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

6 Months Ended

Jun. 24, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

24. Condensed Combining Financial Information of L-3 Communications and Its Subsidiaries

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 Credit Facility are guaranteed, on a joint and several, full and unconditional basis, by certain of its domestic subsidiaries (the “Guarantor Subsidiaries”) and, in the case of the Credit Facility, by L-3 Holdings. See Note 9 to the audited consolidated financial statements for the year ended December 31, 2015, included in the Company’s Annual Report on Form 10-K 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 or from L-3 Communications to L-3 Holdings.

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.” In addition, the guarantees of the Senior Notes will be automatically and unconditionally 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 of all of the capital stock of such guarantor.

The following unaudited 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 June 24, 2016:
Current assets:
Cash and cash equivalents	$	—	$	199	$	—	$	165	$	(12	)	$	352
Billed receivables, net		—		305		301		202		—			808
Contracts in process		—		929		980		253		—			2,162
Other current assets		—		292		136		110		—			538

Total current assets		—		1,725		1,417		730		(12	)		3,860
Goodwill		—		2,339		2,973		994		—			6,306
Other assets		—		778		494		262		—			1,534
Investment in and amounts due from consolidated subsidiaries		4,486		5,336		4,367		—		(14,189	)		—

Total assets	$	4,486	$	10,178	$	9,251	$	1,986	$	(14,201	)	$	11,700

Current portion of long-term debt	$	—	$	549	$	—	$	—	$	—		$	549
Current liabilities		—		905		802		435		(12	)		2,130
Amounts due to consolidated subsidiaries		—		—		—		168		(168	)		—
Other long-term liabilities		—		1,458		194		30		—			1,682
Long-term debt		—		2,780		—		—		—			2,780

Total liabilities		—		5,692		996		633		(180	)		7,141

L-3 shareholders’ equity		4,486		4,486		8,255		1,353		(14,094	)		4,486
Noncontrolling interests		—		—		—		—		73			73

Total equity		4,486		4,486		8,255		1,353		(14,021	)		4,559

Total liabilities and equity	$	4,486	$	10,178	$	9,251	$	1,986	$	(14,201	)	$	11,700

At December 31, 2015:
Current assets:
Cash and cash equivalents	$	—	$	137	$	—	$	165	$	(95	)	$	207
Billed receivables, net		—		278		297		171		—			746
Contracts in process		—		872		958		251		—			2,081
Other current assets		—		288		137		109		—			534
Assets of discontinued operations		—		—		664		—		—			664

Total current assets		—		1,575		2,056		696		(95	)		4,232
Goodwill		—		2,318		2,973		990		—			6,281
Other assets		—		798		496		260		—			1,554
Investment in and amounts due from consolidated subsidiaries		4,355		5,609		3,739		111		(13,814	)		—

Total assets	$	4,355	$	10,300	$	9,264	$	2,057	$	(13,909	)	$	12,067

Current portion of long-term debt	$	—	$	499	$	—	$	—	$	—		$	499
Current liabilities		—		911		899		445		(95	)		2,160
Liabilities of discontinued operations		—		—		220		—		—			220
Other long-term liabilities		—		1,410		195		29		—			1,634
Long-term debt		—		3,125		—		—		—			3,125

Total liabilities		—		5,945		1,314		474		(95	)		7,638

L-3 shareholders’ equity		4,355		4,355		7,950		1,583		(13,888	)		4,355
Noncontrolling interests		—		—		—		—		74			74

Total equity		4,355		4,355		7,950		1,583		(13,814	)		4,429

Total liabilities and equity	$	4,355	$	10,300	$	9,264	$	2,057	$	(13,909	)	$	12,067

Condensed Combining Statements of Operations

Condensed Combining Statements of Operations:
For the quarter ended June 24, 2016:
Total net sales	$	—		$	903		$	1,374		$	454		$	(67)		$	2,664
Total cost of sales		(13	)		(803	)		(1,295	)		(386	)		80			(2,417	)

