Attached files
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| 8-K - FORM 8-K - L3 TECHNOLOGIES, INC. | form8-k.htm |
Contact: L3 Technologies, Inc.
Corporate Communications For Immediate Release
212-697-1111
L3 Announces Third Quarter 2017 Results
· Net sales increased 6% to $2,646 million
· Diluted earnings per share (EPS) from continuing operations of $0.29, including a goodwill impairment charge for Vertex Aerospace of $187 million, or $1.67 per diluted share
· Adjusted diluted EPS from continuing operations(1) of $1.96
· Net cash from operating activities from continuing operations of $316 million
· Book-to-bill ratio of 1.18x on funded orders of $3.1 billion
· Updated 2017 financial guidance
NEW YORK, October 26, 2017 – L3 Technologies, Inc. (NYSE: LLL) today reported diluted EPS from continuing operations of $0.29 and adjusted diluted EPS from continuing operations of $1.96 for the quarter ended September 29, 2017 (2017 third quarter). Adjusted diluted EPS excludes a previously disclosed goodwill impairment charge of $1.67 per diluted share for Vertex Aerospace. Diluted EPS from continuing operations for the quarter ended September 23, 2016 (2016 third quarter) was $1.88. Net sales of $2,646 million for the 2017 third quarter increased by 6% compared to the 2016 third quarter.
“Our third quarter results demonstrated that we are on a disciplined growth trajectory, with increased orders, sales, book-to-bill ratio and segment operating margins,” said Michael T. Strianese, L3’s Chairman and Chief Executive Officer. “We also achieved organic sales growth, primarily through strong performance in our Electronic and Communication Systems segments. During the quarter, we restructured our businesses in the Aerospace Systems segment, and as a result of the Fort Rucker recompetition loss, we recorded an impairment charge related to the Vertex Aerospace goodwill. We also began to evaluate strategic alternatives for Vertex Aerospace. Looking ahead, we are making good progress on our strategic priorities: improving operating efficiencies, making beneficial acquisitions, and driving topline growth.”
(1) Adjusted diluted earnings per share from continuing operations is a non-GAAP financial measure. See Table E for a reconciliation and a discussion of the reasons why the company believes that such presentation provides useful information to investors.
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L3 Announces Results for the 2017 Third Quarter Page 2 |
During the 2017 third quarter the company recorded a goodwill impairment charge of $187 million ($133 million after income taxes), or $1.67 per diluted share related to the decline in the estimated fair value of the Vertex Aerospace reporting unit due to the Fort Rucker Aviation Maintenance and Support contract recompetition loss. The goodwill impairment charge is included in consolidated operating income. Segment operating income represents earnings from the company’s business segments before the goodwill impairment charge. Segment operating income is used by management for purposes of evaluating the operating performance of the company’s business segments.
L3 Consolidated Results
The table below provides L3’s selected financial data.
