L-3 Board of Directors Approves Spin-Off of Engility Holdings, Inc.
L-3 to Redeem
L-3 Board Also Approves Regular Quarterly Dividend
L-3 Provides 2012
“The Board’s actions reflect the culmination of a thorough
strategic evaluation of the company’s businesses. We believe that the
spin-off of Engility is in the best interests of our company and
shareholders. Engility will now be able to pursue new business
opportunities unconstrained by organizational conflict of interest
regulations and operate in a more cost-competitive manner,” said
In connection with the spin-off, Engility will retain approximately
Engility Common Stock Distribution
The L-3 board of directors approved a pro rata dividend of Engility
common stock owned by L-3 on
L-3 currently has approximately 97 million shares outstanding. Based on the one-to-six distribution ratio for the spin-off, approximately 16 million shares of Engility common stock will be distributed to L-3 shareholders.
The Engility spin-off has been structured to qualify as a tax-free distribution to L-3 shareholders for U.S. federal tax purposes. Cash received in lieu of fractional shares will, however, be taxable. L-3 shareholders should consult their tax advisors with respect to U.S. federal, state, local and foreign tax consequences of the Engility spin-off.
Trading of L-3 and Engility Shares
L-3 shares will continue to trade on the
Engility common stock is expected to begin “when-issued” trading on the
Information About the Spin-Off
The distribution of Engility shares will be made in book entry form, which means no physical share certificates of Engility will be issued. No action or payment by L-3 shareholders is required to receive Engility shares.
Prior to the distribution date, L-3 will mail information statements to all shareholders of L-3 common stock as of the record date. The statements will include information regarding the procedures by which the distribution will be effected and other details of the transaction. The information statement will be available on the Securities and Exchange Commission’s (“SEC”) website at www.sec.gov.
For questions relating to the transfer or mechanics of the distribution,
shareholders may contact
The completion of the distribution is subject to the satisfaction or
waiver of a number of conditions, including the Registration Statement
on Form 10 for the Engility common stock being declared effective by the
L-3 Quarterly Dividend
The L-3 board of directors also declared a quarterly cash dividend of
L-3 Provides 2012 Financial Guidance Excluding Engility
Additionally, L-3 updated its 2012 financial guidance to exclude Engility, which will become a discontinued operation on the distribution date (see 2012 Consolidated Financial Guidance table on page 6).
To learn more about L-3, please visit the company’s website at www.L-3com.com. L-3 uses its website as a channel of distribution of material company information. Financial and other material information regarding L-3 is routinely posted on the company’s website and is readily accessible.
Certain of the matters discussed in this release that are predictive in
nature, that depend upon or refer to events or conditions or that
include words such as ‘‘expects,’’ ‘‘anticipates,’’ ‘‘intends,’’
‘‘plans,’’ ‘‘believes,’’ ‘‘estimates,’’ and similar expressions
constitute forward-looking statements. Although we believe that these
statements are based upon reasonable assumptions they are subject to
several risks and uncertainties, and therefore, we can give no assurance
that these statements will be achieved. Such statements will also be
influenced by factors which include, among other things: timing and
completion of the planned spin-off of Engility; our dependence on the
defense industry and the business risks peculiar to that industry,
including changing priorities or reductions in the
For a discussion of these and other risks and uncertainties that could
impair our results of operations or financial condition, see ‘‘Part I —
Item 1A — Risk Factors’’ and Note 19 to our audited consolidated
financial statements, included in our Annual Report on Form 10-K for the
Our forward-looking statements are not guarantees of future performance and the actual results or developments may differ materially from the expectations expressed in the forward-looking statements. Given these uncertainties, you should not place any reliance on these forward-looking statements. These forward-looking statements also represent our estimates and assumptions only as of the date that they were made. We expressly disclaim a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this release to reflect events or changes in circumstances or changes in expectations or the occurrence of anticipated events.
2012 Consolidated Financial Guidance
($ in Millions, except per share amounts)
|Prior Guidance (April 26, 2012)||L-3 Excluding Engility|
|L-3 Including||Engility||L-3 Excluding||Current Guidance|
|Engility||Estimate||Engility||(June 25, 2012)|
$14,550 to $14,750
$12,950 to $13,150
$12,950 to $13,150
|Debt Retirement Charge||
$8.45 to $8.60
$7.70 to $7.85
|Net Cash from Operating Activities||
|Less: CapEx, net of Dispositions||
|Free Cash Flow||
|Notes: (1)||The 2012 Current Guidance is a Continuing Operations presentation. Effective with the Engility spin-off scheduled to occur on July 17, 2012, Engility will be de-consolidated and reported as discontinued operations. Accordingly, the 2012 Current Guidance excludes estimated diluted EPS of $0.37 and free cash flow of ~$80 million (~$82 from operating activities less $2 of net Cap Ex) for the Engility discontinued operations for the period between January 1, 2012 and July 17, 2012.|
|(2)||The 2012 Current Guidance includes the use of the $325 million net distribution in connection with the Engility spin-off to redeem $250 million of the 6-3/8% senior subordinated notes and repurchase ~$75 million of L-3 shares. A debt retirement charge of $8 million or $0.05 per share will be incurred to redeem the senior subordinated notes. As Engility will be a standalone independent entity beginning at the time of the spin-off, L-3 will not be providing any guidance with respect to Engility’s 2012 expected results. Information on the outlook for Engility for 2012 is included in Engility’s registration statement on Form 10 and the related Information Statement prepared in connection with the spin-off.|