- Book-to-bill ratio of 1.25x on
funded orders of $3.4 billion
- Sales increased 14% to $2.7
billion
- Diluted earnings per share (EPS)
from continuing operations of $2.71
- Adjusted diluted EPS from continuing
operations(1) of $2.89
- Cash from continuing operations of
$174 million
- Free cash flow of $146
million
- Increased 2019 full-year financial
guidance
L3 Technologies, Inc. (NYSE:LLL) today reported diluted earnings
per share (EPS) from continuing operations of $2.71 and adjusted
diluted EPS from continuing operations of $2.89 for the quarter
ended March 29, 2019 (2019 first quarter), an increase of 16%
and 24%, respectively, compared to diluted EPS from continuing
operations for the quarter ended March 30, 2018 (2018 first
quarter) of $2.34. Adjusted diluted EPS excludes $15 million ($11
million after income taxes, or $0.14 per diluted share) of merger
and acquisition related expenses and $3 million ($0.04 per diluted
share) related to business divestitures, primarily a loss on the
sale of business. Net sales of $2,700 million for the 2019 first
quarter increased by 14% compared to the 2018 first quarter.
“We had strong first quarter performance highlighted by a
notable book-to-bill ratio of 1.25 and increases in sales,
operating income, operating margin, EPS and free cash flow,” said
Christopher E. Kubasik, L3’s Chairman, Chief Executive Officer and
President. “Across L3, our team continues to be engaged, productive
and efficient, and their outstanding work is reflected in our
financial results. I appreciate this focus, which lays the
groundwork for becoming a more agile and integrated technology
leader with the impending merger of L3 and Harris.”
_________________
(1)
Adjusted diluted EPS from continuing
operations is not calculated in accordance with accounting
principles generally accepted in the United States of America (U.S.
GAAP) and represents diluted EPS from continuing operations
excluding merger, acquisition and divestiture related expenses and
losses. The company believes that merger, acquisition and
divestiture related expenses and losses affect the comparability of
the results of operations and that disclosing diluted EPS from
continuing operations excluding these items is useful to investors
as it allows investors to more easily compare 2019 first quarter
results to 2018 first quarter results. However, these non-GAAP
financial measures may not be defined or calculated by other
companies in the same manner.
L3 Consolidated Results
The table below provides L3’s selected financial data.
First Quarter Ended
March
March
(in millions, except per share data) 29,
30, Increase/
2019 2018 (decrease) Net sales
$2,700
$2,371 14 % Operating income
$293 $251 17 % Plus: Merger,
acquisition and divestiture related expenses and losses
18
$— nm Segment operating income
$311 $251 24 % Segment
operating margin
11.5% 10.6% 90 bpts Interest expense
$(37) $(41) (10) % Interest and other income, net
4 6
nm Effective income tax rate(a)
14.2% 11.1% nm Net income
from continuing operations attributable to L3
$217 $187 16 %
Adjusted net income from continuing operations attributable to L3
$231 $187 24 % Diluted earnings per share from continuing
operations
$2.71 $2.34 16 % Adjusted diluted earnings per
share from continuing operations
$2.89 $2.34 24 % Diluted
weighted average common shares outstanding
80.0 79.9 — %
Net cash provided from (used in) operating activities from
continuing operations
$174 $(35) nm Less: Capital
expenditures
(49) (56) (13) % Plus: Disposition of property,
plant and equipment
3 2 nm Tax and transaction payments
related to divestitures
1 4 nm Merger and acquisition
related payments
17 — nm Free cash flow(b)(c)
$146
$(85) nm
_________________
(a) The effective income tax rate
corresponding to adjusted diluted EPS was 14.7% for the 2019 first
quarter.
(b) Free cash flow is defined as net cash
from operating activities from continuing operations less net
capital expenditures (capital expenditures less cash
proceeds from dispositions of property,
plant and equipment), plus tax and transaction payments related to
divestitures, and merger and acquisition
related payments. The company believes
free cash flow is a useful measure for investors because it
portrays the company's ability to generate cash from
operations for purposes such as repaying
debt, returning cash to shareholders and funding acquisitions. The
company also uses free cash flow as
a performance measure in evaluating
management.