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Third Quarter Ended |
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Year-to-Date Ended |
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(in millions, except per share data) |
Sept. 29, |
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Sept. 23, |
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Increase/ |
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Sept. 29, |
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Sept. 23, |
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Increase/ |
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2017 |
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2016 |
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(decrease) |
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2017 |
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2016 |
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(decrease) |
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Net sales |
$ |
2,646 |
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$ |
2,505 |
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6 |
% |
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$ |
8,047 |
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$ |
7,522 |
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7 |
% |
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Operating income |
$ |
63 |
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$ |
215 |
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(71) |
% |
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$ |
628 |
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$ |
714 |
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(12) |
% |
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Goodwill impairment charge |
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187 |
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- |
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nm |
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187 |
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- |
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nm |
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Segment operating income |
$ |
250 |
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$ |
215 |
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16 |
% |
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$ |
815 |
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714 |
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14 |
% |
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Operating margin |
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2.4 |
% |
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8.6 |
% |
(620) |
bpts |
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7.8 |
% |
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9.5 |
% |
(170) |
bpts |
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Segment operating margin |
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9.4 |
% |
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8.6 |
% |
80 |
bpts |
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10.1 |
% |
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9.5 |
% |
60 |
bpts |
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Interest expense and other |
$ |
(37) |
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$ |
(35) |
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6 |
% |
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$ |
(113) |
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$ |
(115) |
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(2) |
% |
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Effective income tax rate |
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- |
% |
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16.1 |
% |
nm |
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22.1 |
% |
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21.7 |
% |
40 |
bpts |
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Net income from continuing operations attributable to L3 |
$ |
23 |
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$ |
148 |
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(84) |
% |
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$ |
389 |
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$ |
459 |
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(15) |
% |
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Adjusted net income from continuing operations |
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attributable to L3(a) |
$ |
156 |
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$ |
148 |
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5 |
% |
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$ |
522 |
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$ |
459 |
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14 |
% |
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Diluted earnings per share from continuing operations |
$ |
0.29 |
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$ |
1.88 |
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(85) |
% |
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$ |
4.88 |
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$ |
5.83 |
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(16) |
% |
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Adjusted diluted earnings per share from continuing |
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operations(a) |
$ |
1.96 |
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$ |
1.88 |
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4 |
% |
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$ |
6.55 |
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$ |
5.83 |
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12 |
% |
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Diluted weighted average common shares outstanding |
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79.8 |
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78.8 |
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1 |
% |
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79.6 |
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78.7 |
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1 |
% |
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Net cash from operating activities from continuing operations |
$ |
316 |
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$ |
210 |
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50 |
% |
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$ |
667 |
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$ |
586 |
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14 |
% |
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Less: Capital expenditures, net of dispositions(b) |
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(54) |
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(47) |
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15 |
% |
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(87) |
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(111) |
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(22) |
% |
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Free cash flow(c) |
$ |
262 |
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$ |
163 |
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61 |
% |
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$ |
580 |
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$ |
475 |
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22 |
% |
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___________________ |
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(a) Non-GAAP metric that excludes the goodwill impairment charge for Vertex Aerospace. See Table E for a reconciliation and a discussion of the reasons why |
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the company believes that such information provides useful information to investors. |
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(b) Results for the 2017 year-to-date period include $64 million of cash proceeds related to the sale of the company's property in San Carlos, California. |
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(c) Free cash flow is defined as net cash from operating activities from continuing operations less net capital expenditures (capital expenditures less cash proceeds |
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from dispositions of property, plant and equipment). 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.
nm = not meaningful |
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L3 Announces Results for the 2017 Third Quarter Page 3 |
Third Quarter Results of Operations: For the 2017 third quarter, consolidated net sales of $2,646 million increased $141 million, or 6%, compared to the 2016 third quarter, including organic sales(2) growth of 4%. Organic sales exclude $56 million of sales increases related to business acquisitions and $17 million of sales declines related to business divestitures. For the 2017 third quarter, organic sales to the U.S. Government increased $82 million, or 4%, to $1,945 million, and organic sales to international and commercial customers increased $20 million, or 3%, to $645 million.
Operating income for the 2017 third quarter decreased by $152 million, or 71%, compared to the 2016 third quarter. Segment operating income for the 2017 third quarter increased by $35 million, or 16%, compared to the 2016 third quarter. Segment operating income as a percentage of sales (segment operating margin) increased by 80 basis points to 9.4% for the 2017 third quarter, compared to 8.6% for the 2016 third quarter. The increase in segment operating margin was driven primarily by improved contract performance, primarily at Communication Systems and a pre-tax charge in Sensor Systems for a settlement of the class action litigation related to EoTech recorded in the 2016 third quarter that did not recur. These increases were partially offset by severance and restructuring costs of $34 million, primarily at Communication Systems and Aerospace Systems. See the reportable segment results for additional discussion of sales and operating margin trends.
