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10-Q





☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 September 29, 2023





☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _______________ to ______________


1-3863


L3HARRIS TECHNOLOGIES, INC.





Delaware34-0276860(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)


1025 West NASA BoulevardMelbourne,Florida32919(Address of principal executive offices)(Zip Code)


321 727-9100


Securities registered pursuant to Section 12(b) of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock, par value $1.00 per shareLHXNew York Stock Exchange


Yes


Yes





Large accelerated filerþAccelerated filer☐Non-accelerated filer ̈Smaller reporting company☐Emerging growth company☐








þ


189,540,249







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Page No.Part I. Financial Information:ITEM 1.     Financial Statements (Unaudited):Condensed Consolidated Statement of Operationsfor the Quarter and Three Quarters Ended September 29, 2023 and September 30, 20222Condensed Consolidated Statement of Comprehensive Income (Loss)for the Quarter andThree Quarters EndedSeptember 29, 2023andSeptember 30, 20223Condensed Consolidated Balance SheetatSeptember 29, 2023andDecember 30, 20224Condensed Consolidated Statement of Cash Flowsfor the Three Quarters Ended September 29, 2023 and September 30, 20225Condensed Consolidated Statement of Equityfor the Quarter and Three Quarters Ended September 29, 2023 and September 30, 20226Notes toCondensed Consolidated Financial Statements8Report of Independent Registered Public Accounting Firm (PCAOB ID:42)29ITEM 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations30ITEM 3.     Quantitative and Qualitative Disclosures About Market Risk45ITEM 4.     Controls and Procedures45Part II. Other Information:ITEM 1.      Legal Proceedings46ITEM 1A.   Risk Factors46ITEM 2.      Unregistered Sales of Equity Securities,Use of Proceeds, and Issuer Purchases of Equity Securities47ITEM 3.      Defaults Upon Senior Securities47ITEM 4.      Mine Safety Disclosures47ITEM 5.      Other Information47ITEM 6.      Exhibits48Signatures49








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ITEM 1.FINANCIAL STATEMENTS.













Quarter EndedThree Quarters Ended(In millions, except per share amounts)September 29, 2023September 30, 2022September 29, 2023September 30, 2022Revenue from product sales and services$4,915$4,246$14,079$12,484Cost of product sales and services(3,608)(3,052)(10,371)(8,819)Engineering, selling and administrative expenses(828)(742)(2,384)(2,239)Sale of asset group and business divestiture-related gains, net——268Impairment of goodwill and other assets—(802)(78)(802)Non-operating income, net8099245313Interest expense, net(159)(70)(372)(205)Income (loss) before income taxes400(321)1,145740Income taxes(18)20(73)(96)Net income (loss)382(301)1,072644Noncontrolling interests, net of income taxes11(3)2Net income (loss) attributable to L3Harris Technologies, Inc.$383$(300)$1,069$646Net income (loss) per common share attributable to L3Harris Technologies, Inc. common shareholdersBasic$2.02$(1.56)$5.64$3.36Diluted$2.02$(1.56)$5.61$3.33Basic weighted-average common shares outstanding189.3191.3189.6192.2Diluted weighted-average common shares outstanding190.1191.3190.6194.0













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Quarter EndedThree Quarters Ended(In millions)September 29, 2023September 30, 2022September 29, 2023September 30, 2022Net income (loss)$382$(301)$1,072$644Other comprehensive loss:Foreign currency translation loss, net of income taxes(45)(120)(10)(196)Net unrealized (loss) income on hedging derivatives, net of income taxes(3)(12)6(14)Other comprehensive loss, recognized during the period(48)(132)(4)(210)Reclassification adjustments for gains included in net income(10)(2)(29)(10)Other comprehensive loss, net of income taxes(58)(134)(33)(220)Total comprehensive income (loss)324(435)1,039424Comprehensive loss (income) attributable to noncontrolling interest11(3)2Total comprehensive income (loss) attributable to L3Harris Technologies, Inc.$325$(434)$1,036$426










