourth quarter of 2011.

F-16

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

With respect to each of the immaterial out of period amounts included in the Company’s previously issued financial statements, the table below presents the: (1) nature of the adjustments, (2) applicable segment, (3) amount of increase (or decrease) to sales and operating income, (4) period recorded and (5) correct period.

		2013					2012						2011
Nature of Adjustment	Applicable Segment	Sales			Operating Income		Sales			Operating Income			Sales			Operating Income		Period Recorded	Correct Period
		($ in millions)
Higher development and material costs for networked communications systems	Communication Systems	$	10		$	10	$	(10	)	$	(10	)	$	—		$	—	1Q 2013	4Q 2012
Sub-contractor subscription deposit	Aerospace Systems		26			2		(26	)		(2	)		—			—	4Q 2012	1Q, 2Q, 3Q & Q4 2013
Costs accruals for goods/services received	Aerospace Systems		5			1		(5	)		(1	)		—			—	4Q 2012	1Q 2013
Unrecorded liabilities	Aerospace Systems		(2	)		—		2			—			—			—	1Q 2013	4Q 2012
Accrued vacation	Aerospace Systems		—			1		—			(1	)		—			—	4Q 2013	4Q 2012, 1Q, 2Q & 3Q 2013
Warranty reserve	Electronic Systems		—			—		3			(4	)		(3	)		4	3Q 2012	4Q 2011
Total		$	39		$	14	$	(36	)	$	(18	)	$	(3	)	$	4

F-17

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The table below presents the impact of the matters discussed above on sales and pre-tax income for the years ended December 31, 2013, 2012 and 2011 and for the years ended prior to December 31, 2011.

	2013				2012				2011				Prior to 2011
	Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income
	(in millions)
Army C-12 Contract	$	(25)	$	(35)	$	(3)	$	(16)	$	(1)	$	(3)		—		—
Other Logistics Support Contracts		(2)		(11)		(2)		(11)		—		(2)		(1)		(4)
Logistics Solutions	$	(27)	$	(46)	$	(5)	$	(27)	$	(1)	$	(5)	$	(1)	$	(4)
Platform Systems		(12)		(14)		3		2		—		—		—		—
Total Internal Review of Aerospace Systems Segment	$	(39)	$	(60)	$	(2)	$	(25)	$	(1)	$	(5)	$	(1)	$	(4)
Sales-Type Lease Transaction		(7)		5		—		3		—		3		—		17
Out of Period Amounts		39		14		(36)		(18)		(3)		4		—		—
Total Revisions	$	(7)	$	(41)	$	(38)	$	(40)	$	(4)	$	2	$	(1)	$	13

In accordance with ASC 650-10-S99 and S55, the Company performed an analysis to determine if the impact of the amounts disclosed above were material to its previously issued financial statements. Based on that analysis, the Company believes that its previously issued financial statements are not materially misstated on either a quantitative or qualitative basis. However, as a result of completing the review, the Company believes that correcting these errors in the quarterly report on Form 10-Q for the second quarter of 2014 would, in the aggregate, cause a material misstatement to forecasted pre-tax income and net income for the fiscal year ending December 31, 2014. Accordingly, the Company is correcting these errors by revising its previously issued financial statements to record all the adjustments in the table above in the appropriate period.

F-18

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The tables below present the Company’s: (1) As Previously Reported, (2) Adjustments, and (3) As Currently Reported Condensed Consolidated Balance Sheets as of December 31, 2013 and 2012, Statements of Operations and Operating Activities for the Statement of Cash Flows, for the fiscal years ended December 31, 2013, 2012 and 2011. The Adjustments correct for: (1) the results of the Aerospace Systems internal review, (2) the accounting related to a sales-type lease transaction within the Company’s Electronic Systems segment and (3) immaterial out of period amounts previously recorded in the Company’s financial statements but not recorded in the appropriate period to reflect them in the appropriate period.

			Adjustments for:
	As Previously Reported		Aerospace Systems Segment Internal Review		Sales-Type Lease Transaction		Out of Period Amounts		As Revised
	(in millions)
Condensed Consolidated Balance Sheet as of December 31, 2013:
ASSETS
Current Assets:
Cash and cash equivalents	$	500	$	—	$	—	$	—	$	500
Billed receivables, net of allowances of $26 in 2013		1,015		(24)		—		—		991
Contracts in process		2,524		(67)		(26)		—		2,431
Inventories		359		—		—		—		359
Deferred income taxes		122		25		—		—		147
Other current assets		129		9		28		—		166
Total current assets		4,649		(57)		2		—		4,594
Property, plant and equipment, net		1,039		3		—		—		1,042
Goodwill		7,796		—		—		—		7,796
Identifiable intangible assets		285		—		—		—		285
Deferred debt issue costs		24		—		—		—		24
Other assets		216		—		31		—		247
Total assets	$	14,009	$	(54)	$	33	$	—	$	13,988
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, trade	$	541	$	—	$	—	$	—	$	541
Accrued employment costs		543		2		—		—		545
Accrued expenses		455		3		—		—		458
Advance payments and billings in excess of costs incurred		570		1		5		—		576
Income taxes		31		—		—		—		31
Other current liabilities		383		—		—		—		383
Total current liabilities		2,523		6		5		—		2,534
Pension and postretirement benefits		727		—		—		—		727
Deferred income taxes		635		—		—		—		635
Other liabilities		396		—		10		—		406
Long-term debt		3,630		—		—		—		3,630
Total liabilities		7,911		6		15		—		7,932
Equity:
L-3 shareholders’ equity:
L-3 Communications Holdings, Inc.’s common stock		5,653		—		—		—		5,653
L-3 Communications Holdings, Inc.’s treasury stock at cost		(5,288)		—		—		—		(5,288)
Retained earnings		5,768		(60)		17		1		5,726
Accumulated other comprehensive loss		(110)		—		—		—		(110)
Total L-3 shareholders’ equity		6,023		(60)		17		1		5,981
Noncontrolling interests		75		—		—		—		75
Total equity		6,098		(60)		17		1		6,056
Total liabilities and equity	$	14,009	$	(54)	$	32	$	1	$	13,988

F-19

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

			Adjustments for:
	As Previously Reported		Aerospace Systems Segment Internal Review		Sales-Type Lease Transaction		Out of Period Amounts		As Revised
	(in millions)
Condensed Consolidated Balance Sheet as of December 31, 2012:
ASSETS
Current Assets:
Cash and cash equivalents	$	349	$	—	$	—	$	—	$	349
Billed receivables, net of allowances of $33 in 2012		968		—		—		—		968
Contracts in process		2,597		(30)		(45)		(12)		2,510
Inventories		358		—		—		—		358
Deferred income taxes		95		12		—		6		113
Other current assets		138		—		45		3		186
Total current assets		4,505		(18)		—		(3)		4,484
Property, plant and equipment, net		1,016		1		—		6		1,023
Goodwill		7,776		—		—		—		7,776
Identifiable intangible assets		314		—		—		—		314
Deferred debt issue costs		29		—		—		—		29
Other assets		151		—		23		—		174
Total assets	$	13,791	$	(17)	$	23	$	3	$	13,800
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, trade	$	494	$	—	$	—	$	11	$	505
Accrued employment costs		551		2		—		2		555
Accrued expenses		469		1		—		(1)		469
Advance payments and billings in excess of costs incurred		620		1		—		—		621
Income taxes		21		—		—		—		21
Other current liabilities		392		—		—		—		392
Total current liabilities		2,547		4		—		12		2,563
Pension and postretirement benefits		1,360		—		—		—		1,360
Deferred income taxes		328		—		—		—		328
Other liabilities		384		—		9		—		393
Long-term debt		3,629		—		—		—		3,629
Total liabilities		8,248		4		9		12		8,273
Equity:
L-3 shareholders’ equity:
L-3 Communications Holdings, Inc.’s common stock		5,314		—		—		—		5,314
L-3 Communications Holdings, Inc.’s treasury stock at cost		(4,488)		—		—		—		(4,488)
Retained earnings		5,191		(22)		14		(8)		5,175
Accumulated other comprehensive loss		(550)		—		—		—		(550)
Total L-3 shareholders’ equity		5,467		(22)		14		(8)		5,451
Noncontrolling interests		76		—		—		—		76
Total equity		5,543		(22)		14		(8)		5,527
Total liabilities and equity	$	13,791	$	(18)	$	23	$	4	$	13,800

F-20

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

			Adjustments for:
	As Previously Reported		Aerospace Systems Segment Internal Review		Sales-Type Lease Transaction		Out of Period Amounts		As Revised
	(in millions)
Consolidated Statement of Operations for the year ended December 31, 2013:
Net sales:
Products	$	7,192	$	(11)	$	(7)	$	15	$	7,189
Services		5,437		(28)		—		24		5,433
Total net sales		12,629		(39)		(7)		39		12,622
Cost of sales:
Products		(6,409)		(3)		7		(4)		(6,409)
Services		(4,962)		(18)		—		(21)		(5,001)
Total cost of sales		(11,371)		(21)		7		(25)		(11,410)
Impairment charge		—		—		—		—		—
Operating income		1,258		(60)		—		14		1,212
Interest expense		(177)		—		—		—		(177)
Interest and other income, net		15		—		5		—		20
Debt retirement charge		—		—		—		—		—
Income from continuing operations before income taxes		1,096		(60)		5		14		1,055
Provision for income taxes		(309)		21		(2)		(5)		(295)
Income from continuing operations		787		(39)		3		9		760
Income from discontinued operations, net of income tax		—		—		—		—		—
Net income	$	787	$	(39)	$	3	$	9	$	760
Net income attributable to noncontrolling interests		(9)		—		—		—		(9)
Net income attributable to L-3	$	778	$	(39)	$	3	$	9	$	751
Net income allocable to participating securities		—		—		—		—		—
Net income allocable to L-3 Holdings’ common shareholders	$	778	$	(39)	$	3	$	9	$	751
Basic earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.70	$	(0.43)	$	0.03	$	0.10	$	8.40
Discontinued operations		—		—		—		—		—
Basic earnings per share	$	8.70	$	(0.43)	$	0.03	$	0.10	$	8.40
Diluted earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.54	$	(0.43)	$	0.03	$	0.10	$	8.24
Discontinued operations		—		—		—		—		—
Diluted earnings per share	$	8.54	$	(0.43)	$	0.03	$	0.10	$	8.24
Cash dividends paid per common share	$	2.20	$	—	$	—	$	—	$	2.20
L-3 Holdings’ weighted average common shares outstanding:
Basic		89.4		—		—		—		89.4
Diluted		91.1		—		—		—		91.1

F-21

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

			Adjustments for:
	As Previously Reported		Aerospace Systems Segment Internal Review		Sales-Type Lease Transaction		Out of Period Amounts			As Revised
	(in millions, except per share data)
Consolidated Statement of Operations for the year ended December 31, 2012:
Net sales:
Products	$	7,535	$	64	$	—	$	(13)		$	7,586
Services		5,611		(66)		—		(24)			5,521
Total net sales		13,146		(2)		—		(37)	(1)		13,107
Cost of sales:
Products		(6,724)		(57)		—		(1)			(6,782)
Services		(5,071)		34		—		20			(5,017)
Total cost of sales		(11,795)		(23)		—		19			(11,799)
Impairment charge		—		—		—		—			—
Operating income		1,351		(25)		—		(18)			1,308
Interest expense		(184)		—		—		—			(184)
Interest and other income, net		8		—		3		—			11
Debt retirement charge		(13)		—		—		—			(13)
Income from continuing operations before income taxes		1,162		(25)		3		(18)			1,122
Provision for income taxes		(374)		9		(1)		6			(360)
Income from continuing operations		788		(16)		2		(12)			762
Income from discontinued operations, net of income tax		32		—		—		—			32
Net income	$	820	$	(16)	$	2	$	(12)		$	794
Net income attributable to noncontrolling interests		(10)		—		—		—			(10)
Net income attributable to L-3	$	810	$	(16)	$	2	$	(12)		$	784
Net income allocable to participating securities		—		—		—		—			—
Net income allocable to L-3 Holdings’ common shareholders	$	810	$	(16)	$	2	$	(12)		$	784
Basic earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.12	$	(0.17)	$	0.02	$	(0.12)		$	7.85
Discontinued operations		0.29		—		—		—			0.29
Basic earnings per share	$	8.41	$	(0.17)	$	0.02	$	(0.12)		$	8.14
Diluted earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.01	$	(0.17)	$	0.02	$	(0.12)		$	7.74
Discontinued operations		0.29		—		—		—			0.29
Diluted earnings per share	$	8.30	$	(0.17)	$	0.02	$	(0.12)		$	8.03
Cash dividends paid per common share	$	2.00	$	—	$	—	$	—		$	2.00
L-3 Holdings’ weighted average common shares outstanding:
Basic		96.3		—		—		—			96.3
Diluted		97.6		—		—		—			97.6

⁽¹⁾  Includes rounding of $1 million.

F-22

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

			Adjustments for:
	As Previously Reported		Aerospace Systems Segment Internal Review		Sales-Type Lease Transaction		Out of Period Amounts		As Revised
	(in millions, except per share data)
Consolidated Statement of Operations for the year ended December 31, 2011:
Net sales:
Products	$	7,552	$	—	$	—	$	(3)	$	7,549
Services		5,606		(1)		—		—		5,605
Total net sales		13,158		(1)		—		(3)		13,154
Cost of sales:
Products		(6,673)		—		—		7		(6,666)
Services		(5,043)		(4)		—		—		(5,047)
Total cost of sales		(11,716)		(4)		—		7		(11,713)
Impairment charge		(43)		—		—		—		(43)
Operating income		1,399		(5)		—		4		1,398
Interest expense		(204)		—		—		—		(204)
Interest and other income, net		—		—		3		—		3
Debt retirement charge		(35)		—		—		—		(35)
Income from continuing operations before income taxes		1,160		(5)		3		4		1,162
Provision for income taxes		(296)		2		(1)		(1)		(296)
Income from continuing operations		864		(3)		2		3		866
Income from discontinued operations, net of income tax		104		—		—		—		104
Net income	$	968	$	(3)	$	2	$	3	$	970
Net income attributable to noncontrolling interests		(12)		—		—		—		(12)
Net income attributable to L-3	$	956	$	(3)	$	2	$	3	$	958
Net income allocable to participating securities		(2)		—		—		—		(2)
Net income allocable to L-3 Holdings’ common shareholders	$	954	$	(3)	$	2	$	3	$	956
Basic earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.17	$	(0.03)	$	0.02	$	0.03	$	8.19
Discontinued operations		0.97		—		—		—		0.97
Basic earnings per share	$	9.14	$	(0.03)	$	0.02	$	0.03	$	9.16
Diluted earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.08	$	(0.03)	$	0.02	$	0.03	$	8.10
Discontinued operations		0.95		—		—		—		0.95
Diluted earnings per share	$	9.03	$	(0.03)	$	0.02	$	0.03	$	9.05
Cash dividends paid per common share	$	1.80	$	—	$	—	$	—	$	1.80
L-3 Holdings’ weighted average common shares outstanding:
Basic		104.4		—		—		—		104.4
Diluted		105.6		—		—		—		105.6

F-23

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

	As Previously Reported		Net Adjustments		As Revised
	(in millions)
Consolidated Statement of Cash Flows for the year ended December 31, 2013:
Operating activities:
Net income	$	787	$	(27)	$	760
Income from discontinued operations, net of tax		—		—		—
Income from continuing operations		787		(27)		760
Depreciation of property, plant and equipment		166		—		166
Amortization of intangibles and other assets		48		—		48
Deferred income tax provision		48		(6)		42
Stock-based employee compensation expense		59		—		59
Contributions to employee savings plans in L-3 Holdings’ common stock		114		—		114
Amortization of pension and postretirement benefit plans net loss and prior service cost		83		—		83
Amortization of bond discounts and deferred debt issue costs (included in interest expense)		6		—		6
Goodwill impairment charge		—		—		—
Equity in losses of unconsolidated subsidiaries		—		—		—
Other non-cash items		2		—		2
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables		(42)		24		(18)
Contracts in process		94		10		104
Inventories		2		—		2
Other assets		(81)		(7)		(88)
Accounts payable, trade		45		(11)		34
Accrued employment costs		(5)		—		(5)
Accrued expenses		(6)		1		(5)
Advance payments and billings in excess of costs incurred		(50)		6		(44)
Income taxes		39		(8)		31
Excess income tax benefits related to share-based payment arrangements		(4)		—		(4)
Other current liabilities		(4)		—		(4)
Pension and postretirement benefits		14		—		14
All other operating activities		(52)		18		(34)
Net cash from operating activities from continuing operations	$	1,263	$	—	$	1,263

F-24

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

	As Previously Reported		Net Adjustments		As Revised
	(in millions)
Consolidated Statement of Cash Flows for the year ended December 31, 2012:
Operating activities:
Net income	$	820	$	(26)	$	794
Income from discontinued operations, net of tax		(32)		—		(32)
Income from continuing operations		788		(26)		762
Depreciation of property, plant and equipment		170		—		170
Amortization of intangibles and other assets		58		—		58
Deferred income tax provision		112		(15)		97
Stock-based employee compensation expense		59		—		59
Contributions to employee savings plans in L-3 Holdings’ common stock		125		—		125
Amortization of pension and postretirement benefit plans net loss and prior service cost		68		—		68
Amortization of bond discounts and deferred debt issue costs (included in interest expense)		7		—		7
Goodwill impairment charge		—		—		—
Equity in losses of unconsolidated subsidiaries		3		—		3
Other non-cash items		9		—		9
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables		147		—		147
Contracts in process		(126)		59		(67)
Inventories		(35)		—		(35)
Other assets		11		(3)		8
Accounts payable, trade		81		11		92
Accrued employment costs		(13)		3		(10)
Accrued expenses		(100)		—		(100)
Advance payments and billings in excess of costs incurred		36		1		37
Income taxes		(48)		1		(47)
Excess income tax benefits related to share-based payment arrangements		(3)		—		(3)
Other current liabilities		(52)		6		(46)
Pension and postretirement benefits		(64)		—		(64)
All other operating activities		(2)		(37)		(39)
Net cash from operating activities from continuing operations	$	1,231	$	—	$	1,231

F-25

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

	As Previously Reported		Net Adjustments		As Revised
	(in millions)
Consolidated Statement of Cash Flows for the year ended December 31, 2011:
Operating activities:
Net income	$	968	$	2	$	970
Income from discontinued operations, net of tax		(104)		—		(104)
Income from continuing operations		864		2		866
Depreciation of property, plant and equipment		167		—		167
Amortization of intangibles and other assets		63		—		63
Deferred income tax provision		124		(1)		123
Stock-based employee compensation expense		57		—		57
Contributions to employee savings plans in L-3 Holdings’ common stock		113		—		113
Amortization of pension and postretirement benefit plans net loss and prior service cost		48		—		48
Amortization of bond discounts and deferred debt issue costs (included in interest expense)		13		—		13
Goodwill impairment charge		43		—		43
Equity in losses of unconsolidated subsidiaries		12		—		12
Other non-cash items		11		—		11
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables		(13)		—		(13)
Contracts in process		(121)		11		(110)
Inventories		(14)		—		(14)
Other assets		(6)		(3)		(9)
Accounts payable, trade		(35)		—		(35)
Accrued employment costs		(23)		—		(23)
Accrued expenses		67		1		68
Advance payments and billings in excess of costs incurred		(39)		—		(39)
Income taxes		(18)		2		(16)
Excess income tax benefits related to share-based payment arrangements		(2)		—		(2)
Other current liabilities		4		(6)		(2)
Pension and postretirement benefits		(83)		—		(83)
All other operating activities		(1)		(6)		(7)
Net cash from operating activities from continuing operations	$	1,231	$	—	$	1,231

4. New Accounting Standards Implemented

Effective January 1, 2013, the Company adopted a new accounting standard issued by the Financial Accounting Standards Board (FASB), which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income (loss) (AOCI). This standard requires entities to disclose additional information about reclassification adjustments, including: (1) changes in AOCI balances by component and (2) significant items reclassified out of AOCI. The adoption of this standard resulted in additional disclosures of items reclassified out of AOCI and did not impact the Company’s financial position, results of operations or cash flows. See Note 12 for these additional disclosures.

F-26

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

5. Acquisitions and Divestures

Business Acquisitions

All business acquisitions are included in the Company’s results of operations from their respective acquisition dates.

2013 Business Acquisition

On December 19, 2013, the Company acquired Mustang Technology Group, L.P. (Mustang) business for an aggregate purchase price of $54 million, which was financed with cash on hand. The purchase price is subject to adjustment based on closing date net working capital. Mustang develops and manufactures radar-based sensors and systems used in precision-guided weapons, electronic warfare, unmanned systems and other military applications. Based on the preliminary purchase price allocations, the aggregate goodwill recognized for this business was $44 million, most of which is expected to be deductible for income tax purposes. The goodwill was assigned to the Electronic Systems reportable segment. The final purchase price allocation is expected to be completed in the second quarter of 2014 and will be based on final purchase price, final appraisals and other analysis of fair values of acquired assets and liabilities. The Company does not expect differences between the preliminary and final purchase price allocations to have a material impact on its results of operations or financial position.

2012 Business Acquisitions

During the year ended December 31, 2012, in separate transactions, the Company acquired three businesses for an aggregate purchase price of $349 million, which were financed with cash on hand. Based on the final purchase price allocations, the aggregate goodwill recognized for these businesses was $278 million, of which $182 million is expected to be deductible for income tax purposes. The goodwill was assigned to the Electronic Systems reportable segment. A description of each business acquisition made by the Company during the year ended December 31, 2012 is listed below:

• On February 6, 2012, the Company acquired the Kollmorgen Electro-Optical business (named L-3 KEO). L-3 KEO develops and manufactures specialized equipment, including submarine photonics systems and periscopes, ship fire control systems, visual landing aids and ground electro-optical and sensor-cueing systems for the U.S. military and allied international governments.

• On April 13, 2012, the Company acquired the assets and liabilities of MAVCO, Inc. (MAVCO). MAVCO is an audio, video, lighting and broadcast systems integrations business primarily for cruise lines.

• On August 6, 2012, the Company acquired the commercial aircraft simulation business from Thales Group (named Link Simulation & Training U.K. Limited (Link U.K.)). Link U.K. is a leading manufacturer of flight simulation systems for the commercial aviation market.

The purchase prices and purchase price allocations for L-3 KEO and MAVCO were finalized as of June 28, 2013 and December 31, 2012, respectively, with no significant changes from the preliminary amounts. The Link U.K. purchase price allocation was finalized as of September 27, 2013 based on the results of the final appraisals and valuations of the assets and liabilities acquired and estimated final closing date net working capital. The final purchase price allocations resulted in certain adjustments to the preliminary valuations, the most significant of which included an increase to goodwill of $32 million, which included $4 million for foreign currency translation adjustments, an increase to other liabilities of $17 million, and a decrease of $16 million to contracts in process. The purchase price for Link U.K. was finalized in the fourth quarter of 2013 and resulted in a $6 million final net working capital adjustment that had been previously accrued. As discussed in Note 2, the audited condensed consolidated balance sheet as of December 31, 2012 has been revised for these adjustments in accordance with accounting standards for business combinations.

F-27

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

2011 Business Acquisitions

During the year ended December 31, 2011, in separate transactions, the Company acquired two businesses for an aggregate purchase price of $18 million, which were financed with cash on hand. Based on final purchase price allocations, the aggregate goodwill recognized for these businesses was $19 million, of which $14 million is expected to be deductible for income tax purposes. The goodwill was assigned to the reportable segments listed below:

Segment	December 31, 2013
	(in millions)
Electronic Systems	$	10
Communication Systems		9
Total	$	19

A description of each business acquisition made by the Company during the year ended December 31, 2011 is listed below:

• On July 1, 2011, the Company acquired the communications and engineering business of ComHouse Wireless L.P. (ComHouse). The acquired business provides L-3 with cellular wave form modulation technology that can be used to counter improvised explosive devices.

• On October 28, 2011, the Company acquired the cargo radiation screening business of Detector Networks International LLC (DNI). The purchase price for DNI is subject to additional, contingent consideration not to exceed $10 million and is based on DNI’s post-acquisition financial performance through December 31, 2014. The Company recorded a $7 million liability on the acquisition date for the fair value of the contingent consideration, which was reduced by $2 million in 2012 and $5 million in 2013 due to lower than expected financial performance.

The purchase prices for ComHouse and DNI are final and the purchase price allocations for these acquisitions were completed with no significant changes from the preliminary amounts.

Business Divestitures

2012 Spin-off of Engility

The Company completed the spin-off of its subsidiary, Engility Holdings, Inc. (Engility), on July 17, 2012. In connection with the spin-off, Engility made a cash distribution of $335 million to L-3. A portion of the proceeds were used to redeem $250 million of the 6 ³⁄₈% Senior Subordinated Notes due 2015 (6 ³⁄₈% 2015 Notes) on July 26, 2012. There was no gain or loss recognized by L-3 as a result of the spin-off transaction.

Prior to the completion of the spin-off, L-3 and Engility entered into a Distribution Agreement dated July 16, 2012 and several other agreements that govern certain aspects of L-3’s relationship with Engility. These agreements generally provide that each party is responsible for its respective assets, liabilities and obligations, including employee benefits, insurance and tax-related assets and liabilities, following the spin-off, whether accrued or contingent. The agreements also described certain services that L-3 provided to Engility that were substantially completed by December 31, 2013.

L-3 incurred transaction expenses in connection with the spin-off of $19 million ($14 million after income taxes) for the year ended December 31, 2012 and $9 million ($7 million after income taxes) for the year ended December 31, 2011, which have been included in discontinued operations. In addition, L-3 allocated interest expense for debt not directly attributable or related to L-3’s other operations of $14 million and $31 million to

F-28

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

discontinued operations for the years ended December 31, 2012 and 2011, respectively. Interest expense was allocated in accordance with the accounting standards for discontinued operations and was based on the ratio of Engility net assets to the sum of: (1) total L-3 consolidated net assets and (2) L-3 consolidated total debt.

Engility’s statement of operations data, which has been classified as discontinued operations, is provided in the table below.

	January 1 to July 17, 2012		Year Ended December 31, 2011
	(in millions)
Product and service revenues	$	911	$	2,011
Operating income from discontinued operations before income taxes		68		199
Interest expense allocated to discontinued operations		(14)		(31)
Income from discontinued operations before income taxes	$	54	$	168
Income tax expense		(22)		(64)
Income from discontinued operations, net of income taxes	$	32	$	104
Net income from discontinued operations attributable to noncontrolling interests		(4)		(3)
Net income from discontinued operations attributable to L-3	$	28	$	101

2011 Business Divestiture

On February 22, 2011, the Company divested the MOI business of Microdyne Corporation (Microdyne), which was within the Electronic Systems segment. The divestiture resulted in a pre-tax loss of $2 million. Microdyne’s annual revenues (approximately $8 million), operating results and net assets were not material for any period presented and, therefore, this divestiture is not reported as a discontinued operation. The net proceeds from the sale are included in investing activities on the Consolidated Statement of Cash Flows.

Unaudited Pro Forma Statements of Operations Data

The following unaudited pro forma Statements of Operations data presents the combined results of the Company and its business acquisitions completed during the years ended December 31, 2013, 2012 and 2011, assuming that the business acquisitions completed during 2013, 2012 and 2011 had occurred on January 1, 2011.

	Year Ended December 31,
	2013		2012		2011
	(in millions, except per share data)
Pro forma net sales	$	12,657	$	13,239	$	13,498
Pro forma income from continuing operations	$	760	$	764	$	883
Pro forma net income attributable to L-3	$	751	$	786	$	975
Pro forma diluted earnings per share from continuing operations	$	8.24	$	7.76	$	8.26
Pro forma diluted earnings per share	$	8.24	$	8.05	$	9.21

The unaudited pro forma results disclosed in the table above are based on various assumptions and are not necessarily indicative of the results of operations that would have occurred had the Company completed these acquisitions on the dates indicated above.

F-29

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

6. Contracts in Process

The components of contracts in process are presented in the table below. The unbilled contract receivables, inventoried contract costs and unliquidated progress payments principally relate to contracts with the U.S. Government and prime contractors or subcontractors of the U.S. Government. In connection with contracts in process assumed by the Company in its business acquisitions, the underlying contractual customer relationships are separately recognized as identifiable intangible assets at the date of acquisition, and are discussed and presented in Note 8.

	December 31,
	2013		2012
	(in millions)
Unbilled contract receivables, gross	$	2,502	$	2,802
Unliquidated progress payments		(1,035)		(1,256)
Unbilled contract receivables, net		1,467		1,546
Inventoried contract costs, gross		1,044		1,091
Unliquidated progress payments		(80)		(127)
Inventoried contract costs, net		964		964
Total contracts in process	$	2,431	$	2,510

Unbilled Contract Receivables. Unbilled contract receivables represent accumulated incurred costs and earned profits on contracts (revenue arrangements), which have been recorded as sales, but have not yet been billed to customers. Unbilled contract receivables arise from the cost-to-cost method of revenue recognition that is used to record sales on certain fixed-price contracts. Unbilled contract receivables from fixed-price type contracts are converted to billed receivables when amounts are invoiced to customers according to contractual billing terms, which generally occur when deliveries or other performance milestones are completed. Unbilled contract receivables also arise from cost-plus type contracts and time-and-material type contracts, for revenue amounts that have not been billed by the end of the accounting period due to the timing of preparation of invoices to customers. The Company believes that approximately 98% of the unbilled contract receivables at December 31, 2013 will be billed and collected within one year.

Unliquidated Progress Payments. Unliquidated progress payments arise from fixed-price type contracts with the U.S. Government that contain progress payment clauses, and represent progress payments on invoices that have been collected in cash, but have not yet been liquidated. Progress payment invoices are billed to the customer as contract costs are incurred at an amount generally equal to 75% to 80% of incurred costs. Unliquidated progress payments are liquidated as deliveries or other contract performance milestones are completed, at an amount equal to a percentage of the contract sales price for the items delivered or work performed, based on a contractual liquidation rate. Therefore, unliquidated progress payments are a contra asset account, and are classified against unbilled contract receivables if revenue for the underlying contract is recorded using the cost-to-cost method, and against inventoried contract costs if revenue is recorded using the units-of-delivery method.

Inventoried Contract Costs. In accordance with contract accounting standards, the Company’s U.S. Government contractor businesses account for the portion of their G&A, IRAD and B&P costs that are allowable and reimbursable indirect contract costs under U.S. Government procurement regulations on their U.S. Government contracts (revenue arrangements) as inventoried contract costs. G&A, IRAD and B&P costs are allocated to contracts for which the U.S. Government is the end customer and are charged to costs of sales when sales on the related contracts are recognized. The Company’s U.S. Government contractor businesses record the unallowable portion of their G&A, IRAD and B&P costs to expense as incurred, and do not include them in inventoried contract costs.

F-30

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The table below presents a summary of G&A, IRAD and B&P costs included in inventoried contract costs and the changes to them, including amounts charged to cost of sales by the Company’s U.S. Government contractor businesses for the periods presented.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Amounts included in inventoried contract costs at beginning of the year	$	110	$	91	$	97
IRAD and B&P costs incurred		296		336		327
Other G&A costs incurred		893		891		843
Total contract costs incurred		1,189		1,227		1,170
Amounts charged to cost of sales		(1,161)		(1,208)		(1,176)
Amounts included in inventoried contract costs at end of the year	$	138	$	110	$	91

The table below presents a summary of selling, general and administrative expenses and research and development expenses for the Company’s commercial businesses, which are expensed as incurred and included in cost of sales on the Consolidated Statements of Operations.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Selling, general and administrative expenses	$	293	$	306	$	300
Research and development expenses		74		88		73
Total	$	367	$	394	$	373

7. Inventories

Inventories at Lower of Cost or Market. The table below presents the components of inventories at the lower of cost (first-in, first-out or average cost) or realizable value.

	December 31,
	2013		2012
	(in millions)
Raw materials, components and sub-assemblies	$	160	$	166
Work in process		125		121
Finished goods		74		71
Total	$	359	$	358

8. Goodwill and Identifiable Intangible Assets

Goodwill. In accordance with the accounting standards for business combinations, the Company records the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition (commonly referred to as the purchase price allocation). As part of the purchase price allocations for the Company’s business acquisitions, identifiable intangible assets are recognized as assets apart from goodwill if they arise from contractual or other legal rights, or if they are capable of being separated or divided from the acquired business and sold, transferred, licensed, rented or exchanged. However, the Company does not recognize any intangible assets apart from goodwill for the assembled workforces of its business acquisitions. At December 31, 2013, the

F-31

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Company had approximately 48,000 employees, and the substantial majority of the sales generated by the Company’s businesses are from the productive labor efforts of its employees, as compared to selling manufactured products or right-to-use technology.

Generally, the largest intangible assets from the businesses that the Company acquires are the assembled workforces, which includes the human capital of the management, administrative, marketing and business development, scientific, engineering and technical employees of the acquired businesses. The success of the Company’s businesses, including their ability to retain existing business (revenue arrangements) and to successfully compete for and win new business (revenue arrangements), is primarily dependent on the management, marketing and business development, contracting, engineering and technical skills and knowledge of its employees, rather than on productive capital (plant and equipment, and technology and intellectual property). Additionally, for a significant portion of its businesses, the Company’s ability to attract and retain employees who have U.S. Government security clearances, particularly those of top-secret and above, is critical to its success, and is often a prerequisite for retaining existing revenue arrangements and pursuing new ones. Generally, patents, trademarks and licenses are not material for the Company’s acquired businesses. Furthermore, the Company’s U.S. Government contracts (revenue arrangements) generally permit other companies to use the Company’s patents in most domestic work performed by such other companies for the U.S. Government. Therefore, because intangible assets for assembled workforces are part of goodwill in accordance with the accounting standards for business combinations, the substantial majority of the intangible assets for the Company’s business acquisitions is recognized as goodwill. Additionally, the value assigned to goodwill for the Company’s business acquisitions also includes the value that the Company expects to realize from cost reduction measures that it implements for its acquired businesses.

The table below presents the changes in goodwill allocated to the Company’s reporting units in each reportable segment.

	Aerospace Systems		Electronic Systems		Communication Systems		NSS		Consolidated Total
	(in millions)
Balance at December 31, 2011	$	1,764	$	3,750	$	992	$	966	$	7,472
Business acquisitions		—		278		—		—		278
Foreign currency translation(1)		6		18		—		2		26
Balance at December 31, 2012	$	1,770	$	4,046	$	992	$	968	$	7,776
Business acquisition		—		44		—		—		44
Business disposition		—		(2)		—		—		(2)
Foreign currency translation(1)		(19)		(3)		—		—		(22)
Balance at December 31, 2013	$	1,751	$	4,085	$	992	$	968	$	7,796

⁽¹⁾  The changes in goodwill from foreign currency translation adjustments are due to fluctuations in the U.S. dollar and foreign currency exchange rates. The decreases in goodwill presented in Electronic Systems and Aerospace Systems segments during 2013 were primarily due to the strengthening of the U.S. dollar against the Canadian dollar and Australian dollar, partially offset by the weakening of the U.S. dollar against the Euro and British pound. Conversely, the increases in goodwill presented in the Electronic Systems, Aerospace Systems and NSS segments during 2012 were due to the weakening of the U.S dollar against the Euro, Canadian dollar and the British pound.

The $44 million increase to goodwill for the year ended December 31, 2013 was due to the Mustang business acquisition. The $278 million increase to goodwill for the year ended December 31, 2012 was due to three business acquisitions completed during the year.

F-32

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

As discussed in Note 2, the carrying value of goodwill is tested for impairment annually as of November 30 and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, on an interim basis using a two step process.

The first step of the November 30, 2013 and November 30, 2012 annual impairment tests did not indicate any impairments. The November 30, 2011 annual impairment test did identify an impairment at the Marine Services business, which is now part of the Marine & Power Systems business included in the Electronic Systems segment. The Company performed the second step of the impairment test in accordance with the accounting standards for goodwill to measure the impairment loss and determined that the implied goodwill was $43 million lower than the carrying amount. Accordingly, the Company recorded a non-cash impairment charge of $43 million ($42 million after income taxes, or $0.40 per diluted share) for the impairment of goodwill. The Company’s accumulated goodwill impairment losses were $58 million at December 31, 2013 and 2012, of which $43 million and $15 million were recorded in the Electronic Systems and Communication Systems segments, respectively.

Identifiable Intangible Assets. The most significant identifiable intangible asset that is separately recognized for the Company’s business acquisitions is customer contractual relationships. All of the Company’s customer relationships are established through written customer contracts (revenue arrangements). The fair value for customer contractual relationships is determined, as of the date of acquisition, based on estimates and judgments regarding expectations for the estimated future after-tax earnings and cash flows (including cash flows for working capital) arising from the follow-on sales on contract (revenue arrangement) renewals expected from the customer contractual relationships over their estimated lives, including the probability of expected future contract renewals and sales, less a contributory assets charge, all of which is discounted to present value.

Information on the Company’s identifiable intangible assets that are subject to amortization is presented in the table below.

	December 31, 2013							December 31, 2012
	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in years)			(in millions)
Customer contractual relationships	19	$	466	$	253	$	213	$	460	$	225	$	235
Technology	11		168		108		60		164		98		66
Other	17		27		15		12		27		14		13
Total	17	$	661	$	376	$	285	$	651	$	337	$	314

Amortization expense recorded by the Company for its identifiable intangible assets is presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Amortization expense	$	39	$	47	$	54

F-33

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Based on gross carrying amounts at December 31, 2013, the Company’s estimate of amortization expense for identifiable intangible assets for the years ending December 31, 2014 through 2018 is presented in the table below.

	Year Ending December 31,
	2014		2015		2016		2017		2018
	(in millions)
Estimated amortization expense	$	43	$	40	$	33	$	31	$	25

9. Other Current Liabilities and Other Liabilities

The table below presents the components of other current liabilities.

	December 31,
	2013		2012
	(in millions)
Other Current Liabilities:
Accruals for pending and threatened litigation (see Note 20)	$	6	$	7
Estimated costs in excess of estimated contract value to complete contracts in process in a loss position		78		96
Accrued product warranty costs		75		76
Accrued interest		52		53
Deferred revenues		35		35
Estimated contingent purchase price payable for acquired businesses		—		4
Other		137		121
Total other current liabilities	$	383	$	392

The table below presents the components of other liabilities.

	December 31,
	2013		2012
	(in millions)
Other Liabilities:
Non-current income taxes payable (see Note 18)	$	177	$	146
Accrued workers’ compensation		46		57
Deferred compensation		45		43
Accrued product warranty costs		24		23
Notes payable and capital lease obligations		15		24
Estimated contingent purchase price payable for acquired businesses		—		5
Other		99		95
Total other liabilities	$	406	$	393

F-34

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

10. Property, Plant and Equipment

The table below presents the components of Property, Plant and Equipment.

	December 31,
	2013		2012
	(in millions)
Land	$	62	$	63
Buildings and improvements		415		407
Machinery, equipment, furniture and fixtures		1,643		1,532
Leasehold improvements		328		322
Gross property, plant and equipment		2,448		2,324
Accumulated depreciation and amortization		(1,406)		(1,301)
Property, plant and equipment, net	$	1,042	$	1,023

11. Debt

The components of long-term debt and a reconciliation to the carrying amount of long-term debt are presented in the table below.

	December 31,
	2013		2012
	(in millions)
L-3 Communications:
Borrowings under Amended and Restated Revolving Credit Facility(1)	$	—	$	—
3.95% Senior Notes due 2016		500		500
5.20% Senior Notes due 2019		1,000		1,000
4.75% Senior Notes due 2020		800		800
4.95% Senior Notes due 2021		650		650
Subtotal		2,950		2,950
L-3 Holdings:
3% Convertible Contingent Debt Securities due 2035		689		689
Principal amount of long-term debt		3,639		3,639
Unamortized discounts		(9)		(10)
Carrying amount of long-term debt	$	3,630	$	3,629

⁽¹⁾  During 2013, L-3 Communications’ aggregate borrowings and repayments under the Amended and Restated Revolving Credit Facility were $1,893 million. L-3 Communications had the availability of substantially all of its $1 billion Amended and Restated Revolving Credit Facility at December 31, 2013 and 2012.

L-3 Communications Amended and Restated Revolving Credit Facility

On February 3, 2012, L-3 Communications amended and restated its $1 billion Revolving Credit Facility, which extended the expiration date to February 3, 2017. The terms of the Amended and Restated Revolving Credit Facility are substantially consistent with the terms of this facility prior to its amendment and restatement except that: (1) provisions that previously limited the ability of L-3 Communications to pay dividends, repurchase L-3 Holdings’ common stock and make other distributions with respect to any capital stock were eliminated, (2) a provision that previously limited the ability of L-3 Communications to make investments in L-3 Holdings was made less restrictive and (3) the cost of borrowings, loan commitment fees and letter of credit fees were reduced. In addition, the Amended and Restated Revolving Credit Facility provides for uncommitted

F-35

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

incremental revolving facilities and additional term loan facilities in an aggregate principal amount of up to $500 million. Borrowings under the Amended and Restated Revolving Credit Facility bear interest, at L-3 Communications’ option, at either (1) the “base rate” equal to the highest of (a) 0.50% per annum above the latest federal funds rate, (b) the Bank of America “prime rate” (as defined in the Amended and Restated Revolving Credit Facility), and (c) 1.00% per annum above a “Eurodollar Rate” (as defined in the Amended and Restated Revolving Credit Facility), plus a spread ranging from 0.25% to 1.00% per annum, or (2) a “Eurodollar Rate” (as defined in the Amended and Restated Revolving Credit Facility) plus a spread ranging from 1.25% to 2.00% per annum. L-3 Communications pays: (1) commitment fees calculated on the daily amounts of the available unused commitments at a rate ranging from 0.15% to 0.325% per annum, (2) letter of credit fees ranging from 0.675% to 1.20% per annum for commercial and performance letters of credit and (3) letter of credit fees ranging from 1.25% to 2.00% for financial letters of credit. The interest rate spread and the commitment fee rate, in all cases, depend on L-3 Communications’ debt rating at the time of determination. The debt rating is based on the credit ratings as determined by Standard & Poor’s Rating Services, Moody’s Investors Service, Inc. and Fitch Ratings of L-3 Communications’ non-credit enhanced senior, unsecured long-term debt.

L-3 Communications Senior Notes

The Senior Notes are unsecured senior obligations of L-3 Communications. The terms of each outstanding Senior Note are presented in the table below.

Note	Date of Issuance	Amount Issued		Discount(1)		Net Cash Proceeds		Effective Interest Rate		Redemption at Treasury Rate(2)(3)
		(in millions)
3.95% Senior Notes due November 15, 2016	November 22, 2011	$	500	$	4	$	491		4.11%		50 bps
5.20% Senior Notes due October 15, 2019	October 2, 2009	$	1,000	$	4	$	987		5.25%		30 bps
4.75% Senior Notes due July 15, 2020	May 21, 2010	$	800	$	3	$	790		4.79%		25 bps
4.95% Senior Notes due February 15, 2021	February 7, 2011	$	650	$	4	$	639		5.02%		25 bps

⁽¹⁾  Discounts are recorded as a reduction to the principal amount of the notes and are amortized as interest expense over the term of the notes.

⁽²⁾  The Senior Notes may be redeemed at any time prior to their maturity at the option of L-3 Communications, in whole or in part, at a redemption price equal to the greater of (1) 100% of the principal amount, or (2) the present value of the remaining principal and interest payments discounted to the date of redemption, on a semi-annual basis, at the Treasury Rate (as defined in the Senior Indentures), plus the spread indicated in the table above.

⁽³⁾  Upon the occurrence of a change in control (as defined in the Senior Indentures), each holder of the notes will have the right to require L-3 Communications to repurchase all or any part of such holder’s notes at an offer price in cash equal to 101% of the aggregate principal amount plus accrued and unpaid interest, if any, to the date of purchase.

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L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Information on the Senior Subordinated Notes redeemed by the Company during the years ended December 31, 2012 and 2011 is presented in the table below.

Note	Redemption Date		Principal Amount Redeemed		Debt Retirement Charge		Redemption Price % of Principal
			(in millions)
6 3⁄8% Senior Subordinated Notes due October 15, 2015		October 15, 2012	$	250	$	5		101.063%
6 3⁄8% Senior Subordinated Notes due October 15, 2015(1)		July 26, 2012	$	250	$	8		102.125%
6 3⁄8% Senior Subordinated Notes due October 15, 2015		December 22, 2011	$	500	$	17		102.125%
5 7⁄8% Senior Subordinated Notes due January 15, 2015		March 9, 2011	$	650	$	18		101.958%

⁽¹⁾  In connection with the spin-off, Engility made a cash distribution of $335 million to L-3, a portion of which was used to redeem $250 million of the 6 ³⁄₈% 2015 Notes.

L-3 Holdings

In 2005, L-3 Holdings sold $700 million of 3% Convertible Contingent Debt Securities (CODES) due August 1, 2035. Interest is payable semi-annually on February 1 and August 1 of each year. On February 2, 2011, L-3 Holdings repurchased approximately $11 million of the CODES as a result of the exercise by the holders of their contractual right to require L-3 Holdings to repurchase their CODES. Holders of the remaining CODES may require L-3 Holdings to repurchase the CODES, in whole or in part, on February 1, 2016, February 1, 2021, February 1, 2026 and February 1, 2031 at a cash repurchase price equal to 100% of the principal amount of the CODES (plus accrued and unpaid interest, including contingent interest and additional interest, if any). In addition, holders of the CODES may require L-3 Holdings to repurchase the CODES at a repurchase price equal to 100% of the principal amount of the CODES (plus accrued and unpaid interest, including contingent interest and additional interest, if any) if a “fundamental change” (as such term is defined in the indenture governing the CODES) occurs prior to maturity of the CODES. At December 31, 2013 and 2012, the remaining $689 million principal amount of CODES was classified as long-term debt.

In accordance with the provisions of the accounting standard for convertible debt, the Company separately accounts for the liability and equity (conversion option) components of the CODES in a manner that reflects the Company’s non-convertible debt borrowing rate. Through February 1, 2011, the effective interest rate of the CODES was 6.33% and interest expense related to both the contractual coupon interest and amortization of the discount on the liability components. The Company amortized the discount on the liability component of the CODES through February 1, 2011 which was the first date that the holders of the CODES had a contractual right to require L-3 Holdings to repurchase the CODES. Interest expense for the CODES after February 1, 2011 relates only to the contractual coupon interest. Interest expense recognized was $21 million for both years ended December 31, 2013 and 2012, and $23 million for the year ended December 31, 2011, a portion of which was allocated to discontinued operations in 2012 and 2011 as a result of the spin-off of Engility. The carrying amount of the equity components (conversion feature) of the CODES was $64 million at December 31, 2013 and 2012.

The CODES are convertible into cash and shares of L-3 Holdings’ common stock based on a current conversion rate of 11.0813 shares of L-3 Holdings common stock per one thousand dollars in principal amount of the CODES (equivalent to a conversion price of $90.24 per share) only under the following circumstances: (1) prior to August 1, 2033, on any date during any fiscal quarter (and only during such fiscal quarter) beginning after September 30, 2005, if the closing sales price of the common stock of L-3 Holdings is more than 120% of

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L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

the then current conversion price (currently $108.29) for at least 20 trading days in the 30 consecutive trading-day period ending on the last trading day of the previous fiscal quarter; (2) on or after August, 1, 2033, at all times on or after any date on which the closing sale price of the common stock of L-3 Holdings is more than 120% of the then current conversion price (currently $108.29); (3) if we distribute to all holders of our common stock, rights or warrants (other than pursuant to a rights plan) entitling them to purchase, for a period of 45 calendar days or less, shares of L-3 Holdings’ common stock at a price less than the average closing sales price for the ten trading days preceding the declaration date for such distribution; (4) if we distribute to all holders of our common stock, cash and other assets, debt securities or rights to purchase L-3 Holdings’ securities (other than pursuant to a rights plan), which distribution has a per share value exceeding 10% of the closing sale price of L-3 Holdings common stock on the trading day preceding the declaration date for such distribution; (5) during the five consecutive business-day period following any five consecutive trading-day period in which the average trading price of the CODES was less than 98% of the average of the closing sale price of L-3 Holdings common stock during such five trading day period multiplied by the then current conversion rate; (6) during a specified period if the CODES have been called for redemption; or (7) during a specified period if a “fundamental change” occurs. The conversion rate is subject to adjustments in certain circumstances set forth in the indenture governing the CODES. For the year ended December 31, 2013, the conversion feature of the CODES was dilutive to earnings per share (EPS) (see Note 17).

Upon conversion of the CODES, the settlement amount will be computed as follows: (1) if L-3 Holdings elects to satisfy the entire conversion obligation in cash, L-3 Holdings will deliver to the holder for each one thousand dollars in principal amount of the CODES converted cash in an amount equal to the conversion value; or (2) if L-3 Holdings elects to satisfy the conversion obligation in a combination of cash and common stock, L-3 Holdings will deliver to the holder for each one thousand dollars in principal amount of the CODES converted (x) cash in an amount equal to (i) the fixed dollar amount per one thousand dollars in principal amount of the CODES of the conversion obligation to be satisfied in cash specified in the notice regarding L-3 Holdings’ chosen method of settlement or, if lower, the conversion value, or (ii) the percentage of the conversion obligation to be satisfied in cash specified in the notice regarding L-3 Holdings chosen method of settlement multiplied by the conversion value, as the case may be (the “cash amount”); provided that in either case the cash amount shall in no event be less than the lesser of (a) the principal amount of the CODES converted and (b) the conversion value; and (y) a number of shares of common stock of L-3 Holdings for each of the 20 trading days in the conversion period equal to 1/20th of (i) the conversion rate then in effect minus (ii) the quotient of the cash amount divided by the closing price of common stock of L-3 Holdings for that day (plus cash in lieu of fractional shares, if applicable).

The CODES are senior unsecured obligations of L-3 Holdings and rank equal in right of payment with all existing and future senior indebtedness and senior to all future senior subordinated indebtedness of L-3 Holdings. The CODES are jointly and severally guaranteed on a senior subordinated basis by the existing and future domestic subsidiaries of L-3 Holdings that guarantee any other indebtedness of L-3 Holdings or any of its domestic subsidiaries.

The CODES are subject to redemption at the option of L-3 Holdings, in whole or in part, at a cash redemption price (plus accrued and unpaid interest, including contingent interest and additional interest, if any) equal to 100% of the principal amount of the CODES.

Holders of the CODES have a right to receive contingent interest payments, which will be paid on the CODES during any six-month period commencing February 1, 2011 in which the trading price of the CODES for each of the five trading days ending on the second trading day preceding the first day of the applicable six-month interest period equals or exceeds 120% of the principal amount of the CODES. The contingent interest payable per one thousand dollars in principal amount of CODES will equal 0.25% of the average trading price of one thousand

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L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

dollars in principal amount of CODES during the five trading days ending on the second trading day preceding the first day of the applicable six-month interest period. The contingent interest payment provision has been accounted for as an embedded derivative. The amount assigned to the embedded derivative is adjusted periodically through other income (expense) for changes in its fair value, if any. The change in the fair value of the embedded derivative related to the CODES was $0 for the years ended December 31, 2013, 2012 and 2011.

Guarantees

L-3 Communications

The borrowings under the Amended and Restated Revolving Credit Facility are fully and unconditionally guaranteed by L-3 Holdings and by substantially all of the material 100% owned domestic subsidiaries of L-3 Communications on an unsecured senior basis. The payment of principal and premium, if any, and interest on the Senior Notes is fully and unconditionally guaranteed, on an unsecured senior basis, jointly and severally, by L-3 Communications’ material 100% owned domestic subsidiaries that guarantee any of its other indebtedness.

L-3 Holdings

The payment of principal and premium, if any, and interest on the CODES is fully and unconditionally guaranteed, on an unsecured senior subordinated basis, jointly and severally, by L-3 Communications and its 100% owned domestic subsidiaries that guarantee any of its other liabilities.

Subordination

The guarantees of the Amended and Restated Revolving Credit Facility and the Senior Notes rank senior to the guarantees of the CODES and rank pari passu with each other.

Covenants

Financial and other restrictive covenants. The Amended and Restated Revolving Credit Facility contains financial and other restrictive covenants that limit, among other things, the ability of the subsidiaries of L-3 Communications to borrow additional funds, and the ability of L-3 Communications and its subsidiaries to incur liens, make investments, merge or consolidate or dispose of assets. The Company’s Amended and Restated Revolving Credit Facility contains covenants that require that (1) the Company’s consolidated leverage ratio be less than or equal to 4.0 to 1.0; (2) the Company’s consolidated interest coverage ratio be greater than or equal to 3.0 to 1.0; and (3) the Company’s consolidated senior leverage ratio be less than or equal to 3.5 to 1.0, in each case, as of the end of any fiscal quarter. Calculations of the financial covenants are to exclude, among other things, certain items such as impairment losses on goodwill or other intangible assets, non-cash gains or losses from discontinued operations, gains or losses in connection with asset dispositions, and gains or losses with respect to judgments or settlements in connection with litigation matters. As of December 31, 2013, the Company was in compliance with its financial and other restrictive covenants.

The Senior Indentures contain covenants customary for investment grade notes, including covenants that restrict the ability of L-3 Communications and its 100% owned domestic subsidiaries to create, incur, assume or permit to exist any lien, except permitted liens (as defined in the Senior Indentures) and restrict the ability of L-3 Communications and its subsidiaries to enter into certain sale and leaseback transactions (as defined in the Senior Indentures).

Cross default provisions. The Amended and Restated Revolving Credit Facility contains cross default provisions that are triggered when a payment default occurs or certain other defaults occur that would allow the acceleration of indebtedness, swap contracts or guarantees of L-3 Holdings, L-3 Communications or its subsidiaries, so long as the aggregate amount of such indebtedness, swap contracts or guarantees is at least

F-39

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

$50 million and such defaults (other than payment defaults and defaults that have resulted in acceleration) have not been cured within 10 days. The CODES indenture contains cross acceleration provisions that are triggered when holders of the indebtedness of L-3 Holdings or any of its subsidiaries (or the payment of which is guaranteed by such entities) accelerate at least $50 million in aggregate principal amount of those obligations. The Senior Notes indenture contains a cross acceleration provision that is triggered when a default or acceleration occurs under any indenture or instrument of L-3 Communications or its subsidiaries or the payment of which is guaranteed by L-3 Communications or its subsidiaries in an aggregate amount of at least $100 million.

12. Accumulated Other Comprehensive (Loss) Income

The changes in the accumulated other comprehensive (loss) income (AOCI) balances, net of related tax effects are presented in the table below.

	Foreign currency translation		Unrealized gains (losses) on hedging instruments		Unrecognized (losses) gains and prior service cost, net		Total accumulated other comprehensive loss
	(in millions)
Balance at December 31, 2010	$	161	$	10	$	(427)	$	(256)
Period change		(28)		(10)		(160)		(198)
Balance at December 31, 2011	$	133	$	—	$	(587)	$	(454)
Period change		34		3		(133)		(96)
Balance at December 31, 2012	$	167	$	3	$	(720)	$	(550)
Period change		(25)		(2)		467		440
Balance at December 31, 2013	$	142	$	1	$	(253)	$	(110)

The amounts reclassified from AOCI are presented in the table below.

	Foreign currency translation		Unrealized gains (losses) on hedging instruments		Unrecognized (losses) and prior service cost, net		Total accumulated other comprehensive (loss) income
	(in millions)
Balance at December 31, 2012	$	167	$	3	$	(720)	$	(550)
Other comprehensive (loss) income before reclassifications, net of tax		(25)		(1)		414		388
Amounts reclassified from other comprehensive (loss) income, net of tax		—		(1)		53		52
Net current period other comprehensive (loss) income		(25)		(2)		467		440
Balance at December 31, 2013	$	142	$	1	$	(253)	$	(110)

F-40

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Further details regarding the amounts reclassified from AOCI are presented in the table below.

	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income
Details About Accumulated Other Comprehensive (Loss) Income Components	Year ended December 31, 2013		Affected Line Item in the Audited Consolidated Statement of Operations
	(millions)
Loss on hedging instruments	$	(1)	Cost of sales-products
		(1)	Income from continuing operations before income taxes
		—	Provision for income taxes
	$	(1)	Income from continuing operations
Amortization of defined benefit pension items:
Net loss	$	83	(a)
		83	Income from continuing operations before income taxes
		(30)	Provision for income taxes
	$	53	Income from continuing operations
Total reclassification for the period	$	52	Income from continuing operations

^(a)  Amounts related to pension and postretirement benefit plans were reclassified from AOCI and recorded as a component of net periodic benefit cost (see Note 21 for additional information).

13. Equity

The $1.5 billion share repurchase program authorized on April 26, 2011 by L-3 Holdings’ Board of Directors expired on April 30, 2013. On February 5, 2013, L-3 Holdings’ Board of Directors approved a new share repurchase program that authorizes L-3 Holdings to repurchase up to an additional $1.5 billion of its common stock through June 30, 2015. Repurchases of L-3 Holdings’ common stock under the February 5, 2013 share repurchase program are made at management’s discretion in accordance with applicable U.S. Federal securities laws in the open market or otherwise. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company’s financial position, earnings, legal requirements, other investment opportunities (including acquisitions), market conditions and other factors. L-3 Holdings repurchased 8.7 million shares of its common stock at an average price of $91.95 per share for an aggregate amount of $800 million from January 1, 2013 through December 31, 2013. Approximately 2.1 million of the share repurchases, for an aggregate amount of $168 million, were repurchased pursuant to the April 26, 2011 share repurchase program. The remaining share repurchases were made pursuant to the share repurchase program authorized on February 5, 2013. All share repurchases of L-3 Holdings’ common stock have been recorded as treasury shares.

From January 1, 2014 through February 19, 2014, L-3 Holdings repurchased 928,040 shares of its common stock at an average price of $107.52 per share for an aggregate amount of approximately $100 million. The remaining dollar value of authorization under our February 5, 2013 share repurchase program at February 19, 2014 is $768 million.

F-41

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

14. Fair Value Measurements

L-3 applies the accounting standards for fair value measurements to all of the Company’s assets and liabilities that are measured and recorded at fair value. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants. The standards establish a fair value hierarchy that gives the highest priority to observable inputs and the lowest priority to unobservable inputs.

The following table presents the fair value hierarchy level for each of the Company’s assets and liabilities that are measured and recorded at fair value on a recurring basis.

	December 31,
	2013						2012
Description	Level 1(1)		Level 2(2)		Level 3(3)		Level 1(1)		Level 2(2)		Level 3(3)
	(in millions)
Assets
Cash equivalents	$	299	$	—	$	—	$	284	$	—	$	—
Derivatives (foreign currency forward contracts)		—		6		—		—		8		—
Total assets	$	299	$	6	$	—	$	284	$	8	$	—
Liabilities
Derivatives (foreign currency forward contracts)	$	—	$	5	$	—	$	—	$	3	$	—

⁽¹⁾  Level 1 is based on quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Cash equivalents are primarily held in registered money market funds which are valued using quoted market prices.

⁽²⁾  Level 2 is based on pricing inputs other than quoted prices in active markets, which are either directly or indirectly observable. The fair value is determined using a valuation model based on observable market inputs, including quoted foreign currency forward exchange rates and consideration of non-performance risk.

⁽³⁾  Level 3 is based on pricing inputs that are not observable and not corroborated by market data. The Company has no Level 3 assets or liabilities.

15. Financial Instruments

At December 31, 2013 and 2012, the Company’s financial instruments consisted primarily of cash and cash equivalents, billed receivables, trade accounts payable, Senior Notes, CODES and foreign currency forward contracts. The carrying amounts of cash and cash equivalents, billed receivables and trade accounts payable are representative of their respective fair values because of the short-term maturities or expected settlement dates of these instruments. The carrying amounts and estimated fair values of the Company’s other financial instruments are presented in the table below.

	December 31, 2013				December 31, 2012
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(in millions)
Senior Notes(1)	$	2,941	$	3,121	$	2,940	$	3,301
CODES(1)	$	689	$	830	$	689	$	697
Foreign currency forward contracts(2)	$	1	$	1	$	5	$	5

⁽¹⁾  The Company measures the fair value of its Senior Notes and CODES using Level 2 inputs based primarily on current market yields for its existing debt traded in the secondary market.

⁽²⁾  The Company measures the fair values of foreign currency forward contracts based on forward exchange rates. See Note 16 for additional disclosures regarding the notional amounts and fair values of foreign currency forward contracts.

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L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

16. Derivative Financial Instruments

Notional amounts are used to measure the volume of foreign currency forward contracts and do not represent exposure to foreign currency losses. The table below presents the notional amounts of the Company’s outstanding foreign currency forward contracts by currency as of December 31, 2013.

Currency	Notional Amount
	(in millions)
Canadian dollar	$	137
U.S. dollar		98
Euro		66
British pound		18
Other		2
Total	$	321

At December 31, 2013, the Company’s foreign currency forward contracts had maturities through 2018.

The table below presents the fair values and the location of the Company’s derivative instruments in the consolidated balance sheets.

	December 31, 2013								December 31, 2012
	Other Current Assets		Other Assets		Other Current Liabilities		Other Liabilities		Other Current Assets		Other Assets		Other Current Liabilities		Other Liabilities
	(in millions)
Derivatives designated as hedging instruments:
Foreign currency forward contracts(1)	$	5	$	1	$	3	$	2	$	4	$	4	$	2	$	1
Derivatives not designated as hedging instruments:
Foreign currency forward contracts(1)		—		—		—		—		—		—		—		—
Embedded derivative related to the CODES		—		—		—		—		—		—		—		—
Total derivative instruments	$	5	$	1	$	3	$	2	$	4	$	4	$	2	$	1

⁽¹⁾  See Note 14 for a description of the fair value hierarchy related to the Company’s foreign currency forward contracts.

The effect of gains or losses from foreign currency forward contracts was not material to the consolidated statements of operations for the years ended December 31, 2013 and 2012. At December 31, 2013, the estimated net amount of existing losses that are expected to be reclassified into income within the next 12 months is $1 million.

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L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

17. L-3 Holdings’ Earnings Per Share

A reconciliation of basic and diluted EPS is presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions, except per share data)
Reconciliation of net income:
Net income	$	760	$	794	$	970
Net income from continuing operations attributable to noncontrolling interests		(9)		(6)		(9)
Net income from discontinued operations attributable to noncontrolling interests		—		(4)		(3)
Net income allocable to participating securities		—		—		(2)
Net income allocable to L-3 Holdings common shareholders	$	751	$	784	$	956
Earnings allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	751	$	756	$	855
Discontinued operations, net of income tax		—		28		101
Net income allocable to L-3 Holdings common shareholders	$	751	$	784	$	956
Earnings per share allocable to L-3 Holdings’ common shareholders:
Basic:
Weighted average common shares outstanding		89.4		96.3		104.4
Basic earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.40	$	7.85	$	8.19
Discontinued operations, net of income tax		—		0.29		0.97
Basic earnings per share	$	8.40	$	8.14	$	9.16
Diluted:
Common and potential common shares:
Weighted average common shares outstanding		89.4		96.3		104.4
Assumed exercise of stock options		3.9		1.9		2.0
Unvested restricted stock awards		1.8		2.0		1.8
Employee stock purchase plan contributions		0.2		0.3		0.2
Performance unit awards		0.1		0.1		0.1
Assumed purchase of common shares for treasury		(4.5)		(3.0)		(2.9)
Assumed conversion of the CODES(1)		0.2		—		—
Common and potential common shares		91.1		97.6		105.6
Diluted earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.24	$	7.74	$	8.10
Discontinued operations, net of income tax		—		0.29		0.95
Diluted earnings per share	$	8.24	$	8.03	$	9.05

⁽¹⁾  L-3 Holdings’ CODES had no impact on diluted EPS for the years ended December 31, 2012 and 2011 because the average market price of L-3 Holdings’ common stock during these periods was less than the price at which the CODES would have been convertible into L-3 Holdings’ common stock. As of December 31, 2013, 2012 and 2011, the conversion prices were $90.24, $91.21 and $96.48, respectively.

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L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The computation of diluted EPS excluded shares for stock options and employee stock purchase plan contributions of 0.9 million and 3.2 million for the years ended December 31, 2013 and 2012, as they were anti-dilutive. In addition, shares for stock options of 3.2 million for the year ended December 31, 2011, were anti-dilutive and excluded from diluted EPS.

18. Income Taxes

Income from continuing operations before income taxes is summarized in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Domestic	$	858	$	892	$	895
Foreign		197		230		267
Income from continuing operations before income taxes	$	1,055	$	1,122	$	1,162

The components of the Company’s current and deferred portions of the provision for income taxes on continuing operations are presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Current income tax provision:
Federal	$	181	$	198	$	78
State and local		34		21		26
Foreign		38		44		69
Subtotal		253		263		173
Deferred income tax provision:
Federal		35		80		95
State and local		—		8		15
Foreign		7		9		13
Subtotal		42		97		123
Total provision for income taxes	$	295	$	360	$	296

A reconciliation of the statutory federal income tax rate to the effective income tax rate on continuing operations of the Company is presented in the table below.

	Year Ended December 31,
	2013		2012		2011
Statutory federal income tax rate		35.0%		35.0%	35.0%
State and local income taxes, net of federal income tax benefit		2.1		1.7	2.3
Foreign income taxes		(1.6)		(2.0)	(2.6)
Manufacturing benefits		(1.9)		(1.8)	(1.5)
Research and experimentation and other tax credits		(3.6)		(0.5)	(1.1)
Resolution of tax contingencies		(1.0)		(0.9)	(7.7)
Goodwill impairment		—		—	1.2
Other, net		(1.0)		0.6	(0.1)
Effective income tax rate on continuing operations		28.0%		32.1%	25.5%

F-45

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The significant components of the Company’s net deferred tax assets and liabilities are presented in the table below.

	December 31,
	2013		2012
	(in millions)
Deferred tax assets:
Inventoried costs	$	72	$	33
Compensation and benefits		164		114
Pension and postretirement benefits		207		444
Loss carryforwards		24		20
Tax credit carryforwards		7		9
Other		75		48
Gross deferred tax assets		549		668
Less: valuation allowance		(22)		(19)
Net deferred tax assets		527		649
Deferred tax liabilities:
Goodwill and other intangible assets	$	726	$	657
Income recognition on contracts in process		58		56
Property, plant and equipment		85		71
Long-term debt-CODES		81		73
Other		65		7
Gross deferred tax liabilities		1,015		864
Total net deferred tax liabilities	$	(488)	$	(215)

The classification of the Company’s deferred tax assets and liabilities are presented in the table below.

