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What changed in L3Harris's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of L3Harris's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+358 added−460 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-20)

Top changes in L3Harris's 2025 10-K

358 paragraphs added · 460 removed · 252 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

37 edited+19 added−33 removed11 unchanged
Biggest changeGovernment funding, as well as the timing of product deliveries and customer acceptance. Human Capital Our success depends on our highly-educated and skilled workforce. Attracting, developing, motivating and retaining highly-skilled people, particularly those with technical, engineering and science backgrounds, is critical to our ability to execute our strategic priorities.
Biggest changeAttracting, developing, motivating and retaining highly-skilled people, particularly those with technical, engineering and science backgrounds, and in many cases, security clearances, is critical to our ability to execute our strategic priorities. We use human capital measures to set goals and monitor performance in several areas, including health and safety and talent.
Government, whether directly or through prime contractors, was $4.2 billion (21% of our revenue) and came from a large number of countries with no single foreign country accounting for more than 5% of our total revenue. For financial information regarding our domestic and international operations, including long-lived assets, see Note 14: Business Segments in the Notes.
Government, whether directly or through prime contractors, was $4.4 billion ( 21% of our revenue) and came from a large number of countries with no single foreign country accounting for more than 5% of our total revenue. For financial information regarding our domestic and international operations, including long-lived assets, see Note 14: Business Segments in the Notes.
Regulations include, but are not limited to, those related to import and export controls, corruption, bribery, the protection of the environment, government procurement, wireless communications, competition, product safety, workplace health and safety, employment, labor and data privacy. The following describes significant regulations that may impact our businesses. For further discussion of risks relating to government regulations, see “Item 1A.
Regulations include, but are not limited to, those related to import and export controls, corruption, bribery, the protection of the environment, government procurement, competition, product safety, workplace health and safety, employment, labor and data privacy. The following describes significant regulations that may impact our businesses. For further discussion of risks relating to government regulations, see “Item 1A.
Our website address is https://www.l3harris.com . Our annual reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, current reports on Form 8-K and amendments to such reports are available free of charge on our website https://www.l3harris.com/investors , as soon as reasonably practicable after these reports are electronically filed with or furnished to the U.S.
Our website address is https://www.l3harris.com . Our annual reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, current reports on Form 8- K and amendments to such reports are available free of charge on our website https://www.l3harris.com/investors , as soon as reasonably practicable after these re ports are electronically filed with or furnished to the U.S.
Risk Factors” of this Report. Government Contracts. In fiscal 2023, the percentage of our revenue that was derived from sales to U.S. Government customers, including foreign military sales funded through the U.S. Government, whether directly or through prime contractors, was 76% and no other customer accounted for more than 5% of our revenue.
Risk Factors” of this Report. Government Contracts. In fiscal 2024 , the percentage of our revenue that was derived from sales to U.S. Government customers, including foreign military sales funded through the U.S. Government, whether directly or through prime contractors, was 76% and no other customer accounted for more than 5% of our revenue.
Securities and Exchange Commission (“SEC”). We also will provide the reports in electronic or paper form, free of charge, upon written request. Our website and the information posted thereon are not incorporated into this Report or any current or other periodic report that we file with or furnish to the SEC.
Securities and Exchange Commission (“ SEC ”). We also will provide the reports in electronic or paper form, free of charge, upon written request. Our website and the information posted thereon are not incorporated into this Report or any current or other periodic report that we file with or furnish to the SEC.
Time-and-material contracts are considered fixed-price contracts as they specify a fixed hourly rate for each labor hour charged. For further discussion of risks relating to U.S. Government contracts, see “Item 1A. Risk Factors,” “Item 3. Legal Proceedings” and “Item 7. M anagement’s Discussion and Analysis of Financial Condition and Results of Operation s” of this Report. Environmental.
Time-and-material contracts are considered fixed-price contracts as they specify a fixed hourly rate for each labor hour charged. For further discussion of risks relating to U.S. Government contracts, see “Item 1A. Risk Factors,” “Item 3. Legal Proceedings” and “Item 7. M anagement’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report. Environmental.
Under our U.S. Government cost-reimbursable contracts, we are reimbursed periodically for allowable costs and are paid a portion of the fee based on contract progress. Some costs have been made partially or wholly unallowable for reimbursement by statute or regulation. Examples include certain merger and acquisition costs, lobbying costs, charitable contributions, interest expense and certain litigation defense costs.
Under our U.S. Government cost-reimbursable contracts, we are reimbursed periodically for allowable costs and are paid a portion of the fee based on contract progress. Some costs ar e partially or wholly unallowable for reimbursement by statute or regulation. Examples include certain merger and acquisition costs , lobbying costs, charitable contributions, interest expense, financing costs and certain litigation defense costs.
Department of Defense (“DoD”), international, federal and state agency customers in the following business sectors: Tactical Communications: Design, manufacture and sustainment of resilient and secure communication solutions that include tactical radios, software, satellite terminals and end-to-end battlefield systems.
Department of Defense (“ DoD ”), international, federal, and state agency customers in the following business sectors: Tactical Communications: Design, manufacture and sustainment of resilient and interoperable secure communication solutions that include tactical radios, software, waveforms, satellite terminals and end-to-end battlefield systems.
Competitive Conditions and Trends in Market Demand We operate in highly-competitive markets that are sensitive to technological advances. Some of our competitors in each of our markets are larger than we are and can maintain higher levels of expenditures for research and development (“R&D”).
Competitive Conditions and Trends in Market Demand We operate in highly-competitive markets that are sensitive to technological advances. Some of our competitors in each of our markets are larger than we are and can maintain higher levels of expenditures for research and development (“ R&D ”).
We offer competitive salaries and comprehensive benefit packages, including health care, retirement planning and employer retirement contributions, educational assistance, child and elder back-up care, paid parental leave and a discretionary paid time off program. In addition, we offer caregiver time-off and pre-retirement programs.
We offer competitive salaries and comprehensive benefit packages, including health care, retirement planning and employer retirement contributions, educational assistance, child and elder back-up care, paid parental leave, and a discretionary paid time off program. Sustainability .
As of December 29, 2023, approximately 2,800, or 6%, of our U.S. employees were covered by various collective bargaining agreements, which we expect will be renegotiated as they expire, as we historically have done without significant disruption to operating activities. Health and Safety.
As of January 3, 2025 , approximately 2,600 , or 6% , of our U.S. employees were covered by various collective bargaining agreements, which we expect will be renegotiated as they expire, as we historically have done without significant disruption to operating activities. Health and Safety.
We provide top-tier capabilities in the design, development, integration, production and sustainment of major weapons systems for defense primes and national security, civil government, and international customers in the following business sectors: Space Systems: End-to-end mission solutions in support of intelligence, surveillance and reconnaissance (“ISR”); position, navigation and timing; weather and climate monitoring; missile defense and ground-based space surveillance networks.
We provide top-tier capabilities in the design, development, integration, production and sustainment of weapons systems for national security, civil government and international customers in the following business sectors: Space Systems: Intelligence, surveillance and reconnaissance (“ ISR ”); position, navigation and timing; weather and climate monitoring; missile defense and ground-based space surveillance networks.
We prioritize the safety of our employees through maintaining a proactive safety culture and implementing programs designed to eliminate workplace incidents, risks and hazards. Throughout the year, we review and monitor our performance closely to reduce Occupational Safety and Health Administration reportable incidents.
We prioritize the safety of our employees through maintaining a proactive safety culture and implementing programs designed to eliminate workplace incidents, risks and hazards. Throughout the year, we review and monitor our performance closely to reduce Occupational Safety and Health Administration reportable incidents . Talent Strategy. We are focused on ensuring we maintain a balanced talent portfolio.
Research and Development We conduct R&D activities using our own funds (company-funded R&D) and under contractual arrangements (customer-funded R&D), such as designs. See Note 1: Significant Accounting Policies in the Notes for further information on company-funded R&D.
See Note 1: Significant Accounting Policies in the Notes for additional information regarding Company-wide total backlog. R&D We conduct R&D activities using our own funds (company-funded R&D) and under contractual arrangements (customer-funded R&D) . See Note 1: Significant Accounting Policies in the Notes for further information on company- funded R&D.
We deliver top-tier capabilities in the design, development, integration, production, modernization and sustainment of ISR, passive sensing and targeting, electronic attack, autonomy, power and communications, networks and sensors for national security and international customers in the following business sectors: ISR: Airborne passive sensing and targeting, mission systems development, integration and life-cycle management for strategic reconnaissance, national command and control, tactical surveillance, electronic attack, agile strike, mobility, and classified platforms.
IMS specializes in system design, development, integration, production, modernization and sustainment for national security and international customers in the following business sectors: ISR: Airborne passive sensing and targeting, mission systems development, integration and life-cycle management for strategic reconnaissance, national command and control, tactical surveillance, electronic attack, agile strike, mobility, and classified platforms.
The majority of our international marketing activities are conducted through subsidiaries that operate in the Europe, Middle East and Africa (“EMEA”) and Asia-Pacific (“APAC”) regions and Canada. We also have established international marketing organizations and several regional sales offices. For further information regarding our international subsidiaries, see Exhibit 21 of this Report.
The majority of our international marketing activities are conducted through subsidiaries that operate in the Europe, Middle East and Africa (“ EMEA ”) and Asia-Pacific (“ APAC ”) regions and Canada. We also have established international marketing organizations and several regional sales offices .
See Note 13: Acquisitions, Divestitures and Asset Sales in the Notes for further information. _____________________________________________________________________ 2 CS CS enables warfighters across all domains with solutions critical to mission success even in the most contested environments. We are a leading provider of resilient communication solutions for the U.S.
Enables warfighters across all domains with solutions critical to mission success even in the most contested environments. We are a leading provider of resilient communication solutions for the U.S.
ITEM 1. BUSINESS. General L3Harris Technologies, Inc. is the Trusted Disruptor for the defense industry. With customers’ mission-critical needs in mind, we deliver end-to-end technology solutions connecting the space, air, land, sea and cyber domains. We support government customers in more than 100 countries, with our largest customers being various departments and agencies of the U.S.
ITEM 1. BUSINESS. General L3Harris Technologies, Inc. is the Trusted Disruptor for the defense industry. With customers’ mission-critical needs in mind, we deliver end-to-end technology solutions connecting the space, air, land, sea and cyber domains in the interest of global security.
Space Propulsion and Power Systems: Premier propulsion and power systems for national security, space and exploration missions. International Business In fiscal 2023, revenue from products and services where the end consumer is located outside the U.S., including foreign military sales funded through the U.S.
International Business In fiscal 2024 , revenue from products and services where the end consumer is located outside the U.S., including foreign military sales funded through the U.S.
AR is a leading provider of propulsion, power and armament products and systems to U.S. government, including the DoD, National Aeronautics and Space Administration (“NASA”) and major aerospace and defense prime contractors in the following business sectors: Missile Solutions: Propulsion technologies and armament systems for strategic defense, missile defense, hypersonic and tactical systems.
Government, including the DoD , National Aeronautics and Space Administration (" NASA ") and major aerospace and defense prime contractors in the following business sectors: Missile Solutions: Propulsion technologies and armament systems for strategic defense, missile defense, hypersonic and tactical systems. Space Propulsion and Power Systems: Premier propulsion and power systems for national security, space and exploration missions.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report. Backlog Company-wide total backlog was $32.7 billion at December 29, 2023, inclusive of backlog from the acquisitions of TDL and AJRD, compared with $22.3 billion at December 30, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this R ep ort. _____________________________________________________________________ 3 Backlog Company-wide total backlog was $34.2 billion and $32.7 billion at January 3, 2025 and December 29, 2023 , respectively .
We structure our operations primarily around the products, systems and services we sell and the markets we serve, and we report the financial results of our continuing operations in four operating segments, which are also our reportable segments: Space & Airborne Systems (“SAS”); Integrated Mission Systems (“IMS”); Communication Systems (“CS”); and Aerojet Rocketdyne (“AR”), established in connection with the fiscal 2023 acquisition of Aerojet Rocketdyne Holdings, Inc.
Description of Business Segments We structure our operations primarily around the products, systems and services we sell and the markets we serve, and we report our financial results in four operating segments, which are also our reportable segments or business segments.
Intellectual Property We own a large portfolio of patents, trade secrets, know-how, confidential information, trademarks, copyrights and other intellectual property and we routinely apply for new patents, trademarks and copyrights. We also license intellectual property to and from third parties. For discussion of risks relating to intellectual property, see “Item 1A. Risk Factors” of this Report.
Intellectual Property We own a large portfolio of patents, trade secrets, know-how, confidential information, trademarks, copyrights and other intellectual property and we routinely apply for new patents, trademarks and copyrights. We also license intellectual property to and from third parties . With regard to certain patents, the U.S. Government has an irrevocable, non-exclusive, royalty-free license, pursuant to which the U.S.
Intel & Cyber: Situational awareness, intelligence systems and advanced wireless solutions for classified intelligence and defense customers. Mission Avionics: Sensors, processors, hardened electronics, release systems and antennas for aircraft platforms. Mission Networks: Communications and networking solutions for air traffic management. ACS: Threat warning and countermeasures for airborne, ground and maritime platforms.
Intel & Cyber: Situational awareness, optical networks and advanced wireless solutions for classified intelligence and defense customers. Mission Networks: Communications and networking solutions for air traffic management.
We also rely on a limited number of certified microelectronics component suppliers for our products. We have experienced component shortages from vendors as a result of pandemics, natural disasters, or the shifting regulatory landscape. These events or regulations may cause a spike in demand for certain electronic components, such as lead-free components, resulting in industry-wide supply chain disruptions.
We depend on suppliers and subcontractors for a large number of components and subsystems. We also rely on a limited number of certified microelectronics component suppliers for our products. We have experienced component shortages from vendors as a result of the global pandemic, natural disasters, or the shifting regulatory landscape.