(c) Excludes free cash flow from
discontinued operations.
nm = not meaningful
First Quarter Results of Operations: For the 2019 first quarter,
consolidated net sales of $2,700 million increased $329 million, or
14%, compared to the 2018 first quarter. Organic sales(2) increased
by $333 million, or 14%, to $2,670 million for the 2019 first
quarter. Organic sales exclude $30 million of sales increases
related to business acquisitions and $34 million of sales declines
related to business divestitures. For the 2019 first quarter,
organic sales to the U.S. Government increased $287 million, or
18%, to $1,916 million, and organic sales to international and
commercial customers increased $46 million, or 6%, to $754
million.
____________________
(2)
Organic sales represent net sales
excluding the sales impact of acquisitions and divestitures. Sales
increases related to acquired businesses are sales from
acquisitions that are included in L3’s actual results for less than
12 months. Sales declines related to business divestitures are
sales from divestitures that are included in L3’s actual results
for the 12 months prior to the divestitures. The company believes
organic sales is a useful measure for investors because it provides
period-to-period comparisons of the company’s ongoing operational
and financial performance.
Segment operating income for the 2019 first quarter increased by
$60 million, or 24%, compared to the 2018 first quarter. Segment
operating income as a percentage of sales (segment operating
margin) increased by 90 basis points to 11.5% for the 2019 first
quarter from 10.6% for the 2018 first quarter. Favorable contract
performance primarily at Communications and Networked Systems
(C&NS), lower severance and general & administrative
(G&A) expenses at C&NS and Electronic Systems segments and
lower pension expense across all three segments were partially
offset by sales mix changes at Electronic Systems, primarily
Commercial Aviation Solutions.
See the reportable segment results below for additional
discussion of sales and operating margin trends.
The effective income tax rate for the 2019 first quarter
increased to 14.2% from 11.1% for the 2018 first quarter. The
increase was driven by a reduction in tax benefits from equity
compensation partially offset by an increased tax benefit on export
sales.
Orders: Funded orders for the 2019 first quarter increased 28%
to $3,383 million compared to $2,636 million for the 2018 first
quarter. The book-to-bill ratio was 1.25x for the 2019 first
quarter. Funded backlog increased 7% to $10,396 million at
March 29, 2019, compared to $9,704 million at December 31,
2018.
The table below provides funded orders data for the first
quarter of 2019.
First Quarter Ended
($ in millions)
March 29,2019
March 30,2018
Increase/(decrease)
ISRS
$ 1,734 $ 1,097 58 % C&NS
934 743 26
% Electronic Systems
715 796 (10 )% Total
$ 3,383 $ 2,636 28 %
Cash Flow: Net cash provided from operating activities from
continuing operations was $174 million for the 2019 first quarter,
an increase of $209 million compared to net cash used of $35
million for the 2018 first quarter. The increase was primarily due
to higher operating income and timing of billings and collections
across several business areas in all three segments. Cash on hand
at March 29, 2019 was $1,108 million, an increase of $42
million compared to December 31, 2018.
Reportable Segment Results
The company has three reportable segments. The company evaluates
the performance of its segments based on their sales, operating
income and operating margin. Corporate expenses are allocated to
the company’s operating segments using an allocation methodology
prescribed by U.S. Government regulations for government
contractors. Accordingly, segment results include all costs and
expenses, except for goodwill impairment charges, merger and
acquisition related expenses, divestiture related costs, and
certain other items that are excluded by management for purposes of
evaluating the performance of the company’s business segments.
Intelligence, Surveillance and
Reconnaissance Systems
First Quarter Ended Increase
($ in millions)
March 29,2019
March 30,2018
Net sales
$ 1,253 $ 1,016 23 % Operating
income
$ 130 $ 93 40 % Operating margin
10.4 % 9.2 %
120 bpts
First Quarter: ISRS net sales for the 2019 first quarter
increased by $237 million, or 23%, compared to the 2018 first
quarter. Organic sales increased by $252 million, or 25%, compared
to the 2018 first quarter. Organic sales exclude $19 million of
sales increases related to business acquisitions and $34 million of
sales declines related to business divestitures. Organic sales
increased by: (1) $135 million for Surveillance & Strike
Systems primarily due to higher volume related to procurement and
ISR missionization of business jet aircraft systems for the U.S.
Air Force (USAF) EC-37B Compass Call Recap aircraft, the Royal
Australian Air Force (RAAF) MC-55A Peregrine aircraft and the High
Altitude Observatory (HALO) aircraft for the U.S. Missile Defense
Agency (MDA), (2) $53 million for Reconnaissance Mission Systems
due to procurement and modification related to special mission
aircraft for the U.S. Government, (3) $36 million for Integrated
Land Systems primarily due to increased deliveries of night vision
products to an international customer and (4) $35 million due to
increased deliveries of airborne turret systems to U.S. and foreign
militaries. These increases were partially offset by $7 million for
Intelligence & Mission Systems primarily due to fewer
deliveries of electronic warfare countermeasures products as
contracts near completion.