The effective tax rate for the 2017 third quarter was approximately 0%, and therefore not meaningful because the company recorded an income tax benefit related to the goodwill impairment charge at Vertex Aerospace. Excluding the goodwill impairment charge and related income tax benefits, the effective tax rate would have increased to 24.9% compared to 16.1% for the 2016 third quarter due to $17 million of tax benefits for the reversal of previously accrued amounts in the 2016 third quarter related to various U.S. Federal, foreign and state tax matters that did not recur.
Diluted EPS from continuing operations was $0.29 for the 2017 third quarter, compared to $1.88 for the 2016 third quarter. Adjusted diluted EPS from continuing operations increased 4% to $1.96. Diluted weighted average common shares outstanding for the 2017 third quarter increased 1% compared to the 2016 third quarter due to changes in the dilutive impact of common share equivalents, primarily caused by a higher L3 stock price.
Year-to-Date Results of Operations: For the year-to-date period ended September 29, 2017 (2017 year-to-date period), consolidated net sales of $8,047 million increased $525 million, or 7%, compared to the year-to-date period ended September 23, 2016 (2016 year-to-date period). Organic sales increased by $401 million, or 5%, to $7,886 million for the 2017 year-to-date period. Organic sales exclude $162 million of sales increases related to business acquisitions and $38 million of sales declines related to business divestitures. For the 2017 year-to-date period, organic sales to the U.S. Government increased $390 million, or 7%, to $5,877 million, and organic sales to international and commercial customers increased $11 million, or 1%, to $2,009 million.
Due to the calendarization of the company’s fiscal quarter end dates, the 2017 year-to-date period had 2% more business days compared to the 2016 year-to-date period. The extra days for the 2017 year-to-date period will reverse in the 2017 fourth quarter.
Operating income for the 2017 year-to-date period decreased by $86 million, or 12%, compared to the 2016 year-to-date period. Segment operating income for the 2017 year-to-date period increased by $101 million, or 14%, compared to the 2016 year-to-date period. Segment operating margin increased by 60 basis points to 10.1% for the 2017 year-to-date period, compared to 9.5% for the 2016 year-to-date period. The increase in segment operating margin was primarily driven by a pre-tax charge for a settlement of the class action litigation related to EoTech in the 2016 third quarter that did not recur and lower return allowances related to a voluntary returns program, which ended in the first quarter of 2017, and improved contract performance, primarily for Communication Systems and Sensor Systems. See the reportable segment results for additional discussion of sales and operating margin trends.
(2) Organic sales represent net sales excluding the sales impact of acquisitions and divestitures. 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. Sales increases related to acquired businesses are sales from acquisitions that are included in L3’s actual results for less than 12 months. 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.
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L3 Announces Results for the 2017 Third Quarter Page 4 |
The effective tax rate for the 2017 year-to-date period increased to 22.1% from 21.7% for the same period last year. Excluding the goodwill impairment charge and related income tax benefits, the effective tax rate would have increased to 23.8% due to prior year tax benefits of $21 million for the reversal of certain previously accrued amounts related to various U.S. Federal, foreign and state tax matters that did not recur, which were partially offset by a lower effective tax rate on foreign earnings.
Diluted EPS from continuing operations was $4.88 for the 2017 year-to-date period, compared to $5.83 for the 2016 year-to-date period. Adjusted diluted EPS from continuing operations increased 12% to $6.55. Diluted weighted average common shares outstanding for the 2017 year-to-date period increased 1% compared to the 2016 year-to-date period due to changes in the dilutive impact of common share equivalents, primarily caused by a higher L3 stock price.
Orders: Funded orders for the 2017 third quarter increased 16% to $3,126 million compared to $2,688 million for the 2016 third quarter. Funded orders for the 2017 year-to-date period increased 9% to $8,107 million compared to $7,415 million for the 2016 year-to-date period. The book-to-bill ratio was 1.18x for the 2017 third quarter and 1.01x for the 2017 year-to-date period. Funded backlog increased 1% to $9,021 million at September 29, 2017 compared to $8,896 million at December 31, 2016.