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(In millions, except shares)September 29, 2023December 30, 2022AssetsCurrent assetsCash and cash equivalents$499$880Receivables, net of allowances for collection losses of $24 and $40, respectively1,3811,251Contract assets3,4772,987Inventories1,6381,291Income taxes receivable4340Other current assets463258Assets of business held for sale—47Total current assets7,5016,754Non-current assetsProperty, plant and equipment, net2,8182,104Operating lease right-of-use assets758756Goodwill20,73617,283Other intangible assets, net9,0506,001Deferred income taxes8773Recoverable environmental remediation costs382—Other non-current assets961553Total assets$42,293$33,524Liabilities and equityCurrent liabilitiesShort-term debt$2,033$2Accounts payable2,1121,945Contract liabilities1,9401,400Compensation and benefits461398Other accrued items1,190818Income taxes payable383376Current portion of long-term debt, net363818Liabilities of business held for sale—19Total current liabilities8,4825,776Non-current liabilitiesDefined benefit plans404262Operating lease liabilities736741Long-term debt, net11,1406,225Deferred income taxes812719Reserves for environmental remediation costs524107Other long-term liabilities1,4791,070Total liabilities23,57714,900EquityShareholders’ Equity:Preferred stock, without par value; 1,000,000 shares authorized; none issued——Common stock, $1.00 par value; 500,000,000 shares authorized; issued and outstanding 189,439,991 and 190,611,458 shares at September 29, 2023 and December 30, 2022, respectively189191Other capital15,47015,677Retained earnings3,2782,943Accumulated other comprehensive loss(321)(288)Total shareholders’ equity18,61618,523Noncontrolling interests100101Total equity18,71618,624Total liabilities and equity$42,293$33,524










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Three Quarters Ended(In millions)September 29, 2023September 30, 2022Operating ActivitiesNet income$1,072$644Adjustments to reconcile net income to net cash provided by operating activities:Amortization of acquisition-related intangibles546454Depreciation and other amortization270243Share-based compensation6792Share-based matching contributions under defined contribution plans172161Pension and other postretirement benefit plan income(209)(297)Impairment of goodwill and other assets78802Sale of asset group and business divestiture-related gains, net(26)(8)Deferred income taxes(277)(454)(Increase) decrease in:Receivables, net53(93)Contract assets(136)(111)Inventories(195)(357)Other current assets(87)26Increase (decrease) in:Accounts payable(18)312Contract liabilities202(133)Compensation and benefits(55)(95)Other accrued items(27)2Income taxes15259Other operating activities(138)(71)Net cash provided by operating activities1,3071,376Investing ActivitiesNet cash paid for acquired businesses(6,688)—Additions to property, plant and equipment(312)(181)Proceeds from sale of property, plant and equipment, net—10Proceeds from sales of businesses, net715Proceeds from sale of asset group, net—18Cash used for equity investments(11)(47)Other investing activities27Net cash used in investing activities(6,938)(188)Financing ActivitiesProceeds from borrowings, net of issuance cost7,5685Repayments of borrowings(3,159)(12)Change in commercial paper, net(1)2,031—Proceeds from exercises of employee stock options1840Repurchases of common stock(518)(900)Cash dividends(652)(650)Tax withholding payments associated with vested share-based awards(28)(44)Other financing activities(6)(5)Net cash provided by (used in) financing activities5,254(1,566)Effect of exchange rate changes on cash and cash equivalents(4)(34)Net decrease in cash and cash equivalents(381)(412)Cash and cash equivalents, beginning of period880941Cash and cash equivalents, end of period$499$529


(1) SeeNote H: Debt and Credit Arrangementsin the Notes to the Condensed Consolidated Financial Statements.










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(In millions, except per share amounts)Common StockOther CapitalRetained EarningsAccumulated Other Comprehensive LossNon-controlling InterestsTotal EquityBalance at June 30, 2023$189$15,391$3,111$(263)$103$18,531Net income (loss)——383—(1)382Other comprehensive loss, net of income taxes———(58)—(58)Shares issued under stock incentive plans—5———5Shares issued under defined contribution plans—51———51Share-based compensation expense—22———22Cash dividends ($1.14 per share)——(216)——(216)Other—1——(2)(1)Balance at September 29, 2023$189$15,470$3,278$(321)$100$18,716Balance as of July 1, 2022$192$15,814$3,312$(232)$104$19,190Net loss——(300)—(1)(301)Other comprehensive loss, net of income taxes———(134)—(134)Shares issued under stock incentive plans—6———6Shares issued under defined contribution plans—48———48Share-based compensation expense—23———23Tax withholding payments on share-based awards—(6)———(6)Repurchases and retirement of common stock(1)(141)(29)——(171)Cash dividends ($1.12 per share)——(215)——(215)Other————(1)(1)Balance as of September 30, 2022$191$15,744$2,768$(366)$102$18,439








---













(In millions, except per share amounts)Common StockOther CapitalRetained EarningsAccumulated Other Comprehensive LossNon-controlling InterestsTotal EquityBalance at December 30, 2022$191$15,677$2,943$(288)$101$18,624Net income——1,069—31,072Other comprehensive loss, net of income taxes———(33)—(33)Shares issued under stock incentive plans—18———18Shares issued under defined contribution plans1171———172Share-based compensation expense—67———67Tax withholding payments on share-based awards—(28)———(28)Repurchases and retirement of common stock(3)(433)(82)——(518)Cash dividends ($3.42 per share)——(652)——(652)Other—(2)——(4)(6)Balance at September 29, 2023$189$15,470$3,278$(321)$100$18,716Balance as of December 31, 2021$194$16,248$2,917$(146)$106$19,319Net income (loss)——646—(2)644Other comprehensive loss, net of income taxes———(220)—(220)Shares issued under stock incentive plans—40———40Shares issued under defined contribution plans1160———161Share-based compensation expense—92———92Tax withholding payments on share-based awards—(44)———(44)Repurchases and retirement of common stock(4)(752)(144)——(900)Cash dividends ($3.36 per share)——(650)——(650)Other——(1)—(2)(3)Balance as of September 30, 2022$191$15,744$2,768$(366)$102$18,439