ISRS operating income for the 2019 first quarter increased $37
million, or 40%, compared to the 2018 first quarter. Operating
margin increased by 120 basis points to 10.4% driven by higher
sales volume, lower pension expense, which increased operating
margin by 60 basis points and the impact from divestiture of lower
margin businesses.
Communications and Networked
Systems
First Quarter Ended Increase
($ in millions)
March 29,2019
March 30,2018
Net sales
$ 785 $ 707 11 % Operating income
$ 84 $ 64 31 % Operating margin
10.7 % 9.1 %
160 bpts
First Quarter: C&NS net sales for the 2019 first quarter
increased by $78 million, or 11%, compared to the 2018 first
quarter. Organic sales increased by $72 million, or 10%, compared
to the 2018 first quarter. Organic sales exclude $6 million of
sales increases related to business acquisitions. Organic sales
increased by: (1) $46 million for Broadband Communications due to
higher production volume for Unmanned Aerial Vehicle (UAV)
communication systems for the U.S. Department of Defense (DoD) and
(2) $26 million primarily for Communications & Microwave
Products due to increased deliveries of mobile and ground-based
SATCOM systems for the U.S. Special Operations Command
(USSOCOM).
C&NS operating income for the 2019 first quarter increased
by $20 million, or 31%, compared to the 2018 first quarter.
Operating margin increased by 160 basis points to 10.7%. Operating
margin increased by: (1) 90 basis points primarily due to favorable
contract performance, (2) 40 basis points due to lower severance
and G&A expenses and (3) 30 basis points due to lower pension
expenses.
Electronic Systems
First Quarter Ended
Increase
($ in millions) March 29, 2019
March 30, 2018 Net sales
$
662 $ 648 2 % Operating income
$ 97 $
94 3 % Operating margin
14.7 %
14.5 % 20
bpts
First Quarter: Electronic Systems net sales for the 2019 first
quarter increased by $14 million, or 2%, compared to the 2018 first
quarter. Organic sales increased by $9 million, or 1%, compared to
the 2018 first quarter. Organic sales exclude $5 million of sales
increases related to business acquisitions. Organic sales increased
by $29 million for Precision Engagement Systems due to new awards
on classified programs and increased volume for fuzing and ordnance
and guidance systems products primarily to the U.S. Army. These
increases were partially offset by: (1) $15 million for Defense
Training Solutions primarily due to the loss of the USAF C-17
contract recompetition last year as our incumbent contract ended in
November 2018 and (2) $5 million for Commercial Aviation Solutions
primarily due to lower volume for commercial flight simulators as
certain contracts near completion.
Electronic Systems operating income for the 2019 first quarter
increased by $3 million, or 3%, compared to the 2018 first quarter.
Operating margin increased by 20 basis points to 14.7%. Operating
margin increased by 140 basis points due to lower G&A expenses
and 30 basis points due to lower pension expense. These increases
were offset by 150 basis points due to sales mix changes primarily
at Commercial Aviation Solutions.
Financial Guidance
Based on information known as of the date of this release, the
company has updated its consolidated and segment financial guidance
for the year ending December 31, 2019, as presented in the tables
below. All financial guidance amounts are based on results from
continuing operations and are estimates subject to change,
including as a result of matters discussed under the
“Forward-Looking Statements” cautionary language beginning on page
6. The company undertakes no duty to update its guidance.
Consolidated 2019 Financial Guidance (in millions,
except per share data) Current
Guidance
Prior Guidance(January 29, 2019)
Net sales $10,900 $10,750 Operating margin 12.0% 12.0% Interest
expense $155 $155 Interest and other income $30 $30 Effective tax
rate 19% 20% Minority interest expense(1) $22 $22 Net cash from
operating activities from continuing operations $1,285 $1,275
Capital expenditures, net of dispositions of property, plant and
equipment (230) (230) Free cash flow $1,055 $1,045
_____________
(1) Minority interest expense represents
net income from continuing operations attributable to
non-controlling interests.