We expect to recognize approximately 40% of the revenue associated with Company-wide total backlog by the end of 2024 and approximately 65% of the _____________________________________________________________________ 3 revenue associated with Company-wide total backlog by the end of 2025, with the remainder to be recognized thereafter. See Note 1: Significant Accounting Policies in the Notes for additional information regarding Company-wide total backlog.
We expect to recognize approximately 45% of the revenue associated with Company-wide total backlog by the end of fiscal 2025 and approximately 75% of the revenue associated with Company-wide total backlog by the end of fiscal 2026 , with the remainder to be recognized thereafter.
With regard to certain patents, the U.S. Government has an irrevocable, non-exclusive, royalty-free license, pursuant to which the U.S. Government may use or authorize others to use the inventions covered by such patents. Pursuant to similar arrangements, the U.S. Government may consent to our use of inventions covered by patents owned by other persons.
Government may use or authorize others to use the inventions covered by such patents. Pursuant to similar arrangements, the U.S. Government may consent to our use of inventions covered by patents owned by other persons. Numerous trademarks used on or in connection with our products are also considered to be valuable assets.
Integrated Vision Solutions (“IVS”) : Design, manufacture and sustainment of a full suite of helmet-mounted integrated night vision goggles with leading-edge image intensifier tubes and weapon-mounted sights, aiming lasers, and range finders. Public Safety: State-of-art communication equipment, systems and applications for federal agencies, state and local government first responders, utilities and transit agencies.
Broadband Communications: Design, manufacture and sustainment of resilient and secure communication solutions that include ISR and tactical data links, software and integrated broadband networks. Integrated Vision Solutions : Design, manufacture and sustainment of a full suite of helmet-mounted integrated night vision goggles with leading-edge image intensifier tubes and weapon-mounted sights, aiming lasers, and range finders.
We concentrate on the opportunities that we believe are compatible with our resources, overall technological capabilities and objectives. Principal competitive factors are product and system quality and reliability; technological capabilities; service; past performance; ability to develop and implement complex, integrated solutions; ability to meet delivery schedules; and cost-effectiveness.
Such collaboration is required by modern market dynamics where competing in our markets requires the ability to fuse hardware, software and artificial intelligence (“ AI ”) . Principal competitive factors are product and system quality and reliability; technological capabilities; service; past performance; ability to develop and implement complex, integrated solutions; ability to meet delivery schedules; and cost-effectiveness.
Additional information is provided in our Sustainability Report, which can be found on our Company website, and is not incorporated by reference into this Report. We have incurred, and based on currently available information, we expect to continue to incur capital and operating costs to comply with existing and pending environmental laws and regulations. See “Item 1A.
Our operations are subject to and affected by U.S. federal, state, local and foreign laws and regulations relating to the protection of the environment. We have incurred and, based on currently available information, we expect to continue to incur capital and operating costs to comply with existing and pending environmental laws and regulations. See “Item 1A.
Description of Business Segments Our business segments provide a wide-range of products, systems and services to various customers and are described below.
From time to time, we acquire or divest businesses and strategically realign businesses within and across our business segments to optimize existing capabilities and enhance the efficiency with which we develop and deliver our products and services. Our business segments provide a wide-range of products, systems and services to various customers and are described below.
For further discussion of risks relating to subcontractors and suppliers, see “Item 1A. Risk Factors” of this Report. We do not consider any material portion of our business to be seasonal. Various factors can affect the distribution of our revenue between accounting periods, including the timing of contract awards and the timing and availability of U.S.
These events or regulations may cause a spike in demand for certain electronic components resulting in industry-wide supply chain disruptions. For further discussion of risks relating to subcontractors and suppliers, see “Item 1A. Risk Factors” of this Report. We do not consider any material portion of our business to be seasonal.
Our talent strategy focuses on attracting new perspectives, ideas and capabilities, recognizing and rewarding performance, and developing, engaging and retaining high-performing employees. We strive to attract employees in all stages of their careers.
Attracting new perspectives, ideas and capabilities, recognizing and rewarding performance, offering professional development and career growth opportunities, and providing an engaging employee experience that retains talent are strategic priorities. We strive to attract employees in all stages of their careers. We hired approximately 4,500 new employees in fiscal 2024 .
Government and their prime contractors. Our products and services have defense and civil government applications, as well as commercial applications. Our fiscal year ends on the Friday nearest December 31. Each of our fiscal years ended December 29, 2023 (“fiscal 2023”), December 30, 2022 (“fiscal 2022”) and December 31, 2021 (“fiscal 2021”) included 52 weeks.
We support government customers in more than 100 countries, with our largest customers being various departments and agencies of the U.S. Government, their prime contractors and international allies. Our products and services have defense and civil government applications, as well as commercial applications. Our fiscal year ends on the Friday nearest December 31.
Additional information regarding our human capital strategy is available in our DE&I Annual Report that can be found on our company website. Information on our website, including our DE&I Annual Report, is not incorporated by reference into this Report. _____________________________________________________________________ 6 Available Information Our principal executive offices are located at 1025 West NASA Boulevard, Melbourne, Florida 32919.
Additional information regarding our human capital strategy and sustainability goals are available in our 2024 Sustainability Report which we expect to be published in fiscal 2025 on our company website. Information on our website, including our 2024 Sustainability Report, is not incorporated by reference into this Report. Workforce Demographics.
SAS SAS is a leading provider of full mission solutions as a prime and subsystem integrator in the space, airborne and cyber domains.
For financial information with respect to our business segments, see Note 14: Business Segments in the Notes . Space & Airborne Systems (“ SAS ”). Supplies f ull mission solutions as a prime and subsystem integrator in the space, airborne and cyber domains.
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(“AJRD”), discussed further below. Throughout this form 10-K, we also refer to our operating segments as our business segments. See Note 14: Business Segments in the Notes to Consolidated Financial Statements in this Report (the “Notes”) for further information regarding our business segments, including how we define segment operating income or loss. Business Realignment.
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The fiscal year ended January 3, 2025 (“ fiscal 2024 ”) included 53 weeks and fiscal years ended December 29, 2023 (“ fiscal 2023 ”) and December 30, 2022 (“ fiscal 2022 ”) included 52 weeks.
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Effective for fiscal 2023, we adjusted our reporting to better align our businesses and transferred our Agile Development Group (“ADG”) business from our IMS segment to our SAS segment.
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Airborne Combat Systems : Sensors, processors, hardened electronics, unmanned aircraft systems, precision weapons, infrared search and tracking, distributed aperture systems and precision pointing, weapons release systems; antennas for aircraft platforms; and threat warning and countermeasures for airborne, ground and maritime platforms. Integrated Mission Systems (“ IMS ”).
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On October 1, 2023, we combined our Electronic Warfare sector and the majority of the ADG sector within our SAS segment to _____________________________________________________________________ 1 create a new sector, Advanced Combat Systems (“ACS”). The remaining portion of the ADG sector was combined with our Space Systems sector within our SAS segment.
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Delivers differentiated mission capabilities and prime systems integration to support intelligence, reconnaissance and surveillance (ISR), passive sensing and targeting, electronic attack, autonomy, power and communications, networks and sensors.
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The historical results, discussion and presentation of our business segments as set forth in the accompanying Consolidated Financial Statements and the Notes reflect the impact of these changes for all periods presented in order to present segment information on a comparable basis.
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Maritime: Power, electrical, imaging, communication and sensor systems for naval platforms; integrated autonomous vessels for surface and undersea operations; fleet management; in-service support; missionization prototyping; and naval integration.
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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. See Note 6: Goodwill and Intangible Assets and Note 14: Business Segments in the Notes for further information.
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Global Optical Systems: Multi-domain, multi-spectral electro-optical and infrared (EO/IR) sensor systems supporting ISR and target acquisition missions; manufacturing of specialty laser and filter glass materials, laser range finders, target designators and transmitters; and highly scalable autonomous solutions.
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For financial information with respect to our business segments, including revenue, operating income and total assets, and with respect to our operations outside the United States, see Note 14: Business Segments in the Notes, and for additional information with respect to our business segments, see “Discussion of Business Segment Results of Operations” in “Item 7.
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On January 4, 2025, we realigned our software solutions business from the ISR sector into Global Optical Solutions and renamed the sector Targeting & Sensor Systems. _____________________________________________________________________ 2 Defense Electronics : Space communications and space flight avionics; 360-degree visible/midwave IR passive surveillance; f uzing, navigation and range-testing solutions; and precision electronic components.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report. For a discussion of certain risks affecting our business segments, including risks relating to our U.S. Government contracts and subcontracts, see “Item 1. Business - Government Contracts,” “Item 1A. Risk Factors” and “Item 3. Legal Proceedings” of this Report.
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Commercial Aviation Solutions : Integrated aircraft avionics, pilot training and data analytics services for the commercial aviation industry. At January 3, 2025 , Commercial Aviation Solutions (“ CAS disposal group ”) was classified as held for sale in our Consolidated Balance Sheet . See Note 13: Acquisitions and Divestitures in the Notes for further information. Communication Systems (“ CS ”).
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Also includes ADG, an innovation accelerator and collaboration initiative established to rapidly address near-peer, national security threats. IMS IMS is a leading provider of differentiated mission capabilities and prime systems integration for the air, land and sea domains.
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Public Safety and Professional Communications: State-of-the-art communication equipment, systems and applications for federal agencies, state and local government first responders, utilities and transit agencies. Aerojet Rocketdyne (“ AR ”) . Provides propulsion, power and armament products and systems to U.S.
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Maritime: Passive sensing and targeting, autonomy and manned and unmanned teaming, power and communications, undersea sensors and networks and classified capabilities for manned platforms and unmanned surface and undersea vessels. Electro Optical: Passive sensing and targeting; laser imaging and sensor systems; space communications and avionics; and fuzing, navigation and range-testing solutions on platforms spanning all domains.
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We concentrate on the opportunities that we believe are compatible with our resources, overall technological capabilities and objectives. We also collaborate with innovative partners, such as our strategic partnerships with Palantir Technologies and Shield Capital to develop new capabilities to meet the demands of our customers.
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Commercial Aviation Solutions: Integrated aircraft avionics, pilot training and data analytics services for the commercial aviation industry. On November 27, 2023, we announced that we entered into a definitive agreement to sell Commercial Aviation Solutions (“CAS disposal group”).
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Various factors can affect the distribution of our revenue between accounting periods, including the timing of contract awards and the timing and availability of U.S. Government funding, as well as the timing of product deliveries and customer acceptance. Human Capital and Sustainability Our success depends on our skilled workforce.
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Broadband Communications: Design, manufacture and sustainment of resilient and secure communication solutions that include ISR and tactical data links, software and integrated broadband networks. Includes the operations of Tactical Data Links product line (“TDL”), acquired from Viasat, Inc. (“Viasat”) on January 3, 2023. See Note 13: Acquisitions, Divestitures and Asset Sales in the Notes for further information.
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We had approximately 47,000 employees at January 3, 2025 , including approximately 18,000 engineers and scientists. Of our total employees, 89% were located in the U.S.
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AR On July 28, 2023, we acquired AJRD, a technology-based engineering and manufacturing company.
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During fiscal 2024 , we updated our environmental sustainability goals: by 2030 we plan to reduce our Scope 1 and Scope 2 greenhouse gas (“ GHG ”) emissions by 60%, water usage by 20%, solid waste by 10% from 2021 levels and source 40% of our electricity from renewable sources. _____________________________________________________________________ 5 Available Information Our principal executive offices are located at 1025 West NASA Boulevard, Melbourne, Florida 32919.
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Numerous trademarks used on or in connection with our products are also considered to be valuable assets.
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Cautionary Statement Regarding Forward-Looking Statements This Report, including “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that involve risks and uncertainties, as well as assumptions that may not materialize or prove correct, which could cause our results to differ materially from those expressed in or implied by such forward-looking statements.
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Our operations are subject to and affected by U.S. federal, state, local and foreign laws and regulations regarding discharge of materials into the environment or otherwise relating to the protection of the environment.
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All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, statements concerning: our plans, strategies and objectives for future operations; new products, systems, technologies, services or developments; future economic conditions, performance or outlook; future political conditions; the outcome of contingencies or litigation; environmental remediation cost estimates; the potential level of share repurchases, dividends or pension contributions; potential acquisitions or divestitures; the integration of our acquisitions; the value of contract awards and programs; expected revenue; expected cash flows or capital expenditures; our beliefs or expectations; activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future; and assumptions underlying any of the foregoing.
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We have previously announced our environmental sustainability goals: to reduce greenhouse gas (“GHG”) emissions by 30% and water usage by 20% from 2019 levels and achieve a 75% solid waste diversion rate (away from landfills) by 2026 . We invested in renewable energy and other solutions to achieve our GHG emission reduction target and our other environmental sustainability goals.
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Forward-looking statements may be identified by their use of forward-looking terminology, such as “believes,” “expects,” “may,” “could,” “should,” “would,” “will,” “intends,” “plans,” “estimates,” “anticipates,” “projects” and similar words or expressions.
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We took a step towards our goal by entering into a virtual power purchase agreement, which has been operational since 2021. In 2023, we measured our performance against these goals and exceeded our GHG emissions and water use reduction targets and are progressing towards our solid waste diversion rate from landfill goal.
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You should not place undue reliance on these forward-looking statements, which reflect our management’s opinions only as of the date of filing of this Report and are not guarantees of future performance or actual results.
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We depend on suppliers and subcontractors for a large number of components and subsystems. For example, in our AR segment we are reliant on a limited number of certified suppliers of cases and igniters, in part because of the extensive qualification and safety requirements on explosive and missile-related components.
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Factors that might cause our results to differ materially from those expressed in or implied by these forward-looking statements, from our current expectations or projections or from our historical results include, but are not limited to, those discussed in “Item 7.