	December 31,
	2013		2012
	(in millions)
Current deferred tax assets	$	147	$	113
Non-current deferred tax liabilities		(635)		(328)
Total net deferred tax liabilities	$	(488)	$	(215)

At December 31, 2013, the Company had approximately $26 million of capital loss carryforwards that will expire, if unused, beginning in 2016. The realizability of the $9 million resulting deferred tax asset depends on the Company generating a like amount of capital gains before the losses expire. The Company does not believe that it is more likely than not that it will generate sufficient capital gains during this time period, and has therefore established a full valuation allowance against the capital loss carryforward. The Company also has $6 million of Federal net operating loss carryforwards that expire, if unused, between 2026 and 2030 and are subject to limitations based upon the future taxable income of certain subsidiaries, and $34 million of foreign net operating losses that can be carried forward indefinitely. The Company has established a valuation allowance against the resulting $10 million deferred tax asset because it does not believe that it is more likely than not that the subsidiaries with the net operating losses will generate sufficient taxable income to utilize the losses. In addition, the Company had $124 million of state net operating losses that will expire, if unused, between 2016 and 2033 and $10 million of tax credit carryforwards related to state and foreign research and experimentation credits and investment tax credits that will expire, if unused, beginning in 2014. The Company believes that it

F-46

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

will generate sufficient taxable income, of the appropriate character, to utilize $72 million of the state net operating losses and substantially all of the state and foreign credit carryforwards before they expire.

As of December 31, 2013, the total amount of unrecognized tax benefits was $169 million, $102 million of which would reduce the effective income tax rate, if recognized. A reconciliation of the change in unrecognized income tax benefits, excluding potential interest and penalties, is presented in the table below.

	2013		2012		2011
	(in millions)
Balance at January 1	$	138	$	150	$	201
Additions for tax positions related to the current year		18		8		10
Additions for tax positions related to prior years		41		9		33
Reductions for tax positions related to prior years		(8)		(13)		(13)
Reductions for tax positions related to settlements with taxing authorities		—		(1)		(5)
Reduction for tax positions related to prior years as a result of a lapse of statute of limitations		(20)		(15)		(76)
Balance at December 31	$	169	$	138	$	150

The Company and its subsidiaries file income tax returns in the U.S. Federal jurisdiction, which is the Company’s primary tax jurisdiction, and various state and foreign jurisdictions. The statutes of limitations for the Company’s U.S. Federal income tax returns for the years ended December 31, 2010 through 2012 are open as of December 31, 2013. The U.S. Internal Revenue Service (IRS) commenced audits of the Company’s U.S. Federal income tax returns for 2011 and 2010. The Company cannot predict the outcome of the audits at this time. As of December 31, 2013, the Company anticipates that unrecognized tax benefits will decrease by approximately $18 million over the next 12 months due to the potential resolution of unrecognized tax benefits involving several jurisdictions and tax periods. The actual amount could vary significantly depending on the ultimate timing and nature of any settlements.

During the years ended December 31, 2013 and 2012, the statutes of limitations for several of the Company’s tax returns, including its 2009 and 2008 U.S. Federal income tax returns, respectively, as well as certain foreign tax returns expired. As a result, the Company reduced its income tax provision by $10 million in both years ended December 31, 2013 and 2012 for the reversal of previously accrued amounts.

During the year ended December 31, 2011, the Company reached an agreement with the IRS relating to the audit of the Company’s 2006 and 2007 U.S. Federal income tax returns. The Company also reached agreement on several state and foreign audits. As a result of these agreements, the Company reversed previously accrued income tax expense of $12 million, including interest and penalties. In addition, the statutes of limitations for the 2006 and 2007 U.S. Federal income tax returns and certain foreign and state tax returns expired in 2011. As a result, the Company reversed $81 million of previously accrued income tax expense, which included interest and penalties.

As of December 31, 2013 and 2012, current and non-current income taxes payable include accrued potential interest of $11 million ($7 million after income taxes) and $11 million ($6 million after income taxes), respectively, and potential penalties of $8 million and $7 million, respectively. With respect to the interest related items, the Company’s income tax expense included a benefit of $2 million and $6 million for the years ended December 31, 2012 and 2011, respectively.

At December 31, 2013, the Company has not provided deferred U.S. income taxes and foreign withholding taxes for $325 million of undistributed earnings by its non-U.S. subsidiaries as such earnings are intended to be reinvested indefinitely. Quantification of additional taxes that may be payable on distribution is not practicable.

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L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

19. Stock-Based Compensation

Stock-based Compensation Plans. The Company has adopted stock-based compensation plans in order to provide incentives to directors, officers, employees and other individuals providing services to or on behalf of the Company and its subsidiaries. The Company believes that its stock-based compensation awards encourage high levels of performance by individuals who contribute to the success of the Company and enable the Company to attract, retain and reward talented and experienced individuals. This is accomplished by providing eligible individuals with an opportunity to obtain or increase a proprietary interest in the Company and/or by providing eligible individuals with additional incentives to join or remain with the Company. The stock-based compensation plans serve to better align the interests of management and its employees with those of the Company’s shareholders. During the year ended December 31, 2013, the Company awarded stock-based compensation under its Amended and Restated 2008 Long Term Performance Plan (2008 LTPP). Awards under the 2008 LTPP may be granted to any officer or employee of the Company or any of its subsidiaries, non-employee directors, or to any other individual who provides services to or on behalf of the Company or any of its subsidiaries. To date, awards under the 2008 LTPP have been in the form of L-3 Holdings’ restricted stock units, performance units and options to purchase L-3 Holdings’ common stock.

On April 30, 2013, the stockholders of L-3 Holdings approved an amendment to the 2008 LTPP. The principal purpose of the amendment was to increase the number of shares authorized for issuance under the 2008 Plan by 6.5 million shares. In addition, the plan was amended to: (1) include all future equity issuances to non-employee directors under the 2008 LTPP instead of through the L-3 Communications Holdings, Inc. 2008 Directors Stock Incentive Plan (2008 DSIP), a separate equity plan previously used solely for non-employee directors, (2) include revised limits on the amount of annual equity grants to employees and include new limits on the amount of annual equity grants to non-employee directors, and (3) modify the way that shares issued under full value awards (that is, awards other than stock options or stock appreciations rights) granted under the 2008 LTPP are counted for purposes of calculating the number of authorized shares that have been issued, as further described below.

The amendment to the 2008 LTPP increased the number of shares authorized for issuance under the 2008 LTPP to approximately 19.2 million shares. Under the 2008 LTPP, each share of L-3 Holdings’ common stock issued under a full value award granted on or after February 26, 2013 is counted as 3.69 shares for purposes of this share limit. Each share issued under full value awards granted between March 1, 2010 and February 25, 2013 is counted as 2.6 shares for purposes of the share limit. At December 31, 2013, 7.9 million shares of L-3 Holdings’ common stock remained available for future awards under the 2008 LTPP.

The Company’s stock-based compensation by form of award, including stock-based compensation recorded in discontinued operations as a result of the spin-off of Engility, is presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Stock options	$	10	$	10	$	11
Restricted stock units		41		46		48
Performance units		7		8		5
Total before income taxes		58		64		64
Income taxes		(22)		(24)		(24)
Total after income taxes		36		40		40
Less: Stock based compensation recorded in discontinued operations, net of income taxes		—		1		4
Stock based compensation recorded in continuing operations, net of income taxes	$	36	$	39	$	36

F-48

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Engility Spin-off Adjustments. As a result of the spin-off of Engility, effective July 17, 2012, all outstanding stock-based compensation awards related to Engility employees were assumed by Engility. Also in connection with the spin-off, the share amounts for all remaining L-3 outstanding stock options, restricted stock units and performance units, and the strike price for stock options were adjusted to maintain the aggregate intrinsic value at the Engility spin-off date of all grants outstanding on that date, pursuant to the terms of the stock-based compensation plans under which they were issued. Taking into account the change in the value of the Company’s common stock as a result of the distribution of the Engility shares to the Company’s shareholders, the conversion ratio for the remaining stock options, restricted stock units and performance units was 1.043678. For stock options, the net effect of these adjustments was an increase to the stock options outstanding due to the limited number of stock options assumed by Engility for the Engility employees. For restricted stock units, the net effect of these adjustments was a decrease in restricted stock units outstanding as the number of shares assumed by Engility for the Engility employees exceeded the impact of the adjustment for restricted stock units held by L-3 employees. The Engility spin-off adjustments are reflected in the January 1, 2013 share amounts in the stock option, restricted stock unit award and performance award tables below.

Stock Options. The exercise price of stock options granted under the 2008 LTPP may not be less than the fair market value of L-3 Holdings’ common stock on the date of grant. Options expire after 10 years from the date of grant and vest ratably over a three year period on the annual anniversary of the date of grant. All unvested options are subject to forfeiture upon termination of employment (subject to customary exceptions for death or disability). All of the stock option awards issued under the 2008 LTPP are non-qualified stock options for U.S. income tax regulations. The table below presents a summary of the Company’s stock option activity as of December 31, 2013 and changes during the year then ended.

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
	(in thousands)				(in years)		(in millions)
Number of shares under option:
Outstanding at January 1, 2013		4,989.9	$	76.57		5.8	$	23
Options granted		741.7		77.00
Options exercised		(1,770.4)		73.24
Options forfeited		(78.3)		89.93
Outstanding at December 31, 2013		3,882.9	$	77.90		6.2	$	112
Vested and expected to vest at December 31, 2013(1)		3,865.9	$	77.91		6.2	$	112
Exercisable at December 31, 2013		2,420.9	$	80.44		4.9	$	64

⁽¹⁾  Represents outstanding options reduced by expected forfeitures for options not fully vested.

The weighted average grant date fair value of the stock options awarded was $12.09, $11.32, and $15.54 for the years ended December 31, 2013, 2012 and 2011, respectively. The aggregate intrinsic value, disclosed in the table above, represents the difference between L-3 Holdings’ closing stock price on the last trading day for the period, and the exercise price, multiplied by the number of in-the-money stock options.

The total intrinsic value of stock options exercised, based on the difference between the L-3 Holdings’ stock price at the time of exercise and the related exercise price, was $32 million, $7 million and $8 million for the years ended December 31, 2013, 2012 and 2011, respectively. At December 31, 2013, unrecognized

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L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

compensation costs related to stock options were $10 million ($6 million after income taxes), which are expected to be recognized over a weighted average remaining period of 1.1 years.

The actual income tax benefit realized related to compensation deductions arising from the exercise of stock options by the Company’s employees totaled $10 million, $2 million and $3 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Stock Option Fair Value Estimation Assumptions. The Company estimates the fair value of its stock options at the date of grant using the Black-Scholes option-pricing valuation model. The Company’s valuation model is affected by L-3 Holdings’ stock price as well as weighted average assumptions for a number of subjective variables described below.

• Expected Holding Period. The expected holding period represents the period of time that granted stock options are expected to be outstanding until they are exercised. The Company uses historical stock option exercise data to estimate the expected holding period.

• Expected Volatility. Expected volatility is based on L-3 Holdings’ historical share price volatility matching the expected holding period.

• Expected Dividend Yield. Expected dividend yield is based on L-3 Holdings’ anticipated dividend payments and historical pattern of dividend increases over the expected holding period.

• Risk-Free Interest Rates. The risk-free interest rates for stock options are based on U.S. Treasuries for a maturity period matching the expected holding period.

Changes in assumptions can materially impact the estimated fair value of stock options. The weighted average assumptions used in the valuation model are presented in the table below.

	2013 Grants		2012 Grants		2011 Grants
Expected holding period (in years)		5.6		5.4		5.2
Expected volatility		26.4%		27.0%		26.4%
Expected dividend yield		3.6%		3.6%		2.8%
Risk-free interest rate		1.0%		1.0%		2.2%

Restricted Stock Units. The Company awards restricted stock units that automatically convert into shares of L-3 Holdings’ common stock upon vesting (in the case of awards granted to employees) or upon the date on which the recipient ceases to be a director (in the case of awards granted to directors). These awards are subject to forfeiture until certain restrictions have lapsed, including a three year cliff vesting period for employees and a one year cliff vesting period for directors, in each case starting on the date of grant. The weighted average grant date fair value of the restricted stock units awarded was $77.12, $70.42 and $80.17 for the years ended December 31, 2013, 2012 and 2011, respectively. The grant date fair value of the restricted stock unit awards is based on L-3 Holdings’ closing stock price at the date of grant, and is generally recognized as compensation expense on a straight-line basis over the vesting period. However, for employees who attain retirement eligibility status prior to the end of the three year cliff vesting period, and who have provided at least one year of service after the date of grant, compensation expense is recognized over the shorter period from the date of grant to the retirement eligibility date. Retirement eligible employees are those employees that have attained the age of 65 and have completed at least five years of service (which service must be continuous through the date of termination except for a single break in service that does not exceed one year in length).

F-50

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The table below presents a summary of the Company’s nonvested restricted stock unit awards as of December 31, 2013 and changes during the year then ended.

	Number of       Shares		Weighted Average Grant Date       Fair Value
	(in thousands)
Nonvested balance at January 1, 2013		1,729.7	$	75.64
Granted		606.4		77.12
Vested		(476.4)		85.81
Forfeited		(85.9)		73.60
Nonvested balance at December 31, 2013		1,773.8	$	73.51

As of December 31, 2013, total unrecognized compensation costs related to nonvested restricted stock unit awards were $48 million ($30 million after income taxes) and are expected to be recognized over a weighted average remaining period of 1.2 years. The total fair value of restricted stock unit awards vested during the years ended December 31, 2013, 2012 and 2011 as of their vesting dates was $37 million, $44 million and $35 million, respectively.

Performance Units. The Company awards performance units, with each unit having a value at the time of grant equal to a share of L-3 Holdings’ common stock. The number of units ultimately earned can range from zero to 200% of the original award based upon the level of performance achieved by the Company over the associated performance period in relation to pre-determined performance goals. Units earned under the program are converted into shares of L-3 Holdings’ common stock, or are paid in cash based on the closing price of L-3 Holdings’ common stock at the end of the performance period, as determined at the time of grant by the Compensation Committee of the Board of Directors of L-3 Holdings.

During the years ended December 31, 2013, 2012, and 2011, the Company awarded performance units with a weighted average grant date fair value per unit of $77.00, $70.43 and $95.50, respectively. Of these units, (1) all the units granted in 2013 and 2012 and half of the units granted in 2011 have performance conditions based on L-3’s diluted earnings per share (the EPS Element) and (2) half of the units granted in 2011 have performance conditions based on L-3’s total stockholder return relative to a peer group of companies (the TSR Element). The Company did not award any performance units related to the TSR Element in 2013 and 2012. The performance periods for the units began on January 1 of the applicable grant year and end on December 31 of the year corresponding to a three-year performance period. Units based on the EPS Element are payable in shares of L-3 Holdings’ common stock, while units based on the TSR Element are payable in cash. As of December 31, 2013, total unrecognized compensation costs related to the performance units were $6 million ($4 million after income taxes) and are expected to be recognized over a weighted average remaining period of 1.4 years.

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L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The table below presents a summary of the Company’s performance unit awards based on expected performance as of December 31, 2013 and changes during the year then ended.

	Payable in Cash (TSR)				Payable in Shares (EPS)
	Number of Units		Weighted Average Grant Date Fair Value		Number of Units		Weighted Average Grant Date Fair Value
	(in thousands)				(in thousands)
Outstanding at January 1, 2013		59.3	$	106.20		125.6	$	71.86
Granted		—		—		61.7		77.00
(Decrease) increase due to expected performance		(33.1)		106.20		59.9		69.04
Vested		(25.3)		106.20		(67.9)		76.82
Forfeited		(0.9)		106.20		(3.8)		69.56
Outstanding at December 31, 2013		—	$	—		175.5	$	70.84

The performance period for the units awarded in 2011 ended on December 31, 2013. Based on the EPS Element and TSR Element achieved during the performance period, a total of 93,251 performance units having a fair market value of $10.0 million as of their vesting date were earned by the participants on December 31, 2013.

Performance Units Fair Value Assumptions. The TSR Element is initially measured at fair value and subsequently remeasured each reporting period using a Monte Carlo valuation model that incorporates current assumptions, including L-3 Holdings’ stock price and the variables described below.

• Expected Volatility. Expected volatility is based on L-3 Holdings’ historical share price volatility matching the remaining measurement period.

• Expected Dividend Yield. Expected dividend yield is based on L-3 Holdings’ anticipated dividend payments and historical pattern of dividend increases over the remaining measurement period.

• Risk-Free Interest Rate. Risk-free interest rates for the performance units are based on U.S. Treasuries for a maturity matching the remaining measurement period.

Changes in assumptions can materially impact the estimated fair value of the TSR Element from period to period. The weighted average assumptions used in the valuation model as of December 31, 2013 for the 2011 TSR Element are presented in the table below.

	2011 Grants
Expected volatility		10.2%
Expected dividend yield		2.2%
Risk-free interest rate		0.02%

Employee Stock Purchase Plan. Effective July 1, 2009, the Company adopted the 2009 Employee Stock Purchase Plan (2009 ESPP). Under the 2009 ESPP, eligible employees are offered options to purchase shares of L-3 Holdings’ common stock at the end of each six-month offering period at 95% of fair market value based on the average of the highest and lowest sales prices for the stock on the purchase date. Eligible employees generally include all employees of the Company and each subsidiary or affiliate of the Company that has been designated to participate in the 2009 ESPP. Offering periods begin on the first trading day in January and July of each calendar year and end on the last trading day in June and December of each calendar year. Share purchases are funded through payroll deductions of up to 10% of an employee’s eligible compensation for each payroll period, or $21,250 each calendar year.

F-52

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

As of December 31, 2013, 4.6 million shares were available for future issuance under the 2009 ESPP (i.e., excluding the effect of shares issued in January 2014 as described below). In July 2013, the Company issued 0.2 million shares under the 2009 ESPP at an average price of $81.71 per share, which covered employee contributions for the six months ended June 30, 2013. In January 2014, the Company issued 0.2 million shares under the 2009 ESPP at an average price of $101.55 per share, which covered employee contributions for the six months ended December 31, 2013. The 5% discount is not recognized as compensation expense in accordance with the accounting standard for share-based compensation expense.

20. Commitments and Contingencies

Non-Cancelable Operating Leases

The Company leases certain facilities and equipment under agreements expiring at various dates through 2037. Certain leases contain renewal options or escalation clauses providing for increased rental payments based upon maintenance, utility and tax increases. No lease agreement imposes a restriction on the Company’s ability to pay dividends, engage in debt or equity financing transactions, or enter into further lease agreements.

The following table presents future minimum payments under non-cancelable operating leases with initial or remaining terms in excess of one year at December 31, 2013.

	Real Estate		Equipment		Total
			(in millions)
2014	$	145	$	9	$	154
2015		88		5		93
2016		72		3		75
2017		65		1		66
2018		53		1		54
Thereafter		110		—		110
Total minimum payments required		533		19		552
Less: Sublease rentals under non-cancelable leases		4		—		4
Net minimum payments required	$	529	$	19	$	548

Rent expense was $141 million for 2013, $145 million for 2012, and $140 million for 2011. Sublease rental income was $6 million for 2013 and $5 million for both 2012 and 2011.

Letters of Credit

The Company enters into standby letters of credit with financial institutions covering performance and financial guarantees pursuant to contractual arrangements with certain customers. The Company had total outstanding letters of credit aggregating to $634 million and $504 million at December 31, 2013 and 2012, respectively. The letters of credit reduced the availability under the Amended and Restated Revolving Credit Facility by less than $1 million at December 31, 2013 and 2012, respectively. These letters of credit may be drawn upon in the event of the Company’s nonperformance.

Guarantees

The Company, from time to time, enters into contractual guarantees that arise in connection with its business acquisitions, dispositions, and other contractual arrangements in the normal course of business.

In connection with the spin-off of Engility, L-3 entered into a Distribution Agreement and several other agreements that govern certain aspects of L-3’s relationship with Engility, including employee matters, tax

F-53

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

matters, transition services, and the future supplier/customer relationship between L-3 and Engility. These agreements generally provide cross-indemnities that, except as otherwise provided, are principally designed to place the financial responsibility for the obligations and liabilities of each entity with that respective entity. Engility has joint and several liability with L-3 to the U.S. Internal Revenue Service (IRS) for the consolidated U.S. Federal income taxes of L-3’s consolidated group for taxable periods in which Engility was a part of that group. However, the Tax Matters Agreement specifies the portion of this tax liability for which L-3 and Engility will each bear responsibility, and L-3 and Engility have agreed to indemnify each other against any amounts for which the other is not responsible. The Tax Matters Agreement also allocates responsibility between L-3 and Engility for other taxes, including special rules for allocating tax liabilities in the event that the spin-off is determined not to be tax-free. Though valid as between the parties, the Tax Matters Agreement is not binding on the IRS.

The Company has two existing real estate lease agreements, which include residual guarantee amounts, expiring on August 31, 2015 and are accounted for as operating leases. On or before the lease expiration date, the Company can exercise options under the lease agreements to renew the leases, purchase both properties for $28 million, or sell both properties on behalf of the lessor (the “Sale Option”). If the Company elects the Sale Option, the Company must pay the lessor a residual guarantee amount of $23 million for both properties, on or before the lease expiration date. In addition, at the time both properties are sold, the Company must pay the lessor a supplemental rent payment equal to the gross sales proceeds in excess of the residual guarantee, provided that such amount shall not exceed $5 million. For these real estate lease agreements, if the gross sales proceeds are less than the sum of the residual guarantee amount and the supplemental rent payment, the Company is required to pay a supplemental rent payment to the extent the reduction in the fair value of the properties is demonstrated by an independent appraisal to have been caused by the Company’s failure to properly maintain the properties. The aggregate residual guarantee amounts equal $23 million and are included in the future minimum payments under non-cancelable real estate operating lease payments relating to the expiration dates of such leases.

The Company has a contract to provide and operate a full-service training facility for the U.S. Air Force (USAF), including simulator systems adjacent to a USAF base in Oklahoma. The Company acted as the construction agent on behalf of the third-party owner-lessors for procurement and construction for the simulator systems, which were completed and delivered in August 2002. The Company, as lessee, entered into operating lease agreements for a term of 15 years for the simulator systems with the owner-lessors. At the end of the lease term, the Company may elect to purchase the simulator systems at fair market value, which can be no less than $7 million and no greater than $21 million. If the Company does not elect to purchase the simulator systems on the date of expiration (during the first quarter of 2018), the Company shall pay to the lessor, as additional rent, $7 million and return the simulator systems to the lessors.

Environmental Matters

Management continually assesses the Company’s obligations with respect to applicable environmental protection laws, including those obligations assumed in connection with certain business acquisitions. While it is difficult to determine the timing and ultimate cost to be incurred by the Company in order to comply with these laws, based upon available internal and external assessments, with respect to those environmental loss contingencies of which management is aware, the Company believes that there are no environmental loss contingencies that, individually or in the aggregate, would be material to the Company’s consolidated results of operations. The Company accrues for these contingencies when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated.

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L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Procurement Regulations

A substantial majority of the Company’s revenues are generated from providing products and services under legally binding agreements or contracts with U.S. Government and international government customers. U.S. Government contracts are subject to extensive legal and regulatory requirements, and from time to time, agencies of the U.S. Government investigate whether such contracts were and are being conducted in accordance with these requirements. The Company is currently cooperating with the U.S. Government on several investigations from which civil, criminal or administrative proceedings have or could result and give rise to fines, penalties, compensatory and treble damages, restitution and/or forfeitures. The Company does not currently anticipate that any of these investigations will have a material adverse effect, individually or in the aggregate, on its consolidated financial position, results of operations or cash flows. However, under U.S. Government regulations, an indictment of the Company by a federal grand jury, or an administrative finding against the Company as to its present responsibility to be a U.S. Government contractor or subcontractor, could result in the Company being suspended for a period of time from eligibility for awards of new government contracts or task orders or in a loss of export privileges. A conviction, or an administrative finding against the Company that satisfies the requisite level of seriousness, could result in debarment from contracting with the federal government for a specified term. In addition, all of the Company’s U.S. Government contracts: (1) are subject to audit and various pricing and cost controls, (2) include standard provisions for termination for the convenience of the U.S. Government or for default, and (3) are subject to cancellation if funds for contracts become unavailable. International government contracts generally include comparable provisions relating to terminations for convenience and default, as well as other procurement clauses relevant to the international government.

Litigation Matters

The Company is also subject to litigation, proceedings, claims or assessments and various contingent liabilities incidental to its businesses, including those specified below. Furthermore, in connection with certain business acquisitions, the Company has assumed some or all claims against, and liabilities of, such acquired businesses, including both asserted and unasserted claims and liabilities.

In accordance with the accounting standard for contingencies, the Company records a liability when management believes that it is both probable that a liability has been incurred and the Company can reasonably estimate the amount of the loss. Generally, the loss is recorded at the amount the Company expects to resolve the liability. The estimated amounts of liabilities recorded for pending and threatened litigation are disclosed in Note 9. Amounts recoverable from insurance contracts or third parties are recorded as assets when deemed probable. At December 31, 2013, the Company did not record any amounts for recoveries from insurance contracts or third parties in connection with the amount of liabilities recorded for pending and threatened litigation. Legal defense costs are expensed as incurred. The Company believes it has recorded adequate provisions for its litigation matters. The Company reviews these provisions quarterly and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. While it is reasonably possible that an unfavorable outcome may occur in one or more of the following matters, unless otherwise stated below, the Company believes that it is not probable that a loss has been incurred in any of these matters. With respect to the litigation matters below for which it is reasonably possible that an unfavorable outcome may occur, an estimate of loss or range of loss is disclosed when such amount or amounts can be reasonably estimated. Although the Company believes that it has valid defenses with respect to legal matters and investigations pending against it, the results of litigation can be difficult to predict, particularly those involving jury trials. Accordingly, our current judgment as to the likelihood of our loss (or our current estimate as to the potential range of loss, if applicable) with respect to any particular litigation matter may turn out to be wrong. Therefore, it is possible that the financial position, results of operations or cash flows of the Company could be materially adversely affected in any particular period by the unfavorable resolution of one or more of these or other contingencies.

F-55

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Kalitta Air. On January 31, 1997, a predecessor of Kalitta Air filed a lawsuit in the U.S. District Court for the Northern District of California (the trial court) asserting, among other things, negligence and negligent misrepresentation against Central Texas Airborne Systems, Inc. (CTAS), a predecessor to L-3 Integrated Systems (L-3 IS), in connection with work performed by a predecessor to CTAS to convert two Boeing 747 aircraft from passenger configuration to cargo freighters. CTAS’ insurance carrier has accepted defense of this matter and has retained counsel, subject to a reservation of rights by the insurer to dispute its obligations under the applicable insurance policies in the event a judgment is ultimately rendered against CTAS. The work at issue in the lawsuit was performed using Supplemental Type Certificates (STCs) issued in 1988 by the Federal Aviation Administration (FAA). In 1996, following completion of the work, the FAA issued an airworthiness directive with respect to the STCs that effectively grounded the aircraft. Following two jury trials (in which Kalitta Air did not prevail) and related appeals to the U.S. Court of Appeals for the Ninth Circuit (the Court of Appeals), a third jury trial for this matter began on October 31, 2011, during which Kalitta Air sought damages of approximately $235 million plus an unspecified amount of pre-judgment interest that, in other contexts, has been claimed by Kalitta Air to exceed $240 million. Following the completion of the third trial on November 30, 2011, the jury rendered a verdict in favor of CTAS, finding no negligence on the part of CTAS. The trial court entered a judgment upon the verdict on March 20, 2012. Kalitta Air filed an appeal of the judgment with the Court of Appeals on July 23, 2012. The Court of Appeals ruled against Kalitta Air and affirmed the trial court’s judgment on November 25, 2013. Kalitta Air subsequently filed a motion for a rehearing of its appeal, which was denied by the Court of Appeals on January 8, 2014.

Bashkirian Airways. On July 1, 2004, lawsuits were filed on behalf of the estates of 31 Russian children in the state courts of Washington, Arizona, California, Florida, New York and New Jersey against Honeywell, Honeywell TCAS, Thales USA, Thales France, the Company and Aviation Communications & Surveillance Systems (ACSS), which is a joint venture of L-3 and Thales. The suits relate to the crash over southern Germany of a Bashkirian Airways Tupelov TU 154M aircraft and a DHL Boeing 757 cargo aircraft. On-board the Tupelov aircraft were 9 crew members and 60 passengers, including 45 children. The Boeing aircraft carried a crew of two. Both aircraft were equipped with Honeywell/ACSS Model 2000, Change 7 Traffic Collision and Avoidance Systems (TCAS). Sensing the other aircraft, the on-board DHL TCAS instructed the DHL pilot to descend, and the Tupelov on-board TCAS instructed the Tupelov pilot to climb. However, the Swiss air traffic controller ordered the Tupelov pilot to descend. The Tupelov pilot disregarded the on-board TCAS and put the Tupelov aircraft into a descent striking the DHL aircraft in midair at approximately 35,000 feet. All crew and passengers of both planes were lost. Investigations by the National Transportation Safety Board after the crash revealed that both TCAS units were performing as designed. The suits allege negligence and strict product liability based upon the design of the units and the training provided to resolve conflicting commands and seek approximately $315 million in damages, including $150 million in punitive damages. The Company’s insurers have accepted defense of this matter and have retained counsel. The matters were consolidated in the U.S. District Court for the District of New Jersey, which then dismissed the actions on the basis of forum non conveniens. Plaintiffs representing 30 of the estates re-filed their complaint against ACSS on April 23, 2007 with the Barcelona Court’s Registry in Spain. On March 9, 2010, the court ruled in favor of the plaintiffs and entered judgment against ACSS in the amount of approximately $6.7 million, all of which represented compensatory damages. Both ACSS and the plaintiffs appealed the judgment. In May 2012, the appellate court ruled in favor of the plaintiffs and entered judgment against ACSS in the amount of $48 million. ACSS filed an appeal of the judgment with the Supreme Court of Spain on September 28, 2012. On July 1, 2013, the Supreme Court agreed to consider the appeal, and the parties are awaiting the Supreme Court’s decision. The Company believes that the ruling and the damages awarded are inconsistent with the law and evidence presented, and accordingly, that it is not probable that the Company has incurred a loss with respect to this matter. As of the date of this filing, 18 out of the 30 plaintiffs have released their claims against ACSS in consideration for payments made by the Company’s insurance carriers.

F-56

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

21. Pensions and Other Employee Benefits

The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility for participation in these plans varies and benefits are generally based on the participant’s compensation and/or years of service. The Company’s funding policy is generally to contribute in accordance with cost accounting standards that affect government contractors, subject to the Internal Revenue Code and regulations thereon. Plan assets are invested primarily in listed stocks, mutual funds, corporate bonds, U.S. Government obligations and U.S. Government agency obligations.

The Company also provides postretirement medical and life insurance benefits for retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company’s pension plans. These benefits are funded primarily on a pay-as-you-go basis with the retiree generally paying a portion of the cost through contributions, deductibles and coinsurance provisions.

In accordance with accounting standards for employee pension and postretirement benefits, the Company recognizes the unfunded status of its pension and postretirement benefit plans in the consolidated financial statements and measures its pension and postretirement benefit plan assets and benefit obligations as of December 31.

F-57

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The following table summarizes changes in the benefit obligations, the plan assets and funded status for all of the Company’s pension and postretirement benefit plans, as well as the aggregate balance sheet impact.

	Pension Plans				Postretirement Benefit Plans
	2013		2012		2013		2012
	(in millions)
Change in benefit obligation:
Benefit obligation at the beginning of the year	$	3,222	$	2,679	$	218	$	216
Service cost		126		113		4		4
Interest cost		132		134		7		10
Plan participants’ contributions		2		2		4		4
Amendments		14		—		—		(5)
Obligation assumed in connection with a business acquisition(1)		—		29		—		3
Actuarial (gain) loss		(402)		358		(23)		(2)
Foreign currency exchange rate changes		(21)		8		(3)		1
Curtailments, settlements and special termination benefits		3		3		—		1
Benefits paid		(103)		(104)		(13)		(14)
Benefit obligation at the end of the year	$	2,973	$	3,222	$	194	$	218
Change in plan assets:
Fair value of plan assets at the beginning of the year	$	2,026	$	1,712	$	47	$	42
Actual return on plan assets		394		215		9		4
Assets acquired in connection with a business acquisition(1)		—		29		—		—
Employer contributions		105		173		8		11
Plan participants’ contributions		2		2		4		4
Foreign currency exchange rate changes		(21)		6		—		—
Transfers(2)		—		(7)		—		—
Benefits paid		(103)		(104)		(13)		(14)
Fair value of plan assets at the end of the year	$	2,403	$	2,026	$	55	$	47
Unfunded status at the end of the year	$	(570)	$	(1,196)	$	(139)	$	(171)
Assets and (liabilities) recognized in the consolidated balance sheets consist of:
Non-current assets	$	35	$	9	$	—	$	—
Current liabilities		(8)		(7)		(9)		(9)
Non-current liabilities		(597)		(1,198)		(130)		(162)
	$	(570)	$	(1,196)	$	(139)	$	(171)

⁽¹⁾  Represents pension and postretirement plan obligations and pension plan assets assumed/acquired during 2012 as part of the L-3 KEO business acquisition.

⁽²⁾  Represents assets related to various supplemental executive retirement plans that had previously been classified as pension plan assets; however, such assets are not held by the plans and are now classified as other assets.

F-58

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The table below summarizes the net loss and prior service cost balances at December 31, in the accumulated other comprehensive loss account, before related tax effects, for all of the Company’s pension and postretirement benefit plans.

	Pension Plans				Postretirement Benefit Plans
	2013		2012		2013		2012
	(in millions)
Net loss (gain)	$	425	$	1,146	$	(9)	$	21
Prior service cost (credit)		1		(12)		(8)		(10)
Total amount recognized	$	426	$	1,134	$	(17)	$	11

The aggregate accumulated benefit obligation (ABO) for all of the Company’s pension plans was $2,657 million at December 31, 2013 and $2,783 million at December 31, 2012. The table below presents information for the pension plans with an ABO in excess of the fair value of plan assets at December 31, 2013 and 2012.

	Pension Plans
	2013		2012
	(in millions)
Projected benefit obligation	$	2,408	$	3,177
Accumulated benefit obligation		2,115		2,743
Fair value of plan assets		1,815		1,975

The table below summarizes the weighted average assumptions used to determine the benefit obligations for the Company’s pension and postretirement plans disclosed at December 31, 2013 and 2012.

	Pension Plans				Postretirement Benefit Plans
	2013		2012		2013		2012
Benefit obligations:
Discount rate		5.03%(1)		4.15%(1)		4.43%(2)		3.37%(2)
Rate of compensation increase		3.50%(3)		3.56%(3)		3.50%(3)		3.59%(3)

⁽¹⁾  The weighted average discount rate assumptions used at December 31, 2013 and 2012 were comprised of separate assumptions determined by country of 5.1% and 4.2% for the U.S. based plans, 4.7% and 3.9% for the Canadian based plans and 3.5% and 3.4% for the German based plans.

⁽²⁾  The weighted average discount rate assumptions used at December 31, 2013 and 2012 were comprised of separate assumptions determined by country of 4.4% and 3.3% for the U.S. based plans and 4.6% and 3.7% for the Canadian based plans.

⁽³⁾  The weighted average rate of compensation increase assumptions were comprised of separate assumptions determined by country of 3.5% for the U.S. based plans at both December 31, 2013 and 2012 and 3.5% and 4.0% for the Canadian based plans at December 31, 2013 and 2012.

F-59

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The following table summarizes the components of net periodic benefit cost for the Company’s pension and postretirement benefit plans for the years ended December 31, 2013, 2012 and 2011.

	Pension Plans						Postretirement Benefit Plans
	2013		2012		2011		2013		2012		2011
	(in millions)
Components of net periodic benefit cost:
Service cost	$	126	$	113	$	106	$	4	$	4	$	5
Interest cost		132		134		128		7		10		10
Expected return on plan assets		(164)		(145)		(139)		(4)		(3)		(2)
Amortization of prior service cost (credits)		1		1		1		(3)		(3)		(3)
Amortization of net loss		83		69		49		2		1		1
Curtailment or settlement loss		3		7		—		—		1		—
Net periodic benefit cost	$	181	$	179	$	145	$	6	$	10	$	11

The following table summarizes the other changes in plan assets and benefit obligations recognized in other comprehensive income for the Company’s pension and postretirement benefit plans for the years ended December 31, 2013, 2012 and 2011.

	Pension Plans						Postretirement Benefit Plans
	2013		2012		2011		2013		2012		2011
	(in millions)
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net (gain) loss	$	(637)	$	287	$	266	$	(29)	$	(3)	$	10
Prior service cost (credit)		14		(1)		2		—		(5)		—
Amortization of net loss		(83)		(69)		(49)		(2)		(1)		(1)
Amortization of prior service (cost) credit		(1)		(1)		(1)		3		3		3
Total recognized in other comprehensive income		(707)		216		218		(28)		(6)		12
Total recognized in net periodic benefit cost and other comprehensive income	$	(526)	$	395	$	363	$	(22)	$	4	$	23

The following table summarizes the amounts expected to be amortized from accumulated other comprehensive income (loss) and recognized as components of net periodic benefit costs during 2014.

	Pension Plans		Postretirement Benefit Plans		Total
			(in millions)
Net loss (gain)	$	17	$	(1)	$	16
Prior service cost (credit)		2		(2)		—
	$	19	$	(3)	$	16

F-60

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The table below summarizes the weighted average assumptions used to determine the net periodic benefit cost for the years ended December 31, 2013, 2012 and 2011.

	Pension Plans						Postretirement Benefit Plans
	2013		2012		2011		2013		2012		2011
Discount rate		4.15%(1)		5.02%(1)		5.57%(1)		3.37%(4)		4.71%(4)		5.40%(4)
Expected long-term return on plan assets		8.13%(2)		8.15%(2)		8.57%(2)		7.64%		7.64%		6.20%
Rate of compensation increase		3.50%(3)		4.06%(3)		4.50%(3)		3.50%		4.09%		4.50%

⁽¹⁾  The weighted average discount rate assumptions used for the years ended December 31, 2013, 2012, and 2011 were comprised of separate assumptions determined by country of 4.2%, 5.1% and 5.6% for the U.S. based plans, 3.9%, 4.4% and 5.4% for the Canadian based plans and 3.4%, 5.1%, and 5.4% for the German based plans, respectively.

⁽²⁾  The weighted average expected long-term return on plan assets assumptions used were comprised of separate assumptions determined by country of 8.25% for the U.S. based plans for the year ended December 31, 2013, 2012 and 2011 and 7.25% for the year ended December 31, 2013 and 7.5% for the years ended December 31, 2012 and 2011 for the Canadian based plans.

⁽³⁾  The weighted average rate of compensation increase assumptions used for the year ended December 31, 2013 were comprised of separate assumptions determined by country of 3.5% for both the U.S and Canadian based plans. The rate of compensation increase assumptions were 4.0% for the U.S based plans and 4.5% for the Canadian based plans for the year ended December 31, 2012. The rate of compensation increase assumptions were 4.5% for both the U.S. and Canadian based plans for the year ended December 31, 2011.

⁽⁴⁾  The weighted average discount rate assumptions used for the years ended December 31, 2013, 2012 and 2011 were comprised of separate assumptions determined by country of 3.3%, 4.8% and 5.4% for the U.S. based plans and 3.7%, 4.3% and 5.4% for the Canadian based plans, respectively.

The expected long-term return on plan assets assumption represents the average rate that the Company expects to earn over the long-term on the assets of the Company’s benefit plans, including those from dividends, interest income and capital appreciation. The Company utilizes a third-party consultant to assist in the development of the expected long-term return on plan assets, which is based on expectations regarding future long-term rates of return for the plans’ investment portfolio, with consideration given to the allocation of investments by asset class and historical rates of return for each individual asset class. The Company utilizes a building block methodology that utilizes historical and forward looking rates of return for each asset class and takes into account expected returns above inflation and risk premium. These long-term rates of return are then applied to the target portfolio allocations that are generally aligned with the actual asset allocations of our plans to develop the expected long-term rate of return.

The annual increase in cost of benefits (health care cost trend rate) is assumed to be an average of 8.0% in 2014 and is assumed to gradually decrease to a rate of 5.0% in 2020 and thereafter. Health care cost trend assumptions are based on (1) observed or expected short term rates of increase for different types of health models based on actual claims experience and benchmarking, and (2) a reasonable estimate of an appropriate, sustainable level of health care cost trend in the future, weighting factors that influence trend primarily price inflation and cost leveraging benefit plan features. Assumed health care cost trend rates have a significant effect on amounts reported for postretirement medical benefit plans. A one percentage point change in the assumed health care cost trend rates would have the following effects:

	1 percentage point
	Increase		Decrease
	(in millions)
Effect on total service and interest cost	$	1	$	—
Effect on postretirement benefit obligations		9		(7)

F-61

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Plan Assets. The Company’s Benefit Plan Committee (Committee) has the responsibility to formulate the investment policies and strategies for the plans’ assets. The Committee structures the investment of plan assets to achieve the following goals: (1) maximize the plans’ long-term rate of return on assets for an acceptable level of risk; and (2) limit the volatility of investment returns and consequent impact on the plans’ assets. In the pursuit of these goals, the Committee has formulated the following investment policies and objectives: (1) invest assets of the plans in a manner consistent with the fiduciary standards of the Employee Retirement Income Security Act of 1974 (ERISA); (2) preserve the plans’ assets; (3) maintain sufficient liquidity to fund benefit payments and pay plan expenses; (4) evaluate the performance of investment managers; and (5) achieve, on average, a minimum total rate of return equal to the established benchmarks for each asset category.

The Committee retains a professional investment consultant to advise the Committee and help ensure that the above policies and strategies are met. The Committee does not actively manage the day to day operations and selection process of individual securities and investments, as it retains the professional services of qualified investment management organizations to fulfill those tasks. Qualified investment management organizations are evaluated on several criteria for selection, with a focus on the investment management organizations’ demonstrated capability to achieve results that will meet or exceed the investment objectives they have been assigned and conform to the policies established by the Committee. While the investment management organizations have investment discretion over the assets placed under their management, the Committee provides each investment manager with specific investment guidelines relevant to its asset class.

The Committee has established the allowable range that the plans’ assets may be invested in for each major asset category. In addition, the Committee has established guidelines regarding diversification within asset categories to limit risk and exposure to a single or limited number of securities. The investments of the plans’ include a diversified portfolio of both equity and fixed income investments. Equity investments are further diversified across U.S. and non-U.S. stocks, small to large capitalization stocks, and growth and value stocks. Fixed income assets are diversified across U.S. and non-U.S. issuers, corporate and governmental issuers, and credit quality. The plan also invests in real estate through publicly traded real estate securities. Derivatives may be used only for hedging purposes or to create synthetic long positions. The plans are prohibited from directly owning commodities, unregistered securities, restricted stock, private placements, or interest in oil, gas, mineral exploration, or other development programs. Further, short selling or utilizing margin buying for investment purposes is prohibited.

The table below presents the allowable range for each major category of the plans’ assets at December 31, 2013 as well as the Company’s pension plan and postretirement benefit plan weighted-average asset allocations at December 31, 2013 and 2012, by asset category.

	U.S.						Canada
Asset Category	2013 and 2012 Range		2013		2012		2013 Range	2013		2012 Range		2012
Domestic equity(1)		30%-60%		54%		51%	10%-25%		20%		15%-30%		19%
International equity(2)		10%-20%		11		10	30%-60%		49		20%-50%		46
Fixed income securities		20%-40%		22		29	20%-60%		28		25%-55%		32
Real estate securities		0%-15%		6		8	—		—		—		—
Other, primarily cash and cash equivalents		0%-15%		7		2	0%-15%		3		0%-15%		3
Total				100%		100%			100%				100%

⁽¹⁾  Domestic equities for Canadian plans refers to equities of Canadian companies.

⁽²⁾  International equities for Canadian plans includes equities of U.S. companies.

F-62

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

The Committee regularly monitors the investment of the plans’ assets to ensure that the actual investment allocation remains within the established range. The Committee also regularly measures and monitors investment risk through ongoing performance reporting and investment manager reviews. Investment manager reviews include assessing the managers’ performance versus the appropriate benchmark index both in the short and long-term period, performance versus peers, and an examination of the risk the managers assumed in order to achieve rates of return.

The table below presents the fair value of the Company’s pension plans’ assets at December 31, 2013 and 2012, by asset category segregated by level within the fair value hierarchy, as described below.

	U.S. Pension Plans’ Assets								Canadian Pension Plans’ Assets
	Fair Value Measured at December 31, 2013								Fair Value Measured at December 31, 2013
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Equity securities(1):
U.S. Equity	$	1,141	$	—	$	—	$	1,141	$	54	$	18	$	—	$	72
International Equity		79		146		—		225		117		18		—		135
Fixed Income — Investment Grade(2)		216		135		—		351		—		82		—		82
Fixed Income — High Yield(3)		—		118		—		118		—		—		—		—
Real Estate Investment Trusts(4)		118		—		—		118		—		—		—		—
Other(5)		—		150		—		150		6		5		—		11
Total	$	1,554	$	549	$	—	$	2,103	$	177	$	123	$	—	$	300
	Fair Value Measured at December 31, 2012								Fair Value Measured at December 31, 2012
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Equity securities(1):
U.S. Equity	$	893	$	—	$	—	$	893	$	43	$	13	$	—	$	56
International Equity		67		117		—		184		98		21		—		119
Fixed Income — Investment Grade(2)		194		197		—		391		—		88		—		88
Fixed Income — High Yield(3)		—		105		—		105		—		—		—		—
Real Estate Investment Trusts(4)		138		—		—		138		—		—		—		—
Other(5)		—		42		—		42		3		7		—		10
Total	$	1,292	$	461	$	—	$	1,753	$	144	$	129	$	—	$	273

⁽¹⁾  Equity securities consist of investments in common stock of U.S. and international companies. The fair value of equity securities is based on quoted market prices available in active markets at the close of a trading day, primarily the New York Stock Exchange (NYSE), National Association of Securities Dealers Automated Quotations (NASDAQ), and various international exchanges. The Level 2 investment balance is derived from a regulated commingled equity trust fund, which fair value is based on the net asset value (NAV) at the end of each month. The NAV is calculated by the fund manager based on the fair value of the fund’s holdings, primarily equity securities traded in active markets, determined as of the end of each month. Withdrawals are permitted monthly based on NAV.

⁽²⁾  Approximately 62% in 2013 and 50% in 2012 of U.S. plan assets that are invested in the Fixed Income — Investment Grade asset category consist of a mutual fund offered by a registered investment company (the “Fund”). The Fund invests in investment grade fixed income securities, mortgaged-backed securities, U.S. treasury and agency bonds and corporate bonds. This Fund is classified by the Company as a Level 1 measurement within the fair value hierarchy, as the mutual fund trades on an active market and daily, quoted prices are available. The remaining 38% of U.S. plan assets in 2013 are primarily investment grade corporate bonds from various industries held directly by the Company. The fair values of these investments are based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs. The remaining 50% of U.S. plan assets in 2012 and all of the Canadian plan assets for both 2013 and 2012 are

F-63

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

invested in regulated commingled equity trust funds (the “Bond Funds”). As these Bond Funds do not trade in an active market, the fair value is based on NAVs calculated by fund managers based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs and classified as Level 2. Withdrawals are permitted monthly based on NAV.

⁽³⁾  Fixed Income — High Yield consists of investments in corporate high-yield bonds from various industries. The fair values of these investments are based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs.

⁽⁴⁾  Real Estate Investment Trusts (REITs) consist of securities that trade on the major exchanges and invest directly in real estate, either through properties or mortgages.

⁽⁵⁾  Other consists primarily of (1) cash equivalents maintained in commingled trust funds, which invest primarily in short term, high quality money market securities such as government obligations, commercial paper, time deposits and certificates of deposit, and are classified as Level 2, and (2) cash, which is classified as Level 1.

The table below presents the fair value of the Company’s postretirement benefit plans’ assets at December 31, 2013 and 2012, by asset category segregated by level within the fair value hierarchy, as described below.

	Postretirement Benefit Plans’ Assets
	Fair Value Measured at December 31, 2013								Fair Value Measured at December 31, 2012
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Equity securities(1):
U.S. Equity	$	23	$	—	$	—	$	23	$	27	$	—	$	—	$	27
International Equity		1		2		—		3		1		1		—		2
Fixed Income — Investment Grade(2)		21		2		—		23		11		3		—		14
Fixed Income — High Yield(3)		—		2		—		2		—		1		—		1
Real Estate Investment Trusts(4)		2		—		—		2		2		—		—		2
Other(5)		—		2		—		2		—		1		—		1
Total	$	47	$	8	$	—	$	55	$	41	$	6	$	—	$	47

⁽¹⁾  Equity securities consist of investments in common stock of U.S. and international companies. The fair value of equity securities is based on quoted market prices available in active markets at the close of a trading day, primarily the NYSE, NASDAQ, and various international exchanges. The Level 2 investment balance is derived from a regulated commingled equity trust fund, which fair value is based on NAV at the end of each month. The NAV is calculated by the fund manager based on the fair value of the fund’s holdings, primarily equity securities traded in active markets, determined as of the end of each month. Withdrawals are permitted monthly based on NAV.

⁽²⁾  Approximately 91% in 2013 and 79% in 2012 of the postretirement benefit plan assets that are invested in the Fixed Income — Investment Grade asset category consist of a mutual fund offered by the Fund. The Fund invests in investment grade fixed income securities, mortgaged-backed securities, U.S. treasury and agency bonds and corporate bonds. This Fund is classified by the Company as a Level 1 measurement within the fair value hierarchy as the mutual fund trades on an active market and daily, quoted prices are available. The remaining 9% of postretirement benefit plan assets in 2013 are primarily investment grade corporate bonds from various industries held directly by the Company. The fair values of these investments are based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs. The remaining 21% in 2012 of the postretirement benefit plan assets are invested in the Bond Fund. As the Bond Fund does not trade in an active market, the fair value is based on NAV’s calculated by the fund manager based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs and classified as Level 2. Withdrawals are permitted monthly based on NAV.

⁽³⁾  Fixed Income — High Yield consists of investments in corporate high-yield bonds from various industries. The fair values of these investments are based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs.

⁽⁴⁾  REITs consist of securities that trade on the major exchanges and invest directly in real estate, either through properties or mortgages.

⁽⁵⁾  Other consists primarily of cash equivalents maintained in commingled trust funds, which invest primarily in short term, high quality money market securities such as government obligations, commercial paper, time deposits and certificates of deposit, and are classified as Level 2.

F-64

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Contributions. The funding policy for the Company’s pension and postretirement benefit plans is to contribute at least the minimum required by applicable laws and regulations or to directly make benefit payments where appropriate. The Company makes voluntary, additional contributions to the pension plans depending on a number of factors, including operating cash flow levels, alternative uses for excess cash and the plans’ funded status. At December 31, 2013, all legal funding requirements had been met. For the year ending December 31, 2014, the Company currently expects to contribute between approximately $97 million and $108 million to its pension plans, and approximately $10 million to its postretirement benefit plans.

Estimated Future Benefit Payments. The following table presents expected pension and postretirement benefit payments and expected postretirement subsidies due to the Medicare Prescription Drug Improvement and Modernization Act of 2003, which reflect expected future service, as appropriate.

	Pension Benefits		Postretirement Benefits
			Benefit Payments		Subsidy Receipts
	(in millions)
2014	$	116		13		—
2015		125		13		—
2016		134		14		—
2017		146		14		—
2018		152		15		—
Years 2019-2023		925		77		1

Employee Savings Plans. Under its various employee savings plans, the Company matches the contributions of participating employees up to a designated level. The extent of the match, vesting terms and the form of the matching contributions vary among the plans. Under these plans, the Company’s matching contributions in L-3 Holdings’ common stock and cash attributable to continuing operations were $120 million for 2013, $126 million for 2012 and $113 million for 2011. The Company’s matching contributions in L-3 Holdings’ common stock and cash attributable to discontinued operations were $8 million for 2012 and $24 million for 2011.

Multi-employer Benefit Plans. Certain of the Company’s businesses participate in multi-employer defined benefit pension plans. The Company makes cash contributions to these plans under the terms of collective-bargaining agreements that cover its union employees based on a fixed rate per hour of service worked by the covered employees. The risks of participating in these multi-employer plans are different from single-employer plans in the following aspects: (1) assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers, (2) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers and (3) if the Company chooses to stop participating in some of its multi-employer plans, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

F-65

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Under these plans, the Company contributed cash and recorded expenses for each of its individually significant plans and all of its other plans in aggregate as noted in the table below.

Pension Fund	EIN/Pension Plan Number		Pension Protection Act Zone Status(1)				FIP/RP(2) Status Pending/ Implemented	Contributions by L-3 Communications						Surcharge Imposed		Expiration     Date of Collective- Bargaining Agreement
			2013		2012			2013		2012		2011
								(in millions)
IAM National Pension Fund		51-6031295/002		Green		Green	No	$	21(3)	$	20(4)	$	19(4)		No	2/14/2014 to  1/29/2016(5)
Other Pension Funds(6)									—		—		—
						Total contributions		$	21	$	20	$	19

⁽¹⁾  A zone status rating of green indicates the plan is at least 80% funded. The funding status of the IAM National Pension Fund was impacted by a market value investment loss for the plan year ended December 31, 2008, which amortization was extended over five years.

⁽²⁾  Funding improvement plan or rehabilitation plan.

⁽³⁾  At the date the audited financial statements for the Company were issued, Form 5500 for the plan year ending December 31, 2013 was not available.

⁽⁴⁾  Represents 6% of total plan contributions for both years ended December 31, 2012 and 2011 based on Form 5500.

⁽⁵⁾  The Company is a party to multiple bargaining agreements for multiple projects that require contributions into the IAM National Pension Fund. The most significant of these agreements, expiring April 27, 2014, cover multiple programs in the Company’s Aerospace Systems reportable segment and represent 72% of 2013 contributions.

⁽⁶⁾  Consists of three pension funds in which the Company’s contributions are individually, and in the aggregate, insignificant.

22. Supplemental Cash Flow Information

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Interest paid on outstanding debt	$	171	$	198	$	238
Income tax payments		245		332		273
Income tax refunds		23		22		18

F-66

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

23. 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 and operating income. All corporate expenses are allocated to the Company’s operating segments using an allocation methodology prescribed by U.S. Government regulations for government contractors. Accordingly, all costs and expenses, except for the goodwill impairment charge in 2011 (which was not included in the Company’s segment performance measures), are included in the Company’s measure of segment profitability. Certain Corporate expenses of $10 million and $26 million for the years ended December 31, 2012 and 2011, respectively, that had previously been allocated to the Engility businesses were retained by the Company and were allocated to L-3’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,
	2013		2012		2011
	(in millions)
Net Sales
Products
Aerospace Systems	$	1,827	$	1,755	$	1,579
Electronic Systems		3,661		3,754		3,862
Communication Systems		1,755		2,083		2,042
NSS		71		98		153
Elimination of intercompany sales		(125)		(104)		(87)
Total products sales		7,189		7,586		7,549
Services
Aerospace Systems		2,730		2,844		2,857
Electronic Systems		1,054		1,011		928
Communication Systems		471		445		428
NSS		1,228		1,292		1,465
Elimination of intercompany sales		(50)		(71)		(73)
Total services sales		5,433		5,521		5,605
Consolidated total	$	12,622	$	13,107	$	13,154
Operating Income
Aerospace Systems	$	426	$	437	$	451
Electronic Systems		533		569		624
Communication Systems		168		223		265
NSS		85		79		101
Segment Total	$	1,212	$	1,308	$	1,441
Impairment charge(1)		—		—		(43)
Consolidated total	$	1,212	$	1,308	$	1,398
Depreciation and amortization
Aerospace Systems	$	38	$	46	$	44
Electronic Systems		117		121		124
Communication Systems		48		47		43
NSS		11		14		19
Consolidated total	$	214	$	228	$	230

F-67

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Capital Expenditures
Aerospace Systems	$	54	$	42	$	42
Electronic Systems		71		77		79
Communication Systems		59		84		60
NSS		5		5		5
Corporate		20		2		1
Consolidated total	$	209	$	210	$	187
Total Assets
Aerospace Systems	$	3,087	$	3,074	$	3,125
Electronic Systems		6,928		6,792		6,607
Communication Systems		2,130		2,179		1,783
NSS		1,247		1,228		1,317
Corporate		596		527		959
Assets of discontinued operations		—		—		1,729
Consolidated total	$	13,988	$	13,800	$	15,520

⁽¹⁾  Represents a non-cash goodwill impairment charge recorded in the fourth quarter of 2011 due to a decline in the estimated fair value of a reporting unit within the Electronic Systems segment.

Corporate assets not allocated to the reportable segments primarily include cash and cash equivalents, corporate office fixed assets, deferred income tax assets and liabilities and deferred debt issue costs. In addition, substantially all of the Company’s assets are located in North America.

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,
	2013		2012		2011
	(in millions)
U.S.	$	9,808	$	10,658	$	11,067
International:
United Kingdom		449		360		310
Canada		357		314		328
Germany		272		263		243
Australia		218		222		118
South Korea		178		125		93
Saudi Arabia		132		76		41
Italy		107		116		98
Other		1,101		973		856
Total international		2,814		2,449		2,087
Consolidated	$	12,622	$	13,107	$	13,154

F-68

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Net sales to principal customers are summarized in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
U.S. Government agencies(1)	$	9,186	$	9,986	$	10,438
Commercial		1,689		1,658		1,524
Allied international governments(1)		1,747		1,463		1,192
Consolidated	$	12,622	$	13,107	$	13,154

⁽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.

24. Employee Severance and Termination Costs

Consistent with the Company’s strategy to continuously improve its cost structure and right-size its businesses, especially in view of sequestration and other DoD budget restrictions, L-3 is completing employment reduction actions across several of its businesses to reduce both direct and indirect costs, including overhead and general and administrative costs. As a result of these initiatives and due to the impact of sequestration at certain affected business units, the Company recorded employee severance and other termination costs of $29 million with respect to approximately 2,000 employees during the year ended December 31, 2013, $23 million with respect to approximately 1,600 employees during the year ended December 31, 2012 and $20 million with respect to approximately 1,200 employees for the year ended December 31, 2011. Employee severance and other termination costs are reported within cost of sales on the consolidated statement of operations. The remaining balance to be paid in connection with these initiatives was $11 million at December 31, 2013 and $9 million at December 31, 2012. Employee severance and other termination costs incurred by reportable segment for the years ended December 31, 2013, 2012 and 2011 are presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Aerospace Systems	$	2	$	1	$	3
Electronic Systems		16		13		12
Communication Systems		11		8		4
NSS		—		1		1
Consolidated	$	29	$	23	$	20

F-69

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

25. Unaudited Quarterly Financial Data

Unaudited summarized financial data by quarter for the years ended December 31, 2013 and 2012 is presented in the table below. The Company’s unaudited quarterly results of operations are affected, significantly in some periods, by our business acquisitions. See Note 5.

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	(in millions, except per share data)
2013
Sales	$	3,197	$	3,189	$	3,002	$	3,234
Operating income		310		290		306		306
Income from continuing operations		192		176		204		188
Net income attributable to L-3		191		175		200		185
Basic EPS(1) (2)		2.12		1.95		2.23		2.10
Diluted EPS(1) (2)		2.09		1.92		2.19		2.04
2012
Sales	$	3,160	$	3,143	$	3,284	$	3,520
Operating income		322		328		319		339
Income from continuing operations		186		189		188		199
Net income attributable to L-3		200		203		185		196
Basic EPS from continuing operations(1)		1.88		1.93		1.94		2.11
Diluted EPS from continuing operations(1)		1.86		1.91		1.91		2.08
Basic EPS(1)		2.02		2.09		1.93		2.11
Diluted EPS(1)		2.00		2.06		1.90		2.08

⁽¹⁾  EPS in each quarter is computed using the weighted-average number of shares outstanding during that quarter, while EPS for the full year is computed using the weighted-average number of shares outstanding during the year. Therefore, the sum of the four quarters’ EPS may not equal the full year computed EPS.

⁽²⁾  EPS and EPS from continuing operations are the same in 2013.

F-70

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

26. 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, 2013.

	L-3 Communications Common Stock				Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total
	Shares Issued		Par Value
			(in millions, except shares issued)
Balance at December 31, 2010		100	$	—	$	4,801	$	—	$	2,226	$	(256)	$	6,771
Net income attributable to L-3		—		—		—		—		958		—		958
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	$	—	$	2,034	$	(454)	$	6,644
Net income attributable to L-3		—		—		—		—		784		—		784
Contributions from L-3 Holdings		—		—		250		—		—		—		250
Dividends to L-3 Holdings		—		—		—		—		(1,064)		—		(1,064)
Comprehensive loss		—		—		—		—		—		(96)		(96)
Net change of equity due to spin-off of Engility		—		—		—		—		(1,063)		—		(1,063)
Other		—		—		—		—		(4)		—		(4)
Balance at December 31, 2012		100	$	—	$	5,314	$	—	$	687	$	(550)	$	5,451
Net income attributable to L-3		—		—		—		—		751		—		751
Contributions from L-3 Holdings		—		—		339		—		—		—		339
Dividends to L-3 Holdings		—		—		—		—		(997)		—		(997)
Comprehensive gain		—		—		—		—		—		440		440
Other		—		—		—		—		(3)		—		(3)
Balance at December 31, 2013		100	$	—	$	5,653	$	—	$	438	$	(110)	$	5,981

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 100% owned subsidiary of L-3 Holdings. The debt of L-3 Communications, including the Senior 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 the Guarantor Subsidiaries. See Note 11 for additional information. 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.

F-71

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Under the terms of the indentures governing the Senior Notes, the guarantees of the Senior 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”. Under the terms of the indenture governing the CODES, the guarantees of the CODES will be automatically and unconditionally released and discharged: (1) upon the release of guarantees of all other outstanding indebtedness of L-3 Holdings and its subsidiaries (other than a foreign subsidiary) or (2) upon the designation of such guarantor as an “excluded subsidiary.” In addition, the guarantees of the Senior Notes and the CODES will 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.

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. As discussed in Note 3, the Company is revising its previously issued financial statements. As part of that revision, the Company has revised the accompanying condensed combining financial statements contained herein. The adjustments related to the internal review of the Aerospace Systems segment, excluding certain adjustments related to the Platform Systems segment, were recorded as adjustments to the Guarantor Subsidiaries financial statement amounts. Adjustments from the internal review that related to a foreign subsidiary of the Platform Systems segment, with a cumulative operating impact through December 31, 2013 of $10 million, were recorded to the Non-Guarantor Subsidiaries financial statement amounts. The adjustments for the accounting related to a sales-type lease transaction for flight simulator systems within its Electronic Systems segment have been recorded as adjustments to the L-3 Communications financial statement amounts. The adjustments for the previously identified immaterial errors were recorded as adjustments to the Guarantor Subsidiaries financial statement amounts.

F-72

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

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, 2013:
Current assets:
Cash and cash equivalents	$	—	$	258	$	—	$	261	$	(19)	$	500
Billed receivables, net		—		364		401		226		—		991
Contracts in process		—		925		1,152		354		—		2,431
Other current assets		—		344		159		169		—		672
Total current assets		—		1,891		1,712		1,010		(19)		4,594
Goodwill		—		2,307		4,326		1,163		—		7,796
Other assets		—		838		532		228		—		1,598
Investment in and amounts due from consolidated subsidiaries		6,670		6,940		3,744		—		(17,354)		—
Total assets	$	6,670	$	11,976	$	10,314	$	2,401	$	(17,373)	$	13,988
Current liabilities	$	—	$	914	$	1,011	$	628	$	(19)	$	2,534
Amounts due to consolidated subsidiaries		—		—		—		270		(270)		—
Other long-term liabilities		—		1,451		193		124		—		1,768
Long-term debt		689		3,630		—		—		(689)		3,630
Total liabilities		689		5,995		1,204		1,022		(978)		7,932
L-3 shareholders’ equity		5,981		5,981		9,110		1,379		(16,470)		5,981
Noncontrolling interests		—		—		—		—		75		75
Total equity		5,981		5,981		9,110		1,379		(16,395)		6,056
Total liabilities and equity	$	6,670	$	11,976	$	10,314	$	2,401	$	(17,373)	$	13,988
At December 31, 2012:
Current assets:
Cash and cash equivalents	$	—	$	246	$	—	$	242	$	(139)	$	349
Billed receivables, net		—		290		441		237		—		968
Contracts in process		—		893		1,275		342		—		2,510
Other current assets		—		308		161		188		—		657
Total current assets		—		1,737		1,877		1,009		(139)		4,484
Goodwill		—		2,010		4,627		1,139		—		7,776
Other assets		—		757		572		211		—		1,540
Investment in and amounts due from consolidated subsidiaries		6,140		7,153		3,299		101		(16,693)		—
Total assets	$	6,140	$	11,657	$	10,375	$	2,460	$	(16,832)	$	13,800
Current liabilities	$	—	$	823	$	1,221	$	658	$	(139)	$	2,563
Other long-term liabilities		—		1,754		210		117		—		2,081
Long-term debt		689		3,629		—		—		(689)		3,629
Total liabilities		689		6,206		1,431		775		(828)		8,273
L-3 shareholders’ equity		5,451		5,451		8,944		1,685		(16,080)		5,451
Noncontrolling interests		—		—		—		—		76		76
Total equity		5,451		5,451		8,944		1,685		(16,004)		5,527
Total liabilities and equity	$	6,140	$	11,657	$	10,375	$	2,460	$	(16,832)	$	13,800

F-73

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

	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, 2013:
Net sales	$	—	$	3,842	$	6,804	$	2,363	$	(387)	$	12,622
Cost of sales		(59)		(3,549)		(6,139)		(2,109)		446		(11,410)
Operating (loss) income		(59)		293		665		254		59		1,212
Interest expense		(21)		(176)		—		(1)		21		(177)
Interest and other income (expense), net		—		15		—		5		—		20
(Loss) income from continuing operations before income taxes		(80)		132		665		258		80		1,055
Benefit (provision) for income taxes		22		(38)		(184)		(73)		(22)		(295)
Equity in net income of consolidated subsidiaries		809		657		—		—		(1,466)		—
Net income		751		751		481		185		(1,408)		760
Net income attributable to noncontrolling interests		—		—		—		—		(9)		(9)
Net income attributable to L-3	$	751	$	751	$	481	$	185	$	(1,417)	$	751
Comprehensive income attributable to L-3	$	1,191	$	1,191	$	480	$	159	$	(1,830)	$	1,191
For the year ended December 31, 2012:
Net sales	$	—	$	3,737	$	7,475	$	2,278	$	(383)	$	13,107
Cost of sales		(59)		(3,434)		(6,749)		(1,999)		442		(11,799)
Operating (loss) income		(59)		303		726		279		59		1,308
Interest expense		(21)		(183)		—		(1)		21		(184)
Interest and other income (expense), net		—		14		(5)		2		—		11
Debt retirement charge		—		(13)		—		—		—		(13)
(Loss) income from continuing operations before income taxes		(80)		121		721		280		80		1,122
Benefit (provision) for income taxes		26		(37)		(230)		(93)		(26)		(360)
Equity in net income of consolidated subsidiaries		838		668		—		—		(1,506)		—
Income from continuing operations		784		752		491		187		(1,452)		762
Income from discontinued operations, net of income tax		—		32		—		—		—		32
Net income		784		784		491		187		(1,452)		794
Net income attributable to noncontrolling interests		—		—		—		—		(10)		(10)
Net income attributable to L-3	$	784	$	784	$	491	$	187	$	(1,462)	$	784
Comprehensive income attributable to L-3	$	688	$	688	$	493	$	215	$	(1,396)	$	688

F-74

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

	L-3 Holdings (Parent)		L-3 Communications		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated L-3
	(in millions)
For the year ended December 31, 2011:
Net sales	$	—	$	3,735	$	7,572	$	2,187	$	(340)	$	13,154
Cost of sales		(57)		(3,335)		(6,857)		(1,861)		397		(11,713)
Impairment charge		—		(43)		—		—		—		(43)
Operating (loss) income		(57)		357		715		326		57		1,398
Interest expense		(23)		(201)		(1)		(5)		26		(204)
Interest and other income (expense), net		—		17		(15)		4		(3)		3
Debt retirement charge		—		(35)		—		—		—		(35)
(Loss) income from continuing operations before income taxes		(80)		138		699		325		80		1,162
Benefit (provision) for income taxes		20		(35)		(178)		(83)		(20)		(296)
Equity in net income of consolidated subsidiaries		1,018		751		—		—		(1,769)		—
Income from continuing operations		958		854		521		242		(1,709)		866
Income from discontinued operations, net of income tax		—		104		—		—		—		104
Net income		958		958		521		242		(1,709)		970
Net income attributable to noncontrolling interests		—		—		—		—		(12)		(12)
Net income attributable to L-3	$	958	$	958	$	521	$	242	$	(1,721)	$	958
Comprehensive income attributable to L-3	$	760	$	760	$	511	$	221	$	(1,492)	$	760

F-75

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

	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, 2013:
Operating activities:
Net cash from operating activities	$	999	$	437	$	776	$	231	$	(1,180)	$	1,263
Investing activities:
Business acquisitions, net of cash acquired		—		(62)		—		—		—		(62)
Investments in L-3 Communications		(149)		—		—		—		149		—
Other investing activities		—		(88)		(89)		(22)		—		(199)
Net cash used in investing activities		(149)		(150)		(89)		(22)		149		(261)
Financing activities:
Common stock repurchased		(800)		—		—		—		—		(800)
Dividends paid on L-3 Holdings common stock		(199)		—		—		—		—		(199)
Dividends paid to L-3 Holdings		—		(999)		—		—		999		—
Investments from L-3 Holdings		—		149		—		—		(149)		—
Other financing activities		149		575		(687)		(188)		301		150
Net cash used in financing activities		(850)		(275)		(687)		(188)		1,151		(849)
Effect of foreign currency exchange rate changes on cash		—		—		—		(2)		—		(2)
Net (decrease) increase in cash		—		12		—		19		120		151
Cash and cash equivalents, beginning of the year		—		246		—		242		(139)		349
Cash and cash equivalents, end of the year	$	—	$	258	$	—	$	261	$	(19)	$	500
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

F-76

L-3 COMMUNICATIONS HOLDINGS, INC.