Segment 2019 Financial Guidance ($ in
millions) Current Guidance
Prior Guidance(January 29, 2019)
Net
Sales:
ISRS $4,825 to $4,925 $4,700 to $4,800 C&NS $3,150 to $3,250
$3,125 to $3,225 Electronic Systems $2,775 to $2,875 $2,775 to
$2,875
Operating
Margin:
ISRS 11.1% to 11.3% 11.1% to 11.3% C&NS 11.0% to 11.2% 11.0% to
11.2% Electronic Systems 14.3% to 14.5%
14.3% to 14.5%
The revisions to our Current Guidance compared to our Prior
Guidance primarily includes:
- an increase in estimated sales at ISRS
for ISR Recap and Special Mission aircraft fleet expansion work,
and at C&NS for classified programs and
- a lower effective income tax rate due
to higher tax benefits on export sales to foreign customers and an
expected increase in tax benefits from equity compensation.
Guidance for 2019 excludes: (i) potential changes to
interpretations of U.S. tax reform, (ii) any potential goodwill
impairment charges for which the information is presently unknown,
(iii) potential adverse results related to litigation
contingencies, (iv) gains and losses related to potential business
divestitures, (v) impact of potential acquisitions and divestitures
and (vi) L3 Harris merger, integration and transaction related
payments and expenses.
Additional financial information regarding the 2019 financial
guidance is available on the company’s website at www.L3T.com.
Conference Call
In conjunction with this release, L3 will host a conference call
today, Wednesday, May 1, 2019, at 11:00 a.m. ET that will be
simultaneously broadcast over the Internet. Christopher E. Kubasik,
Chairman, Chief Executive Officer and President, and Ralph G.
D’Ambrosio, Senior Vice President and Chief Financial Officer, will
host the call.
Listeners can access the conference call live at the following
website address:
http://www.L3T.com
Please allow 15 minutes prior to the call to visit this site to
download and install any necessary audio software. The archived
version of the call may be accessed at the site or by dialing
1-877-344-7529 (for domestic callers) or 1-412-317-0088 (for
international callers) and using the Replay Access Code: 10129454
approximately one hour after the call ends. The Conference Replay
will be available through Wednesday, May 15, 2019.
With headquarters in New York City and approximately 31,000
employees worldwide, L3 develops advanced defense technologies and
commercial solutions in pilot training, aviation security, night
vision and EO/IR, weapons, maritime systems and space.
To learn more about L3, please visit the company’s website at
www.L3T.com. L3 uses its website as a channel of distribution of
material company information. Financial and other material
information regarding L3 is routinely posted on the company’s
website and is readily accessible.
Forward-Looking Statements
Certain of the matters discussed in this press release,
including information regarding the company’s 2019 financial
guidance, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements
other than historical facts may be forward-looking statements, such
as “may,” “will,” “should,” “likely,” “projects,” “financial
guidance,” ‘‘expects,’’ ‘‘anticipates,’’ ‘‘intends,’’ ‘‘plans,’’
‘‘believes,’’ ‘‘estimates,’’ and similar expressions are used to
identify forward-looking statements. The company cautions investors
that these statements are subject to risks and uncertainties, many
of which are difficult to predict and generally beyond the
company’s control, that could cause actual results to differ
materially from those expressed in, or implied or projected by, the
forward-looking information and statements. Some of the factors
that could cause actual results to differ include, but are not
limited to, the following: the occurrence of any event, change or
other circumstances that could give us or Harris the right to
terminate the definitive merger agreement between us and Harris;
the outcome of any legal proceedings that may be instituted against
us, Harris or our respective directors with respect to the merger;
the ability to obtain regulatory approvals and satisfy other
closing conditions to the merger in a timely manner or at all,
including the risk that regulatory approvals required for the
merger are not obtained or are obtained subject to conditions that
are not anticipated; delay in closing the merger; difficulties and
delays in integrating our business with Harris business or fully
realizing anticipated cost savings and other benefits; business
disruptions from the proposed merger that may harm our business or
Harris business, including current plans and operations; any
announcement relating to the proposed transaction could have
adverse effects on our ability or the ability of Harris to retain
and hire key personnel or maintain relationships with suppliers and
customers, including the U.S. government and other governments, or
on our or Harris operating results and businesses generally; the
risk that the announcement of the proposed transaction could have
adverse effects on the market price of our common stock or Harris
common stock and the uncertainty as to the long-term value of the
common stock of the combined company following the merger; certain
restrictions during the pendency of the merger that may impact our
ability or the ability of Harris to pursue certain business
opportunities or strategic transactions; the business, economic and
political conditions in the markets in which we and Harris operate;
our dependence on the defense industry; backlog processing and
program slips resulting from delayed awards and/or funding from the
Department of Defense (DoD) and other major customers; the U.S.