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In the opinion of management, such interim financial statements reflect all adjustments (including normal recurring adjustments) considered necessary for a fair presentation of our financial condition, results of operations, cash flows and equity for the periods presented therein. The balance sheet at December 30, 2022 has been derived from our audited financial statements, but does not include all of the information and footnotes required by GAAP for annual financial statements.


Effective for fiscal 2023, which began December 31, 2022, we adjusted our reporting to better align our businesses and transferred our Agile Development Group (“ADG”) business from our Integrated Mission Systems (“IMS”) segment to our Space & Airborne Systems (“SAS”) segment.


The historical results, discussion and presentation of our business segments as set forth in the accompanying Condensed Consolidated Financial Statements and these Notes reflect the impact of these changes for all periods presented in order to present segment information on a comparable basis. There is no impact on our previously reported consolidated statements of operations, balance sheets, statements of cash flows or statements of equity resulting from these changes.





Upon completion of the acquisition, we established a new reportable segment, Aerojet Rocketdyne (“AR”). The operations of AJRD are reported in the newly established AR segment and in our corporate segment.








The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the accompanying Condensed Consolidated Financial Statements and these Notes and related disclosures. These estimates and assumptions are based on experience and other information available prior to issuance of the accompanying Condensed Consolidated Financial Statements and these Notes. Materially different results can occur as circumstances change and additional information becomes known.











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In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805):Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification (“ASC”) 2014-09,Revenue from Contracts with Customers (Topic 606) . The update generally results in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. We adopted the new standard effective December 31, 2022. On January 3, 2023 and July 28, 2023 we completed the acquisitions of Viasat, Inc.’s Tactical Data Links product line (“TDL”) and AJRD, respectively. We applied the provisions of ASU 2021-08 in our purchase accounting for both acquisitions, and adoption of the new standard did not have a material impact on our operating results, financial position, or cash flows.




NOTE B: ACQUISITIONS, DIVESTITURES AND ASSET SALES







1.958


2.25 three-year








As of the acquisition date, the fair value of consideration transferred consisted of the following:


(In millions)January 3, 2023Purchase price$1,958Estimated net working capital and other adjustments15Cash consideration paid1,973Settlement of preexisting relationship(1)1Fair value of consideration transferred$1,974





1








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January 3, 2023(In millions)PreliminaryMeasurement Period Adjustments, Net1,2PreliminaryAdjustedReceivables$28$—$28Contract assets181129Inventories164(10)154Other current assets9—9Property, plant and equipment50—50Operating lease right-of-use assets12—12Goodwill1,0141031,117Other intangible assets850(95)755Deferred income taxes33336Other non-current assets6(1)5Total assets acquired$2,184$11$2,195Accounts payable$20$—$20Contract liabilities28—28Compensation and benefits2—2Other accrued items1191120Operating lease liabilities10—10Other long-term liabilities311041Total liabilities assumed$210$11$221Net assets acquired$1,974$—$1,974








11





The preliminary fair value of identifiable intangible assets acquired as of the acquisition date is as follows:


TotalUseful Lives(In millions)(In Years)Developed technology$34917Customer relationships:(1)Backlog832Government programs32316Total customer relationships406Total identifiable intangible assets acquired$755











---







86
  15 29


64 33 31 7 22 11 22


1.117


The following table includes revenue and income before income taxes of TDL included in our Condensed Consolidated Statement of Operations for the quarter ended September 29, 2023 and for the acquisition date through September 29, 2023 and the comparable periods of calendar year 2022. The comparable period results do not include any integration synergies or accounting conformity adjustments and are not necessarily indicative of our results of operations that actually would have been obtained had the acquisition of TDL been completed for the period presented, or which may be realized in the future.Quarter EndedThree Quarters Ended(In millions)September 29, 2023September 30, 2022September 29, 2023September 30, 2022Revenue$97$105$261$290Income before income taxes38308655


10 64







100





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4.715
  3.25








As of the acquisition date, the fair value of consideration transferred consisted of the following:


(In millions)July 28, 2023Cash consideration paid for AJRD outstanding common stock & equity awards$4,748AJRD debt settled by L3Harris257Cash consideration paid5,005Less cash acquired(290)Fair value of consideration transferred$4,715