AND L-3 COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

	L-3 Holdings (Parent)		L-3 Communications		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated L-3
	(in millions)
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

F-77

EX-12

Exhibit 12

L-3 Communications Holdings, Inc.

and L-3 Communications Corporation

Ratio of Earnings to Fixed Charges (Unaudited)

	Year Ended December 31,
	2013		2012		2011		2010		2009
	(In millions, except ratio of earnings to fixed charges)
Earnings:
Income from continuing operations before income taxes	$	1,055	$	1,122	$	1,162	$	1,254	$	1,134
Net income from continuing operations attributable to noncontrolling interests		(9)		(6)		(9)		(9)		(9)
Income from continuing operations before income taxes after noncontrolling interests	$	1,046	$	1,116	$	1,153	$	1,245	$	1,125
Add:
Interest expense		172		193		226		257		268
Amortization of debt expense		5		5		9		12		11
Interest component of rent expense		47		54		55		59		59
Earnings	$	1,270	$	1,368	$	1,443	$	1,573	$	1,463
Fixed charges:
Interest expense	$	172	$	193	$	226	$	257	$	268
Amortization of debt expense		5		5		9		12		11
Interest component of rent expense		47		54		55		59		59
Fixed charges	$	224	$	252	$	290	$	328	$	338
Ratio of earnings to fixed charges		5.7x		5.4x		5.0x		4.8x		4.3x

EX-23

Exhibit 23

CONSENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-59281, 333-78317, 333-120393, 333-123424, 333-151964, 333-160359, 333-168466, 333-168467, 333-183353 and 333-188450) of L-3 Communications Holdings, Inc. and subsidiaries and in the Registration Statements on Form S-3 ASR (No. 333-188457) and Form S-8 (No. 333-184783), in each case, of L-3 Communications Corporation and subsidiaries of our report dated February 25, 2014, except with respect to our opinion on the consolidated financial statements insofar as it relates to the effects of the reportable business segment realignment in Notes 1, 5, 8, 23, 24, and 26, as to which the date is May 1, 2014, and except for the effects of the revision discussed in Note 3 to the consolidated financial statements and the matter described in the fourth paragraph of Management’s Report on Internal Control Over Financial Reporting, as to which the date is October 10, 2014, relating to the consolidated financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K/A.

PricewaterhouseCoopers, LLP

New York, New York

October 10, 2014

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Michael T. Strianese, certify that:

1. I have reviewed this report on Form 10-K/A for the year ended December 31, 2013 of L-3 Communications Holdings, Inc. and L-3 Communications Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;

4. The registrants’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrants’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrants’ internal control over financial reporting that occurred during the registrants’ most recent fiscal quarter (the registrants’ fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants’ internal control over financial reporting; and

5. The registrants’ other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants’ auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants’ ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants’ internal control over financial reporting.

Date October 10, 2014

/s/ Michael T. Strianese

Michael T. Strianese

Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Ralph G. D’Ambrosio, certify that:

1. I have reviewed this report on Form 10-K/A for the year ended December 31, 2013 of L-3 Communications Holdings, Inc. and L-3 Communications Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;

4. The registrants’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrants’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrants’ internal control over financial reporting that occurred during the registrants’ most recent fiscal quarter (the registrants’ fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants’ internal control over financial reporting; and

5. The registrants’ other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants’ auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants’ ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants’ internal control over financial reporting.

Date: October 10, 2014

/s/ Ralph G. D’Ambrosio

Ralph G. D’Ambrosio

Senior Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of L-3 Communications Holdings, Inc. (“L-3 Holdings”) and L-3 Communications Corporation (“L-3 Communications”; together with L-3 Holdings referred to as “L-3”) on Form 10-K/A for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Michael T. Strianese, Chairman, President and Chief Executive Officer and Ralph G. D’Ambrosio, Senior Vice President and Chief Financial Officer, in each case, of L-3 Holdings and L-3 Communications, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of L-3.

Date: October 10, 2014

/s/ Michael T. Strianese	/s/ Ralph G. D’Ambrosio
Michael T. Strianese	Ralph G. D’Ambrosio
Chairman, President and Chief Executive Officer	Senior Vice President and Chief Financial Officer

XML

Acquisitions and Divestures (Tables)

12 Months Ended

Dec. 31, 2013

Text Block [Abstract]

Schedule of Goodwill

The goodwill was assigned to the reportable segments listed below:

Segment	December 31, 2013
	(in millions)
Electronic Systems	$	10
Communication Systems		9
Total	$	19

Statement of Operations Data Classified as Discontinued Operations

Engility’s statement of operations data, which has been classified as discontinued operations, is provided in the table below.

	January 1 to July 17, 2012		Year Ended December 31, 2011
	(in millions)
Product and service revenues	$	911	$	2,011
Operating income from discontinued operations before income taxes		68		199
Interest expense allocated to discontinued operations		(14)		(31)
Income from discontinued operations before income taxes	$	54	$	168
Income tax expense		(22)		(64)
Income from discontinued operations, net of income taxes	$	32	$	104
Net income from discontinued operations attributable to noncontrolling interests		(4)		(3)
Net income from discontinued operations attributable to L-3	$	28	$	101

Unaudited Pro Forma Statements of Operations Data

The following unaudited pro forma Statements of Operations data presents the combined results of the Company and its business acquisitions completed during the years ended December 31, 2013, 2012 and 2011, assuming that the business acquisitions completed during 2013, 2012 and 2011 had occurred on January 1, 2011.

	Year Ended December 31,
	2013		2012		2011
	(in millions, except per share data)
Pro forma net sales	$	12,657	$	13,239	$	13,498
Pro forma income from continuing operations	$	760	$	764	$	883
Pro forma net income attributable to L-3	$	751	$	786	$	975
Pro forma diluted earnings per share from continuing operations	$	8.24	$	7.76	$	8.26
Pro forma diluted earnings per share	$	8.24	$	8.05	$	9.21

XML

Segment Information - Company's Sales Attributable to U.S. Customers and International Customers (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Net sales	$ 12,622	$ 13,107	$ 13,154
Operating Segments [Member] | U.S. [Member]
Segment Reporting Information [Line Items]
Net sales	9,808	10,658	11,067
Operating Segments [Member] | United Kingdom [Member]
Segment Reporting Information [Line Items]
Net sales	449	360	310
Operating Segments [Member] | Canada [Member]
Segment Reporting Information [Line Items]
Net sales	357	314	328
Operating Segments [Member] | Germany [Member]
Segment Reporting Information [Line Items]
Net sales	272	263	243
Operating Segments [Member] | Australia [Member]
Segment Reporting Information [Line Items]
Net sales	218	222	118
Operating Segments [Member] | South Korea [Member]
Segment Reporting Information [Line Items]
Net sales	178	125	93
Operating Segments [Member] | Saudi Arabia (Member)
Segment Reporting Information [Line Items]
Net sales	132	76	41
Operating Segments [Member] | Italy [Member]
Segment Reporting Information [Line Items]
Net sales	107	116	98
Operating Segments [Member] | Other [Member]
Segment Reporting Information [Line Items]
Net sales	1,101	973	856
Operating Segments [Member] | Total International [Member]
Segment Reporting Information [Line Items]
Net sales	$ 2,814	$ 2,449	$ 2,087

XML

Income Taxes - Reconciliation of Change in Unrecognized Income Tax Benefits, Excluding Interest and Penalties (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Abstract]
Balance at January 1	$ 138	$ 150	$ 201
Additions for tax positions related to the current year	18	8	10
Additions for tax positions related to prior years	41	9	33
Reductions for tax positions related to prior years	(8)	(13)	(13)
Reductions for tax positions related to settlements with taxing authorities		(1)	(5)
Reduction for tax positions related to prior years as a result of a lapse of statute of limitations	(20)	(15)	(76)
Balance at December 31	$ 169	$ 138	$ 150

XML

Pensions and Other Employee Benefits (Tables)

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Changes in Benefit Obligations, Plan Assets and Funded Status and Aggregate Balance Sheet Impact

The following table summarizes changes in the benefit obligations, the plan assets and funded status for all of the Company’s pension and postretirement benefit plans, as well as the aggregate balance sheet impact.

	Pension Plans				Postretirement Benefit Plans
	2013		2012		2013		2012
	(in millions)
Change in benefit obligation:
Benefit obligation at the beginning of the year	$	3,222	$	2,679	$	218	$	216
Service cost		126		113		4		4
Interest cost		132		134		7		10
Plan participants’ contributions		2		2		4		4
Amendments		14		—		—		(5)
Obligation assumed in connection with a business acquisition(1)		—		29		—		3
Actuarial (gain) loss		(402)		358		(23)		(2)
Foreign currency exchange rate changes		(21)		8		(3)		1
Curtailments, settlements and special termination benefits		3		3		—		1
Benefits paid		(103)		(104)		(13)		(14)
Benefit obligation at the end of the year	$	2,973	$	3,222	$	194	$	218
Change in plan assets:
Fair value of plan assets at the beginning of the year	$	2,026	$	1,712	$	47	$	42
Actual return on plan assets		394		215		9		4
Assets acquired in connection with a business acquisition(1)		—		29		—		—
Employer contributions		105		173		8		11
Plan participants’ contributions		2		2		4		4
Foreign currency exchange rate changes		(21)		6		—		—
Transfers(2)		—		(7)		—		—
Benefits paid		(103)		(104)		(13)		(14)
Fair value of plan assets at the end of the year	$	2,403	$	2,026	$	55	$	47
Unfunded status at the end of the year	$	(570)	$	(1,196)	$	(139)	$	(171)
Assets and (liabilities) recognized in the consolidated balance sheets consist of:
Non-current assets	$	35	$	9	$	—	$	—
Current liabilities		(8)		(7)		(9)		(9)
Non-current liabilities		(597)		(1,198)		(130)		(162)
	$	(570)	$	(1,196)	$	(139)	$	(171)

⁽¹⁾  Represents pension and postretirement plan obligations and pension plan assets assumed/acquired during 2012 as part of the L-3 KEO business acquisition.

⁽²⁾  Represents assets related to various supplemental executive retirement plans that had previously been classified as pension plan assets; however, such assets are not held by the plans and are now classified as other assets.

Net Loss and Prior Service Cost Balances in Accumulated Other Comprehensive Loss Account

The table below summarizes the net loss and prior service cost balances at December 31, in the accumulated other comprehensive loss account, before related tax effects, for all of the Company’s pension and postretirement benefit plans.

	Pension Plans				Postretirement Benefit Plans
	2013		2012		2013		2012
	(in millions)
Net loss (gain)	$	425	$	1,146	$	(9)	$	21
Prior service cost (credit)		1		(12)		(8)		(10)
Total amount recognized	$	426	$	1,134	$	(17)	$	11

Pension Plans with an Accumulated Benefit Obligation in Excess of Fair Value of Plan Assets

The table below presents information for the pension plans with an ABO in excess of the fair value of plan assets at December 31, 2013 and 2012.

	Pension Plans
	2013		2012
	(in millions)
Projected benefit obligation	$	2,408	$	3,177
Accumulated benefit obligation		2,115		2,743
Fair value of plan assets		1,815		1,975

Weighted Average Assumptions Used to Determine Benefit Obligations

The table below summarizes the weighted average assumptions used to determine the benefit obligations for the Company’s pension and postretirement plans disclosed at December 31, 2013 and 2012.

	Pension Plans				Postretirement Benefit Plans
	2013		2012		2013		2012
Benefit obligations:
Discount rate		5.03%(1)		4.15%(1)		4.43%(2)		3.37%(2)
Rate of compensation increase		3.50%(3)		3.56%(3)		3.50%(3)		3.59%(3)

⁽¹⁾  The weighted average discount rate assumptions used at December 31, 2013 and 2012 were comprised of separate assumptions determined by country of 5.1% and 4.2% for the U.S. based plans, 4.7% and 3.9% for the Canadian based plans and 3.5% and 3.4% for the German based plans.

⁽²⁾  The weighted average discount rate assumptions used at December 31, 2013 and 2012 were comprised of separate assumptions determined by country of 4.4% and 3.3% for the U.S. based plans and 4.6% and 3.7% for the Canadian based plans.

⁽³⁾  The weighted average rate of compensation increase assumptions were comprised of separate assumptions determined by country of 3.5% for the U.S. based plans at both December 31, 2013 and 2012 and 3.5% and 4.0% for the Canadian based plans at December 31, 2013 and 2012.

Components of Net Periodic Benefit Cost

The following table summarizes the components of net periodic benefit cost for the Company’s pension and postretirement benefit plans for the years ended December 31, 2013, 2012 and 2011.

	Pension Plans						Postretirement Benefit Plans
	2013		2012		2011		2013		2012		2011
	(in millions)
Components of net periodic benefit cost:
Service cost	$	126	$	113	$	106	$	4	$	4	$	5
Interest cost		132		134		128		7		10		10
Expected return on plan assets		(164)		(145)		(139)		(4)		(3)		(2)
Amortization of prior service cost (credits)		1		1		1		(3)		(3)		(3)
Amortization of net loss		83		69		49		2		1		1
Curtailment or settlement loss		3		7		—		—		1		—
Net periodic benefit cost	$	181	$	179	$	145	$	6	$	10	$	11

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income

The following table summarizes the other changes in plan assets and benefit obligations recognized in other comprehensive income for the Company’s pension and postretirement benefit plans for the years ended December 31, 2013, 2012 and 2011.

	Pension Plans						Postretirement Benefit Plans
	2013		2012		2011		2013		2012		2011
	(in millions)
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net (gain) loss	$	(637)	$	287	$	266	$	(29)	$	(3)	$	10
Prior service cost (credit)		14		(1)		2		—		(5)		—
Amortization of net loss		(83)		(69)		(49)		(2)		(1)		(1)
Amortization of prior service (cost) credit		(1)		(1)		(1)		3		3		3
Total recognized in other comprehensive income		(707)		216		218		(28)		(6)		12
Total recognized in net periodic benefit cost and other comprehensive income	$	(526)	$	395	$	363	$	(22)	$	4	$	23

Amounts Expected to be Amortized from Accumulated Other Comprehensive Income (Loss) and Recognized as Components of Net Periodic Benefit Costs

The following table summarizes the amounts expected to be amortized from accumulated other comprehensive income (loss) and recognized as components of net periodic benefit costs during 2014.

	Pension Plans		Postretirement Benefit Plans		Total
			(in millions)
Net loss (gain)	$	17	$	(1)	$	16
Prior service cost (credit)		2		(2)		—
	$	19	$	(3)	$	16

Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost

The table below summarizes the weighted average assumptions used to determine the net periodic benefit cost for the years ended December 31, 2013, 2012 and 2011.

	Pension Plans						Postretirement Benefit Plans
	2013		2012		2011		2013		2012		2011
Discount rate		4.15%(1)		5.02%(1)		5.57%(1)		3.37%(4)		4.71%(4)		5.40%(4)
Expected long-term return on plan assets		8.13%(2)		8.15%(2)		8.57%(2)		7.64%		7.64%		6.20%
Rate of compensation increase		3.50%(3)		4.06%(3)		4.50%(3)		3.50%		4.09%		4.50%

⁽¹⁾  The weighted average discount rate assumptions used for the years ended December 31, 2013, 2012, and 2011 were comprised of separate assumptions determined by country of 4.2%, 5.1% and 5.6% for the U.S. based plans, 3.9%, 4.4% and 5.4% for the Canadian based plans and 3.4%, 5.1%, and 5.4% for the German based plans, respectively.

⁽²⁾  The weighted average expected long-term return on plan assets assumptions used were comprised of separate assumptions determined by country of 8.25% for the U.S. based plans for the year ended December 31, 2013, 2012 and 2011 and 7.25% for the year ended December 31, 2013 and 7.5% for the years ended December 31, 2012 and 2011 for the Canadian based plans.

⁽³⁾  The weighted average rate of compensation increase assumptions used for the year ended December 31, 2013 were comprised of separate assumptions determined by country of 3.5% for both the U.S and Canadian based plans. The rate of compensation increase assumptions were 4.0% for the U.S based plans and 4.5% for the Canadian based plans for the year ended December 31, 2012. The rate of compensation increase assumptions were 4.5% for both the U.S. and Canadian based plans for the year ended December 31, 2011.

⁽⁴⁾  The weighted average discount rate assumptions used for the years ended December 31, 2013, 2012 and 2011 were comprised of separate assumptions determined by country of 3.3%, 4.8% and 5.4% for the U.S. based plans and 3.7%, 4.3% and 5.4% for the Canadian based plans, respectively.

Effect of One Percentage Point Change in Assumed Health Care Cost Trend Rates

A one percentage point change in the assumed health care cost trend rates would have the following effects:

	1 percentage point
	Increase		Decrease
	(in millions)
Effect on total service and interest cost	$	1	$	—
Effect on postretirement benefit obligations		9		(7)

Allowable Range for Each Major Category of the Plans' Assets and Weighted-Average Asset Allocations by Asset Category

The table below presents the allowable range for each major category of the plans’ assets at December 31, 2013 as well as the Company’s pension plan and postretirement benefit plan weighted-average asset allocations at December 31, 2013 and 2012, by asset category.

	U.S.						Canada
Asset Category	2013 and 2012 Range		2013		2012		2013 Range	2013		2012 Range		2012
Domestic equity(1)		30%-60%		54%		51%	10%-25%		20%		15%-30%		19%
International equity(2)		10%-20%		11		10	30%-60%		49		20%-50%		46
Fixed income securities		20%-40%		22		29	20%-60%		28		25%-55%		32
Real estate securities		0%-15%		6		8	—		—		—		—
Other, primarily cash and cash equivalents		0%-15%		7		2	0%-15%		3		0%-15%		3
Total				100%		100%			100%				100%

⁽¹⁾  Domestic equities for Canadian plans refers to equities of Canadian companies.

⁽²⁾  International equities for Canadian plans includes equities of U.S. companies.

Fair Value of the Company's Pension Plans' and Postretirement Benefit Plans' Assets

The table below presents the fair value of the Company’s pension plans’ assets at December 31, 2013 and 2012, by asset category segregated by level within the fair value hierarchy, as described below.

	U.S. Pension Plans’ Assets								Canadian Pension Plans’ Assets
	Fair Value Measured at December 31, 2013								Fair Value Measured at December 31, 2013
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Equity securities(1):
U.S. Equity	$	1,141	$	—	$	—	$	1,141	$	54	$	18	$	—	$	72
International Equity		79		146		—		225		117		18		—		135
Fixed Income — Investment Grade(2)		216		135		—		351		—		82		—		82
Fixed Income — High Yield(3)		—		118		—		118		—		—		—		—
Real Estate Investment Trusts(4)		118		—		—		118		—		—		—		—
Other(5)		—		150		—		150		6		5		—		11
Total	$	1,554	$	549	$	—	$	2,103	$	177	$	123	$	—	$	300
	Fair Value Measured at December 31, 2012								Fair Value Measured at December 31, 2012
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Equity securities(1):
U.S. Equity	$	893	$	—	$	—	$	893	$	43	$	13	$	—	$	56
International Equity		67		117		—		184		98		21		—		119
Fixed Income — Investment Grade(2)		194		197		—		391		—		88		—		88
Fixed Income — High Yield(3)		—		105		—		105		—		—		—		—
Real Estate Investment Trusts(4)		138		—		—		138		—		—		—		—
Other(5)		—		42		—		42		3		7		—		10
Total	$	1,292	$	461	$	—	$	1,753	$	144	$	129	$	—	$	273

⁽¹⁾  Equity securities consist of investments in common stock of U.S. and international companies. The fair value of equity securities is based on quoted market prices available in active markets at the close of a trading day, primarily the New York Stock Exchange (NYSE), National Association of Securities Dealers Automated Quotations (NASDAQ), and various international exchanges. The Level 2 investment balance is derived from a regulated commingled equity trust fund, which fair value is based on the net asset value (NAV) at the end of each month. The NAV is calculated by the fund manager based on the fair value of the fund’s holdings, primarily equity securities traded in active markets, determined as of the end of each month. Withdrawals are permitted monthly based on NAV.

⁽²⁾  Approximately 62% in 2013 and 50% in 2012 of U.S. plan assets that are invested in the Fixed Income — Investment Grade asset category consist of a mutual fund offered by a registered investment company (the “Fund”). The Fund invests in investment grade fixed income securities, mortgaged-backed securities, U.S. treasury and agency bonds and corporate bonds. This Fund is classified by the Company as a Level 1 measurement within the fair value hierarchy, as the mutual fund trades on an active market and daily, quoted prices are available. The remaining 38% of U.S. plan assets in 2013 are primarily investment grade corporate bonds from various industries held directly by the Company. The fair values of these investments are based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs. The remaining 50% of U.S. plan assets in 2012 and all of the Canadian plan assets for both 2013 and 2012 are invested in regulated commingled equity trust funds (the “Bond Funds”). As these Bond Funds do not trade in an active market, the fair value is based on NAVs calculated by fund managers based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs and classified as Level 2. Withdrawals are permitted monthly based on NAV.

⁽³⁾  Fixed Income — High Yield consists of investments in corporate high-yield bonds from various industries. The fair values of these investments are based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs.

⁽⁴⁾  Real Estate Investment Trusts (REITs) consist of securities that trade on the major exchanges and invest directly in real estate, either through properties or mortgages.

⁽⁵⁾  Other consists primarily of (1) cash equivalents maintained in commingled trust funds, which invest primarily in short term, high quality money market securities such as government obligations, commercial paper, time deposits and certificates of deposit, and are classified as Level 2, and (2) cash, which is classified as Level 1.

The table below presents the fair value of the Company’s postretirement benefit plans’ assets at December 31, 2013 and 2012, by asset category segregated by level within the fair value hierarchy, as described below.

	Postretirement Benefit Plans’ Assets
	Fair Value Measured at December 31, 2013								Fair Value Measured at December 31, 2012
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Equity securities(1):
U.S. Equity	$	23	$	—	$	—	$	23	$	27	$	—	$	—	$	27
International Equity		1		2		—		3		1		1		—		2
Fixed Income — Investment Grade(2)		21		2		—		23		11		3		—		14
Fixed Income — High Yield(3)		—		2		—		2		—		1		—		1
Real Estate Investment Trusts(4)		2		—		—		2		2		—		—		2
Other(5)		—		2		—		2		—		1		—		1
Total	$	47	$	8	$	—	$	55	$	41	$	6	$	—	$	47

⁽¹⁾  Equity securities consist of investments in common stock of U.S. and international companies. The fair value of equity securities is based on quoted market prices available in active markets at the close of a trading day, primarily the NYSE, NASDAQ, and various international exchanges. The Level 2 investment balance is derived from a regulated commingled equity trust fund, which fair value is based on NAV at the end of each month. The NAV is calculated by the fund manager based on the fair value of the fund’s holdings, primarily equity securities traded in active markets, determined as of the end of each month. Withdrawals are permitted monthly based on NAV.

⁽²⁾  Approximately 91% in 2013 and 79% in 2012 of the postretirement benefit plan assets that are invested in the Fixed Income — Investment Grade asset category consist of a mutual fund offered by the Fund. The Fund invests in investment grade fixed income securities, mortgaged-backed securities, U.S. treasury and agency bonds and corporate bonds. This Fund is classified by the Company as a Level 1 measurement within the fair value hierarchy as the mutual fund trades on an active market and daily, quoted prices are available. The remaining 9% of postretirement benefit plan assets in 2013 are primarily investment grade corporate bonds from various industries held directly by the Company. The fair values of these investments are based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs. The remaining 21% in 2012 of the postretirement benefit plan assets are invested in the Bond Fund. As the Bond Fund does not trade in an active market, the fair value is based on NAV’s calculated by the fund manager based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs and classified as Level 2. Withdrawals are permitted monthly based on NAV.

⁽³⁾  Fixed Income — High Yield consists of investments in corporate high-yield bonds from various industries. The fair values of these investments are based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs.

⁽⁴⁾  REITs consist of securities that trade on the major exchanges and invest directly in real estate, either through properties or mortgages.

⁽⁵⁾  Other consists primarily of cash equivalents maintained in commingled trust funds, which invest primarily in short term, high quality money market securities such as government obligations, commercial paper, time deposits and certificates of deposit, and are classified as Level 2.

Estimated Future Benefit Payments

Estimated Future Benefit Payments. The following table presents expected pension and postretirement benefit payments and expected postretirement subsidies due to the Medicare Prescription Drug Improvement and Modernization Act of 2003, which reflect expected future service, as appropriate.

	Pension Benefits		Postretirement Benefits
			Benefit Payments		Subsidy Receipts
	(in millions)
2014	$	116		13		—
2015		125		13		—
2016		134		14		—
2017		146		14		—
2018		152		15		—
Years 2019-2023		925		77		1

Cash Contributions and Expenses under Multi-Employer Benefit Plans

Under these plans, the Company contributed cash and recorded expenses for each of its individually significant plans and all of its other plans in aggregate as noted in the table below.

Pension Fund	EIN/Pension Plan Number		Pension Protection Act Zone Status(1)				FIP/RP(2) Status Pending/ Implemented	Contributions by L-3 Communications						Surcharge Imposed		Expiration     Date of Collective- Bargaining Agreement
			2013		2012			2013		2012		2011
								(in millions)
IAM National Pension Fund		51-6031295/002		Green		Green	No	$	21(3)	$	20(4)	$	19(4)		No	2/14/2014 to  1/29/2016(5)
Other Pension Funds(6)									—		—		—
						Total contributions		$	21	$	20	$	19

⁽¹⁾  A zone status rating of green indicates the plan is at least 80% funded. The funding status of the IAM National Pension Fund was impacted by a market value investment loss for the plan year ended December 31, 2008, which amortization was extended over five years.

⁽²⁾  Funding improvement plan or rehabilitation plan.

⁽³⁾  At the date the audited financial statements for the Company were issued, Form 5500 for the plan year ending December 31, 2013 was not available.

⁽⁴⁾  Represents 6% of total plan contributions for both years ended December 31, 2012 and 2011 based on Form 5500.

⁽⁵⁾  The Company is a party to multiple bargaining agreements for multiple projects that require contributions into the IAM National Pension Fund. The most significant of these agreements, expiring April 27, 2014, cover multiple programs in the Company’s Aerospace Systems reportable segment and represent 72% of 2013 contributions.

⁽⁶⁾  Consists of three pension funds in which the Company’s contributions are individually, and in the aggregate, insignificant.

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Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2013

Investments, All Other Investments [Abstract]

Carrying Amounts and Estimated Fair Values of Company's Long-Term Debt and Foreign Currency Forward Contracts

The carrying amounts and estimated fair values of the Company’s other financial instruments are presented in the table below.

	December 31, 2013				December 31, 2012
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(in millions)
Senior Notes(1)	$	2,941	$	3,121	$	2,940	$	3,301
CODES(1)	$	689	$	830	$	689	$	697
Foreign currency forward contracts(2)	$	1	$	1	$	5	$	5

⁽¹⁾  The Company measures the fair value of its Senior Notes and CODES using Level 2 inputs based primarily on current market yields for its existing debt traded in the secondary market.

⁽²⁾  The Company measures the fair values of foreign currency forward contracts based on forward exchange rates. See Note 16 for additional disclosures regarding the notional amounts and fair values of foreign currency forward contracts.

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Pensions and Other Employee Benefits - Changes in Benefit Obligations, Plan Assets and Funded Status and Aggregate Balance Sheet Impact (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Assets and (liabilities) recognized in the consolidated balance sheets consist of:
Non-current liabilities	$ (727)	$ (1,360)
Pension Plans [Member]
Change in benefit obligation:
Benefit obligation at the beginning of the year	3,222	2,679
Service cost	126	113	106
Interest cost	132	134	128
Plan participants' contributions	2	2
Amendments	14
Obligation assumed in connection with a business acquisition		29
Actuarial (gain) loss	(402)	358
Foreign currency exchange rate changes	(21)	8
Curtailments, settlements and special termination benefits	3	3
Benefits paid	(103)	(104)
Benefit obligation at the end of the year	2,973	3,222	2,679
Change in plan assets:
Fair value of plan assets at the beginning of the year	2,026	1,712
Actual return on plan assets	394	215
Assets acquired in connection with a business acquisition		29
Employer contributions	105	173
Plan participants' contributions	2	2
Foreign currency exchange rate changes	(21)	6
Transfers		(7)
Benefits paid	(103)	(104)
Fair value of plan assets at the end of the year	2,403	2,026	1,712
Unfunded status at the end of the year	(570)	(1,196)
Assets and (liabilities) recognized in the consolidated balance sheets consist of:
Non-current assets	35	9
Current liabilities	(8)	(7)
Non-current liabilities	(597)	(1,198)
Total	(570)	(1,196)
Postretirement Benefit Plans [Member]
Change in benefit obligation:
Benefit obligation at the beginning of the year	218	216
Service cost	4	4	5
Interest cost	7	10	10
Plan participants' contributions	4	4
Amendments		(5)
Obligation assumed in connection with a business acquisition		3
Actuarial (gain) loss	(23)	(2)
Foreign currency exchange rate changes	(3)	1
Curtailments, settlements and special termination benefits		1
Benefits paid	(13)	(14)
Benefit obligation at the end of the year	194	218	216
Change in plan assets:
Fair value of plan assets at the beginning of the year	47	42
Actual return on plan assets	9	4
Assets acquired in connection with a business acquisition
Employer contributions	8	11
Plan participants' contributions	4	4
Foreign currency exchange rate changes
Transfers
Benefits paid	(13)	(14)
Fair value of plan assets at the end of the year	55	47	42
Unfunded status at the end of the year	(139)	(171)
Assets and (liabilities) recognized in the consolidated balance sheets consist of:
Non-current assets
Current liabilities	(9)	(9)
Non-current liabilities	(130)	(162)
Total	$ (139)	$ (171)

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Revisions to Previously Issued Financial Statements - Condensed Combining Statements of Cash Flows (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating activities:
Net income	$ 760	$ 794	$ 970
Income from discontinued operations, net of tax		(32)	(104)
Income from continuing operations	760	762	866
Depreciation of property, plant and equipment	166	170	167
Amortization of intangibles and other assets	48	58	63
Deferred income tax provision	42	97	123
Stock-based employee compensation expense	59	59	57
Contributions to employee savings plans in L-3 Holdings' common stock	114	125	113
Amortization of pension and postretirement benefit plans net loss and prior service cost	83	68	48
Amortization of bond discounts and deferred debt issue costs (included in interest expense)	6	7	13
Goodwill impairment charge			43
Equity in losses of unconsolidated subsidiaries		3	12
Other non-cash items	2	9	11
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables	(18)	147	(13)
Contracts in process	104	(67)	(110)
Inventories	2	(35)	(14)
Other assets	(88)	8	(9)
Accounts payable, trade	34	92	(35)
Accrued employment costs	(5)	(10)	(23)
Accrued expenses	(5)	(100)	68
Advance payments and billings in excess of costs incurred	(44)	37	(39)
Income taxes	31	(47)	(16)
Excess income tax benefits related to share-based payment arrangements	(4)	(3)	(2)
Other current liabilities	(4)	(46)	(2)
Pension and postretirement benefits	14	(64)	(83)
All other operating activities	(34)	(39)	(7)
Net cash from operating activities from continuing operations	1,263	1,231	1,231
As Previously Reported [Member]
Operating activities:
Net income	787	820	968
Income from discontinued operations, net of tax		(32)	(104)
Income from continuing operations	787	788	864
Depreciation of property, plant and equipment	166	170	167
Amortization of intangibles and other assets	48	58	63
Deferred income tax provision	48	112	124
Stock-based employee compensation expense	59	59	57
Contributions to employee savings plans in L-3 Holdings' common stock	114	125	113
Amortization of pension and postretirement benefit plans net loss and prior service cost	83	68	48
Amortization of bond discounts and deferred debt issue costs (included in interest expense)	6	7	13
Goodwill impairment charge			43
Equity in losses of unconsolidated subsidiaries		3	12
Other non-cash items	2	9	11
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables	(42)	147	(13)
Contracts in process	94	(126)	(121)
Inventories	2	(35)	(14)
Other assets	(81)	11	(6)
Accounts payable, trade	45	81	(35)
Accrued employment costs	(5)	(13)	(23)
Accrued expenses	(6)	(100)	67
Advance payments and billings in excess of costs incurred	(50)	36	(39)
Income taxes	39	(48)	(18)
Excess income tax benefits related to share-based payment arrangements	(4)	(3)	(2)
Other current liabilities	(4)	(52)	4
Pension and postretirement benefits	14	(64)	(83)
All other operating activities	(52)	(2)	(1)
Net cash from operating activities from continuing operations	1,263	1,231	1,231
Restatement Adjustments [Member]
Operating activities:
Net income	(27)	(26)	2
Income from discontinued operations, net of tax
Income from continuing operations	(27)	(26)	2
Depreciation of property, plant and equipment
Amortization of intangibles and other assets
Deferred income tax provision	(6)	(15)	(1)
Stock-based employee compensation expense
Contributions to employee savings plans in L-3 Holdings' common stock
Amortization of pension and postretirement benefit plans net loss and prior service cost
Amortization of bond discounts and deferred debt issue costs (included in interest expense)
Goodwill impairment charge
Equity in losses of unconsolidated subsidiaries
Other non-cash items
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables	24
Contracts in process	10	59	11
Inventories
Other assets	(7)	(3)	(3)
Accounts payable, trade	(11)	11
Accrued employment costs		3
Accrued expenses	1		1
Advance payments and billings in excess of costs incurred	6	1
Income taxes	(8)	1	2
Excess income tax benefits related to share-based payment arrangements
Other current liabilities		6	(6)
Pension and postretirement benefits
All other operating activities	18	(37)	(6)
Net cash from operating activities from continuing operations

XML

Pensions and Other Employee Benefits - Pension Plans with an Accumulated Benefit Obligation in Excess of Fair Value of Plan Assets (Detail) (Pension Plans [Member], USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Projected benefit obligation	$ 2,408	$ 3,177
Accumulated benefit obligation	2,115	2,743
Fair value of plan assets	$ 1,815	$ 1,975

XML

Supplemental Cash Flow Information (Tables)

12 Months Ended

Dec. 31, 2013

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Interest paid on outstanding debt	$	171	$	198	$	238
Income tax payments		245		332		273
Income tax refunds		23		22		18

XML

Contracts in Process - Selling, General and Administrative Expenses and Research and Development Expenses (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Inventory Disclosure [Abstract]
Selling, general and administrative expenses	$ 293	$ 306	$ 300
Research and development expenses	74	88	73
Total	$ 367	$ 394	$ 373

XML

L-3 Holdings' Earnings Per Share - Reconciliation of Basic and Diluted EPS (Parenthetical) (Detail) (USD $)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Earnings Per Share [Abstract]
Conversion price of L-3 Holdings' CODES	$ 90.24	$ 91.21	$ 96.48

XML

Accumulated Other Comprehensive (Loss) Income (Tables)

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

Changes in Accumulated Other Comprehensive (Loss) Income Balances, Net of Related Tax Effects

The changes in the accumulated other comprehensive (loss) income (AOCI) balances, net of related tax effects are presented in the table below.

	Foreign currency translation		Unrealized gains (losses) on hedging instruments		Unrecognized (losses) gains and prior service cost, net		Total accumulated other comprehensive loss
	(in millions)
Balance at December 31, 2010	$	161	$	10	$	(427)	$	(256)
Period change		(28)		(10)		(160)		(198)
Balance at December 31, 2011	$	133	$	—	$	(587)	$	(454)
Period change		34		3		(133)		(96)
Balance at December 31, 2012	$	167	$	3	$	(720)	$	(550)
Period change		(25)		(2)		467		440
Balance at December 31, 2013	$	142	$	1	$	(253)	$	(110)

Summary of Amounts Reclassified from Accumulated Other Comprehensive (Loss) Income

The amounts reclassified from AOCI are presented in the table below.

	Foreign currency translation		Unrealized gains (losses) on hedging instruments		Unrecognized (losses) and prior service cost, net		Total accumulated other comprehensive (loss) income
	(in millions)
Balance at December 31, 2012	$	167	$	3	$	(720)	$	(550)
Other comprehensive (loss) income before reclassifications, net of tax		(25)		(1)		414		388
Amounts reclassified from other comprehensive (loss) income, net of tax		—		(1)		53		52
Net current period other comprehensive (loss) income		(25)		(2)		467		440
Balance at December 31, 2013	$	142	$	1	$	(253)	$	(110)

Further details regarding the amounts reclassified from AOCI are presented in the table below.

	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income
Details About Accumulated Other Comprehensive (Loss) Income Components	Year ended December 31, 2013		Affected Line Item in the Audited Consolidated Statement of Operations
	(millions)
Loss on hedging instruments	$	(1)	Cost of sales-products
		(1)	Income from continuing operations before income taxes
		—	Provision for income taxes
	$	(1)	Income from continuing operations
Amortization of defined benefit pension items:
Net loss	$	83	(a)
		83	Income from continuing operations before income taxes
		(30)	Provision for income taxes
	$	53	Income from continuing operations
Total reclassification for the period	$	52	Income from continuing operations

^(a)  Amounts related to pension and postretirement benefit plans were reclassified from AOCI and recorded as a component of net periodic benefit cost (see Note 21 for additional information).

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Employee Severance and Termination Costs

12 Months Ended

Dec. 31, 2013

Restructuring and Related Activities [Abstract]

Employee Severance and Termination Costs

24. Employee Severance and Termination Costs

Consistent with the Company’s strategy to continuously improve its cost structure and right-size its businesses, especially in view of sequestration and other DoD budget restrictions, L-3 is completing employment reduction actions across several of its businesses to reduce both direct and indirect costs, including overhead and general and administrative costs. As a result of these initiatives and due to the impact of sequestration at certain affected business units, the Company recorded employee severance and other termination costs of $29 million with respect to approximately 2,000 employees during the year ended December 31, 2013, $23 million with respect to approximately 1,600 employees during the year ended December 31, 2012 and $20 million with respect to approximately 1,200 employees for the year ended December 31, 2011. Employee severance and other termination costs are reported within cost of sales on the consolidated statement of operations. The remaining balance to be paid in connection with these initiatives was $11 million at December 31, 2013 and $9 million at December 31, 2012. Employee severance and other termination costs incurred by reportable segment for the years ended December 31, 2013, 2012 and 2011 are presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Aerospace Systems	$	2	$	1	$	3
Electronic Systems		16		13		12
Communication Systems		11		8		4
NSS		—		1		1
Consolidated	$	29	$	23	$	20

XML

Inventories - Inventories at Lower of Cost or Market (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Inventory Disclosure [Abstract]
Raw materials, components and sub-assemblies	$ 160	$ 166
Work in process	125	121
Finished goods	74	71
Total	$ 359	$ 358

XML

Stock-Based Compensation - Company's Performance Unit Awards Based on Expected Performance (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning Balance, Number of Shares	1,729,700
Granted, Number of Shares	606,400
Vested, Number of Shares	(476,400)
Forfeited, Number of Shares	(85,900)
Ending Balance, Number of Shares	1,773,800
Beginning Balance, Weighted Average Grant Date Fair Value	$ 75.64
Granted, Weighted Average Grant Date Fair Value	$ 77.12
Vested, Weighted Average Grant Date Fair Value	$ 85.81
Forfeited, Weighted Average Grant Date Fair Value	$ 73.60
Ending Balance, Weighted Average Grant Date Fair Value	$ 73.51
TSR [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning Balance, Number of Shares	59,300
Granted, Number of Shares
(Decrease) increase due to expected performance, Number of Shares	(33,100)
Vested, Number of Shares	(25,300)
Forfeited, Number of Shares	(900)
Ending Balance, Number of Shares
Beginning Balance, Weighted Average Grant Date Fair Value	$ 106.20
Granted, Weighted Average Grant Date Fair Value
(Decrease) increase due to expected performance, Weighted Average Grant Date Fair Value	$ 106.20
Vested, Weighted Average Grant Date Fair Value	$ 106.20
Forfeited, Weighted Average Grant Date Fair Value	$ 106.20
Ending Balance, Weighted Average Grant Date Fair Value
EPS [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning Balance, Number of Shares	125,600
Granted, Number of Shares	61,700
(Decrease) increase due to expected performance, Number of Shares	59,900
Vested, Number of Shares	(67,900)
Forfeited, Number of Shares	(3,800)
Ending Balance, Number of Shares	175,500
Beginning Balance, Weighted Average Grant Date Fair Value	$ 71.86
Granted, Weighted Average Grant Date Fair Value	$ 77.00
(Decrease) increase due to expected performance, Weighted Average Grant Date Fair Value	$ 69.04
Vested, Weighted Average Grant Date Fair Value	$ 76.82
Forfeited, Weighted Average Grant Date Fair Value	$ 69.56
Ending Balance, Weighted Average Grant Date Fair Value	$ 70.84

XML

Pensions and Other Employee Benefits - Components of Net Periodic Benefit Cost (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Pension Plans [Member]
Components of net periodic benefit cost:
Service cost	$ 126	$ 113	$ 106
Interest cost	132	134	128
Expected return on plan assets	(164)	(145)	(139)
Amortization of prior service cost (credits)	1	1	1
Amortization of net loss	83	69	49
Curtailment or settlement loss	3	7
Net periodic benefit cost	181	179	145
Postretirement Benefit Plans [Member]
Components of net periodic benefit cost:
Service cost	4	4	5
Interest cost	7	10	10
Expected return on plan assets	(4)	(3)	(2)
Amortization of prior service cost (credits)	(3)	(3)	(3)
Amortization of net loss	2	1	1
Curtailment or settlement loss		1
Net periodic benefit cost	$ 6	$ 10	$ 11

XML

Pensions and Other Employee Benefits - Allowable Range for Each Major Category of Plans' Assets and Weighted-Average Asset Allocations by Asset Category (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
U.S. [Member]
Defined Benefit Plan Disclosure [Line Items]
Weighted-average asset allocations	100.00%	100.00%
U.S. [Member] | Domestic Equity [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets, minimum range	30.00%	30.00%
Percentage of plan assets, maximum range	60.00%	60.00%
Weighted-average asset allocations	54.00%	51.00%
U.S. [Member] | International Equity [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets, minimum range	10.00%	10.00%
Percentage of plan assets, maximum range	20.00%	20.00%
Weighted-average asset allocations	11.00%	10.00%
U.S. [Member] | Fixed Income Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets, minimum range	20.00%	20.00%
Percentage of plan assets, maximum range	40.00%	40.00%
Weighted-average asset allocations	22.00%	29.00%
U.S. [Member] | Real Estate Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets, minimum range	0.00%	0.00%
Percentage of plan assets, maximum range	15.00%	15.00%
Weighted-average asset allocations	6.00%	8.00%
U.S. [Member] | Other Asset [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets, minimum range	0.00%	0.00%
Percentage of plan assets, maximum range	15.00%	15.00%
Weighted-average asset allocations	7.00%	2.00%
Canada [Member]
Defined Benefit Plan Disclosure [Line Items]
Weighted-average asset allocations	100.00%	100.00%
Canada [Member] | Domestic Equity [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets, minimum range	10.00%	15.00%
Percentage of plan assets, maximum range	25.00%	30.00%
Weighted-average asset allocations	20.00%	19.00%
Canada [Member] | International Equity [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets, minimum range	30.00%	20.00%
Percentage of plan assets, maximum range	60.00%	50.00%
Weighted-average asset allocations	49.00%	46.00%
Canada [Member] | Fixed Income Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets, minimum range	20.00%	25.00%
Percentage of plan assets, maximum range	60.00%	55.00%
Weighted-average asset allocations	28.00%	32.00%
Canada [Member] | Real Estate Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets, minimum range
Percentage of plan assets, maximum range
Weighted-average asset allocations
Canada [Member] | Other Asset [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of plan assets, minimum range	0.00%	0.00%
Percentage of plan assets, maximum range	15.00%	15.00%
Weighted-average asset allocations	3.00%	3.00%

XML

Acquisitions and Divestures - Statement of Operations Data Classified as Discontinued Operations (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended			6 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Jul. 17, 2012 Engility [Member]	Dec. 31, 2012 Engility [Member]	Dec. 31, 2011 Engility [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Product and service revenues				$ 911		$ 2,011
Operating income from discontinued operations before income taxes				68		199
Interest expense allocated to discontinued operations				(14)	(14)	(31)
Income from discontinued operations before income taxes				54		168
Income tax expense				(22)		(64)
Income from discontinued operations, net of income taxes		32	104	32		104
Net income from discontinued operations attributable to noncontrolling interests				(4)		(3)
Net income from discontinued operations attributable to L-3		$ 28	$ 101	$ 28		$ 101

XML

Debt - Components of Long-Term Debt and Reconciliation to Carrying Amount of Long-Term Debt (Parenthetical) (Detail) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Aggregate borrowings and requirements for restated revolving credit facility	$ 1,893,000,000
Borrowings under Amended and Restated Revolving Credit Facility	$ 1,000,000,000	$ 1,000,000,000
CODES Due 2035 [Member]
Debt Instrument [Line Items]
Interest rate on Senior Notes	3.00%
L-3 Communications Corporation [Member] | 3.95% Senior Notes due 2016 [Member]
Debt Instrument [Line Items]
Interest rate on Senior Notes	3.95%	3.95%
L-3 Communications Corporation [Member] | 5.20% Senior Notes due 2019 [Member]
Debt Instrument [Line Items]
Interest rate on Senior Notes	5.20%	5.20%
L-3 Communications Corporation [Member] | 4.75% Senior Notes due 2020 [Member]
Debt Instrument [Line Items]
Interest rate on Senior Notes	4.75%	4.75%
L-3 Communications Corporation [Member] | 4.95% Senior Notes due 2021 [Member]
Debt Instrument [Line Items]
Interest rate on Senior Notes	4.95%	4.95%
L-3 Communications Holdings, Inc. [Member] | CODES Due 2035 [Member]
Debt Instrument [Line Items]
Interest rate on Senior Notes	3.00%	3.00%

XML

Employee Severance and Termination Costs (Tables)

12 Months Ended

Dec. 31, 2013

Restructuring and Related Activities [Abstract]

Employee Severance and Other Termination Costs Incurred by Reportable Segment

Employee severance and other termination costs incurred by reportable segment for the years ended December 31, 2013, 2012 and 2011 are presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Aerospace Systems	$	2	$	1	$	3
Electronic Systems		16		13		12
Communication Systems		11		8		4
NSS		—		1		1
Consolidated	$	29	$	23	$	20

XML

Income Taxes - Components of Net Deferred Tax Assets and Liabilities (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Deferred tax assets:
Inventoried costs	$ 72	$ 33
Compensation and benefits	164	114
Pension and postretirement benefits	207	444
Loss carryforwards	24	20
Tax credit carryforwards	7	9
Other	75	48
Gross deferred tax assets	549	668
Less: valuation allowance	(22)	(19)
Net deferred tax assets	527	649
Deferred tax liabilities:
Goodwill and other intangible assets	726	657
Income recognition on contracts in process	58	56
Property, plant and equipment	85	71
Long-term debt-CODES	81	73
Other	65	7
Gross deferred tax liabilities	1,015	864
Total net deferred tax liabilities	$ (488)	$ (215)

XML

Pensions and Other Employee Benefits - Fair Value of the Company's Pension Plans' and Postretirement Benefit Plans' Assets (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Postretirement Benefit Plans Assets [Member]
Equity securities:
Fair value of company's plan assets	$ 55	$ 47
Postretirement Benefit Plans Assets [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	47	41
Postretirement Benefit Plans Assets [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	8	6
Postretirement Benefit Plans Assets [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
Postretirement Benefit Plans Assets [Member] | U.S. Equity [Member]
Equity securities:
Fair value of company's plan assets	23	27
Postretirement Benefit Plans Assets [Member] | U.S. Equity [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	23	27
Postretirement Benefit Plans Assets [Member] | U.S. Equity [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets
Postretirement Benefit Plans Assets [Member] | U.S. Equity [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
Postretirement Benefit Plans Assets [Member] | International Equity [Member]
Equity securities:
Fair value of company's plan assets	3	2
Postretirement Benefit Plans Assets [Member] | International Equity [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	1	1
Postretirement Benefit Plans Assets [Member] | International Equity [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	2	1
Postretirement Benefit Plans Assets [Member] | International Equity [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
Postretirement Benefit Plans Assets [Member] | Fixed Income - Investment Grade [Member]
Equity securities:
Fair value of company's plan assets	23	14
Postretirement Benefit Plans Assets [Member] | Fixed Income - Investment Grade [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	21	11
Postretirement Benefit Plans Assets [Member] | Fixed Income - Investment Grade [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	2	3
Postretirement Benefit Plans Assets [Member] | Fixed Income - Investment Grade [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
Postretirement Benefit Plans Assets [Member] | Fixed Income - High Yield [Member]
Equity securities:
Fair value of company's plan assets	2	1
Postretirement Benefit Plans Assets [Member] | Fixed Income - High Yield [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets
Postretirement Benefit Plans Assets [Member] | Fixed Income - High Yield [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	2	1
Postretirement Benefit Plans Assets [Member] | Fixed Income - High Yield [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
Postretirement Benefit Plans Assets [Member] | Real Estate Investment Trusts [Member]
Equity securities:
Fair value of company's plan assets	2	2
Postretirement Benefit Plans Assets [Member] | Real Estate Investment Trusts [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	2	2
Postretirement Benefit Plans Assets [Member] | Real Estate Investment Trusts [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets
Postretirement Benefit Plans Assets [Member] | Real Estate Investment Trusts [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
Postretirement Benefit Plans Assets [Member] | Other Asset [Member]
Equity securities:
Fair value of company's plan assets	2	1
Postretirement Benefit Plans Assets [Member] | Other Asset [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets
Postretirement Benefit Plans Assets [Member] | Other Asset [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	2	1
Postretirement Benefit Plans Assets [Member] | Other Asset [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
U.S. Based Pension Plans [Member]
Equity securities:
Fair value of company's plan assets	2,103	1,753
U.S. Based Pension Plans [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	1,554	1,292
U.S. Based Pension Plans [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	549	461
U.S. Based Pension Plans [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
U.S. Based Pension Plans [Member] | U.S. Equity [Member]
Equity securities:
Fair value of company's plan assets	1,141	893
U.S. Based Pension Plans [Member] | U.S. Equity [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	1,141	893
U.S. Based Pension Plans [Member] | U.S. Equity [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets
U.S. Based Pension Plans [Member] | U.S. Equity [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
U.S. Based Pension Plans [Member] | International Equity [Member]
Equity securities:
Fair value of company's plan assets	225	184
U.S. Based Pension Plans [Member] | International Equity [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	79	67
U.S. Based Pension Plans [Member] | International Equity [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	146	117
U.S. Based Pension Plans [Member] | International Equity [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
U.S. Based Pension Plans [Member] | Fixed Income - Investment Grade [Member]
Equity securities:
Fair value of company's plan assets	351	391
U.S. Based Pension Plans [Member] | Fixed Income - Investment Grade [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	216	194
U.S. Based Pension Plans [Member] | Fixed Income - Investment Grade [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	135	197
U.S. Based Pension Plans [Member] | Fixed Income - Investment Grade [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
U.S. Based Pension Plans [Member] | Fixed Income - High Yield [Member]
Equity securities:
Fair value of company's plan assets	118	105
U.S. Based Pension Plans [Member] | Fixed Income - High Yield [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets
U.S. Based Pension Plans [Member] | Fixed Income - High Yield [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	118	105
U.S. Based Pension Plans [Member] | Fixed Income - High Yield [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
U.S. Based Pension Plans [Member] | Real Estate Investment Trusts [Member]
Equity securities:
Fair value of company's plan assets	118	138
U.S. Based Pension Plans [Member] | Real Estate Investment Trusts [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	118	138
U.S. Based Pension Plans [Member] | Real Estate Investment Trusts [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets
U.S. Based Pension Plans [Member] | Real Estate Investment Trusts [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
U.S. Based Pension Plans [Member] | Other Asset [Member]
Equity securities:
Fair value of company's plan assets	150	42
U.S. Based Pension Plans [Member] | Other Asset [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets
U.S. Based Pension Plans [Member] | Other Asset [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	150	42
U.S. Based Pension Plans [Member] | Other Asset [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member]
Equity securities:
Fair value of company's plan assets	300	273
Canadian Based Pension Plans [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	177	144
Canadian Based Pension Plans [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	123	129
Canadian Based Pension Plans [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member] | U.S. Equity [Member]
Equity securities:
Fair value of company's plan assets	72	56
Canadian Based Pension Plans [Member] | U.S. Equity [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	54	43
Canadian Based Pension Plans [Member] | U.S. Equity [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	18	13
Canadian Based Pension Plans [Member] | U.S. Equity [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member] | International Equity [Member]
Equity securities:
Fair value of company's plan assets	135	119
Canadian Based Pension Plans [Member] | International Equity [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	117	98
Canadian Based Pension Plans [Member] | International Equity [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	18	21
Canadian Based Pension Plans [Member] | International Equity [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member] | Fixed Income - Investment Grade [Member]
Equity securities:
Fair value of company's plan assets	82	88
Canadian Based Pension Plans [Member] | Fixed Income - Investment Grade [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member] | Fixed Income - Investment Grade [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	82	88
Canadian Based Pension Plans [Member] | Fixed Income - Investment Grade [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member] | Fixed Income - High Yield [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member] | Fixed Income - High Yield [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member] | Fixed Income - High Yield [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member] | Fixed Income - High Yield [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member] | Real Estate Investment Trusts [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member] | Real Estate Investment Trusts [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member] | Real Estate Investment Trusts [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member] | Real Estate Investment Trusts [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets
Canadian Based Pension Plans [Member] | Other Asset [Member]
Equity securities:
Fair value of company's plan assets	11	10
Canadian Based Pension Plans [Member] | Other Asset [Member] | Level 1 [Member]
Equity securities:
Fair value of company's plan assets	6	3
Canadian Based Pension Plans [Member] | Other Asset [Member] | Level 2 [Member]
Equity securities:
Fair value of company's plan assets	5	7
Canadian Based Pension Plans [Member] | Other Asset [Member] | Level 3 [Member]
Equity securities:
Fair value of company's plan assets

XML

Contracts in Process - Additional Information (Detail)	Dec. 31, 2013
Contractors [Abstract]
Percentage of unbilled contract receivables billed and collected within one year	98.00%
Percentage of incurred costs billed, minimum	75.00%
Percentage of incurred costs billed, maximum	80.00%

XML

Financial Information of L-3 Communications and Its Subsidiaries - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
L-3 Communications Holdings, Inc. [Member]
Debt Instrument [Line Items]
Ownership percentage	100.00%
Non-Guarantor Subsidiaries [Member]
Debt Instrument [Line Items]
Cumulative aggregate adjustments, net	$ 10

XML

Other Current Liabilities and Other Liabilities - Other Liabilities (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Other Liabilities:
Non-current income taxes payable (see Note 18)	$ 177	$ 146
Accrued workers' compensation	46	57
Deferred compensation	45	43
Accrued product warranty costs	24	23
Notes payable and capital lease obligations	15	24
Estimated contingent purchase price payable for acquired businesses		5
Other	99	95
Total other liabilities	$ 406	$ 393

XML

Employee Severance and Termination Costs - Employee Severance and Other Termination Costs Incurred by Reportable Segment (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Restructuring Cost and Reserve [Line Items]
Employee severance and other related termination costs	$ 29	$ 23	$ 20
Aerospace Systems [Member]
Restructuring Cost and Reserve [Line Items]
Employee severance and other related termination costs	2	1	3
Electronic Systems [Member]
Restructuring Cost and Reserve [Line Items]
Employee severance and other related termination costs	16	13	12
Communication Systems [Member]
Restructuring Cost and Reserve [Line Items]
Employee severance and other related termination costs	11	8	4
NSS [Member]
Restructuring Cost and Reserve [Line Items]
Employee severance and other related termination costs		$ 1	$ 1

XML

Financial Information of L-3 Communications and Its Subsidiaries - Condensed Combining Statements of Operations (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 27, 2013	Jun. 28, 2013	Mar. 29, 2013	Dec. 31, 2012	Sep. 28, 2012	Jun. 29, 2012	Mar. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Condensed Financial Statements, Captions [Line Items]
Net sales									$ 12,622	$ 13,107	$ 13,154
Cost of sales									(11,410)	(11,799)	(11,713)
Impairment charge											(43)
Operating (loss) income	306	306	290	310	339	319	328	322	1,212	1,308	1,398
Interest expense									(177)	(184)	(204)
Interest and other income (expense), net									20	11	3
Debt retirement charge										(13)	(35)
(Loss) income from continuing operations before income taxes									1,055	1,122	1,162
Benefit (provision) for income taxes									(295)	(360)	(296)
Equity in net income of consolidated subsidiaries
Income from continuing operations	188	204	176	192	199	188	189	186	760	762	866
Income from discontinued operations, net of income tax										32	104
Net income									760	794	970
Net income attributable to noncontrolling interests									(9)	(10)	(12)
Net income attributable to L-3	185	200	175	191	196	185	203	200	751	784	958
Comprehensive income attributable to L-3									1,191	688	760
L-3 Communications Holdings, Inc. [Member]
Condensed Financial Statements, Captions [Line Items]
Net sales
Cost of sales									(59)	(59)	(57)
Impairment charge
Operating (loss) income									(59)	(59)	(57)
Interest expense									(21)	(21)	(23)
Interest and other income (expense), net
Debt retirement charge
(Loss) income from continuing operations before income taxes									(80)	(80)	(80)
Benefit (provision) for income taxes									22	26	20
Equity in net income of consolidated subsidiaries									809	838	1,018
Income from continuing operations										784	958
Income from discontinued operations, net of income tax
Net income									751	784	958
Net income attributable to noncontrolling interests
Net income attributable to L-3									751	784	958
Comprehensive income attributable to L-3									1,191	688	760
L-3 Communications Corporation [Member]
Condensed Financial Statements, Captions [Line Items]
Net sales									3,842	3,737	3,735
Cost of sales									(3,549)	(3,434)	(3,335)
Impairment charge											(43)
Operating (loss) income									293	303	357
Interest expense									(176)	(183)	(201)
Interest and other income (expense), net									15	14	17
Debt retirement charge										(13)	(35)
(Loss) income from continuing operations before income taxes									132	121	138
Benefit (provision) for income taxes									(38)	(37)	(35)
Equity in net income of consolidated subsidiaries									657	668	751
Income from continuing operations										752	854
Income from discontinued operations, net of income tax										32	104
Net income									751	784	958
Net income attributable to noncontrolling interests
Net income attributable to L-3									751	784	958
Comprehensive income attributable to L-3									1,191	688	760
Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net sales									6,804	7,475	7,572
Cost of sales									(6,139)	(6,749)	(6,857)
Impairment charge
Operating (loss) income									665	726	715
Interest expense											(1)
Interest and other income (expense), net										(5)	(15)
Debt retirement charge
(Loss) income from continuing operations before income taxes									665	721	699
Benefit (provision) for income taxes									(184)	(230)	(178)
Equity in net income of consolidated subsidiaries
Income from continuing operations										491	521
Income from discontinued operations, net of income tax
Net income									481	491	521
Net income attributable to noncontrolling interests
Net income attributable to L-3									481	491	521
Comprehensive income attributable to L-3									480	493	511
Non-Guarantor Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Net sales									2,363	2,278	2,187
Cost of sales									(2,109)	(1,999)	(1,861)
Impairment charge
Operating (loss) income									254	279	326
Interest expense									(1)	(1)	(5)
Interest and other income (expense), net									5	2	4
Debt retirement charge
(Loss) income from continuing operations before income taxes									258	280	325
Benefit (provision) for income taxes									(73)	(93)	(83)
Equity in net income of consolidated subsidiaries
Income from continuing operations										187	242
Income from discontinued operations, net of income tax
Net income									185	187	242
Net income attributable to noncontrolling interests
Net income attributable to L-3									185	187	242
Comprehensive income attributable to L-3									159	215	221
Eliminations [Member]
Condensed Financial Statements, Captions [Line Items]
Net sales									(387)	(383)	(340)
Cost of sales									446	442	397
Impairment charge
Operating (loss) income									59	59	57
Interest expense									21	21	26
Interest and other income (expense), net											(3)
Debt retirement charge
(Loss) income from continuing operations before income taxes									80	80	80
Benefit (provision) for income taxes									(22)	(26)	(20)
Equity in net income of consolidated subsidiaries									(1,466)	(1,506)	(1,769)
Income from continuing operations										(1,452)	(1,709)
Income from discontinued operations, net of income tax
Net income									(1,408)	(1,452)	(1,709)
Net income attributable to noncontrolling interests									(9)	(10)	(12)
Net income attributable to L-3									(1,417)	(1,462)	(1,721)
Comprehensive income attributable to L-3									$ (1,830)	$ (1,396)	$ (1,492)

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Goodwill and Identifiable Intangible Assets - Changes in Goodwill by Segment (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Goodwill [Line Items]
Balance, Beginning	$ 7,776	$ 7,472
Business acquisition	44	278
Business disposition	(2)
Foreign currency translation	(22)	26
Balance, Ending	7,796	7,776
Aerospace Systems [Member]
Goodwill [Line Items]
Balance, Beginning	1,770	1,764
Business acquisition
Business disposition
Foreign currency translation	(19)	6
Balance, Ending	1,751	1,770
Electronic Systems [Member]
Goodwill [Line Items]
Balance, Beginning	4,046	3,750
Business acquisition	44	278
Business disposition	(2)
Foreign currency translation	(3)	18
Balance, Ending	4,085	4,046
Communication Systems [Member]
Goodwill [Line Items]
Balance, Beginning	992	992
Business acquisition
Business disposition
Foreign currency translation
Balance, Ending	992	992
NSS [Member]
Goodwill [Line Items]
Balance, Beginning	968	966
Business acquisition
Business disposition
Foreign currency translation		2
Balance, Ending	$ 968	$ 968

XML

Property, Plant and Equipment - Property, Plant and Equipment (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Abstract]
Land	$ 62	$ 63
Buildings and improvements	415	407
Machinery, equipment, furniture and fixtures	1,643	1,532
Leasehold improvements	328	322
Gross property, plant and equipment	2,448	2,324
Accumulated depreciation and amortization	(1,406)	(1,301)
Property, plant and equipment, net	$ 1,042	$ 1,023

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Contracts in Process - General and Administrative, Independent Research and Development and Bid and Proposal Costs (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Inventory Disclosure [Abstract]
Amounts included in inventoried contract costs at beginning of the year	$ 110	$ 91	$ 97
IRAD and B&P costs incurred	296	336	327
Other G&A costs incurred	893	891	843
Total contract costs incurred	1,189	1,227	1,170
Amounts charged to cost of sales	(1,161)	(1,208)	(1,176)
Amounts included in inventoried contract costs at end of the year	$ 138	$ 110	$ 91

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Acquisitions and Divestures - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended			12 Months Ended			12 Months Ended		0 Months Ended	3 Months Ended	12 Months Ended		12 Months Ended			6 Months Ended	12 Months Ended			0 Months Ended		12 Months Ended
	Dec. 31, 2013 Business	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Microdyne Corporation [Member]	Dec. 31, 2011 Microdyne Corporation [Member]	Dec. 19, 2013 2013 Business Acquisition [Member]	Dec. 31, 2012 2012 Business Acquisitions [Member] Business	Dec. 31, 2013 Link U.K. [Member]	Sep. 27, 2013 Link U.K. [Member] Adjustments to Preliminary Valuations Adjustments [Member]	Dec. 31, 2013 Link U.K. [Member] Adjustments to Preliminary Valuations Adjustments [Member]	Dec. 31, 2011 2011 Business Acquisitions [Member] Business	Dec. 31, 2013 2011 Business Acquisitions [Member]	Dec. 31, 2013 Kollmorgen Electro-Optical [Member]	Dec. 31, 2013 MAVCO, Inc. [Member]	Dec. 31, 2013 ComHouse [Member]	Jul. 17, 2012 Engility [Member]	Dec. 31, 2013 Engility [Member]	Dec. 31, 2012 Engility [Member]	Dec. 31, 2011 Engility [Member]	Jul. 26, 2012 Engility [Member] 6 3/8% Senior Subordinated Notes due October 15, 2015 [Member]	Jul. 26, 2012 Engility [Member] 6 3/8% Senior Subordinated Notes due October 15, 2015 [Member]	Dec. 31, 2013 Engility [Member] Cargo Radiation Screening Business of DNI [Member]	Dec. 31, 2012 Engility [Member] Cargo Radiation Screening Business of DNI [Member]	Oct. 28, 2011 Engility [Member] Cargo Radiation Screening Business of DNI [Member]
Acquisitions And Discontinued Operations [Line Items]
Aggregate purchase price of acquisition						$ 54	$ 349				$ 18
Goodwill deductible for income tax purposes						44	182				14
Number of businesses acquired	3						3				2
Amount of goodwill recognized	7,796	7,776	7,472				278		32		19	19
Acquisition date								Aug. 06, 2012					Feb. 06, 2012	Apr. 13, 2012	Jul. 01, 2011							Oct. 28, 2011
Other liabilities									17
Contracts in process									16
Foreign currency translation adjustments									4
Net working capital adjustment										6
Maximum contingent consideration related to acquisition																								10
Fair value of the contingent consideration																						5	2	7
Spin-off date																	Jul. 17, 2012
Net cash distribution in connection with spin-off																		335
Redemption of 6 3/8% Senior Subordinated Notes due 2015																				250
Interest rate on Senior Notes																					6.375%
Distribution Agreement date																	Jul. 16, 2012
Transaction expenses in connection with the spin-off, before income taxes																		19	9
Transaction expenses in connection with the spin-off, after income taxes																		14	7
Interest expense for debt																14		14	31
Divestiture date				Feb. 22, 2011
Amount of loss on sale of business					2
Annual revenues from business					$ 8											$ 911			$ 2,011

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Derivative Financial Instruments

12 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

16. Derivative Financial Instruments

Notional amounts are used to measure the volume of foreign currency forward contracts and do not represent exposure to foreign currency losses. The table below presents the notional amounts of the Company’s outstanding foreign currency forward contracts by currency as of December 31, 2013.