Operating (loss) income		(13	)		100			79			68			13			247
Interest expense		—			(43	)		—			—			—			(43	)
Interest and other income, net		—			3			—			2			—			5
Debt retirement charge		—			(5	)		—			—			—			(5	)

(Loss) income from continuing operations before income taxes		(13	)		55			79			70			13			204
Benefit (provision) for income taxes		4			(14	)		(21	)		(18	)		(4	)		(53	)
Equity in net income of consolidated subsidiaries		156			106			—			—			(262	)		—

Net income		147			147			58			52			(253	)		151
Net income attributable to noncontrolling interests		—			—			—			—			(4	)		(4	)

Net income attributable to L-3	$	147		$	147		$	58		$	52		$	(257	)	$	147

Comprehensive income attributable to L-3	$	161		$	161		$	61		$	55		$	(277	)	$	161

For the quarter ended June 26, 2015:
Total net sales	$	—		$	879		$	1,243		$	494		$	(73	)	$	2,543
Total cost of sales		(10	)		(810	)		(1,228	)		(427	)		83			(2,392	)
(Loss) gain related to business divestitures		—			(5	)		(25	)		32			—			2

Operating (loss) income		(10	)		64			(10	)		99			10			153
Interest expense		—			(41	)		(1	)		—			—			(42	)
Interest and other income, net		—			4			—			1			—			5

(Loss) income from continuing operations before income taxes		(10	)		27			(11	)		100			10			116
Benefit (provision) for income taxes		—			1			15			(12	)		—			4
Equity in net income of consolidated subsidiaries		130			92			—			—			(222	)		—

Income from continuing operations		120			120			4			88			(212	)		120
Income from discontinued operations, net of income tax		—			—			4			—			—			4

Net income		120			120			8			88			(212	)		124
Net income attributable to noncontrolling interests		—			—			—			—			(4	)		(4	)

Net income attributable to L-3	$	120		$	120		$	8		$	88		$	(216	)	$	120

Comprehensive income attributable to L-3	$	205		$	205		$	12		$	160		$	(377	)	$	205

Condensed Combining Statements of Operations:
For the first half ended June 24, 2016:
Total net sales	$	—		$	1,725		$	2,559		$	863		$	(130	)	$	5,017
Total cost of sales		(19	)		(1,542	)		(2,363	)		(743	)		149			(4,518	)

Operating (loss) income		(19	)		183			196			120			19			499
Interest expense		—			(84	)		—			—			—			(84	)
Interest and other income, net		—			6			—			3			—			9
Debt retirement charge		—			(5	)		—			—			—			(5	)

(Loss) income from continuing operations before income taxes		(19	)		100			196			123			19			419
Benefit (provision) for income taxes		5			(24	)		(47	)		(30	)		(5	)		(101	)
Equity in net income of consolidated subsidiaries		388			298			—			—			(686	)		—

Income from continuing operations		374			374			149			93			(672	)		318
Income from discontinued operations, net of income tax		—			—			63			—			—			63

Net income		374			374			212			93			(672	)		381
Net income attributable to noncontrolling interests		—			—			—			—			(7	)		(7	)

Net income attributable to L-3	$	374		$	374		$	212		$	93		$	(679	)	$	374

Comprehensive income attributable to L-3	$	404		$	404		$	223		$	96		$	(723	)	$	404

For the first half ended June 26, 2015:
Total net sales		—			1,675			2,515			980			(139	)		5,031
Total cost of sales		(23	)		(1,539	)		(2,400	)		(871	)		162			(4,671	)
(Loss) gain related to business divestitures		—			(5	)		(28	)		13			—			(20	)

Operating (loss) income		(23	)		131			87			122			23			340
Interest expense		—			(80	)		(1	)		—			—			(81	)
Interest and other income, net		—			7			—			1			—			8

