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

12 Months Ended

Dec. 31, 2013

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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