Government fiscal situation; changes in DoD budget levels and
spending priorities; our reliance on contracts with a limited
number of customers and the possibility of termination of
government contracts by unilateral government action or for failure
to perform; the extensive legal and regulatory requirements
surrounding many of our contracts; our ability to retain our
existing business and related contracts; our ability to
successfully compete for and win new business, or, identify,
acquire and integrate additional businesses; our ability to
maintain and improve our operating margin; the availability of
government funding and changes in customer requirements for our
products and services; the outcome of litigation matters (see Notes
to our annual report on Form 10-K and quarterly reports on Form
10-Q); results of audits by U.S. Government agencies and of ongoing
governmental investigations; our significant amount of debt and the
restrictions contained in our debt agreements and actions taken by
rating agencies that could result in a downgrade of our debt; our
ability to continue to recruit, retain and train our employees;
actual future interest rates, volatility and other assumptions used
in the determination of pension benefits and equity based
compensation, as well as the market performance of benefit plan
assets; our collective bargaining agreements; our ability to
successfully negotiate contracts with labor unions and our ability
to favorably resolve labor disputes should they arise; the
business, economic and political conditions in the markets in which
we operate; the risk that our commercial aviation products and
services businesses are affected by a downturn in global demand for
air travel or a reduction in commercial aircraft OEM (Original
Equipment Manufacturer) production rates; the DoD’s Better Buying
Power and other efficiency initiatives; events beyond our control
such as acts of terrorism; our ability to perform contracts on
schedule; our international operations including currency risks and
compliance with foreign laws; our extensive use of fixed-price type
revenue arrangements; the rapid change of technology and high level
of competition in which our businesses participate; risks relating
to technology and data security; our introduction of new products
into commercial markets or our investments in civil and commercial
products or companies; the impact on our business of improper
conduct by our employees, agents or business partners; goodwill
impairments and the fair values of our assets; and the ultimate
resolution of contingent matters, claims and investigations
relating to acquired businesses, and the impact on the final
purchase price allocations.
Our forward-looking statements speak only as of the date of this
press release or as of the date they were made, and we undertake no
obligation to update forward-looking statements. For a more
detailed discussion of these factors, also see the information
under the captions “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in our
most recent report on Form 10-K for the year ended December 31,
2018 and in the quarterly report on Form 10-Q for the quarterly
period ended March 29, 2019, and any material updates to these
factors contained in any of our future filings.
As for the forward-looking statements that relate to future
financial results and other projections, actual results will be
different due to the inherent uncertainties of estimates, forecasts
and projections and may be better or worse than projected and such
differences could be material. Given these uncertainties, you
should not place any reliance on these forward-looking
statements.
# # #
- Financial Tables Follow -
Table
A
L3 TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in millions, except per share
data)
First Quarter Ended(a)
March 29,2019
March 30,2018
Net sales $ 2,700 $ 2,371
Cost of sales
(2,007 ) (1,723 )
General and administrative
expenses (382 ) (397 )
Total costs and
operating expenses (2,389 ) (2,120 )
Merger,
acquisition and divestiture related expenses and losses
(18 ) — 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 tax
— 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 L3’s common shareholders:
Continuing operations $ 2.74 $ 2.40
Discontinued operations — 0.20
Basic
earnings per share $ 2.74 $ 2.60
Diluted earnings per share attributable to L3's common
shareholders: Continuing operations $ 2.71
$ 2.34
Discontinued operations — 0.20
Diluted earnings per share $ 2.71 $
2.54
L3’s weighted average common shares
outstanding: Basic 79.2 78.2
Diluted 80.0 79.9
_______________
(a)
It is the company's established practice
to close its books for the quarters ending March, June and
September on the Friday preceding the end of the calendar quarter.
The interim financial statements and tables of financial
information included herein have been prepared and are labeled
based on that convention. The company closes its annual books on
December 31 regardless of what day it falls on.
Table
B
L3 TECHNOLOGIES, INC.
