L 3 COMMUNICATIONS CORP

CIK:0001039101|SEC Filings

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 29, 2019	Mar. 30, 2018
Net sales:
Total sales	$ 2,700	$ 2,371
Operating costs and expenses:
General and administrative expenses	(382)	(397)
Total operating costs and expenses	(2,389)	(2,120)
Merger, acquisition and divestiture related expenses and losses	(18)	0
Operating income	293	251
Interest expense	(37)	(41)
Interest and other income, net	4	6
Income from continuing operations before income taxes	260	216
Provision for income taxes	(37)	(24)
Income from continuing operations	223	192
Income from discontinued operations, net of income taxes	0	16
Net income	223	208
Net income from continuing operations attributable to noncontrolling interests	(6)	(5)
Net income attributable to L3	$ 217	$ 203
Basic earnings per share attributable to common shareholders:
Continuing operations (in dollars per share)	$ 2.74	$ 2.40
Discontinued operations (in dollars per share)	0.00	0.20
Basic earnings per share (in dollars per share)	2.74	2.60
Diluted earnings per share attributable to common shareholders:
Continuing operations (in dollars per share)	2.71	2.34
Discontinued operations (in dollars per share)	0.00	0.20
Diluted earnings per share (in dollars per share)	2.71	2.54
Cash dividends declared per common share (in dollars per share)	$ 0.85	$ 0.8
Weighted average common shares outstanding:
Basic (in shares)	79.2	78.2
Diluted (in shares)	80.0	79.9
Product [Member]
Net sales:
Total sales	$ 1,932	$ 1,646
Operating costs and expenses:
Cost of Goods and services sold	(1,442)	(1,191)
Service [Member]
Net sales:
Total sales	768	725
Operating costs and expenses:
Cost of Goods and services sold	$ (565)	$ (532)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	3 Months Ended
	Mar. 29, 2019	Mar. 30, 2018
Operating activities:
Net income	$ 223	$ 208
Less: income from discontinued operations, net of tax	0	(16)
Income from continuing operations	223	192
Depreciation of property, plant and equipment	43	43
Amortization of intangibles and other assets	15	13
Deferred income tax provision	8	16
Stock-based employee compensation expense	12	20
Contributions to employee savings plans in common stock	30	32
Amortization of pension and postretirement benefit plans net loss and prior service cost	9	18
Other non-cash items	5	1
Changes in operating assets and liabilities, excluding amounts from acquisitions and divestitures, and discontinued operations:
Billed receivables	116	(73)
Contract assets	(142)	(145)
Inventories	(20)	(65)
Prepaid expenses and other current assets	(31)	(99)
Accounts payable, trade	(32)	56
Accrued employment costs	(70)	(54)
Accrued expenses	(31)	(6)
Contract liabilities	43	41
Income taxes	14	(11)
All other operating activities	(18)	(14)
Net cash from (used in) operating activities from continuing operations	174	(35)
Investing activities:
Proceeds from the sale of businesses, net of closing date cash balances	1	0
Working capital adjustment on prior divestitures	(20)	0
Capital expenditures	(49)	(56)
Dispositions of property, plant and equipment	3	2
Other investing activities	(9)	(29)
Net cash used in investing activities from continuing operations	(74)	(83)
Financing activities:
Borrowings under revolving credit facility	0	207
Repayments of borrowings under revolving credit facility	0	(207)
Common stock repurchased	0	(119)
Dividends paid	(70)	(65)
Proceeds from exercises of stock options	19	55
Proceeds from employee stock purchase plan	0	8
Repurchases of common stock to satisfy tax withholding obligations	(22)	(23)
Other financing activities	(7)	(2)
Net cash used in financing activities from continuing operations	(80)	(146)
Effect of foreign currency exchange rate changes on cash and cash equivalents	3	6
Net cash from (used in) discontinued operations:
Operating activities	19	(29)
Investing activities	0	(1)
Net cash from (used in) discontinued operations	19	(30)
Net increase (decrease) cash and cash equivalents	42	(288)
Cash and cash equivalents, beginning of the period	1,066	662
Cash and cash equivalents, end of the period	$ 1,108	$ 374

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Mar. 29, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 1,108	$ 1,066
Billed receivables, net of allowances of $13 in 2019 and $12 in 2018	804	919
Contract assets	1,735	1,590
Inventories	896	879
Prepaid expenses and other current assets	362	356
Total current assets	4,905	4,810
Property, plant and equipment, net	1,178	1,169
Operating lease right-of-use assets	618	0
Goodwill	6,826	6,808
Identifiable intangible assets	378	390
Other assets	358	341
Total assets	14,263	13,518
Current liabilities:
Accounts payable, trade	672	699
Accrued employment costs	411	491
Accrued expenses	219	251
Contract liabilities	711	669
Income taxes payable	55	49
Other current liabilities	364	288
Total current liabilities	2,432	2,447
Pension and postretirement benefits	1,202	1,211
Deferred income taxes	205	196
Other liabilities	415	436
Operating lease liabilities	569	0
Long-term debt	3,322	3,321
Total liabilities	8,145	7,611
Commitments and contingencies (see Note 19)
Shareholders’ equity:
Common stock: $.01 par value; 300,000,000 shares authorized, 79,397,240 shares outstanding at March 29, 2019 and 78,800,714 shares outstanding at December 31, 2018	6,904	6,866
Treasury stock (at cost), 84,999,711 shares at March 29, 2019 and December 31, 2018	(7,726)	(7,726)
Retained earnings	7,574	7,424
Accumulated other comprehensive loss	(701)	(725)
Total shareholders’ equity	6,051	5,839
Noncontrolling interests	67	68
Total equity	6,118	5,907
Total liabilities and equity	$ 14,263	$ 13,518