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(In millions)July 28, 2023Receivables$156Contract assets338Inventories14Income taxes receivable3Other current assets114Property, plant and equipment574Operating lease right-of-use assets51Goodwill2,348Other intangible assets2,860Recoverable environmental remediation costs383Other non-current assets175Total assets acquired$7,016Accounts payable145Contract liabilities310Compensation and benefits116Income taxes payable6Current portion of long-term debt, net1Other accrued items278Defined benefit plans223Operating lease liabilities40Long-term debt, net41Deferred income taxes398Reserves for environmental remediation costs417Other long-term liabilities326Total liabilities assumed$2,301Fair value of consideration transferred$4,715





The preliminary fair value of identifiable intangible assets acquired as of the acquisition date is as follows:





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TotalUseful Lives(In millions)(In Years)Trade names$12010 - 20Customer relationships:(1)Backlog3603 - 4Government programs2,38015 - 25Total customer relationships2,740Total identifiable intangible assets acquired$2,860














37
    4


53 26 27
    4


2,348






































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455 56 The pro forma results do not include any integration synergies and are not necessarily indicative of our results of operations that actually would have been obtained had the acquisition of AJRD been completed for the period presented, or which may be realized in the future.


Three Quarters Ended(In millions)September 29, 2023September 30, 2022Revenue$1,740$1,589Income before income taxes156180


45 67







70 26 71








23 8










22 67 23 92





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Three Quarters Ended September 29, 2023Three Quarters Ended September 30, 2022(In millions, except per share amounts)SharesWeighted-Average Grant-Date Fair ValuePer ShareSharesWeighted-Average Grant-Date Fair ValuePer ShareStock options granted(1)0.4$209.880.4$231.71Restricted stock and restricted stock units granted(2)0.3$200.610.3$224.79Performance share units grants(3)0.2$223.090.2$258.83





three-year


three-years


three-year





0.1 0.5 0.1 0.7










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(In millions)Foreign currency translationNet unrealized losses on hedging derivativesUnrecognized postretirement obligationsTotal AOCLBalance at December 30, 2022$(237)$(79)$28$(288)Other comprehensive (loss) income, before reclassifications to earnings and income taxes(10)8—(2)Income taxes—(2)—(2)Other comprehensive (loss) income before reclassifications to earnings, net of income taxes(10)6—(4)Losses (gains) reclassified to earnings, before income taxes—3(41)(38)Income taxes—(1)109Losses (gains) reclassified to earnings, net of income taxes(1)—2(31)(29)Other comprehensive (loss) income, net of income taxes(10)8(31)(33)Balance at September 29, 2023$(247)$(71)$(3)$(321)Balance at December 31, 2021$(118)$(89)$61$(146)Other comprehensive loss, before reclassifications to earnings and income taxes(196)(18)—(214)Income taxes—4—4Other comprehensive loss before reclassifications to earnings, net of income taxes(196)(14)—(210)Losses (gains) reclassified to earnings, before income taxes—7(18)(11)Income taxes—(2)31Losses (gains) reclassified to earnings, net of income taxes(1)—5(15)(10)Other comprehensive loss, net of income taxes(196)(9)(15)(220)Balance at September 30, 2022$(314)$(98)$46$(366)



















(In millions)September 29, 2023December 30, 2022Contract assets(1)$3,477$2,987Contract liabilities, current(2)(1,940)(1,400)Contract liabilities, non-current(3)(104)(117)Net contract assets$1,433$1,470





386


315











(In millions)September 29, 2023December 30, 2022Unbilled contract receivables, gross$7,126$4,629Unliquidated progress payments and advances(3,649)(1,642)Contract assets$3,477$2,987


223 1.12 196 967










(In millions)September 29, 2023December 30, 2022Finished products(1)$302$181Work in process513396Materials and supplies823714Inventories(1)$1,638$1,291





114 70







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(In millions)SASIMSCSARTotalBalance at December 30, 2022$5,778$7,709$3,796$—$17,283Reallocation of goodwill in business realignment327(327)———Goodwill from TDL acquisition——1,117—1,117Goodwill from AJRD acquisition———2,3482,348Goodwill decrease from divestitures(1)(9)———(9)Currency translation adjustments(5)2—(3)Balance at September 29, 2023$6,091$7,384$4,913$2,348$20,736





9 39


nine eight 327


1,117


2,348


355 313 134


367 80





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September 29, 2023December 30, 2022(In millions)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount(1)Customer relationships$9,270$2,658$6,612$6,124$2,189$3,935Developed technologies915435480566366200Contract backlog21111—Trade names — divisions21561154955342Other22—22—Total finite-lived identifiable intangible assets10,4043,1577,2476,7882,6114,177In-process research and development———21—21Trade names — corporate1,803—1,8031,803—1,803Total identifiable intangible assets, net$12,207$3,157$9,050$8,612$2,611$6,001