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We use human capital measures to set goals and monitor performance in several areas, including employee health and safety; talent acquisition, development and retention; and diversity, equity and inclusion (“DE&I”). Workforce Demographics. We had approximately 50,000 employees at December 29, 2023, including approximately 20,000 engineers and scientists.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations,” most notably those listed in the following section of this Report. All forward-looking statements are qualified by, and should be read in conjunction with, those risk factors.
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Of our total employees, 89% are located in the U.S. and a significant number of our employees possess a U.S. Government security clearance.
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Forward-looking statements are made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “ Securities Act ”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and are made as of the date of filing of this Report, and we disclaim any intention or obligation, other than imposed by law, to update or revise any forward-looking statements, whether as a result of new information, future events or developments or otherwise, after the date of filing of this Report or, in the case of any document incorporated by reference, the date of that document.
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With these efforts, in the last 3 years, we have reduced our total recordable injury rate (“TRIR”) and lost day injury rate (“LDIR”) by 37% and 41%, respectively.
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For fiscal 2023, our TRIR declined by 24% and LDIR declined by 29%, compared with the previous year, while numerous of our locations reached one year or more without a recordable injury. _____________________________________________________________________ 5 Talent Acquisition, Development and Retention.
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In addition to hiring approximately 6,400 new employees (excluding acquisition in fiscal 2023), we were recognized with more than 15 employer awards or recognitions from external organizations in fiscal 2023. Our development philosophy centers around creating broad experiences, setting “SMART” (specific, measurable, achievable, realistic, and timely) performance goals and offering continuous feedback and learning opportunities.
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We provide formal and informal development aligned with individual learning styles including self-directed personal and professional development through e-learning, books and videos; professional certification support; leadership development programs developed in partnership with leading universities; rotational programs; and on-the-job learning.
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Annually and quarterly, we assign learning content that supports our “e3” (excellence, everywhere, everyday) operating system, Code of Conduct, ethical standards, compliance with laws applicable to our business and responsibility for safety and environmental goals. We maintain a robust succession planning process whereby we regularly review our internal talent pipeline and adjust individual development plans accordingly.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA significant decline in the fair value of our plan assets, or other adverse changes to our overall defined benefit plans, could require us to make significant funding contributions and affect cash flows in future periods. CAS governs the extent to which postretirement costs and plan contributions are allocable to and recoverable under contracts with the U.S. Government.
Biggest changeWhile our outstanding long-term debt is all fixed rate and our repayment schedule is known, the costs and returns related to our defined benefit plans are variable. Accordingly, our defined benefit plan liabilities could increase, which could require us to make significant funding contributions to our defined benefit plans and affect cash flows in future periods.
Our future success will depend on our ability to develop new products and services and technologies that achieve market acceptance in our current and future markets. Our businesses are characterized by rapidly changing technologies and evolving industry standards.
Our future success will depend on our ability to develop new products and services that achieve market acceptance in our current and future markets. Our businesses are characterized by rapidly changing technologies and evolving industry standards.
Our worldwide income tax provision may be adversely affected by a number of factors, which include: • Changes in domestic or international tax laws or the interpretation of such tax laws; • The jurisdictions in which profits are determined to be earned and taxed; • Adjustments to estimated taxes upon finalization of various tax returns; • Increases in expenses not fully deductible for tax purposes, including impairment of goodwill or other long-term assets in connection with mergers or acquisitions; • Changes in available tax credits; • Changes in share-based compensation expense; • Changes in the valuation of our deferred tax assets and liabilities; and • The resolution of issues arising from tax audits with various tax authorities.
Our worldwide income tax provision may be adversely affected by a number of factors, which include: • Changes in domestic or international tax laws or the interpretation of such tax laws; • The jurisdictions in which profits are determined to be earned and taxed; • Adjustments to estimated taxes upon finalization of various tax returns; • Increases in expenses not fully deductible for tax purposes, including impairment of goodwill or other long- term assets acquired in connection with mergers or acquisitions ; • Changes in available tax credits; • Changes in share-based compensation expense; • Changes in the valuation of our deferred tax assets and liabilities; and • The resolution of issues arising from tax audits with various tax authorities.
If we are not successful in obtaining or maintaining the necessary licenses or authorizations in a timely manner, our sales relating to those approvals may be reversed, prevented or delayed, and any significant impairment of our ability to sell products or technologies outside of the U.S. could negatively impact our business, financial condition, results of operations, cash flows and equity.
If we are not successful in obtaining or maintaining the necessary licenses or authorizations in a timely _____________________________________________________________________ 13 manner, our sales relating to those approvals may be reversed, prevented or delayed, and any significant impairment of our ability to sell products or technologies outside of the U.S. could negatively impact our business, financial condition, results of operations, cash flows and equity.
In addition, misconduct involving data security lapses resulting in the compromise of personal information or the improper use of our customers’ sensitive or classified information could result in remediation costs, regulatory sanctions against us and serious harm to our reputation and could adversely impact our ability to continue to contract with the U.S.
In addition, misconduct involving data security lapses resulting in the compromise of personal information or the improper use of our customers’ sensitive or classified information could result in remediation costs, regulatory sanctions against us and serious harm to our reputation and could adversely impact our ability to continue to contract with the U.S. Government.
The handling, production, transport, and _____________________________________________________________________ 13 disposition of hazardous materials could result in incidents that temporarily shut down or otherwise disrupt our manufacturing operations and could cause production delays. A release of these chemicals or an unplanned ignition or explosion could result in death or significant injuries to employees and others.
The handling, production, transport, and disposition of hazardous materials could result in incidents that temporarily shut down or otherwise disrupt our manufacturing operations and could cause production delays. A release of these chemicals or an unplanned ignition or explosion could result in death or significant injuries to employees and others.
Government contract under an undefinitized contract action with a not-to-exceed price before the terms, specifications or price are finally agreed to between the parties. In these arrangements, the U.S. Government has the ability to unilaterally definitize the contract if a mutual agreement regarding terms, specifications and price cannot be reached.
Government contract under an undefinitized contract action with a not-to-exceed price before the terms, specifications or price are agreed to between the parties. In these arrangements, the U.S. Government has the ability to unilaterally definitize the contract if a mutual agreement regarding terms, specifications and price cannot be reached.
In addition, our ability to withstand competitive pressures and to react to changes in the defense technology industry could be impaired. The lenders _____________________________________________________________________ 14 who hold such debt could also accelerate amounts due, which could potentially trigger a default or acceleration of any of our other debt.
In addition, our ability to withstand competitive pressures and to react to changes in the defense technology industry could be impaired. The lenders who hold such debt could also accelerate amounts due, which could potentially trigger a default or acceleration of any of our other debt.
We evaluate the recoverability of recorded goodwill annually, as well as when we change reporting units (either as a result of a reorganization or as the result of divestiture activity) and when events _____________________________________________________________________ 18 or circumstances indicate there may be an impairment. If an impairment exists, we record the charge in the period of determination.
We evaluate the recoverability of recorded goodwill annually, as well as when we change reporting units (either as a result of a reorganization or as the result of divestiture activity) and when events or circumstances indicate there may be an impairment. If an impairment exists, we record the charge in the period of determination.
In addition, the results of litigation or arbitration can be difficult to predict, including litigation involving jury trials. Accordingly, our current judgment as to the likelihood of our loss (or our current estimate as to the potential range of loss, if applicable) with respect to any particular litigation or arbitration matter may be wrong.
In addition, the results of litigation or arbitration can be difficult to predict, including litigation involving jury trials. Accordingly, our current _____________________________________________________________________ 14 judgment as to the likelihood of our loss (or our current estimate as to the potential range of loss, if applicable) with respect to any particular litigation or arbitration matter may be wrong.
However, because of the significance of the judgments and the difficulties inherent in estimating future costs, we cannot guarantee that estimated revenues and contract costs will not change in the future. Any cost growth or changes in estimated contract revenues and costs may adversely affect results of operations and financial condition.
However, because of the significance of the judgments and the difficulties inherent in estimating future costs, we cannot guarantee that estimated revenues and contract costs will not change in the future. Any cost growth or _____________________________________________________________________ 12 changes in estimated contract revenues and costs may adversely affect results of operations and financial condition.
Furthermore, if we do not meet contract deadlines or specifications, we may need to renegotiate contracts on less favorable terms, be forced to pay penalties or liquidated damages or suffer major losses if the customer exercises its right to terminate.
Furthermore, if we do not meet contract deadlines or specifications, we may need to renegotiate contracts on less favorable terms, be forced to pay penalties or liquidated damages or suffer losses if the customer exercises its right to terminate.
Also, a significant portion of our international revenue is from, and a significant portion of our business activity is being conducted with or in, less-developed countries and sometimes countries with unstable governments, or in areas of military conflict or at military installations.
Also , a portion of our international revenue is from, and a portion of our business activity is being conducted with or in, less-developed countries and sometimes countries with unstable governments, or in areas of military conflict or at military installations.
Strategic mergers, acquisitions and divestitures we have made in the past and may make in the future present significant risks and uncertainties that could adversely affect our business, financial condition, results of operations, cash flows and equity, which include: • Difficulty in identifying and evaluating potential mergers and acquisitions, including the risk that our due diligence does not identify or fully assess valuation issues, potential liabilities or other merger or acquisition risks; • Difficulty, delays and expense in integrating newly merged or acquired businesses and operations, including combining product and service offerings, and in entering into new markets in which we are not experienced, in an efficient and cost-effective manner while maintaining adequate standards, controls and procedures, and the risk that we encounter significant unanticipated costs or other problems associated with integration; • Differences in business backgrounds, corporate cultures and management philosophies that may delay successful integration; • Difficulty, delays and expense in consolidating and rationalizing IT infrastructure, which may include multiple legacy systems from various mergers and acquisitions and integrating software code; • Challenges in achieving strategic objectives, cost savings and other expected benefits; • Risk that our markets do not evolve as anticipated and that the strategic mergers, acquisitions and divestitures do not prove to be those needed to be successful in those markets; • Risk that we assume or retain, or that companies we have merged with or acquired have assumed or retained or otherwise become subject to, significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying parties; • Risk that indemnification related to businesses divested or spun off that we may be required to provide or otherwise bear may be significant and could negatively impact our business; • Risk that mergers, acquisitions, divestitures, spin offs and other strategic transactions fail to qualify for the intended tax treatment for U.S. federal income tax purposes and the possibility that the full tax benefits anticipated to result from such transactions may not be realized; • Risk that we are not able to complete strategic divestitures on satisfactory terms and conditions, including non-competition arrangements applicable to certain of our business lines, or within expected timeframes; • Potential loss of key employees or customers of the businesses acquired or to be divested; • Risk of diverting the attention of senior management from our existing operations; and • Risk that we have a future impairment charge related to the acquired goodwill or other long-term assets.
Strategic mergers, acquisitions and divestitures we have made in the past and may make in the future present significant risks and uncertainties that could adversely affect our business, financial condition, results of operations, cash flows and equity, which include: • Difficulty in identifying and evaluating potential mergers and acquisitions, including the risk that our due diligence does not identify or fully assess valuation issues, potential liabilities or other merger or acquisition risks; • Difficulty, delays and expense in integrating newly merged or acquired businesses and operations, including combining product and service offerings, and in entering into new markets in which we are not experienced, in an efficient and cost-effective manner while maintaining adequate standards, controls and procedures, and the risk that we encounter significant unanticipated costs or other problems associated with integration; • Differences in business backgrounds, corporate cultures and management philosophies that may delay successful integration; • Difficulty, delays and expense in consolidating and rationalizing IT infrastructure, which may include multiple legacy systems from various mergers and acquisitions and integrating software code; • Challenges in achieving strategic objectives, cost savings and other expected benefits; • Risk that our markets do not evolve as anticipated and that the strategic mergers, acquisitions and divestitures do not prove to be those needed to be successful in those markets; • Risk that we assume or retain, or that companies we have merged with or acquired have assumed or retained or otherwise become subject to, significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying parties; • Risk that indemnification related to businesses divested or spun off that we may be required to provide or otherwise bear may be significant and could negatively impact our business; • Risk that mergers, acquisitions, divestitures, spin offs and other strategic transactions fail to qualify for the intended tax treatment for U.S. federal income tax purposes and the possibility that the full tax benefits anticipated to result from such transactions may not be realized; • Risk that we are not able to complete strategic divestitures on satisfactory terms and conditions, including non-competition arrangements applicable to certain of our business lines, or within expected timeframes; • Potential loss of key employees or customers of the businesses acquired or to be divested; and • Risk of diverting the attention of senior management from our existing operations.
In fiscal 2023, 73% of our revenue was derived from fixed-price contracts that allow us to benefit from cost savings, but subject us to the risk of potential cost overruns, including due to greater than anticipated or a sustained period of increased inflation or unexpected delays because we assume all of the cost burden.
In fiscal 2024 , 73% of our revenue was derived from fixed-price contracts that allow us to benefit from cost savings, but subject us to the risk of potential cost overruns, including due to greater than anticipated or a sustained period of increased inflation or unexpected delays because we assume all of the cost burden.
As a result of that uncertainty, it is difficult to develop accurate estimates of the level of growth in the markets we serve.
As a result of that uncertainty, it is difficult to develop accurate estimates of the level of _____________________________________________________________________ 8 growth in the markets we serve.
Government. _____________________________________________________________________ 16 The outcome of litigation or arbitration in which we are involved from time to time is unpredictable, and an adverse decision in any such matter could have a material adverse effect on our financial condition, results of operations, cash flows and equity.
The outcome of litigation or arbitration in which we are involved from time to time is unpredictable, and an adverse decision in any such matter could have a material adverse effect on our financial condition, results of operations, cash flows and equity .