Cash Flow: Net cash from operating activities from continuing operations was $667 million for the 2017 year-to-date period, an increase of $81 million, compared to $586 million for the 2016 year-to-date period. The increase in net cash from operating activities from continuing operations was driven by higher segment operating income and by less cash used for working capital partially offset by higher income tax payments compared to the 2016 year-to-date period. Capital expenditures, net of dispositions, were $87 million for the 2017 year-to-date period and included proceeds of $64 million from the sale of the company’s property in San Carlos, California. The company paid dividends of $178 million during the 2017 year-to-date period compared to $166 million during the 2016 year-to-date period. Repurchases of the company’s common stock were $91 million during the 2017 year-to-date period, compared to $326 million during the 2016 year-to-date period.
Reportable Segment Results
The company has four reportable segments. The company evaluates the performance of its segments based on their sales, operating income and operating margin. Corporate expenses are allocated to the company’s operating segments using an allocation methodology prescribed by U.S. Government regulations for government contractors. Accordingly, segment results include all costs and expenses, except for goodwill impairment charges and certain other items that are excluded by management for purposes of evaluating the performance of the company’s business segments.
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Electronic Systems |
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Third Quarter Ended |
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Year-to-Date Ended |
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Sept. 29, |
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Sept. 23, |
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Sept. 29, |
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Sept. 23, |
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($ in millions) |
2017 |
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2016 |
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Increase |
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2017 |
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2016 |
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Increase |
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Net sales |
$ |
715 |
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$ |
635 |
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13 |
% |
$ |
2,220 |
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$ |
1,890 |
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17 |
% |
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Operating income |
$ |
103 |
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$ |
88 |
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17 |
% |
$ |
299 |
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$ |
256 |
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17 |
% |
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Operating margin |
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14.4 |
% |
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13.9 |
% |
50 |
bpts |
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13.5 |
% |
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13.5 |
% |
- |
bpts |
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Third Quarter: Electronic Systems net sales for the 2017 third quarter increased by $80 million, or 13%, compared to the 2016 third quarter. Organic sales increased by $51 million, or 8%, compared to the 2016 third quarter. Organic sales exclude $47 million of sales increases related to business acquisitions and $18 million of sales declines related to business divestitures. Organic sales increased by: (1) $38 million for Total Training Solutions primarily due to higher volume on commercial flight simulators, (2) $19 million for Precision Engagement Systems primarily due to increased deliveries of fuzing and ordnance products for the U.S. Army and (3) $13 million for Power & Propulsion primarily due to higher volume for U.S. Navy (USN) power conversion and distribution systems. These increases were partially offset primarily <
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L3 Announces Results for the 2017 Third Quarter Page 5 |
by a $19 million decrease at Security & Detection due to lower deliveries of airport screening devices to the U.S. Transportation Security Administration and international customers.
Electronic Systems operating income for the 2017 third quarter increased by $15 million, or 17%, compared to the 2016 third quarter. Operating margin increased by 50 basis points to 14.4%. Operating margin increased by 110 basis points primarily due to higher sales volume and mix changes at Power & Propulsion Systems and Aviation Products partially offset by 60 basis points primarily due to severance costs of $4 million.
Year-to-Date: Electronic Systems net sales for the 2017 year-to-date period increased by $330 million, or 17%, compared to the 2016 year-to-date period. Organic sales increased by $225 million, or 12%, compared to the 2016 year-to-date period. Organic sales exclude $143 million of sales increases related to business acquisitions and $38 million of sales declines related to business divestitures. Organic sales increased by: (1) $136 million for Total Training Solutions due to higher volume on commercial flight simulators and training systems for the U.S. Air Force (USAF) and deliveries of training systems for the U.S. Army’s Flight School XXI program, (2) $77 million for Precision Engagement Systems primarily due to trends similar to the 2017 third quarter and guidance and control products primarily for the USAF and foreign militaries, (3) $39 million for Power & Propulsion primarily due to trends similar to the 2017 third quarter and higher volume for surface ship bridge system upgrades and guided destroyer modernization program, and (4) $22 million for Aviation Products primarily due to deliveries of aviation recorders and traffic and collision avoidance systems for commercial airline customers. These increases were partially offset by a $49 million decrease at Security & Detection due to trends similar to the 2017 third quarter and timing of deliveries of cargo screening devices to international customers.