10





TDL AcquisitionAJRD Acquisition(In millions)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying AmountCustomer relationships$406$46$360$2,740$37$2,703Developed technologies34915334———Trade names — divisions———1201119





208 546 151 454





(In millions)Year 1$881Year 2805Year 3724Year 4572Year 5519Thereafter3,746Total$7,247





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In-process R&D Impairment. During the three quarters ended September 29, 2023, we closed a facility, which triggered an evaluation of the in-process research and development (“R&D”) related to the operations of the closed facility for impairment. As a result we recorded a $21 million non-cash charge for the impairment of in-process R&D intangible assets, which is included in the “Impairment of goodwill and other assets” line item in our Condensed Consolidated Statement of Operations.













(In millions)September 29, 2023December 30, 2022Variable-rate debt:Floating rate notes, due March 10, 2023 (“Floating 2023 Notes”)$—$250Term loan, due November 21, 20252,250—Fixed-rate debt:3.85% notes, due June 15, 2023 (“3.85% 2023 Notes”)—8003.95% notes, due May 28, 20243503503.832% notes, due April 27, 20256006007.00% debentures, due January 15, 20261001003.85% notes, due December 15, 20265505505.40% notes, due January 15, 2027 (“5.4% 2027 Notes”)1,250—6.35% debentures, due February 1, 202826264.40% notes, due June 15, 20281,8501,8502.90% notes, due December 15, 20294004001.80% notes, due January 15, 20316506505.40% notes, due July 31, 2033 (“5.4% 2033 Notes”)1,500—4.854% notes, due April 27, 20354004006.15% notes, due December 15, 20403003005.054% notes, due April 27, 20455005005.60% notes, due July 31, 2053  (“5.6% 2053 Notes”)500—Total variable and fixed-rate debt11,2266,776Financing lease obligations and other debt277222Total debt11,5036,998Plus: unamortized bond premium5570Less: unamortized discounts and issuance costs(55)(25)Total debt, net11,5037,043Less: current portion of long-term debt, net(363)(818)Total long-term debt, net$11,140$6,225





2.25 three-year


2.0


250


2.25 no





---




0.10 1.125 1.875 6.7 6.1


3.25





15 25 100 100


101


9 13 6


no





250 250


800


no





2.4 364 364








---










2.1 no





2.0 five-year no








1.0 3.9


397


2.0 2.1
  5.50


701 no no







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Quarter Ended September 29, 2023Three Quarters Ended September 29, 2023(In millions)PensionOther BenefitsPensionOther BenefitsNet periodic benefit incomeOperatingService cost$10$—$22$1Non-operatingInterest cost10032838Expected return on plan assets(162)(5)(467)(15)Amortization of net actuarial gain(2)(5)(7)(15)Amortization of prior service (credit) cost(7)—(20)1Non-service cost periodic benefit income(71)(7)(211)(21)Net periodic benefit income$(61)$(7)$(189)$(20)Quarter Ended September 30, 2022Three Quarters Ended September 30, 2022(In millions)PensionOther BenefitsPensionOther BenefitsNet periodic benefit incomeOperatingService cost$10$1$32$2Non-operatingInterest cost5511655Expected return on plan assets(156)(5)(468)(16)Amortization of net actuarial loss (gain)2(1)7(5)Amortization of prior service (credit) cost(7)—(21)1Non-service cost periodic benefit income(106)(5)(317)(15)Net periodic benefit income$(96)$(4)$(285)$(13)










Net income per common share attributable to L3Harris common shareholders (“EPS”) is computed by dividing earnings to L3Harris common shareholders less earnings allocated to participating securities, if applicable, by the weighted-average number of common shares outstanding for the period. Net income per diluted common share attributable to L3Harris common shareholders (“diluted EPS”) incorporates potential dilutive common shares, primarily consisting of employee stock options and restricted and performance share unit awards, into the weighted-average number of common shares outstanding.





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Quarter EndedThree Quarters Ended(In millions)September 29, 2023September 30, 2022September 29, 2023September 30, 2022Basic weighted-average common shares outstanding189.3191.3189.6192.2Impact of dilutive share-based awards0.8—1.01.8Diluted weighted-average common shares outstanding190.1191.3190.6194.0


immaterial 2.0 1.9 0.3







4.5 6.2


6.4 13.0

























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September 29, 2023December 30, 2022(In millions)TotalLevel 1TotalLevel 1AssetsDeferred compensation plan assets:(1)Equity and fixed income securities$97$97$64$64Investments measured at NAV:Corporate-owned life insurance3633Total fair value of deferred compensation plan assets$133$97LiabilitiesDeferred compensation plan liabilities:(2)Equity securities and mutual funds$14$14$8$8Investments measured at NAV:Common/collective trusts and guaranteed investment contracts231192Total fair value of deferred compensation plan liabilities$245$200














