| 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. |
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