Electronic Systems operating income for the 2017 year-to-date period increased by $43 million, or 17%, compared to the 2016 year-to-date period. Operating margin for the 2017 year-to-date period and 2016 year-to-date period was 13.5%. Higher sales volume and mix changes, primarily for Power & Propulsion Systems and Aviation Products increased operating margin by 140 basis points and were offset by lower margins related to acquisitions, higher severance costs of $5 million and lower favorable contract performance adjustments across several business areas.
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Aerospace Systems |
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Third Quarter Ended |
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Year-to-Date Ended |
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Sept. 29, |
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Sept. 23, |
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Sept. 29, |
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Sept. 23, |
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($ in millions) |
2017 |
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2016 |
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Increase |
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2017 |
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2016 |
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Decrease |
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Net sales |
$ |
1,025 |
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$ |
1,012 |
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1 |
% |
$ |
3,096 |
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$ |
3,165 |
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(2) |
% |
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Operating income |
$ |
57 |
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$ |
56 |
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2 |
% |
$ |
196 |
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$ |
232 |
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(16) |
% |
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Operating margin |
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5.6 |
% |
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5.5 |
% |
10 |
bpts |
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6.3 |
% |
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7.3 |
% |
(100) |
bpts |
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Third Quarter: During the 2017 third quarter, the company restructured Aerospace Systems to streamline operations by consolidating most of the Aircraft Systems sector into the ISR Systems sector, which has been renamed Mission Integration. The company incurred employee severance costs of $15 million in connection with the restructuring.
Aerospace Systems net sales for the 2017 third quarter increased by $13 million, or 1%, compared to the 2016 third quarter. Sales increased $28 million for Vertex Aerospace partially offset by lower sales of $15 million for Mission Integration. Sales increased for Vertex Aerospace primarily due to higher volume on the USAF KC-10 contractor logistics support contract, partially offset by reduced deliveries for UH-1Y aircraft cabin assemblies. Sales decreased for Mission Integration due to lower volume, primarily for the USAF Compass Call aircraft, Australian Defence Force (ADF) C-27J aircraft and small ISR aircraft systems for the U.S. Army. These decreases were partially offset by higher volume for large ISR aircraft systems and small ISR aircraft fleet management services for the DoD.
Aerospace Systems operating income for the 2017 third quarter remained substantially the same as the 2016 third quarter. Operating margin increased by 10 basis points to 5.6%. Operating margin increased 140 basis points due to improved contract performance primarily at Mission Integration and increased sales volume and mix changes for Vertex Aerospace. These increases were partially offset by 130 basis points primarily due to severance costs of $15 million.
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L3 Announces Results for the 2017 Third Quarter Page 6 |
Year-to-Date: Aerospace Systems net sales for the 2017 year-to-date period decreased by $69 million, or 2%, compared to the 2016 year-to-date period. Sales decreased $128 million for Mission Integration partially offset by higher sales of $59 million for Vertex Aerospace. Sales decreased for Mission Integration due to trends similar to the 2017 third quarter and due to the procurement and delivery of two business jets to a foreign military customer in the 2016 second quarter that did not recur. Sales increased for Vertex Aerospace due to trends similar to the 2017 third quarter.
Aerospace Systems operating income for the 2017 year-to-date period decreased by $36 million, or 16%, compared to the 2016 year-to-date period. Operating margin decreased by 100 basis points to 6.3%. Operating margin decreased by: (1) 60 basis points due to severance costs of $15 million and (2) 40 basis points primarily due to lower favorable contract performance adjustments during the 2017 year-to-date period compared to 2016 year-to-date period.