September 29, 2023December 30, 2022(In millions)Carrying AmountFair ValueCarrying AmountFair ValueTerm Loan 2025(1)$2,250$2,250$—$—All other long-term debt, net (including current portion)(2)9,2538,6677,0436,569Total debt, net$11,503$10,917$7,043$6,569






















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Quarter EndedThree Quarters Ended(In millions, except per share amounts)September 29, 2023September 30, 2022September 29, 2023September 30, 2022Net EAC adjustments, before income taxes(1)$(10)$—$(97)$58Net EAC adjustments, net of income taxes(8)—(73)44Net EAC adjustments, net of income taxes, per diluted share(0.04)—(0.38)0.23





48


Revenue recognized from performance obligations satisfied in prior periods was $28 million and $97 million for the quarter and three quarters ended September 29, 2023, respectively, and $23 million and $113 million for the quarter and three quarters ended September 30, 2022, respectively










At September 29, 2023, our ending backlog was $31.8 billion. We expect to recognize approximately 55% of the revenue associated with this backlog by the end of 2024 and approximately 80% by the end of 2025, with the remainder to be recognized thereafter. At December 30, 2022, our ending backlog was $22.3 billion







four





























Quarter EndedThree Quarters Ended(In millions)September 29, 2023September 30, 2022September 29, 2023September 30, 2022Revenue from Product Sales and ServicesSAS$1,686$1,593$5,056$4,682IMS1,5681,6305,0034,897CS1,2551,0683,7073,024AR455**455**Corporate eliminations(49)(45)(142)(119)Total revenue from product sales and services$4,915$4,246$14,079$12,484Income (loss) before Income TaxesSegment operating income (loss):SAS(1)$210$92$565$472IMS(1)187(143)534315CS282(97)873370AR56**56**Total segment operating income (loss)735(148)2,0281,157Unallocated Items:Unallocated corporate department (expense) income, net(2)1418(27)33Amortization of acquisition-related intangibles(3)(208)(151)(546)(454)Additional cost of sales related to the fair value step-up in inventory sold——(30)—Merger, acquisition, and divestiture related expenses(56)(31)(144)(117)Sale of asset group and business divestiture-related gains, net——268Impairment of goodwill and other assets(4)——(39)—LHX NeXt(5)(33)—(68)—Charges for severance and other termination costs—(29)—(29)Charge related to an additional pre-merger legal contingency—(31)—(31)FAS/CAS operating adjustment(6)27227265Total unallocated items(256)(202)(756)(525)Non-operating income, net8099245313Interest expense, net(159)(70)(372)(205)Income (loss) before income taxes$400$(321)$1,145$740








27 12








21 18

















Quarter EndedThree Quarters Ended(In millions)September 29, 2023September 30, 2022September 29, 2023September 30, 2022FAS pension service cost$(10)$(11)$(23)$(34)Less: CAS pension cost(37)(33)(95)(99)FAS/CAS operating adjustment27227265Non-service FAS pension income78111232332FAS/CAS pension adjustment, net$105$133$304$397





four


Quarter EndedSeptember 29, 2023September 30, 2022(In millions)SASIMSCSARSASIMSCSARRevenue By Customer RelationshipPrime contractor$1,082$962$866$113$1,013$1,089$690**Subcontractor592585374342565525364**Intersegment122115—151614**Total revenue$1,686$1,568$1,255$455$1,593$1,630$1,068**Revenue By Contract TypeFixed-price(1)$1,040$1,164$1,047$272$939$1,246$899**Cost-reimbursable634383193183639368155**Intersegment122115—151614**Total revenue$1,686$1,568$1,255$455$1,593$1,630$1,068**Revenue By Geographical RegionUnited States$1,478$1,141$874$443$1,414$1,213$706**International19640636612164401348**Intersegment122115—151614**Total revenue$1,686$1,568$1,255$455$1,593$1,630$1,068**


Three Quarters EndedSeptember 29, 2023September 30, 2022(In millions)SASIMSCSARSASIMSCSARRevenue By Customer RelationshipPrime contractor$3,176$3,243$2,471$113$2,977$3,210$2,037**Subcontractor1,8451,6941,1963421,6691,636954**Intersegment356640—365133**Total revenue$5,056$5,003$3,707$455$4,682$4,897$3,024**Revenue By Contract TypeFixed-price(1)$3,161$3,767$3,127$272$2,737$3,716$2,530**Cost-reimbursable1,8601,1705401831,9091,130461**Intersegment356640—365133**Total revenue$5,056$5,003$3,707$455$4,682$4,897$3,024**Revenue By Geographical RegionUnited States$4,407$3,679$2,499$443$4,136$3,549$1,962**International6141,2581,168125101,2971,029**Intersegment356640—365133**Total revenue$5,056$5,003$3,707$455$4,682$4,897$3,024**

