(Loss) income from continuing operations before income taxes		(23	)		58			86			123			23			267
Benefit (provision) for income taxes		4			(9	)		(14	)		(19	)		(4	)		(42	)
Equity in net income of consolidated subsidiaries		244			176			—			—			(420	)		—

Income from continuing operations		225			225			72			104			(401	)		225
Income from discontinued operations, net of income tax		—			—			8			—			—			8

Net income		225			225			80			104			(401	)		233
Net income attributable to noncontrolling interests		—			—			—			—			(8	)		(8	)

Net income attributable to L-3	$	225		$	225		$	80		$	104		$	(409	)	$	225

Comprehensive income attributable to L-3	$	231		$	231		$	81		$	87		$	(399	)	$	231

Condensed Combining Statements of Cash Flows

Condensed Combining Statements of Cash Flows
For the first half ended June 24, 2016:
Operating activities:
Net cash from operating activities	$	388		$	161		$	206		$	79		$	(465	)	$	369

Investing activities:
Business acquisitions, net of cash acquired		—			(27	)		—			—			—			(27	)
Proceeds from sale of businesses, net of closing date cash balances		—			576			—			(1	)		—			575
Investments in L-3 Communications		(34	)		—			—			—			34			—
Other investing activities		—			(11	)		(28	)		(19	)		—			(58	)

Net cash (used in) from investing activities from continuing operations		(34	)		538			(28	)		(20	)		34			490

Financing activities:
Repurchases of senior notes		—			(298	)		—			—			—			(298	)
Common stock repurchased		(276	)		—			—			—			—			(276	)
Dividends paid on L-3 Holdings common stock		(112	)		—			—			—			—			(112	)
Dividends paid to L-3 Holdings		—			(388	)		—			—			388			—
Investments from L-3 Holdings		—			34			—			—			(34	)		—
Other financing activities		34			15			(122	)		(59	)		160			28

Net cash used in financing activities from continuing operations		(354	)		(637	)		(122	)		(59	)		514			(658	)

Net decrease in cash and cash equivalents of discontinued operations		—			—			(56	)		—			—			(56	)

Net increase in cash		—			62			—			—			83			145
Cash and cash equivalents, beginning of the period		—			137			—			165			(95	)		207

Cash and cash equivalents, end of the period	$	—		$	199		$	—		$	165		$	(12	)	$	352

For the first half ended June 26, 2015:
Operating activities:
Net cash from (used in) operating activities	$	457		$	289		$	114		$	(9	)	$	(542	)	$	309

Investing activities:
Business acquisitions, net of cash acquired		—			(260	)		—			—			—			(260	)
Proceeds from sale of business, net of closing date cash balance		—			—			28			276			—			304
Investments in L-3 Communications		(23	)		—			—			—			23			—
Other investing activities		—			(46	)		(23	)		(8	)		—			(77	)

Net cash (used in) from investing activities from continuing operations		(23	)		(306	)		5			268			23			(33	)

Financing activities:
Common stock repurchased		(346	)		—			—			—			—			(346	)
Dividends paid on L-3 Holdings common stock		(111	)		—			—			—			—			(111	)
Dividends paid to L-3 Holdings		—			(457	)		—			—			457			—
Investments from L-3 Holdings		—			23			—			—			(23	)		—
Other financing activities		23			287			(145	)		(289	)		136			12

Net cash used in financing activities from continuing operations		(434	)		(147	)		(145	)		(289	)		570			(445	)

Effect of foreign currency exchange rate changes on cash		—			—			—			(8	)		—			(8	)
Net increase in cash and cash equivalents of discontinued operations		—			—			27			—			—			27
Change in cash balance in assets held for sale		—			—			1			60			—			61

Net (decrease) increase in cash		—			(164	)		2			22			51			(89	)
Cash and cash equivalents, beginning of the period		—			361			1			142			(62	)		442

Cash and cash equivalents, end of the period	$	—		$	197		$	3		$	164		$	(11	)	$	353