Currency	Notional Amount
	(in millions)
Canadian dollar	$	137
U.S. dollar		98
Euro		66
British pound		18
Other		2
Total	$	321

At December 31, 2013, the Company’s foreign currency forward contracts had maturities through 2018.

The table below presents the fair values and the location of the Company’s derivative instruments in the consolidated balance sheets.

	December 31, 2013								December 31, 2012
	Other Current Assets		Other Assets		Other Current Liabilities		Other Liabilities		Other Current Assets		Other Assets		Other Current Liabilities		Other Liabilities
	(in millions)
Derivatives designated as hedging instruments:
Foreign currency forward contracts(1)	$	5	$	1	$	3	$	2	$	4	$	4	$	2	$	1
Derivatives not designated as hedging instruments:
Foreign currency forward contracts(1)		—		—		—		—		—		—		—		—
Embedded derivative related to the CODES		—		—		—		—		—		—		—		—
Total derivative instruments	$	5	$	1	$	3	$	2	$	4	$	4	$	2	$	1

⁽¹⁾  See Note 14 for a description of the fair value hierarchy related to the Company’s foreign currency forward contracts.

The effect of gains or losses from foreign currency forward contracts was not material to the consolidated statements of operations for the years ended December 31, 2013 and 2012. At December 31, 2013, the estimated net amount of existing losses that are expected to be reclassified into income within the next 12 months is $1 million.

XML

Segment Information - Summary of Segment Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 27, 2013	Jun. 28, 2013	Mar. 29, 2013	Dec. 31, 2012	Sep. 28, 2012	Jun. 29, 2012	Mar. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net Sales
Net products sales									$ 7,189	$ 7,586	$ 7,549
Net services sales									5,433	5,521	5,605
Consolidated total									12,622	13,107	13,154
Operating Income
Impairment charge											(43)
Operating income	306	306	290	310	339	319	328	322	1,212	1,308	1,398
Depreciation and amortization
Depreciation and amortization									214	228	230
Capital Expenditures
Capital Expenditures									209	210	187
Total Assets
Assets of discontinued operations											1,729
Total assets	13,988				13,800				13,988	13,800	15,520
Operating Segments [Member]
Operating Income
Operating income									1,212	1,308	1,441
Operating Segments [Member] | Aerospace Systems [Member]
Net Sales
Net products sales									1,827	1,755	1,579
Net services sales									2,730	2,844	2,857
Operating Income
Operating income									426	437	451
Depreciation and amortization
Depreciation and amortization									38	46	44
Capital Expenditures
Capital Expenditures									54	42	42
Total Assets
Total assets	3,087				3,074				3,087	3,074	3,125
Operating Segments [Member] | Electronic Systems [Member]
Net Sales
Net products sales									3,661	3,754	3,862
Net services sales									1,054	1,011	928
Operating Income
Operating income									533	569	624
Depreciation and amortization
Depreciation and amortization									117	121	124
Capital Expenditures
Capital Expenditures									71	77	79
Total Assets
Total assets	6,928				6,792				6,928	6,792	6,607
Operating Segments [Member] | Communication Systems [Member]
Net Sales
Net products sales									1,755	2,083	2,042
Net services sales									471	445	428
Operating Income
Operating income									168	223	265
Depreciation and amortization
Depreciation and amortization									48	47	43
Capital Expenditures
Capital Expenditures									59	84	60
Total Assets
Total assets	2,130				2,179				2,130	2,179	1,783
Operating Segments [Member] | NSS [Member]
Net Sales
Net products sales									71	98	153
Net services sales									1,228	1,292	1,465
Operating Income
Operating income									85	79	101
Depreciation and amortization
Depreciation and amortization									11	14	19
Capital Expenditures
Capital Expenditures									5	5	5
Total Assets
Total assets	1,247				1,228				1,247	1,228	1,317
Corporate [Member]
Capital Expenditures
Capital Expenditures									20	2	1
Total Assets
Total assets	596				527				596	527	959
Elimination of Intercompany Sales [Member]
Net Sales
Net products sales									(125)	(104)	(87)
Net services sales									$ (50)	$ (71)	$ (73)

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L-3 Holdings' Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Reconciliation of Basic and Diluted EPS

A reconciliation of basic and diluted EPS is presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions, except per share data)
Reconciliation of net income:
Net income	$	760	$	794	$	970
Net income from continuing operations attributable to noncontrolling interests		(9)		(6)		(9)
Net income from discontinued operations attributable to noncontrolling interests		—		(4)		(3)
Net income allocable to participating securities		—		—		(2)
Net income allocable to L-3 Holdings common shareholders	$	751	$	784	$	956
Earnings allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	751	$	756	$	855
Discontinued operations, net of income tax		—		28		101
Net income allocable to L-3 Holdings common shareholders	$	751	$	784	$	956
Earnings per share allocable to L-3 Holdings’ common shareholders:
Basic:
Weighted average common shares outstanding		89.4		96.3		104.4
Basic earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.40	$	7.85	$	8.19
Discontinued operations, net of income tax		—		0.29		0.97
Basic earnings per share	$	8.40	$	8.14	$	9.16
Diluted:
Common and potential common shares:
Weighted average common shares outstanding		89.4		96.3		104.4
Assumed exercise of stock options		3.9		1.9		2.0
Unvested restricted stock awards		1.8		2.0		1.8
Employee stock purchase plan contributions		0.2		0.3		0.2
Performance unit awards		0.1		0.1		0.1
Assumed purchase of common shares for treasury		(4.5)		(3.0)		(2.9)
Assumed conversion of the CODES(1)		0.2		—		—
Common and potential common shares		91.1		97.6		105.6
Diluted earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.24	$	7.74	$	8.10
Discontinued operations, net of income tax		—		0.29		0.95
Diluted earnings per share	$	8.24	$	8.03	$	9.05

⁽¹⁾  L-3 Holdings’ CODES had no impact on diluted EPS for the years ended December 31, 2012 and 2011 because the average market price of L-3 Holdings’ common stock during these periods was less than the price at which the CODES would have been convertible into L-3 Holdings’ common stock. As of December 31, 2013, 2012 and 2011, the conversion prices were $90.24, $91.21 and $96.48, respectively.

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Goodwill and Identifiable Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in Goodwill by Segment

The table below presents the changes in goodwill allocated to the Company’s reporting units in each reportable segment.

	Aerospace Systems		Electronic Systems		Communication Systems		NSS		Consolidated Total
	(in millions)
Balance at December 31, 2011	$	1,764	$	3,750	$	992	$	966	$	7,472
Business acquisitions		—		278		—		—		278
Foreign currency translation(1)		6		18		—		2		26
Balance at December 31, 2012	$	1,770	$	4,046	$	992	$	968	$	7,776
Business acquisition		—		44		—		—		44
Business disposition		—		(2)		—		—		(2)
Foreign currency translation(1)		(19)		(3)		—		—		(22)
Balance at December 31, 2013	$	1,751	$	4,085	$	992	$	968	$	7,796

⁽¹⁾  The changes in goodwill from foreign currency translation adjustments are due to fluctuations in the U.S. dollar and foreign currency exchange rates. The decreases in goodwill presented in Electronic Systems and Aerospace Systems segments during 2013 were primarily due to the strengthening of the U.S. dollar against the Canadian dollar and Australian dollar, partially offset by the weakening of the U.S. dollar against the Euro and British pound. Conversely, the increases in goodwill presented in the Electronic Systems, Aerospace Systems and NSS segments during 2012 were due to the weakening of the U.S dollar against the Euro, Canadian dollar and the British pound.

Identifiable Intangible Assets

Information on the Company’s identifiable intangible assets that are subject to amortization is presented in the table below.

	December 31, 2013							December 31, 2012
	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in years)			(in millions)
Customer contractual relationships	19	$	466	$	253	$	213	$	460	$	225	$	235
Technology	11		168		108		60		164		98		66
Other	17		27		15		12		27		14		13
Total	17	$	661	$	376	$	285	$	651	$	337	$	314

Amortization Expense

Amortization expense recorded by the Company for its identifiable intangible assets is presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Amortization expense	$	39	$	47	$	54

Estimated Amortization Expense

Based on gross carrying amounts at December 31, 2013, the Company’s estimate of amortization expense for identifiable intangible assets for the years ending December 31, 2014 through 2018 is presented in the table below.

	Year Ending December 31,
	2014		2015		2016		2017		2018
	(in millions)
Estimated amortization expense	$	43	$	40	$	33	$	31	$	25

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Contracts in Process - Components of Contracts in Process (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Components of contracts in process
Unbilled contract receivables, gross	$ 2,502	$ 2,802
Unliquidated progress payments	(1,035)	(1,256)
Unbilled contract receivables, net	1,467	1,546
Inventoried contract costs, gross	1,044	1,091
Unliquidated progress payments	(80)	(127)
Inventoried contract costs, net	964	964
Total contracts in process	$ 2,431	$ 2,510

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Equity - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended	12 Months Ended				12 Months Ended	2 Months Ended	12 Months Ended			2 Months Ended
	Apr. 30, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Feb. 05, 2013	Dec. 31, 2013 February 5, 2013 Share Repurchase Program [Member]	Feb. 19, 2014 February 5, 2013 Share Repurchase Program [Member] Subsequent Event [Member]	Dec. 31, 2013 Common Stock [Member]	Dec. 31, 2012 Common Stock [Member]	Dec. 31, 2011 Common Stock [Member]	Feb. 19, 2014 Common Stock [Member] February 5, 2013 Share Repurchase Program [Member] Subsequent Event [Member]
Share repurchase program expired	$ 1,500
Additional amount of shares authorized to be repurchased					1,500
Average price per share of repurchased shares		$ 91.95					$ 107.52
Number of common shares repurchased								8,700,000	12,100,000	13,300,000	928,040
Aggregate amount of repurchased shares		800	872	958		168	100
Shares repurchased						2,100,000
Remaining value under share repurchase program							$ 768

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Changes in Company's Accrued Product Warranty Costs

The table below presents the changes in the Company’s accrued product warranty costs.

	Year Ended December 31,
	2013		2012
	(in millions)
Accrued product warranty costs(1):
Balance at January 1	$	99	$	94
Acquisitions during this period		2		7
Accruals for product warranties issued during the period		71		78
Changes to accruals for product warranties existing before January 1		3		(3)
Foreign currency translation adjustments		—		1
Settlements made during the period		(76)		(78)
Balance at December 31	$	99	$	99

⁽¹⁾  Warranty obligations incurred in connection with long-term production contracts that are accounted for under the POC cost-to-cost method are included within the contract estimates at completion and are excluded from the above amounts. The balances above include both the current and non-current amounts.

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Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation by Form of Award

The Company’s stock-based compensation by form of award, including stock-based compensation recorded in discontinued operations as a result of the spin-off of Engility, is presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Stock options	$	10	$	10	$	11
Restricted stock units		41		46		48
Performance units		7		8		5
Total before income taxes		58		64		64
Income taxes		(22)		(24)		(24)
Total after income taxes		36		40		40
Less: Stock based compensation recorded in discontinued operations, net of income taxes		—		1		4
Stock based compensation recorded in continuing operations, net of income taxes	$	36	$	39	$	36

Company's Stock Option Activity and Changes

The table below presents a summary of the Company’s stock option activity as of December 31, 2013 and changes during the year then ended.

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
	(in thousands)				(in years)		(in millions)
Number of shares under option:
Outstanding at January 1, 2013		4,989.9	$	76.57		5.8	$	23
Options granted		741.7		77.00
Options exercised		(1,770.4)		73.24
Options forfeited		(78.3)		89.93
Outstanding at December 31, 2013		3,882.9	$	77.90		6.2	$	112
Vested and expected to vest at December 31, 2013(1)		3,865.9	$	77.91		6.2	$	112
Exercisable at December 31, 2013		2,420.9	$	80.44		4.9	$	64

⁽¹⁾  Represents outstanding options reduced by expected forfeitures for options not fully vested.

Weighted Average Assumptions in Valuation Model

The weighted average assumptions used in the valuation model are presented in the table below.

	2013 Grants		2012 Grants		2011 Grants
Expected holding period (in years)		5.6		5.4		5.2
Expected volatility		26.4%		27.0%		26.4%
Expected dividend yield		3.6%		3.6%		2.8%
Risk-free interest rate		1.0%		1.0%		2.2%

	2011 Grants
Expected volatility		10.2%
Expected dividend yield		2.2%
Risk-free interest rate		0.02%

Company's Nonvested Restricted Stock Unit Awards and Changes

The table below presents a summary of the Company’s nonvested restricted stock unit awards as of December 31, 2013 and changes during the year then ended.

	Number of       Shares		Weighted Average Grant Date       Fair Value
	(in thousands)
Nonvested balance at January 1, 2013		1,729.7	$	75.64
Granted		606.4		77.12
Vested		(476.4)		85.81
Forfeited		(85.9)		73.60
Nonvested balance at December 31, 2013		1,773.8	$	73.51

Company's Performance Unit Awards Based on Expected Performance

The table below presents a summary of the Company’s performance unit awards based on expected performance as of December 31, 2013 and changes during the year then ended.

	Payable in Cash (TSR)				Payable in Shares (EPS)
	Number of Units		Weighted Average Grant Date Fair Value		Number of Units		Weighted Average Grant Date Fair Value
	(in thousands)				(in thousands)
Outstanding at January 1, 2013		59.3	$	106.20		125.6	$	71.86
Granted		—		—		61.7		77.00
(Decrease) increase due to expected performance		(33.1)		106.20		59.9		69.04
Vested		(25.3)		106.20		(67.9)		76.82
Forfeited		(0.9)		106.20		(3.8)		69.56
Outstanding at December 31, 2013		—	$	—		175.5	$	70.84

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Revisions to Previously Issued Financial Statements - Condensed Combining Balance Sheets (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Accounting Changes and Error Corrections [Abstract]
Allowances for billed receivables	$ 26	$ 33

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Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended				12 Months Ended		12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013	Dec. 31, 2010	Dec. 31, 2013 Federal [Member]	Dec. 31, 2013 Foreign [Member]	Dec. 31, 2013 State [Member]
Operating Loss Carryforwards [Line Items]
Capital loss carryforwards			$ 26
Deferred tax asset related to capital loss			9
Net operating loss carryforwards					6	34	124
Unused net operating loss carryforwards expiration period					Between 2026 and 2030		Between 2016 and 2033
Valuation allowance against deferred tax asset			10
Tax credit carryforwards			10
Expected state net operating losses to be utilized			72
Unrecognized tax benefits	138	150	169	201
Unrecognized tax benefits that would reduce the effective income tax rate			102
Anticipated decrease in unrecognized tax benefit over the next 12 months			18
Change in previously accrued income tax expenses related to tax returns	10	81	10
Change in previously accrued income tax expenses related to audit		12
Accrued potential interest included with in current and non-current income taxes payable	11		11
Accrued potential interest included with in current and non-current income taxes payable after income taxes	6		7
Potential penalties	7		8
Expense (benefit) for interest related items included in income taxes expenses	2	6
Undistributed earnings of non-U.S. Companies			$ 325

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Financial Information of L-3 Communications and Its Subsidiaries - Condensed Combining Statements of Cash Flows (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating activities:
Net cash from operating activities from continuing operations	$ 1,263	$ 1,231	$ 1,231
Investing activities:
Business acquisitions, net of cash acquired	(62)	(348)	(20)
Investments in L-3 Communications
Other investing activities	(199)	148	(179)
Net cash used in investing activities from continuing operations	(261)	(200)	(199)
Financing activities:
Proceeds from sale of senior notes			1,143
Redemption of senior subordinated notes		(500)	(1,150)
Redemption of senior subordinated notes and CODES			(1,161)
Common stock repurchased	(800)	(872)	(958)
Dividends paid on L-3 Holdings common stock	(199)	(195)	(188)
Dividends paid to L-3 Holdings
Investments from L-3 Holdings
Other financing activities	150	40	45
Net cash used in financing activities from continuing operations	(849)	(1,527)	(1,119)
Effect of foreign currency exchange rate changes on cash	(2)	7	(4)
Net increase in cash and cash equivalents of discontinued operations		74	248
Net (decrease) increase in cash and cash equivalents	151	(415)	157
Cash and cash equivalents, beginning of the year	349	764	607
Cash and cash equivalents, end of the year	500	349	764
L-3 Communications Holdings, Inc. [Member]
Operating activities:
Net cash from operating activities from continuing operations	999	1,067	1,157
Investing activities:
Business acquisitions, net of cash acquired
Investments in L-3 Communications	(149)	(42)	(55)
Other investing activities
Net cash used in investing activities from continuing operations	(149)	(42)	(55)
Financing activities:
Redemption of senior subordinated notes
Redemption of senior subordinated notes and CODES			(11)
Common stock repurchased	(800)	(872)	(958)
Dividends paid on L-3 Holdings common stock	(199)	(195)	(188)
Dividends paid to L-3 Holdings
Investments from L-3 Holdings
Other financing activities	149	42	55
Net cash used in financing activities from continuing operations	(850)	(1,025)	(1,102)
Effect of foreign currency exchange rate changes on cash
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of the year
Cash and cash equivalents, end of the year
L-3 Communications Corporation [Member]
Operating activities:
Net cash from operating activities from continuing operations	437	252	476
Investing activities:
Business acquisitions, net of cash acquired	(62)	(348)	(20)
Investments in L-3 Communications
Other investing activities	(88)	225	(84)
Net cash used in investing activities from continuing operations	(150)	(123)	(104)
Financing activities:
Proceeds from sale of senior notes			1,143
Redemption of senior subordinated notes		(500)
Redemption of senior subordinated notes and CODES			(1,150)
Common stock repurchased
Dividends paid on L-3 Holdings common stock
Dividends paid to L-3 Holdings	(999)	(1,067)	(1,157)
Investments from L-3 Holdings	149	42	55
Other financing activities	575	924	882
Net cash used in financing activities from continuing operations	(275)	(601)	(227)
Effect of foreign currency exchange rate changes on cash
Net increase in cash and cash equivalents of discontinued operations		74	248
Net (decrease) increase in cash and cash equivalents	12	(398)	393
Cash and cash equivalents, beginning of the year	246	644	251
Cash and cash equivalents, end of the year	258	246	644
Guarantor Subsidiaries [Member]
Operating activities:
Net cash from operating activities from continuing operations	776	858	792
Investing activities:
Business acquisitions, net of cash acquired
Investments in L-3 Communications
Other investing activities	(89)	(59)	(75)
Net cash used in investing activities from continuing operations	(89)	(59)	(75)
Financing activities:
Common stock repurchased
Dividends paid on L-3 Holdings common stock
Dividends paid to L-3 Holdings
Investments from L-3 Holdings
Other financing activities	(687)	(799)	(717)
Net cash used in financing activities from continuing operations	(687)	(799)	(717)
Effect of foreign currency exchange rate changes on cash
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of the year
Cash and cash equivalents, end of the year
Non-Guarantor Subsidiaries [Member]
Operating activities:
Net cash from operating activities from continuing operations	231	265	220
Investing activities:
Business acquisitions, net of cash acquired
Investments in L-3 Communications
Other investing activities	(22)	(18)	(20)
Net cash used in investing activities from continuing operations	(22)	(18)	(20)
Financing activities:
Common stock repurchased
Dividends paid on L-3 Holdings common stock
Dividends paid to L-3 Holdings
Investments from L-3 Holdings
Other financing activities	(188)	(234)	(447)
Net cash used in financing activities from continuing operations	(188)	(234)	(447)
Effect of foreign currency exchange rate changes on cash	(2)	7	(4)
Net (decrease) increase in cash and cash equivalents	19	20	(251)
Cash and cash equivalents, beginning of the year	242	222	473
Cash and cash equivalents, end of the year	261	242	222
Eliminations [Member]
Operating activities:
Net cash from operating activities from continuing operations	(1,180)	(1,211)	(1,414)
Investing activities:
Business acquisitions, net of cash acquired
Investments in L-3 Communications	149	42	55
Other investing activities
Net cash used in investing activities from continuing operations	149	42	55
Financing activities:
Common stock repurchased
Dividends paid on L-3 Holdings common stock
Dividends paid to L-3 Holdings	999	1,067	1,157
Investments from L-3 Holdings	(149)	(42)	(55)
Other financing activities	301	107	272
Net cash used in financing activities from continuing operations	1,151	1,132	1,374
Effect of foreign currency exchange rate changes on cash
Net (decrease) increase in cash and cash equivalents	120	(37)	15
Cash and cash equivalents, beginning of the year	(139)	(102)	(117)
Cash and cash equivalents, end of the year	$ (19)	$ (139)	$ (102)

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Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Summary Of Significant Accounting Policies [Line Items]
Percentage of sales accounted for under contract accounting standards	47.00%
Percentage of fixed-price type contracts	38.00%
Percentage of cost-plus type contracts	9.00%
Increase in operating income due to changes in contract estimates	$ 114	$ 72	$ 73
Percentage of increase in operating income due to changes in contract estimates	9.00%	6.00%	5.00%
Period of performance for contracts accounted for under the percentage-of-completion method of accounting, minimum	1 year
Goodwill impairment charges			$ 43
Minimum [Member] | Buildings and Improvements [Member]
Summary Of Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful life	10 years
Minimum [Member] | Machinery, Equipment, Furniture and Fixtures [Member]
Summary Of Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful life	3 years
Maximum [Member] | Buildings and Improvements [Member]
Summary Of Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful life	40 years
Maximum [Member] | Machinery, Equipment, Furniture and Fixtures [Member]
Summary Of Significant Accounting Policies [Line Items]
Property, plant and equipment, estimated useful life	10 years
CODES Due 2035 [Member]
Summary Of Significant Accounting Policies [Line Items]
Interest rate on debt instruments	3.00%
Debt instruments, maturity year	2035

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Company's Assets and Liabilities at Fair Value on Recurring Basis

The following table presents the fair value hierarchy level for each of the Company’s assets and liabilities that are measured and recorded at fair value on a recurring basis.

	December 31,
	2013						2012
Description	Level 1(1)		Level 2(2)		Level 3(3)		Level 1(1)		Level 2(2)		Level 3(3)
	(in millions)
Assets
Cash equivalents	$	299	$	—	$	—	$	284	$	—	$	—
Derivatives (foreign currency forward contracts)		—		6		—		—		8		—
Total assets	$	299	$	6	$	—	$	284	$	8	$	—
Liabilities
Derivatives (foreign currency forward contracts)	$	—	$	5	$	—	$	—	$	3	$	—

⁽¹⁾  Level 1 is based on quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Cash equivalents are primarily held in registered money market funds which are valued using quoted market prices.

⁽²⁾  Level 2 is based on pricing inputs other than quoted prices in active markets, which are either directly or indirectly observable. The fair value is determined using a valuation model based on observable market inputs, including quoted foreign currency forward exchange rates and consideration of non-performance risk.

⁽³⁾  Level 3 is based on pricing inputs that are not observable and not corroborated by market data. The Company has no Level 3 assets or liabilities.

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Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating activities:
Net income	$ 760	$ 794	$ 970
Income from discontinued operations, net of tax		(32)	(104)
Income from continuing operations	760	762	866
Depreciation of property, plant and equipment	166	170	167
Amortization of intangibles and other assets	48	58	63
Deferred income tax provision	42	97	123
Stock-based employee compensation expense	59	59	57
Contributions to employee savings plans in L-3 Holdings' common stock	114	125	113
Amortization of pension and postretirement benefit plans net loss and prior service cost	83	68	48
Amortization of bond discounts and deferred debt issue costs (included in interest expense)	6	7	13
Goodwill impairment charge			43
Equity in losses of unconsolidated subsidiaries		3	12
Other non-cash items	2	9	11
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables	(18)	147	(13)
Contracts in process	104	(67)	(110)
Inventories	2	(35)	(14)
Other assets	(88)	8	(9)
Accounts payable, trade	34	92	(35)
Accrued employment costs	(5)	(10)	(23)
Accrued expenses	(5)	(100)	68
Advance payments and billings in excess of costs incurred	(44)	37	(39)
Income taxes	31	(47)	(16)
Excess income tax benefits related to share-based payment arrangements	(4)	(3)	(2)
Other current liabilities	(4)	(46)	(2)
Pension and postretirement benefits	14	(64)	(83)
All other operating activities	(34)	(39)	(7)
Net cash from operating activities from continuing operations	1,263	1,231	1,231
Investing activities:
Contribution received from the spin-off of Engility		335
Business acquisitions, net of cash acquired	(62)	(348)	(20)
Proceeds from sale of a business	4	5	1
Capital expenditures	(209)	(210)	(187)
Dispositions of property, plant and equipment	12	5	6
Cash from equity investees		20
Other investing activities	(6)	(7)	1
Net cash used in investing activities from continuing operations	(261)	(200)	(199)
Financing activities:
Proceeds from sale of senior notes			1,143
Redemption of senior subordinated notes		(500)	(1,150)
Redemption of CODES			(11)
Borrowings under revolving credit facility	1,893	596	625
Repayment of borrowings under revolving credit facility	(1,893)	(596)	(625)
Common stock repurchased	(800)	(872)	(958)
Dividends paid on L-3 Holdings' common stock	(199)	(195)	(188)
Proceeds from exercise of stock options	128	19	22
Proceeds from employee stock purchase plan	36	39	46
Debt issue costs		(6)	(11)
Excess income tax benefits related to share-based payment arrangements	4	3	2
Other financing activities	(18)	(15)	(14)
Net cash used in financing activities from continuing operations	(849)	(1,527)	(1,119)
Effect of foreign currency exchange rate changes on cash and cash equivalents	(2)	7	(4)
Cash from (used in) discontinued operations:
Operating activities		75	253
Investing activities			(4)
Financing activities		(1)	(1)
Cash from discontinued operations		74	248
Net (decrease) increase in cash and cash equivalents	151	(415)	157
Cash and cash equivalents, beginning of the year	349	764	607
Cash and cash equivalents, end of the year	$ 500	$ 349	$ 764

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Supplemental Cash Flow Information - Supplemental Cash Flow Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Additional Cash Flow Elements and Supplemental Cash Flow Information [Abstract]
Interest paid on outstanding debt	$ 171	$ 198	$ 238
Income tax payments	245	332	273
Income tax refunds	$ 23	$ 22	$ 18

XML

Stock-Based Compensation - Weighted Average Assumptions in Valuation Model (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected holding period (in years)	5 years 7 months 6 days	5 years 4 months 24 days	5 years 2 months 12 days
Expected volatility	26.40%	27.00%	26.40%
Expected dividend yield	3.60%	3.60%	2.80%
Risk-free interest rate	1.00%	1.00%	2.20%
TSR [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility			10.20%
Expected dividend yield			2.20%
Risk-free interest rate			0.02%

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Summary of Significant Accounting Policies - Changes in Company's Accrued Product Warranty Costs (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Accrued product warranty costs:
Balance at January 1	$ 99	$ 94
Acquisitions during this period	2	7
Accruals for product warranties issued during the period	71	78
Changes to accruals for product warranties existing before January 1	3	(3)
Foreign currency translation adjustments		1
Settlements made during the period	(76)	(78)
Balance at December 31	$ 99	$ 99

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Pensions and Other Employee Benefits - Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Pension Plans [Member]
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net (gain) loss	$ (637)	$ 287	$ 266
Prior service cost (credit)	14	(1)	2
Amortization of net loss	(83)	(69)	(49)
Amortization of prior service (cost) credit	(1)	(1)	(1)
Total recognized in other comprehensive income	(707)	216	218
Total recognized in net periodic benefit cost and other comprehensive income	(526)	395	363
Postretirement Benefit Plans [Member]
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net (gain) loss	(29)	(3)	10
Prior service cost (credit)		(5)
Amortization of net loss	(2)	(1)	(1)
Amortization of prior service (cost) credit	3	3	3
Total recognized in other comprehensive income	(28)	(6)	12
Total recognized in net periodic benefit cost and other comprehensive income	$ (22)	$ 4	$ 23

XML

Pensions and Other Employee Benefits - Estimated Future Benefit Payments (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Pension Plans [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
2014	$ 116
2015	125
2016	134
2017	146
2018	152
Years 2019-2023	925
Postretirement Benefit Plans [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
2014	13
2015	13
2016	14
2017	14
2018	15
Years 2019-2023	77
Subsidy Receipts, 2014
Subsidy Receipts, 2015
Subsidy Receipts, 2016
Subsidy Receipts, 2017
Subsidy Receipts, 2018
Subsidy Receipts, Years 2019-2023	$ 1

XML

Other Current Liabilities and Other Liabilities (Tables)

12 Months Ended

Dec. 31, 2013

Text Block [Abstract]

Other Current Liabilities

The table below presents the components of other current liabilities.

	December 31,
	2013		2012
	(in millions)
Other Current Liabilities:
Accruals for pending and threatened litigation (see Note 20)	$	6	$	7
Estimated costs in excess of estimated contract value to complete contracts in process in a loss position		78		96
Accrued product warranty costs		75		76
Accrued interest		52		53
Deferred revenues		35		35
Estimated contingent purchase price payable for acquired businesses		—		4
Other		137		121
Total other current liabilities	$	383	$	392

Other Liabilities

The table below presents the components of other liabilities.

	December 31,
	2013		2012
	(in millions)
Other Liabilities:
Non-current income taxes payable (see Note 18)	$	177	$	146
Accrued workers’ compensation		46		57
Deferred compensation		45		43
Accrued product warranty costs		24		23
Notes payable and capital lease obligations		15		24
Estimated contingent purchase price payable for acquired businesses		—		5
Other		99		95
Total other liabilities	$	406	$	393

XML

Commitments and Contingencies

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

20. Commitments and Contingencies

Non-Cancelable Operating Leases

The Company leases certain facilities and equipment under agreements expiring at various dates through 2037. Certain leases contain renewal options or escalation clauses providing for increased rental payments based upon maintenance, utility and tax increases. No lease agreement imposes a restriction on the Company’s ability to pay dividends, engage in debt or equity financing transactions, or enter into further lease agreements.

The following table presents future minimum payments under non-cancelable operating leases with initial or remaining terms in excess of one year at December 31, 2013.

	Real Estate		Equipment		Total
			(in millions)
2014	$	145	$	9	$	154
2015		88		5		93
2016		72		3		75
2017		65		1		66
2018		53		1		54
Thereafter		110		—		110
Total minimum payments required		533		19		552
Less: Sublease rentals under non-cancelable leases		4		—		4
Net minimum payments required	$	529	$	19	$	548

Rent expense was $141 million for 2013, $145 million for 2012, and $140 million for 2011. Sublease rental income was $6 million for 2013 and $5 million for both 2012 and 2011.

Letters of Credit

The Company enters into standby letters of credit with financial institutions covering performance and financial guarantees pursuant to contractual arrangements with certain customers. The Company had total outstanding letters of credit aggregating to $634 million and $504 million at December 31, 2013 and 2012, respectively. The letters of credit reduced the availability under the Amended and Restated Revolving Credit Facility by less than $1 million at December 31, 2013 and 2012, respectively. These letters of credit may be drawn upon in the event of the Company’s nonperformance.

Guarantees

The Company, from time to time, enters into contractual guarantees that arise in connection with its business acquisitions, dispositions, and other contractual arrangements in the normal course of business.

In connection with the spin-off of Engility, L-3 entered into a Distribution Agreement and several other agreements that govern certain aspects of L-3’s relationship with Engility, including employee matters, tax matters, transition services, and the future supplier/customer relationship between L-3 and Engility. These agreements generally provide cross-indemnities that, except as otherwise provided, are principally designed to place the financial responsibility for the obligations and liabilities of each entity with that respective entity. Engility has joint and several liability with L-3 to the U.S. Internal Revenue Service (IRS) for the consolidated U.S. Federal income taxes of L-3’s consolidated group for taxable periods in which Engility was a part of that group. However, the Tax Matters Agreement specifies the portion of this tax liability for which L-3 and Engility will each bear responsibility, and L-3 and Engility have agreed to indemnify each other against any amounts for which the other is not responsible. The Tax Matters Agreement also allocates responsibility between L-3 and Engility for other taxes, including special rules for allocating tax liabilities in the event that the spin-off is determined not to be tax-free. Though valid as between the parties, the Tax Matters Agreement is not binding on the IRS.

The Company has two existing real estate lease agreements, which include residual guarantee amounts, expiring on August 31, 2015 and are accounted for as operating leases. On or before the lease expiration date, the Company can exercise options under the lease agreements to renew the leases, purchase both properties for $28 million, or sell both properties on behalf of the lessor (the “Sale Option”). If the Company elects the Sale Option, the Company must pay the lessor a residual guarantee amount of $23 million for both properties, on or before the lease expiration date. In addition, at the time both properties are sold, the Company must pay the lessor a supplemental rent payment equal to the gross sales proceeds in excess of the residual guarantee, provided that such amount shall not exceed $5 million. For these real estate lease agreements, if the gross sales proceeds are less than the sum of the residual guarantee amount and the supplemental rent payment, the Company is required to pay a supplemental rent payment to the extent the reduction in the fair value of the properties is demonstrated by an independent appraisal to have been caused by the Company’s failure to properly maintain the properties. The aggregate residual guarantee amounts equal $23 million and are included in the future minimum payments under non-cancelable real estate operating lease payments relating to the expiration dates of such leases.

The Company has a contract to provide and operate a full-service training facility for the U.S. Air Force (USAF), including simulator systems adjacent to a USAF base in Oklahoma. The Company acted as the construction agent on behalf of the third-party owner-lessors for procurement and construction for the simulator systems, which were completed and delivered in August 2002. The Company, as lessee, entered into operating lease agreements for a term of 15 years for the simulator systems with the owner-lessors. At the end of the lease term, the Company may elect to purchase the simulator systems at fair market value, which can be no less than $7 million and no greater than $21 million. If the Company does not elect to purchase the simulator systems on the date of expiration (during the first quarter of 2018), the Company shall pay to the lessor, as additional rent, $7 million and return the simulator systems to the lessors.

Environmental Matters

Management continually assesses the Company’s obligations with respect to applicable environmental protection laws, including those obligations assumed in connection with certain business acquisitions. While it is difficult to determine the timing and ultimate cost to be incurred by the Company in order to comply with these laws, based upon available internal and external assessments, with respect to those environmental loss contingencies of which management is aware, the Company believes that there are no environmental loss contingencies that, individually or in the aggregate, would be material to the Company’s consolidated results of operations. The Company accrues for these contingencies when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated.

Procurement Regulations

A substantial majority of the Company’s revenues are generated from providing products and services under legally binding agreements or contracts with U.S. Government and international government customers. U.S. Government contracts are subject to extensive legal and regulatory requirements, and from time to time, agencies of the U.S. Government investigate whether such contracts were and are being conducted in accordance with these requirements. The Company is currently cooperating with the U.S. Government on several investigations from which civil, criminal or administrative proceedings have or could result and give rise to fines, penalties, compensatory and treble damages, restitution and/or forfeitures. The Company does not currently anticipate that any of these investigations will have a material adverse effect, individually or in the aggregate, on its consolidated financial position, results of operations or cash flows. However, under U.S. Government regulations, an indictment of the Company by a federal grand jury, or an administrative finding against the Company as to its present responsibility to be a U.S. Government contractor or subcontractor, could result in the Company being suspended for a period of time from eligibility for awards of new government contracts or task orders or in a loss of export privileges. A conviction, or an administrative finding against the Company that satisfies the requisite level of seriousness, could result in debarment from contracting with the federal government for a specified term. In addition, all of the Company’s U.S. Government contracts: (1) are subject to audit and various pricing and cost controls, (2) include standard provisions for termination for the convenience of the U.S. Government or for default, and (3) are subject to cancellation if funds for contracts become unavailable. International government contracts generally include comparable provisions relating to terminations for convenience and default, as well as other procurement clauses relevant to the international government.

Litigation Matters

The Company is also subject to litigation, proceedings, claims or assessments and various contingent liabilities incidental to its businesses, including those specified below. Furthermore, in connection with certain business acquisitions, the Company has assumed some or all claims against, and liabilities of, such acquired businesses, including both asserted and unasserted claims and liabilities.

In accordance with the accounting standard for contingencies, the Company records a liability when management believes that it is both probable that a liability has been incurred and the Company can reasonably estimate the amount of the loss. Generally, the loss is recorded at the amount the Company expects to resolve the liability. The estimated amounts of liabilities recorded for pending and threatened litigation are disclosed in Note 9. Amounts recoverable from insurance contracts or third parties are recorded as assets when deemed probable. At December 31, 2013, the Company did not record any amounts for recoveries from insurance contracts or third parties in connection with the amount of liabilities recorded for pending and threatened litigation. Legal defense costs are expensed as incurred. The Company believes it has recorded adequate provisions for its litigation matters. The Company reviews these provisions quarterly and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. While it is reasonably possible that an unfavorable outcome may occur in one or more of the following matters, unless otherwise stated below, the Company believes that it is not probable that a loss has been incurred in any of these matters. With respect to the litigation matters below for which it is reasonably possible that an unfavorable outcome may occur, an estimate of loss or range of loss is disclosed when such amount or amounts can be reasonably estimated. Although the Company believes that it has valid defenses with respect to legal matters and investigations pending against it, the results of litigation can be difficult to predict, particularly those involving jury trials. Accordingly, our current judgment as to the likelihood of our loss (or our current estimate as to the potential range of loss, if applicable) with respect to any particular litigation matter may turn out to be wrong. Therefore, it is possible that the financial position, results of operations or cash flows of the Company could be materially adversely affected in any particular period by the unfavorable resolution of one or more of these or other contingencies.

Kalitta Air. On January 31, 1997, a predecessor of Kalitta Air filed a lawsuit in the U.S. District Court for the Northern District of California (the trial court) asserting, among other things, negligence and negligent misrepresentation against Central Texas Airborne Systems, Inc. (CTAS), a predecessor to L-3 Integrated Systems (L-3 IS), in connection with work performed by a predecessor to CTAS to convert two Boeing 747 aircraft from passenger configuration to cargo freighters. CTAS’ insurance carrier has accepted defense of this matter and has retained counsel, subject to a reservation of rights by the insurer to dispute its obligations under the applicable insurance policies in the event a judgment is ultimately rendered against CTAS. The work at issue in the lawsuit was performed using Supplemental Type Certificates (STCs) issued in 1988 by the Federal Aviation Administration (FAA). In 1996, following completion of the work, the FAA issued an airworthiness directive with respect to the STCs that effectively grounded the aircraft. Following two jury trials (in which Kalitta Air did not prevail) and related appeals to the U.S. Court of Appeals for the Ninth Circuit (the Court of Appeals), a third jury trial for this matter began on October 31, 2011, during which Kalitta Air sought damages of approximately $235 million plus an unspecified amount of pre-judgment interest that, in other contexts, has been claimed by Kalitta Air to exceed $240 million. Following the completion of the third trial on November 30, 2011, the jury rendered a verdict in favor of CTAS, finding no negligence on the part of CTAS. The trial court entered a judgment upon the verdict on March 20, 2012. Kalitta Air filed an appeal of the judgment with the Court of Appeals on July 23, 2012. The Court of Appeals ruled against Kalitta Air and affirmed the trial court’s judgment on November 25, 2013. Kalitta Air subsequently filed a motion for a rehearing of its appeal, which was denied by the Court of Appeals on January 8, 2014.

Bashkirian Airways. On July 1, 2004, lawsuits were filed on behalf of the estates of 31 Russian children in the state courts of Washington, Arizona, California, Florida, New York and New Jersey against Honeywell, Honeywell TCAS, Thales USA, Thales France, the Company and Aviation Communications & Surveillance Systems (ACSS), which is a joint venture of L-3 and Thales. The suits relate to the crash over southern Germany of a Bashkirian Airways Tupelov TU 154M aircraft and a DHL Boeing 757 cargo aircraft. On-board the Tupelov aircraft were 9 crew members and 60 passengers, including 45 children. The Boeing aircraft carried a crew of two. Both aircraft were equipped with Honeywell/ACSS Model 2000, Change 7 Traffic Collision and Avoidance Systems (TCAS). Sensing the other aircraft, the on-board DHL TCAS instructed the DHL pilot to descend, and the Tupelov on-board TCAS instructed the Tupelov pilot to climb. However, the Swiss air traffic controller ordered the Tupelov pilot to descend. The Tupelov pilot disregarded the on-board TCAS and put the Tupelov aircraft into a descent striking the DHL aircraft in midair at approximately 35,000 feet. All crew and passengers of both planes were lost. Investigations by the National Transportation Safety Board after the crash revealed that both TCAS units were performing as designed. The suits allege negligence and strict product liability based upon the design of the units and the training provided to resolve conflicting commands and seek approximately $315 million in damages, including $150 million in punitive damages. The Company’s insurers have accepted defense of this matter and have retained counsel. The matters were consolidated in the U.S. District Court for the District of New Jersey, which then dismissed the actions on the basis of forum non conveniens. Plaintiffs representing 30 of the estates re-filed their complaint against ACSS on April 23, 2007 with the Barcelona Court’s Registry in Spain. On March 9, 2010, the court ruled in favor of the plaintiffs and entered judgment against ACSS in the amount of approximately $6.7 million, all of which represented compensatory damages. Both ACSS and the plaintiffs appealed the judgment. In May 2012, the appellate court ruled in favor of the plaintiffs and entered judgment against ACSS in the amount of $48 million. ACSS filed an appeal of the judgment with the Supreme Court of Spain on September 28, 2012. On July 1, 2013, the Supreme Court agreed to consider the appeal, and the parties are awaiting the Supreme Court’s decision. The Company believes that the ruling and the damages awarded are inconsistent with the law and evidence presented, and accordingly, that it is not probable that the Company has incurred a loss with respect to this matter. As of the date of this filing, 18 out of the 30 plaintiffs have released their claims against ACSS in consideration for payments made by the Company’s insurance carriers.

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Stock-Based Compensation

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

19. Stock-Based Compensation

Stock-based Compensation Plans. The Company has adopted stock-based compensation plans in order to provide incentives to directors, officers, employees and other individuals providing services to or on behalf of the Company and its subsidiaries. The Company believes that its stock-based compensation awards encourage high levels of performance by individuals who contribute to the success of the Company and enable the Company to attract, retain and reward talented and experienced individuals. This is accomplished by providing eligible individuals with an opportunity to obtain or increase a proprietary interest in the Company and/or by providing eligible individuals with additional incentives to join or remain with the Company. The stock-based compensation plans serve to better align the interests of management and its employees with those of the Company’s shareholders. During the year ended December 31, 2013, the Company awarded stock-based compensation under its Amended and Restated 2008 Long Term Performance Plan (2008 LTPP). Awards under the 2008 LTPP may be granted to any officer or employee of the Company or any of its subsidiaries, non-employee directors, or to any other individual who provides services to or on behalf of the Company or any of its subsidiaries. To date, awards under the 2008 LTPP have been in the form of L-3 Holdings’ restricted stock units, performance units and options to purchase L-3 Holdings’ common stock.

On April 30, 2013, the stockholders of L-3 Holdings approved an amendment to the 2008 LTPP. The principal purpose of the amendment was to increase the number of shares authorized for issuance under the 2008 Plan by 6.5 million shares. In addition, the plan was amended to: (1) include all future equity issuances to non-employee directors under the 2008 LTPP instead of through the L-3 Communications Holdings, Inc. 2008 Directors Stock Incentive Plan (2008 DSIP), a separate equity plan previously used solely for non-employee directors, (2) include revised limits on the amount of annual equity grants to employees and include new limits on the amount of annual equity grants to non-employee directors, and (3) modify the way that shares issued under full value awards (that is, awards other than stock options or stock appreciations rights) granted under the 2008 LTPP are counted for purposes of calculating the number of authorized shares that have been issued, as further described below.

The amendment to the 2008 LTPP increased the number of shares authorized for issuance under the 2008 LTPP to approximately 19.2 million shares. Under the 2008 LTPP, each share of L-3 Holdings’ common stock issued under a full value award granted on or after February 26, 2013 is counted as 3.69 shares for purposes of this share limit. Each share issued under full value awards granted between March 1, 2010 and February 25, 2013 is counted as 2.6 shares for purposes of the share limit. At December 31, 2013, 7.9 million shares of L-3 Holdings’ common stock remained available for future awards under the 2008 LTPP.

The Company’s stock-based compensation by form of award, including stock-based compensation recorded in discontinued operations as a result of the spin-off of Engility, is presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Stock options	$	10	$	10	$	11
Restricted stock units		41		46		48
Performance units		7		8		5
Total before income taxes		58		64		64
Income taxes		(22)		(24)		(24)
Total after income taxes		36		40		40
Less: Stock based compensation recorded in discontinued operations, net of income taxes		—		1		4
Stock based compensation recorded in continuing operations, net of income taxes	$	36	$	39	$	36

Engility Spin-off Adjustments. As a result of the spin-off of Engility, effective July 17, 2012, all outstanding stock-based compensation awards related to Engility employees were assumed by Engility. Also in connection with the spin-off, the share amounts for all remaining L-3 outstanding stock options, restricted stock units and performance units, and the strike price for stock options were adjusted to maintain the aggregate intrinsic value at the Engility spin-off date of all grants outstanding on that date, pursuant to the terms of the stock-based compensation plans under which they were issued. Taking into account the change in the value of the Company’s common stock as a result of the distribution of the Engility shares to the Company’s shareholders, the conversion ratio for the remaining stock options, restricted stock units and performance units was 1.043678. For stock options, the net effect of these adjustments was an increase to the stock options outstanding due to the limited number of stock options assumed by Engility for the Engility employees. For restricted stock units, the net effect of these adjustments was a decrease in restricted stock units outstanding as the number of shares assumed by Engility for the Engility employees exceeded the impact of the adjustment for restricted stock units held by L-3 employees. The Engility spin-off adjustments are reflected in the January 1, 2013 share amounts in the stock option, restricted stock unit award and performance award tables below.

Stock Options. The exercise price of stock options granted under the 2008 LTPP may not be less than the fair market value of L-3 Holdings’ common stock on the date of grant. Options expire after 10 years from the date of grant and vest ratably over a three year period on the annual anniversary of the date of grant. All unvested options are subject to forfeiture upon termination of employment (subject to customary exceptions for death or disability). All of the stock option awards issued under the 2008 LTPP are non-qualified stock options for U.S. income tax regulations. The table below presents a summary of the Company’s stock option activity as of December 31, 2013 and changes during the year then ended.

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
	(in thousands)				(in years)		(in millions)
Number of shares under option:
Outstanding at January 1, 2013		4,989.9	$	76.57		5.8	$	23
Options granted		741.7		77.00
Options exercised		(1,770.4)		73.24
Options forfeited		(78.3)		89.93
Outstanding at December 31, 2013		3,882.9	$	77.90		6.2	$	112
Vested and expected to vest at December 31, 2013(1)		3,865.9	$	77.91		6.2	$	112
Exercisable at December 31, 2013		2,420.9	$	80.44		4.9	$	64

⁽¹⁾  Represents outstanding options reduced by expected forfeitures for options not fully vested.

The weighted average grant date fair value of the stock options awarded was $12.09, $11.32, and $15.54 for the years ended December 31, 2013, 2012 and 2011, respectively. The aggregate intrinsic value, disclosed in the table above, represents the difference between L-3 Holdings’ closing stock price on the last trading day for the period, and the exercise price, multiplied by the number of in-the-money stock options.

The total intrinsic value of stock options exercised, based on the difference between the L-3 Holdings’ stock price at the time of exercise and the related exercise price, was $32 million, $7 million and $8 million for the years ended December 31, 2013, 2012 and 2011, respectively. At December 31, 2013, unrecognized compensation costs related to stock options were $10 million ($6 million after income taxes), which are expected to be recognized over a weighted average remaining period of 1.1 years.

The actual income tax benefit realized related to compensation deductions arising from the exercise of stock options by the Company’s employees totaled $10 million, $2 million and $3 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Stock Option Fair Value Estimation Assumptions. The Company estimates the fair value of its stock options at the date of grant using the Black-Scholes option-pricing valuation model. The Company’s valuation model is affected by L-3 Holdings’ stock price as well as weighted average assumptions for a number of subjective variables described below.

• Expected Holding Period. The expected holding period represents the period of time that granted stock options are expected to be outstanding until they are exercised. The Company uses historical stock option exercise data to estimate the expected holding period.

• Expected Volatility. Expected volatility is based on L-3 Holdings’ historical share price volatility matching the expected holding period.

• Expected Dividend Yield. Expected dividend yield is based on L-3 Holdings’ anticipated dividend payments and historical pattern of dividend increases over the expected holding period.

• Risk-Free Interest Rates. The risk-free interest rates for stock options are based on U.S. Treasuries for a maturity period matching the expected holding period.

Changes in assumptions can materially impact the estimated fair value of stock options. The weighted average assumptions used in the valuation model are presented in the table below.

	2013 Grants		2012 Grants		2011 Grants
Expected holding period (in years)		5.6		5.4		5.2
Expected volatility		26.4%		27.0%		26.4%
Expected dividend yield		3.6%		3.6%		2.8%
Risk-free interest rate		1.0%		1.0%		2.2%

Restricted Stock Units. The Company awards restricted stock units that automatically convert into shares of L-3 Holdings’ common stock upon vesting (in the case of awards granted to employees) or upon the date on which the recipient ceases to be a director (in the case of awards granted to directors). These awards are subject to forfeiture until certain restrictions have lapsed, including a three year cliff vesting period for employees and a one year cliff vesting period for directors, in each case starting on the date of grant. The weighted average grant date fair value of the restricted stock units awarded was $77.12, $70.42 and $80.17 for the years ended December 31, 2013, 2012 and 2011, respectively. The grant date fair value of the restricted stock unit awards is based on L-3 Holdings’ closing stock price at the date of grant, and is generally recognized as compensation expense on a straight-line basis over the vesting period. However, for employees who attain retirement eligibility status prior to the end of the three year cliff vesting period, and who have provided at least one year of service after the date of grant, compensation expense is recognized over the shorter period from the date of grant to the retirement eligibility date. Retirement eligible employees are those employees that have attained the age of 65 and have completed at least five years of service (which service must be continuous through the date of termination except for a single break in service that does not exceed one year in length).

The table below presents a summary of the Company’s nonvested restricted stock unit awards as of December 31, 2013 and changes during the year then ended.

	Number of       Shares		Weighted Average Grant Date       Fair Value
	(in thousands)
Nonvested balance at January 1, 2013		1,729.7	$	75.64
Granted		606.4		77.12
Vested		(476.4)		85.81
Forfeited		(85.9)		73.60
Nonvested balance at December 31, 2013		1,773.8	$	73.51

As of December 31, 2013, total unrecognized compensation costs related to nonvested restricted stock unit awards were $48 million ($30 million after income taxes) and are expected to be recognized over a weighted average remaining period of 1.2 years. The total fair value of restricted stock unit awards vested during the years ended December 31, 2013, 2012 and 2011 as of their vesting dates was $37 million, $44 million and $35 million, respectively.

Performance Units. The Company awards performance units, with each unit having a value at the time of grant equal to a share of L-3 Holdings’ common stock. The number of units ultimately earned can range from zero to 200% of the original award based upon the level of performance achieved by the Company over the associated performance period in relation to pre-determined performance goals. Units earned under the program are converted into shares of L-3 Holdings’ common stock, or are paid in cash based on the closing price of L-3 Holdings’ common stock at the end of the performance period, as determined at the time of grant by the Compensation Committee of the Board of Directors of L-3 Holdings.

During the years ended December 31, 2013, 2012, and 2011, the Company awarded performance units with a weighted average grant date fair value per unit of $77.00, $70.43 and $95.50, respectively. Of these units, (1) all the units granted in 2013 and 2012 and half of the units granted in 2011 have performance conditions based on L-3’s diluted earnings per share (the EPS Element) and (2) half of the units granted in 2011 have performance conditions based on L-3’s total stockholder return relative to a peer group of companies (the TSR Element). The Company did not award any performance units related to the TSR Element in 2013 and 2012. The performance periods for the units began on January 1 of the applicable grant year and end on December 31 of the year corresponding to a three-year performance period. Units based on the EPS Element are payable in shares of L-3 Holdings’ common stock, while units based on the TSR Element are payable in cash. As of December 31, 2013, total unrecognized compensation costs related to the performance units were $6 million ($4 million after income taxes) and are expected to be recognized over a weighted average remaining period of 1.4 years.

The table below presents a summary of the Company’s performance unit awards based on expected performance as of December 31, 2013 and changes during the year then ended.

	Payable in Cash (TSR)				Payable in Shares (EPS)
	Number of Units		Weighted Average Grant Date Fair Value		Number of Units		Weighted Average Grant Date Fair Value
	(in thousands)				(in thousands)
Outstanding at January 1, 2013		59.3	$	106.20		125.6	$	71.86
Granted		—		—		61.7		77.00
(Decrease) increase due to expected performance		(33.1)		106.20		59.9		69.04
Vested		(25.3)		106.20		(67.9)		76.82
Forfeited		(0.9)		106.20		(3.8)		69.56
Outstanding at December 31, 2013		—	$	—		175.5	$	70.84

The performance period for the units awarded in 2011 ended on December 31, 2013. Based on the EPS Element and TSR Element achieved during the performance period, a total of 93,251 performance units having a fair market value of $10.0 million as of their vesting date were earned by the participants on December 31, 2013.

Performance Units Fair Value Assumptions. The TSR Element is initially measured at fair value and subsequently remeasured each reporting period using a Monte Carlo valuation model that incorporates current assumptions, including L-3 Holdings’ stock price and the variables described below.

• Expected Volatility. Expected volatility is based on L-3 Holdings’ historical share price volatility matching the remaining measurement period.

• Expected Dividend Yield. Expected dividend yield is based on L-3 Holdings’ anticipated dividend payments and historical pattern of dividend increases over the remaining measurement period.

• Risk-Free Interest Rate. Risk-free interest rates for the performance units are based on U.S. Treasuries for a maturity matching the remaining measurement period.

Changes in assumptions can materially impact the estimated fair value of the TSR Element from period to period. The weighted average assumptions used in the valuation model as of December 31, 2013 for the 2011 TSR Element are presented in the table below.

	2011 Grants
Expected volatility		10.2%
Expected dividend yield		2.2%
Risk-free interest rate		0.02%

Employee Stock Purchase Plan. Effective July 1, 2009, the Company adopted the 2009 Employee Stock Purchase Plan (2009 ESPP). Under the 2009 ESPP, eligible employees are offered options to purchase shares of L-3 Holdings’ common stock at the end of each six-month offering period at 95% of fair market value based on the average of the highest and lowest sales prices for the stock on the purchase date. Eligible employees generally include all employees of the Company and each subsidiary or affiliate of the Company that has been designated to participate in the 2009 ESPP. Offering periods begin on the first trading day in January and July of each calendar year and end on the last trading day in June and December of each calendar year. Share purchases are funded through payroll deductions of up to 10% of an employee’s eligible compensation for each payroll period, or $21,250 each calendar year.

As of December 31, 2013, 4.6 million shares were available for future issuance under the 2009 ESPP (i.e., excluding the effect of shares issued in January 2014 as described below). In July 2013, the Company issued 0.2 million shares under the 2009 ESPP at an average price of $81.71 per share, which covered employee contributions for the six months ended June 30, 2013. In January 2014, the Company issued 0.2 million shares under the 2009 ESPP at an average price of $101.55 per share, which covered employee contributions for the six months ended December 31, 2013. The 5% discount is not recognized as compensation expense in accordance with the accounting standard for share-based compensation expense.

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Derivative Financial Instruments - Notional Amounts of Company's Outstanding Foreign Currency Forward Contracts by Currency (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	$ 321
Canadian Dollar [Member]
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	137
U.S. Dollar [Member]
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	98
Euro [Member]
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	66
British Pound [Member]
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	18
Other [Member]
Derivative [Line Items]
Notional amounts of foreign currency forward contracts	$ 2

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Summary of Segment Information

The tables below present net sales, operating income, depreciation and amortization, capital expenditures and total assets by reportable segment.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Net Sales
Products
Aerospace Systems	$	1,827	$	1,755	$	1,579
Electronic Systems		3,661		3,754		3,862
Communication Systems		1,755		2,083		2,042
NSS		71		98		153
Elimination of intercompany sales		(125)		(104)		(87)
Total products sales		7,189		7,586		7,549
Services
Aerospace Systems		2,730		2,844		2,857
Electronic Systems		1,054		1,011		928
Communication Systems		471		445		428
NSS		1,228		1,292		1,465
Elimination of intercompany sales		(50)		(71)		(73)
Total services sales		5,433		5,521		5,605
Consolidated total	$	12,622	$	13,107	$	13,154
Operating Income
Aerospace Systems	$	426	$	437	$	451
Electronic Systems		533		569		624
Communication Systems		168		223		265
NSS		85		79		101
Segment Total	$	1,212	$	1,308	$	1,441
Impairment charge(1)		—		—		(43)
Consolidated total	$	1,212	$	1,308	$	1,398
Depreciation and amortization
Aerospace Systems	$	38	$	46	$	44
Electronic Systems		117		121		124
Communication Systems		48		47		43
NSS		11		14		19
Consolidated total	$	214	$	228	$	230
Capital Expenditures
Aerospace Systems	$	54	$	42	$	42
Electronic Systems		71		77		79
Communication Systems		59		84		60
NSS		5		5		5
Corporate		20		2		1
Consolidated total	$	209	$	210	$	187
Total Assets
Aerospace Systems	$	3,087	$	3,074	$	3,125
Electronic Systems		6,928		6,792		6,607
Communication Systems		2,130		2,179		1,783
NSS		1,247		1,228		1,317
Corporate		596		527		959
Assets of discontinued operations		—		—		1,729
Consolidated total	$	13,988	$	13,800	$	15,520

⁽¹⁾  Represents a non-cash goodwill impairment charge recorded in the fourth quarter of 2011 due to a decline in the estimated fair value of a reporting unit within the Electronic Systems segment.

Company's Sales Attributable to U.S. Customers and International Customers

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,
	2013		2012		2011
	(in millions)
U.S.	$	9,808	$	10,658	$	11,067
International:
United Kingdom		449		360		310
Canada		357		314		328
Germany		272		263		243
Australia		218		222		118
South Korea		178		125		93
Saudi Arabia		132		76		41
Italy		107		116		98
Other		1,101		973		856
Total international		2,814		2,449		2,087
Consolidated	$	12,622	$	13,107	$	13,154

Net Sales to Principal Customers

Net sales to principal customers are summarized in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
U.S. Government agencies(1)	$	9,186	$	9,986	$	10,438
Commercial		1,689		1,658		1,524
Allied international governments(1)		1,747		1,463		1,192
Consolidated	$	12,622	$	13,107	$	13,154

⁽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.

XML

Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

The table below presents the components of Property, Plant and Equipment.

	December 31,
	2013		2012
	(in millions)
Land	$	62	$	63
Buildings and improvements		415		407
Machinery, equipment, furniture and fixtures		1,643		1,532
Leasehold improvements		328		322
Gross property, plant and equipment		2,448		2,324
Accumulated depreciation and amortization		(1,406)		(1,301)
Property, plant and equipment, net	$	1,042	$	1,023

XML

Pensions and Other Employee Benefits

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Pensions and Other Employee Benefits

21. Pensions and Other Employee Benefits

The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility for participation in these plans varies and benefits are generally based on the participant’s compensation and/or years of service. The Company’s funding policy is generally to contribute in accordance with cost accounting standards that affect government contractors, subject to the Internal Revenue Code and regulations thereon. Plan assets are invested primarily in listed stocks, mutual funds, corporate bonds, U.S. Government obligations and U.S. Government agency obligations.

The Company also provides postretirement medical and life insurance benefits for retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company’s pension plans. These benefits are funded primarily on a pay-as-you-go basis with the retiree generally paying a portion of the cost through contributions, deductibles and coinsurance provisions.

In accordance with accounting standards for employee pension and postretirement benefits, the Company recognizes the unfunded status of its pension and postretirement benefit plans in the consolidated financial statements and measures its pension and postretirement benefit plan assets and benefit obligations as of December 31.

The following table summarizes changes in the benefit obligations, the plan assets and funded status for all of the Company’s pension and postretirement benefit plans, as well as the aggregate balance sheet impact.

	Pension Plans				Postretirement Benefit Plans
	2013		2012		2013		2012
	(in millions)
Change in benefit obligation:
Benefit obligation at the beginning of the year	$	3,222	$	2,679	$	218	$	216
Service cost		126		113		4		4
Interest cost		132		134		7		10
Plan participants’ contributions		2		2		4		4
Amendments		14		—		—		(5)
Obligation assumed in connection with a business acquisition(1)		—		29		—		3
Actuarial (gain) loss		(402)		358		(23)		(2)
Foreign currency exchange rate changes		(21)		8		(3)		1
Curtailments, settlements and special termination benefits		3		3		—		1
Benefits paid		(103)		(104)		(13)		(14)
Benefit obligation at the end of the year	$	2,973	$	3,222	$	194	$	218
Change in plan assets:
Fair value of plan assets at the beginning of the year	$	2,026	$	1,712	$	47	$	42
Actual return on plan assets		394		215		9		4
Assets acquired in connection with a business acquisition(1)		—		29		—		—
Employer contributions		105		173		8		11
Plan participants’ contributions		2		2		4		4
Foreign currency exchange rate changes		(21)		6		—		—
Transfers(2)		—		(7)		—		—
Benefits paid		(103)		(104)		(13)		(14)
Fair value of plan assets at the end of the year	$	2,403	$	2,026	$	55	$	47
Unfunded status at the end of the year	$	(570)	$	(1,196)	$	(139)	$	(171)
Assets and (liabilities) recognized in the consolidated balance sheets consist of:
Non-current assets	$	35	$	9	$	—	$	—
Current liabilities		(8)		(7)		(9)		(9)
Non-current liabilities		(597)		(1,198)		(130)		(162)
	$	(570)	$	(1,196)	$	(139)	$	(171)

⁽¹⁾  Represents pension and postretirement plan obligations and pension plan assets assumed/acquired during 2012 as part of the L-3 KEO business acquisition.

⁽²⁾  Represents assets related to various supplemental executive retirement plans that had previously been classified as pension plan assets; however, such assets are not held by the plans and are now classified as other assets.

The table below summarizes the net loss and prior service cost balances at December 31, in the accumulated other comprehensive loss account, before related tax effects, for all of the Company’s pension and postretirement benefit plans.

	Pension Plans				Postretirement Benefit Plans
	2013		2012		2013		2012
	(in millions)
Net loss (gain)	$	425	$	1,146	$	(9)	$	21
Prior service cost (credit)		1		(12)		(8)		(10)
Total amount recognized	$	426	$	1,134	$	(17)	$	11

The aggregate accumulated benefit obligation (ABO) for all of the Company’s pension plans was $2,657 million at December 31, 2013 and $2,783 million at December 31, 2012. The table below presents information for the pension plans with an ABO in excess of the fair value of plan assets at December 31, 2013 and 2012.

	Pension Plans
	2013		2012
	(in millions)
Projected benefit obligation	$	2,408	$	3,177
Accumulated benefit obligation		2,115		2,743
Fair value of plan assets		1,815		1,975

The table below summarizes the weighted average assumptions used to determine the benefit obligations for the Company’s pension and postretirement plans disclosed at December 31, 2013 and 2012.

	Pension Plans				Postretirement Benefit Plans
	2013		2012		2013		2012
Benefit obligations:
Discount rate		5.03%(1)		4.15%(1)		4.43%(2)		3.37%(2)
Rate of compensation increase		3.50%(3)		3.56%(3)		3.50%(3)		3.59%(3)

⁽¹⁾  The weighted average discount rate assumptions used at December 31, 2013 and 2012 were comprised of separate assumptions determined by country of 5.1% and 4.2% for the U.S. based plans, 4.7% and 3.9% for the Canadian based plans and 3.5% and 3.4% for the German based plans.

⁽²⁾  The weighted average discount rate assumptions used at December 31, 2013 and 2012 were comprised of separate assumptions determined by country of 4.4% and 3.3% for the U.S. based plans and 4.6% and 3.7% for the Canadian based plans.

⁽³⁾  The weighted average rate of compensation increase assumptions were comprised of separate assumptions determined by country of 3.5% for the U.S. based plans at both December 31, 2013 and 2012 and 3.5% and 4.0% for the Canadian based plans at December 31, 2013 and 2012.

The following table summarizes the components of net periodic benefit cost for the Company’s pension and postretirement benefit plans for the years ended December 31, 2013, 2012 and 2011.