UNAUDITED SELECT FINANCIAL DATA
(in millions)
First Quarter Ended
March 29,2019
March 30,2018
Segment operating
data
Net sales: ISRS $ 1,253 $ 1,016
C&NS 785 707
Electronic Systems 662
648
Total $ 2,700 $ 2,371
Segment operating income: ISRS $
130 $ 93
C&NS 84 64
Electronic
Systems 97 94
Segment operating
income $ 311 $ 251
Segment operating margin: ISRS 10.4 %
9.2 %
C&NS 10.7 % 9.1 %
Electronic
Systems 14.7 % 14.5 %
Total 11.5
% 10.6 %
Depreciation and amortization:
ISRS $ 23 $ 21
C&NS 16 17
Electronic Systems 19 18
Total
$ 58 $ 56
Funded order
data
ISRS $ 1,734 $ 1,097
C&NS
934 743
Electronic Systems 715 796
Total $ 3,383 $ 2,636
March 29, December 31,
2019 2018
Backlog
Funded $ 10,396 $ 9,704
Table
C
L3 TECHNOLOGIES, INC.
UNAUDITED CONDENSED
CONSOLIDATED
BALANCE SHEETS
(in millions)
March 29,2019
December 31,2018
ASSETS Cash and cash equivalents $
1,108 $ 1,066
Billed receivables, net 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 —
Goodwill 6,826 6,808
Identifiable intangible
assets 378 390
Other assets 358 341
Total assets $ 14,263 $ 13,518
LIABILITIES AND EQUITY 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 —
Long-term debt 3,322 3,321
Total liabilities 8,145 7,611
Shareholders’
equity 6,051 5,839
Noncontrolling interests
67 68
Total equity 6,118 5,907
Total liabilities and equity $ 14,263 $
13,518
Table
D
L3 TECHNOLOGIES, INC.
UNAUDITED CONDENSED
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in millions)
First Quarter Ended March 29, 2019
March 30, 2018
Operating
activities
Net income $ 223 $ 208
Less: (income) loss
from discontinued operations, net of tax — (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
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 —
Working capital adjustment on prior
divestitures (20 ) —
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 — 207
Repayments of borrowings under revolving credit facility
— (207 )
Common stock repurchased — (119 )
Dividends paid (70 ) (65 )
Proceeds from
exercise of stock options 19 55
Proceeds from
employee stock purchase plan — 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
Cash from (used in) discontinued operations:
Operating activities 19 (29 )
Investing
activities — (1 )
Cash from (used in)
discontinued operations 19 (30 )
Net increase
in 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
Table
E
L3 TECHNOLOGIES, INC.
NON-GAAP FINANCIAL MEASURES
(in millions, except per share
amounts)
First Quarter Ended March 29, 2019
March 30, 2018 Diluted EPS from continuing
operations attributable to L3's common stockholders
$
2.71 $ 2.34 EPS impact of merger and acquisition related
expenses (1)
0.14 — EPS impact of divestiture related
expenses and losses(2)
0.04 — Adjusted diluted EPS
from continuing operations (3)
$ 2.89 $ 2.34
Net income from continuing operations attributable to L3
$ 217 $ 187 Merger and acquisition related expenses
(1)
11 — Divestiture related expenses and losses (2)
3 — Adjusted net income from continuing operations
attributable to L3 (3)
$ 231 $ 187
__________________
(1) Merger and acquisition related
expenses
$ (15 )
Tax benefit
4 After-tax impact
(11 ) Diluted
weighted average common shares outstanding
80.0 Per
share impact (4)
$ (0.14 )
(2) Divestiture related expenses and
losses
$ (3 ) Tax benefit
— After-tax
impact
(3 ) Diluted weighted average common shares
outstanding
80.0 Per share impact (4)
$
(0.04 )
(3) Adjusted diluted EPS from continuing
operations is diluted EPS from continuing operations excluding
merger, acquisition and divestiture related
expenses and losses. Adjusted net income
attributable to L3 is net income attributable to L3 excluding
merger, acquisition and divestiture related
expenses and losses. These amounts are not
calculated in accordance with accounting principles generally
accepted in the United States of America
(U.S. GAAP). We believe that the merger,
acquisition and divestiture related expenses and losses affect the
comparability of the results of operations
for 2019 to the results of operations for
2018. We also believe that disclosing net income and diluted EPS
excluding these items is useful to investors
as it allows investors to more easily
compare the 2019 results to the 2018 results. However, these
non-GAAP financial measures may not be defined or
calculated by other companies in the same
manner.
(4) Amounts may not calculate directly due
to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190501005367/en/
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