Cost overruns would adversely impact our results of operations, which are dependent on our ability to maximize our earnings from our contracts, and the potential risk would be greater if our contracts shifted toward a greater percentage of fixed-price contracts, particularly firm fixed-price contracts, as opposed to cost-plus and time-and-material contracts. _____________________________________________________________________ 8 To the extent feasible, we have consistently followed the practice of contractually adjusting our prices to reflect the impact of inflation on salaries and fringe benefits for employees and the cost of purchased materials and services and in some cases seeking the inclusion of adjustment clauses to incorporate certain cost adjustments in fixed-price contracts for unexpected inflation.
Cost overruns would adversely impact our results of operations, which are dependent on our ability to maximize our earnings from our contracts, and the potential risk would be greater if our contracts shifted toward a greater percentage of fixed-price contracts, particularly firm fixed-price contracts, as opposed to cost- type and time-and-material contracts. _____________________________________________________________________ 7 To the extent feasible, we have consistently followed the practice of contractually adjusting our prices to reflect the impact of inflation on salaries and fringe benefits for employees and the cost of purchased materials and services and in some cases seeking the inclusion of adjustment clauses to incorporate certain cost adjustments in fixed-price contracts for unexpected inflation.
With our acquisition of AJRD, our business operations are subject to risk in connection with the handling, production, and disposition of potentially explosive and ignitable energetic materials and other dangerous chemicals, including motors and other materials used in rocket propulsion.
Our business operations are subject to risk in connection with the handling, production, and disposition of potentially explosive and ignitable energetic materials and other dangerous chemicals, including motors and other materials used in rocket propulsion.
Strategic transactions, including mergers, acquisitions and divestitures, involve significant risks and uncertainties that could adversely affect our business, financial condition, results of operations, cash flows and equity.
Strategic Transactions and Investments Risks Strategic transactions, including mergers, acquisitions and divestitures, involve significant risks and uncertainties that could adversely affect our business, financial condition, results of operations, cash flows and _____________________________________________________________________ 15 equity.
However, while we continuously work to implement supply chain resiliency initiatives such as these, we cannot guarantee the success of any of these efforts. Material supply disruptions may still occur in the future, _____________________________________________________________________ 11 leading to untimely delivery or unsatisfactory quality of products and services, and potentially adversely affecting our business, operational results, financial condition and cash flow.
While we continuously work to implement supply chain resiliency initiatives , we cannot guarantee the success of any of these efforts. Material supply disruptions may still occur in the future, leading to untimely delivery or unsatisfactory quality of products and services, and potentially adversely affecting our business, operational results, financial condition and cash flow.
Ongoing instability and current conflicts in global markets, including in the Ukraine and Eastern Europe, Israel, the Gaza Strip and the Middle East and Asia, and the potential for other conflicts and future terrorist activities and other recent geo-political events throughout the world, including new or increased economic and trade sanctions, have created and may continue to create economic and political uncertainties and impacts that could have a material adverse effect on our business, operations and profitability.
Ongoing instability and current conflicts in global markets, including in the Ukraine and Eastern Europe, the Middle East and Asia, and the potential for other conflicts and future terrorist activities and geo-political events throughout the world, including new or increased economic and trade sanctions, including tariffs, have created and may continue to create economic and political uncertainties and impacts that could have a material adverse effect on our business, operations and profitability.
Government has increasingly relied on certain types of contracts that are subject to multiple competitive bidding processes, including multi-vendor indefinite delivery, indefinite quantity (“IDIQ”), government-wide acquisition contracts (“GWACs”), General Services Administration Schedules and other multi-award contracts, which has resulted in greater competition and increased pricing pressure.
Government has increasingly relied on certain types of contracts that are subject to multiple competitive bidding processes, including multi-vendor indefinite-delivery, indefinite-quantity (“ IDIQ ”), government-wide acquisition contracts, General Services Administration Schedules and other multi-award contracts, which has resulted in greater competition and increased pricing pressure.
Government contracts. _____________________________________________________________________ 9 We participate in markets that are often subject to uncertain economic conditions, which makes it difficult to estimate growth in our markets and, as a result, future income and expenditures. We participate in U.S. and international markets that are subject to uncertain economic conditions.
We participate in markets that are often subject to uncertain economic conditions, which makes it difficult to estimate growth in our markets and, as a result, future income and expenditures. We participate in U.S. and international markets that are subject to uncertain economic conditions.
We cannot predict the extent to which total funding and/or funding for individual programs will be included, increased, or reduced as part of the annual appropriations process ultimately approved by Congress and the President or in separate supplemental appropriations or continuing resolutions, as applicable. Budget and appropriations decisions made by the U.S.
We cannot predict the extent to which total funding and/or funding for individual programs will be changed as part of the annual appropriations process ultimately approved by Congress and the President or in separate supplemental appropriations or continuing resolutions, as applicable. Budget and appropriations decisions made by the U.S.
Government contracting or subcontracting for a period of time. In addition, U.S. Government contracts generally contain provisions permitting termination, in whole or in part, without prior notice at the U.S. Government’s convenience upon payment only for work done and commitments made at the time of termination.
Government contracting or subcontracting for a period of time. In addition, U.S. Government contracts generally contain provisions permitting termination, in whole or in part, without prior notice at the U.S. Government’s convenience upon payment only for work done and commitments made at the time of termination. For some contracts, we are a subcontractor and the U.S.
Other risks of doing business internationally include: • Laws, regulations and policies of foreign governments relating to investments and operations; • Unforeseen changes in export controls and other trade regulations; • Changes in regulatory requirements, including business or operating license requirements, currency exchange controls or embargoes; • Uncertainties and restrictions concerning the availability of funding, credit or guarantees; • Risk of non-payment or delayed payment by non-U.S. customers; _____________________________________________________________________ 10 • Contractual obligations to non-U.S. customers that may include specific in-country purchases, investments, manufacturing agreements or financial or other support obligations, known as offset obligations, that may extend for years, require teaming with local companies and result in significant penalties if not satisfied; • Issues related to involving international dealers, distributors, sales representatives and consultants; • Difficulties of managing a geographically dispersed organization and culturally diverse workforces, including compliance with local laws and practices; • Fluctuations of currency, currency revaluations, difficulties with repatriating cash generated or held abroad in a tax-efficient manner and changes in tax laws; • Uncertainties as to local laws and enforcement of contract and intellectual property rights and occasional requirements for onerous contract terms; • Changes in government, economic and political policies, political or civil unrest, acts of terrorism, threats of international boycotts, U.S. anti-boycott legislation or sanctions against U.S. defense companies; and • Increased risk of an incident resulting in damage or destruction to our facilities or products or resulting in injury or loss of life to our employees, subcontractors or other third parties.
Other risks of doing business internationally include: • Laws, regulations and policies of foreign governments relating to investments and operations; • Unforeseen changes in export controls and other trade regulations; • Changes in regulatory requirements, including business or operating license requirements, currency exchange controls or embargoes; • Uncertainties and restrictions concerning the availability of funding, credit or guarantees; • Risk of non-payment or delayed payment by non-U.S. customers; • Contractual obligations to non-U.S. customers that may include specific in-country purchases, investments, manufacturing agreements or financial or other support obligations, known as offset obligations, that may extend for years, require teaming with local companies and result in significant penalties if not satisfied; • Issues related to involving international dealers, distributors, sales representatives and consultants; • Difficulties of managing a geographically dispersed organization and culturally diverse workforces, including compliance with local laws and practices; • Fluctuations of currency, currency revaluations, difficulties with repatriating cash generated or held abroad in a tax-efficient manner and changes in tax laws; • Uncertainties as to local laws and enforcement of contract and intellectual property rights and occasional requirements for onerous contract terms; • Changes in government, economic and political policies, political or civil unrest, acts of terrorism, threats of international boycotts, U.S. anti-boycott legislation or sanctions against U.S. defense companies; and • Increased risk of an incident resulting in damage or destruction to our facilities or products or resulting in injury or loss of life to our employees, subcontractors or other third parties. _____________________________________________________________________ 9 Business and Operational Risks We depend on our subcontractors and suppliers, and failures in or disruptions to our supply chain could cause our products and or services to be produced or delivered in an untimely or unsatisfactory manner.
From time to time, as with any industry, our subcontractors and suppliers experience financial and operational difficulties outside of our direct control, which may impact their ability to deliver the materials, components, subsystems and services we need.
From time to time, our subcontractors and suppliers experience financial and operational difficulties outside of our direct control, which may impact their ability to deliver the materials, components, subsystems and services we need.
In addition, our business, financial condition, results of operations, cash flows and equity are subject to, and could be materially adversely affected by, various risks and uncertainties, including, without limitation, those set forth below, any one of which could cause our actual results to vary materially from recent results or our anticipated future results.
ITEM 1A. RISK FACTORS. Our business, financial condition, results of operations, cash flows and equity are subject to, and could be materially adversely affected by, various risks and uncertainties, including, without limitation, those set forth below, any one of which could cause our actual results to vary materially from recent results or our anticipated future results.
In addition, some of our contracts have provisions relating to cost controls and audit rights, and if we fail to meet the terms specified in those contracts, we may not realize their full benefits.
S ome of our contracts have provisions relating to cost controls and audit rights, and if we fail to meet the terms specified in those contracts, we may not realize their full benefits.
Government are outside of our control and have long-term consequences for our business. U.S. Government spending priorities and levels remain uncertain and difficult to predict and are _____________________________________________________________________ 7 affected by numerous factors, including the U.S. Government’s budget deficit and the national debt. A change in U.S.
Government are outside of our control and may have long-term consequences for our business. U.S. Government spending priorities and levels remain uncertain and difficult to predict, especially with a new administration, and are affected by numerous factors, including the U.S. Government’s budget deficit and the national debt. A change in U.S.
In addition, certain of our non-U.S. customers, including in the Middle East and other oil or natural gas-producing countries, could be adversely affected by weakness or volatility in oil or natural gas prices, or negative expectations about future prices or volatility or impacts of the war between Israel and Hamas, which could adversely affect demand for our products, systems, services or technologies.
In addition, certain of our non-U.S. customers, including in the Middle East and other oil or natural gas- producing countries, could be impacted by weakness or volatility in oil or natural gas prices, or negative expectations about future prices or volatility, which could adversely affect demand for our products, systems, services or technologies.
Our efforts to gain awards of contracts and ensure a competitive position in the market depends in part on our ability to ensure that our intellectual property is protected, that our intellectual property rights are not diluted or subject to misuse, and that we are able to license certain third-party intellectual property on reasonable terms.
Our competitive position in the market depends in part on our ability to ensure that our intellectual property is protected, that our intellectual property rights are not diluted or subject to misuse, and that we are able to license certain third-party intellectual property on reasonable terms.
In addition, the markets for our products and services or technologies may not develop as we currently anticipate, we may not be as successful in newly identified markets as we currently anticipate, and acquisitions, joint ventures or other teaming arrangements we may enter into to pursue developing new products and services or technologies may not be successful.
In addition, the markets for our products and services may not develop as we currently anticipate, we may not be as successful in newly identified markets as anticipated, and joint ventures, partnerships, strategic alliances or other teaming arrangements we may enter into to pursue developing new products and services may not be successful.
Furthermore, competitors may develop competing products and services or technologies that gain market acceptance in advance of our products and services or technologies, or competitors may develop new products and services or technologies that cause our existing products and services or technologies to become non-competitive or obsolete, which could adversely affect our results of operations.
Furthermore, competitors may develop competing products and services or incorporate new technologies into our existing products and services that either gain market acceptance in advance of our products and services or cause our existing products and services or _____________________________________________________________________ 11 technologies to become non-competitive or obsolete, which could adversely affect our results of operations and harm our business.
As an advanced technology-based solutions provider, and particularly as a government contractor with access to national security or other sensitive government information, we face a heightened risk of a security breach or disruption from threats to gain unauthorized access to our and our customers’ proprietary information on our IT networks and related systems, our classified networks, and to the IT networks and related systems that we operate and maintain for certain of our customers.
As a government contractor with access to national security or other sensitive government information, we face a heightened risk of a security breach or disruption from threats to gain unauthorized access to our and our customers’ proprietary information on our IT networks and related systems, our classified networks, and to the IT networks and related systems that we operate, maintain and secure for certain of our customers.
Any inability of the U.S. Government to complete its budget process for any GFY and resulting operation on funding levels equivalent to its prior fiscal year pursuant to a CR or shut down, also could have material adverse consequences on our current or future business. For more information see “Item 7.
Government to complete its budget process for any GFY and resulting operation on funding levels equivalent to its prior fiscal year pursuant to a Continuing Resolution (“ CR ”) or shut down, also could have material adverse consequences on our current or future business. For more information see “Item 7.
We must attract and retain key employees, and any failure to do so could seriously harm us. Our future success depends to a significant degree upon the continued contributions of our management and our ability to attract and retain highly-qualified management and technical personnel, including engineers and employees who have U.S.
We must attract and retain key employees, and any failure to do so could harm us. Our future success depends to a significant degree upon the continued contributions of our management and our ability to attract and retain highly-qualified management and technical personnel, including engineers and employees who have U.S. Government security clearances, particularly clearances of top secret and above.
Further, competitive bidding processes involve significant cost and managerial time to prepare bids and proposals for contracts that may not be awarded to us or may be split with competitors, and the risk that we may fail to accurately estimate the resources and costs required to fulfill any contract awarded to us.
Further, competitive bidding processes involve significant cost and managerial time to prepare bids _____________________________________________________________________ 6 and proposals for contracts and the risk that we may fail to accurately estimate the resources and costs required to fulfill any contract awarded to us.
Our pending patent and trademark registration applications may not be allowed, or competitors may challenge the validity or scope of our patents or trademark registrations. In addition, our patents may not provide us a significant competitive advantage. We may be required to spend significant resources to monitor and enforce our intellectual property rights.
Our pending patent and trademark registration applications may not be allowed, or competitors may challenge the validity or scope of our patents or trademark registrations. We may be required to spend significant resources to monitor and enforce our intellectual property rights.