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Communication Systems |
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Third Quarter Ended |
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Year-to-Date Ended |
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Sept. 29, |
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Sept. 23, |
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Increase/ |
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Sept. 29, |
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Sept. 23, |
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($ in millions) |
2017 |
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2016 |
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(decrease) |
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2017 |
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2016 |
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Increase |
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Net sales |
$ |
540 |
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$ |
504 |
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7 |
% |
$ |
1,626 |
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$ |
1,470 |
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11 |
% |
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Operating income |
$ |
42 |
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$ |
40 |
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5 |
% |
$ |
170 |
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$ |
143 |
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19 |
% |
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Operating margin |
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7.8 |
% |
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7.9 |
% |
(10) |
bpts |
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10.5 |
% |
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9.7 |
% |
80 |
bpts |
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Third Quarter: Communication Systems net sales for the 2017 third quarter increased by $36 million, or 7%, compared to the 2016 third quarter. The increase was primarily driven by Broadband Communication Systems due to increased deliveries of secure networked communication systems primarily for the U.S. Department of Defense (DoD).
Communication Systems operating income for the 2017 third quarter increased by $2 million, or 5%, compared to the 2016 third quarter. Operating margin decreased by 10 basis points to 7.8%. Severance and restructuring costs of $15 million primarily related to the EDD/ETI Traveling Wave Tube (TWT) businesses consolidation decreased operating margin by 280 basis points. Sales mix changes partially offset by improved contract performance, primarily in Space & Power Systems and Broadband Communication Systems increased operating margin by 270 basis points.
Year-to-Date: Communication Systems net sales for the 2017 year-to-date period increased by $156 million, or 11%, compared to the 2016 year-to-date period due to trends similar to the 2017 third quarter.
Communication Systems operating income for the 2017 year-to-date period increased by $27 million, or 19%, compared to the 2016 year-to-date period. Operating margin increased by 80 basis points to 10.5%. Consolidation activities related to the EDD/ETI TWT businesses increased operating margin by 80 basis points consisting of: (1) an increase in operating margin of 260 basis points related to a pre-tax gain of $42 million on the sale of the company’s property in San Carlos, California, in the second quarter of 2017 and (2) a decrease in operating margin of 180 basis points related to severance and restructuring costs of $30 million.
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L3 Announces Results for the 2017 Third Quarter Page 7 |
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Sensor Systems |
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Third Quarter Ended |
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Year-to-Date Ended |
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Sept. 29, |
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Sept. 23, |
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Sept. 29, |
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Sept. 23, |
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($ in millions) |
2017 |
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2016 |
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Increase |
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2017 |
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2016 |
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Increase |
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Net sales |
$ |
366 |
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$ |
354 |
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3 |
% |
$ |
1,105 |
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$ |
997 |
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11 |
% |
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Operating income |
$ |
48 |
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$ |
31 |
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55 |
% |
$ |
150 |
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$ |
83 |
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81 |
% |
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Operating margin |
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13.1 |
% |
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8.8 |
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430 |
bpts |
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13.6 |
% |
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8.3 |
% |
530 |
bpts |
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Third Quarter: Sensor Systems net sales for the 2017 third quarter increased by $12 million, or 3%, compared to the 2016 third quarter. Organic sales increased by $3 million, or 1%, compared to the 2016 third quarter. Organic sales exclude $9 million of sales increases related to business acquisitions. Organic sales increased by $15 million due to higher volume for space electronics products and $7 million due to higher deliveries of night vision equipment primarily to the ADF. These increases were offset by $19 million of lower deliveries of airborne turret systems primarily to foreign militaries.
Sensor Systems operating income for the 2017 third quarter increased by $17 million, or 55%, compared to the 2016 third quarter. Operating margin increased by 430 basis points to 13.1% primarily due to a $14 million pre-tax charge for a settlement of the class action litigation related to EoTech recorded in the 2016 third quarter that did not recur.