(In millions)September 29, 2023December 30, 2022Total AssetsSAS$9,099$8,838IMS10,86910,925CS7,1845,800AR4,078**Corporate(1)11,0637,961Total Assets$42,293$33,524








9.1 6.0







---
















469 40 433





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The largest acquired environmental matter is the Sacramento, California site. AJRD is subject to a Partial Consent Decree (“PCD”) related to this site which requires us, among other things, to conduct a Remedial Investigation and Feasibility Study to determine the nature and extent of impacts due to the release of chemicals from the Sacramento, California site, monitor the American River and offsite public water supply wells, operate Groundwater Extraction and Treatment facilities that collect groundwater at the site perimeter, and pay certain government oversight costs. The PCD required a guarantee up to $75 million (in addition to a prior $20 million guarantee) to assure that the Sacramento remediation activities are fully funded. Obligations under the $75 million aggregate guarantee are limited to $10 million in any year. Both the $75 million aggregate guarantee and the $10 million annual limitation are subject to adjustment annually for inflation. As of September 29, 2023, the estimated range of anticipated costs for the Sacramento, California site related to the PCD and other federal and state orders was $239 million to $372 million and the accrued amount was $239 million included as a component of the “Other accrued items” and “Reserves for environmental remediation costs” line item in in ourCondensed Consolidated Balance Sheet.







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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.











































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Quarter EndedThree Quarters Ended(Dollars in millions, except per share amounts)September 29, 2023September 30, 2022September 29, 2023September 30, 2022Revenue from product sales and services:SAS$1,686$1,593$5,056$4,682IMS1,5681,6305,0034,897CS1,2551,0683,7073,024AR455**455**Corporate eliminations(49)(45)(142)(119)Revenue from product sales and services4,9154,24614,07912,484Cost of product sales and services(3,608)(3,052)(10,371)(8,819)% of total revenue73%72%74%71%Gross margin1,3071,1943,7083,665% of total revenue27%28%26%29%Engineering, selling and administrative expenses(828)(742)(2,384)(2,239)% of total revenue17%17%17%18%Sale of asset group and business divestiture-related gains, net——268Impairment of goodwill and other assets—(802)(78)(802)Non-operating income, net8099245313Interest expense, net(159)(70)(372)(205)Income (loss) before income taxes400(321)1,145740Income taxes(18)20(73)(96)Effective tax rate4.5%6.2%6.4%13.0%Net income (loss)382(301)1,072644Noncontrolling interests, net of income taxes11(3)2Net income (loss) attributable to L3Harris Technologies, Inc.$383$(300)$1,069$646% of total revenue8%7%8%5%Diluted EPS$2.02$(1.56)$5.61$3.33


























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Quarter EndedThree Quarters Ended(In millions)September 29, 2023September 30, 2022September 29, 2023September 30, 2022Amortization of acquisition-related intangibles$(185)$(133)$(477)$(400)Company-sponsored R&D costs(1)(125)(151)(356)(452)Merger, acquisition, and divestiture related expenses(56)(31)(144)(117)LHX NeXt(2)(33)—(68)—Charges for severance and other termination costs—(29)—(29)Charge related to an additional pre-merger legal contingency—(31)—(31)Other ESA expenses(3)(429)(367)(1,339)(1,210)Total ESA expenses$(828)$(742)$(2,384)$(2,239)



































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Three Quarters Ended(In millions)September 29, 2023Other AssetsImpairment of customer contracts:SAS$27IMS3Unallocated corporate expense1848Facility closures:IMS9Unallocated corporate expense21Impairment of other assets$78











Quarter EndedThree Quarters Ended(In millions)September 29, 2023September 30, 2022September 29, 2023September 30, 2022Non-service FAS pension income(1)$78$111$232$332Other, net(2)2(12)13(19)Non-operating income, net$80$99$245$313


























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Quarter EndedThree Quarters EndedSeptember 29, 2023September 30, 2022% Inc/(Dec)September 29, 2023September 30, 2022% Inc/(Dec)Revenue$1,686$1,5936%$5,056$4,6828%Operating income21092128%56547220%Operating income as a percentage of revenue (“operating margin”)12%6%11%10%

















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Quarter EndedThree Quarters Ended(Dollars in millions)September 29, 2023September 30, 2022% Inc/(Dec)September 29, 2023September 30, 2022% Inc/(Dec)Revenue$1,568$1,630(4)%$5,003$4,8972%Operating income (loss)187(143)*53431570%Operating margin12%(9)%11%6%




