Because a significant portion of our revenue is dependent on our performance and payment under our U.S. Government contracts, the loss of one or more large contracts could have an adverse impact on our business, financial condition, results of operations, cash flows and equity. From time to time, we may begin performance of a U.S.
Government contracts, the loss of one or more large contracts could have an adverse impact on our business, financial condition, results of operations, cash flows and equity. From time to time, we may begin performance of a U.S.
The real estate assets acquired as part of our acquisition of AJRD in particular are subject to various risks, including that our reserves for estimated future environmental obligations may prove to be insufficient, we may be unable to complete environmental remediation or, we may be unable to have state and federal environmental restrictions on lifted.
Our real estate assets in particular are subject to various risks, including that our reserves for estimated future environmental obligations may prove to be insufficient, we may be unable to complete environmental remediation or, we may be unable to have state and federal environmental restrictions lifted.
A security breach or other significant disruption involving these types of information and IT networks and related systems could: • Disrupt proper functioning of these networks and systems and, therefore, our operations and/or those of certain of our customers; • Result in unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours, our customers or our employees, including trade secrets, which could be used to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; • Compromise national security and other sensitive government functions; • Require significant management attention and resources to remedy damages that result; • Result in costs which exceed our insurance coverage and/or indemnification arrangements; • Subject us to claims for contract breach, damages, credits, penalties or termination; and • Damage our reputation with our customers and the general public. _____________________________________________________________________ 12 We must also rely on the safeguards put in place by customers, suppliers, vendors, subcontractors or other third parties to minimize the impact of cyber threats, other security threats or business disruptions.
A security breach or other significant disruption involving these types of information and IT networks and related systems could: • Disrupt proper functioning of these networks and systems and, therefore, our operations and/or those of certain of our customers; • Result in unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours, our customers or our employees, including trade secrets, which could be used to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; • Compromise national security and other sensitive government functions; • Require significant management attention and resources to remedy damages that result; • Result in costs which exceed our insurance coverage and/or indemnification arrangements; • Subject us to claims for contract breach, damages, credits, penalties or termination; and • Damage our reputation with our customers and the general public.
Macroeconomic, Industry and Governmental Risks We depend on winning business in competitive markets from U.S. Government customers for a significant portion of our revenue. We are highly dependent on revenue from U.S. Government customers, primarily defense-related programs with the DoD and a broad range of programs with the U.S. Intelligence Community and other U.S. Government departments and agencies.
Macroeconomic, Industry and Governmental Risks We depend on winning business in competitive markets from U.S. Government customers for a significant portion of our revenue. We are highly dependent on revenue from U.S. Government customers, primarily defense- related programs with the DoD and other government agencies . The market for sales to U.S. Government customers is highly competitive and the U.S.
Government contract or relationship as a result of any of these acts would have an adverse impact on our operations and could have an adverse effect on our standing and eligibility for future U.S.
Government contracting or subcontracting for a period of time. The termination of a U.S. Government contract or relationship as a result of any of these acts would have an adverse impact on our operations and could have an adverse effect on our standing and eligibility for future U.S. Government contracts.
With our acquisition of AJRD, there is risk of the release, unplanned ignition, explosion, or improper handling of dangerous materials used in our business, which could disrupt our operations and adversely affect our financial results.
Risk of the release, unplanned ignition, explosion, or improper handling of dangerous materials used in our business could disrupt our operations and adversely affect our financial results .
We derive a significant portion of our revenue from international operations and are subject to the risks of doing business internationally. We are dependent on sales to customers outside the U.S.
We derive a significant portion of our revenue from international operations and are subject to the risks of doing business internationally. We are dependent on sales to customers outside the U.S . We expect that international revenue will continue to account for a significant portion of our total revenue.
Although we maintain insurance for certain risks, including certain cybersecurity exposures, the amount of our insurance coverage may not be adequate to cover all claims or liabilities, and we may be forced to bear substantial costs from an accident or incident.
Although we maintain insurance for certain risks, including certain cybersecurity exposures, the amount of our insurance coverage may not be adequate to cover all claims or liabilities, and we may be forced to bear substantial costs from an accident or incident. It also is not possible for us to obtain insurance to protect against all operational risks and liabilities.
Government investigate whether we have been and are operating in accordance with these requirements. We may cooperate with the U.S. Government in those investigations. Under U.S. Government regulations, an indictment of L3Harris by a federal grand jury, or an administrative finding against us as to our present responsibility to be a U.S.
Foreign Corrupt Practices Act (“ FCPA ”) , and from time to time agencies of the U.S. Government investigate whether we have been and are operating in accordance with these requirements. Under U.S. Government regulations, an indictment of L3Harris by a federal grand jury, or an administrative finding against us as to our present responsibility to be a U.S.
In some cases, the resources of foreign governments may be behind such attacks due to the nature of our business and the industries in which we operate. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures.
In some cases, the resources of foreign governments may be behind such attacks due to the nature of our business and the industries in which we operate. Accordingly, we may be unable to anticipate these techniques or to implement adequate security controls or other preventative measures and future cyber security incidents may have a material negative impact on us.
Because many of these contracts involve new technologies and applications and can last for years, unforeseen events, such as technological difficulties, fluctuations in the price of materials, a significant increase in or a sustained period of increased inflation, problems with our suppliers, labor market conditions and cost overruns, can result in the contractual price becoming less favorable or even unprofitable to us over-time (which, especially in the case of sharp and significant sustained inflation, could happen quickly and have long lasting impacts), and increased interest rates resulting from inflationary pressures can also impact the fair value of these contracts.
Because many of these contracts involve new technologies and applications and can last for years, unforeseen events, such as technological difficulties, increases in the price of materials, a significant increase in or a sustained period of increased inflation, problems with our suppliers, labor market conditions and cost overruns, can result in less favorable economics or even l osses over-time (which, especially in the case of sharp and significant sustained inflation, could happen quickly and have long lasting impacts).
In addition, if Congress does not enact a full-year GFY2024 appropriations bill, the U.S. Government may not be able to fulfill its funding obligations, and there could be significant disruption to all discretionary programs and corresponding impacts on the entire defense industry, which could adversely affect our business, results of operations, financial condition and cash flow.
Government may not be able to fulfill its funding obligations, and there could be significant disruption to all discretionary programs and corresponding impacts on the entire defense industry, which could adversely affect our business, results of operations, financial condition and cash flow. Any inability of the U.S.
We depend significantly on U.S. Government contracts, which generally are subject to immediate termination and heavily regulated and audited. The application or impact of regulations, unilateral government action, termination or negative audit findings for one or more of these contracts could have an adverse impact on our business, financial condition, results of operations, cash flows and equity. U.S.
The application or impact of regulations, unilateral government action, termination or negative audit findings for one or more of our contracts could have an adverse impact on our business, financial condition, results of operations, cash flows and equity. U.S. Government contracts are generally subject to U.S. Government oversight audits, which could result in adjustments to our contract costs.
Cost overruns may adversely affect our financial performance and our ability to win new contracts. Contracts for development programs include complex design and technical requirements and are generally contracted on a cost-reimbursable basis, however, some of our existing development programs are contracted on a fixed-price basis or include cost-type contracting for the development phase with fixed-price production options.
Contracts for development programs include complex design and technical requirements and are generally contracted on a cost-reimbursable basis, however, some existing development programs are contracted on a fixed- price basis or include cost-type contracting for the development phase with fixed-price production options.
Our efforts and measures have not been entirely effective in the case of every cyber security incident, but no incident has had a material negative impact on us to date.
Cybersecurity" in this Report for further discussion of our risk management and strategy related to cybersecurity threats. _____________________________________________________________________ 10 Our efforts and measures have not been entirely effective in the case of every cyber security incident, but no incident has had a material negative impact on us to date.
While we have robust processes in place to ensure we have the right talent in place to meet our commitments, to the extent that the demand for qualified personnel exceeds supply in certain areas, we could also experience higher labor, recruiting or training costs in order to attract and retain such employees.
To the extent that the demand for qualified personnel exceeds supply in certain areas, we could experience higher labor, recruiting or training costs in order to attract and retain such employees.
There are many reasons estimated contract costs can increase, including: (i) supply chain disruptions, inflation and labor issues; (ii) design or other development challenges; and (iii) program execution challenges (including from technical or quality issues and other performance concerns).
Our profitability can be adversely affected when estimated contract costs increase from our initial estimates, especially without comparable increases in revenue. There are many reasons estimated contract costs can increase, including: (i) supply chain disruptions, inflation and labor issues; (ii) design or other development challenges; and (iii) program execution challenges (including from technical or quality issues and other performance concerns).
A significant judgment or arbitration award against us arising out of any of our current or future litigation or arbitration matters could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity.
A significant judgment or arbitration award against us arising out of any of our current or future litigation or arbitration matters could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity. We may become subject to intellectual property infringement claims, and third parties may infringe upon our intellectual property rights.
We are subject to government investigations, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity. U.S. Government contractors are subject to extensive legal and regulatory requirements, including ITAR and U.S. Foreign Corrupt Practices Act (“FCPA”), and from time to time agencies of the U.S.
We are subject to government investigations, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity. U.S. Government contractors are subject to extensive legal and regulatory requirements, including International Traffic in Arms Regulations (“ ITAR ”) and U.S.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - U.S. and International Budget Environment” of this Report. Our results of operations and cash flows are substantially affected by our mix of fixed-price, cost-plus and time-and-material type contracts.
Management’s Discussion and Analysis of Financial Condition and Results of Operations - U.S. and International Budget Environment” of this Report. Our results of operations and cash flows are substantially affected by our mix of fixed-price, cost-type and time-and-material type contracts. Fixed-price contracts, particularly for development programs, could subject us to losses from cost overruns or inflation .
For some contracts, we are a subcontractor and not the prime contractor, and in those arrangements, the U.S. Government could terminate the prime contractor for convenience without regard for our performance as a subcontractor. We may be unable to procure new contracts to offset revenue or backlog lost as a result of any termination of our U.S. Government contracts.
Government could terminate the prime contractor for convenience without regard for our performance as a subcontractor. We may be unable to secure new contracts to offset revenue or backlog lost as a result of any termination of our U.S. Government contracts. Because a significant portion of our revenue is dependent on our performance and payment under our U.S.
Failure to attract and retain such personnel would damage our future prospects and could adversely affect our ability to succeed in our human capital goals and priorities, as well as negatively impact our business and operating results.
Failure to attract and retain such personnel would damage our future prospects and could adversely affect our ability to succeed in our human capital goals and priorities, as well as negatively impact our business and operating results. We could be negatively impacted by a security breach of our Information Technology (“IT”) networks and related systems .
We face the risk of a security breach, whether through cyber-attack, cyber intrusion or insider threat via the Internet, malware, computer viruses, attachments to e-mails, persons inside our organization or with access to systems inside our organization, subcontractors or suppliers, threats to the physical security of our facilities and employees or other significant disruption of our IT networks and related systems or those of our suppliers or subcontractors.
We face the risk of a security breach, whether through cyber-attack on our IT infrastructure, insider threat, or threats to the physical security of our facilities and employees or other significant disruption of our IT networks and related systems or those of our suppliers or subcontractors.
The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, is persistent and substantial as the volume, intensity and sophistication of attempted attacks, intrusions and threats from around the world remain elevated and unlikely to diminish.
The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, is persistent. The volume, intensity and sophistication of threats from around the world remains elevated. These risks may increase as AI capabilities improve.
Any significant increase in our future effective tax rates could adversely impact our results of operations for future periods. We may not be successful in obtaining the necessary export licenses to conduct certain operations abroad, and Congress may prevent proposed sales to certain foreign governments. We must first obtain export and other licenses and authorizations from various U.S.
Any significant increase in our future effective tax rates, or timing of deductions, credits, or payments, could adversely impact our results of operations and cash flow for future periods. We may not be successful in obtaining the necessary export licenses and Congress may prevent proposed sales to certain foreign governments.
Government contracts also generally are subject to U.S. Government oversight audits, which could result in adjustments to our contract costs. Any costs found to be improperly allocated to a specific contract will not be reimbursed, and such costs already reimbursed must be refunded. We have recorded contract revenue based on costs we expect to realize upon final audit.
Any costs found to be improperly allocated to a specific contract will not be reimbursed, and such costs already reimbursed must be refunded. We have recorded contract revenue based on costs we expect to realize upon final audit.
If our initial estimates are incorrect, we can lose money (or make more or less money than estimated) on these contracts. Fixed-price U.S. Government contracts can expose us to potentially large losses because the U.S.
If our initial estimates are incorrect, we can lose money (or make more or less money than estimated) on these contracts. Fixed-price U.S. Government contracts can expose us to potentially large losses because the U.S. Government can hold us responsible for completing a project or, in limited circumstances, paying the entire cost of its replacement by another provider.
During that time, Congress may take action to block the proposed _____________________________________________________________________ 15 sale. We may be unsuccessful in obtaining necessary licenses or authorizations or Congress may prevent or delay certain sales. Our ability to obtain necessary licenses and authorizations timely or at all is subject to risks and uncertainties, including changing U.S.
We may be unsuccessful in obtaining necessary licenses or authorizations or Congress may prevent or delay certain sales. Our ability to obtain necessary licenses and authorizations timely or at all is subject to risks and uncertainties, including changing U.S. Government policies or laws or delays in Congressional action due to geopolitical and other factors.
Certain heightened regulatory requirements that may apply to these sources can further limit the subcontractors and suppliers we may utilize. Legislation, regulatory changes or other governmental actions, including product certification or stewardship requirements, sourcing restrictions, tariffs, embargos, product authenticity, cybersecurity regulation, and environmental standards (e.g., greenhouse gas emission limitations) may all impact our subcontractors and suppliers.