	Pension Plans						Postretirement Benefit Plans
	2013		2012		2011		2013		2012		2011
	(in millions)
Components of net periodic benefit cost:
Service cost	$	126	$	113	$	106	$	4	$	4	$	5
Interest cost		132		134		128		7		10		10
Expected return on plan assets		(164)		(145)		(139)		(4)		(3)		(2)
Amortization of prior service cost (credits)		1		1		1		(3)		(3)		(3)
Amortization of net loss		83		69		49		2		1		1
Curtailment or settlement loss		3		7		—		—		1		—
Net periodic benefit cost	$	181	$	179	$	145	$	6	$	10	$	11

The following table summarizes the other changes in plan assets and benefit obligations recognized in other comprehensive income for the Company’s pension and postretirement benefit plans for the years ended December 31, 2013, 2012 and 2011.

	Pension Plans						Postretirement Benefit Plans
	2013		2012		2011		2013		2012		2011
	(in millions)
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net (gain) loss	$	(637)	$	287	$	266	$	(29)	$	(3)	$	10
Prior service cost (credit)		14		(1)		2		—		(5)		—
Amortization of net loss		(83)		(69)		(49)		(2)		(1)		(1)
Amortization of prior service (cost) credit		(1)		(1)		(1)		3		3		3
Total recognized in other comprehensive income		(707)		216		218		(28)		(6)		12
Total recognized in net periodic benefit cost and other comprehensive income	$	(526)	$	395	$	363	$	(22)	$	4	$	23

The following table summarizes the amounts expected to be amortized from accumulated other comprehensive income (loss) and recognized as components of net periodic benefit costs during 2014.

	Pension Plans		Postretirement Benefit Plans		Total
			(in millions)
Net loss (gain)	$	17	$	(1)	$	16
Prior service cost (credit)		2		(2)		—
	$	19	$	(3)	$	16

The table below summarizes the weighted average assumptions used to determine the net periodic benefit cost for the years ended December 31, 2013, 2012 and 2011.

	Pension Plans						Postretirement Benefit Plans
	2013		2012		2011		2013		2012		2011
Discount rate		4.15%(1)		5.02%(1)		5.57%(1)		3.37%(4)		4.71%(4)		5.40%(4)
Expected long-term return on plan assets		8.13%(2)		8.15%(2)		8.57%(2)		7.64%		7.64%		6.20%
Rate of compensation increase		3.50%(3)		4.06%(3)		4.50%(3)		3.50%		4.09%		4.50%

⁽¹⁾  The weighted average discount rate assumptions used for the years ended December 31, 2013, 2012, and 2011 were comprised of separate assumptions determined by country of 4.2%, 5.1% and 5.6% for the U.S. based plans, 3.9%, 4.4% and 5.4% for the Canadian based plans and 3.4%, 5.1%, and 5.4% for the German based plans, respectively.

⁽²⁾  The weighted average expected long-term return on plan assets assumptions used were comprised of separate assumptions determined by country of 8.25% for the U.S. based plans for the year ended December 31, 2013, 2012 and 2011 and 7.25% for the year ended December 31, 2013 and 7.5% for the years ended December 31, 2012 and 2011 for the Canadian based plans.

⁽³⁾  The weighted average rate of compensation increase assumptions used for the year ended December 31, 2013 were comprised of separate assumptions determined by country of 3.5% for both the U.S and Canadian based plans. The rate of compensation increase assumptions were 4.0% for the U.S based plans and 4.5% for the Canadian based plans for the year ended December 31, 2012. The rate of compensation increase assumptions were 4.5% for both the U.S. and Canadian based plans for the year ended December 31, 2011.

⁽⁴⁾  The weighted average discount rate assumptions used for the years ended December 31, 2013, 2012 and 2011 were comprised of separate assumptions determined by country of 3.3%, 4.8% and 5.4% for the U.S. based plans and 3.7%, 4.3% and 5.4% for the Canadian based plans, respectively.

The expected long-term return on plan assets assumption represents the average rate that the Company expects to earn over the long-term on the assets of the Company’s benefit plans, including those from dividends, interest income and capital appreciation. The Company utilizes a third-party consultant to assist in the development of the expected long-term return on plan assets, which is based on expectations regarding future long-term rates of return for the plans’ investment portfolio, with consideration given to the allocation of investments by asset class and historical rates of return for each individual asset class. The Company utilizes a building block methodology that utilizes historical and forward looking rates of return for each asset class and takes into account expected returns above inflation and risk premium. These long-term rates of return are then applied to the target portfolio allocations that are generally aligned with the actual asset allocations of our plans to develop the expected long-term rate of return.

The annual increase in cost of benefits (health care cost trend rate) is assumed to be an average of 8.0% in 2014 and is assumed to gradually decrease to a rate of 5.0% in 2020 and thereafter. Health care cost trend assumptions are based on (1) observed or expected short term rates of increase for different types of health models based on actual claims experience and benchmarking, and (2) a reasonable estimate of an appropriate, sustainable level of health care cost trend in the future, weighting factors that influence trend primarily price inflation and cost leveraging benefit plan features. Assumed health care cost trend rates have a significant effect on amounts reported for postretirement medical benefit plans. A one percentage point change in the assumed health care cost trend rates would have the following effects:

	1 percentage point
	Increase		Decrease
	(in millions)
Effect on total service and interest cost	$	1	$	—
Effect on postretirement benefit obligations		9		(7)

Plan Assets. The Company’s Benefit Plan Committee (Committee) has the responsibility to formulate the investment policies and strategies for the plans’ assets. The Committee structures the investment of plan assets to achieve the following goals: (1) maximize the plans’ long-term rate of return on assets for an acceptable level of risk; and (2) limit the volatility of investment returns and consequent impact on the plans’ assets. In the pursuit of these goals, the Committee has formulated the following investment policies and objectives: (1) invest assets of the plans in a manner consistent with the fiduciary standards of the Employee Retirement Income Security Act of 1974 (ERISA); (2) preserve the plans’ assets; (3) maintain sufficient liquidity to fund benefit payments and pay plan expenses; (4) evaluate the performance of investment managers; and (5) achieve, on average, a minimum total rate of return equal to the established benchmarks for each asset category.

The Committee retains a professional investment consultant to advise the Committee and help ensure that the above policies and strategies are met. The Committee does not actively manage the day to day operations and selection process of individual securities and investments, as it retains the professional services of qualified investment management organizations to fulfill those tasks. Qualified investment management organizations are evaluated on several criteria for selection, with a focus on the investment management organizations’ demonstrated capability to achieve results that will meet or exceed the investment objectives they have been assigned and conform to the policies established by the Committee. While the investment management organizations have investment discretion over the assets placed under their management, the Committee provides each investment manager with specific investment guidelines relevant to its asset class.

The Committee has established the allowable range that the plans’ assets may be invested in for each major asset category. In addition, the Committee has established guidelines regarding diversification within asset categories to limit risk and exposure to a single or limited number of securities. The investments of the plans’ include a diversified portfolio of both equity and fixed income investments. Equity investments are further diversified across U.S. and non-U.S. stocks, small to large capitalization stocks, and growth and value stocks. Fixed income assets are diversified across U.S. and non-U.S. issuers, corporate and governmental issuers, and credit quality. The plan also invests in real estate through publicly traded real estate securities. Derivatives may be used only for hedging purposes or to create synthetic long positions. The plans are prohibited from directly owning commodities, unregistered securities, restricted stock, private placements, or interest in oil, gas, mineral exploration, or other development programs. Further, short selling or utilizing margin buying for investment purposes is prohibited.

The table below presents the allowable range for each major category of the plans’ assets at December 31, 2013 as well as the Company’s pension plan and postretirement benefit plan weighted-average asset allocations at December 31, 2013 and 2012, by asset category.

	U.S.						Canada
Asset Category	2013 and 2012 Range		2013		2012		2013 Range	2013		2012 Range		2012
Domestic equity(1)		30%-60%		54%		51%	10%-25%		20%		15%-30%		19%
International equity(2)		10%-20%		11		10	30%-60%		49		20%-50%		46
Fixed income securities		20%-40%		22		29	20%-60%		28		25%-55%		32
Real estate securities		0%-15%		6		8	—		—		—		—
Other, primarily cash and cash equivalents		0%-15%		7		2	0%-15%		3		0%-15%		3
Total				100%		100%			100%				100%

⁽¹⁾  Domestic equities for Canadian plans refers to equities of Canadian companies.

⁽²⁾  International equities for Canadian plans includes equities of U.S. companies.

The Committee regularly monitors the investment of the plans’ assets to ensure that the actual investment allocation remains within the established range. The Committee also regularly measures and monitors investment risk through ongoing performance reporting and investment manager reviews. Investment manager reviews include assessing the managers’ performance versus the appropriate benchmark index both in the short and long-term period, performance versus peers, and an examination of the risk the managers assumed in order to achieve rates of return.

The table below presents the fair value of the Company’s pension plans’ assets at December 31, 2013 and 2012, by asset category segregated by level within the fair value hierarchy, as described below.

	U.S. Pension Plans’ Assets								Canadian Pension Plans’ Assets
	Fair Value Measured at December 31, 2013								Fair Value Measured at December 31, 2013
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Equity securities(1):
U.S. Equity	$	1,141	$	—	$	—	$	1,141	$	54	$	18	$	—	$	72
International Equity		79		146		—		225		117		18		—		135
Fixed Income — Investment Grade(2)		216		135		—		351		—		82		—		82
Fixed Income — High Yield(3)		—		118		—		118		—		—		—		—
Real Estate Investment Trusts(4)		118		—		—		118		—		—		—		—
Other(5)		—		150		—		150		6		5		—		11
Total	$	1,554	$	549	$	—	$	2,103	$	177	$	123	$	—	$	300
	Fair Value Measured at December 31, 2012								Fair Value Measured at December 31, 2012
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Equity securities(1):
U.S. Equity	$	893	$	—	$	—	$	893	$	43	$	13	$	—	$	56
International Equity		67		117		—		184		98		21		—		119
Fixed Income — Investment Grade(2)		194		197		—		391		—		88		—		88
Fixed Income — High Yield(3)		—		105		—		105		—		—		—		—
Real Estate Investment Trusts(4)		138		—		—		138		—		—		—		—
Other(5)		—		42		—		42		3		7		—		10
Total	$	1,292	$	461	$	—	$	1,753	$	144	$	129	$	—	$	273

⁽¹⁾  Equity securities consist of investments in common stock of U.S. and international companies. The fair value of equity securities is based on quoted market prices available in active markets at the close of a trading day, primarily the New York Stock Exchange (NYSE), National Association of Securities Dealers Automated Quotations (NASDAQ), and various international exchanges. The Level 2 investment balance is derived from a regulated commingled equity trust fund, which fair value is based on the net asset value (NAV) at the end of each month. The NAV is calculated by the fund manager based on the fair value of the fund’s holdings, primarily equity securities traded in active markets, determined as of the end of each month. Withdrawals are permitted monthly based on NAV.

⁽²⁾  Approximately 62% in 2013 and 50% in 2012 of U.S. plan assets that are invested in the Fixed Income — Investment Grade asset category consist of a mutual fund offered by a registered investment company (the “Fund”). The Fund invests in investment grade fixed income securities, mortgaged-backed securities, U.S. treasury and agency bonds and corporate bonds. This Fund is classified by the Company as a Level 1 measurement within the fair value hierarchy, as the mutual fund trades on an active market and daily, quoted prices are available. The remaining 38% of U.S. plan assets in 2013 are primarily investment grade corporate bonds from various industries held directly by the Company. The fair values of these investments are based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs. The remaining 50% of U.S. plan assets in 2012 and all of the Canadian plan assets for both 2013 and 2012 are invested in regulated commingled equity trust funds (the “Bond Funds”). As these Bond Funds do not trade in an active market, the fair value is based on NAVs calculated by fund managers based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs and classified as Level 2. Withdrawals are permitted monthly based on NAV.

⁽³⁾  Fixed Income — High Yield consists of investments in corporate high-yield bonds from various industries. The fair values of these investments are based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs.

⁽⁴⁾  Real Estate Investment Trusts (REITs) consist of securities that trade on the major exchanges and invest directly in real estate, either through properties or mortgages.

⁽⁵⁾  Other consists primarily of (1) cash equivalents maintained in commingled trust funds, which invest primarily in short term, high quality money market securities such as government obligations, commercial paper, time deposits and certificates of deposit, and are classified as Level 2, and (2) cash, which is classified as Level 1.

The table below presents the fair value of the Company’s postretirement benefit plans’ assets at December 31, 2013 and 2012, by asset category segregated by level within the fair value hierarchy, as described below.

	Postretirement Benefit Plans’ Assets
	Fair Value Measured at December 31, 2013								Fair Value Measured at December 31, 2012
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Equity securities(1):
U.S. Equity	$	23	$	—	$	—	$	23	$	27	$	—	$	—	$	27
International Equity		1		2		—		3		1		1		—		2
Fixed Income — Investment Grade(2)		21		2		—		23		11		3		—		14
Fixed Income — High Yield(3)		—		2		—		2		—		1		—		1
Real Estate Investment Trusts(4)		2		—		—		2		2		—		—		2
Other(5)		—		2		—		2		—		1		—		1
Total	$	47	$	8	$	—	$	55	$	41	$	6	$	—	$	47

⁽¹⁾  Equity securities consist of investments in common stock of U.S. and international companies. The fair value of equity securities is based on quoted market prices available in active markets at the close of a trading day, primarily the NYSE, NASDAQ, and various international exchanges. The Level 2 investment balance is derived from a regulated commingled equity trust fund, which fair value is based on NAV at the end of each month. The NAV is calculated by the fund manager based on the fair value of the fund’s holdings, primarily equity securities traded in active markets, determined as of the end of each month. Withdrawals are permitted monthly based on NAV.

⁽²⁾  Approximately 91% in 2013 and 79% in 2012 of the postretirement benefit plan assets that are invested in the Fixed Income — Investment Grade asset category consist of a mutual fund offered by the Fund. The Fund invests in investment grade fixed income securities, mortgaged-backed securities, U.S. treasury and agency bonds and corporate bonds. This Fund is classified by the Company as a Level 1 measurement within the fair value hierarchy as the mutual fund trades on an active market and daily, quoted prices are available. The remaining 9% of postretirement benefit plan assets in 2013 are primarily investment grade corporate bonds from various industries held directly by the Company. The fair values of these investments are based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs. The remaining 21% in 2012 of the postretirement benefit plan assets are invested in the Bond Fund. As the Bond Fund does not trade in an active market, the fair value is based on NAV’s calculated by the fund manager based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs and classified as Level 2. Withdrawals are permitted monthly based on NAV.

⁽³⁾  Fixed Income — High Yield consists of investments in corporate high-yield bonds from various industries. The fair values of these investments are based on yields currently available on comparable bonds of issuers with similar credit ratings, quoted prices of similar bonds in an active market, or cash flows based on observable inputs.

⁽⁴⁾  REITs consist of securities that trade on the major exchanges and invest directly in real estate, either through properties or mortgages.

⁽⁵⁾  Other consists primarily of cash equivalents maintained in commingled trust funds, which invest primarily in short term, high quality money market securities such as government obligations, commercial paper, time deposits and certificates of deposit, and are classified as Level 2.

Contributions. The funding policy for the Company’s pension and postretirement benefit plans is to contribute at least the minimum required by applicable laws and regulations or to directly make benefit payments where appropriate. The Company makes voluntary, additional contributions to the pension plans depending on a number of factors, including operating cash flow levels, alternative uses for excess cash and the plans’ funded status. At December 31, 2013, all legal funding requirements had been met. For the year ending December 31, 2014, the Company currently expects to contribute between approximately $97 million and $108 million to its pension plans, and approximately $10 million to its postretirement benefit plans.

Estimated Future Benefit Payments. The following table presents expected pension and postretirement benefit payments and expected postretirement subsidies due to the Medicare Prescription Drug Improvement and Modernization Act of 2003, which reflect expected future service, as appropriate.

	Pension Benefits		Postretirement Benefits
			Benefit Payments		Subsidy Receipts
	(in millions)
2014	$	116		13		—
2015		125		13		—
2016		134		14		—
2017		146		14		—
2018		152		15		—
Years 2019-2023		925		77		1

Employee Savings Plans. Under its various employee savings plans, the Company matches the contributions of participating employees up to a designated level. The extent of the match, vesting terms and the form of the matching contributions vary among the plans. Under these plans, the Company’s matching contributions in L-3 Holdings’ common stock and cash attributable to continuing operations were $120 million for 2013, $126 million for 2012 and $113 million for 2011. The Company’s matching contributions in L-3 Holdings’ common stock and cash attributable to discontinued operations were $8 million for 2012 and $24 million for 2011.

Multi-employer Benefit Plans. Certain of the Company’s businesses participate in multi-employer defined benefit pension plans. The Company makes cash contributions to these plans under the terms of collective-bargaining agreements that cover its union employees based on a fixed rate per hour of service worked by the covered employees. The risks of participating in these multi-employer plans are different from single-employer plans in the following aspects: (1) assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers, (2) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers and (3) if the Company chooses to stop participating in some of its multi-employer plans, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

Under these plans, the Company contributed cash and recorded expenses for each of its individually significant plans and all of its other plans in aggregate as noted in the table below.

Pension Fund	EIN/Pension Plan Number		Pension Protection Act Zone Status(1)				FIP/RP(2) Status Pending/ Implemented	Contributions by L-3 Communications						Surcharge Imposed		Expiration     Date of Collective- Bargaining Agreement
			2013		2012			2013		2012		2011
								(in millions)
IAM National Pension Fund		51-6031295/002		Green		Green	No	$	21(3)	$	20(4)	$	19(4)		No	2/14/2014 to  1/29/2016(5)
Other Pension Funds(6)									—		—		—
						Total contributions		$	21	$	20	$	19

⁽¹⁾  A zone status rating of green indicates the plan is at least 80% funded. The funding status of the IAM National Pension Fund was impacted by a market value investment loss for the plan year ended December 31, 2008, which amortization was extended over five years.

⁽²⁾  Funding improvement plan or rehabilitation plan.

⁽³⁾  At the date the audited financial statements for the Company were issued, Form 5500 for the plan year ending December 31, 2013 was not available.

⁽⁴⁾  Represents 6% of total plan contributions for both years ended December 31, 2012 and 2011 based on Form 5500.

⁽⁵⁾  The Company is a party to multiple bargaining agreements for multiple projects that require contributions into the IAM National Pension Fund. The most significant of these agreements, expiring April 27, 2014, cover multiple programs in the Company’s Aerospace Systems reportable segment and represent 72% of 2013 contributions.

⁽⁶⁾  Consists of three pension funds in which the Company’s contributions are individually, and in the aggregate, insignificant.

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Supplemental Cash Flow Information

12 Months Ended

Dec. 31, 2013

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

22. Supplemental Cash Flow Information

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Interest paid on outstanding debt	$	171	$	198	$	238
Income tax payments		245		332		273
Income tax refunds		23		22		18

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Consolidated Statements of Equity (Parenthetical) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Cash dividends paid on common stock, per share	$ 2.20	$ 2.00	$ 1.80
Retained Earnings [Member]
Cash dividends paid on common stock, per share	$ 2.20	$ 2.00	$ 1.80

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Segment Information

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Information

23. 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 and operating income. All corporate expenses are allocated to the Company’s operating segments using an allocation methodology prescribed by U.S. Government regulations for government contractors. Accordingly, all costs and expenses, except for the goodwill impairment charge in 2011 (which was not included in the Company’s segment performance measures), are included in the Company’s measure of segment profitability. Certain Corporate expenses of $10 million and $26 million for the years ended December 31, 2012 and 2011, respectively, that had previously been allocated to the Engility businesses were retained by the Company and were allocated to L-3’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,
	2013		2012		2011
	(in millions)
Net Sales
Products
Aerospace Systems	$	1,827	$	1,755	$	1,579
Electronic Systems		3,661		3,754		3,862
Communication Systems		1,755		2,083		2,042
NSS		71		98		153
Elimination of intercompany sales		(125)		(104)		(87)
Total products sales		7,189		7,586		7,549
Services
Aerospace Systems		2,730		2,844		2,857
Electronic Systems		1,054		1,011		928
Communication Systems		471		445		428
NSS		1,228		1,292		1,465
Elimination of intercompany sales		(50)		(71)		(73)
Total services sales		5,433		5,521		5,605
Consolidated total	$	12,622	$	13,107	$	13,154
Operating Income
Aerospace Systems	$	426	$	437	$	451
Electronic Systems		533		569		624
Communication Systems		168		223		265
NSS		85		79		101
Segment Total	$	1,212	$	1,308	$	1,441
Impairment charge(1)		—		—		(43)
Consolidated total	$	1,212	$	1,308	$	1,398
Depreciation and amortization
Aerospace Systems	$	38	$	46	$	44
Electronic Systems		117		121		124
Communication Systems		48		47		43
NSS		11		14		19
Consolidated total	$	214	$	228	$	230
Capital Expenditures
Aerospace Systems	$	54	$	42	$	42
Electronic Systems		71		77		79
Communication Systems		59		84		60
NSS		5		5		5
Corporate		20		2		1
Consolidated total	$	209	$	210	$	187
Total Assets
Aerospace Systems	$	3,087	$	3,074	$	3,125
Electronic Systems		6,928		6,792		6,607
Communication Systems		2,130		2,179		1,783
NSS		1,247		1,228		1,317
Corporate		596		527		959
Assets of discontinued operations		—		—		1,729
Consolidated total	$	13,988	$	13,800	$	15,520

⁽¹⁾  Represents a non-cash goodwill impairment charge recorded in the fourth quarter of 2011 due to a decline in the estimated fair value of a reporting unit within the Electronic Systems segment.

Corporate assets not allocated to the reportable segments primarily include cash and cash equivalents, corporate office fixed assets, deferred income tax assets and liabilities and deferred debt issue costs. In addition, substantially all of the Company’s assets are located in North America.

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,
	2013		2012		2011
	(in millions)
U.S.	$	9,808	$	10,658	$	11,067
International:
United Kingdom		449		360		310
Canada		357		314		328
Germany		272		263		243
Australia		218		222		118
South Korea		178		125		93
Saudi Arabia		132		76		41
Italy		107		116		98
Other		1,101		973		856
Total international		2,814		2,449		2,087
Consolidated	$	12,622	$	13,107	$	13,154

Net sales to principal customers are summarized in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
U.S. Government agencies(1)	$	9,186	$	9,986	$	10,438
Commercial		1,689		1,658		1,524
Allied international governments(1)		1,747		1,463		1,192
Consolidated	$	12,622	$	13,107	$	13,154

⁽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.

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Goodwill and Identifiable Intangible Assets - Amortization Expense (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 39	$ 47	$ 54

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Stock-Based Compensation - Stock-Based Compensation by Form of Award (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	$ 58	$ 64	$ 64
Income taxes	(22)	(24)	(24)
Total after income taxes	36	40	40
Less: Stock based compensation recorded in discontinued operations, net of income taxes		1	4
Stock based compensation recorded in continuing operations, net of income taxes	36	39	36
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	10	10	11
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	41	46	48
Performance Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation	$ 7	$ 8	$ 5

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Contracts in Process (Tables)

12 Months Ended

Dec. 31, 2013

Text Block [Abstract]

Components of Contracts in Process

The components of contracts in process are presented in the table below.

	December 31,
	2013		2012
	(in millions)
Unbilled contract receivables, gross	$	2,502	$	2,802
Unliquidated progress payments		(1,035)		(1,256)
Unbilled contract receivables, net		1,467		1,546
Inventoried contract costs, gross		1,044		1,091
Unliquidated progress payments		(80)		(127)
Inventoried contract costs, net		964		964
Total contracts in process	$	2,431	$	2,510

General and Administrative, Independent Research and Development and Bid and Proposal Costs

The table below presents a summary of G&A, IRAD and B&P costs included in inventoried contract costs and the changes to them, including amounts charged to cost of sales by the Company’s U.S. Government contractor businesses for the periods presented.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Amounts included in inventoried contract costs at beginning of the year	$	110	$	91	$	97
IRAD and B&P costs incurred		296		336		327
Other G&A costs incurred		893		891		843
Total contract costs incurred		1,189		1,227		1,170
Amounts charged to cost of sales		(1,161)		(1,208)		(1,176)
Amounts included in inventoried contract costs at end of the year	$	138	$	110	$	91

Selling, General and Administrative Expenses and Research and Development Expenses

The table below presents a summary of selling, general and administrative expenses and research and development expenses for the Company’s commercial businesses, which are expensed as incurred and included in cost of sales on the Consolidated Statements of Operations.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Selling, general and administrative expenses	$	293	$	306	$	300
Research and development expenses		74		88		73
Total	$	367	$	394	$	373

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Future Minimum Payments Under Non-Cancelable Operating Leases

The following table presents future minimum payments under non-cancelable operating leases with initial or remaining terms in excess of one year at December 31, 2013.

	Real Estate		Equipment		Total
			(in millions)
2014	$	145	$	9	$	154
2015		88		5		93
2016		72		3		75
2017		65		1		66
2018		53		1		54
Thereafter		110		—		110
Total minimum payments required		533		19		552
Less: Sublease rentals under non-cancelable leases		4		—		4
Net minimum payments required	$	529	$	19	$	548

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Acquisitions and Divestures - Schedule of Goodwill (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Goodwill [Line Items]
Goodwill	$ 7,796	$ 7,776	$ 7,472
2011 Business Acquisitions [Member]
Goodwill [Line Items]
Goodwill	19		19
Electronic Systems [Member]
Goodwill [Line Items]
Goodwill	4,085	4,046	3,750
Electronic Systems [Member] | 2011 Business Acquisitions [Member]
Goodwill [Line Items]
Goodwill	10
Communication Systems [Member]
Goodwill [Line Items]
Goodwill	992	992	992
Communication Systems [Member] | 2011 Business Acquisitions [Member]
Goodwill [Line Items]
Goodwill	$ 9

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Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 500	$ 349
Billed receivables, net of allowances of $26 in 2013 and $33 in 2012	991	968
Contracts in process	2,431	2,510
Inventories	359	358
Deferred income taxes	147	113
Other current assets	166	186
Total current assets	4,594	4,484
Property, plant and equipment, net	1,042	1,023
Goodwill	7,796	7,776
Identifiable intangible assets	285	314
Deferred debt issue costs	24	29
Other assets	247	174
Total assets	13,988	13,800
Current liabilities:
Accounts payable, trade	541	505
Accrued employment costs	545	555
Accrued expenses	458	469
Advance payments and billings in excess of costs incurred	576	621
Income taxes	31	21
Other current liabilities	383	392
Total current liabilities	2,534	2,563
Pension and postretirement benefits	727	1,360
Deferred income taxes	635	328
Other liabilities	406	393
Long-term debt	3,630	3,629
Total liabilities	7,932	8,273
Commitments and contingencies (see Note 20)
L-3 shareholders' equity:
L-3 Communications Holdings, Inc.'s common stock: $.01 par value; 300,000,000 shares authorized, 85,828,485 shares outstanding at December 31, 2013 and 90,433,743 shares outstanding at December 31, 2012 (L-3 Communications Corporation's common stock: $.01 par value, 100 shares authorized, issued and outstanding)	5,653	5,314
L-3 Communications Holdings, Inc.'s treasury stock (at cost), 66,118,406 shares at December 31, 2013 and 57,418,645 shares at December 31, 2012	(5,288)	(4,488)
Retained earnings	5,726	5,175
Accumulated other comprehensive loss	(110)	(550)
Total L-3 shareholders' equity	5,981	5,451
Noncontrolling interests	75	76
Total equity	6,056	5,527
Total liabilities and equity	$ 13,988	$ 13,800

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Debt (Tables)

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Components of Long-Term Debt and Reconciliation to Carrying Amount of Long-Term Debt

The components of long-term debt and a reconciliation to the carrying amount of long-term debt are presented in the table below.

	December 31,
	2013		2012
	(in millions)
L-3 Communications:
Borrowings under Amended and Restated Revolving Credit Facility(1)	$	—	$	—
3.95% Senior Notes due 2016		500		500
5.20% Senior Notes due 2019		1,000		1,000
4.75% Senior Notes due 2020		800		800
4.95% Senior Notes due 2021		650		650
Subtotal		2,950		2,950
L-3 Holdings:
3% Convertible Contingent Debt Securities due 2035		689		689
Principal amount of long-term debt		3,639		3,639
Unamortized discounts		(9)		(10)
Carrying amount of long-term debt	$	3,630	$	3,629

⁽¹⁾  During 2013, L-3 Communications’ aggregate borrowings and repayments under the Amended and Restated Revolving Credit Facility were $1,893 million. L-3 Communications had the availability of substantially all of its $1 billion Amended and Restated Revolving Credit Facility at December 31, 2013 and 2012.

Information Regarding Outstanding Senior Subordinated Note

The terms of each outstanding Senior Note are presented in the table below.

Note	Date of Issuance	Amount Issued		Discount(1)		Net Cash Proceeds		Effective Interest Rate		Redemption at Treasury Rate(2)(3)
		(in millions)
3.95% Senior Notes due November 15, 2016	November 22, 2011	$	500	$	4	$	491		4.11%		50 bps
5.20% Senior Notes due October 15, 2019	October 2, 2009	$	1,000	$	4	$	987		5.25%		30 bps
4.75% Senior Notes due July 15, 2020	May 21, 2010	$	800	$	3	$	790		4.79%		25 bps
4.95% Senior Notes due February 15, 2021	February 7, 2011	$	650	$	4	$	639		5.02%		25 bps

⁽¹⁾  Discounts are recorded as a reduction to the principal amount of the notes and are amortized as interest expense over the term of the notes.

⁽²⁾  The Senior Notes may be redeemed at any time prior to their maturity at the option of L-3 Communications, in whole or in part, at a redemption price equal to the greater of (1) 100% of the principal amount, or (2) the present value of the remaining principal and interest payments discounted to the date of redemption, on a semi-annual basis, at the Treasury Rate (as defined in the Senior Indentures), plus the spread indicated in the table above.

⁽³⁾  Upon the occurrence of a change in control (as defined in the Senior Indentures), each holder of the notes will have the right to require L-3 Communications to repurchase all or any part of such holder’s notes at an offer price in cash equal to 101% of the aggregate principal amount plus accrued and unpaid interest, if any, to the date of purchase.

Redemptions of Senior Subordinated Notes

Information on the Senior Subordinated Notes redeemed by the Company during the years ended December 31, 2012 and 2011 is presented in the table below.

Note	Redemption Date		Principal Amount Redeemed		Debt Retirement Charge		Redemption Price % of Principal
			(in millions)
6 3⁄8% Senior Subordinated Notes due October 15, 2015		October 15, 2012	$	250	$	5		101.063%
6 3⁄8% Senior Subordinated Notes due October 15, 2015(1)		July 26, 2012	$	250	$	8		102.125%
6 3⁄8% Senior Subordinated Notes due October 15, 2015		December 22, 2011	$	500	$	17		102.125%
5 7⁄8% Senior Subordinated Notes due January 15, 2015		March 9, 2011	$	650	$	18		101.958%

⁽¹⁾  In connection with the spin-off, Engility made a cash distribution of $335 million to L-3, a portion of which was used to redeem $250 million of the 6 ³⁄₈% 2015 Notes.

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Accumulated Other Comprehensive (Loss) Income - Summary of Amounts Reclassified from Accumulated Other Comprehensive (Loss) Income (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 27, 2013	Jun. 28, 2013	Mar. 29, 2013	Dec. 31, 2012	Sep. 28, 2012	Jun. 29, 2012	Mar. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance				$ (550)				$ (454)	$ (550)	$ (454)	$ (256)
Other comprehensive (loss) income before reclassifications, net of tax									388
Amounts reclassified from other comprehensive (loss) income, net of tax									52
Net current period other comprehensive (loss) income									440	(96)	(198)
Ending Balance	(110)				(550)				(110)	(550)	(454)
Cost of sales-products									6,409	6,782	6,666
Income from continuing operations before income taxes									1,055	1,122	1,162
Provision for income taxes									(295)	(360)	(296)
Income from continuing operations	188	204	176	192	199	188	189	186	760	762	866
Reclassification out of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Income from continuing operations									52
Foreign Currency Translation [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance				167				133	167	133	161
Other comprehensive (loss) income before reclassifications, net of tax									(25)
Amounts reclassified from other comprehensive (loss) income, net of tax
Net current period other comprehensive (loss) income									(25)	34	(28)
Ending Balance	142				167				142	167	133
Unrealized Gains (Losses) on Hedging Instruments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance				3					3		10
Other comprehensive (loss) income before reclassifications, net of tax									(1)
Amounts reclassified from other comprehensive (loss) income, net of tax									(1)
Net current period other comprehensive (loss) income									(2)	3	(10)
Ending Balance	1				3				1	3
Unrealized Gains (Losses) on Hedging Instruments [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Cost of sales-products									(1)
Income from continuing operations before income taxes									(1)
Provision for income taxes
Income from continuing operations									(1)
Unrecognized (Losses) Gains and Prior Service Cost, Net [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance				(720)				(587)	(720)	(587)	(427)
Other comprehensive (loss) income before reclassifications, net of tax									414
Amounts reclassified from other comprehensive (loss) income, net of tax									53
Net current period other comprehensive (loss) income									467	(133)	(160)
Ending Balance	(253)				(720)				(253)	(720)	(587)
Accumulated Defined Benefit Plans Adjustment [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Net loss									83
Income from continuing operations before income taxes									83
Provision for income taxes									(30)
Income from continuing operations									$ 53

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Pensions and Other Employee Benefits - Fair Value of the Company's Pension Plans' and Postretirement Benefit Plans' Assets (Parenthetical) (Detail)	Dec. 31, 2013	Dec. 31, 2012
U.S. Based Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of mutual fund in total investment in fixed income - investment grade securities	62.00%	50.00%
Percentage of pooled bond funds in total investment in fixed income - investment grade securities	38.00%	50.00%
Postretirement Benefit Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of mutual fund in total investment in fixed income - investment grade securities	91.00%	79.00%
Percentage of pooled bond funds in total investment in fixed income - investment grade securities	9.00%	21.00%
Canadian Based Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Percentage of mutual fund in total investment in fixed income - investment grade securities	50.00%	50.00%

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Stock-Based Compensation - Additional Information (Detail) (USD $)	12 Months Ended		1 Months Ended		12 Months Ended		12 Months Ended
	Dec. 31, 2013 Stock	Dec. 31, 2012	Jul. 31, 2013 2009 Employee Stock Purchase Plan [Member]	Jan. 31, 2013 2009 Employee Stock Purchase Plan [Member]	Dec. 31, 2013 2009 Employee Stock Purchase Plan [Member]	Dec. 31, 2013 2008 Directors Stock Incentive Plan [Member]	Dec. 31, 2013 2008 Long Term Performance Plan [Member]	Dec. 31, 2013 Stock Options [Member]	Dec. 31, 2012 Stock Options [Member]	Dec. 31, 2011 Stock Options [Member]	Dec. 31, 2013 Restricted Stock Units [Member] Age	Dec. 31, 2012 Restricted Stock Units [Member]	Dec. 31, 2011 Restricted Stock Units [Member]	Dec. 31, 2013 Performance Units [Member]	Dec. 31, 2012 Performance Units [Member]	Dec. 31, 2011 Performance Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares authorized for issuance under the amendment					4,600,000	6,500,000	19,200,000
Shares of L-3 Holdings common stock available to be awarded	3.69	2.60
Maximum number of shares of L-3 Holdings common stock may be issued pursuant to "full value" awards under the amendment							7,900,000
Engility spin-off adjustments, conversion ratio for the remaining stock options	1.043678
Expiration period of stock options granted from date of grant								10 years
Vesting period								3 years			3 years
Weighted average grant date fair value of stock options								$ 12.09	$ 11.32	$ 15.54
Intrinsic value of stock options exercised								$ 32,000,000	$ 7,000,000	$ 8,000,000
Unrecognized compensation costs related to equity awards after income taxes								10,000,000			30,000,000			4,000,000
Unrecognized compensation costs related to stock awards								6,000,000			48,000,000			6,000,000
Weighted average remaining period for recognition of unrecognized costs related to equity awards								1 year 1 month 6 days			1 year 2 months 12 days			1 year 4 months 24 days
Actual income tax benefit realized related to compensation deductions arising from the exercise of stock options								10,000,000	2,000,000	3,000,000
Vesting period of units granted for non-employee directors											1 year
Weighted average grant date fair value	$ 77.12										$ 77.12	$ 70.42	$ 80.17	$ 77.00	$ 70.43	$ 95.50
Length of service after grant date											1 year			3 years	3 years	3 years
Age of retirement eligible employees											65
Length of service for retirement eligible employees, minimum											At least five years
Fair value of restricted stock unit awards vested											37,000,000	44,000,000	35,000,000
Minimum payout range														0.00%
Maximum payout range														200.00%
Total performance units earned														93,251
Fair market value of total performance units earned as of their vesting date														10,000,000
Percentage of fair market value for offering period					95.00%
Term of plans					Eligible employees are offered options to purchase shares of L-3 Holdings' common stock at the end of each six-month offering period at 95% of fair market value based on the average of the highest and lowest sales prices for the stock on the purchase date.
Offering period to purchase shares					6 months
Share purchases funded through payroll deductions up to a maximum percentage					10.00%
Share purchases funded through payroll deductions up to a maximum value					$ 21,250
Issued shares under the ESPP, shares			200,000	200,000
Issued shares under the ESPP, per share			$ 81.71	$ 101.55
Employee discount on the purchase of common stock					5.00%

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Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Statement of Comprehensive Income [Abstract]
Income tax benefits on unrealized (losses) gains on hedging instruments	$ (3)	$ 2	$ (7)
Income tax effect on amortization of net loss and prior service cost previously recognized	30	26	18
Income tax benefits on net prior service (costs) credit arising during the period	(5)	2	(1)
Income tax benefits on net gain (loss) arising during the period	$ 243	$ (105)	$ (87)

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Debt - Redemptions of Senior Subordinated Notes (Parenthetical) (Detail) (L-3 Communications Corporation [Member], USD $) In Millions, unless otherwise specified	0 Months Ended
	Dec. 31, 2013	Jul. 26, 2012 6 3/8% Senior Subordinated Notes due October 15, 2015 [Member]	Jul. 26, 2012 6 3/8% Senior Subordinated Notes due October 15, 2015 [Member]	Dec. 31, 2013 5 7/8% Senior Subordinated Notes due January 15, 2015 [Member]
Debt Instrument [Line Items]
Net cash distribution in connection with spin-off	$ 335
Redemption of 6 3/8% Senior Subordinated Notes due 2015		$ 250
Interest rate on Senior Notes			6.375%	5.875%

XML

Pensions and Other Employee Benefits - Cash Contributions and Expenses under Multi-Employer Benefit Plans (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2013 Funds	Dec. 31, 2012	Dec. 31, 2011
Compensation and Retirement Disclosure [Abstract]
Minimum percentage funded to have green zone status rating	80.00%
Period of amortization of pension fund	5 years
Percentage of total plan contributions		6.00%	6.00%
Percentage of contributions from reportable segment	72.00%
Expiration date of multiple bargaining agreements	Apr. 27, 2014
Number of pension funds included in Other Pension Funds	3

XML

Segment Information - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013 Segment	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting [Abstract]
Number of segments	4
Corporate expenses		$ 10	$ 26

XML

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

12 Months Ended

Dec. 31, 2013

Text Block [Abstract]

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, 2013.

	L-3 Communications Common Stock				Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total
	Shares Issued		Par Value
			(in millions, except shares issued)
Balance at December 31, 2010		100	$	—	$	4,801	$	—	$	2,226	$	(256)	$	6,771
Net income attributable to L-3		—		—		—		—		958		—		958
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	$	—	$	2,034	$	(454)	$	6,644
Net income attributable to L-3		—		—		—		—		784		—		784
Contributions from L-3 Holdings		—		—		250		—		—		—		250
Dividends to L-3 Holdings		—		—		—		—		(1,064)		—		(1,064)
Comprehensive loss		—		—		—		—		—		(96)		(96)
Net change of equity due to spin-off of Engility		—		—		—		—		(1,063)		—		(1,063)
Other		—		—		—		—		(4)		—		(4)
Balance at December 31, 2012		100	$	—	$	5,314	$	—	$	687	$	(550)	$	5,451
Net income attributable to L-3		—		—		—		—		751		—		751
Contributions from L-3 Holdings		—		—		339		—		—		—		339
Dividends to L-3 Holdings		—		—		—		—		(997)		—		(997)
Comprehensive gain		—		—		—		—		—		440		440
Other		—		—		—		—		(3)		—		(3)
Balance at December 31, 2013		100	$	—	$	5,653	$	—	$	438	$	(110)	$	5,981

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, 2013:
Current assets:
Cash and cash equivalents	$	—	$	258	$	—	$	261	$	(19)	$	500
Billed receivables, net		—		364		401		226		—		991
Contracts in process		—		925		1,152		354		—		2,431
Other current assets		—		344		159		169		—		672
Total current assets		—		1,891		1,712		1,010		(19)		4,594
Goodwill		—		2,307		4,326		1,163		—		7,796
Other assets		—		838		532		228		—		1,598
Investment in and amounts due from consolidated subsidiaries		6,670		6,940		3,744		—		(17,354)		—
Total assets	$	6,670	$	11,976	$	10,314	$	2,401	$	(17,373)	$	13,988
Current liabilities	$	—	$	914	$	1,011	$	628	$	(19)	$	2,534
Amounts due to consolidated subsidiaries		—		—		—		270		(270)		—
Other long-term liabilities		—		1,451		193		124		—		1,768
Long-term debt		689		3,630		—		—		(689)		3,630
Total liabilities		689		5,995		1,204		1,022		(978)		7,932
L-3 shareholders’ equity		5,981		5,981		9,110		1,379		(16,470)		5,981
Noncontrolling interests		—		—		—		—		75		75
Total equity		5,981		5,981		9,110		1,379		(16,395)		6,056
Total liabilities and equity	$	6,670	$	11,976	$	10,314	$	2,401	$	(17,373)	$	13,988
At December 31, 2012:
Current assets:
Cash and cash equivalents	$	—	$	246	$	—	$	242	$	(139)	$	349
Billed receivables, net		—		290		441		237		—		968
Contracts in process		—		893		1,275		342		—		2,510
Other current assets		—		308		161		188		—		657
Total current assets		—		1,737		1,877		1,009		(139)		4,484
Goodwill		—		2,010		4,627		1,139		—		7,776
Other assets		—		757		572		211		—		1,540
Investment in and amounts due from consolidated subsidiaries		6,140		7,153		3,299		101		(16,693)		—
Total assets	$	6,140	$	11,657	$	10,375	$	2,460	$	(16,832)	$	13,800
Current liabilities	$	—	$	823	$	1,221	$	658	$	(139)	$	2,563
Other long-term liabilities		—		1,754		210		117		—		2,081
Long-term debt		689		3,629		—		—		(689)		3,629
Total liabilities		689		6,206		1,431		775		(828)		8,273
L-3 shareholders’ equity		5,451		5,451		8,944		1,685		(16,080)		5,451
Noncontrolling interests		—		—		—		—		76		76
Total equity		5,451		5,451		8,944		1,685		(16,004)		5,527
Total liabilities and equity	$	6,140	$	11,657	$	10,375	$	2,460	$	(16,832)	$	13,800

Condensed Combining Statements of Operations

Condensed Combining Statements of Operations:
For the year ended December 31, 2013:
Net sales	$	—	$	3,842	$	6,804	$	2,363	$	(387)	$	12,622
Cost of sales		(59)		(3,549)		(6,139)		(2,109)		446		(11,410)
Operating (loss) income		(59)		293		665		254		59		1,212
Interest expense		(21)		(176)		—		(1)		21		(177)
Interest and other income (expense), net		—		15		—		5		—		20
(Loss) income from continuing operations before income taxes		(80)		132		665		258		80		1,055
Benefit (provision) for income taxes		22		(38)		(184)		(73)		(22)		(295)
Equity in net income of consolidated subsidiaries		809		657		—		—		(1,466)		—
Net income		751		751		481		185		(1,408)		760
Net income attributable to noncontrolling interests		—		—		—		—		(9)		(9)
Net income attributable to L-3	$	751	$	751	$	481	$	185	$	(1,417)	$	751
Comprehensive income attributable to L-3	$	1,191	$	1,191	$	480	$	159	$	(1,830)	$	1,191
For the year ended December 31, 2012:
Net sales	$	—	$	3,737	$	7,475	$	2,278	$	(383)	$	13,107
Cost of sales		(59)		(3,434)		(6,749)		(1,999)		442		(11,799)
Operating (loss) income		(59)		303		726		279		59		1,308
Interest expense		(21)		(183)		—		(1)		21		(184)
Interest and other income (expense), net		—		14		(5)		2		—		11
Debt retirement charge		—		(13)		—		—		—		(13)
(Loss) income from continuing operations before income taxes		(80)		121		721		280		80		1,122
Benefit (provision) for income taxes		26		(37)		(230)		(93)		(26)		(360)
Equity in net income of consolidated subsidiaries		838		668		—		—		(1,506)		—
Income from continuing operations		784		752		491		187		(1,452)		762
Income from discontinued operations, net of income tax		—		32		—		—		—		32
Net income		784		784		491		187		(1,452)		794
Net income attributable to noncontrolling interests		—		—		—		—		(10)		(10)
Net income attributable to L-3	$	784	$	784	$	491	$	187	$	(1,462)	$	784
Comprehensive income attributable to L-3	$	688	$	688	$	493	$	215	$	(1,396)	$	688
For the year ended December 31, 2011:
Net sales	$	—	$	3,735	$	7,572	$	2,187	$	(340)	$	13,154
Cost of sales		(57)		(3,335)		(6,857)		(1,861)		397		(11,713)
Impairment charge		—		(43)		—		—		—		(43)
Operating (loss) income		(57)		357		715		326		57		1,398
Interest expense		(23)		(201)		(1)		(5)		26		(204)
Interest and other income (expense), net		—		17		(15)		4		(3)		3
Debt retirement charge		—		(35)		—		—		—		(35)
(Loss) income from continuing operations before income taxes		(80)		138		699		325		80		1,162
Benefit (provision) for income taxes		20		(35)		(178)		(83)		(20)		(296)
Equity in net income of consolidated subsidiaries		1,018		751		—		—		(1,769)		—
Income from continuing operations		958		854		521		242		(1,709)		866
Income from discontinued operations, net of income tax		—		104		—		—		—		104
Net income		958		958		521		242		(1,709)		970
Net income attributable to noncontrolling interests		—		—		—		—		(12)		(12)
Net income attributable to L-3	$	958	$	958	$	521	$	242	$	(1,721)	$	958
Comprehensive income attributable to L-3	$	760	$	760	$	511	$	221	$	(1,492)	$	760

Condensed Combining Statements of Cash Flows

	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, 2013:
Operating activities:
Net cash from operating activities	$	999	$	437	$	776	$	231	$	(1,180)	$	1,263
Investing activities:
Business acquisitions, net of cash acquired		—		(62)		—		—		—		(62)
Investments in L-3 Communications		(149)		—		—		—		149		—
Other investing activities		—		(88)		(89)		(22)		—		(199)
Net cash used in investing activities		(149)		(150)		(89)		(22)		149		(261)
Financing activities:
Common stock repurchased		(800)		—		—		—		—		(800)
Dividends paid on L-3 Holdings common stock		(199)		—		—		—		—		(199)
Dividends paid to L-3 Holdings		—		(999)		—		—		999		—
Investments from L-3 Holdings		—		149		—		—		(149)		—
Other financing activities		149		575		(687)		(188)		301		150
Net cash used in financing activities		(850)		(275)		(687)		(188)		1,151		(849)
Effect of foreign currency exchange rate changes on cash		—		—		—		(2)		—		(2)
Net (decrease) increase in cash		—		12		—		19		120		151
Cash and cash equivalents, beginning of the year		—		246		—		242		(139)		349
Cash and cash equivalents, end of the year	$	—	$	258	$	—	$	261	$	(19)	$	500
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

	L-3 Holdings (Parent)		L-3 Communications		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated L-3
	(in millions)
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

XML

Financial Instruments - Carrying Amounts and Estimated Fair Values of Company's Long-Term Debt and Foreign Currency Forward Contracts (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Senior Notes, Carrying Amount	$ 2,941	$ 2,940
CODES, Carrying Amount	689	689
Senior Notes, Estimated Fair Value	3,121	3,301
CODES, Estimated Fair Value	830	697
Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Foreign currency forward contracts	1	5
Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Foreign currency forward contracts	$ 1	$ 5

XML

Financial Information of L-3 Communications and Its Subsidiaries

12 Months Ended

Dec. 31, 2013

Text Block [Abstract]

Financial Information of L-3 Communications and Its Subsidiaries

26. 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, 2013.

	L-3 Communications Common Stock				Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total
	Shares Issued		Par Value
			(in millions, except shares issued)
Balance at December 31, 2010		100	$	—	$	4,801	$	—	$	2,226	$	(256)	$	6,771
Net income attributable to L-3		—		—		—		—		958		—		958
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	$	—	$	2,034	$	(454)	$	6,644
Net income attributable to L-3		—		—		—		—		784		—		784
Contributions from L-3 Holdings		—		—		250		—		—		—		250
Dividends to L-3 Holdings		—		—		—		—		(1,064)		—		(1,064)
Comprehensive loss		—		—		—		—		—		(96)		(96)
Net change of equity due to spin-off of Engility		—		—		—		—		(1,063)		—		(1,063)
Other		—		—		—		—		(4)		—		(4)
Balance at December 31, 2012		100	$	—	$	5,314	$	—	$	687	$	(550)	$	5,451
Net income attributable to L-3		—		—		—		—		751		—		751
Contributions from L-3 Holdings		—		—		339		—		—		—		339
Dividends to L-3 Holdings		—		—		—		—		(997)		—		(997)
Comprehensive gain		—		—		—		—		—		440		440
Other		—		—		—		—		(3)		—		(3)
Balance at December 31, 2013		100	$	—	$	5,653	$	—	$	438	$	(110)	$	5,981

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 100% owned subsidiary of L-3 Holdings. The debt of L-3 Communications, including the Senior 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 the Guarantor Subsidiaries. See Note 11 for additional information. 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, the guarantees of the Senior 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”. Under the terms of the indenture governing the CODES, the guarantees of the CODES will be automatically and unconditionally released and discharged: (1) upon the release of guarantees of all other outstanding indebtedness of L-3 Holdings and its subsidiaries (other than a foreign subsidiary) or (2) upon the designation of such guarantor as an “excluded subsidiary.” In addition, the guarantees of the Senior Notes and the CODES will 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.

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. As discussed in Note 3, the Company is revising its previously issued financial statements. As part of that revision, the Company has revised the accompanying condensed combining financial statements contained herein. The adjustments related to the internal review of the Aerospace Systems segment, excluding certain adjustments related to the Platform Systems segment, were recorded as adjustments to the Guarantor Subsidiaries financial statement amounts. Adjustments from the internal review that related to a foreign subsidiary of the Platform Systems segment, with a cumulative operating impact through December 31, 2013 of $10 million, were recorded to the Non-Guarantor Subsidiaries financial statement amounts. The adjustments for the accounting related to a sales-type lease transaction for flight simulator systems within its Electronic Systems segment have been recorded as adjustments to the L-3 Communications financial statement amounts. The adjustments for the previously identified immaterial errors were recorded as adjustments to the Guarantor Subsidiaries financial statement amounts.

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, 2013:
Current assets:
Cash and cash equivalents	$	—	$	258	$	—	$	261	$	(19)	$	500
Billed receivables, net		—		364		401		226		—		991
Contracts in process		—		925		1,152		354		—		2,431
Other current assets		—		344		159		169		—		672
Total current assets		—		1,891		1,712		1,010		(19)		4,594
Goodwill		—		2,307		4,326		1,163		—		7,796
Other assets		—		838		532		228		—		1,598
Investment in and amounts due from consolidated subsidiaries		6,670		6,940		3,744		—		(17,354)		—
Total assets	$	6,670	$	11,976	$	10,314	$	2,401	$	(17,373)	$	13,988
Current liabilities	$	—	$	914	$	1,011	$	628	$	(19)	$	2,534
Amounts due to consolidated subsidiaries		—		—		—		270		(270)		—
Other long-term liabilities		—		1,451		193		124		—		1,768
Long-term debt		689		3,630		—		—		(689)		3,630
Total liabilities		689		5,995		1,204		1,022		(978)		7,932
L-3 shareholders’ equity		5,981		5,981		9,110		1,379		(16,470)		5,981
Noncontrolling interests		—		—		—		—		75		75
Total equity		5,981		5,981		9,110		1,379		(16,395)		6,056
Total liabilities and equity	$	6,670	$	11,976	$	10,314	$	2,401	$	(17,373)	$	13,988
At December 31, 2012:
Current assets:
Cash and cash equivalents	$	—	$	246	$	—	$	242	$	(139)	$	349
Billed receivables, net		—		290		441		237		—		968
Contracts in process		—		893		1,275		342		—		2,510
Other current assets		—		308		161		188		—		657
Total current assets		—		1,737		1,877		1,009		(139)		4,484
Goodwill		—		2,010		4,627		1,139		—		7,776
Other assets		—		757		572		211		—		1,540
Investment in and amounts due from consolidated subsidiaries		6,140		7,153		3,299		101		(16,693)		—
Total assets	$	6,140	$	11,657	$	10,375	$	2,460	$	(16,832)	$	13,800
Current liabilities	$	—	$	823	$	1,221	$	658	$	(139)	$	2,563
Other long-term liabilities		—		1,754		210		117		—		2,081
Long-term debt		689		3,629		—		—		(689)		3,629
Total liabilities		689		6,206		1,431		775		(828)		8,273
L-3 shareholders’ equity		5,451		5,451		8,944		1,685		(16,080)		5,451
Noncontrolling interests		—		—		—		—		76		76
Total equity		5,451		5,451		8,944		1,685		(16,004)		5,527
Total liabilities and equity	$	6,140	$	11,657	$	10,375	$	2,460	$	(16,832)	$	13,800
Condensed Combining Statements of Operations:
For the year ended December 31, 2013:
Net sales	$	—	$	3,842	$	6,804	$	2,363	$	(387)	$	12,622
Cost of sales		(59)		(3,549)		(6,139)		(2,109)		446		(11,410)
Operating (loss) income		(59)		293		665		254		59		1,212
Interest expense		(21)		(176)		—		(1)		21		(177)
Interest and other income (expense), net		—		15		—		5		—		20
(Loss) income from continuing operations before income taxes		(80)		132		665		258		80		1,055
Benefit (provision) for income taxes		22		(38)		(184)		(73)		(22)		(295)
Equity in net income of consolidated subsidiaries		809		657		—		—		(1,466)		—
Net income		751		751		481		185		(1,408)		760
Net income attributable to noncontrolling interests		—		—		—		—		(9)		(9)
Net income attributable to L-3	$	751	$	751	$	481	$	185	$	(1,417)	$	751
Comprehensive income attributable to L-3	$	1,191	$	1,191	$	480	$	159	$	(1,830)	$	1,191
For the year ended December 31, 2012:
Net sales	$	—	$	3,737	$	7,475	$	2,278	$	(383)	$	13,107
Cost of sales		(59)		(3,434)		(6,749)		(1,999)		442		(11,799)
Operating (loss) income		(59)		303		726		279		59		1,308
Interest expense		(21)		(183)		—		(1)		21		(184)
Interest and other income (expense), net		—		14		(5)		2		—		11
Debt retirement charge		—		(13)		—		—		—		(13)
(Loss) income from continuing operations before income taxes		(80)		121		721		280		80		1,122
Benefit (provision) for income taxes		26		(37)		(230)		(93)		(26)		(360)
Equity in net income of consolidated subsidiaries		838		668		—		—		(1,506)		—
Income from continuing operations		784		752		491		187		(1,452)		762
Income from discontinued operations, net of income tax		—		32		—		—		—		32
Net income		784		784		491		187		(1,452)		794
Net income attributable to noncontrolling interests		—		—		—		—		(10)		(10)
Net income attributable to L-3	$	784	$	784	$	491	$	187	$	(1,462)	$	784
Comprehensive income attributable to L-3	$	688	$	688	$	493	$	215	$	(1,396)	$	688
For the year ended December 31, 2011:
Net sales	$	—	$	3,735	$	7,572	$	2,187	$	(340)	$	13,154
Cost of sales		(57)		(3,335)		(6,857)		(1,861)		397		(11,713)
Impairment charge		—		(43)		—		—		—		(43)
Operating (loss) income		(57)		357		715		326		57		1,398
Interest expense		(23)		(201)		(1)		(5)		26		(204)
Interest and other income (expense), net		—		17		(15)		4		(3)		3
Debt retirement charge		—		(35)		—		—		—		(35)
(Loss) income from continuing operations before income taxes		(80)		138		699		325		80		1,162
Benefit (provision) for income taxes		20		(35)		(178)		(83)		(20)		(296)
Equity in net income of consolidated subsidiaries		1,018		751		—		—		(1,769)		—
Income from continuing operations		958		854		521		242		(1,709)		866
Income from discontinued operations, net of income tax		—		104		—		—		—		104
Net income		958		958		521		242		(1,709)		970
Net income attributable to noncontrolling interests		—		—		—		—		(12)		(12)
Net income attributable to L-3	$	958	$	958	$	521	$	242	$	(1,721)	$	958
Comprehensive income attributable to L-3	$	760	$	760	$	511	$	221	$	(1,492)	$	760

	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, 2013:
Operating activities:
Net cash from operating activities	$	999	$	437	$	776	$	231	$	(1,180)	$	1,263
Investing activities:
Business acquisitions, net of cash acquired		—		(62)		—		—		—		(62)
Investments in L-3 Communications		(149)		—		—		—		149		—
Other investing activities		—		(88)		(89)		(22)		—		(199)
Net cash used in investing activities		(149)		(150)		(89)		(22)		149		(261)
Financing activities:
Common stock repurchased		(800)		—		—		—		—		(800)
Dividends paid on L-3 Holdings common stock		(199)		—		—		—		—		(199)
Dividends paid to L-3 Holdings		—		(999)		—		—		999		—
Investments from L-3 Holdings		—		149		—		—		(149)		—
Other financing activities		149		575		(687)		(188)		301		150
Net cash used in financing activities		(850)		(275)		(687)		(188)		1,151		(849)
Effect of foreign currency exchange rate changes on cash		—		—		—		(2)		—		(2)
Net (decrease) increase in cash		—		12		—		19		120		151
Cash and cash equivalents, beginning of the year		—		246		—		242		(139)		349
Cash and cash equivalents, end of the year	$	—	$	258	$	—	$	261	$	(19)	$	500
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

	L-3 Holdings (Parent)		L-3 Communications		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations		Consolidated L-3
	(in millions)
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

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Financial Information of L-3 Communications and Its Subsidiaries - Condensed Combining Statements of Equity (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended							12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Common Stock [Member]	Dec. 31, 2012 Common Stock [Member]	Dec. 31, 2011 Common Stock [Member]	Dec. 31, 2010 Common Stock [Member]	Dec. 31, 2013 Retained Earnings [Member]	Dec. 31, 2012 Retained Earnings [Member]	Dec. 31, 2011 Retained Earnings [Member]	Dec. 31, 2013 L-3 Communications Corporation [Member]	Dec. 31, 2012 L-3 Communications Corporation [Member]	Dec. 31, 2011 L-3 Communications Corporation [Member]	Dec. 31, 2013 L-3 Communications Corporation [Member] Common Stock [Member]	Dec. 31, 2012 L-3 Communications Corporation [Member] Common Stock [Member]	Dec. 31, 2011 L-3 Communications Corporation [Member] Common Stock [Member]	Dec. 31, 2013 L-3 Communications Corporation [Member] Additional Paid-in Capital [Member]	Dec. 31, 2012 L-3 Communications Corporation [Member] Additional Paid-in Capital [Member]	Dec. 31, 2011 L-3 Communications Corporation [Member] Additional Paid-in Capital [Member]	Dec. 31, 2013 L-3 Communications Corporation [Member] Treasury Stock [Member]	Dec. 31, 2012 L-3 Communications Corporation [Member] Treasury Stock [Member]	Dec. 31, 2011 L-3 Communications Corporation [Member] Treasury Stock [Member]	Dec. 31, 2013 L-3 Communications Corporation [Member] Retained Earnings [Member]	Dec. 31, 2012 L-3 Communications Corporation [Member] Retained Earnings [Member]	Dec. 31, 2011 L-3 Communications Corporation [Member] Retained Earnings [Member]	Dec. 31, 2013 L-3 Communications Corporation [Member] Accumulated Other Comprehensive Loss [Member]	Dec. 31, 2012 L-3 Communications Corporation [Member] Accumulated Other Comprehensive Loss [Member]	Dec. 31, 2011 L-3 Communications Corporation [Member] Accumulated Other Comprehensive Loss [Member]
Condensed Financial Statements, Captions [Line Items]
Beginning Balance											$ 5,451	$ 6,644	$ 6,771				$ 5,314	$ 5,064	$ 4,801				$ 687	$ 2,034	$ 2,226	$ (550)	$ (454)	$ (256)
Beginning Balance, Shares				85.8	90.4	99.0	108.6							100.0	100.0	100.0
Net income attributable to L-3	760	794	970					751	784	958	751	784	958										751	784	958
Contributions from L-3 Holdings											339	250	263				339	250	263
Dividends to L-3 Holdings											(997)	(1,064)	(1,157)										(997)	(1,064)	(1,157)
Comprehensive gain (loss)	440	(96)	(198)								440	(96)	(198)													440	(96)	(198)
Net change of equity due to spin-off of Engility												(1,063)												(1,063)
Other											(3)	(4)	7										(3)	(4)	7
Ending Balance											$ 5,981	$ 5,451	$ 6,644				$ 5,653	$ 5,314	$ 5,064				$ 438	$ 687	$ 2,034	$ (110)	$ (550)	$ (454)
Ending Balance, Shares				85.8	90.4	99.0	108.6							100.0	100.0	100.0

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Pensions and Other Employee Benefits - Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
U.S. Based Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Assumptions used to determine net periodic benefit cost, Weighted average discount rate	4.20%	5.10%	5.60%
Assumptions used to determine net periodic benefit cost, Weighted average expected long-term return on plan assets	8.25%	8.25%	8.25%
Assumptions used to determine net periodic benefit cost, Rate of compensation increase	3.50%	4.00%	4.50%
Canadian Based Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Assumptions used to determine net periodic benefit cost, Weighted average discount rate	3.70%	4.30%	5.40%
Assumptions used to determine net periodic benefit cost, Weighted average expected long-term return on plan assets	7.25%	7.50%	7.50%
Assumptions used to determine net periodic benefit cost, Rate of compensation increase	3.50%	4.50%	4.50%
U.S. Based Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Assumptions used to determine net periodic benefit cost, Weighted average discount rate	3.30%	4.80%	5.40%
Canadian Based Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Assumptions used to determine net periodic benefit cost, Weighted average discount rate	3.90%	4.40%	5.40%
German Based Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Assumptions used to determine net periodic benefit cost, Weighted average discount rate	3.40%	5.10%	5.40%

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Revisions to Previously Issued Financial Statements - Schedule of Impact on Sales and Pre-tax Income (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	$ 12,622	$ 13,107	$ 13,154
Pre-tax income	1,055	1,122	1,162
Total Internal Review of Aerospace Systems Segment [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Pre-tax income	(60)	(25)	(5)
Out of Period Amounts [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	39	(36)	(3)
Restatement Adjustments [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	(7)	(38)	(4)
Pre-tax income	(41)	(40)	2
Restatement Adjustments [Member] | Army C-12 Contract [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	(25)	(3)	(1)
Pre-tax income	(35)	(16)	(3)
Restatement Adjustments [Member] | Other Logistics Support Contracts [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	(2)	(2)
Pre-tax income	(11)	(11)	(2)
Restatement Adjustments [Member] | Logistics Solutions [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	(27)	(5)	(1)
Pre-tax income	(46)	(27)	(5)
Restatement Adjustments [Member] | Platform Systems [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	(12)	3
Pre-tax income	(14)	2
Restatement Adjustments [Member] | Total Internal Review of Aerospace Systems Segment [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	(39)	(2)	(1)
Pre-tax income	(60)	(25)	(5)
Restatement Adjustments [Member] | Sales-Type Lease Transaction [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	(7)
Pre-tax income	5	3	3
Restatement Adjustments [Member] | Sales-Type Lease Transaction [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	(7)
Pre-tax income	5	3	3
Restatement Adjustments [Member] | Out of Period Amounts [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	39	(37)	(3)
Pre-tax income	14	(18)	4
Restatement Adjustments [Member] | Out of Period Amounts [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	39	(36)	(3)
Pre-tax income	14	(18)	4
Restatement Adjustments [Member] | Prior to 2011 [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	(1)
Pre-tax income	13
Restatement Adjustments [Member] | Prior to 2011 [Member] | Army C-12 Contract [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales
Pre-tax income
Restatement Adjustments [Member] | Prior to 2011 [Member] | Other Logistics Support Contracts [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	(1)
Pre-tax income	(4)
Restatement Adjustments [Member] | Prior to 2011 [Member] | Logistics Solutions [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	(1)
Pre-tax income	(4)
Restatement Adjustments [Member] | Prior to 2011 [Member] | Platform Systems [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales
Pre-tax income
Restatement Adjustments [Member] | Prior to 2011 [Member] | Total Internal Review of Aerospace Systems Segment [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales	(1)
Pre-tax income	(4)
Restatement Adjustments [Member] | Prior to 2011 [Member] | Sales-Type Lease Transaction [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales
Pre-tax income	17
Restatement Adjustments [Member] | Prior to 2011 [Member] | Out of Period Amounts [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales
Pre-tax income

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Equity

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

Equity

13. Equity

The $1.5 billion share repurchase program authorized on April 26, 2011 by L-3 Holdings’ Board of Directors expired on April 30, 2013. On February 5, 2013, L-3 Holdings’ Board of Directors approved a new share repurchase program that authorizes L-3 Holdings to repurchase up to an additional $1.5 billion of its common stock through June 30, 2015. Repurchases of L-3 Holdings’ common stock under the February 5, 2013 share repurchase program are made at management’s discretion in accordance with applicable U.S. Federal securities laws in the open market or otherwise. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company’s financial position, earnings, legal requirements, other investment opportunities (including acquisitions), market conditions and other factors. L-3 Holdings repurchased 8.7 million shares of its common stock at an average price of $91.95 per share for an aggregate amount of $800 million from January 1, 2013 through December 31, 2013. Approximately 2.1 million of the share repurchases, for an aggregate amount of $168 million, were repurchased pursuant to the April 26, 2011 share repurchase program. The remaining share repurchases were made pursuant to the share repurchase program authorized on February 5, 2013. All share repurchases of L-3 Holdings’ common stock have been recorded as treasury shares.

