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L-3 Communications Holdings, Inc. (NYSE: LLL) today reported diluted earnings per share (diluted EPS) from continuing operations of $1.98 for the quarter ended September 28, 2012 (2012 third quarter), compared to $2.02 for the quarter ended September 30, 2011 (2011 third quarter). The 2012 third quarter included a tax benefit of $0.11 per diluted share that is discussed below. Net sales of $3.3 billion for the 2012 third quarter decreased by 0.5% compared to the 2011 third quarter.
On July 17, 2012, L-3 completed the previously announced spin-off of its subsidiary, Engility Holdings, Inc. (Engility). The spin-off was a tax-free distribution to L-3 shareholders for U.S. federal tax purposes in which L-3 shareholders of record on July 16, 2012 (the record date) received one share of Engility common stock for every six shares of L-3 common stock held on the record date. In connection with the spin-off, Engility made a cash distribution of $335 million to L-3. L-3 used a portion of the proceeds to redeem $250 million of its 6
8% Senior Subordinated Notes due 2015 (2015 Notes) on July 26, 2012. L-3 intends to use the remaining proceeds primarily to repurchase additional outstanding shares of its common stock. L-3’s results present Engility as a discontinued operation.
“Overall, we had a solid third quarter and performed well in our core areas and we continued to make progress in our international and commercial businesses. In spite of the challenges and uncertainty in the U.S. defense budget, sales grew in our Electronic Systems, C
3ISR and AM&M segments, which demonstrates that L-3 is well-positioned and executing on its strategy to grow market share and be adaptable and agile in the markets we serve,” said Michael T. Strianese, chairman, president and chief executive officer. “Orders for the quarter were $3.2 billion, resulting in a book-to-bill ratio of 0.99x. We ended the quarter with funded backlog of $11.0 billion, up 11% compared to December 2011.”
“We remain focused on delivering innovation to our customers and value to all of our stakeholders. We are proactively reducing our operating costs and right sizing our business units, while also investing in research and development. We continue to deploy our capital using a disciplined and balanced approach, with cash dividends and share buybacks, modest debt reduction, plus acquisitions that expand our market share and strengthen our businesses. On August 7, 2012, we acquired the commercial aircraft simulation business of Thales Group, which extends our simulation and training business into the global commercial marketplace and also provides us a full-motion simulator capability. Going forward, this strategy will continue to serve L-3 well.”