Legislation, regulatory changes or other governmental actions, including product certification or stewardship requirements, sourcing restrictions, tariffs, embargoes , product authenticity, cybersecurity regulation, and environmental standards (e.g., greenhouse gas emission limitations) may all impact our subcontractors and suppliers, and there continues to be uncertainty about actions that may be implemented by the new Administration.
We and our subcontractors and suppliers have also experienced difficulties in the timely procurement of necessary materials and components, including microelectronics. Current geopolitical conditions, including sanctions and other trade restrictive activities and strained inter-country relations, have contributed to issues procuring necessary materials and components.
Current geopolitical conditions, including sanctions and other trade restrictive activities and strained inter-country relations, have contributed to issues procuring necessary materials and components.
We regularly review safety related to these products with our Board of Directors (“Board”). The failure to properly store and ultimately dispose of such materials could create significant liability and/or result in regulatory sanctions.
The failure to properly store and ultimately dispose of such materials could create significant liability and/or result in regulatory sanctions.
It also is not possible for us to obtain _____________________________________________________________________ 17 insurance to protect against all operational risks and liabilities. Substantial claims resulting from an incident in excess of U.S. Government indemnity and our insurance coverage would harm our financial condition, results of operations, cash flows and equity.
Substantial claims resulting from an incident in excess of U.S. Government indemnity and our insurance coverage would harm our financial condition, results of operations, cash flows and equity.
Government spending priorities or an increase in non-procurement spending at the expense of our programs, or a reduction in total U.S. Government spending on an absolute or inflation-adjusted basis, could have material adverse consequences on our current or future business. For GFY 2024, the federal government is currently being funded under a Continuing Resolution (“CR”).
Government spending priorities or an increase in non-procurement spending at the expense of our programs, or a reduction in total U.S. Government spending on an absolute or inflation-adjusted basis, could have material adverse consequences on our current or future business. If Congre ss does not enact a full-year GFY 2025 appropriations bill, the U.S.
Unforeseen environmental issues, including regulations related to GHG emissions or change in customer sentiment related to environmental sustainability, could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity.
Environmental issues could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity.
Additionally, bid protests from unsuccessful bidders can extend the time until work on a contract can begin and may result in significant expense or delay, contract modification or contract rescission as a result of our competitors protesting or challenging contracts awarded to us. A reduction in U.S. Government funding or a change in U.S.
We may choose not to bid in certain competitive bidding processes, which would result in the potential loss of opportunities. Additionally, bid protests from unsuccessful bidders can result in significant expense or delay, contract modification or contract rescission as a result of our competitors protesting or challenging contracts awarded to us. A reduction in U.S.
Environmental laws and regulations may institute substantial fines and criminal sanctions as well as facility shutdowns to address violations and may require the installation of costly pollution control equipment or operational changes to limit emissions or discharges. Our suppliers may face similar business interruptions and incur additional costs that may increase the price of materials needed for manufacturing.
Compliance with current and future environmental laws and regulations may require significant operating and capital costs. Environmental laws and regulations may institute substantial fines and criminal sanctions as well as facility shutdowns to address violations and may require the installation of costly pollution control equipment or operational changes to limit emissions or discharges.
We also incur, and expect to continue to incur, costs to comply with current environmental laws and regulations related to remediation of conditions in the environment. In addition, if violations of environmental laws result in us, or in one or more of our operations, being identified as an excluded party in the U.S.
In addition, if violations of environmental laws result in us, or in one or more of our operations, being identified as an excluded party in the U.S.
Government agencies before we are permitted to sell certain products and technologies outside of the U.S. For example, the U.S. Department of State must notify Congress at least 15 to 60 days, depending on the size and location of the proposed sale, prior to authorizing certain sales of defense equipment and services to foreign governments.
Department of State must notify Congress at least 15 to 60 days, depending on the size and location of the proposed sale, prior to authorizing certain sales of defense equipment and services to foreign governments. During that time, Congress may take action to block the proposed sale.
Our ability to manufacture and deliver products and services to our customers requires our U.S. and non-U.S. subcontractors and suppliers to provide a variety of materials, components, subsystems and services. Some of our programs are very long duration with complex re-qualification and we must ensure long term supply capacity of subcontractors and suppliers.
Our ability to manufacture and deliver products and services to our customers requires our U.S. and non-U.S. subcontractors and suppliers to provide a variety of materials, components, subsystems and services.
Accounting for our contracts requires judgment relative to assessing risks, including estimating contract revenue and costs and assumptions for schedule and technical issues. Due to the size and nature of many of our contracts, the estimation of total revenue and cost at completion is complicated and subject to many variables.
Due to the size and nature of many of our contracts, the estimation of total revenue and cost at completion is complicated and subject to many variables.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe could be negatively impacted by a security breach, through cyber-attack, cyber intrusion, insider threats, supply chain incidents, or otherwise, or other significant disruption of our IT networks and related systems or of those we operate for certain of our customers. See “Item 1A - Risk Factors” in this Report for further discussion of specific risks related to cybersecurity threats.
Biggest changeWhile we have implemented robust practices to mitigate cybersecurity risks, and prior cybersecurity threats have not materially affected our business strategy, results of operations or financial condition, we could be negatively impacted by a cybersecurity breach, through cyber-attack, cyber intrusion, insider threats, supply chain incidents, or otherwise, or other significant disruption of our IT networks and related systems or of those we operate for certain of our customers.
Risks related to cybersecurity threats are reflected in an enterprise risk “heat map,” along with other material risks identified through the ERM process, and any mitigation plans developed to manage such risks are reported to our Board.
Risks related to cybersecurity threats are reflected in an enterprise risk “heat map,” along with other material risks identified through the ERM process, and any mitigation plans developed to manage such risks are reported to our Board of Directors (“ Board ”).
Activities and cybersecurity incidents are reported to our CIO, who briefs senior management, including our CEO, as well the Innovation and Cyber Committee of our Board (the “Innovation and Cyber Committee”) and the Audit Committee of our Board (the “Audit Committee”), as appropriate.
Activities and cybersecurity incidents are reported to our CIO, who briefs senior management, including our CEO, as well as the Innovation and Cyber Committee and the Audit Committee of our Board (respectively, the “Innovation and Cyber Committee ” and the “ Audit Committee ”), as appropriate.
The CIO also oversees the internal cybersecurity organization of more than 100 full-time employees headed by our Chief Information Security Officer (our “Cybersecurity Team”).
The CIO oversees the internal cybersecurity organization of more than 100 full-time employees headed by our Chief Information Security Officer (our “ Cybersecurity Team ”).
Our Cybersecurity Team regularly tests employees throughout the year to assess the effectiveness of the cybersecurity training. We also periodically conduct penetration testing of our network, hold tabletop exercises of cyber incidents, and undertake cybersecurity assessments led by Internal Audit to improve our risk mitigation and assist in the determination of a potential material impact caused by a cybersecurity incident.
We also periodically conduct penetration testing of our network, hold tabletop exercises of cyber incidents, and undertake cybersecurity assessments led by Internal Audit to improve our risk mitigation and assist in the determination of a potential material impact caused by a cybersecurity incident.
Our Chief Information Officer (“CIO”), has extensive experience leading information technology for global organizations across aerospace, defense and industrials, works directly with our CEO and other members of senior management to assess cybersecurity threats as part of the ERM process.
Our Information Security organization, is led by our Chief Information Officer (“ CIO ”), who has extensive experience leading information technology for global _____________________________________________________________________ 16 organizations across aerospace, defense and industrials, and works directly with our Chief Executive Officer (“ CEO ”) and other members of senior management to assess cybersecurity threats as part of the ERM process.
Governance The Audit Committee provides regular oversight and review of our ERM process and other guidelines and policies governing the processes by which our CEO and senior management assess our exposure to risk, including risk from cybersecurity threats.
See “Item 1A. Risk Factors” in this Report for further discussion of specific risks related to cybersecurity threats. _____________________________________________________________________ 17 Governance The Audit Committee provides regular oversight and review of our ERM process and other guidelines and policies governing the processes by which our CEO and senior management assess our exposure to risk, including risk from cybersecurity threats.
To mitigate cybersecurity risk introduced from our supply chain, we have a dedicated Cybersecurity - Supply Chain Risk Management team. This team assesses new suppliers against best cybersecurity practices, ensures cybersecurity regulations are contractually obligated and coordinates mitigation actions across the company if a supplier is impacted by a cybersecurity incident.
This team assesses new suppliers against best cybersecurity practices, ensures cybersecurity regulations are contractually flowed down and coordinates mitigation actions across the company if a supplier is impacted by a cybersecurity incident.
They utilize industry monitoring services to identify potential supply chain incidents and work closely with our Cybersecurity team to understand the latest threats affecting our industry. _____________________________________________________________________ 19 Additionally, as part of our processes to manage risks related to a breach in our information systems, management requires employees to take annual cybersecurity training and shares regular awareness updates regarding cybersecurity threats.
Additionally, as part of our processes to manage risks related to a breach in our information systems, management requires employees to take annual cybersecurity training and shares regular awareness updates regarding cybersecurity threats. Our Cybersecurity Team regularly tests employees throughout the year to assess the effectiveness of the cybersecurity training.
ITEM 1C. CYBERSECURITY. Risk Management and Strategy We assess and identify material risks from cybersecurity threats primarily through the work of our Information Security organization as part of our enterprise risk management (“ERM”) process. The ERM process, administered by management with input from each business segment and function, continually monitors material risks facing L3Harris, including cybersecurity threats.
The ERM process, administered by management with input from each business segment and function, continuously monitors material risks facing L3Harris, including cybersecurity threats.
These organizations share real-time cybersecurity threat information and best practices in protecting, detecting and recovering from cybersecurity threats. We also have a counterintelligence and insider threat program to detect potential external and internal threats, conducted by purposeful or unwitting actors.
These organizations share real-time cybersecurity threat information and best practices in protecting, detecting and recovering from cybersecurity threats. We are committed to safeguarding against both internal and external security threats through a robust counterintelligence and insider threat program that utilizes cutting-edge data analytics and machine learning.
As a government contractor, we must comply with extensive cybersecurity regulations, including the Defense Federal Acquisition Regulation Supplement (“DFARS”) related to adequately safeguarding controlled unclassified information (“CUI”) and reporting cybersecurity incidents to the DoD. The policies and implemented controls reflect our adherence to these requirements and have been assessed by external organizations, including industry partners and the federal government.
As a defense contractor, we are subject to the Department of Defense's cybersecurity regulations, including the Defense Federal Acquisition Regulation Supplement, ensuring the protection of Controlled Unclassified Information and prompt reporting of cybersecurity incidents.
Added
ITEM 1C. CYBERSECURITY. Risk Management and Strategy We assess and identify material risks from cybersecurity threats primarily through the work of our Information Security organization, which is fully integrated in our enterprise risk management (“ ERM ”) process in close partnership with other functions such as Engineering, Industrial Security, Internal Audit , and Legal.
Added
Our practices have been rigorously assessed by the Defense Contract Management Agency to meet the Level 2 Cybersecurity Maturity Model Certification requirements, reflecting our dedication to maintaining stringent security controls. To mitigate cybersecurity risks introduced from our supply chain, we have a dedicated Cybersecurity - Supply Chain Risk Management team.
Added
The Supply Chain Risk Management team utilizes industry monitoring services to identify potential supply chain incidents and works closely with our Cybersecurity Team to understand the latest threats affecting our industry.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeCS — Salt Lake City, Utah; Rochester, New York; Londonderry, New Hampshire; Lynchburg, Virginia; Tempe, Arizona; Carlsbad, California; Farnborough, United Kingdom; Brisbane, Australia; Sunrise, Florida; and Abu Dhabi, United Arab Emirates. AR — Camden, Arkansas; Chatsworth, California; Huntsville, Alabama; West Palm Beach, Florida; Orange, Virginia; Redmond, Washington; Orlando, Florida; Hancock County, Mississippi; and Jonesborough, Tennessee.
Biggest changeCS — Rochester, New York; Salt Lake City, Utah; Londonderry, New Hampshire; Lynchburg, Virginia; Tempe, Arizona; Carlsbad, California; Farnborough, United Kingdom; Brisbane, Australia; Melbourne, Sunrise, Florida; and A bu Dhabi, United Arab Emirates . AR — Camden, Arkansas; Chatsworth, California; Huntsville, Alabama; West Palm Beach, Florida; Orange, Virginia; Redmond, Washington; Orlando, Florida; and Hancock County, Mississippi.
Corporate — Melbourne, Florida; and Washington, D.C. Our facilities are suitable and adequate for their intended purposes, are well-maintained, are generally in regular use and have capacities adequate for current and projected needs. We will, from time to time, acquire additional facilities, expand existing facilities and dispose of existing facilities or parts thereof, as management deems necessary.
Corporate — Melbourne, Florida; and Arlington, VA. Our facilities are suitable and adequate for their intended purposes, are well-maintained, are generally in regular use and have capacities adequate for current and projected needs. We will, from time to time, acquire additional facilities, expand existing facilities and dispose of existing facilities or parts thereof, as management deems necessary.
As of December 29, 2023, we had major operations at the following locations: SAS — Palm Bay, Melbourne and Malabar, Florida; Rochester and Amityville, New York; Clifton, New Jersey; Van Nuys, San Diego, San Leandro and Menlo Park, California; Colorado Springs, Colorado; Herndon, Virginia; Fort Wayne, Indiana; Wilmington, Massachusetts; and Alpharetta, Georgia.
As of January 3, 2025 , we had major operations at the following locations: SAS — Palm Bay, Melbourne and Malabar, Florida; Rochester and Amityville, New York; Clifton, New Jersey; Van Nuys and San Diego California; Colorado Springs, Colorado; Fort Wayne, Indiana; Herndon, Virginia; Wilmington, Massachusetts; and Alpharetta, Georgia.