From January 1, 2014 through February 19, 2014, L-3 Holdings repurchased 928,040 shares of its common stock at an average price of $107.52 per share for an aggregate amount of approximately $100 million. The remaining dollar value of authorization under our February 5, 2013 share repurchase program at February 19, 2014 is $768 million.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation: The accompanying financial statements comprise the consolidated financial statements of L-3 Holdings and L-3 Communications. L-3 Holdings’ only asset is its investment in the common stock of L-3 Communications, its wholly-owned subsidiary, and its only obligations are: (1) the 3% Convertible Contingent Debt Securities (CODES) due 2035, which were issued by L-3 Holdings on July 29, 2005, (2) its guarantee of borrowings under the Amended and Restated Revolving Credit Facility of L-3 Communications and (3) its guarantee of other contractual obligations of L-3 Communications and its subsidiaries. L-3 Holdings’ obligations relating to the CODES have been jointly, severally, fully and unconditionally guaranteed by L-3 Communications and certain of its wholly-owned domestic subsidiaries. Accordingly, such debt has been reflected as debt of L-3 Communications in its consolidated financial statements in accordance with the accounting standards for pushdown accounting. All issuances of and conversions into L-3 Holdings’ equity securities, including grants of stock options, restricted stock, restricted stock units and performance units by L-3 Holdings to employees and directors of L-3 Communications and its subsidiaries, have been reflected in the consolidated financial statements of L-3 Communications. As a result, the consolidated financial positions, results of operations and cash flows of L-3 Holdings and L-3 Communications are substantially the same. See Note 26 for additional information regarding the audited financial information of L-3 Communications and its subsidiaries.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and costs of sales during the reporting period. The most significant of these estimates and assumptions relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, market values for inventories reported at lower of cost or market, pension and post-retirement benefit obligations, stock-based employee compensation expense, income taxes, including the valuations of deferred tax assets, litigation reserves and environmental obligations, accrued product warranty costs, and the recoverability, useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill. Changes in estimates are reflected in the periods during which they become known. Actual amounts will differ from these estimates and could differ materially.

The audited condensed consolidated balance sheet as of December 31, 2012 has been revised for the final purchase price allocation of the Link Simulation & Training U.K. Limited (Link U.K.) business acquisition. Link U.K is the commercial aircraft simulation business acquired from Thales Group effective August 6, 2012. During 2013, the Company completed the purchase price allocation, which was based on the final appraisals and valuations of the acquired assets and liabilities and estimated final closing date net working capital. The L-3 audited condensed consolidated balance sheet as of December 31, 2012 has been adjusted in accordance with the accounting standards for business combinations. See Note 5 for additional information regarding the final purchase price allocation for Link U.K. and resulting adjustments.

Certain other reclassifications have been made to conform prior-year amounts to the current-year presentation.

Principles of Consolidation

Principles of Consolidation: The consolidated financial statements of the Company include all wholly-owned and majority-owned subsidiaries. All significant intercompany transactions are eliminated in consolidation. Investments in equity securities, joint ventures and limited liability corporations over which the Company has significant influence but does not have voting control are accounted for using the equity method. Investments over which the Company does not have significant influence are accounted for using the cost method.

Revenue Recognition

Revenue Recognition: Substantially all of the Company’s sales are generated from written contractual (revenue) arrangements. The sales price for the Company’s revenue arrangements are either fixed-price, cost-plus or time-and-material type. Depending on the contractual scope of work, the Company utilizes either contract accounting standards or accounting standards for revenue arrangements with commercial customers to account for these contracts. Approximately 47% of the Company’s 2013 sales were accounted for under contract accounting standards, of which approximately 38% were fixed-price type contracts and approximately 9% were cost-plus type contracts. For contracts that are accounted for under contract accounting standards, sales and profits are recognized based on: (1) a Percentage-of-Completion (POC) method of accounting (fixed-price contracts), (2) allowable costs incurred plus the estimated profit on those costs (cost-plus contracts), or (3) direct labor hours expended multiplied by the contractual fixed rate per hour plus incurred costs for material (time-and-material contracts). Aggregate net changes in contract estimates increased operating income by $114 million, or 9%, for the year ended December 31, 2013, $72 million, or 6%, for the year ended December 31, 2012, and $73 million, or 5%, for the year ended December 31, 2011.

Sales and profits on fixed-price type contracts covered by contract accounting standards are substantially recognized using POC methods of accounting. Sales and profits on fixed-price production contracts under which units are produced and delivered in a continuous or sequential process are recorded as units are delivered based on their contractual selling prices (the “units-of-delivery” method). Sales and profits on each fixed-price production contract under which units are not produced and delivered in a continuous or sequential process, or under which a relatively few number of units are produced, are recorded based on the ratio of actual cumulative costs incurred to the total estimated costs at completion of the contract, multiplied by the total estimated contract revenue, less cumulative sales recognized in prior periods (the “cost-to-cost” method). Under both POC methods of accounting, a single estimated total profit margin is used to recognize profit for each contract over its entire period of performance, which can exceed one year. Losses on contracts are recognized in the period in which they become evident. The impact of revisions of contract estimates, which may result from contract modifications, performance or other reasons, are recognized on a cumulative catch-up basis in the period in which the revisions are made.

Sales and profits on cost-plus type contracts covered by contract accounting standards are recognized as allowable costs are incurred on the contract, at an amount equal to the allowable costs plus the estimated profit on those costs. The estimated profit on a cost-plus type contract is fixed or variable based on the contractual fee arrangement. Incentive and award fees are the primary variable fee contractual arrangements. Incentive and award fees on cost-plus type contracts are included as an element of total estimated contract revenues and are recorded as sales when a basis exists for the reasonable prediction of performance in relation to established contractual targets and the Company is able to make reasonably dependable estimates for them.

Sales and profits on time-and-material type contracts are recognized on the basis of direct labor hours expended multiplied by the contractual fixed rate per hour, plus the actual costs of materials and other direct non-labor costs.

Sales on arrangements for (1) fixed-price type contracts that require us to perform services that are not related to the production of tangible assets (Fixed-Price Service Contracts) and (2) certain commercial customers are recognized in accordance with accounting standards for revenue arrangements with commercial customers. Sales for the Company’s businesses whose customers are primarily commercial business enterprises are substantially all generated from single element revenue arrangements. Sales are recognized when there is persuasive evidence of an arrangement, delivery has occurred or services have been performed, the selling price to the buyer is fixed or determinable and collectability is reasonably assured. Sales for Fixed-Price Service Contracts that do not contain measurable units of work performed are generally recognized on a straight-line basis over the contractual service period, unless evidence suggests that the revenue is earned, or obligations fulfilled, in a different manner. Sales for Fixed-Price Service Contracts that contain measurable units of work performed are generally recognized when the units of work are completed. Sales and profit on cost-plus and time-and-material type contracts to perform services are recognized in the same manner as those within the scope of contract accounting standards, except for incentive and award fees. Cost-based incentive fees are recognized when they are realizable in the amount that would be due under the contractual termination provisions as if the contract was terminated. Performance based incentive fees and award fees are recorded as sales when awarded by the customer.

For contracts with multiple deliverables, the Company applies the separation and allocation guidance under the accounting standard for revenue arrangements with multiple deliverables, unless all the deliverables are covered by contract accounting standards, in which case the Company applies the separation and allocation guidance under contract accounting standards. Revenue arrangements with multiple deliverables are evaluated to determine if the deliverables should be separated into more than one unit of accounting. The Company recognizes revenue for each unit of accounting based on the revenue recognition policies discussed above.

Sales and profit in connection with contracts to provide services to the U.S. Government that contain collection risk because the contracts are incrementally funded and subject to the availability of funds appropriated, are deferred until a contract modification is obtained, indicating that adequate funds are available to the contract or task order.

Research and Development

Research and Development: Independent research and development (IRAD) costs sponsored by the Company and bid and proposal (B&P) costs relate to both U.S. Government contracts and those for international and commercial customers. The IRAD and B&P costs for certain of the Company’s businesses that are U.S. Government contractors are recoverable indirect contract costs that are allocated to U.S. Government contracts in accordance with U.S. Government procurement regulations, and are specifically excluded from research and development accounting standards. The Company includes the recoverable IRAD and B&P costs allocated to U.S. Government contracts in inventoried contract costs, and charges them to costs of sales when the related contract sales are recognized as revenue. Research and development costs that are not recoverable on U.S. Government contracts are accounted for in accordance with research and development accounting standards and are expensed to cost of sales as incurred.

Customer-funded research and development costs are incurred pursuant to contracts (revenue arrangements) to perform research and development activities according to customer specifications. These costs are not accounted for as research and development expenses, and are also not indirect contract costs. Instead, these costs are direct contract costs and are expensed to cost of sales when the corresponding revenue is recognized, which is generally as the research and development services are performed. Customer-funded research and development costs are substantially all incurred under cost-plus type contracts with the U.S. Government.

Product Warranties

Product Warranties: Product warranty costs are accrued when revenue is recognized for the covered products. Product warranty expense is recognized based on the terms of the product warranty and the related estimated costs. Accrued warranty costs are reduced as product warranty costs are incurred.

The table below presents the changes in the Company’s accrued product warranty costs.

	Year Ended December 31,
	2013		2012
	(in millions)
Accrued product warranty costs(1):
Balance at January 1	$	99	$	94
Acquisitions during this period		2		7
Accruals for product warranties issued during the period		71		78
Changes to accruals for product warranties existing before January 1		3		(3)
Foreign currency translation adjustments		—		1
Settlements made during the period		(76)		(78)
Balance at December 31	$	99	$	99

⁽¹⁾  Warranty obligations incurred in connection with long-term production contracts that are accounted for under the POC cost-to-cost method are included within the contract estimates at completion and are excluded from the above amounts. The balances above include both the current and non-current amounts.

Deferred Debt Issue Costs

Deferred Debt Issue Costs: Costs to issue debt are capitalized and deferred when incurred, and subsequently amortized to interest expense over the term of the related debt using the effective interest rate method.

Stock-Based Compensation

Stock-Based Compensation: The Company follows the fair value based method of accounting for stock-based employee compensation, which requires the Company to expense all stock-based employee compensation. Stock-based employee compensation is primarily a non-cash expense because the Company settles these obligations by issuing shares of L-3 Holdings common stock instead of settling such obligations with cash payments, except for certain performance unit awards that are payable in cash.

Compensation expense for all restricted stock unit and stock option awards is recognized on a straight-line basis over the requisite service period for the entire award based on the grant date fair value. All of the stock options granted to employees by the Company are non-qualified stock options under U.S. income tax regulations. Compensation expense for performance units payable in L-3 Holdings common stock is based on the fair value of the units at the grant date (measurement date), adjusted each reporting period for progress towards the target award, and recognized on a straight line basis over the requisite service period. Compensation expense for performance units that are payable in cash is based on a binomial valuation technique (the Monte Carlo valuation model) adjusted for historical performance each reporting period and recognized on a straight-line basis over the requisite service period.

Income Taxes

Income Taxes: The Company provides for income taxes using the liability method. Deferred income tax assets and liabilities reflect tax carryforwards and the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes, as determined under enacted tax laws and rates. The effect of changes in tax laws or rates is accounted for in the period of enactment. Valuation allowances for deferred tax assets are provided when it is more likely than not that the assets will not be realized, considering, when appropriate, tax planning strategies.

Income tax accounting standards prescribe: (1) a minimum recognition threshold that an income tax benefit arising from an uncertain income tax position taken, or expected to be taken, on an income tax return is required to meet before being recognized in the financial statements and (2) the measurement of the income tax benefits recognized from such positions. The Company’s accounting policy is to classify uncertain income tax positions that are not expected to be resolved in one year as non-current income tax liabilities and to classify potential interest and penalties on uncertain income tax positions as elements of the provision for income taxes on its financial statements.

Cash and Cash Equivalents

Cash and Cash Equivalents: Cash equivalents consist of highly liquid investments with an original maturity of three months or less at the time of purchase.

Contracts in Process

Contracts in Process: Contracts in process include unbilled contract receivables and inventoried contract costs for which sales and profits are recognized primarily using a POC method of accounting. Unbilled Contract Receivables represent accumulated incurred costs and earned profits on contracts in process that have been recorded as sales, primarily using the cost-to-cost method, but have not been billed to customers. Inventoried Contract Costs primarily represent incurred costs on contracts using the units-of-delivery method of accounting and include direct costs and indirect costs, including overhead costs, and materials acquired for U.S. Government service contracts. As discussed in Note 6, the Company’s inventoried contract costs for U.S. Government contracts, and contracts with prime contractors or subcontractors of the U.S. Government include allocated general and administrative costs (G&A), IRAD costs and B&P costs. Contracts in Process contain amounts relating to contracts and programs with long performance cycles, a portion of which may not be realized within one year. For contracts in a loss position, the unrecoverable costs expected to be incurred in future periods are recorded in Estimated Costs in Excess of Estimated Contract Value to Complete Contracts in Process in a Loss Position, which is a component of Other Current Liabilities. Under the terms of certain revenue arrangements (contracts) with the U.S. Government, the Company is entitled to receive progress payments as costs are incurred or milestone payments as work is performed. The U.S. Government has a security interest in the Unbilled Contract Receivables and Inventoried Contract Costs to which progress payments have been applied, and such progress payments are reflected as a reduction of the related amounts. Milestone payments that have been received in excess of contract costs incurred and related estimated profits are reported on the Company’s balance sheet as Advance Payments and Billings in Excess of Costs Incurred.

The Company values its acquired contracts in process in connection with business acquisitions on the date of acquisition at contract value less the Company’s estimated costs to complete the contract and a reasonable profit allowance on the Company’s completion effort commensurate with the profit margin that the Company earns on similar contracts.

Inventories

Inventories: Inventories, other than Inventoried Contract Costs, are stated at cost (first-in, first-out or average cost), but not in excess of realizable value. A provision for excess or inactive inventory is recorded based upon an analysis that considers current inventory levels, historical usage patterns and future sales expectations.

Property, Plant and Equipment

Property, Plant and Equipment: Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed by applying principally the straight-line method to the estimated useful lives of the related assets. Useful lives range substantially from 10 to 40 years for buildings and improvements and three to 10 years for machinery, equipment, furniture and fixtures. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. When property or equipment is retired or otherwise disposed of, the net book value of the asset is removed from the Company’s balance sheet and the net gain or loss is included in the determination of operating income. Property, plant and equipment acquired as part of a business acquisition is valued at fair value.

Goodwill

Goodwill: The carrying value of goodwill and indefinite lived identifiable intangible assets are not amortized, but are tested for impairment annually as of November 30 and, additionally on an interim basis, whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The accounting standards for goodwill allow for the assessment of qualitative factors to determine whether it is more likely or not that the fair value of a reporting unit is less than its carrying amount. L-3 did not utilize a qualitative assessment approach for the November 30, 2013 goodwill impairment test, as we chose instead to complete the quantitative two-step testing process for each reporting unit. The first step in the process is to identify any potential impairment by comparing the carrying value of a reporting unit to its fair value. The Company determines the fair value of its reporting units using a discounted cash flows valuation approach. If a potential impairment is identified, the second step is to measure the impairment loss by comparing the implied fair value of goodwill with the carrying value of goodwill of the reporting unit. There were no impairment charges that resulted from the annual impairment assessment or change in circumstances during the years ended December 31, 2013 and 2012. The Company recorded a goodwill impairment charge of $43 million during the year ended December 31, 2011. See Note 8 for additional information on the goodwill impairment charge.

Identifiable Intangible Assets

Identifiable Intangible Assets: Identifiable intangible assets represent assets acquired as part of the Company’s business acquisitions and include customer contractual relationships, technology, favorable leasehold interests and trade names. The initial measurement of these intangible assets is based on their fair values. Identifiable intangible assets are: (1) tested for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable and (2) amortized over their estimated useful lives as the economic benefits are consumed. The Company reviews and updates its estimates of the duration of its customer contractual relationships. If such estimates indicate that the duration of the Company’s customer contractual relationships has decreased compared to the estimates made as of the date the Company acquired these intangible assets, then the Company accelerates the amortization period for its customer contractual relationships over their remaining useful economic life.

Derivative Financial Instruments

Derivative Financial Instruments: The Company’s derivative financial instruments include foreign currency forward contracts, which are entered into for risk management purposes, and an embedded derivative representing the contingent interest payment provision related to the CODES.

The Company’s U.S. and foreign businesses enter into contracts with customers, subcontractors or vendors that are denominated in currencies other than their functional currencies. To protect the functional currency equivalent cash flows associated with certain of these contracts, the Company enters into foreign currency forward contracts. The Company’s activities involving foreign currency forward contracts are designed to hedge the changes in the functional currency equivalent cash flows due to movements in foreign exchange rates compared to the functional currency. The foreign currencies hedged are primarily the Canadian dollar, the U.S. dollar, the Euro and the British pound. The Company manages exposure to counterparty non-performance credit risk by entering into foreign currency forward contracts only with major financial institutions that are expected to fully perform under the terms of such contracts. Foreign currency forward contracts are recorded in the Company’s balance sheets at fair value and are generally designated and accounted for as cash flow hedges in accordance with the accounting standards for derivative instruments and hedging activities. Gains and losses on designated foreign currency forward contracts that are highly effective in offsetting the corresponding change in the cash flows of the hedged transactions are recorded net of income taxes in accumulated other comprehensive income (loss) (accumulated OCI) and then recognized in income when the underlying hedged transaction affects income. Gains and losses on foreign currency forward contracts that do not meet hedge accounting criteria are recognized in income immediately.

The embedded derivative related to the issuance of the CODES is recorded at fair value with changes reflected in the Consolidated Statements of Operations.

Translation of Foreign Currency and Foreign Currency Transactions

Translation of Foreign Currency and Foreign Currency Transactions: Transactions in foreign currencies are translated into the local (functional) currency of the respective business at the approximate prevailing rate at the time of the transaction. Foreign exchange transaction gains and losses in the years ended December 31, 2013, 2012 and 2011 are not material to the Company’s results of operations. The operations of the Company’s foreign subsidiaries are translated from the local (functional) currencies into U.S. dollars using weighted average rates of exchange during each reporting period. The rates of exchange at each balance sheet date are used for translating the assets and liabilities of the Company’s foreign subsidiaries. Gains or losses resulting from these translation adjustments are included in the balance sheets as a component of accumulated other comprehensive income (loss).

Accounting Standards Issued and Not Yet Implemented

Accounting Standards Issued and Not Yet Implemented: In July 2013, the FASB issued amendments to an accounting standard which requires an unrecognized tax benefit or portion of an unrecognized tax benefit to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward except when certain conditions exist. The amendments are effective for the Company for fiscal years beginning after December 15, 2013, including that year’s interim periods. The adoption of this standard will not impact the Company’s financial position, results of operations or cash flows.

Comprehensive Income

Effective January 1, 2013, the Company adopted a new accounting standard issued by the Financial Accounting Standards Board (FASB), which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income (loss) (AOCI). This standard requires entities to disclose additional information about reclassification adjustments, including: (1) changes in AOCI balances by component and (2) significant items reclassified out of AOCI. The adoption of this standard resulted in additional disclosures of items reclassified out of AOCI and did not impact the Company’s financial position, results of operations or cash flows. See Note 12 for these additional disclosures.

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Fair Value Measurements - Company's Assets and Liabilities at Fair Value on Recurring Basis (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Level 1 [Member]
Assets
Cash equivalents	$ 299	$ 284
Derivatives (foreign currency forward contracts)
Total assets	299	284
Liabilities
Derivatives (foreign currency forward contracts)
Level 2 [Member]
Assets
Cash equivalents
Derivatives (foreign currency forward contracts)	6	8
Total assets	6	8
Liabilities
Derivatives (foreign currency forward contracts)	5	3
Level 3 [Member]
Assets
Cash equivalents
Derivatives (foreign currency forward contracts)
Total assets
Liabilities
Derivatives (foreign currency forward contracts)

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Pensions and Other Employee Benefits - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
Health care cost trend in 2014	8.00%
Health care cost trend in 2020 and thereafter	5.00%
Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Aggregate accumulated benefit obligation (ABO)	$ 2,657	$ 2,783
Pension Plans [Member] | Minimum [Member]
Defined Benefit Plan Disclosure [Line Items]
Expected contributions to plans in 2014	97
Pension Plans [Member] | Maximum [Member]
Defined Benefit Plan Disclosure [Line Items]
Expected contributions to plans in 2014	108
Postretirement Benefit Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Expected contributions to plans in 2014	10
Continuing Operations [Member]
Defined Benefit Plan Disclosure [Line Items]
Company's matching contributions in L-3 Holdings' common stock and cash	120	126	113
Discontinued Operations [Member]
Defined Benefit Plan Disclosure [Line Items]
Company's matching contributions in L-3 Holdings' common stock and cash		$ 8	$ 24

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Financial Instruments

12 Months Ended

Dec. 31, 2013

Investments, All Other Investments [Abstract]

Financial Instruments

15. Financial Instruments

At December 31, 2013 and 2012, the Company’s financial instruments consisted primarily of cash and cash equivalents, billed receivables, trade accounts payable, Senior Notes, CODES and foreign currency forward contracts. The carrying amounts of cash and cash equivalents, billed receivables and trade accounts payable are representative of their respective fair values because of the short-term maturities or expected settlement dates of these instruments. The carrying amounts and estimated fair values of the Company’s other financial instruments are presented in the table below.

	December 31, 2013				December 31, 2012
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(in millions)
Senior Notes(1)	$	2,941	$	3,121	$	2,940	$	3,301
CODES(1)	$	689	$	830	$	689	$	697
Foreign currency forward contracts(2)	$	1	$	1	$	5	$	5

⁽¹⁾  The Company measures the fair value of its Senior Notes and CODES using Level 2 inputs based primarily on current market yields for its existing debt traded in the secondary market.

⁽²⁾  The Company measures the fair values of foreign currency forward contracts based on forward exchange rates. See Note 16 for additional disclosures regarding the notional amounts and fair values of foreign currency forward contracts.

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Revisions to Previously Issued Financial Statements - Condensed Combining Statements of Operations (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 27, 2013	Jun. 28, 2013	Mar. 29, 2013	Dec. 31, 2012	Sep. 28, 2012	Jun. 29, 2012	Mar. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net sales:
Products									$ 7,189	$ 7,586	$ 7,549
Services									5,433	5,521	5,605
Total net sales									12,622	13,107	13,154
Cost of sales:
Products									(6,409)	(6,782)	(6,666)
Services									(5,001)	(5,017)	(5,047)
Total cost of sales									(11,410)	(11,799)	(11,713)
Impairment charge											(43)
Operating income	306	306	290	310	339	319	328	322	1,212	1,308	1,398
Interest expense									(177)	(184)	(204)
Interest and other income, net									20	11	3
Debt retirement charge										(13)	(35)
Income from continuing operations before income taxes									1,055	1,122	1,162
Provision for income taxes									(295)	(360)	(296)
Income from continuing operations	188	204	176	192	199	188	189	186	760	762	866
Income from discontinued operations, net of income tax										32	104
Net income									760	794	970
Net income attributable to noncontrolling interests									(9)	(10)	(12)
Net income attributable to L-3	185	200	175	191	196	185	203	200	751	784	958
Net income allocable to participating securities											(2)
Net income allocable to L-3 Holdings' common shareholders									751	784	956
Basic earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations					$ 2.11	$ 1.94	$ 1.93	$ 1.88	$ 8.40	$ 7.85	$ 8.19
Discontinued operations										$ 0.29	$ 0.97
Basic earnings per share	$ 2.10	$ 2.23	$ 1.95	$ 2.12	$ 2.11	$ 1.93	$ 2.09	$ 2.02	$ 8.40	$ 8.14	$ 9.16
Diluted earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations					$ 2.08	$ 1.91	$ 1.91	$ 1.86	$ 8.24	$ 7.74	$ 8.10
Discontinued operations										$ 0.29	$ 0.95
Diluted earnings per share	$ 2.04	$ 2.19	$ 1.92	$ 2.09	$ 2.08	$ 1.90	$ 2.06	$ 2.00	$ 8.24	$ 8.03	$ 9.05
Cash dividends paid per common share									$ 2.20	$ 2.00	$ 1.80
L-3 Holdings' weighted average common shares outstanding:
Basic									89.4	96.3	104.4
Diluted									91.1	97.6	105.6
Out of Period Amounts [Member]
Net sales:
Total net sales									39	(36)	(3)
Cost of sales:
Operating income									14	(18)	4
As Previously Reported [Member]
Net sales:
Products									7,192	7,535	7,552
Services									5,437	5,611	5,606
Total net sales									12,629	13,146	13,158
Cost of sales:
Products									(6,409)	(6,724)	(6,673)
Services									(4,962)	(5,071)	(5,043)
Total cost of sales									(11,371)	(11,795)	(11,716)
Impairment charge											(43)
Operating income									1,258	1,351	1,399
Interest expense									(177)	(184)	(204)
Interest and other income, net									15	8
Debt retirement charge										(13)	(35)
Income from continuing operations before income taxes									1,096	1,162	1,160
Provision for income taxes									(309)	(374)	(296)
Income from continuing operations									787	788	864
Income from discontinued operations, net of income tax										32	104
Net income									787	820	968
Net income attributable to noncontrolling interests									(9)	(10)	(12)
Net income attributable to L-3									778	810	956
Net income allocable to participating securities											(2)
Net income allocable to L-3 Holdings' common shareholders									778	810	954
Basic earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations									$ 8.70	$ 8.12	$ 8.17
Discontinued operations										$ 0.29	$ 0.97
Basic earnings per share									$ 8.70	$ 8.41	$ 9.14
Diluted earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations									$ 8.54	$ 8.01	$ 8.08
Discontinued operations										$ 0.29	$ 0.95
Diluted earnings per share									$ 8.54	$ 8.30	$ 9.03
Cash dividends paid per common share									$ 2.20	$ 2.00	$ 1.80
L-3 Holdings' weighted average common shares outstanding:
Basic									89.4	96.3	104.4
Diluted									91.1	97.6	105.6
Restatement Adjustments [Member]
Cost of sales:
Impairment charge
Income from continuing operations									(27)	(26)	2
Income from discontinued operations, net of income tax
Net income									(27)	(26)	2
Restatement Adjustments [Member] | Aerospace Systems Segment Internal Review [Member ]
Net sales:
Products									(11)	64
Services									(28)	(66)	(1)
Total net sales									(39)	(2)	(1)
Cost of sales:
Products									(3)	(57)
Services									(18)	34	(4)
Total cost of sales									(21)	(23)	(4)
Impairment charge
Operating income									(60)	(25)	(5)
Interest expense
Interest and other income, net
Debt retirement charge
Income from continuing operations before income taxes									(60)	(25)	(5)
Provision for income taxes									21	9	2
Income from continuing operations									(39)	(16)	(3)
Income from discontinued operations, net of income tax
Net income									(39)	(16)	(3)
Net income attributable to noncontrolling interests
Net income attributable to L-3									(39)	(16)	(3)
Net income allocable to participating securities
Net income allocable to L-3 Holdings' common shareholders									(39)	(16)	(3)
Basic earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations									$ (0.43)	$ (0.17)	$ (0.03)
Discontinued operations
Basic earnings per share									$ (0.43)	$ (0.17)	$ (0.03)
Diluted earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations									$ (0.43)	$ (0.17)	$ (0.03)
Discontinued operations
Diluted earnings per share									$ (0.43)	$ (0.17)	$ (0.03)
Cash dividends paid per common share
L-3 Holdings' weighted average common shares outstanding:
Basic
Diluted
Restatement Adjustments [Member] | Sales-Type Lease Transaction [Member]
Net sales:
Products									(7)
Services
Total net sales									(7)
Cost of sales:
Products									7
Services
Total cost of sales									7
Impairment charge
Operating income
Interest expense
Interest and other income, net									5	3	3
Debt retirement charge
Income from continuing operations before income taxes									5	3	3
Provision for income taxes									(2)	(1)	(1)
Income from continuing operations									3	2	2
Income from discontinued operations, net of income tax
Net income									3	2	2
Net income attributable to noncontrolling interests
Net income attributable to L-3									3	2	2
Net income allocable to participating securities
Net income allocable to L-3 Holdings' common shareholders									3	2	2
Basic earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations									$ 0.03	$ 0.02	$ 0.02
Discontinued operations
Basic earnings per share									$ 0.03	$ 0.02	$ 0.02
Diluted earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations									$ 0.03	$ 0.02	$ 0.02
Discontinued operations
Diluted earnings per share									$ 0.03	$ 0.02	$ 0.02
Cash dividends paid per common share
L-3 Holdings' weighted average common shares outstanding:
Basic
Diluted
Restatement Adjustments [Member] | Out of Period Amounts [Member]
Net sales:
Products									15	(13)	(3)
Services									24	(24)
Total net sales									39	(37)	(3)
Cost of sales:
Products									(4)	(1)	7
Services									(21)	20
Total cost of sales									(25)	19	7
Impairment charge
Operating income									14	(18)	4
Interest expense
Interest and other income, net
Debt retirement charge
Income from continuing operations before income taxes									14	(18)	4
Provision for income taxes									(5)	6	(1)
Income from continuing operations									9	(12)	3
Income from discontinued operations, net of income tax
Net income									9	(12)	3
Net income attributable to noncontrolling interests
Net income attributable to L-3									9	(12)	3
Net income allocable to participating securities
Net income allocable to L-3 Holdings' common shareholders									$ 9	$ (12)	$ 3
Basic earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations									$ 0.10	$ (0.12)	$ 0.03
Discontinued operations
Basic earnings per share									$ 0.10	$ (0.12)	$ 0.03
Diluted earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations									$ 0.10	$ (0.12)	$ 0.03
Discontinued operations
Diluted earnings per share									$ 0.10	$ (0.12)	$ 0.03
Cash dividends paid per common share
L-3 Holdings' weighted average common shares outstanding:
Basic
Diluted

XML

Income Taxes - Reconciliation of Statutory Federal Income Tax Rate to Effective Income Tax Rate on Continuing Operations (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Abstract]
Statutory federal income tax rate	35.00%	35.00%	35.00%
State and local income taxes, net of federal income tax benefit	2.10%	1.70%	2.30%
Foreign income taxes	(1.60%)	(2.00%)	(2.60%)
Manufacturing benefits	(1.90%)	(1.80%)	(1.50%)
Research and experimentation and other tax credits	(3.60%)	(0.50%)	(1.10%)
Resolution of tax contingencies	(1.00%)	(0.90%)	(7.70%)
Goodwill impairment			1.20%
Other, net	(1.00%)	0.60%	(0.10%)
Effective income tax rate on continuing operations	28.00%	32.10%	25.50%

XML

Consolidated Statements of Equity (USD $) In Millions, except Share data, unless otherwise specified	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Noncontrolling Interests [Member]
Beginning Balance at Dec. 31, 2010	$ 6,862	$ 1	$ 4,800	$ (2,658)	$ 4,884	$ (256)	$ 91
Beginning Balance, Shares at Dec. 31, 2010		108,600,000
Net income	970				958		12
Other comprehensive gain (loss)	(198)					(198)
Distributions to noncontrolling interests	(11)						(11)
Cash dividends paid on common stock	(188)				(188)
Shares issued:
Employee savings plans	137		137
Employee savings plans, Shares		2,100,000
Exercise of stock options	18		18
Exercise of stock options, Shares		400,000
Employee stock purchase plan	46		46
Employee stock purchase plan, Shares		900,000
Stock-based compensation expense	64		64
Treasury stock purchased	(958)			(958)
Treasury stock purchased, Shares		(13,300,000)
Other	(9)		(2)		(4)		(3)
Other, Shares		300,000
Ending Balance at Dec. 31, 2011	6,733	1	5,063	(3,616)	5,650	(454)	89
Ending Balance, Shares at Dec. 31, 2011		99,000,000
Net income	794				784		10
Other comprehensive gain (loss)	(96)					(96)
Distributions to noncontrolling interests	(10)						(10)
Cash dividends paid on common stock	(192)				(192)
Shares issued:
Employee savings plans	141		141
Employee savings plans, Shares		2,100,000
Exercise of stock options	19		19
Exercise of stock options, Shares		400,000
Employee stock purchase plan	39		39
Employee stock purchase plan, Shares		700,000
Stock-based compensation expense	60		60
Contribution received from the spin-off of Engility	335				335
Spin-off of Engility	(1,411)				(1,398)		(13)
Treasury stock purchased	(872)			(872)
Treasury stock purchased, Shares		(12,100,000)
Other	(13)		(9)		(4)
Other, Shares		300,000
Ending Balance at Dec. 31, 2012	5,527	1	5,313	(4,488)	5,175	(550)	76
Ending Balance, Shares at Dec. 31, 2012		90,400,000
Net income	760				751		9
Other comprehensive gain (loss)	440					440
Distributions to noncontrolling interests	(10)						(10)
Cash dividends paid on common stock	(197)				(197)
Shares issued:
Employee savings plans	121		121
Employee savings plans, Shares		1,500,000
Exercise of stock options	128		128
Exercise of stock options, Shares	1,770,400	1,800,000
Employee stock purchase plan	36		36
Employee stock purchase plan, Shares		500,000
Stock-based compensation expense	59		59
Treasury stock purchased	(800)			(800)
Treasury stock purchased, Shares		(8,700,000)
Other	(8)		(5)		(3)
Other, Shares		300,000
Ending Balance at Dec. 31, 2013	$ 6,056	$ 1	$ 5,652	$ (5,288)	$ 5,726	$ (110)	$ 75
Ending Balance, Shares at Dec. 31, 2013		85,800,000

XML

Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Allowances for billed receivables	$ 26	$ 33
Treasury stock (at cost), shares	66,118,406	57,418,645
L-3 Communications Holdings, Inc. [Member]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares outstanding	85,828,485	90,433,743
L-3 Communications Corporation [Member]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100	100
Common stock, shares issued	100	100
Common stock, shares outstanding	100	100

XML

Goodwill and Identifiable Intangible Assets

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Identifiable Intangible Assets

8. Goodwill and Identifiable Intangible Assets

Goodwill. In accordance with the accounting standards for business combinations, the Company records the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition (commonly referred to as the purchase price allocation). As part of the purchase price allocations for the Company’s business acquisitions, identifiable intangible assets are recognized as assets apart from goodwill if they arise from contractual or other legal rights, or if they are capable of being separated or divided from the acquired business and sold, transferred, licensed, rented or exchanged. However, the Company does not recognize any intangible assets apart from goodwill for the assembled workforces of its business acquisitions. At December 31, 2013, the Company had approximately 48,000 employees, and the substantial majority of the sales generated by the Company’s businesses are from the productive labor efforts of its employees, as compared to selling manufactured products or right-to-use technology.

Generally, the largest intangible assets from the businesses that the Company acquires are the assembled workforces, which includes the human capital of the management, administrative, marketing and business development, scientific, engineering and technical employees of the acquired businesses. The success of the Company’s businesses, including their ability to retain existing business (revenue arrangements) and to successfully compete for and win new business (revenue arrangements), is primarily dependent on the management, marketing and business development, contracting, engineering and technical skills and knowledge of its employees, rather than on productive capital (plant and equipment, and technology and intellectual property). Additionally, for a significant portion of its businesses, the Company’s ability to attract and retain employees who have U.S. Government security clearances, particularly those of top-secret and above, is critical to its success, and is often a prerequisite for retaining existing revenue arrangements and pursuing new ones. Generally, patents, trademarks and licenses are not material for the Company’s acquired businesses. Furthermore, the Company’s U.S. Government contracts (revenue arrangements) generally permit other companies to use the Company’s patents in most domestic work performed by such other companies for the U.S. Government. Therefore, because intangible assets for assembled workforces are part of goodwill in accordance with the accounting standards for business combinations, the substantial majority of the intangible assets for the Company’s business acquisitions is recognized as goodwill. Additionally, the value assigned to goodwill for the Company’s business acquisitions also includes the value that the Company expects to realize from cost reduction measures that it implements for its acquired businesses.

The table below presents the changes in goodwill allocated to the Company’s reporting units in each reportable segment.

	Aerospace Systems		Electronic Systems		Communication Systems		NSS		Consolidated Total
	(in millions)
Balance at December 31, 2011	$	1,764	$	3,750	$	992	$	966	$	7,472
Business acquisitions		—		278		—		—		278
Foreign currency translation(1)		6		18		—		2		26
Balance at December 31, 2012	$	1,770	$	4,046	$	992	$	968	$	7,776
Business acquisition		—		44		—		—		44
Business disposition		—		(2)		—		—		(2)
Foreign currency translation(1)		(19)		(3)		—		—		(22)
Balance at December 31, 2013	$	1,751	$	4,085	$	992	$	968	$	7,796

⁽¹⁾  The changes in goodwill from foreign currency translation adjustments are due to fluctuations in the U.S. dollar and foreign currency exchange rates. The decreases in goodwill presented in Electronic Systems and Aerospace Systems segments during 2013 were primarily due to the strengthening of the U.S. dollar against the Canadian dollar and Australian dollar, partially offset by the weakening of the U.S. dollar against the Euro and British pound. Conversely, the increases in goodwill presented in the Electronic Systems, Aerospace Systems and NSS segments during 2012 were due to the weakening of the U.S dollar against the Euro, Canadian dollar and the British pound.

The $44 million increase to goodwill for the year ended December 31, 2013 was due to the Mustang business acquisition. The $278 million increase to goodwill for the year ended December 31, 2012 was due to three business acquisitions completed during the year.

As discussed in Note 2, the carrying value of goodwill is tested for impairment annually as of November 30 and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, on an interim basis using a two step process.

The first step of the November 30, 2013 and November 30, 2012 annual impairment tests did not indicate any impairments. The November 30, 2011 annual impairment test did identify an impairment at the Marine Services business, which is now part of the Marine & Power Systems business included in the Electronic Systems segment. The Company performed the second step of the impairment test in accordance with the accounting standards for goodwill to measure the impairment loss and determined that the implied goodwill was $43 million lower than the carrying amount. Accordingly, the Company recorded a non-cash impairment charge of $43 million ($42 million after income taxes, or $0.40 per diluted share) for the impairment of goodwill. The Company’s accumulated goodwill impairment losses were $58 million at December 31, 2013 and 2012, of which $43 million and $15 million were recorded in the Electronic Systems and Communication Systems segments, respectively.

Identifiable Intangible Assets. The most significant identifiable intangible asset that is separately recognized for the Company’s business acquisitions is customer contractual relationships. All of the Company’s customer relationships are established through written customer contracts (revenue arrangements). The fair value for customer contractual relationships is determined, as of the date of acquisition, based on estimates and judgments regarding expectations for the estimated future after-tax earnings and cash flows (including cash flows for working capital) arising from the follow-on sales on contract (revenue arrangement) renewals expected from the customer contractual relationships over their estimated lives, including the probability of expected future contract renewals and sales, less a contributory assets charge, all of which is discounted to present value.

Information on the Company’s identifiable intangible assets that are subject to amortization is presented in the table below.

	December 31, 2013							December 31, 2012
	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in years)			(in millions)
Customer contractual relationships	19	$	466	$	253	$	213	$	460	$	225	$	235
Technology	11		168		108		60		164		98		66
Other	17		27		15		12		27		14		13
Total	17	$	661	$	376	$	285	$	651	$	337	$	314

Amortization expense recorded by the Company for its identifiable intangible assets is presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Amortization expense	$	39	$	47	$	54

Based on gross carrying amounts at December 31, 2013, the Company’s estimate of amortization expense for identifiable intangible assets for the years ending December 31, 2014 through 2018 is presented in the table below.

	Year Ending December 31,
	2014		2015		2016		2017		2018
	(in millions)
Estimated amortization expense	$	43	$	40	$	33	$	31	$	25

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L-3 Holdings' Earnings Per Share - Reconciliation of Basic and Diluted EPS (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 27, 2013	Jun. 28, 2013	Mar. 29, 2013	Dec. 31, 2012	Sep. 28, 2012	Jun. 29, 2012	Mar. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Reconciliation of net income:
Net income									$ 760	$ 794	$ 970
Net income from continuing operations attributable to noncontrolling interests									(9)	(6)	(9)
Net income from discontinued operations attributable to noncontrolling interests										(4)	(3)
Net income allocable to participating securities											(2)
Net income allocable to L-3 Holdings' common shareholders									751	784	956
Earnings allocable to L-3 Holdings' common shareholders:
Continuing operations									751	756	855
Discontinued operations, net of income tax										28	101
Net income allocable to L-3 Holdings' common shareholders									$ 751	$ 784	$ 956
Basic:
Weighted average common shares outstanding									89.4	96.3	104.4
Basic earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations					$ 2.11	$ 1.94	$ 1.93	$ 1.88	$ 8.40	$ 7.85	$ 8.19
Discontinued operations, net of income tax										$ 0.29	$ 0.97
Basic earnings per share	$ 2.10	$ 2.23	$ 1.95	$ 2.12	$ 2.11	$ 1.93	$ 2.09	$ 2.02	$ 8.40	$ 8.14	$ 9.16
Common and potential common shares:
Weighted average common shares outstanding									89.4	96.3	104.4
Assumed purchase of common shares for treasury									(4.5)	(3.0)	(2.9)
Assumed conversion of the CODES									0.2
Common and potential common shares									91.1	97.6	105.6
Diluted earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations					$ 2.08	$ 1.91	$ 1.91	$ 1.86	$ 8.24	$ 7.74	$ 8.10
Discontinued operations, net of income tax										$ 0.29	$ 0.95
Diluted earnings per share	$ 2.04	$ 2.19	$ 1.92	$ 2.09	$ 2.08	$ 1.90	$ 2.06	$ 2.00	$ 8.24	$ 8.03	$ 9.05
Stock Options [Member]
Common and potential common shares:
Common and potential common shares									3.9	1.9	2.0
Unvested Restricted Stock Awards [Member]
Common and potential common shares:
Common and potential common shares									1.8	2.0	1.8
Employee Stock Purchase Plan Contributions [Member]
Common and potential common shares:
Common and potential common shares									0.2	0.3	0.2
Performance Unit Awards [Member]
Common and potential common shares:
Common and potential common shares									0.1	0.1	0.1

XML

Debt - Redemptions of Senior Subordinated Notes (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Debt retirement charge		$ (13)	$ (35)
L-3 Communications Corporation [Member]
Debt Instrument [Line Items]
Debt retirement charge		(13)	(35)
Redemption Price % of Principal	101.00%
L-3 Communications Corporation [Member] | 6 3/8% Senior Subordinated Notes due October 15, 2015 [Member]
Debt Instrument [Line Items]
Redemption Date	Oct. 15, 2012
Principal Amount Redeemed	250
Debt retirement charge	5
Redemption Price % of Principal	101.063%
L-3 Communications Corporation [Member] | 6 3/8% Senior Subordinated Notes due October 15, 2015 [Member]
Debt Instrument [Line Items]
Redemption Date	Jul. 26, 2012
Principal Amount Redeemed	250
Debt retirement charge	8
Redemption Price % of Principal	102.125%
L-3 Communications Corporation [Member] | 6 3/8% Senior Subordinated Notes due October 15, 2015 [Member]
Debt Instrument [Line Items]
Redemption Date	Dec. 22, 2011
Principal Amount Redeemed	500
Debt retirement charge	17
Redemption Price % of Principal	102.125%
L-3 Communications Corporation [Member] | 5 7/8% Senior Subordinated Notes due January 15, 2015 [Member]
Debt Instrument [Line Items]
Redemption Date	Mar. 09, 2011
Principal Amount Redeemed	650
Debt retirement charge	$ 18
Redemption Price % of Principal	101.958%

XML

Debt - Information Regarding Outstanding Senior Subordinated Note (Detail) (L-3 Communications Corporation [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
3.95% Senior Notes due 2016 [Member]
Debt Instrument [Line Items]
Date of Issuance	Nov. 22, 2011
Amount Issued	$ 500
Discount	4
Net Cash Proceeds	491
Effective Interest Rate	4.11%
Redemption at Treasury Rate	0.50%
5.20% Senior Notes due 2019 [Member]
Debt Instrument [Line Items]
Date of Issuance	Oct. 02, 2009
Amount Issued	1,000
Discount	4
Net Cash Proceeds	987
Effective Interest Rate	5.25%
Redemption at Treasury Rate	0.30%
4.75% Senior Notes due 2020 [Member]
Debt Instrument [Line Items]
Date of Issuance	May 21, 2010
Amount Issued	800
Discount	3
Net Cash Proceeds	790
Effective Interest Rate	4.79%
Redemption at Treasury Rate	0.25%
4.95% Senior Notes due 2021 [Member]
Debt Instrument [Line Items]
Date of Issuance	Feb. 07, 2011
Amount Issued	650
Discount	4
Net Cash Proceeds	$ 639
Effective Interest Rate	5.02%
Redemption at Treasury Rate	0.25%

XML

Pensions and Other Employee Benefits - Net Loss and Prior Service Cost Balances in Accumulated Other Comprehensive Loss Account (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Net loss (gain)	$ 425	$ 1,146
Prior service cost (credit)	1	(12)
Total amount recognized	426	1,134
Postretirement Benefit Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Net loss (gain)	(9)	21
Prior service cost (credit)	(8)	(10)
Total amount recognized	$ (17)	$ 11

XML

Pensions and Other Employee Benefits - Effect of One Percentage Point Change in Assumed Health Care Cost Trend Rates (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]
Effect of one percentage point increase on total service and interest cost	$ 1
Effect of one percentage point decrease on total service and interest cost
Effect of one percentage point increase on postretirement benefit obligations	9
Effect of one percentage point decrease on postretirement benefit obligations	$ (7)

XML

Unaudited Quarterly Financial Data - Company's Unaudited Quarterly Results of Operations (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 27, 2013	Jun. 28, 2013	Mar. 29, 2013	Dec. 31, 2012	Sep. 28, 2012	Jun. 29, 2012	Mar. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Statement of Financial Position [Abstract]
Sales	$ 3,234	$ 3,002	$ 3,189	$ 3,197	$ 3,520	$ 3,284	$ 3,143	$ 3,160
Operating income	306	306	290	310	339	319	328	322	1,212	1,308	1,398
Income from continuing operations	188	204	176	192	199	188	189	186	760	762	866
Net income attributable to L-3	$ 185	$ 200	$ 175	$ 191	$ 196	$ 185	$ 203	$ 200	$ 751	$ 784	$ 958
Basic EPS from continuing operations					$ 2.11	$ 1.94	$ 1.93	$ 1.88	$ 8.40	$ 7.85	$ 8.19
Diluted EPS from continuing operations					$ 2.08	$ 1.91	$ 1.91	$ 1.86	$ 8.24	$ 7.74	$ 8.10
Basic EPS	$ 2.10	$ 2.23	$ 1.95	$ 2.12	$ 2.11	$ 1.93	$ 2.09	$ 2.02	$ 8.40	$ 8.14	$ 9.16
Diluted EPS	$ 2.04	$ 2.19	$ 1.92	$ 2.09	$ 2.08	$ 1.90	$ 2.06	$ 2.00	$ 8.24	$ 8.03	$ 9.05

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Commitments and Contingencies - Future Minimum Payments Under Non-Cancelable Operating Leases (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Operating Leased Assets [Line Items]
2014	$ 154
2015	93
2016	75
2017	66
2018	54
Thereafter	110
Total minimum payments required	552
Less: Sublease rentals under non-cancelable leases	4
Net minimum payments required	548
Real Estate Securities [Member]
Operating Leased Assets [Line Items]
2014	145
2015	88
2016	72
2017	65
2018	53
Thereafter	110
Total minimum payments required	533
Less: Sublease rentals under non-cancelable leases	4
Net minimum payments required	529
Equipment [Member]
Operating Leased Assets [Line Items]
2014	9
2015	5
2016	3
2017	1
2018	1
Thereafter
Total minimum payments required	19
Less: Sublease rentals under non-cancelable leases
Net minimum payments required	$ 19

XML

Document and Entity Information (USD $) In Billions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Feb. 19, 2014	Jun. 28, 2013
Document And Entity Information [Abstract]
Document Type	10-K/A
Amendment Flag	true
Amendment Description	We are filing this Amendment No. 1 (this “Amendment” or “Form 10-K/A”) to our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 following the completion of the internal review of our Aerospace Systems segment, which is discussed in our document.
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Trading Symbol	LLL
Entity Registrant Name	L 3 COMMUNICATIONS HOLDINGS INC
Entity Central Index Key	0001056239
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		85,847,821
Entity Public Float			$ 7.6

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Pensions and Other Employee Benefits - Weighted Average Assumptions Used to Determine Benefit Obligations (Detail)	Dec. 31, 2013	Dec. 31, 2012
Pension Plans [Member]
Benefit obligations:
Discount rate	5.03%	4.15%
Rate of compensation increase	3.50%	3.56%
Postretirement Benefit Plans [Member]
Benefit obligations:
Discount rate	4.43%	3.37%
Rate of compensation increase	3.50%	3.59%

XML

Other Current Liabilities and Other Liabilities

12 Months Ended

Dec. 31, 2013

Text Block [Abstract]

Other Current Liabilities and Other Liabilities

9. Other Current Liabilities and Other Liabilities

The table below presents the components of other current liabilities.

	December 31,
	2013		2012
	(in millions)
Other Current Liabilities:
Accruals for pending and threatened litigation (see Note 20)	$	6	$	7
Estimated costs in excess of estimated contract value to complete contracts in process in a loss position		78		96
Accrued product warranty costs		75		76
Accrued interest		52		53
Deferred revenues		35		35
Estimated contingent purchase price payable for acquired businesses		—		4
Other		137		121
Total other current liabilities	$	383	$	392

The table below presents the components of other liabilities.

	December 31,
	2013		2012
	(in millions)
Other Liabilities:
Non-current income taxes payable (see Note 18)	$	177	$	146
Accrued workers’ compensation		46		57
Deferred compensation		45		43
Accrued product warranty costs		24		23
Notes payable and capital lease obligations		15		24
Estimated contingent purchase price payable for acquired businesses		—		5
Other		99		95
Total other liabilities	$	406	$	393

XML

Goodwill and Identifiable Intangible Assets - Additional Information (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013 Business Employees	Dec. 31, 2012	Dec. 31, 2011
Goodwill [Line Items]
Approximate number of employees	48,000
Increase to goodwill	$ 44	$ 278
Number of business acquisition	3
Goodwill impairment charge			43
Goodwill impairment charge after income taxes	42
Non-cash impairment charge	43
Goodwill impairment charge per share	$ 0.40
Accumulated goodwill impairment losses	58	58
Communication Systems [Member]
Goodwill [Line Items]
Accumulated goodwill impairment losses	15	15
Electronic Systems [Member]
Goodwill [Line Items]
Accumulated goodwill impairment losses	$ 43	$ 43

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Debt - Additional Information (Detail) (USD $)	12 Months Ended					0 Months Ended		0 Months Ended		12 Months Ended								0 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Feb. 03, 2012	Dec. 31, 2011	Jul. 29, 2005	Feb. 03, 2012 Minimum [Member]	Feb. 03, 2012 Minimum [Member]	Feb. 03, 2012 Maximum [Member]	Feb. 03, 2012 Maximum [Member]	Dec. 31, 2013 L-3 Communications Holdings, Inc. [Member]	Dec. 31, 2012 L-3 Communications Holdings, Inc. [Member]	Dec. 31, 2011 L-3 Communications Holdings, Inc. [Member]	Jan. 31, 2011 L-3 Communications Holdings, Inc. [Member]	Dec. 31, 2013 CODES Due 2035 [Member]	Feb. 02, 2011 CODES Due 2035 [Member]	Dec. 31, 2013 CODES Due 2035 [Member] L-3 Communications Holdings, Inc. [Member]	Dec. 31, 2012 CODES Due 2035 [Member] L-3 Communications Holdings, Inc. [Member]	Feb. 03, 2012 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Total aggregate borrowings under revolving credit facility			$ 1,000,000,000
Revolving credit facility expiration date																		Feb. 03, 2017
Uncommitted incremental revolving facilities and additional term loan facilities			500,000,000
Base rate above the latest federal funds rate			0.50%
Base rate above a Eurodollar Rate			1.00%
Applicable spread on base rate option							0.25%		1.00%
Applicable spread on Eurodollar Rate option							1.25%		2.00%
Commitment fees calculated on the daily amounts of the available unused commitments						0.15%		0.325%
Letter of credit fees for performance and commercial letters of credit						0.675%		1.20%
Letter of credit fees for financial letters of credit						1.25%		2.00%
Sale of 3% Convertible Contingent Debt Securities by L-3 Holdings					700,000,000
Interest rate on Senior Notes														3.00%		3.00%	3.00%
Repurchases by the holders of the CODES															11,000,000
Cash redemption price in CODES										Equal to 100% of the principal amount
Remaining CODES that have been classified as long-term debt										689,000,000	689,000,000
Effective Interest Rate													6.33%
Interest expense recognized										21,000,000	21,000,000	23,000,000
Carrying amount of the equity component (conversion feature)	64,000,000	64,000,000
Conversion rate of CODES, shares										11.0813
Conversion price of L-3 Holding CODES	$ 90.24	$ 91.21		$ 96.48						$ 90.24
Settlement amount upon conversion of the CODES										1,000
Excess of current common stock price over common stock conversion price	120.00%									120.00%
Current convertible common stock price	$ 108.29															$ 108.29
Number of trading days for conversion, minimum										20 days
Number of consecutive trading-day period ending on the last trading day of the previous fiscal quarter										30 days
Maximum number of calendar days for purchase of common stock	45 days
Number of trading days preceding the declaration date for distribution	10 days
Percentage exceeding per share value of the closing price	10.00%
Percentage of average closing price	98.00%
Number of consecutive business-day period	5 days
Number of consecutive trading-day period	5 days
Number of trading days in the conversion period	20 days
Payment period of contingent interest	6 months
Number of trading days ending on the second trading day preceding the first day of the applicable six-month interest period	5 days
Percentage of average trading price of one thousand dollars in principal amount of CODES for contingent interest payable	0.25%
Changes in the fair value of the embedded derivative	0	0		0
Ownership percentage										100.00%
Maximum consolidated senior leverage ratio under revolving credit facility covenants	Less than or equal to 4.0 to 1.0
Minimum consolidated interest coverage ratio under revolving credit facility covenants	Greater than or equal to 3.0 to 1.0
Maximum consolidated interest coverage ratio under revolving credit facility covenants	Less than or equal to 3.5 to 1.0
Minimum aggregate amount of indebtedness, swap contracts or guarantees to trigger cross default provisions	50,000,000
Maximum days to cure defaults triggering cross default provisions	10 days
Minimum aggregate principal amount of senior subordinated notes accelerated to trigger cross default provisions	50,000,000
Minimum aggregate amount of senior notes accelerated to trigger cross default provisions	$ 100,000,000

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Consolidated Statements of Operations (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 27, 2013	Jun. 28, 2013	Mar. 29, 2013	Dec. 31, 2012	Sep. 28, 2012	Jun. 29, 2012	Mar. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net sales:
Products									$ 7,189	$ 7,586	$ 7,549
Services									5,433	5,521	5,605
Total net sales									12,622	13,107	13,154
Cost of sales:
Products									(6,409)	(6,782)	(6,666)
Services									(5,001)	(5,017)	(5,047)
Total cost of sales									(11,410)	(11,799)	(11,713)
Impairment charge											(43)
Operating income	306	306	290	310	339	319	328	322	1,212	1,308	1,398
Interest expense									(177)	(184)	(204)
Interest and other income, net									20	11	3
Debt retirement charge										(13)	(35)
Income from continuing operations before income taxes									1,055	1,122	1,162
Provision for income taxes									(295)	(360)	(296)
Income from continuing operations	188	204	176	192	199	188	189	186	760	762	866
Income from discontinued operations, net of income tax										32	104
Net income									760	794	970
Net income attributable to noncontrolling interests									(9)	(10)	(12)
Net income attributable to L-3	185	200	175	191	196	185	203	200	751	784	958
Net income allocable to participating securities											(2)
Net income allocable to L-3 Holdings' common shareholders									$ 751	$ 784	$ 956
Basic earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations					$ 2.11	$ 1.94	$ 1.93	$ 1.88	$ 8.40	$ 7.85	$ 8.19
Discontinued operations										$ 0.29	$ 0.97
Basic earnings per share	$ 2.10	$ 2.23	$ 1.95	$ 2.12	$ 2.11	$ 1.93	$ 2.09	$ 2.02	$ 8.40	$ 8.14	$ 9.16
Diluted earnings per share allocable to L-3 Holdings' common shareholders:
Continuing operations					$ 2.08	$ 1.91	$ 1.91	$ 1.86	$ 8.24	$ 7.74	$ 8.10
Discontinued operations										$ 0.29	$ 0.95
Diluted earnings per share	$ 2.04	$ 2.19	$ 1.92	$ 2.09	$ 2.08	$ 1.90	$ 2.06	$ 2.00	$ 8.24	$ 8.03	$ 9.05
Cash dividends paid per common share									$ 2.20	$ 2.00	$ 1.80
L-3 Holdings' weighted average common shares outstanding:
Basic									89.4	96.3	104.4
Diluted									91.1	97.6	105.6

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Revisions to Previously Issued Financial Statements

12 Months Ended

Dec. 31, 2013

Accounting Changes and Error Corrections [Abstract]

Revisions to Previously Issued Financial Statements

3. Revisions to Previously Issued Financial Statements

The Company is revising its previously issued financial statements to update for: (1) accounting adjustments due to the internal review at its Aerospace Systems segment, (2) accounting related to a sales-type lease transaction for flight simulator systems within its Electronic Systems segment, and (3) previously identified immaterial errors already recognized in its financial statements but not recorded in the appropriate periods. The accounting errors related to the sales-type lease transaction and immaterial out of period amounts are not related to the internal review at its Aerospace Systems segment.

Internal Review of Aerospace Systems Segment: The Company conducted an internal review related to instances of misconduct and accounting errors at its Aerospace Systems segment. This review was conducted with the assistance of outside legal and accounting advisors, and has been completed. As a result of the internal review, the Company identified and recorded aggregate pre-tax charges as follows: (1) $60 million for 2013, (2) $25 million for 2012, (3) $5 million for 2011, and (4) $4 million for periods prior to 2011.

The adjustments related to the internal review only affected the Logistics Solutions and Platform Systems sectors of the Aerospace Systems segment. The cumulative aggregate adjustments attributable to the Logistics Solutions sector are approximately $82 million, and at the Platform Systems sector are approximately $12 million through 2013. The Logistics Solutions sector adjustments relate to: (1) losses of $54 million through 2013 with respect to the U.S. Army C-12 fixed-price maintenance and logistics support contract due to cost overruns inappropriately deferred, sales invoices inappropriately prepared, and the failure to timely and accurately perform contract estimates at completion and valuation assessments of inventories and receivables at the Army Sustainment Division, and (2) accounting errors of $28 million through 2013 in connection with the valuation of inventories and receivables, as well as the correction for certain accruals on other logistics support contracts. The Platform Systems sector adjustments are primarily due to: (1) losses of $2 million on two aircraft modification contracts and two contracts for rotary wing sub-assemblies and parts, and (2) write-offs of deferred costs of $10 million to design and test aerostructures for a new commercial aircraft.

Sales-Type Lease Transaction: The Company routinely performs on-site accounting and internal control review procedures on a rotational basis. As part of a previously planned review of the Simulation & Training business in its Electronic Systems segment and unrelated to the internal review at its Aerospace Systems segment, the Company evaluated the accounting treatment related to a sales-type lease transaction with the U.S. Army for rotary wing flight simulator systems. The period of performance under this contract began in 2004 and ends in 2023. Based on the results of this evaluation, the Company has adjusted its previously issued financial statements to: (1) increase interest income accretion on the net investment related to this sales-type lease transaction by an estimated aggregate amount of approximately $5 million for 2013, $3 million for each of 2012 and 2011 and $12 million for periods prior to 2011, and (2) decrease sales by approximately $7 million for 2013 and decrease cost of sales by approximately $7 million for 2013 and $5 million for periods prior to 2011.

Out of Period Amounts: The Company has identified various out of period amounts included in its previously issued financial statements that were deemed to be immaterial individually and in the aggregate. In prior periods, in accordance with Accounting Standards Codification (“ASC”) 650-10-S99 and S55 (formerly Staff Accounting Bulletins (“SAB”) No. 99 and No. 108), Accounting Changes and Error Corrections, the Company concluded that these errors were, individually, and in the aggregate, not material, quantitatively or qualitatively, to the financial statements in the period recorded or to the relevant prior periods. Accordingly, the Company recorded these errors in its financial statements in the period that the error was identified. The Company is, on a voluntary basis, revising its previously issued financial statements to correct for these errors already recognized in its financial statements but not recorded in the appropriate periods to reflect them in the appropriate period. These out of period amounts were not discovered as part of the internal review of the Aerospace Systems segment discussed above, but rather represent previously identified errors “resulting from mathematical mistakes, mistakes in application of generally accepted accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared,” as defined in ASC 250-10-20 Accounting Changes and Error Corrections. The Company, therefore, is not treating these amounts as changes in estimates. These errors consist of: (1) increases in development and material costs related to Broadband Communication Systems that were recorded in the first quarter of 2013 but should have been recorded in the fourth quarter of 2012, (2) a sub-contractor subscription deposit that was recorded as sales and income in the fourth quarter of 2012 but should have been amortized to sales and income during 2013, (3) costs accrued in the fourth quarter of 2012 for goods or services received in the first quarter of 2013, (4) several unrecorded liabilities that were recorded in the first quarter of 2013 but should have been recorded in the fourth quarter of 2012, (5) a correction of accrued vacation that was recorded in the fourth quarter of 2013 but should have been recorded in the fourth quarter of 2012 and the first, second and third quarters of 2013, and (6) a warranty reserve reduction recorded in the third quarter of 2012 that should have been recorded in the fourth quarter of 2011.

With respect to each of the immaterial out of period amounts included in the Company’s previously issued financial statements, the table below presents the: (1) nature of the adjustments, (2) applicable segment, (3) amount of increase (or decrease) to sales and operating income, (4) period recorded and (5) correct period.

		2013					2012						2011
Nature of Adjustment	Applicable Segment	Sales			Operating Income		Sales			Operating Income			Sales			Operating Income		Period Recorded	Correct Period
		($ in millions)
Higher development and material costs for networked communications systems	Communication Systems	$	10		$	10	$	(10	)	$	(10	)	$	—		$	—	1Q 2013	4Q 2012
Sub-contractor subscription deposit	Aerospace Systems		26			2		(26	)		(2	)		—			—	4Q 2012	1Q, 2Q, 3Q & Q4 2013
Costs accruals for goods/services received	Aerospace Systems		5			1		(5	)		(1	)		—			—	4Q 2012	1Q 2013
Unrecorded liabilities	Aerospace Systems		(2	)		—		2			—			—			—	1Q 2013	4Q 2012
Accrued vacation	Aerospace Systems		—			1		—			(1	)		—			—	4Q 2013	4Q 2012, 1Q, 2Q & 3Q 2013
Warranty reserve	Electronic Systems		—			—		3			(4	)		(3	)		4	3Q 2012	4Q 2011
Total		$	39		$	14	$	(36	)	$	(18	)	$	(3	)	$	4

The table below presents the impact of the matters discussed above on sales and pre-tax income for the years ended December 31, 2013, 2012 and 2011 and for the years ended prior to December 31, 2011.

	2013				2012				2011				Prior to 2011
	Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income
	(in millions)
Army C-12 Contract	$	(25)	$	(35)	$	(3)	$	(16)	$	(1)	$	(3)		—		—
Other Logistics Support Contracts		(2)		(11)		(2)		(11)		—		(2)		(1)		(4)
Logistics Solutions	$	(27)	$	(46)	$	(5)	$	(27)	$	(1)	$	(5)	$	(1)	$	(4)
Platform Systems		(12)		(14)		3		2		—		—		—		—
Total Internal Review of Aerospace Systems Segment	$	(39)	$	(60)	$	(2)	$	(25)	$	(1)	$	(5)	$	(1)	$	(4)
Sales-Type Lease Transaction		(7)		5		—		3		—		3		—		17
Out of Period Amounts		39		14		(36)		(18)		(3)		4		—		—
Total Revisions	$	(7)	$	(41)	$	(38)	$	(40)	$	(4)	$	2	$	(1)	$	13

In accordance with ASC 650-10-S99 and S55, the Company performed an analysis to determine if the impact of the amounts disclosed above were material to its previously issued financial statements. Based on that analysis, the Company believes that its previously issued financial statements are not materially misstated on either a quantitative or qualitative basis. However, as a result of completing the review, the Company believes that correcting these errors in the quarterly report on Form 10-Q for the second quarter of 2014 would, in the aggregate, cause a material misstatement to forecasted pre-tax income and net income for the fiscal year ending December 31, 2014. Accordingly, the Company is correcting these errors by revising its previously issued financial statements to record all the adjustments in the table above in the appropriate period.

The tables below present the Company’s: (1) As Previously Reported, (2) Adjustments, and (3) As Currently Reported Condensed Consolidated Balance Sheets as of December 31, 2013 and 2012, Statements of Operations and Operating Activities for the Statement of Cash Flows, for the fiscal years ended December 31, 2013, 2012 and 2011. The Adjustments correct for: (1) the results of the Aerospace Systems internal review, (2) the accounting related to a sales-type lease transaction within the Company’s Electronic Systems segment and (3) immaterial out of period amounts previously recorded in the Company’s financial statements but not recorded in the appropriate period to reflect them in the appropriate period.