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Quarter EndedThree Quarters Ended(Dollars in millions)September 29, 2023September 30, 2022% Inc/(Dec)September 29, 2023September 30, 2022% Inc/(Dec)Revenue$1,255$1,06818%$3,707$3,02423%Operating income (loss)282(97)*873370*Operating margin22%(9)%24%12%























Quarter EndedThree Quarters Ended(Dollars in millions)September 29, 2023September 29, 2023Revenue$455$455Operating income5656Operating margin12%12%








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Quarter EndedThree Quarters Ended(Dollars in millions)September 29, 2023September 30, 2022September 29, 2023September 30, 2022Unallocated corporate department (expense) income, net(1)$14$18$(27)$33Amortization of acquisition-related intangibles(2)(208)(151)(546)(454)Additional cost of sales related to the fair value step-up in inventory sold——(30)—Merger, acquisition, and divestiture related expenses(56)(31)(144)(117)Sale of asset group and business divestiture-related gains, net——268Impairment of goodwill and other assets(3)——(39)—LHX NeXt(4)(33)—(68)—Charges for severance and other termination costs—(29)—(29)Charge related to an additional pre-merger legal contingency—(31)—(31)FAS/CAS operating adjustment(5)27227265Total unallocated items$(256)$(202)$(756)$(525)

























Three Quarters Ended(In millions)September 29, 2023September 30, 2022Cash and cash equivalents, beginning of period$880$941Operating Activities:Net income1,072644Non-cash adjustments621993Changes in working capital(94)(382)Other, net(292)121Net cash provided by operating activities1,3071,376Net cash used in investing activities(6,938)(188)Net cash provided by (used in) financing activities5,254(1,566)Effect of exchange rate changes on cash and cash equivalents(4)(34)Net decrease in cash and cash equivalents(381)(412)Cash and cash equivalents, end of period$499$529











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September 29, 2023(In millions, except weighted average yield)OutstandingDaily AverageCP Program$2,030$2,101Weighted Average Yield5.50%5.60%








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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.







ITEM 4.CONTROLS AND PROCEDURES.






















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ITEM 1.LEGAL PROCEEDINGS.







ITEM 1A.RISK FACTORS.


































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ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES.








Period*Total number ofshares purchasedAverage pricepaid per shareTotal number ofshares purchasedas part of publiclyannounced plans or programs(1)Maximum approximate dollar value of shares that mayyet be purchased under the plans or programs(1)($ in millions)Month No. 1(July 1, 2023 - July 28, 2023)Repurchase program(1)—$——$3,935Employee transactions(2)20,838$197.93——Month No. 2(July 29, 2023 - August 25, 2023)Repurchase program(1)—$——$3,935Employee transactions(2)45,608$182.53——Month No. 3(August 26, 2023 - September 29, 2023)Repurchase program(1)—$——$3,935Employee transactions(2)21,405$174.86——Total87,851—$3,935






















ITEM 3.DEFAULTS UPON SENIOR SECURITIES.







ITEM 4.MINE SAFETY DISCLOSURES.







ITEM 5.OTHER INFORMATION.


None







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ITEM 6.EXHIBITS.





(2)*            Agreement and Plan of Merger, dated as of December 17, 2022, by and among L3Harris Technologies, Inc., Aquila Merger Sub Inc. and Aerojet Rocketdyne Holdings, Inc., incorporated herein by reference to exhibit 2.1 to L3Harris Technologies, Inc.’s Current Report on Form 8-K filed with the SEC on December 19, 2022. (Commission File Number 1-3863)


(10.1)** L3Harris Technologies, Inc. Executive Change in Control Severance Plan, effective as of July 21, 2023, incorporated herein by reference to Exhibit 10.1 to L3Harris Technologies, Inc.’s Current Report on Form 8-K filed with SEC on July 24 2023. (Commission File Number 1-3863)


(10.2) **   Summary of Annual Compensation of L3Harris Technologies, Inc. Non-Employee Directors, effective as of January 1, 2024, incorporated herein by reference to Exhibit 10. 2 to L3Harris Technologies, Inc.’s Current Report on Form 8-K filed with SEC on July 24 2023. (Commission File Number 1-3863)


(10.3) **   Amendment Thirteen to the L3Harris Retirement Savings Plan (as amended and restated effective January 1, 2021) dated July 17, 2023.


(15)           Letter Regarding Unaudited Interim Financial Information.


(31.1)       Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.


(31.2)       Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.


(32.1)       Section 1350 Certification of Chief Executive Officer.


(32.2)       Section 1350 Certification of Chief Financial Officer.




























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L3HARRIS TECHNOLOGIES, INC.(Registrant)Date: October 27, 2023By:/s/    MICHELLE L. TURNERMichelle L. TurnerSenior Vice President and Chief Financial Officer(Principal Financial Officer and Duly Authorized Officer)