ITEM 2. PROPERTIES. As of December 29, 2023, we operated approximately 300 locations in the U.S., Canada, EMEA, APAC and South America, consisting of approximately 27 million square feet of manufacturing, administrative, R&D, warehousing, engineering and office space, of which we owned approximately 12 million square feet and leased approximately 15 million square feet.
ITEM 2. PROPERTIES. As of January 3, 2025 , we operated approximately 250 locations in the U.S., Canada, EMEA, and APAC, consisting of approximatel y 27 million square feet of manufacturing, administrative, R&D, warehousing, engineering and office space, of which we owned approximately 12 million square feet and leased approximately 15 million square feet.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES. Not applicable. _____________________________________________________________________ 20 INFORMATION ABOUT OUR EXECUTIVE OFFICERS. The name, age, position held with us and principal occupation and employment during at least the past five years for each of our executive officers as of February 16, 2024 were as follows: Name and Age Position Currently Held and Past Business Experience Kenneth L.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES. Not applicable. _____________________________________________________________________ 18 INFORMATION ABOUT OUR EXECUTIVE OFFICERS. Our executive officers as of February 14, 2025 , are listed below, along with their ages on that date, position held with us and principal occupation and business experience during at least the past five years. Name Age Position Held Since Recent Business Experience Kenneth L.
Kubasik, 62 Chair and CEO since June 29, 2022. Vice Chair and CEO from June 29, 2021. Vice Chair, President and Chief Operating Officer from June 29, 2019 to June 29, 2021. Served with L3 Technologies, Inc. (“L3”), as Chairman, CEO and President from May 2018 to June 2019; as CEO and President from January 2018 to May 2018.
Kubasik 63 Chair and CEO June 2022 Vice Chair and CEO (2021); Vice Chair, President and Chief Operating Officer (2019-2021); Chairman, CEO and President, L3 Technologies, Inc. (“L3”) (2018-2019) Samir B.
Rambeau worked at Lockheed Martin for 26 years, notably serving as Vice President and General Manager, Integrated Warfare Systems and Sensors of the Rotary and Mission Systems business from 2020 to 2022 and Vice President and General Manager, C6ISR, Rotary and Mission Systems from 2016 to 2020. Sean J. Stackley, 66 Senior Vice President, Strategy & Growth since October 2022.
Rambeau 52 President, IMS October 2022 VP and General Manager, Integrated Warfare Systems and Sensors of the Rotary and Mission Systems business, Lockheed Martin (2020-2022); VP and General Manager, C6ISR, Rotary and Mission Systems, Lockheed Martin (2016-2020) Edward J.
President, Electronic Systems from July 2015 to June 2019. Vice President and General Manager, Defense Programs, Government Communications Systems from June 2013 to July 2015. There is no family relationship between any of our executive officers or directors. All of our executive officers are elected annually and serve at the pleasure of our Board. _____________________________________________________________________ 21 PART II
All of our executive officers are elected annually and serve at the pleasure of our Board. PART II
Removed
Bedingfield, 51 Chief Financial Officer (“CFO”) since December 11, 2023. Before joining L3Harris, Mr. Bedingfield worked at Epirus, Inc. (“Epirus”) as CEO from December 2022 to December 2023, President and Chief Operating Officer from August 2022 to December 2022, and as CFO from June 2020 to December 2022. Prior to Epirus, Mr.
Added
Bedingfield 52 Chief Financial Officer (“ CFO ”) and President, AR (1) December 2023 CEO, Epirus, Inc. (“Epirus”) (2022-2023); President and Chief Operating Officer, Epirus (2022); CFO, Epirus (2020-2022); CFO, Northrop Grumman Corporation (“Northrop Grumman”) (2015-2020), Aerospace Sector CFO, Northrop Grumman (2013-2015) John P.
Removed
Bedingfield worked at Northrop Grumman Corporation (“Northrop Grumman”) most recently as CFO from 2015 to 2020, Aerospace Sector CFO from 2013 to 2015, and Corporate Controller and Chief Accounting Officer from 2011 to 2013. Prior to Northrop Grumman, Mr. Bedingfield spent 17 years at KPMG, serving as the Partner of the Aerospace & Defense Audit Practice. Christopher E.
Added
Cantillon 58 Vice President (“ VP ”), Principal Accounting Officer May 2024 VP, Assistant Controller (2023-2024); VP of Finance Manufacturing Operations, Pratt & Whitney (2023); VP and Controller, Pratt & Whitney (2020-2023) Christoph T. Feddersen 53 VP, General Counsel & Secretary August 2024 VP, General Counsel of L3Harris SAS (2024); VP and General Counsel, Collins Aerospace Systems (2018-2023) Christopher E.
Removed
Samir B. Mehta, 51 President, CS since January 2023. Before joining L3Harris, Mr. Mehta worked at Collins Aerospace, a subsidiary of RTX, as President of Advanced Structures from 2018 to 2022 and President, Aftermarket from 2017 to 2018. Prior to RTX, Mr. Mehta spent over 17 years with Sikorsky Aircraft, notably serving as President, Defense Systems and Services. Scott T.
Added
Mehta 52 President, CS January 2023 President of Advanced Structures, Collins Aerospace (2018-2022); President, Aftermarket (2017-2018) Melanie Rakita 47 VP and Chief Human Resources Officer April 2023 VP, Human Resources for L3Harris IMS (2023), SAS (2019-2023), and Legacy Harris Corporation Electronic Systems (2018-2019) Jonathan P.
Removed
Mikuen, 62 Senior Vice President, General Counsel and Secretary since February 2013. General Counsel since 2010 and Secretary since 2004. Mr. Mikuen joined L3Harris as finance counsel in 1996. Corliss J. Montesi, 59 Vice President and Principal Accounting Officer since August 2021. Vice President, Internal Audit from June 2020 to August 2021. Before joining L3Harris, Ms.
Added
Zoiss 60 President, SAS June 2019 President, Legacy Harris Corporation Electronic Systems (2015-2019) _______________ (1) Following the retirement of Ross Niebergall on February 3, 2025, Kenneth Bedingfield assumed the additional role of President, AR. There is no family relationship between any of our executive officers or directors.
Removed
Montesi worked at Stanley Black and Decker as Vice President, Functional Transformation – Shared Services from 2018 to 2019; and as Vice President, Corporate Controller from 2014 to 2018. Ross S. Niebergall, 60 President, AR since July 2023. Vice President, AR Integration from March 2023 to July 2023. Vice President and Chief Technology Officer from July 2017 to March 2023.
Removed
Before joining L3Harris, Mr. Niebergall worked at RTX, for over 10 years, notably serving as the Vice President and Deputy for Development Programs, Engineering and Technology from 2016 to 2017 and CEO of Thales Raytheon Systems from 2014 to 2016. Melanie Rakita, 46 Vice President and Chief Human Resources Officer since April 2023.
Removed
Vice President, Human Resources for IMS from February 2023 to March 2023, for SAS from July 2019 to February 2023, and for Electronic Systems from February 2018 to June 2019. Vice President of Talent and Inclusion from February 2017 to February 2018. Vice President, Critical Networks from November 2015 to February 2017. Before joining L3Harris, Ms.
Removed
Rakita worked for United Technologies Corporation from 2008 to 2015. Jonathan P. Rambeau, 51 President, IMS since October 2022. Before joining L3Harris, Mr.
Removed
President, IMS from June 2019 to October 2022. Served with L3 as Senior Vice President and President of Communications & Networked Systems Segment from September 2018 to June 2019; and as Corporate Vice President, Strategic Advance Programs and Technologies from January 2018 to September 2018. Before joining L3 in January 2018, (Hon.) Mr.
Removed
Stackley spent four decades in public service, including a 27-year career with the U.S. Navy, where he most recently was Acting Secretary of the Navy from January 2017 to July 2017 and Secretary of the Navy for Research, Development and Acquisition from 2008 to 2017. Edward J. Zoiss, 59 President, SAS since June 2019.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod* Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (1) Maximum approximate dollar value of shares that may yet be purchased under the plans or programs (1) ($ in millions) Month No. 1 (September 30, 2023 - October 27, 2023) Repurchase program (1) — $ — — $3,935 Employee transactions (2) 20,761 $ 171.09 — — Month No. 2 (October 28, 2023 - November 24, 2023) Repurchase program (1) — $ — — $3,935 Employee transactions (2) 26,591 $ 185.30 — — Month No. 3 (November 25, 2023 - December 29, 2023) Repurchase program (1) — $ — — $3,935 Employee transactions (2) 9,314 $ 200.54 — — Total 56,666 — $3,935 _______________ * Periods represent our fiscal months.
Biggest changeRecent Sales of Unregistered Securities During fiscal 2024 , we did not issue or sell any unregistered securities. _____________________________________________________________________ 20 Issuer Purchases of Equity Securities The following table sets forth information with respect to repurchases by us of our common stock during the fiscal quarter ended January 3, 2025 : Period* Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (1) Maximum approximate dollar value of shares that may yet be purchased under the plans or programs (1) ($ in millions) Month No. 1 (September 28, 2024 - November 1, 2024) Repurchase program (1) — $ — — $3,422 Employee transactions (2) 2,042 $ 243.33 — — Month No. 2 (November 2, 2024 - November 29, 2024) Repurchase program (1) 60,000 $ 227.72 60,000 $3,407 Employee transactions (2) 5,294 $ 245.69 — — Month No. 3 (November 30, 2024 - January 3, 2025) Repurchase program (1) 115,000 $ 225.10 115,000 $3,381 Employee transactions (2) 1,412 $ 239.47 — — Total 183,748 175,000 $3,381 _______________ * Periods represent our fiscal months.
Our equity incentive plans provide that the value of shares delivered to us to pay the exercise price of options or to cover tax withholding obligations shall be the closing price of our common stock on the date the relevant transaction occurs. ITEM 6. [RESERVED.]
Our equity incentive plans provide that the value of shares delivered to us to pay the exercise price of stock options or to cover tax withholding obligations shall be the closing price of our common stock on the date the relevant transaction occurs. ITEM 6. [RESERVED.]
Quarterly cash dividends are typically paid in March, June, September and December. We currently expect to continue paying cash dividends in the near future, but we can give no assurances concerning payment of future dividends or future dividend increases.
We currently expect to continue paying cash dividends in the near future, but we can give no assurances concerning payment of future dividends or future dividend increases.
Market Information Our common stock, par value $1.00 per share, is listed and traded on the New York Stock Exchange (“NYSE”), under the ticker symbol “LHX.” According to the records of our transfer agent, as of February 9, 2024, there were 9,667 holders of record of our common stock.
Market Information Our common stock, par value $1.00 per share, is listed and traded on the New York Stock Exchange (“ NYSE ”), under the ticker symbol “LHX.” According to the records of our transfer agent, as of February 7, 2025 , there were 9,165 holders of record of our common stock. _____________________________________________________________________ 19 Dividends During fiscal 2024 , 2023 and 2022 , w e paid quarterly per share cash dividends on our common stock of $1.16 , $1.14 and $1.12 , respectively.
(2) Represents a combination of (a) shares of our common stock delivered to us in satisfaction of the tax withholding obligation of holders of performance units or restricted units that vested during the quarter and (b) performance units or restricted units returned to us upon retirement or employment termination of employees.
(2) Represents shares of our common stock delivered to us in satisfaction of the tax withholding obligation of holders of restricted stock units (“ RSUs ”) and performance share units (“ PSUs ”) that vested during the quarter.
Issuer Purchases of Equity Securities On January 28, 2021, we announced that our Board approved a $6.0 billion share repurchase authorization under our repurchase program. On October 21, 2022, we announced that our Board approved an additional $3.0 billion share repurchase authorization that was in addition to the remaining unused authorization of 1.5 billion at that time.
(1) On January 28, 2021 and October 21, 2022 , we announced that our Board approved share repurchase authorizations under our repurchase program of $6.0 billion and $3.0 billion , respectively.
L3Harris Stock Performance Graph The following performance graph is not deemed to be filed with the SEC or subject to the liabilities of Section 18 of the Exchange Act, and should not be deemed to be incorporated by reference into any other previous or future filings by us under the Securities Act or the Exchange Act.
Stock Performance Graph The following graph provides a five year comparison of cumulative total shareholder return (“ TSR ”), assuming reinvestment of all dividends and an initial investment of $100 at the close of business on January 3, 2020 , in L3Harris common stock, the Standard & Poor’s 500 Composite Stock Index (“ S&P 500 ”) and the Standard & Poor’s 500 Aerospace & Defense Index (“ S&P 500 Aerospace & Defense ”): FIVE YEAR COMPARISON OF CUMULATIVE TSR (1) _______________ (1) This performance graph is not deemed to be filed with the SEC or subject to the liabilities of Section 18 of the Exchange Act, and should not be deemed to be incorporated by reference into any other previous or future filings by us under the Securities Act or the Exchange Act.
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Dividends We paid per share cash dividends on our common stock of $1.14 each quarterly period of fiscal 2023, $1.12 each quarterly period of fiscal 2022 and $1.02 each quarterly period of fiscal 2021. Our annualized per share cash dividend rate was $4.56 in fiscal 2023, $4.48 in fiscal 2022 and $4.08 in fiscal 2021.
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The performance graph and table below compare the fiscal year in the period ended June 28, 2019, the fiscal transition period for the two quarters ended January 3, 2020, fiscal 2020, fiscal 2021, fiscal 2022 and fiscal 2023 cumulative total shareholder return (“TSR”) of our common stock (the common stock of Harris Corporation prior to the L3Harris Merger on June 29, 2019, and the common stock of L3Harris Technologies, Inc. after the L3Harris Merger) with the comparable cumulative total returns of the Standard & Poor’s 500 Composite Stock Index (“S&P 500”) and the Standard & Poor’s 500 Aerospace & Defense Index (“S&P 500 Aerospace & Defense”).