			Adjustments for:
	As Previously Reported		Aerospace Systems Segment Internal Review		Sales-Type Lease Transaction		Out of Period Amounts		As Revised
	(in millions)
Condensed Consolidated Balance Sheet as of December 31, 2013:
ASSETS
Current Assets:
Cash and cash equivalents	$	500	$	—	$	—	$	—	$	500
Billed receivables, net of allowances of $26 in 2013		1,015		(24)		—		—		991
Contracts in process		2,524		(67)		(26)		—		2,431
Inventories		359		—		—		—		359
Deferred income taxes		122		25		—		—		147
Other current assets		129		9		28		—		166
Total current assets		4,649		(57)		2		—		4,594
Property, plant and equipment, net		1,039		3		—		—		1,042
Goodwill		7,796		—		—		—		7,796
Identifiable intangible assets		285		—		—		—		285
Deferred debt issue costs		24		—		—		—		24
Other assets		216		—		31		—		247
Total assets	$	14,009	$	(54)	$	33	$	—	$	13,988
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, trade	$	541	$	—	$	—	$	—	$	541
Accrued employment costs		543		2		—		—		545
Accrued expenses		455		3		—		—		458
Advance payments and billings in excess of costs incurred		570		1		5		—		576
Income taxes		31		—		—		—		31
Other current liabilities		383		—		—		—		383
Total current liabilities		2,523		6		5		—		2,534
Pension and postretirement benefits		727		—		—		—		727
Deferred income taxes		635		—		—		—		635
Other liabilities		396		—		10		—		406
Long-term debt		3,630		—		—		—		3,630
Total liabilities		7,911		6		15		—		7,932
Equity:
L-3 shareholders’ equity:
L-3 Communications Holdings, Inc.’s common stock		5,653		—		—		—		5,653
L-3 Communications Holdings, Inc.’s treasury stock at cost		(5,288)		—		—		—		(5,288)
Retained earnings		5,768		(60)		17		1		5,726
Accumulated other comprehensive loss		(110)		—		—		—		(110)
Total L-3 shareholders’ equity		6,023		(60)		17		1		5,981
Noncontrolling interests		75		—		—		—		75
Total equity		6,098		(60)		17		1		6,056
Total liabilities and equity	$	14,009	$	(54)	$	32	$	1	$	13,988
Condensed Consolidated Balance Sheet as of December 31, 2012:
ASSETS
Current Assets:
Cash and cash equivalents	$	349	$	—	$	—	$	—	$	349
Billed receivables, net of allowances of $33 in 2012		968		—		—		—		968
Contracts in process		2,597		(30)		(45)		(12)		2,510
Inventories		358		—		—		—		358
Deferred income taxes		95		12		—		6		113
Other current assets		138		—		45		3		186
Total current assets		4,505		(18)		—		(3)		4,484
Property, plant and equipment, net		1,016		1		—		6		1,023
Goodwill		7,776		—		—		—		7,776
Identifiable intangible assets		314		—		—		—		314
Deferred debt issue costs		29		—		—		—		29
Other assets		151		—		23		—		174
Total assets	$	13,791	$	(17)	$	23	$	3	$	13,800
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, trade	$	494	$	—	$	—	$	11	$	505
Accrued employment costs		551		2		—		2		555
Accrued expenses		469		1		—		(1)		469
Advance payments and billings in excess of costs incurred		620		1		—		—		621
Income taxes		21		—		—		—		21
Other current liabilities		392		—		—		—		392
Total current liabilities		2,547		4		—		12		2,563
Pension and postretirement benefits		1,360		—		—		—		1,360
Deferred income taxes		328		—		—		—		328
Other liabilities		384		—		9		—		393
Long-term debt		3,629		—		—		—		3,629
Total liabilities		8,248		4		9		12		8,273
Equity:
L-3 shareholders’ equity:
L-3 Communications Holdings, Inc.’s common stock		5,314		—		—		—		5,314
L-3 Communications Holdings, Inc.’s treasury stock at cost		(4,488)		—		—		—		(4,488)
Retained earnings		5,191		(22)		14		(8)		5,175
Accumulated other comprehensive loss		(550)		—		—		—		(550)
Total L-3 shareholders’ equity		5,467		(22)		14		(8)		5,451
Noncontrolling interests		76		—		—		—		76
Total equity		5,543		(22)		14		(8)		5,527
Total liabilities and equity	$	13,791	$	(18)	$	23	$	4	$	13,800
Consolidated Statement of Operations for the year ended December 31, 2013:
Net sales:
Products	$	7,192	$	(11)	$	(7)	$	15	$	7,189
Services		5,437		(28)		—		24		5,433
Total net sales		12,629		(39)		(7)		39		12,622
Cost of sales:
Products		(6,409)		(3)		7		(4)		(6,409)
Services		(4,962)		(18)		—		(21)		(5,001)
Total cost of sales		(11,371)		(21)		7		(25)		(11,410)
Impairment charge		—		—		—		—		—
Operating income		1,258		(60)		—		14		1,212
Interest expense		(177)		—		—		—		(177)
Interest and other income, net		15		—		5		—		20
Debt retirement charge		—		—		—		—		—
Income from continuing operations before income taxes		1,096		(60)		5		14		1,055
Provision for income taxes		(309)		21		(2)		(5)		(295)
Income from continuing operations		787		(39)		3		9		760
Income from discontinued operations, net of income tax		—		—		—		—		—
Net income	$	787	$	(39)	$	3	$	9	$	760
Net income attributable to noncontrolling interests		(9)		—		—		—		(9)
Net income attributable to L-3	$	778	$	(39)	$	3	$	9	$	751
Net income allocable to participating securities		—		—		—		—		—
Net income allocable to L-3 Holdings’ common shareholders	$	778	$	(39)	$	3	$	9	$	751
Basic earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.70	$	(0.43)	$	0.03	$	0.10	$	8.40
Discontinued operations		—		—		—		—		—
Basic earnings per share	$	8.70	$	(0.43)	$	0.03	$	0.10	$	8.40
Diluted earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.54	$	(0.43)	$	0.03	$	0.10	$	8.24
Discontinued operations		—		—		—		—		—
Diluted earnings per share	$	8.54	$	(0.43)	$	0.03	$	0.10	$	8.24
Cash dividends paid per common share	$	2.20	$	—	$	—	$	—	$	2.20
L-3 Holdings’ weighted average common shares outstanding:
Basic		89.4		—		—		—		89.4
Diluted		91.1		—		—		—		91.1

			Adjustments for:
	As Previously Reported		Aerospace Systems Segment Internal Review		Sales-Type Lease Transaction		Out of Period Amounts			As Revised
	(in millions, except per share data)
Consolidated Statement of Operations for the year ended December 31, 2012:
Net sales:
Products	$	7,535	$	64	$	—	$	(13)		$	7,586
Services		5,611		(66)		—		(24)			5,521
Total net sales		13,146		(2)		—		(37)	(1)		13,107
Cost of sales:
Products		(6,724)		(57)		—		(1)			(6,782)
Services		(5,071)		34		—		20			(5,017)
Total cost of sales		(11,795)		(23)		—		19			(11,799)
Impairment charge		—		—		—		—			—
Operating income		1,351		(25)		—		(18)			1,308
Interest expense		(184)		—		—		—			(184)
Interest and other income, net		8		—		3		—			11
Debt retirement charge		(13)		—		—		—			(13)
Income from continuing operations before income taxes		1,162		(25)		3		(18)			1,122
Provision for income taxes		(374)		9		(1)		6			(360)
Income from continuing operations		788		(16)		2		(12)			762
Income from discontinued operations, net of income tax		32		—		—		—			32
Net income	$	820	$	(16)	$	2	$	(12)		$	794
Net income attributable to noncontrolling interests		(10)		—		—		—			(10)
Net income attributable to L-3	$	810	$	(16)	$	2	$	(12)		$	784
Net income allocable to participating securities		—		—		—		—			—
Net income allocable to L-3 Holdings’ common shareholders	$	810	$	(16)	$	2	$	(12)		$	784
Basic earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.12	$	(0.17)	$	0.02	$	(0.12)		$	7.85
Discontinued operations		0.29		—		—		—			0.29
Basic earnings per share	$	8.41	$	(0.17)	$	0.02	$	(0.12)		$	8.14
Diluted earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.01	$	(0.17)	$	0.02	$	(0.12)		$	7.74
Discontinued operations		0.29		—		—		—			0.29
Diluted earnings per share	$	8.30	$	(0.17)	$	0.02	$	(0.12)		$	8.03
Cash dividends paid per common share	$	2.00	$	—	$	—	$	—		$	2.00
L-3 Holdings’ weighted average common shares outstanding:
Basic		96.3		—		—		—			96.3
Diluted		97.6		—		—		—			97.6

⁽¹⁾  Includes rounding of $1 million.

			Adjustments for:
	As Previously Reported		Aerospace Systems Segment Internal Review		Sales-Type Lease Transaction		Out of Period Amounts		As Revised
	(in millions, except per share data)
Consolidated Statement of Operations for the year ended December 31, 2011:
Net sales:
Products	$	7,552	$	—	$	—	$	(3)	$	7,549
Services		5,606		(1)		—		—		5,605
Total net sales		13,158		(1)		—		(3)		13,154
Cost of sales:
Products		(6,673)		—		—		7		(6,666)
Services		(5,043)		(4)		—		—		(5,047)
Total cost of sales		(11,716)		(4)		—		7		(11,713)
Impairment charge		(43)		—		—		—		(43)
Operating income		1,399		(5)		—		4		1,398
Interest expense		(204)		—		—		—		(204)
Interest and other income, net		—		—		3		—		3
Debt retirement charge		(35)		—		—		—		(35)
Income from continuing operations before income taxes		1,160		(5)		3		4		1,162
Provision for income taxes		(296)		2		(1)		(1)		(296)
Income from continuing operations		864		(3)		2		3		866
Income from discontinued operations, net of income tax		104		—		—		—		104
Net income	$	968	$	(3)	$	2	$	3	$	970
Net income attributable to noncontrolling interests		(12)		—		—		—		(12)
Net income attributable to L-3	$	956	$	(3)	$	2	$	3	$	958
Net income allocable to participating securities		(2)		—		—		—		(2)
Net income allocable to L-3 Holdings’ common shareholders	$	954	$	(3)	$	2	$	3	$	956
Basic earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.17	$	(0.03)	$	0.02	$	0.03	$	8.19
Discontinued operations		0.97		—		—		—		0.97
Basic earnings per share	$	9.14	$	(0.03)	$	0.02	$	0.03	$	9.16
Diluted earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.08	$	(0.03)	$	0.02	$	0.03	$	8.10
Discontinued operations		0.95		—		—		—		0.95
Diluted earnings per share	$	9.03	$	(0.03)	$	0.02	$	0.03	$	9.05
Cash dividends paid per common share	$	1.80	$	—	$	—	$	—	$	1.80
L-3 Holdings’ weighted average common shares outstanding:
Basic		104.4		—		—		—		104.4
Diluted		105.6		—		—		—		105.6

	As Previously Reported		Net Adjustments		As Revised
	(in millions)
Consolidated Statement of Cash Flows for the year ended December 31, 2013:
Operating activities:
Net income	$	787	$	(27)	$	760
Income from discontinued operations, net of tax		—		—		—
Income from continuing operations		787		(27)		760
Depreciation of property, plant and equipment		166		—		166
Amortization of intangibles and other assets		48		—		48
Deferred income tax provision		48		(6)		42
Stock-based employee compensation expense		59		—		59
Contributions to employee savings plans in L-3 Holdings’ common stock		114		—		114
Amortization of pension and postretirement benefit plans net loss and prior service cost		83		—		83
Amortization of bond discounts and deferred debt issue costs (included in interest expense)		6		—		6
Goodwill impairment charge		—		—		—
Equity in losses of unconsolidated subsidiaries		—		—		—
Other non-cash items		2		—		2
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables		(42)		24		(18)
Contracts in process		94		10		104
Inventories		2		—		2
Other assets		(81)		(7)		(88)
Accounts payable, trade		45		(11)		34
Accrued employment costs		(5)		—		(5)
Accrued expenses		(6)		1		(5)
Advance payments and billings in excess of costs incurred		(50)		6		(44)
Income taxes		39		(8)		31
Excess income tax benefits related to share-based payment arrangements		(4)		—		(4)
Other current liabilities		(4)		—		(4)
Pension and postretirement benefits		14		—		14
All other operating activities		(52)		18		(34)
Net cash from operating activities from continuing operations	$	1,263	$	—	$	1,263

	As Previously Reported		Net Adjustments		As Revised
	(in millions)
Consolidated Statement of Cash Flows for the year ended December 31, 2012:
Operating activities:
Net income	$	820	$	(26)	$	794
Income from discontinued operations, net of tax		(32)		—		(32)
Income from continuing operations		788		(26)		762
Depreciation of property, plant and equipment		170		—		170
Amortization of intangibles and other assets		58		—		58
Deferred income tax provision		112		(15)		97
Stock-based employee compensation expense		59		—		59
Contributions to employee savings plans in L-3 Holdings’ common stock		125		—		125
Amortization of pension and postretirement benefit plans net loss and prior service cost		68		—		68
Amortization of bond discounts and deferred debt issue costs (included in interest expense)		7		—		7
Goodwill impairment charge		—		—		—
Equity in losses of unconsolidated subsidiaries		3		—		3
Other non-cash items		9		—		9
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables		147		—		147
Contracts in process		(126)		59		(67)
Inventories		(35)		—		(35)
Other assets		11		(3)		8
Accounts payable, trade		81		11		92
Accrued employment costs		(13)		3		(10)
Accrued expenses		(100)		—		(100)
Advance payments and billings in excess of costs incurred		36		1		37
Income taxes		(48)		1		(47)
Excess income tax benefits related to share-based payment arrangements		(3)		—		(3)
Other current liabilities		(52)		6		(46)
Pension and postretirement benefits		(64)		—		(64)
All other operating activities		(2)		(37)		(39)
Net cash from operating activities from continuing operations	$	1,231	$	—	$	1,231

	As Previously Reported		Net Adjustments		As Revised
	(in millions)
Consolidated Statement of Cash Flows for the year ended December 31, 2011:
Operating activities:
Net income	$	968	$	2	$	970
Income from discontinued operations, net of tax		(104)		—		(104)
Income from continuing operations		864		2		866
Depreciation of property, plant and equipment		167		—		167
Amortization of intangibles and other assets		63		—		63
Deferred income tax provision		124		(1)		123
Stock-based employee compensation expense		57		—		57
Contributions to employee savings plans in L-3 Holdings’ common stock		113		—		113
Amortization of pension and postretirement benefit plans net loss and prior service cost		48		—		48
Amortization of bond discounts and deferred debt issue costs (included in interest expense)		13		—		13
Goodwill impairment charge		43		—		43
Equity in losses of unconsolidated subsidiaries		12		—		12
Other non-cash items		11		—		11
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables		(13)		—		(13)
Contracts in process		(121)		11		(110)
Inventories		(14)		—		(14)
Other assets		(6)		(3)		(9)
Accounts payable, trade		(35)		—		(35)
Accrued employment costs		(23)		—		(23)
Accrued expenses		67		1		68
Advance payments and billings in excess of costs incurred		(39)		—		(39)
Income taxes		(18)		2		(16)
Excess income tax benefits related to share-based payment arrangements		(2)		—		(2)
Other current liabilities		4		(6)		(2)
Pension and postretirement benefits		(83)		—		(83)
All other operating activities		(1)		(6)		(7)
Net cash from operating activities from continuing operations	$	1,231	$	—	$	1,231

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation: The accompanying financial statements comprise the consolidated financial statements of L-3 Holdings and L-3 Communications. L-3 Holdings’ only asset is its investment in the common stock of L-3 Communications, its wholly-owned subsidiary, and its only obligations are: (1) the 3% Convertible Contingent Debt Securities (CODES) due 2035, which were issued by L-3 Holdings on July 29, 2005, (2) its guarantee of borrowings under the Amended and Restated Revolving Credit Facility of L-3 Communications and (3) its guarantee of other contractual obligations of L-3 Communications and its subsidiaries. L-3 Holdings’ obligations relating to the CODES have been jointly, severally, fully and unconditionally guaranteed by L-3 Communications and certain of its wholly-owned domestic subsidiaries. Accordingly, such debt has been reflected as debt of L-3 Communications in its consolidated financial statements in accordance with the accounting standards for pushdown accounting. All issuances of and conversions into L-3 Holdings’ equity securities, including grants of stock options, restricted stock, restricted stock units and performance units by L-3 Holdings to employees and directors of L-3 Communications and its subsidiaries, have been reflected in the consolidated financial statements of L-3 Communications. As a result, the consolidated financial positions, results of operations and cash flows of L-3 Holdings and L-3 Communications are substantially the same. See Note 26 for additional information regarding the audited financial information of L-3 Communications and its subsidiaries.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and costs of sales during the reporting period. The most significant of these estimates and assumptions relate to contract revenue, profit and loss recognition, fair values of assets acquired and liabilities assumed in business combinations, market values for inventories reported at lower of cost or market, pension and post-retirement benefit obligations, stock-based employee compensation expense, income taxes, including the valuations of deferred tax assets, litigation reserves and environmental obligations, accrued product warranty costs, and the recoverability, useful lives and valuation of recorded amounts of long-lived assets, identifiable intangible assets and goodwill. Changes in estimates are reflected in the periods during which they become known. Actual amounts will differ from these estimates and could differ materially.

The audited condensed consolidated balance sheet as of December 31, 2012 has been revised for the final purchase price allocation of the Link Simulation & Training U.K. Limited (Link U.K.) business acquisition. Link U.K is the commercial aircraft simulation business acquired from Thales Group effective August 6, 2012. During 2013, the Company completed the purchase price allocation, which was based on the final appraisals and valuations of the acquired assets and liabilities and estimated final closing date net working capital. The L-3 audited condensed consolidated balance sheet as of December 31, 2012 has been adjusted in accordance with the accounting standards for business combinations. See Note 5 for additional information regarding the final purchase price allocation for Link U.K. and resulting adjustments.

Certain other reclassifications have been made to conform prior-year amounts to the current-year presentation.

Principles of Consolidation: The consolidated financial statements of the Company include all wholly-owned and majority-owned subsidiaries. All significant intercompany transactions are eliminated in consolidation. Investments in equity securities, joint ventures and limited liability corporations over which the Company has significant influence but does not have voting control are accounted for using the equity method. Investments over which the Company does not have significant influence are accounted for using the cost method.

Revenue Recognition: Substantially all of the Company’s sales are generated from written contractual (revenue) arrangements. The sales price for the Company’s revenue arrangements are either fixed-price, cost-plus or time-and-material type. Depending on the contractual scope of work, the Company utilizes either contract accounting standards or accounting standards for revenue arrangements with commercial customers to account for these contracts. Approximately 47% of the Company’s 2013 sales were accounted for under contract accounting standards, of which approximately 38% were fixed-price type contracts and approximately 9% were cost-plus type contracts. For contracts that are accounted for under contract accounting standards, sales and profits are recognized based on: (1) a Percentage-of-Completion (POC) method of accounting (fixed-price contracts), (2) allowable costs incurred plus the estimated profit on those costs (cost-plus contracts), or (3) direct labor hours expended multiplied by the contractual fixed rate per hour plus incurred costs for material (time-and-material contracts). Aggregate net changes in contract estimates increased operating income by $114 million, or 9%, for the year ended December 31, 2013, $72 million, or 6%, for the year ended December 31, 2012, and $73 million, or 5%, for the year ended December 31, 2011.

Sales and profits on fixed-price type contracts covered by contract accounting standards are substantially recognized using POC methods of accounting. Sales and profits on fixed-price production contracts under which units are produced and delivered in a continuous or sequential process are recorded as units are delivered based on their contractual selling prices (the “units-of-delivery” method). Sales and profits on each fixed-price production contract under which units are not produced and delivered in a continuous or sequential process, or under which a relatively few number of units are produced, are recorded based on the ratio of actual cumulative costs incurred to the total estimated costs at completion of the contract, multiplied by the total estimated contract revenue, less cumulative sales recognized in prior periods (the “cost-to-cost” method). Under both POC methods of accounting, a single estimated total profit margin is used to recognize profit for each contract over its entire period of performance, which can exceed one year. Losses on contracts are recognized in the period in which they become evident. The impact of revisions of contract estimates, which may result from contract modifications, performance or other reasons, are recognized on a cumulative catch-up basis in the period in which the revisions are made.

Sales and profits on cost-plus type contracts covered by contract accounting standards are recognized as allowable costs are incurred on the contract, at an amount equal to the allowable costs plus the estimated profit on those costs. The estimated profit on a cost-plus type contract is fixed or variable based on the contractual fee arrangement. Incentive and award fees are the primary variable fee contractual arrangements. Incentive and award fees on cost-plus type contracts are included as an element of total estimated contract revenues and are recorded as sales when a basis exists for the reasonable prediction of performance in relation to established contractual targets and the Company is able to make reasonably dependable estimates for them.

Sales and profits on time-and-material type contracts are recognized on the basis of direct labor hours expended multiplied by the contractual fixed rate per hour, plus the actual costs of materials and other direct non-labor costs.

Sales on arrangements for (1) fixed-price type contracts that require us to perform services that are not related to the production of tangible assets (Fixed-Price Service Contracts) and (2) certain commercial customers are recognized in accordance with accounting standards for revenue arrangements with commercial customers. Sales for the Company’s businesses whose customers are primarily commercial business enterprises are substantially all generated from single element revenue arrangements. Sales are recognized when there is persuasive evidence of an arrangement, delivery has occurred or services have been performed, the selling price to the buyer is fixed or determinable and collectability is reasonably assured. Sales for Fixed-Price Service Contracts that do not contain measurable units of work performed are generally recognized on a straight-line basis over the contractual service period, unless evidence suggests that the revenue is earned, or obligations fulfilled, in a different manner. Sales for Fixed-Price Service Contracts that contain measurable units of work performed are generally recognized when the units of work are completed. Sales and profit on cost-plus and time-and-material type contracts to perform services are recognized in the same manner as those within the scope of contract accounting standards, except for incentive and award fees. Cost-based incentive fees are recognized when they are realizable in the amount that would be due under the contractual termination provisions as if the contract was terminated. Performance based incentive fees and award fees are recorded as sales when awarded by the customer.

For contracts with multiple deliverables, the Company applies the separation and allocation guidance under the accounting standard for revenue arrangements with multiple deliverables, unless all the deliverables are covered by contract accounting standards, in which case the Company applies the separation and allocation guidance under contract accounting standards. Revenue arrangements with multiple deliverables are evaluated to determine if the deliverables should be separated into more than one unit of accounting. The Company recognizes revenue for each unit of accounting based on the revenue recognition policies discussed above.

Sales and profit in connection with contracts to provide services to the U.S. Government that contain collection risk because the contracts are incrementally funded and subject to the availability of funds appropriated, are deferred until a contract modification is obtained, indicating that adequate funds are available to the contract or task order.

Research and Development: Independent research and development (IRAD) costs sponsored by the Company and bid and proposal (B&P) costs relate to both U.S. Government contracts and those for international and commercial customers. The IRAD and B&P costs for certain of the Company’s businesses that are U.S. Government contractors are recoverable indirect contract costs that are allocated to U.S. Government contracts in accordance with U.S. Government procurement regulations, and are specifically excluded from research and development accounting standards. The Company includes the recoverable IRAD and B&P costs allocated to U.S. Government contracts in inventoried contract costs, and charges them to costs of sales when the related contract sales are recognized as revenue. Research and development costs that are not recoverable on U.S. Government contracts are accounted for in accordance with research and development accounting standards and are expensed to cost of sales as incurred.

Customer-funded research and development costs are incurred pursuant to contracts (revenue arrangements) to perform research and development activities according to customer specifications. These costs are not accounted for as research and development expenses, and are also not indirect contract costs. Instead, these costs are direct contract costs and are expensed to cost of sales when the corresponding revenue is recognized, which is generally as the research and development services are performed. Customer-funded research and development costs are substantially all incurred under cost-plus type contracts with the U.S. Government.

Product Warranties: Product warranty costs are accrued when revenue is recognized for the covered products. Product warranty expense is recognized based on the terms of the product warranty and the related estimated costs. Accrued warranty costs are reduced as product warranty costs are incurred.

The table below presents the changes in the Company’s accrued product warranty costs.

	Year Ended December 31,
	2013		2012
	(in millions)
Accrued product warranty costs(1):
Balance at January 1	$	99	$	94
Acquisitions during this period		2		7
Accruals for product warranties issued during the period		71		78
Changes to accruals for product warranties existing before January 1		3		(3)
Foreign currency translation adjustments		—		1
Settlements made during the period		(76)		(78)
Balance at December 31	$	99	$	99

⁽¹⁾  Warranty obligations incurred in connection with long-term production contracts that are accounted for under the POC cost-to-cost method are included within the contract estimates at completion and are excluded from the above amounts. The balances above include both the current and non-current amounts.

Deferred Debt Issue Costs: Costs to issue debt are capitalized and deferred when incurred, and subsequently amortized to interest expense over the term of the related debt using the effective interest rate method.

Stock-Based Compensation: The Company follows the fair value based method of accounting for stock-based employee compensation, which requires the Company to expense all stock-based employee compensation. Stock-based employee compensation is primarily a non-cash expense because the Company settles these obligations by issuing shares of L-3 Holdings common stock instead of settling such obligations with cash payments, except for certain performance unit awards that are payable in cash.

Compensation expense for all restricted stock unit and stock option awards is recognized on a straight-line basis over the requisite service period for the entire award based on the grant date fair value. All of the stock options granted to employees by the Company are non-qualified stock options under U.S. income tax regulations. Compensation expense for performance units payable in L-3 Holdings common stock is based on the fair value of the units at the grant date (measurement date), adjusted each reporting period for progress towards the target award, and recognized on a straight line basis over the requisite service period. Compensation expense for performance units that are payable in cash is based on a binomial valuation technique (the Monte Carlo valuation model) adjusted for historical performance each reporting period and recognized on a straight-line basis over the requisite service period.

Income Taxes: The Company provides for income taxes using the liability method. Deferred income tax assets and liabilities reflect tax carryforwards and the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes, as determined under enacted tax laws and rates. The effect of changes in tax laws or rates is accounted for in the period of enactment. Valuation allowances for deferred tax assets are provided when it is more likely than not that the assets will not be realized, considering, when appropriate, tax planning strategies.

Income tax accounting standards prescribe: (1) a minimum recognition threshold that an income tax benefit arising from an uncertain income tax position taken, or expected to be taken, on an income tax return is required to meet before being recognized in the financial statements and (2) the measurement of the income tax benefits recognized from such positions. The Company’s accounting policy is to classify uncertain income tax positions that are not expected to be resolved in one year as non-current income tax liabilities and to classify potential interest and penalties on uncertain income tax positions as elements of the provision for income taxes on its financial statements.

Cash and Cash Equivalents: Cash equivalents consist of highly liquid investments with an original maturity of three months or less at the time of purchase.

Contracts in Process: Contracts in process include unbilled contract receivables and inventoried contract costs for which sales and profits are recognized primarily using a POC method of accounting. Unbilled Contract Receivables represent accumulated incurred costs and earned profits on contracts in process that have been recorded as sales, primarily using the cost-to-cost method, but have not been billed to customers. Inventoried Contract Costs primarily represent incurred costs on contracts using the units-of-delivery method of accounting and include direct costs and indirect costs, including overhead costs, and materials acquired for U.S. Government service contracts. As discussed in Note 6, the Company’s inventoried contract costs for U.S. Government contracts, and contracts with prime contractors or subcontractors of the U.S. Government include allocated general and administrative costs (G&A), IRAD costs and B&P costs. Contracts in Process contain amounts relating to contracts and programs with long performance cycles, a portion of which may not be realized within one year. For contracts in a loss position, the unrecoverable costs expected to be incurred in future periods are recorded in Estimated Costs in Excess of Estimated Contract Value to Complete Contracts in Process in a Loss Position, which is a component of Other Current Liabilities. Under the terms of certain revenue arrangements (contracts) with the U.S. Government, the Company is entitled to receive progress payments as costs are incurred or milestone payments as work is performed. The U.S. Government has a security interest in the Unbilled Contract Receivables and Inventoried Contract Costs to which progress payments have been applied, and such progress payments are reflected as a reduction of the related amounts. Milestone payments that have been received in excess of contract costs incurred and related estimated profits are reported on the Company’s balance sheet as Advance Payments and Billings in Excess of Costs Incurred.

The Company values its acquired contracts in process in connection with business acquisitions on the date of acquisition at contract value less the Company’s estimated costs to complete the contract and a reasonable profit allowance on the Company’s completion effort commensurate with the profit margin that the Company earns on similar contracts.

Inventories: Inventories, other than Inventoried Contract Costs, are stated at cost (first-in, first-out or average cost), but not in excess of realizable value. A provision for excess or inactive inventory is recorded based upon an analysis that considers current inventory levels, historical usage patterns and future sales expectations.

Property, Plant and Equipment: Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed by applying principally the straight-line method to the estimated useful lives of the related assets. Useful lives range substantially from 10 to 40 years for buildings and improvements and three to 10 years for machinery, equipment, furniture and fixtures. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. When property or equipment is retired or otherwise disposed of, the net book value of the asset is removed from the Company’s balance sheet and the net gain or loss is included in the determination of operating income. Property, plant and equipment acquired as part of a business acquisition is valued at fair value.

Goodwill: The carrying value of goodwill and indefinite lived identifiable intangible assets are not amortized, but are tested for impairment annually as of November 30 and, additionally on an interim basis, whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The accounting standards for goodwill allow for the assessment of qualitative factors to determine whether it is more likely or not that the fair value of a reporting unit is less than its carrying amount. L-3 did not utilize a qualitative assessment approach for the November 30, 2013 goodwill impairment test, as we chose instead to complete the quantitative two-step testing process for each reporting unit. The first step in the process is to identify any potential impairment by comparing the carrying value of a reporting unit to its fair value. The Company determines the fair value of its reporting units using a discounted cash flows valuation approach. If a potential impairment is identified, the second step is to measure the impairment loss by comparing the implied fair value of goodwill with the carrying value of goodwill of the reporting unit. There were no impairment charges that resulted from the annual impairment assessment or change in circumstances during the years ended December 31, 2013 and 2012. The Company recorded a goodwill impairment charge of $43 million during the year ended December 31, 2011. See Note 8 for additional information on the goodwill impairment charge.

Identifiable Intangible Assets: Identifiable intangible assets represent assets acquired as part of the Company’s business acquisitions and include customer contractual relationships, technology, favorable leasehold interests and trade names. The initial measurement of these intangible assets is based on their fair values. Identifiable intangible assets are: (1) tested for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable and (2) amortized over their estimated useful lives as the economic benefits are consumed. The Company reviews and updates its estimates of the duration of its customer contractual relationships. If such estimates indicate that the duration of the Company’s customer contractual relationships has decreased compared to the estimates made as of the date the Company acquired these intangible assets, then the Company accelerates the amortization period for its customer contractual relationships over their remaining useful economic life.

Derivative Financial Instruments: The Company’s derivative financial instruments include foreign currency forward contracts, which are entered into for risk management purposes, and an embedded derivative representing the contingent interest payment provision related to the CODES.

The Company’s U.S. and foreign businesses enter into contracts with customers, subcontractors or vendors that are denominated in currencies other than their functional currencies. To protect the functional currency equivalent cash flows associated with certain of these contracts, the Company enters into foreign currency forward contracts. The Company’s activities involving foreign currency forward contracts are designed to hedge the changes in the functional currency equivalent cash flows due to movements in foreign exchange rates compared to the functional currency. The foreign currencies hedged are primarily the Canadian dollar, the U.S. dollar, the Euro and the British pound. The Company manages exposure to counterparty non-performance credit risk by entering into foreign currency forward contracts only with major financial institutions that are expected to fully perform under the terms of such contracts. Foreign currency forward contracts are recorded in the Company’s balance sheets at fair value and are generally designated and accounted for as cash flow hedges in accordance with the accounting standards for derivative instruments and hedging activities. Gains and losses on designated foreign currency forward contracts that are highly effective in offsetting the corresponding change in the cash flows of the hedged transactions are recorded net of income taxes in accumulated other comprehensive income (loss) (accumulated OCI) and then recognized in income when the underlying hedged transaction affects income. Gains and losses on foreign currency forward contracts that do not meet hedge accounting criteria are recognized in income immediately.

The embedded derivative related to the issuance of the CODES is recorded at fair value with changes reflected in the Consolidated Statements of Operations.

Translation of Foreign Currency and Foreign Currency Transactions: Transactions in foreign currencies are translated into the local (functional) currency of the respective business at the approximate prevailing rate at the time of the transaction. Foreign exchange transaction gains and losses in the years ended December 31, 2013, 2012 and 2011 are not material to the Company’s results of operations. The operations of the Company’s foreign subsidiaries are translated from the local (functional) currencies into U.S. dollars using weighted average rates of exchange during each reporting period. The rates of exchange at each balance sheet date are used for translating the assets and liabilities of the Company’s foreign subsidiaries. Gains or losses resulting from these translation adjustments are included in the balance sheets as a component of accumulated other comprehensive income (loss).

Accounting Standards Issued and Not Yet Implemented: In July 2013, the FASB issued amendments to an accounting standard which requires an unrecognized tax benefit or portion of an unrecognized tax benefit to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward except when certain conditions exist. The amendments are effective for the Company for fiscal years beginning after December 15, 2013, including that year’s interim periods. The adoption of this standard will not impact the Company’s financial position, results of operations or cash flows.

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Employee Severance and Termination Costs - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013 Employees	Dec. 31, 2012 Employees	Dec. 31, 2011 Employees
Restructuring and Related Activities [Abstract]
Employee severance and other related termination costs	$ 29	$ 23	$ 20
Number of employees terminated	2,000	1,600	1,200
Remaining balance of employee termination costs	$ 11	$ 9

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Fair Value Measurements

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

14. Fair Value Measurements

L-3 applies the accounting standards for fair value measurements to all of the Company’s assets and liabilities that are measured and recorded at fair value. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants. The standards establish a fair value hierarchy that gives the highest priority to observable inputs and the lowest priority to unobservable inputs.

The following table presents the fair value hierarchy level for each of the Company’s assets and liabilities that are measured and recorded at fair value on a recurring basis.

	December 31,
	2013						2012
Description	Level 1(1)		Level 2(2)		Level 3(3)		Level 1(1)		Level 2(2)		Level 3(3)
	(in millions)
Assets
Cash equivalents	$	299	$	—	$	—	$	284	$	—	$	—
Derivatives (foreign currency forward contracts)		—		6		—		—		8		—
Total assets	$	299	$	6	$	—	$	284	$	8	$	—
Liabilities
Derivatives (foreign currency forward contracts)	$	—	$	5	$	—	$	—	$	3	$	—

⁽¹⁾  Level 1 is based on quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Cash equivalents are primarily held in registered money market funds which are valued using quoted market prices.

⁽²⁾  Level 2 is based on pricing inputs other than quoted prices in active markets, which are either directly or indirectly observable. The fair value is determined using a valuation model based on observable market inputs, including quoted foreign currency forward exchange rates and consideration of non-performance risk.

⁽³⁾  Level 3 is based on pricing inputs that are not observable and not corroborated by market data. The Company has no Level 3 assets or liabilities.

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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

10. Property, Plant and Equipment

The table below presents the components of Property, Plant and Equipment.

	December 31,
	2013		2012
	(in millions)
Land	$	62	$	63
Buildings and improvements		415		407
Machinery, equipment, furniture and fixtures		1,643		1,532
Leasehold improvements		328		322
Gross property, plant and equipment		2,448		2,324
Accumulated depreciation and amortization		(1,406)		(1,301)
Property, plant and equipment, net	$	1,042	$	1,023

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Goodwill and Identifiable Intangible Assets - Estimated Amortization Expense (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
Estimated amortization expense, 2014	$ 43
Estimated amortization expense, 2015	40
Estimated amortization expense, 2016	33
Estimated amortization expense, 2017	31
Estimated amortization expense, 2018	$ 25

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Contracts in Process

12 Months Ended

Dec. 31, 2013

Text Block [Abstract]

Contracts in Process

6. Contracts in Process

The components of contracts in process are presented in the table below. The unbilled contract receivables, inventoried contract costs and unliquidated progress payments principally relate to contracts with the U.S. Government and prime contractors or subcontractors of the U.S. Government. In connection with contracts in process assumed by the Company in its business acquisitions, the underlying contractual customer relationships are separately recognized as identifiable intangible assets at the date of acquisition, and are discussed and presented in Note 8.

	December 31,
	2013		2012
	(in millions)
Unbilled contract receivables, gross	$	2,502	$	2,802
Unliquidated progress payments		(1,035)		(1,256)
Unbilled contract receivables, net		1,467		1,546
Inventoried contract costs, gross		1,044		1,091
Unliquidated progress payments		(80)		(127)
Inventoried contract costs, net		964		964
Total contracts in process	$	2,431	$	2,510

Unbilled Contract Receivables. Unbilled contract receivables represent accumulated incurred costs and earned profits on contracts (revenue arrangements), which have been recorded as sales, but have not yet been billed to customers. Unbilled contract receivables arise from the cost-to-cost method of revenue recognition that is used to record sales on certain fixed-price contracts. Unbilled contract receivables from fixed-price type contracts are converted to billed receivables when amounts are invoiced to customers according to contractual billing terms, which generally occur when deliveries or other performance milestones are completed. Unbilled contract receivables also arise from cost-plus type contracts and time-and-material type contracts, for revenue amounts that have not been billed by the end of the accounting period due to the timing of preparation of invoices to customers. The Company believes that approximately 98% of the unbilled contract receivables at December 31, 2013 will be billed and collected within one year.

Unliquidated Progress Payments. Unliquidated progress payments arise from fixed-price type contracts with the U.S. Government that contain progress payment clauses, and represent progress payments on invoices that have been collected in cash, but have not yet been liquidated. Progress payment invoices are billed to the customer as contract costs are incurred at an amount generally equal to 75% to 80% of incurred costs. Unliquidated progress payments are liquidated as deliveries or other contract performance milestones are completed, at an amount equal to a percentage of the contract sales price for the items delivered or work performed, based on a contractual liquidation rate. Therefore, unliquidated progress payments are a contra asset account, and are classified against unbilled contract receivables if revenue for the underlying contract is recorded using the cost-to-cost method, and against inventoried contract costs if revenue is recorded using the units-of-delivery method.

Inventoried Contract Costs. In accordance with contract accounting standards, the Company’s U.S. Government contractor businesses account for the portion of their G&A, IRAD and B&P costs that are allowable and reimbursable indirect contract costs under U.S. Government procurement regulations on their U.S. Government contracts (revenue arrangements) as inventoried contract costs. G&A, IRAD and B&P costs are allocated to contracts for which the U.S. Government is the end customer and are charged to costs of sales when sales on the related contracts are recognized. The Company’s U.S. Government contractor businesses record the unallowable portion of their G&A, IRAD and B&P costs to expense as incurred, and do not include them in inventoried contract costs.

The table below presents a summary of G&A, IRAD and B&P costs included in inventoried contract costs and the changes to them, including amounts charged to cost of sales by the Company’s U.S. Government contractor businesses for the periods presented.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Amounts included in inventoried contract costs at beginning of the year	$	110	$	91	$	97
IRAD and B&P costs incurred		296		336		327
Other G&A costs incurred		893		891		843
Total contract costs incurred		1,189		1,227		1,170
Amounts charged to cost of sales		(1,161)		(1,208)		(1,176)
Amounts included in inventoried contract costs at end of the year	$	138	$	110	$	91

The table below presents a summary of selling, general and administrative expenses and research and development expenses for the Company’s commercial businesses, which are expensed as incurred and included in cost of sales on the Consolidated Statements of Operations.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Selling, general and administrative expenses	$	293	$	306	$	300
Research and development expenses		74		88		73
Total	$	367	$	394	$	373

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Financial Information of L-3 Communications and Its Subsidiaries - Condensed Combining Balance Sheets (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 500	$ 349	$ 764	$ 607
Billed receivables, net	991	968
Contracts in process	2,431	2,510
Other current assets	672	657
Total current assets	4,594	4,484
Goodwill	7,796	7,776	7,472
Other assets	1,598	1,540
Investment in and amounts due from consolidated subsidiaries
Total assets	13,988	13,800	15,520
Current liabilities	2,534	2,563
Amounts due to consolidated subsidiaries
Other long-term liabilities	1,768	2,081
Long-term debt	3,630	3,629
Total liabilities	7,932	8,273
L-3 shareholders' equity	5,981	5,451
Noncontrolling interests	75	76
Total equity	6,056	5,527	6,733	6,862
Total liabilities and equity	13,988	13,800
L-3 Communications Holdings, Inc. [Member]
Current assets:
Cash and cash equivalents
Billed receivables, net
Contracts in process
Other current assets
Total current assets
Goodwill
Other assets
Investment in and amounts due from consolidated subsidiaries	6,670	6,140
Total assets	6,670	6,140
Current liabilities
Amounts due to consolidated subsidiaries
Other long-term liabilities
Long-term debt	689	689
Total liabilities	689	689
L-3 shareholders' equity	5,981	5,451
Noncontrolling interests
Total equity	5,981	5,451
Total liabilities and equity	6,670	6,140
L-3 Communications Corporation [Member]
Current assets:
Cash and cash equivalents	258	246	644	251
Billed receivables, net	364	290
Contracts in process	925	893
Other current assets	344	308
Total current assets	1,891	1,737
Goodwill	2,307	2,010
Other assets	838	757
Investment in and amounts due from consolidated subsidiaries	6,940	7,153
Total assets	11,976	11,657
Current liabilities	914	823
Amounts due to consolidated subsidiaries
Other long-term liabilities	1,451	1,754
Long-term debt	3,630	3,629
Total liabilities	5,995	6,206
L-3 shareholders' equity	5,981	5,451
Noncontrolling interests
Total equity	5,981	5,451
Total liabilities and equity	11,976	11,657
Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents
Billed receivables, net	401	441
Contracts in process	1,152	1,275
Other current assets	159	161
Total current assets	1,712	1,877
Goodwill	4,326	4,627
Other assets	532	572
Investment in and amounts due from consolidated subsidiaries	3,744	3,299
Total assets	10,314	10,375
Current liabilities	1,011	1,221
Amounts due to consolidated subsidiaries
Other long-term liabilities	193	210
Long-term debt
Total liabilities	1,204	1,431
L-3 shareholders' equity	9,110	8,944
Noncontrolling interests
Total equity	9,110	8,944
Total liabilities and equity	10,314	10,375
Non-Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	261	242	222	473
Billed receivables, net	226	237
Contracts in process	354	342
Other current assets	169	188
Total current assets	1,010	1,009
Goodwill	1,163	1,139
Other assets	228	211
Investment in and amounts due from consolidated subsidiaries		101
Total assets	2,401	2,460
Current liabilities	628	658
Amounts due to consolidated subsidiaries	270
Other long-term liabilities	124	117
Long-term debt
Total liabilities	1,022	775
L-3 shareholders' equity	1,379	1,685
Noncontrolling interests
Total equity	1,379	1,685
Total liabilities and equity	2,401	2,460
Eliminations [Member]
Current assets:
Cash and cash equivalents	(19)	(139)	(102)	(117)
Billed receivables, net
Contracts in process
Other current assets
Total current assets	(19)	(139)
Goodwill
Other assets
Investment in and amounts due from consolidated subsidiaries	(17,354)	(16,693)
Total assets	(17,373)	(16,832)
Current liabilities	(19)	(139)
Amounts due to consolidated subsidiaries	(270)
Other long-term liabilities
Long-term debt	(689)	(689)
Total liabilities	(978)	(828)
L-3 shareholders' equity	(16,470)	(16,080)
Noncontrolling interests	75	76
Total equity	(16,395)	(16,004)
Total liabilities and equity	$ (17,373)	$ (16,832)

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Description of Business - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2013 Segment
Disclosure Description Of Business Additional Information [Abstract]
Number of segments	4

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Income Taxes - Classification of Deferred Tax Assets and Liabilities (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Current deferred tax assets	$ 147	$ 113
Non-current deferred tax liabilities	(635)	(328)
Total net deferred tax liabilities	$ (488)	$ (215)

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New Accounting Standards Implemented

12 Months Ended

Dec. 31, 2013

Accounting Changes and Error Corrections [Abstract]

New Accounting Standards Implemented

4. New Accounting Standards Implemented

Effective January 1, 2013, the Company adopted a new accounting standard issued by the Financial Accounting Standards Board (FASB), which adds new disclosure requirements for items reclassified out of accumulated other comprehensive income (loss) (AOCI). This standard requires entities to disclose additional information about reclassification adjustments, including: (1) changes in AOCI balances by component and (2) significant items reclassified out of AOCI. The adoption of this standard resulted in additional disclosures of items reclassified out of AOCI and did not impact the Company’s financial position, results of operations or cash flows. See Note 12 for these additional disclosures.

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Acquisitions and Divestures

12 Months Ended

Dec. 31, 2013

Text Block [Abstract]

Acquisitions and Divestures

5. Acquisitions and Divestures

Business Acquisitions

All business acquisitions are included in the Company’s results of operations from their respective acquisition dates.

2013 Business Acquisition

On December 19, 2013, the Company acquired Mustang Technology Group, L.P. (Mustang) business for an aggregate purchase price of $54 million, which was financed with cash on hand. The purchase price is subject to adjustment based on closing date net working capital. Mustang develops and manufactures radar-based sensors and systems used in precision-guided weapons, electronic warfare, unmanned systems and other military applications. Based on the preliminary purchase price allocations, the aggregate goodwill recognized for this business was $44 million, most of which is expected to be deductible for income tax purposes. The goodwill was assigned to the Electronic Systems reportable segment. The final purchase price allocation is expected to be completed in the second quarter of 2014 and will be based on final purchase price, final appraisals and other analysis of fair values of acquired assets and liabilities. The Company does not expect differences between the preliminary and final purchase price allocations to have a material impact on its results of operations or financial position.

2012 Business Acquisitions

During the year ended December 31, 2012, in separate transactions, the Company acquired three businesses for an aggregate purchase price of $349 million, which were financed with cash on hand. Based on the final purchase price allocations, the aggregate goodwill recognized for these businesses was $278 million, of which $182 million is expected to be deductible for income tax purposes. The goodwill was assigned to the Electronic Systems reportable segment. A description of each business acquisition made by the Company during the year ended December 31, 2012 is listed below:

• On February 6, 2012, the Company acquired the Kollmorgen Electro-Optical business (named L-3 KEO). L-3 KEO develops and manufactures specialized equipment, including submarine photonics systems and periscopes, ship fire control systems, visual landing aids and ground electro-optical and sensor-cueing systems for the U.S. military and allied international governments.

• On April 13, 2012, the Company acquired the assets and liabilities of MAVCO, Inc. (MAVCO). MAVCO is an audio, video, lighting and broadcast systems integrations business primarily for cruise lines.

• On August 6, 2012, the Company acquired the commercial aircraft simulation business from Thales Group (named Link Simulation & Training U.K. Limited (Link U.K.)). Link U.K. is a leading manufacturer of flight simulation systems for the commercial aviation market.

The purchase prices and purchase price allocations for L-3 KEO and MAVCO were finalized as of June 28, 2013 and December 31, 2012, respectively, with no significant changes from the preliminary amounts. The Link U.K. purchase price allocation was finalized as of September 27, 2013 based on the results of the final appraisals and valuations of the assets and liabilities acquired and estimated final closing date net working capital. The final purchase price allocations resulted in certain adjustments to the preliminary valuations, the most significant of which included an increase to goodwill of $32 million, which included $4 million for foreign currency translation adjustments, an increase to other liabilities of $17 million, and a decrease of $16 million to contracts in process. The purchase price for Link U.K. was finalized in the fourth quarter of 2013 and resulted in a $6 million final net working capital adjustment that had been previously accrued. As discussed in Note 2, the audited condensed consolidated balance sheet as of December 31, 2012 has been revised for these adjustments in accordance with accounting standards for business combinations.

2011 Business Acquisitions

During the year ended December 31, 2011, in separate transactions, the Company acquired two businesses for an aggregate purchase price of $18 million, which were financed with cash on hand. Based on final purchase price allocations, the aggregate goodwill recognized for these businesses was $19 million, of which $14 million is expected to be deductible for income tax purposes. The goodwill was assigned to the reportable segments listed below:

Segment	December 31, 2013
	(in millions)
Electronic Systems	$	10
Communication Systems		9
Total	$	19

A description of each business acquisition made by the Company during the year ended December 31, 2011 is listed below:

• On July 1, 2011, the Company acquired the communications and engineering business of ComHouse Wireless L.P. (ComHouse). The acquired business provides L-3 with cellular wave form modulation technology that can be used to counter improvised explosive devices.

• On October 28, 2011, the Company acquired the cargo radiation screening business of Detector Networks International LLC (DNI). The purchase price for DNI is subject to additional, contingent consideration not to exceed $10 million and is based on DNI’s post-acquisition financial performance through December 31, 2014. The Company recorded a $7 million liability on the acquisition date for the fair value of the contingent consideration, which was reduced by $2 million in 2012 and $5 million in 2013 due to lower than expected financial performance.

The purchase prices for ComHouse and DNI are final and the purchase price allocations for these acquisitions were completed with no significant changes from the preliminary amounts.

Business Divestitures

2012 Spin-off of Engility

The Company completed the spin-off of its subsidiary, Engility Holdings, Inc. (Engility), on July 17, 2012. In connection with the spin-off, Engility made a cash distribution of $335 million to L-3. A portion of the proceeds were used to redeem $250 million of the 6 ³⁄₈% Senior Subordinated Notes due 2015 (6 ³⁄₈% 2015 Notes) on July 26, 2012. There was no gain or loss recognized by L-3 as a result of the spin-off transaction.

Prior to the completion of the spin-off, L-3 and Engility entered into a Distribution Agreement dated July 16, 2012 and several other agreements that govern certain aspects of L-3’s relationship with Engility. These agreements generally provide that each party is responsible for its respective assets, liabilities and obligations, including employee benefits, insurance and tax-related assets and liabilities, following the spin-off, whether accrued or contingent. The agreements also described certain services that L-3 provided to Engility that were substantially completed by December 31, 2013.

L-3 incurred transaction expenses in connection with the spin-off of $19 million ($14 million after income taxes) for the year ended December 31, 2012 and $9 million ($7 million after income taxes) for the year ended December 31, 2011, which have been included in discontinued operations. In addition, L-3 allocated interest expense for debt not directly attributable or related to L-3’s other operations of $14 million and $31 million to discontinued operations for the years ended December 31, 2012 and 2011, respectively. Interest expense was allocated in accordance with the accounting standards for discontinued operations and was based on the ratio of Engility net assets to the sum of: (1) total L-3 consolidated net assets and (2) L-3 consolidated total debt.

Engility’s statement of operations data, which has been classified as discontinued operations, is provided in the table below.

	January 1 to July 17, 2012		Year Ended December 31, 2011
	(in millions)
Product and service revenues	$	911	$	2,011
Operating income from discontinued operations before income taxes		68		199
Interest expense allocated to discontinued operations		(14)		(31)
Income from discontinued operations before income taxes	$	54	$	168
Income tax expense		(22)		(64)
Income from discontinued operations, net of income taxes	$	32	$	104
Net income from discontinued operations attributable to noncontrolling interests		(4)		(3)
Net income from discontinued operations attributable to L-3	$	28	$	101

2011 Business Divestiture

On February 22, 2011, the Company divested the MOI business of Microdyne Corporation (Microdyne), which was within the Electronic Systems segment. The divestiture resulted in a pre-tax loss of $2 million. Microdyne’s annual revenues (approximately $8 million), operating results and net assets were not material for any period presented and, therefore, this divestiture is not reported as a discontinued operation. The net proceeds from the sale are included in investing activities on the Consolidated Statement of Cash Flows.

Unaudited Pro Forma Statements of Operations Data

The following unaudited pro forma Statements of Operations data presents the combined results of the Company and its business acquisitions completed during the years ended December 31, 2013, 2012 and 2011, assuming that the business acquisitions completed during 2013, 2012 and 2011 had occurred on January 1, 2011.

	Year Ended December 31,
	2013		2012		2011
	(in millions, except per share data)
Pro forma net sales	$	12,657	$	13,239	$	13,498
Pro forma income from continuing operations	$	760	$	764	$	883
Pro forma net income attributable to L-3	$	751	$	786	$	975
Pro forma diluted earnings per share from continuing operations	$	8.24	$	7.76	$	8.26
Pro forma diluted earnings per share	$	8.24	$	8.05	$	9.21

The unaudited pro forma results disclosed in the table above are based on various assumptions and are not necessarily indicative of the results of operations that would have occurred had the Company completed these acquisitions on the dates indicated above.

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Pensions and Other Employee Benefits - Cash Contributions and Expenses under Multi-Employer Benefit Plans (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Multiemployer Plans [Line Items]
Contributions by L-3 Communications	$ 21	$ 20	$ 19
IAM National Pension Fund [Member]
Multiemployer Plans [Line Items]
Contributions by L-3 Communications	21	20	19
EIN/Pension Plan Number	51-6031295/002
Pension Protection Act Zone Status	Green	Green
FIP/RP Status Pending/Implemented	No
Surcharge Imposed	No
Expiration Date of Collective-Bargaining Agreement, First	Feb. 14, 2014
Expiration Date of Collective-Bargaining Agreement, Last	Jan. 29, 2016
Other Pension Funds [Member]
Multiemployer Plans [Line Items]
Contributions by L-3 Communications

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Inventories

12 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Inventories

7. Inventories

Inventories at Lower of Cost or Market. The table below presents the components of inventories at the lower of cost (first-in, first-out or average cost) or realizable value.

	December 31,
	2013		2012
	(in millions)
Raw materials, components and sub-assemblies	$	160	$	166
Work in process		125		121
Finished goods		74		71
Total	$	359	$	358

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Revisions to Previously Issued Financial Statements - Schedule of Nature of Adjustments, Applicable Segment, Amount of Increase (or Decrease) to Sales and Operating Income, Period Recorded and Correct Period (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 27, 2013	Jun. 28, 2013	Mar. 29, 2013	Dec. 31, 2012	Sep. 28, 2012	Jun. 29, 2012	Mar. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales									$ 12,622	$ 13,107	$ 13,154
Operating income	306	306	290	310	339	319	328	322	1,212	1,308	1,398
Out of Period Amounts [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales									39	(36)	(3)
Operating income									14	(18)	4
Out of Period Amounts [Member] | Communication Systems [Member] | Higher Development and Material Costs for Networked Communications Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales									10	(10)
Operating income									10	(10)
Out of Period Amounts [Member] | Aerospace Systems [Member] | Sub-Contractor Subscription Deposit [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales									26	(26)
Operating income									2	(2)
Out of Period Amounts [Member] | Aerospace Systems [Member] | Costs Accruals for Goods/Services Received [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales									5	(5)
Operating income									1	(1)
Out of Period Amounts [Member] | Aerospace Systems [Member] | Unrecorded Liabilities [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales									(2)	2
Operating income
Out of Period Amounts [Member] | Aerospace Systems [Member] | Accrued Vacation [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales
Operating income									1	(1)
Out of Period Amounts [Member] | Electronic Systems [Member] | Warranty Reserve [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales										3	(3)
Operating income										(4)	4
As Previously Reported [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales									12,629	13,146	13,158
Operating income									1,258	1,351	1,399
As Previously Reported [Member] | Out of Period Amounts [Member] | Communication Systems [Member] | Higher Development and Material Costs for Networked Communications Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Period of adjustment									1Q 2013
As Previously Reported [Member] | Out of Period Amounts [Member] | Aerospace Systems [Member] | Sub-Contractor Subscription Deposit [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Period of adjustment									4Q 2012
As Previously Reported [Member] | Out of Period Amounts [Member] | Aerospace Systems [Member] | Costs Accruals for Goods/Services Received [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Period of adjustment									4Q 2012
As Previously Reported [Member] | Out of Period Amounts [Member] | Aerospace Systems [Member] | Unrecorded Liabilities [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Period of adjustment									1Q 2013
As Previously Reported [Member] | Out of Period Amounts [Member] | Aerospace Systems [Member] | Accrued Vacation [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Period of adjustment									4Q 2013
As Previously Reported [Member] | Out of Period Amounts [Member] | Electronic Systems [Member] | Warranty Reserve [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Period of adjustment									3Q 2012
Restatement Adjustments [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales									(7)	(38)	(4)
Restatement Adjustments [Member] | Out of Period Amounts [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales									39	(37)	(3)
Operating income									14	(18)	4
Restatement Adjustments [Member] | Out of Period Amounts [Member] | Communication Systems [Member] | Higher Development and Material Costs for Networked Communications Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Period of adjustment									4Q 2012
Restatement Adjustments [Member] | Out of Period Amounts [Member] | Aerospace Systems [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Sales									$ 39	$ (36)	$ (3)
Restatement Adjustments [Member] | Out of Period Amounts [Member] | Aerospace Systems [Member] | Sub-Contractor Subscription Deposit [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Period of adjustment									1Q, 2Q, 3Q & Q4 2013
Restatement Adjustments [Member] | Out of Period Amounts [Member] | Aerospace Systems [Member] | Costs Accruals for Goods/Services Received [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Period of adjustment									1Q 2013
Restatement Adjustments [Member] | Out of Period Amounts [Member] | Aerospace Systems [Member] | Unrecorded Liabilities [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Period of adjustment									4Q 2012
Restatement Adjustments [Member] | Out of Period Amounts [Member] | Aerospace Systems [Member] | Accrued Vacation [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Period of adjustment									4Q 2012, 1Q, 2Q & 3Q 2013
Restatement Adjustments [Member] | Out of Period Amounts [Member] | Electronic Systems [Member] | Warranty Reserve [Member]
Quantifying Misstatement in Current Year Financial Statements [Line Items]
Period of adjustment									4Q 2011

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Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013 Agreement	Dec. 31, 2012	Dec. 31, 2011	May 31, 2012	Mar. 09, 2010	Jul. 01, 2004
Commitments and Contingencies Disclosure [Abstract]
Rent expense, net of sublease income	$ 141	$ 145	$ 140
Sublease rental income	6	5	5
Total outstanding letters of credit	634	504
Outstanding letters of credit	1	1
Number of existing real estate lease agreements	2
Real estate lease agreements, expiry date	Aug. 31, 2015
Purchase price of property on or before expiration date	28
Residual guarantee amount	23
Maximum amount of supplemental rent payment	5
Aggregate residual guarantee amount	23
Term for operating lease agreements (in years)	15 years
Fair market value of simulator systems, Minimum	7
Fair market value of simulator systems, Maximum	21
Additional rent to be paid for simulator systems after expiration date	7
Kalitta Air damages, minimum	235
Pre-judgment interest in Kalitta Air damages, minimum	240
Total damages sought						315
Punitive damages sought						150
Compensatory damages				$ 48.0	$ 6.7

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Other Current Liabilities and Other Liabilities - Other Current Liabilities (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Other Current Liabilities:
Accruals for pending and threatened litigation (see Note 20)	$ 6	$ 7
Estimated costs in excess of estimated contract value to complete contracts in process in a loss position	78	96
Accrued product warranty costs	75	76
Accrued interest	52	53
Deferred revenues	35	35
Estimated contingent purchase price payable for acquired businesses		4
Other	137	121
Total other current liabilities	$ 383	$ 392

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Revisions to Previously Issued Financial Statements - Condensed Combining Balance Sheets (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 500	$ 349	$ 764	$ 607
Billed receivables, net of allowances	991	968
Contracts in process	2,431	2,510
Inventories	359	358
Deferred income taxes	147	113
Other current assets	166	186
Total current assets	4,594	4,484
Property, plant and equipment, net	1,042	1,023
Goodwill	7,796	7,776	7,472
Identifiable intangible assets	285	314
Deferred debt issue costs	24	29
Other assets	247	174
Total assets	13,988	13,800	15,520
Current liabilities:
Accounts payable, trade	541	505
Accrued employment costs	545	555
Accrued expenses	458	469
Advance payments and billings in excess of costs incurred	576	621
Income taxes	31	21
Other current liabilities	383	392
Total current liabilities	2,534	2,563
Pension and postretirement benefits	727	1,360
Deferred income taxes	635	328
Other liabilities	406	393
Long-term debt	3,630	3,629
Total liabilities	7,932	8,273
L-3 shareholders' equity:
L-3 Communications Holdings, Inc.'s common stock	5,653	5,314
L-3 Communications Holdings, Inc.'s treasury stock at cost	(5,288)	(4,488)
Retained earnings	5,726	5,175
Accumulated other comprehensive loss	(110)	(550)	(454)	(256)
Total L-3 shareholders' equity	5,981	5,451
Noncontrolling interests	75	76
Total equity	6,056	5,527	6,733	6,862
Total liabilities and equity	13,988	13,800
As Previously Reported [Member]
Current assets:
Cash and cash equivalents	500	349
Billed receivables, net of allowances	1,015	968
Contracts in process	2,524	2,597
Inventories	359	358
Deferred income taxes	122	95
Other current assets	129	138
Total current assets	4,649	4,505
Property, plant and equipment, net	1,039	1,016
Goodwill	7,796	7,776
Identifiable intangible assets	285	314
Deferred debt issue costs	24	29
Other assets	216	151
Total assets	14,009	13,791
Current liabilities:
Accounts payable, trade	541	494
Accrued employment costs	543	551
Accrued expenses	455	469
Advance payments and billings in excess of costs incurred	570	620
Income taxes	31	21
Other current liabilities	383	392
Total current liabilities	2,523	2,547
Pension and postretirement benefits	727	1,360
Deferred income taxes	635	328
Other liabilities	396	384
Long-term debt	3,630	3,629
Total liabilities	7,911	8,248
L-3 shareholders' equity:
L-3 Communications Holdings, Inc.'s common stock	5,653	5,314
L-3 Communications Holdings, Inc.'s treasury stock at cost	(5,288)	(4,488)
Retained earnings	5,768	5,191
Accumulated other comprehensive loss	(110)	(550)
Total L-3 shareholders' equity	6,023	5,467
Noncontrolling interests	75	76
Total equity	6,098	5,543
Total liabilities and equity	14,009	13,791
Restatement Adjustments [Member] | Aerospace Systems Segment Internal Review [Member ]
Current assets:
Cash and cash equivalents
Billed receivables, net of allowances	(24)
Contracts in process	(67)	(30)
Inventories
Deferred income taxes	25	12
Other current assets	9
Total current assets	(57)	(18)
Property, plant and equipment, net	3	1
Goodwill
Identifiable intangible assets
Deferred debt issue costs
Other assets
Total assets	(54)	(17)
Current liabilities:
Accounts payable, trade
Accrued employment costs	2	2
Accrued expenses	3	1
Advance payments and billings in excess of costs incurred	1	1
Income taxes
Other current liabilities
Total current liabilities	6	4
Pension and postretirement benefits
Deferred income taxes
Other liabilities
Long-term debt
Total liabilities	6	4
L-3 shareholders' equity:
L-3 Communications Holdings, Inc.'s common stock
L-3 Communications Holdings, Inc.'s treasury stock at cost
Retained earnings	(60)	(22)
Accumulated other comprehensive loss
Total L-3 shareholders' equity	(60)	(22)
Noncontrolling interests
Total equity	(60)	(22)
Total liabilities and equity	(54)	(18)
Restatement Adjustments [Member] | Sales-Type Lease Transaction [Member]
Current assets:
Cash and cash equivalents
Billed receivables, net of allowances
Contracts in process	(26)	(45)
Inventories
Deferred income taxes
Other current assets	28	45
Total current assets	2
Property, plant and equipment, net
Goodwill
Identifiable intangible assets
Deferred debt issue costs
Other assets	31	23
Total assets	33	23
Current liabilities:
Accounts payable, trade
Accrued employment costs
Accrued expenses
Advance payments and billings in excess of costs incurred	5
Income taxes
Other current liabilities
Total current liabilities	5
Pension and postretirement benefits
Deferred income taxes
Other liabilities	10	9
Long-term debt
Total liabilities	15	9
L-3 shareholders' equity:
L-3 Communications Holdings, Inc.'s common stock
L-3 Communications Holdings, Inc.'s treasury stock at cost
Retained earnings	17	14
Accumulated other comprehensive loss
Total L-3 shareholders' equity	17	14
Noncontrolling interests
Total equity	17	14
Total liabilities and equity	32	23
Restatement Adjustments [Member] | Out of Period Amounts [Member]
Current assets:
Cash and cash equivalents
Billed receivables, net of allowances
Contracts in process		(12)
Inventories
Deferred income taxes		6
Other current assets		3
Total current assets		(3)
Property, plant and equipment, net		6
Goodwill
Identifiable intangible assets
Deferred debt issue costs
Other assets
Total assets		3
Current liabilities:
Accounts payable, trade		11
Accrued employment costs		2
Accrued expenses		(1)
Advance payments and billings in excess of costs incurred
Income taxes
Other current liabilities
Total current liabilities		12
Pension and postretirement benefits
Deferred income taxes
Other liabilities
Long-term debt
Total liabilities		12
L-3 shareholders' equity:
L-3 Communications Holdings, Inc.'s common stock
L-3 Communications Holdings, Inc.'s treasury stock at cost
Retained earnings	1	(8)
Accumulated other comprehensive loss
Total L-3 shareholders' equity	1	(8)
Noncontrolling interests
Total equity	1	(8)
Total liabilities and equity	$ 1	$ 4

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Derivative Financial Instruments - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Estimated amount of existing losses expected to be reclassified into income within the next 12 months	$ 1

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Revisions to Previously Issued Financial Statements - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Change in Accounting Estimate [Line Items]
Aggregate pre-tax charge as a result of internal review	$ 1,055	$ 1,122	$ 1,162
Sales-Type Lease Transaction [Member]
Change in Accounting Estimate [Line Items]
Lease period	The period of performance under this contract began in 2004 and ends in 2023.
Increase in interest income	5	3	3
Decrease in sales	(7)
Decrease in cost of sales	(7)
Aerospace Systems [Member] | Total Internal Review of Aerospace Systems Segment [Member]
Change in Accounting Estimate [Line Items]
Aggregate pre-tax charge as a result of internal review	(60)	(25)	(5)
Aerospace Systems [Member] | Logistics Solutions [Member]
Change in Accounting Estimate [Line Items]
Cumulative aggregate adjustments	(82)
Aerospace Systems [Member] | Platform Systems [Member]
Change in Accounting Estimate [Line Items]
Cumulative aggregate adjustments	(12)
Cumulative aggregate adjustments losses	2
Adjustment description	The Platform Systems sector adjustments are primarily due to (1) losses on two aircraft modification contracts and two contracts for rotary wing sub-assemblies and parts, and (2) write-offs of deferred costs to design, test and supply aerostructures for a new commercial aircraft.
Write-offs of deferred costs	10
Aerospace Systems [Member] | Army C-12 Contract [Member]
Change in Accounting Estimate [Line Items]
Cumulative aggregate adjustments losses	54
Aerospace Systems [Member] | Other Logistics Support Contracts [Member]
Change in Accounting Estimate [Line Items]
Cumulative aggregate adjustments losses	28
Prior to 2011 [Member] | Sales-Type Lease Transaction [Member]
Change in Accounting Estimate [Line Items]
Increase in interest income	12
Decrease in cost of sales	(5)
Prior to 2011 [Member] | Aerospace Systems [Member] | Total Internal Review of Aerospace Systems Segment [Member]
Change in Accounting Estimate [Line Items]
Aggregate pre-tax charge as a result of internal review			$ (4)

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Debt - Information Regarding Outstanding Senior Subordinated Note (Parenthetical) (Detail) (L-3 Communications Corporation [Member])	12 Months Ended
	Dec. 31, 2013
L-3 Communications Corporation [Member]
Debt Instrument [Line Items]
Redemption price as percentage of principal amount	100.00%
Senior notes redemption price	101.00%

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Pensions and Other Employee Benefits - Amounts Expected to be Amortized from Accumulated Other Comprehensive Income (Loss) and Recognized as Components of Net Periodic Benefit Costs (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Defined Benefit Plan Disclosure [Line Items]
Net loss (gain)	$ 16
Prior service cost (credit)
Total amount expected to be amortized	16
Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Net loss (gain)	17
Prior service cost (credit)	2
Total amount expected to be amortized	19
Postretirement Benefit Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Net loss (gain)	(1)
Prior service cost (credit)	(2)
Total amount expected to be amortized	$ (3)

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Unaudited Quarterly Financial Data

12 Months Ended

Dec. 31, 2013

Quarterly Financial Information Disclosure [Abstract]

Unaudited Quarterly Financial Data

25. Unaudited Quarterly Financial Data

Unaudited summarized financial data by quarter for the years ended December 31, 2013 and 2012 is presented in the table below. The Company’s unaudited quarterly results of operations are affected, significantly in some periods, by our business acquisitions. See Note 5.