Year-to-Date: Sensor Systems net sales for the 2017 year-to-date period increased by $108 million, or 11%, compared to the 2016 year-to-date period. Organic sales increased by $91 million, or 9%, compared to the 2016 year-to-date period. Organic sales exclude $17 million of sales increases related to business acquisitions. Organic sales increased primarily due to increased task order volume on U.S. Government contracts, higher volume for space electronics products and increased deliveries of airborne turret systems to the USAF and foreign militaries.
Sensor Systems operating income for the 2017 year-to-date period increased by $67 million, or 81%, compared to the 2016 year-to-date period. Operating margin increased by 530 basis points to 13.6%. Operating margin increased by: (1) 230 basis points due to a pre-tax charge for a settlement of the class action litigation related to EoTech in the 2016 third quarter that did not recur and lower return allowances related to a voluntary returns program, which ended in the first quarter of 2017, (2) 170 basis points primarily for improved contract performance at Maritime Sensor Systems and (3) 130 basis points primarily due to higher sales volume and mix changes primarily airborne turret systems.
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L3 Announces Results for the 2017 Third Quarter Page 8 |
Financial Guidance
Based on information known as of today, the company has updated its consolidated and segment financial guidance for the year ending December 31, 2017 that was previously provided on July 27, 2017, as presented in the tables below. All financial guidance amounts are estimates subject to change in the future, including as a result of matters discussed under the “Forward-Looking Statements” cautionary language beginning on page 9. The company undertakes no duty to update its guidance.
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Consolidated 2017 Financial Guidance |
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Prior Guidance |
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Current Guidance |
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(July 27, 2017) |
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Net sales |
$10,800 to $11,000 |
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$10,800 to $11,000 |
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Segment operating margin(1) |
10.3% |
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10.3% |
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Interest expense and other(2) |
$154 |
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$158 |
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Effective tax rate(1) |
24.9% |
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25.8% |
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Minority interest expense(3) |
$17 |
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$17 |
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Diluted shares |
80 |
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80 |
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Diluted EPS |
$7.13 to $7.23 |
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$8.65 to $8.85 |
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Adjusted diluted EPS(1) |
$8.80 to $8.90 |
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NA |
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Net cash from operating activities |
$1,030 |
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$1,030 |
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Capital expenditures, net of dispositions of property, plant and equipment |
(155) |
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(155) |
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Free cash flow |
$875 |
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$875 |
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___________________ |
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(1) Excludes the goodwill impairment charge of $187 million ($133 million after income taxes), or $1.67 per diluted share, for Vertex Aerospace. |
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(2) Interest expense and other is comprised of: (i) interest expense of $172 million and (ii) interest and other income, net, of $18 million. |
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(3) Minority interest expense represents net income from continuing operations attributable to non-controlling interests. |
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NA = Not Applicable
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Segment 2017 Financial Guidance |
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Current Guidance |
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Prior Guidance (July 27, 2017) |
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Net Sales: |
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Electronic Systems |
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$3,000 to $3,100 |
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$3,000 to $3,100 |
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Aerospace Systems |
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$4,050 to $4,150 |
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$4,050 to $4,150 |
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Communication Systems |
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$2,125 to $2,225 |
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$2,125 to $2,225 |
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Sensor Systems |
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$1,525 to $1,625 |
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$1,525 to $1,625 |
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Operating Margin: |
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Electronic Systems |
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13.3% to 13.5% |
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13.2% to 13.4% |
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Aerospace Systems |
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6.4% to 6.6% |
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6.9% to 7.1% |
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Communication Systems |
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10.6% to 10.8% |
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10.6% to 10.8% |
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Sensor Systems |
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13.3% to 13.5% |
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12.7% to 12.9% |
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The revisions to our Current Guidance compared to our Prior Guidance primarily include:
· An increase in Electronic Systems and Sensor Systems operating margins primarily due to improved contract performance;
· A decrease in Aerospace Systems operating margin primarily due to severance costs incurred in the 2017 third quarter; and