Segment Information

12 Months Ended

Dec. 31, 2016

Segment Information [Abstract]

Segment Information

21. Segment Information

The Company has three reportable segments, which are described in Note 1. The Company evaluates the performance of its operating segments and reportable segments based on their sales, operating income and operating margin. Corporate expenses are allocated to the Company’s operating segments using an allocation methodology prescribed by U.S. Government regulations for government contractors. Accordingly, segment results include all costs and expenses, except for goodwill impairment charges, gains or losses related to business divestitures, and certain other items that are excluded by management for purposes of evaluating the operating performance of the Company’s business segments. Certain Corporate expenses of $15 million and $16 million for the years ended December 31, 2015 and 2014, respectively, that had previously been allocated to the NSS business were retained by the Company and were allocated to L3’s three reportable segments.

The tables below present net sales, operating income (loss), depreciation and amortization, capital expenditures and total assets by reportable segment.

	Year Ended December 31,
	2016			2015			2014
	(in millions)
Net Sales
Products
Electronic Systems	$	3,293		$	3,390		$	3,685
Aerospace Systems		1,662			1,661			1,722
Communication Systems		1,585			1,648			1,546
Elimination of intercompany sales		(98	)		(110	)		(114	)
Total products sales		6,442			6,589			6,839
Services
Electronic Systems	$	1,042		$	999		$	1,057
Aerospace Systems		2,580			2,503			2,604
Communication Systems		488			441			539
Elimination of intercompany sales		(41	)		(66	)		(53	)
Total services sales		4,069			3,877			4,147
Consolidated total	$	10,511		$	10,466		$	10,986
Operating income
Electronic Systems	$	518		$	489		$	533
Aerospace Systems		289			205			283
Communication Systems		201			196			196
Segment total		1,008			890			1,012
Loss related to business divestitures(1)		—			(31	)		—
Goodwill impairment charges(2)		—			(384	)		—
Consolidated total	$	1,008		$	475		$	1,012

	Year Ended December 31,
	2016		2015		2014
	(in millions)
Depreciation and amortization
Electronic Systems	$	105	$	110	$	123
Aerospace Systems		54		50		40
Communication Systems		47		50		51
Consolidated total	$	206	$	210	$	214
Capital Expenditures
Electronic Systems	$	113	$	99	$	80
Aerospace Systems		56		55		59
Communication Systems		37		37		29
Corporate		10		6		6
Consolidated total	$	216	$	197	$	174
Total Assets
Electronic Systems	$	6,802	$	6,426	$	6,281
Aerospace Systems		2,535		2,630		3,011
Communication Systems		2,031		1,984		2,025
Corporate		497		365		566
Assets held for sale		—		—		547
Assets of discontinued operations		—		664		1,262
Consolidated total	$	11,865	$	12,069	$	13,692

⁽¹⁾ See Note 3 for information regarding the Company’s business divestitures.

⁽²⁾ Represents non-cash goodwill impairment charges recorded during 2015, including (i) $338 million related to a decline in the estimated fair value of the Vertex Aerospace reporting unit, and (ii) $46 million related to a business retained by L3 in connection with the sale of the NSS business, comprised of (i) $37 million related to the re-allocation of impairment charges recorded for the NSS reporting unit in 2015, and (ii) $9 million related to the re-allocation of goodwill. See Note 6 for additional information.

Corporate assets not allocated to the reportable segments primarily include cash and cash equivalents, corporate office fixed assets, and deferred income tax assets.

The table below presents property, plant and equipment, net by geographic area.

	Year Ended December 31,
	2016		2015
	(in millions)
United States	$	974	$	971
All Other		147		126
Total	$	1,121	$	1,097

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,
	2016		2015		2014
	(in millions)
U.S.	$	8,199	$	7,908	$	8,051
International:
United Kingdom		331		336		335
Canada		297		281		289
Australia		254		321		254
Saudi Arabia		159		201		160
South Korea		127		207		226
Japan		81		95		124
France		75		62		74
Other		988		1,055		1,473
Total international		2,312		2,558		2,935
Consolidated	$	10,511	$	10,466	$	10,986

Net sales to principal customers are summarized in the table below.

	Year Ended December 31,
	2016		2015		2014
	(in millions)
U.S. Government agencies(1)	$	7,649	$	7,291	$	7,464
Commercial		1,282		1,376		1,656
Foreign governments(1)		1,580		1,799		1,866
Consolidated	$	10,511	$	10,466	$	10,986

⁽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.