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	(in millions, except per share data)
2013
Sales	$	3,197	$	3,189	$	3,002	$	3,234
Operating income		310		290		306		306
Income from continuing operations		192		176		204		188
Net income attributable to L-3		191		175		200		185
Basic EPS(1) (2)		2.12		1.95		2.23		2.10
Diluted EPS(1) (2)		2.09		1.92		2.19		2.04
2012
Sales	$	3,160	$	3,143	$	3,284	$	3,520
Operating income		322		328		319		339
Income from continuing operations		186		189		188		199
Net income attributable to L-3		200		203		185		196
Basic EPS from continuing operations(1)		1.88		1.93		1.94		2.11
Diluted EPS from continuing operations(1)		1.86		1.91		1.91		2.08
Basic EPS(1)		2.02		2.09		1.93		2.11
Diluted EPS(1)		2.00		2.06		1.90		2.08

⁽¹⁾  EPS in each quarter is computed using the weighted-average number of shares outstanding during that quarter, while EPS for the full year is computed using the weighted-average number of shares outstanding during the year. Therefore, the sum of the four quarters’ EPS may not equal the full year computed EPS.

⁽²⁾  EPS and EPS from continuing operations are the same in 2013.

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Segment Information - Net Sales to Principal Customers (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Net sales	$ 12,622	$ 13,107	$ 13,154
Operating Segments [Member] | U.S. Government Agencies [Member]
Segment Reporting Information [Line Items]
Net sales	9,186	9,986	10,438
Operating Segments [Member] | Commercial [Member]
Segment Reporting Information [Line Items]
Net sales	1,689	1,658	1,524
Operating Segments [Member] | Allied International Governments [Member]
Segment Reporting Information [Line Items]
Net sales	$ 1,747	$ 1,463	$ 1,192

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income from Continuing Operations Before Income Taxes

Income from continuing operations before income taxes is summarized in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Domestic	$	858	$	892	$	895
Foreign		197		230		267
Income from continuing operations before income taxes	$	1,055	$	1,122	$	1,162

Components of Current and Deferred Portions of Provision for Income Taxes on Continuing Operations

The components of the Company’s current and deferred portions of the provision for income taxes on continuing operations are presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Current income tax provision:
Federal	$	181	$	198	$	78
State and local		34		21		26
Foreign		38		44		69
Subtotal		253		263		173
Deferred income tax provision:
Federal		35		80		95
State and local		—		8		15
Foreign		7		9		13
Subtotal		42		97		123
Total provision for income taxes	$	295	$	360	$	296

Reconciliation of Statutory Federal Income Tax Rate to Effective Income Tax Rate on Continuing Operations

A reconciliation of the statutory federal income tax rate to the effective income tax rate on continuing operations of the Company is presented in the table below.

	Year Ended December 31,
	2013		2012		2011
Statutory federal income tax rate		35.0%		35.0%	35.0%
State and local income taxes, net of federal income tax benefit		2.1		1.7	2.3
Foreign income taxes		(1.6)		(2.0)	(2.6)
Manufacturing benefits		(1.9)		(1.8)	(1.5)
Research and experimentation and other tax credits		(3.6)		(0.5)	(1.1)
Resolution of tax contingencies		(1.0)		(0.9)	(7.7)
Goodwill impairment		—		—	1.2
Other, net		(1.0)		0.6	(0.1)
Effective income tax rate on continuing operations		28.0%		32.1%	25.5%

Components of Net Deferred Tax Assets and Liabilities

The significant components of the Company’s net deferred tax assets and liabilities are presented in the table below.

	December 31,
	2013		2012
	(in millions)
Deferred tax assets:
Inventoried costs	$	72	$	33
Compensation and benefits		164		114
Pension and postretirement benefits		207		444
Loss carryforwards		24		20
Tax credit carryforwards		7		9
Other		75		48
Gross deferred tax assets		549		668
Less: valuation allowance		(22)		(19)
Net deferred tax assets		527		649
Deferred tax liabilities:
Goodwill and other intangible assets	$	726	$	657
Income recognition on contracts in process		58		56
Property, plant and equipment		85		71
Long-term debt-CODES		81		73
Other		65		7
Gross deferred tax liabilities		1,015		864
Total net deferred tax liabilities	$	(488)	$	(215)

Classification of Deferred Tax Assets and Liabilities

The classification of the Company’s deferred tax assets and liabilities are presented in the table below.

	December 31,
	2013		2012
	(in millions)
Current deferred tax assets	$	147	$	113
Non-current deferred tax liabilities		(635)		(328)
Total net deferred tax liabilities	$	(488)	$	(215)

Reconciliation of Change in Unrecognized Income Tax Benefits, Excluding Interest and Penalties

A reconciliation of the change in unrecognized income tax benefits, excluding potential interest and penalties, is presented in the table below.

	2013		2012		2011
	(in millions)
Balance at January 1	$	138	$	150	$	201
Additions for tax positions related to the current year		18		8		10
Additions for tax positions related to prior years		41		9		33
Reductions for tax positions related to prior years		(8)		(13)		(13)
Reductions for tax positions related to settlements with taxing authorities		—		(1)		(5)
Reduction for tax positions related to prior years as a result of a lapse of statute of limitations		(20)		(15)		(76)
Balance at December 31	$	169	$	138	$	150

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Accumulated Other Comprehensive (Loss) Income

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

Accumulated Other Comprehensive (Loss) Income

12. Accumulated Other Comprehensive (Loss) Income

The changes in the accumulated other comprehensive (loss) income (AOCI) balances, net of related tax effects are presented in the table below.

	Foreign currency translation		Unrealized gains (losses) on hedging instruments		Unrecognized (losses) gains and prior service cost, net		Total accumulated other comprehensive loss
	(in millions)
Balance at December 31, 2010	$	161	$	10	$	(427)	$	(256)
Period change		(28)		(10)		(160)		(198)
Balance at December 31, 2011	$	133	$	—	$	(587)	$	(454)
Period change		34		3		(133)		(96)
Balance at December 31, 2012	$	167	$	3	$	(720)	$	(550)
Period change		(25)		(2)		467		440
Balance at December 31, 2013	$	142	$	1	$	(253)	$	(110)

The amounts reclassified from AOCI are presented in the table below.

	Foreign currency translation		Unrealized gains (losses) on hedging instruments		Unrecognized (losses) and prior service cost, net		Total accumulated other comprehensive (loss) income
	(in millions)
Balance at December 31, 2012	$	167	$	3	$	(720)	$	(550)
Other comprehensive (loss) income before reclassifications, net of tax		(25)		(1)		414		388
Amounts reclassified from other comprehensive (loss) income, net of tax		—		(1)		53		52
Net current period other comprehensive (loss) income		(25)		(2)		467		440
Balance at December 31, 2013	$	142	$	1	$	(253)	$	(110)

Further details regarding the amounts reclassified from AOCI are presented in the table below.

	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income
Details About Accumulated Other Comprehensive (Loss) Income Components	Year ended December 31, 2013		Affected Line Item in the Audited Consolidated Statement of Operations
	(millions)
Loss on hedging instruments	$	(1)	Cost of sales-products
		(1)	Income from continuing operations before income taxes
		—	Provision for income taxes
	$	(1)	Income from continuing operations
Amortization of defined benefit pension items:
Net loss	$	83	(a)
		83	Income from continuing operations before income taxes
		(30)	Provision for income taxes
	$	53	Income from continuing operations
Total reclassification for the period	$	52	Income from continuing operations

^(a)  Amounts related to pension and postretirement benefit plans were reclassified from AOCI and recorded as a component of net periodic benefit cost (see Note 21 for additional information).

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Stock-Based Compensation - Company's Stock Option Activity and Changes (Detail) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Beginning Balance, Number of Options Outstanding	4,989,900
Options granted, Number of Options	741,700
Options exercised, Number of Options	(1,770,400)
Options forfeited, Number of Options	(78,300)
Ending Balance, Number of Options Outstanding	3,882,900	4,989,900
Vested and expected to vest, Number of Options	3,865,900
Exercisable, Number of Options	2,420,900
Beginning Balance, Weighted Average Exercise Price Outstanding	$ 76.57
Options granted, Weighted Average Exercise Price	$ 77.00
Options exercised, Weighted Average Exercise Price	$ 73.24
Options forfeited, Weighted Average Exercise Price	$ 89.93
Ending Balance, Weighted Average Exercise Price Outstanding	$ 77.90	$ 76.57
Vested and expected to vest, Weighted Average Exercise Price	$ 77.91
Exercisable, Weighted Average Exercise Price	$ 80.44
Weighted Average Remaining Contractual Term Outstanding	6 years 2 months 12 days	5 years 9 months 18 days
Vested and expected to vest, Weighted Average Remaining Contractual Term	6 years 2 months 12 days
Exercisable, Weighted Average Remaining Contractual Term	4 years 10 months 24 days
Beginning Balance, Aggregate Intrinsic Value Outstanding	$ 23
Ending Balance, Aggregate Intrinsic Value Outstanding	112	23
Vested and expected to vest, Aggregate Intrinsic Value	112
Exercisable, Aggregate Intrinsic Value	$ 64

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L-3 Holdings' Earnings Per Share

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

L-3 Holdings' Earnings Per Share

17. L-3 Holdings’ Earnings Per Share

A reconciliation of basic and diluted EPS is presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions, except per share data)
Reconciliation of net income:
Net income	$	760	$	794	$	970
Net income from continuing operations attributable to noncontrolling interests		(9)		(6)		(9)
Net income from discontinued operations attributable to noncontrolling interests		—		(4)		(3)
Net income allocable to participating securities		—		—		(2)
Net income allocable to L-3 Holdings common shareholders	$	751	$	784	$	956
Earnings allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	751	$	756	$	855
Discontinued operations, net of income tax		—		28		101
Net income allocable to L-3 Holdings common shareholders	$	751	$	784	$	956
Earnings per share allocable to L-3 Holdings’ common shareholders:
Basic:
Weighted average common shares outstanding		89.4		96.3		104.4
Basic earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.40	$	7.85	$	8.19
Discontinued operations, net of income tax		—		0.29		0.97
Basic earnings per share	$	8.40	$	8.14	$	9.16
Diluted:
Common and potential common shares:
Weighted average common shares outstanding		89.4		96.3		104.4
Assumed exercise of stock options		3.9		1.9		2.0
Unvested restricted stock awards		1.8		2.0		1.8
Employee stock purchase plan contributions		0.2		0.3		0.2
Performance unit awards		0.1		0.1		0.1
Assumed purchase of common shares for treasury		(4.5)		(3.0)		(2.9)
Assumed conversion of the CODES(1)		0.2		—		—
Common and potential common shares		91.1		97.6		105.6
Diluted earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.24	$	7.74	$	8.10
Discontinued operations, net of income tax		—		0.29		0.95
Diluted earnings per share	$	8.24	$	8.03	$	9.05

⁽¹⁾  L-3 Holdings’ CODES had no impact on diluted EPS for the years ended December 31, 2012 and 2011 because the average market price of L-3 Holdings’ common stock during these periods was less than the price at which the CODES would have been convertible into L-3 Holdings’ common stock. As of December 31, 2013, 2012 and 2011, the conversion prices were $90.24, $91.21 and $96.48, respectively.

The computation of diluted EPS excluded shares for stock options and employee stock purchase plan contributions of 0.9 million and 3.2 million for the years ended December 31, 2013 and 2012, as they were anti-dilutive. In addition, shares for stock options of 3.2 million for the year ended December 31, 2011, were anti-dilutive and excluded from diluted EPS.

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Accumulated Other Comprehensive (Loss) Income - Changes in Accumulated Other Comprehensive (Loss) Income Balances, Net of Related Tax Effects (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Beginning Balance	$ (550)	$ (454)	$ (256)
Period change	440	(96)	(198)
Ending Balance	(110)	(550)	(454)
Foreign Currency Translation [Member]
Beginning Balance	167	133	161
Period change	(25)	34	(28)
Ending Balance	142	167	133
Unrealized Gains (Losses) on Hedging Instruments [Member]
Beginning Balance	3		10
Period change	(2)	3	(10)
Ending Balance	1	3
Unrecognized (Losses) Gains and Prior Service Cost, Net [Member]
Beginning Balance	(720)	(587)	(427)
Period change	467	(133)	(160)
Ending Balance	$ (253)	$ (720)	$ (587)

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Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Notional Amounts of Company's Outstanding Foreign Currency Forward Contracts by Currency

The table below presents the notional amounts of the Company’s outstanding foreign currency forward contracts by currency as of December 31, 2013.

Currency	Notional Amount
	(in millions)
Canadian dollar	$	137
U.S. dollar		98
Euro		66
British pound		18
Other		2
Total	$	321

Fair Values and Location of Company's Derivative Instruments in Consolidated Balance Sheets

The table below presents the fair values and the location of the Company’s derivative instruments in the consolidated balance sheets.

	December 31, 2013								December 31, 2012
	Other Current Assets		Other Assets		Other Current Liabilities		Other Liabilities		Other Current Assets		Other Assets		Other Current Liabilities		Other Liabilities
	(in millions)
Derivatives designated as hedging instruments:
Foreign currency forward contracts(1)	$	5	$	1	$	3	$	2	$	4	$	4	$	2	$	1
Derivatives not designated as hedging instruments:
Foreign currency forward contracts(1)		—		—		—		—		—		—		—		—
Embedded derivative related to the CODES		—		—		—		—		—		—		—		—
Total derivative instruments	$	5	$	1	$	3	$	2	$	4	$	4	$	2	$	1

⁽¹⁾  See Note 14 for a description of the fair value hierarchy related to the Company’s foreign currency forward contracts.

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L-3 Holdings' Earnings Per Share - Additional Information (Detail) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Earnings Per Share [Abstract]
Shares excluded from computation of diluted earnings per share and employee stock purchase plan contributions	0.9	3.2	3.2

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Inventories (Tables)

12 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Inventories at Lower of Cost or Market

Inventories at Lower of Cost or Market. The table below presents the components of inventories at the lower of cost (first-in, first-out or average cost) or realizable value.

	December 31,
	2013		2012
	(in millions)
Raw materials, components and sub-assemblies	$	160	$	166
Work in process		125		121
Finished goods		74		71
Total	$	359	$	358

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Income Taxes - Components of Current and Deferred Portions of Provision for Income Taxes on Continuing Operations (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Current income tax provision:
Federal	$ 181	$ 198	$ 78
State and local	34	21	26
Foreign	38	44	69
Subtotal	253	263	173
Deferred income tax provision:
Federal	35	80	95
State and local		8	15
Foreign	7	9	13
Subtotal	42	97	123
Total provision for income taxes	$ 295	$ 360	$ 296

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Consolidated Statements of Comprehensive Income (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Statement of Comprehensive Income [Abstract]
Net income	$ 760		$ 794		$ 970
Other comprehensive (loss) income :
Foreign currency translation adjustments	(25)		34		(28)
Unrealized (losses) gains on hedging instruments	(2)	[1]	3	[1]	(10)	[1]
Pension and postretirement benefit plans:
Amortization of net loss and prior service cost previously recognized	53	[2]	42	[2]	30	[2]
Net prior service (costs) credit arising during the period	(9)	[3]	3	[3]	(1)	[3]
Net gain (loss) arising during the period	423	[4]	(178)	[4]	(189)	[4]
Net change in pension and postretirement benefit plans	467		(133)		(160)
Total other comprehensive gain (loss)	440		(96)		(198)
Comprehensive income	1,200		698		772
Comprehensive income attributable to noncontrolling interests	(9)		(10)		(12)
Comprehensive income attributable to L-3	$ 1,191		$ 688		$ 760

[1] Net of income tax benefits of $3 million in 2013, income taxes of $2 million in 2012 and income tax benefits of $7 million in 2011

[2] Net of income taxes of $30 million in 2013, $26 million in 2012 and $18 million in 2011

[3] Net of income tax benefits of $5 million in 2013, income taxes of $2 million in 2012 and income tax benefits of $1 million in 2011

[4] Net of income taxes of $243 million in 2013 and income tax benefits of $105 million in 2012 and $87 million in 2011

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Debt - Components of Long-Term Debt and Reconciliation to Carrying Amount of Long-Term Debt (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Borrowings under Amended and Restated Revolving Credit Facility	$ 1	$ 1
L-3 Communications Corporation [Member]
Debt Instrument [Line Items]
Borrowings under Amended and Restated Revolving Credit Facility
3.95% Senior Notes due 2016	500	500
5.20% Senior Notes due 2019	1,000	1,000
4.75% Senior Notes due 2020	800	800
4.95% Senior Notes due 2021	650	650
Subtotal	2,950	2,950
L-3 Communications Holdings, Inc. [Member]
Debt Instrument [Line Items]
3% Convertible Contingent Debt Securities due 2035	689	689
Principal amount of long-term debt	3,639	3,639
Unamortized discounts	(9)	(10)
Carrying amount of long-term debt	$ 3,630	$ 3,629

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Description of Business

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Description of Business

1. Description of Business

L-3 Communications Holdings, Inc. derives all of its operating income and cash flows from its wholly-owned subsidiary, L-3 Communications Corporation (L-3 Communications). L-3 Communications Holdings, Inc. (L-3 Holdings and, together with its subsidiaries, referred to herein as L-3 or the Company) is a prime contractor in aerospace systems and national security solutions. L-3 is also a leading provider of a broad range of communication and electronic systems and products used on military and commercial platforms. The Company’s customers include the United States (U.S.) Department of Defense (DoD) and its prime contractors, U.S. Government intelligence agencies, the U.S. Department of Homeland Security (DHS), U.S. Department of State (DoS), allied international governments, and domestic and international commercial customers.

In the first quarter of 2014, the Company completed a realignment of its segments to better align its organizational structure with customer priorities and increase operational efficiencies. As a result of the realignment, L-3’s structure consists of four segments: (1) Aerospace Systems, (2) Electronic Systems, (3) Communication Systems, and (4) National Security Solutions (NSS). The audited consolidated financial statements have been recast for this segment structure. Aerospace Systems delivers integrated solutions for the global Intelligence, Surveillance and Reconnaissance (ISR) market and provides modernization, upgrade, sustainment, and maintenance and logistics support for a wide variety of aircraft and ground systems. Electronic Systems provides a broad range of components, products, subsystems, systems, and related services for military and commercial customers in several niche markets across several business areas. These business areas include precision engagement & training, power & propulsion systems, sensor systems, marine systems international, aviation products, warrior systems and security & detection. Communication Systems delivers products and services for the global communications market, specializing in strategic and tactical airborne, space, ground and sea-based communication systems. NSS provides cybersecurity solutions, high-performance computing, enterprise information technology (IT) services, analytics and intelligence analysis to the DoD, U.S. Government intelligence agencies, federal civilian agencies and allied international governments. Financial information with respect to each of our segments is included in Note 23 to our audited consolidated financial statements.

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Unaudited Quarterly Financial Data (Tables)

12 Months Ended

Dec. 31, 2013

Quarterly Financial Information Disclosure [Abstract]

Company's Unaudited Quarterly Results of Operations

Unaudited summarized financial data by quarter for the years ended December 31, 2013 and 2012 is presented in the table below. The Company’s unaudited quarterly results of operations are affected, significantly in some periods, by our business acquisitions. See Note 5.

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	(in millions, except per share data)
2013
Sales	$	3,197	$	3,189	$	3,002	$	3,234
Operating income		310		290		306		306
Income from continuing operations		192		176		204		188
Net income attributable to L-3		191		175		200		185
Basic EPS(1) (2)		2.12		1.95		2.23		2.10
Diluted EPS(1) (2)		2.09		1.92		2.19		2.04
2012
Sales	$	3,160	$	3,143	$	3,284	$	3,520
Operating income		322		328		319		339
Income from continuing operations		186		189		188		199
Net income attributable to L-3		200		203		185		196
Basic EPS from continuing operations(1)		1.88		1.93		1.94		2.11
Diluted EPS from continuing operations(1)		1.86		1.91		1.91		2.08
Basic EPS(1)		2.02		2.09		1.93		2.11
Diluted EPS(1)		2.00		2.06		1.90		2.08

⁽¹⁾  EPS in each quarter is computed using the weighted-average number of shares outstanding during that quarter, while EPS for the full year is computed using the weighted-average number of shares outstanding during the year. Therefore, the sum of the four quarters’ EPS may not equal the full year computed EPS.

⁽²⁾  EPS and EPS from continuing operations are the same in 2013.

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Goodwill and Identifiable Intangible Assets - Identifiable Intangible Assets (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (in years)	17 years
Gross Carrying Amount	$ 661	$ 651
Accumulated Amortization	376	337
Net Carrying Amount	285	314
Customer Contractual Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (in years)	19 years
Gross Carrying Amount	466	460
Accumulated Amortization	253	225
Net Carrying Amount	213	235
Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (in years)	11 years
Gross Carrying Amount	168	164
Accumulated Amortization	108	98
Net Carrying Amount	60	66
Other [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (in years)	17 years
Gross Carrying Amount	27	27
Accumulated Amortization	15	14
Net Carrying Amount	$ 12	$ 13

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Income Taxes - Income from Continuing Operations Before Income Taxes (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Abstract]
Domestic	$ 858	$ 892	$ 895
Foreign	197	230	267
Income from continuing operations before income taxes	$ 1,055	$ 1,122	$ 1,162

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Revisions to Previously Issued Financial Statements - Condensed Combining Statements of Operations (Parenthetical) (Detail) (Out of Period Amounts [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Out of Period Amounts [Member]
Revenue rounded off	$ 1

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Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

18. Income Taxes

Income from continuing operations before income taxes is summarized in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Domestic	$	858	$	892	$	895
Foreign		197		230		267
Income from continuing operations before income taxes	$	1,055	$	1,122	$	1,162

The components of the Company’s current and deferred portions of the provision for income taxes on continuing operations are presented in the table below.

	Year Ended December 31,
	2013		2012		2011
	(in millions)
Current income tax provision:
Federal	$	181	$	198	$	78
State and local		34		21		26
Foreign		38		44		69
Subtotal		253		263		173
Deferred income tax provision:
Federal		35		80		95
State and local		—		8		15
Foreign		7		9		13
Subtotal		42		97		123
Total provision for income taxes	$	295	$	360	$	296

A reconciliation of the statutory federal income tax rate to the effective income tax rate on continuing operations of the Company is presented in the table below.

	Year Ended December 31,
	2013		2012		2011
Statutory federal income tax rate		35.0%		35.0%	35.0%
State and local income taxes, net of federal income tax benefit		2.1		1.7	2.3
Foreign income taxes		(1.6)		(2.0)	(2.6)
Manufacturing benefits		(1.9)		(1.8)	(1.5)
Research and experimentation and other tax credits		(3.6)		(0.5)	(1.1)
Resolution of tax contingencies		(1.0)		(0.9)	(7.7)
Goodwill impairment		—		—	1.2
Other, net		(1.0)		0.6	(0.1)
Effective income tax rate on continuing operations		28.0%		32.1%	25.5%

The significant components of the Company’s net deferred tax assets and liabilities are presented in the table below.

	December 31,
	2013		2012
	(in millions)
Deferred tax assets:
Inventoried costs	$	72	$	33
Compensation and benefits		164		114
Pension and postretirement benefits		207		444
Loss carryforwards		24		20
Tax credit carryforwards		7		9
Other		75		48
Gross deferred tax assets		549		668
Less: valuation allowance		(22)		(19)
Net deferred tax assets		527		649
Deferred tax liabilities:
Goodwill and other intangible assets	$	726	$	657
Income recognition on contracts in process		58		56
Property, plant and equipment		85		71
Long-term debt-CODES		81		73
Other		65		7
Gross deferred tax liabilities		1,015		864
Total net deferred tax liabilities	$	(488)	$	(215)

The classification of the Company’s deferred tax assets and liabilities are presented in the table below.

	December 31,
	2013		2012
	(in millions)
Current deferred tax assets	$	147	$	113
Non-current deferred tax liabilities		(635)		(328)
Total net deferred tax liabilities	$	(488)	$	(215)

At December 31, 2013, the Company had approximately $26 million of capital loss carryforwards that will expire, if unused, beginning in 2016. The realizability of the $9 million resulting deferred tax asset depends on the Company generating a like amount of capital gains before the losses expire. The Company does not believe that it is more likely than not that it will generate sufficient capital gains during this time period, and has therefore established a full valuation allowance against the capital loss carryforward. The Company also has $6 million of Federal net operating loss carryforwards that expire, if unused, between 2026 and 2030 and are subject to limitations based upon the future taxable income of certain subsidiaries, and $34 million of foreign net operating losses that can be carried forward indefinitely. The Company has established a valuation allowance against the resulting $10 million deferred tax asset because it does not believe that it is more likely than not that the subsidiaries with the net operating losses will generate sufficient taxable income to utilize the losses. In addition, the Company had $124 million of state net operating losses that will expire, if unused, between 2016 and 2033 and $10 million of tax credit carryforwards related to state and foreign research and experimentation credits and investment tax credits that will expire, if unused, beginning in 2014. The Company believes that it will generate sufficient taxable income, of the appropriate character, to utilize $72 million of the state net operating losses and substantially all of the state and foreign credit carryforwards before they expire.

As of December 31, 2013, the total amount of unrecognized tax benefits was $169 million, $102 million of which would reduce the effective income tax rate, if recognized. A reconciliation of the change in unrecognized income tax benefits, excluding potential interest and penalties, is presented in the table below.

	2013		2012		2011
	(in millions)
Balance at January 1	$	138	$	150	$	201
Additions for tax positions related to the current year		18		8		10
Additions for tax positions related to prior years		41		9		33
Reductions for tax positions related to prior years		(8)		(13)		(13)
Reductions for tax positions related to settlements with taxing authorities		—		(1)		(5)
Reduction for tax positions related to prior years as a result of a lapse of statute of limitations		(20)		(15)		(76)
Balance at December 31	$	169	$	138	$	150

The Company and its subsidiaries file income tax returns in the U.S. Federal jurisdiction, which is the Company’s primary tax jurisdiction, and various state and foreign jurisdictions. The statutes of limitations for the Company’s U.S. Federal income tax returns for the years ended December 31, 2010 through 2012 are open as of December 31, 2013. The U.S. Internal Revenue Service (IRS) commenced audits of the Company’s U.S. Federal income tax returns for 2011 and 2010. The Company cannot predict the outcome of the audits at this time. As of December 31, 2013, the Company anticipates that unrecognized tax benefits will decrease by approximately $18 million over the next 12 months due to the potential resolution of unrecognized tax benefits involving several jurisdictions and tax periods. The actual amount could vary significantly depending on the ultimate timing and nature of any settlements.

During the years ended December 31, 2013 and 2012, the statutes of limitations for several of the Company’s tax returns, including its 2009 and 2008 U.S. Federal income tax returns, respectively, as well as certain foreign tax returns expired. As a result, the Company reduced its income tax provision by $10 million in both years ended December 31, 2013 and 2012 for the reversal of previously accrued amounts.

During the year ended December 31, 2011, the Company reached an agreement with the IRS relating to the audit of the Company’s 2006 and 2007 U.S. Federal income tax returns. The Company also reached agreement on several state and foreign audits. As a result of these agreements, the Company reversed previously accrued income tax expense of $12 million, including interest and penalties. In addition, the statutes of limitations for the 2006 and 2007 U.S. Federal income tax returns and certain foreign and state tax returns expired in 2011. As a result, the Company reversed $81 million of previously accrued income tax expense, which included interest and penalties.

As of December 31, 2013 and 2012, current and non-current income taxes payable include accrued potential interest of $11 million ($7 million after income taxes) and $11 million ($6 million after income taxes), respectively, and potential penalties of $8 million and $7 million, respectively. With respect to the interest related items, the Company’s income tax expense included a benefit of $2 million and $6 million for the years ended December 31, 2012 and 2011, respectively.

At December 31, 2013, the Company has not provided deferred U.S. income taxes and foreign withholding taxes for $325 million of undistributed earnings by its non-U.S. subsidiaries as such earnings are intended to be reinvested indefinitely. Quantification of additional taxes that may be payable on distribution is not practicable.

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Stock-Based Compensation - Company's Nonvested Restricted Stock Unit Awards and Changes (Detail) (USD $)	12 Months Ended
	Dec. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Beginning Balance, Number of Shares	1,729,700
Granted, Number of Shares	606,400
Vested, Number of Shares	(476,400)
Forfeited, Number of Shares	(85,900)
Ending Balance, Number of Shares	1,773,800
Beginning Balance, Weighted Average Grant Date Fair Value	$ 75.64
Granted, Weighted Average Grant Date Fair Value	$ 77.12
Vested, Weighted Average Grant Date Fair Value	$ 85.81
Forfeited, Weighted Average Grant Date Fair Value	$ 73.60
Ending Balance, Weighted Average Grant Date Fair Value	$ 73.51

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Pensions and Other Employee Benefits - Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost (Detail)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.15%	5.02%	5.57%
Expected long-term return on plan assets	8.13%	8.15%	8.57%
Rate of compensation increase	3.50%	4.06%	4.50%
Postretirement Benefit Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount rate	3.37%	4.71%	5.40%
Expected long-term return on plan assets	7.64%	7.64%	6.20%
Rate of compensation increase	3.50%	4.09%	4.50%

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Pensions and Other Employee Benefits - Weighted Average Assumptions Used to Determine Benefit Obligations (Parenthetical) (Detail)	Dec. 31, 2013	Dec. 31, 2012
U.S. Based Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Assumptions used to determine benefit obligations, Weighted average discount rate	5.10%	4.20%
Assumptions used to determine benefit obligations, Rate of compensation increase	3.50%	3.50%
Canadian Based Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Assumptions used to determine benefit obligations, Weighted average discount rate	4.70%	3.90%
Assumptions used to determine benefit obligations, Rate of compensation increase	3.50%	4.00%
German Based Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Assumptions used to determine benefit obligations, Weighted average discount rate	3.50%	3.40%
U.S. Based Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Assumptions used to determine benefit obligations, Weighted average discount rate	4.40%	3.30%
Canadian Based Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Assumptions used to determine benefit obligations, Weighted average discount rate	4.60%	3.70%

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Acquisitions and Divestures - Unaudited Pro Forma Statements of Operations Data (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Business Combinations [Abstract]
Pro forma net sales	$ 12,657	$ 13,239	$ 13,498
Pro forma income from continuing operations	760	764	883
Pro forma net income attributable to L-3	$ 751	$ 786	$ 975
Pro forma diluted earnings per share from continuing operations	$ 8.24	$ 7.76	$ 8.26
Pro forma diluted earnings per share	$ 8.24	$ 8.05	$ 9.21

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Revisions to Previously Issued Financial Statements (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of Nature of Adjustments, Applicable Segment, Amount of Increase (or Decrease) to Sales and Operating Income, Period Recorded and Correct Period

With respect to each of the immaterial out of period amounts included in the Company’s previously issued financial statements, the table below presents the: (1) nature of the adjustments, (2) applicable segment, (3) amount of increase (or decrease) to sales and operating income, (4) period recorded and (5) correct period.

		2013					2012						2011
Nature of Adjustment	Applicable Segment	Sales			Operating Income		Sales			Operating Income			Sales			Operating Income		Period Recorded	Correct Period
		($ in millions)
Higher development and material costs for networked communications systems	Communication Systems	$	10		$	10	$	(10	)	$	(10	)	$	—		$	—	1Q 2013	4Q 2012
Sub-contractor subscription deposit	Aerospace Systems		26			2		(26	)		(2	)		—			—	4Q 2012	1Q, 2Q, 3Q & Q4 2013
Costs accruals for goods/services received	Aerospace Systems		5			1		(5	)		(1	)		—			—	4Q 2012	1Q 2013
Unrecorded liabilities	Aerospace Systems		(2	)		—		2			—			—			—	1Q 2013	4Q 2012
Accrued vacation	Aerospace Systems		—			1		—			(1	)		—			—	4Q 2013	4Q 2012, 1Q, 2Q & 3Q 2013
Warranty reserve	Electronic Systems		—			—		3			(4	)		(3	)		4	3Q 2012	4Q 2011
Total		$	39		$	14	$	(36	)	$	(18	)	$	(3	)	$	4

Schedule of Impact on Sales and Pre-tax Income

The table below presents the impact of the matters discussed above on sales and pre-tax income for the years ended December 31, 2013, 2012 and 2011 and for the years ended prior to December 31, 2011.

	2013				2012				2011				Prior to 2011
	Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income		Sales		Pre-tax Income
	(in millions)
Army C-12 Contract	$	(25)	$	(35)	$	(3)	$	(16)	$	(1)	$	(3)		—		—
Other Logistics Support Contracts		(2)		(11)		(2)		(11)		—		(2)		(1)		(4)
Logistics Solutions	$	(27)	$	(46)	$	(5)	$	(27)	$	(1)	$	(5)	$	(1)	$	(4)
Platform Systems		(12)		(14)		3		2		—		—		—		—
Total Internal Review of Aerospace Systems Segment	$	(39)	$	(60)	$	(2)	$	(25)	$	(1)	$	(5)	$	(1)	$	(4)
Sales-Type Lease Transaction		(7)		5		—		3		—		3		—		17
Out of Period Amounts		39		14		(36)		(18)		(3)		4		—		—
Total Revisions	$	(7)	$	(41)	$	(38)	$	(40)	$	(4)	$	2	$	(1)	$	13

Adjustment [Member]

Schedule of As Previously Reported, Adjustments and As Currently Reported Financial Statements

The tables below present the Company’s: (1) As Previously Reported, (2) Adjustments, and (3) As Currently Reported Condensed Consolidated Balance Sheets as of December 31, 2013 and 2012, Statements of Operations and Operating Activities for the Statement of Cash Flows, for the fiscal years ended December 31, 2013, 2012 and 2011. The Adjustments correct for: (1) the results of the Aerospace Systems internal review, (2) the accounting related to a sales-type lease transaction within the Company’s Electronic Systems segment and (3) immaterial out of period amounts previously recorded in the Company’s financial statements but not recorded in the appropriate period to reflect them in the appropriate period.

			Adjustments for:
	As Previously Reported		Aerospace Systems Segment Internal Review		Sales-Type Lease Transaction		Out of Period Amounts		As Revised
	(in millions)
Condensed Consolidated Balance Sheet as of December 31, 2013:
ASSETS
Current Assets:
Cash and cash equivalents	$	500	$	—	$	—	$	—	$	500
Billed receivables, net of allowances of $26 in 2013		1,015		(24)		—		—		991
Contracts in process		2,524		(67)		(26)		—		2,431
Inventories		359		—		—		—		359
Deferred income taxes		122		25		—		—		147
Other current assets		129		9		28		—		166
Total current assets		4,649		(57)		2		—		4,594
Property, plant and equipment, net		1,039		3		—		—		1,042
Goodwill		7,796		—		—		—		7,796
Identifiable intangible assets		285		—		—		—		285
Deferred debt issue costs		24		—		—		—		24
Other assets		216		—		31		—		247
Total assets	$	14,009	$	(54)	$	33	$	—	$	13,988
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, trade	$	541	$	—	$	—	$	—	$	541
Accrued employment costs		543		2		—		—		545
Accrued expenses		455		3		—		—		458
Advance payments and billings in excess of costs incurred		570		1		5		—		576
Income taxes		31		—		—		—		31
Other current liabilities		383		—		—		—		383
Total current liabilities		2,523		6		5		—		2,534
Pension and postretirement benefits		727		—		—		—		727
Deferred income taxes		635		—		—		—		635
Other liabilities		396		—		10		—		406
Long-term debt		3,630		—		—		—		3,630
Total liabilities		7,911		6		15		—		7,932
Equity:
L-3 shareholders’ equity:
L-3 Communications Holdings, Inc.’s common stock		5,653		—		—		—		5,653
L-3 Communications Holdings, Inc.’s treasury stock at cost		(5,288)		—		—		—		(5,288)
Retained earnings		5,768		(60)		17		1		5,726
Accumulated other comprehensive loss		(110)		—		—		—		(110)
Total L-3 shareholders’ equity		6,023		(60)		17		1		5,981
Noncontrolling interests		75		—		—		—		75
Total equity		6,098		(60)		17		1		6,056
Total liabilities and equity	$	14,009	$	(54)	$	32	$	1	$	13,988
Condensed Consolidated Balance Sheet as of December 31, 2012:
ASSETS
Current Assets:
Cash and cash equivalents	$	349	$	—	$	—	$	—	$	349
Billed receivables, net of allowances of $33 in 2012		968		—		—		—		968
Contracts in process		2,597		(30)		(45)		(12)		2,510
Inventories		358		—		—		—		358
Deferred income taxes		95		12		—		6		113
Other current assets		138		—		45		3		186
Total current assets		4,505		(18)		—		(3)		4,484
Property, plant and equipment, net		1,016		1		—		6		1,023
Goodwill		7,776		—		—		—		7,776
Identifiable intangible assets		314		—		—		—		314
Deferred debt issue costs		29		—		—		—		29
Other assets		151		—		23		—		174
Total assets	$	13,791	$	(17)	$	23	$	3	$	13,800
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, trade	$	494	$	—	$	—	$	11	$	505
Accrued employment costs		551		2		—		2		555
Accrued expenses		469		1		—		(1)		469
Advance payments and billings in excess of costs incurred		620		1		—		—		621
Income taxes		21		—		—		—		21
Other current liabilities		392		—		—		—		392
Total current liabilities		2,547		4		—		12		2,563
Pension and postretirement benefits		1,360		—		—		—		1,360
Deferred income taxes		328		—		—		—		328
Other liabilities		384		—		9		—		393
Long-term debt		3,629		—		—		—		3,629
Total liabilities		8,248		4		9		12		8,273
Equity:
L-3 shareholders’ equity:
L-3 Communications Holdings, Inc.’s common stock		5,314		—		—		—		5,314
L-3 Communications Holdings, Inc.’s treasury stock at cost		(4,488)		—		—		—		(4,488)
Retained earnings		5,191		(22)		14		(8)		5,175
Accumulated other comprehensive loss		(550)		—		—		—		(550)
Total L-3 shareholders’ equity		5,467		(22)		14		(8)		5,451
Noncontrolling interests		76		—		—		—		76
Total equity		5,543		(22)		14		(8)		5,527
Total liabilities and equity	$	13,791	$	(18)	$	23	$	4	$	13,800
Consolidated Statement of Operations for the year ended December 31, 2013:
Net sales:
Products	$	7,192	$	(11)	$	(7)	$	15	$	7,189
Services		5,437		(28)		—		24		5,433
Total net sales		12,629		(39)		(7)		39		12,622
Cost of sales:
Products		(6,409)		(3)		7		(4)		(6,409)
Services		(4,962)		(18)		—		(21)		(5,001)
Total cost of sales		(11,371)		(21)		7		(25)		(11,410)
Impairment charge		—		—		—		—		—
Operating income		1,258		(60)		—		14		1,212
Interest expense		(177)		—		—		—		(177)
Interest and other income, net		15		—		5		—		20
Debt retirement charge		—		—		—		—		—
Income from continuing operations before income taxes		1,096		(60)		5		14		1,055
Provision for income taxes		(309)		21		(2)		(5)		(295)
Income from continuing operations		787		(39)		3		9		760
Income from discontinued operations, net of income tax		—		—		—		—		—
Net income	$	787	$	(39)	$	3	$	9	$	760
Net income attributable to noncontrolling interests		(9)		—		—		—		(9)
Net income attributable to L-3	$	778	$	(39)	$	3	$	9	$	751
Net income allocable to participating securities		—		—		—		—		—
Net income allocable to L-3 Holdings’ common shareholders	$	778	$	(39)	$	3	$	9	$	751
Basic earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.70	$	(0.43)	$	0.03	$	0.10	$	8.40
Discontinued operations		—		—		—		—		—
Basic earnings per share	$	8.70	$	(0.43)	$	0.03	$	0.10	$	8.40
Diluted earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.54	$	(0.43)	$	0.03	$	0.10	$	8.24
Discontinued operations		—		—		—		—		—
Diluted earnings per share	$	8.54	$	(0.43)	$	0.03	$	0.10	$	8.24
Cash dividends paid per common share	$	2.20	$	—	$	—	$	—	$	2.20
L-3 Holdings’ weighted average common shares outstanding:
Basic		89.4		—		—		—		89.4
Diluted		91.1		—		—		—		91.1

			Adjustments for:
	As Previously Reported		Aerospace Systems Segment Internal Review		Sales-Type Lease Transaction		Out of Period Amounts			As Revised
	(in millions, except per share data)
Consolidated Statement of Operations for the year ended December 31, 2012:
Net sales:
Products	$	7,535	$	64	$	—	$	(13)		$	7,586
Services		5,611		(66)		—		(24)			5,521
Total net sales		13,146		(2)		—		(37)	(1)		13,107
Cost of sales:
Products		(6,724)		(57)		—		(1)			(6,782)
Services		(5,071)		34		—		20			(5,017)
Total cost of sales		(11,795)		(23)		—		19			(11,799)
Impairment charge		—		—		—		—			—
Operating income		1,351		(25)		—		(18)			1,308
Interest expense		(184)		—		—		—			(184)
Interest and other income, net		8		—		3		—			11
Debt retirement charge		(13)		—		—		—			(13)
Income from continuing operations before income taxes		1,162		(25)		3		(18)			1,122
Provision for income taxes		(374)		9		(1)		6			(360)
Income from continuing operations		788		(16)		2		(12)			762
Income from discontinued operations, net of income tax		32		—		—		—			32
Net income	$	820	$	(16)	$	2	$	(12)		$	794
Net income attributable to noncontrolling interests		(10)		—		—		—			(10)
Net income attributable to L-3	$	810	$	(16)	$	2	$	(12)		$	784
Net income allocable to participating securities		—		—		—		—			—
Net income allocable to L-3 Holdings’ common shareholders	$	810	$	(16)	$	2	$	(12)		$	784
Basic earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.12	$	(0.17)	$	0.02	$	(0.12)		$	7.85
Discontinued operations		0.29		—		—		—			0.29
Basic earnings per share	$	8.41	$	(0.17)	$	0.02	$	(0.12)		$	8.14
Diluted earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.01	$	(0.17)	$	0.02	$	(0.12)		$	7.74
Discontinued operations		0.29		—		—		—			0.29
Diluted earnings per share	$	8.30	$	(0.17)	$	0.02	$	(0.12)		$	8.03
Cash dividends paid per common share	$	2.00	$	—	$	—	$	—		$	2.00
L-3 Holdings’ weighted average common shares outstanding:
Basic		96.3		—		—		—			96.3
Diluted		97.6		—		—		—			97.6

⁽¹⁾  Includes rounding of $1 million.

			Adjustments for:
	As Previously Reported		Aerospace Systems Segment Internal Review		Sales-Type Lease Transaction		Out of Period Amounts		As Revised
	(in millions, except per share data)
Consolidated Statement of Operations for the year ended December 31, 2011:
Net sales:
Products	$	7,552	$	—	$	—	$	(3)	$	7,549
Services		5,606		(1)		—		—		5,605
Total net sales		13,158		(1)		—		(3)		13,154
Cost of sales:
Products		(6,673)		—		—		7		(6,666)
Services		(5,043)		(4)		—		—		(5,047)
Total cost of sales		(11,716)		(4)		—		7		(11,713)
Impairment charge		(43)		—		—		—		(43)
Operating income		1,399		(5)		—		4		1,398
Interest expense		(204)		—		—		—		(204)
Interest and other income, net		—		—		3		—		3
Debt retirement charge		(35)		—		—		—		(35)
Income from continuing operations before income taxes		1,160		(5)		3		4		1,162
Provision for income taxes		(296)		2		(1)		(1)		(296)
Income from continuing operations		864		(3)		2		3		866
Income from discontinued operations, net of income tax		104		—		—		—		104
Net income	$	968	$	(3)	$	2	$	3	$	970
Net income attributable to noncontrolling interests		(12)		—		—		—		(12)
Net income attributable to L-3	$	956	$	(3)	$	2	$	3	$	958
Net income allocable to participating securities		(2)		—		—		—		(2)
Net income allocable to L-3 Holdings’ common shareholders	$	954	$	(3)	$	2	$	3	$	956
Basic earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.17	$	(0.03)	$	0.02	$	0.03	$	8.19
Discontinued operations		0.97		—		—		—		0.97
Basic earnings per share	$	9.14	$	(0.03)	$	0.02	$	0.03	$	9.16
Diluted earnings per share allocable to L-3 Holdings’ common shareholders:
Continuing operations	$	8.08	$	(0.03)	$	0.02	$	0.03	$	8.10
Discontinued operations		0.95		—		—		—		0.95
Diluted earnings per share	$	9.03	$	(0.03)	$	0.02	$	0.03	$	9.05
Cash dividends paid per common share	$	1.80	$	—	$	—	$	—	$	1.80
L-3 Holdings’ weighted average common shares outstanding:
Basic		104.4		—		—		—		104.4
Diluted		105.6		—		—		—		105.6

	As Previously Reported		Net Adjustments		As Revised
	(in millions)
Consolidated Statement of Cash Flows for the year ended December 31, 2013:
Operating activities:
Net income	$	787	$	(27)	$	760
Income from discontinued operations, net of tax		—		—		—
Income from continuing operations		787		(27)		760
Depreciation of property, plant and equipment		166		—		166
Amortization of intangibles and other assets		48		—		48
Deferred income tax provision		48		(6)		42
Stock-based employee compensation expense		59		—		59
Contributions to employee savings plans in L-3 Holdings’ common stock		114		—		114
Amortization of pension and postretirement benefit plans net loss and prior service cost		83		—		83
Amortization of bond discounts and deferred debt issue costs (included in interest expense)		6		—		6
Goodwill impairment charge		—		—		—
Equity in losses of unconsolidated subsidiaries		—		—		—
Other non-cash items		2		—		2
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables		(42)		24		(18)
Contracts in process		94		10		104
Inventories		2		—		2
Other assets		(81)		(7)		(88)
Accounts payable, trade		45		(11)		34
Accrued employment costs		(5)		—		(5)
Accrued expenses		(6)		1		(5)
Advance payments and billings in excess of costs incurred		(50)		6		(44)
Income taxes		39		(8)		31
Excess income tax benefits related to share-based payment arrangements		(4)		—		(4)
Other current liabilities		(4)		—		(4)
Pension and postretirement benefits		14		—		14
All other operating activities		(52)		18		(34)
Net cash from operating activities from continuing operations	$	1,263	$	—	$	1,263

	As Previously Reported		Net Adjustments		As Revised
	(in millions)
Consolidated Statement of Cash Flows for the year ended December 31, 2012:
Operating activities:
Net income	$	820	$	(26)	$	794
Income from discontinued operations, net of tax		(32)		—		(32)
Income from continuing operations		788		(26)		762
Depreciation of property, plant and equipment		170		—		170
Amortization of intangibles and other assets		58		—		58
Deferred income tax provision		112		(15)		97
Stock-based employee compensation expense		59		—		59
Contributions to employee savings plans in L-3 Holdings’ common stock		125		—		125
Amortization of pension and postretirement benefit plans net loss and prior service cost		68		—		68
Amortization of bond discounts and deferred debt issue costs (included in interest expense)		7		—		7
Goodwill impairment charge		—		—		—
Equity in losses of unconsolidated subsidiaries		3		—		3
Other non-cash items		9		—		9
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables		147		—		147
Contracts in process		(126)		59		(67)
Inventories		(35)		—		(35)
Other assets		11		(3)		8
Accounts payable, trade		81		11		92
Accrued employment costs		(13)		3		(10)
Accrued expenses		(100)		—		(100)
Advance payments and billings in excess of costs incurred		36		1		37
Income taxes		(48)		1		(47)
Excess income tax benefits related to share-based payment arrangements		(3)		—		(3)
Other current liabilities		(52)		6		(46)
Pension and postretirement benefits		(64)		—		(64)
All other operating activities		(2)		(37)		(39)
Net cash from operating activities from continuing operations	$	1,231	$	—	$	1,231

	As Previously Reported		Net Adjustments		As Revised
	(in millions)
Consolidated Statement of Cash Flows for the year ended December 31, 2011:
Operating activities:
Net income	$	968	$	2	$	970
Income from discontinued operations, net of tax		(104)		—		(104)
Income from continuing operations		864		2		866
Depreciation of property, plant and equipment		167		—		167
Amortization of intangibles and other assets		63		—		63
Deferred income tax provision		124		(1)		123
Stock-based employee compensation expense		57		—		57
Contributions to employee savings plans in L-3 Holdings’ common stock		113		—		113
Amortization of pension and postretirement benefit plans net loss and prior service cost		48		—		48
Amortization of bond discounts and deferred debt issue costs (included in interest expense)		13		—		13
Goodwill impairment charge		43		—		43
Equity in losses of unconsolidated subsidiaries		12		—		12
Other non-cash items		11		—		11
Changes in operating assets and liabilities, excluding amounts from acquisitions, divestitures, and discontinued operations:
Billed receivables		(13)		—		(13)
Contracts in process		(121)		11		(110)
Inventories		(14)		—		(14)
Other assets		(6)		(3)		(9)
Accounts payable, trade		(35)		—		(35)
Accrued employment costs		(23)		—		(23)
Accrued expenses		67		1		68
Advance payments and billings in excess of costs incurred		(39)		—		(39)
Income taxes		(18)		2		(16)
Excess income tax benefits related to share-based payment arrangements		(2)		—		(2)
Other current liabilities		4		(6)		(2)
Pension and postretirement benefits		(83)		—		(83)
All other operating activities		(1)		(6)		(7)
Net cash from operating activities from continuing operations	$	1,231	$	—	$	1,231

XML

Debt

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Debt

11. Debt

The components of long-term debt and a reconciliation to the carrying amount of long-term debt are presented in the table below.

	December 31,
	2013		2012
	(in millions)
L-3 Communications:
Borrowings under Amended and Restated Revolving Credit Facility(1)	$	—	$	—
3.95% Senior Notes due 2016		500		500
5.20% Senior Notes due 2019		1,000		1,000
4.75% Senior Notes due 2020		800		800
4.95% Senior Notes due 2021		650		650
Subtotal		2,950		2,950
L-3 Holdings:
3% Convertible Contingent Debt Securities due 2035		689		689
Principal amount of long-term debt		3,639		3,639
Unamortized discounts		(9)		(10)
Carrying amount of long-term debt	$	3,630	$	3,629

⁽¹⁾  During 2013, L-3 Communications’ aggregate borrowings and repayments under the Amended and Restated Revolving Credit Facility were $1,893 million. L-3 Communications had the availability of substantially all of its $1 billion Amended and Restated Revolving Credit Facility at December 31, 2013 and 2012.

L-3 Communications Amended and Restated Revolving Credit Facility

On February 3, 2012, L-3 Communications amended and restated its $1 billion Revolving Credit Facility, which extended the expiration date to February 3, 2017. The terms of the Amended and Restated Revolving Credit Facility are substantially consistent with the terms of this facility prior to its amendment and restatement except that: (1) provisions that previously limited the ability of L-3 Communications to pay dividends, repurchase L-3 Holdings’ common stock and make other distributions with respect to any capital stock were eliminated, (2) a provision that previously limited the ability of L-3 Communications to make investments in L-3 Holdings was made less restrictive and (3) the cost of borrowings, loan commitment fees and letter of credit fees were reduced. In addition, the Amended and Restated Revolving Credit Facility provides for uncommitted incremental revolving facilities and additional term loan facilities in an aggregate principal amount of up to $500 million. Borrowings under the Amended and Restated Revolving Credit Facility bear interest, at L-3 Communications’ option, at either (1) the “base rate” equal to the highest of (a) 0.50% per annum above the latest federal funds rate, (b) the Bank of America “prime rate” (as defined in the Amended and Restated Revolving Credit Facility), and (c) 1.00% per annum above a “Eurodollar Rate” (as defined in the Amended and Restated Revolving Credit Facility), plus a spread ranging from 0.25% to 1.00% per annum, or (2) a “Eurodollar Rate” (as defined in the Amended and Restated Revolving Credit Facility) plus a spread ranging from 1.25% to 2.00% per annum. L-3 Communications pays: (1) commitment fees calculated on the daily amounts of the available unused commitments at a rate ranging from 0.15% to 0.325% per annum, (2) letter of credit fees ranging from 0.675% to 1.20% per annum for commercial and performance letters of credit and (3) letter of credit fees ranging from 1.25% to 2.00% for financial letters of credit. The interest rate spread and the commitment fee rate, in all cases, depend on L-3 Communications’ debt rating at the time of determination. The debt rating is based on the credit ratings as determined by Standard & Poor’s Rating Services, Moody’s Investors Service, Inc. and Fitch Ratings of L-3 Communications’ non-credit enhanced senior, unsecured long-term debt.

L-3 Communications Senior Notes

The Senior Notes are unsecured senior obligations of L-3 Communications. The terms of each outstanding Senior Note are presented in the table below.

Note	Date of Issuance	Amount Issued		Discount(1)		Net Cash Proceeds		Effective Interest Rate		Redemption at Treasury Rate(2)(3)
		(in millions)
3.95% Senior Notes due November 15, 2016	November 22, 2011	$	500	$	4	$	491		4.11%		50 bps
5.20% Senior Notes due October 15, 2019	October 2, 2009	$	1,000	$	4	$	987		5.25%		30 bps
4.75% Senior Notes due July 15, 2020	May 21, 2010	$	800	$	3	$	790		4.79%		25 bps
4.95% Senior Notes due February 15, 2021	February 7, 2011	$	650	$	4	$	639		5.02%		25 bps

⁽¹⁾  Discounts are recorded as a reduction to the principal amount of the notes and are amortized as interest expense over the term of the notes.

⁽²⁾  The Senior Notes may be redeemed at any time prior to their maturity at the option of L-3 Communications, in whole or in part, at a redemption price equal to the greater of (1) 100% of the principal amount, or (2) the present value of the remaining principal and interest payments discounted to the date of redemption, on a semi-annual basis, at the Treasury Rate (as defined in the Senior Indentures), plus the spread indicated in the table above.

⁽³⁾  Upon the occurrence of a change in control (as defined in the Senior Indentures), each holder of the notes will have the right to require L-3 Communications to repurchase all or any part of such holder’s notes at an offer price in cash equal to 101% of the aggregate principal amount plus accrued and unpaid interest, if any, to the date of purchase.

Information on the Senior Subordinated Notes redeemed by the Company during the years ended December 31, 2012 and 2011 is presented in the table below.

Note	Redemption Date		Principal Amount Redeemed		Debt Retirement Charge		Redemption Price % of Principal
			(in millions)
6 3⁄8% Senior Subordinated Notes due October 15, 2015		October 15, 2012	$	250	$	5		101.063%
6 3⁄8% Senior Subordinated Notes due October 15, 2015(1)		July 26, 2012	$	250	$	8		102.125%
6 3⁄8% Senior Subordinated Notes due October 15, 2015		December 22, 2011	$	500	$	17		102.125%
5 7⁄8% Senior Subordinated Notes due January 15, 2015		March 9, 2011	$	650	$	18		101.958%

⁽¹⁾  In connection with the spin-off, Engility made a cash distribution of $335 million to L-3, a portion of which was used to redeem $250 million of the 6 ³⁄₈% 2015 Notes.

L-3 Holdings

In 2005, L-3 Holdings sold $700 million of 3% Convertible Contingent Debt Securities (CODES) due August 1, 2035. Interest is payable semi-annually on February 1 and August 1 of each year. On February 2, 2011, L-3 Holdings repurchased approximately $11 million of the CODES as a result of the exercise by the holders of their contractual right to require L-3 Holdings to repurchase their CODES. Holders of the remaining CODES may require L-3 Holdings to repurchase the CODES, in whole or in part, on February 1, 2016, February 1, 2021, February 1, 2026 and February 1, 2031 at a cash repurchase price equal to 100% of the principal amount of the CODES (plus accrued and unpaid interest, including contingent interest and additional interest, if any). In addition, holders of the CODES may require L-3 Holdings to repurchase the CODES at a repurchase price equal to 100% of the principal amount of the CODES (plus accrued and unpaid interest, including contingent interest and additional interest, if any) if a “fundamental change” (as such term is defined in the indenture governing the CODES) occurs prior to maturity of the CODES. At December 31, 2013 and 2012, the remaining $689 million principal amount of CODES was classified as long-term debt.

In accordance with the provisions of the accounting standard for convertible debt, the Company separately accounts for the liability and equity (conversion option) components of the CODES in a manner that reflects the Company’s non-convertible debt borrowing rate. Through February 1, 2011, the effective interest rate of the CODES was 6.33% and interest expense related to both the contractual coupon interest and amortization of the discount on the liability components. The Company amortized the discount on the liability component of the CODES through February 1, 2011 which was the first date that the holders of the CODES had a contractual right to require L-3 Holdings to repurchase the CODES. Interest expense for the CODES after February 1, 2011 relates only to the contractual coupon interest. Interest expense recognized was $21 million for both years ended December 31, 2013 and 2012, and $23 million for the year ended December 31, 2011, a portion of which was allocated to discontinued operations in 2012 and 2011 as a result of the spin-off of Engility. The carrying amount of the equity components (conversion feature) of the CODES was $64 million at December 31, 2013 and 2012.

The CODES are convertible into cash and shares of L-3 Holdings’ common stock based on a current conversion rate of 11.0813 shares of L-3 Holdings common stock per one thousand dollars in principal amount of the CODES (equivalent to a conversion price of $90.24 per share) only under the following circumstances: (1) prior to August 1, 2033, on any date during any fiscal quarter (and only during such fiscal quarter) beginning after September 30, 2005, if the closing sales price of the common stock of L-3 Holdings is more than 120% of the then current conversion price (currently $108.29) for at least 20 trading days in the 30 consecutive trading-day period ending on the last trading day of the previous fiscal quarter; (2) on or after August, 1, 2033, at all times on or after any date on which the closing sale price of the common stock of L-3 Holdings is more than 120% of the then current conversion price (currently $108.29); (3) if we distribute to all holders of our common stock, rights or warrants (other than pursuant to a rights plan) entitling them to purchase, for a period of 45 calendar days or less, shares of L-3 Holdings’ common stock at a price less than the average closing sales price for the ten trading days preceding the declaration date for such distribution; (4) if we distribute to all holders of our common stock, cash and other assets, debt securities or rights to purchase L-3 Holdings’ securities (other than pursuant to a rights plan), which distribution has a per share value exceeding 10% of the closing sale price of L-3 Holdings common stock on the trading day preceding the declaration date for such distribution; (5) during the five consecutive business-day period following any five consecutive trading-day period in which the average trading price of the CODES was less than 98% of the average of the closing sale price of L-3 Holdings common stock during such five trading day period multiplied by the then current conversion rate; (6) during a specified period if the CODES have been called for redemption; or (7) during a specified period if a “fundamental change” occurs. The conversion rate is subject to adjustments in certain circumstances set forth in the indenture governing the CODES. For the year ended December 31, 2013, the conversion feature of the CODES was dilutive to earnings per share (EPS) (see Note 17).

Upon conversion of the CODES, the settlement amount will be computed as follows: (1) if L-3 Holdings elects to satisfy the entire conversion obligation in cash, L-3 Holdings will deliver to the holder for each one thousand dollars in principal amount of the CODES converted cash in an amount equal to the conversion value; or (2) if L-3 Holdings elects to satisfy the conversion obligation in a combination of cash and common stock, L-3 Holdings will deliver to the holder for each one thousand dollars in principal amount of the CODES converted (x) cash in an amount equal to (i) the fixed dollar amount per one thousand dollars in principal amount of the CODES of the conversion obligation to be satisfied in cash specified in the notice regarding L-3 Holdings’ chosen method of settlement or, if lower, the conversion value, or (ii) the percentage of the conversion obligation to be satisfied in cash specified in the notice regarding L-3 Holdings chosen method of settlement multiplied by the conversion value, as the case may be (the “cash amount”); provided that in either case the cash amount shall in no event be less than the lesser of (a) the principal amount of the CODES converted and (b) the conversion value; and (y) a number of shares of common stock of L-3 Holdings for each of the 20 trading days in the conversion period equal to 1/20th of (i) the conversion rate then in effect minus (ii) the quotient of the cash amount divided by the closing price of common stock of L-3 Holdings for that day (plus cash in lieu of fractional shares, if applicable).

The CODES are senior unsecured obligations of L-3 Holdings and rank equal in right of payment with all existing and future senior indebtedness and senior to all future senior subordinated indebtedness of L-3 Holdings. The CODES are jointly and severally guaranteed on a senior subordinated basis by the existing and future domestic subsidiaries of L-3 Holdings that guarantee any other indebtedness of L-3 Holdings or any of its domestic subsidiaries.

The CODES are subject to redemption at the option of L-3 Holdings, in whole or in part, at a cash redemption price (plus accrued and unpaid interest, including contingent interest and additional interest, if any) equal to 100% of the principal amount of the CODES.

Holders of the CODES have a right to receive contingent interest payments, which will be paid on the CODES during any six-month period commencing February 1, 2011 in which the trading price of the CODES for each of the five trading days ending on the second trading day preceding the first day of the applicable six-month interest period equals or exceeds 120% of the principal amount of the CODES. The contingent interest payable per one thousand dollars in principal amount of CODES will equal 0.25% of the average trading price of one thousand dollars in principal amount of CODES during the five trading days ending on the second trading day preceding the first day of the applicable six-month interest period. The contingent interest payment provision has been accounted for as an embedded derivative. The amount assigned to the embedded derivative is adjusted periodically through other income (expense) for changes in its fair value, if any. The change in the fair value of the embedded derivative related to the CODES was $0 for the years ended December 31, 2013, 2012 and 2011.

Guarantees

L-3 Communications

The borrowings under the Amended and Restated Revolving Credit Facility are fully and unconditionally guaranteed by L-3 Holdings and by substantially all of the material 100% owned domestic subsidiaries of L-3 Communications on an unsecured senior basis. The payment of principal and premium, if any, and interest on the Senior Notes is fully and unconditionally guaranteed, on an unsecured senior basis, jointly and severally, by L-3 Communications’ material 100% owned domestic subsidiaries that guarantee any of its other indebtedness.

L-3 Holdings

The payment of principal and premium, if any, and interest on the CODES is fully and unconditionally guaranteed, on an unsecured senior subordinated basis, jointly and severally, by L-3 Communications and its 100% owned domestic subsidiaries that guarantee any of its other liabilities.

Subordination

The guarantees of the Amended and Restated Revolving Credit Facility and the Senior Notes rank senior to the guarantees of the CODES and rank pari passu with each other.

Covenants

Financial and other restrictive covenants. The Amended and Restated Revolving Credit Facility contains financial and other restrictive covenants that limit, among other things, the ability of the subsidiaries of L-3 Communications to borrow additional funds, and the ability of L-3 Communications and its subsidiaries to incur liens, make investments, merge or consolidate or dispose of assets. The Company’s Amended and Restated Revolving Credit Facility contains covenants that require that (1) the Company’s consolidated leverage ratio be less than or equal to 4.0 to 1.0; (2) the Company’s consolidated interest coverage ratio be greater than or equal to 3.0 to 1.0; and (3) the Company’s consolidated senior leverage ratio be less than or equal to 3.5 to 1.0, in each case, as of the end of any fiscal quarter. Calculations of the financial covenants are to exclude, among other things, certain items such as impairment losses on goodwill or other intangible assets, non-cash gains or losses from discontinued operations, gains or losses in connection with asset dispositions, and gains or losses with respect to judgments or settlements in connection with litigation matters. As of December 31, 2013, the Company was in compliance with its financial and other restrictive covenants.

The Senior Indentures contain covenants customary for investment grade notes, including covenants that restrict the ability of L-3 Communications and its 100% owned domestic subsidiaries to create, incur, assume or permit to exist any lien, except permitted liens (as defined in the Senior Indentures) and restrict the ability of L-3 Communications and its subsidiaries to enter into certain sale and leaseback transactions (as defined in the Senior Indentures).

Cross default provisions. The Amended and Restated Revolving Credit Facility contains cross default provisions that are triggered when a payment default occurs or certain other defaults occur that would allow the acceleration of indebtedness, swap contracts or guarantees of L-3 Holdings, L-3 Communications or its subsidiaries, so long as the aggregate amount of such indebtedness, swap contracts or guarantees is at least $50 million and such defaults (other than payment defaults and defaults that have resulted in acceleration) have not been cured within 10 days. The CODES indenture contains cross acceleration provisions that are triggered when holders of the indebtedness of L-3 Holdings or any of its subsidiaries (or the payment of which is guaranteed by such entities) accelerate at least $50 million in aggregate principal amount of those obligations. The Senior Notes indenture contains a cross acceleration provision that is triggered when a default or acceleration occurs under any indenture or instrument of L-3 Communications or its subsidiaries or the payment of which is guaranteed by L-3 Communications or its subsidiaries in an aggregate amount of at least $100 million.

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Derivative Financial Instruments - Fair Values and Location of Company's Derivative Instruments in Consolidated Balance Sheets (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Other Current Liabilities [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, assets	$ 3	$ 2
Other Current Liabilities [Member] | Foreign Currency Forward Contracts [Member] | Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, assets	3	2
Other Current Liabilities [Member] | Foreign Currency Forward Contracts [Member] | Not Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, assets
Other Current Liabilities [Member] | CODES Due 2035 [Member] | Not Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, assets
Other Liabilities [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, assets	2	1
Other Liabilities [Member] | Foreign Currency Forward Contracts [Member] | Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, assets	2	1
Other Liabilities [Member] | Foreign Currency Forward Contracts [Member] | Not Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, assets
Other Liabilities [Member] | CODES Due 2035 [Member] | Not Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, assets
Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, liabilities	5	4
Other Current Assets [Member] | Foreign Currency Forward Contracts [Member] | Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, liabilities	5	4
Other Current Assets [Member] | Foreign Currency Forward Contracts [Member] | Not Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, liabilities
Other Current Assets [Member] | CODES Due 2035 [Member] | Not Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, liabilities
Other Assets [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, liabilities	1	4
Other Assets [Member] | Foreign Currency Forward Contracts [Member] | Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, liabilities	1	4
Other Assets [Member] | Foreign Currency Forward Contracts [Member] | Not Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, liabilities
Other Assets [Member] | CODES Due 2035 [Member] | Not Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Total derivative instruments, liabilities