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The figures in the performance graph below assume an initial investment of $100 at the close of business on June 29, 2018 in L3Harris common stock, the S&P 500 and the S&P 500 Aerospace & Defense and the reinvestment of all dividends. _____________________________________________________________________ 22 COMPARISON OF THE FISCAL YEAR ENDED JUNE 28, 2019 (PRIOR TO THE L3HARRIS MERGER), THE FISCAL TRANSITION PERIOD FOR THE TWO QUARTERS ENDED JANUARY 3, 2020, FISCAL 2020, FISCAL 2021, FISCAL 2022 AND FISCAL 2023 CUMULATIVE TOTAL RETURN AMONG L3HARRIS, S&P 500 AND S&P 500 AEROSPACE & DEFENSE Recent Sales of Unregistered Securities During fiscal 2023, we did not issue or sell any unregistered securities.
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During fiscal 2023, we repurchased 2.5 million shares of our common stock under our share repurchase program for $0.5 billion at an average share price of $204.38, excluding commissions of $0.02 per share.
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During fiscal 2022, we repurchased 4.7 million shares of our common stock under our share repurchase program for $1.1 billion at an average share price of $231.44, excluding commissions of $0.02 per share. As of December 29, 2023, the remaining unused authorization under our repurchase programs was $3.9 billion.
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Employee transactions are represented by a combination of (a) shares of our common stock delivered to us in satisfaction of the tax withholding obligation of holders of performance units, restricted units or restricted shares that vested during the quarter and (b) performance units, restricted units or restricted shares returned to us upon retirement or employment termination of employees.
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Our equity incentive plans provide that the value of shares delivered to us to pay the exercise price of options or to cover tax withholding obligations shall be the closing price of our common stock on the date the relevant transaction occurs. _____________________________________________________________________ 23 The following table sets forth information with respect to repurchases by us of our common stock during the fiscal quarter ended December 29, 2023.
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(1) On October 21, 2022, we announced that our Board approved a $3 billion share repurchase authorization under our share repurchase program that was in addition to the remaining unused authorization of 1.5 billion at that time.
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Our repurchase program does not have an expiration date and authorizes us to repurchase shares of our common stock through open market purchases, private transactions, transactions structured through investment banking institutions or any combination thereof. As of December 29, 2023, the remaining unused authorization under our repurchase programs was $3.9 billion (as reflected in the table above).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeObligation assumptions as of: December 29, 2023 December 30, 2022 Discount rate 4.91% 5.18% Rate of future compensation increase 3.01% 3.01% Cash balance interest crediting rate 4.50% 4.00% Cost assumptions for fiscal periods ended: December 29, 2023 December 30, 2022 Discount rate to determine service cost 5.18% 2.69% Discount rate to determine interest cost 5.08% 2.27% Expected return on plan assets 7.46% 7.44% Rate of future compensation increase 3.01% 3.01% Cash balance interest crediting rate 4.00% 3.50% Key assumptions for the Consolidated Pension Plan (our largest defined benefit plan), with 88% of the total PBO as of December 29, 2023 included a discount rate for obligation assumptions of 4.92%, a cash balance interest crediting rate of 4.50% and expected return on plan assets of 7.50% for fiscal 2023, which is being maintained at 7.50% for fiscal 2024.
Biggest changeThe following table presents the significant assumptions used to determine the PBO: January 3, 2025 December 29, 2023 Pension Other Benefits Pension Other Benefits Discount rate 5.46 % 5.38 % 4.91 % 4.87 % The following table presents the significant assumptions used to determine net periodic benefit income: Fiscal Year Ended January 3, 2025 December 29, 2023 Pension Other Benefits Pension Other Benefits Discount rate to determine service cost 4.92 % 5.00 % 5.18 % 5.26 % Discount rate to determine interest cost 4.80 % 4.78 % 5.08 % 5.06 % Expected return on plan assets 7.45 % 7.50 % 7.46 % 7.50 % Discount Rate.
Fair value determinations described above under the heading “Goodwill” in this Critical Accounting Estimates section of this MD&A were determined based on a combination of market-based valuation techniques, utilizing quoted market prices, comparable publicly reported transactions, and projected discounted cash flows. The process of evaluating the potential impairment of goodwill is highly subjective and requires significant judgment.
Fair value determinations described above under the heading “Goodwill” in this Critical Accounting Estimates section of this MD&A were determined based on a combination of market-based valuation techniques, utilizing quoted market prices, comparable publicly reported transactions, and _____________________________________________________________________ 34 projected discounted cash flows. The process of evaluating the potential impairment of goodwill is highly subjective and requires significant judgment.
We test goodwill for impairment at a level within the Company referred to as the reporting unit, which is our business segment level or one level below the business segment. Some of our segments are comprised of several reporting units.
We test goodwill for impairment at a level within the Company referred to as the reporting unit, which is our business segment level or one level below the business _____________________________________________________________________ 33 segment. Some of our segments are comprised of several reporting units.
Based on our current business plan and revenue prospects, we believe that our existing cash, funds generated from operations, availability under our senior unsecured credit facilities and our CP Program and access to the public and private debt and equity markets will be sufficient to provide for our anticipated working capital requirements, capital expenditures, dividend payments, repurchases under our share repurchase program and repayments of our debt securities at maturity for the next twelve months and the reasonably foreseeable future thereafter.
Based on our current business plan and revenue prospects, we believe that our existing cash, funds generated from operations, availability under our senior unsecured credit facilities and our CP Program and access to the public and private debt and equity markets will be sufficient to provide for our anticipated working capital requirements, capital expenditures, dividend payments, repurchases under our share repurchase program and repayments of our debt securities at maturity for the next 12 months and the reasonably foreseeable future thereafter.
We follow very specific and detailed guidelines in each tax jurisdiction regarding the recoverability of any tax assets recorded on the balance sheet and provide necessary valuation allowances as required.
We follow very specific and detailed guidelines in each tax jurisdiction regarding the recoverability of any tax assets recorded on the Consolidated Balance Sheet and provide necessary valuation allowances as required.
We plan to continue to invest, consistent with growth opportunities, and sustain our culture of innovation, while delivering on our commitments to investors, our customers and on every contract we are awarded.
We plan to continue to invest, consistent with profitable growth opportunities, and sustain our culture of innovation, while delivering on our commitments to investors, our customers and on every contract we are awarded.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL STRATEGIES We prioritize cash flow generation through our commitment to operational excellence, efficient balance sheet management and continuous cost reduction efforts. We consistently assess various capital deployment options, considering both our long-term outlook and the evolving market conditions, recognizing the importance of adaptability as market dynamics change over time.
LIQUIDITY AND CAPITAL RESOURCES We prioritize cash flow generation through our commitment to operational excellence, efficient balance sheet management and continuous cost reduction efforts. We consistently assess various capital deployment options, considering both our long-term outlook and the evolving market conditions, recognizing the importance of adaptability as market dynamics change over time.
We regularly review our deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. We have not made any material changes in the methodologies used to determine our tax valuation allowances during fiscal 2023.
We regularly review our deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. We have not made any material changes in the methodologies used to determine our tax valuation allowances during fiscal 2024 .
Factors that must be considered in estimating the total transaction price include contractual cost or performance incentives (such as incentive fees, award fees and penalties) and other forms of variable consideration as well as our historical experience and our expectation for _____________________________________________________________________ 37 performance on the contract.
Factors that must be considered in estimating the total _____________________________________________________________________ 31 transaction price include contractual cost or performance incentives (such as incentive fees, award fees and penalties) and other forms of variable consideration as well as our historical experience and our expectation for performance on the contract.
Based on the annual impairment testing, our Broadband reporting unit had clearance of approximately 20% and goodwill of $2,656 million and our ISR and Electro Optical reporting units had clearances of approximately 6% and goodwill of $3,186 million and $2,193 million, respectively.
Based on the fiscal 2023 annual impairment testing, our Broadband reporting unit had clearance of approximately 20% and goodwill of $2,656 million and our ISR and Electro Optical reporting units had clearances of approximately 6% and goodwill of $3,186 million and $2,193 million , respectively.
Specifically, we consider the plan’s actual historical annual return on assets over the past 15, 20 and 25 years and historical broad market returns over long-term time frames based on our strategic allocation, which is detailed in Note 9: Retirement Benefits in the Notes. Future returns are based on independent estimates of long-term asset class returns.
Specifically, we consider the plan’s actual historical annual return on assets over the past 15, 20 and 25 years and historical broad market returns over long-term timeframes based on our strategic allocation, which is detailed in Note 9: Retirement Benefits in the Notes. Future returns are based on independent estimates of long-term asset class returns.
Revenue and profit related to development and production contracts are generally recognized over-time, typically using the percentage of completion (“POC”) cost-to-cost method of revenue recognition, whereby we measure our progress towards completion of the performance obligation based on the ratio of costs incurred to date to estimated costs at completion under the contract.
Revenue and profit related to development and production contracts are generally recognized over-time, typically using the percentage of completion (“ POC ”) cost-to-cost method of revenue recognition, whereby we measure our progress towards completion of the performance obligation based on the ratio of costs incurred to date to estimated costs at completion under the contract.
These factors include: (i) deterioration in the general economy; (ii) deterioration in the environment in which the Company operates; (iii) increase in materials, labor or other costs; (iv) negative or declining cash flows; (v) changes in management, changes in strategy or significant litigation; (vi) changes in the composition or carrying amount of net assets or an expectation of disposing all or a portion of the reporting unit; or (vii) a sustained decrease in share price.
These factors include: (i) deterioration in the general economy; (ii) deterioration in the environment in which we operate; (iii) increase in materials, labor or other costs; (iv) negative or declining cash flows; (v) changes in management, changes in strategy or significant litigation; (vi) changes in the composition or carrying amount of net assets or an expectation of disposing all or a portion of the reporting unit; or (vii) a sustained decrease in share price.
The allocation of transaction price among separate performance obligations may impact the timing of revenue recognition but will not change the total revenue recognized on the contract. A substantial majority of our revenue is derived from contracts with the U.S. Government, including foreign military sales contracts.
The allocation of transaction price among separate performance obligations may impact the timing of revenue recognition but will not change the total revenue recognized on the contract. A substantial maj ority of our revenue is derived from contracts with the U.S. Government, including foreign military sales contracts.
If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. Fiscal 2023 Impairment Tests. We performed our annual impairment test of all of our reporting units’ goodwill as of September 30, 2023 and concluded that for each of our reporting units no impairment existed. Segment reorganization.
If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. Fiscal 2024 Impairment Tests. We performed our annual impairment test of all of our reporting units’ goodwill as of September 30, 2024 and concluded that for each of our reporting units no impairment existed. Business realignment.
We expect to make approximately $35 million of contributions to these plans in fiscal 2024, and may consider voluntary contributions thereafter. Future required contributions primarily will depend on the actual annual return on assets and the discount rate used to measure the benefit obligation at the end of each year.
We expect to make _____________________________________________________________________ 30 approximately $23 million of contributions to these plans in fiscal 2025 and may consider voluntary contributions thereafter. Future required contributions primarily will depend on the actual annual return on plan assets and the discount rate used to measure the benefit obligation at the end of each year.
At the outset of each contract, we gauge its complexity and perceived risks and establish an estimated total cost at completion in line with these expectations. We follow a standard EAC process in which we review the progress and performance on our ongoing contracts at least quarterly and, in many cases, more frequently.
At the outset of each contract, we gauge its complexity and perceived risks and establish an estimated total cost at completion in line with these expectations. We follow a standard EAC process in which we review the progress and performance on our ongoing contracts .
See Note 13: Acquisitions, Divestitures and Asset Sales and Note 6: Goodwill and Intangible Assets in the Notes for additional information. _____________________________________________________________________ 41 Income Taxes We record deferred tax assets and liabilities for differences between the tax basis of assets and liabilities and amounts reported in our Consolidated Balance Sheet, as well as operating loss and tax credit carryforwards.
See Note 13: Acquisitions and Divestitures in the Notes for additional information. Income Taxes We record deferred tax assets and liabilities for differences between the tax basis of assets and liabilities and amounts reported in our Consolidated Balance Sheet , as well as operating loss and tax credit carryforwards.
For income tax positions where it is not more likely than not that a tax benefit will be realized, we do not recognize a tax benefit in our Consolidated Financial Statements.
For income tax positions where it is not more likely than not that a tax benefit will be realized, we do not recognize a tax benefit in our Consolidated Balance Sheet .
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following Management’s Discussion and Analysis (“MD&A”) is intended to assist in an understanding of our financial condition and results of operations for fiscal 2023 compared with fiscal 2022. A discussion of fiscal 2022 compared to fiscal 2021 can be found in Part II: Item 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following Management’s Discussion and Analysis (“ MD&A ”) is intended to assist in an understanding of our financial condition and results of operations for fiscal 2024 compared with fiscal 2023 . A discussion of fiscal 2023 compared to fiscal 2022 can be found in Part II.
During fiscal 2023, we drew $2.25 billion in long-term debt on Term Loan 2025. The proceeds were utilized to fund the cash consideration paid and a portion of the associated transaction and integration costs related to the TDL acquisition and repay the entire outstanding $250 million aggregate principal amount of our Floating 2023 Notes.
During fiscal 2023 , we drew $2.25 billion in long-term debt on Term Loan 2025 and utilized the proceeds to fund the TDL acquisition, including a portion of associated transaction and integration costs, and to repay the entire outstanding $250 million aggregate principal amount of our Floating Rate Notes due March 2023 .
Depending on these factors, and the resulting funded status of our pension plans, the level of future statutory required minimum contributions could be material. We had net defined benefit plan assets of $66 million as of December 29, 2023 compared with net unfunded defined benefit plan obligations of $69 million as of December 30, 2022.
Depending on these factors, and the resulting funded status of our pension plans, the level of future statutory required minimum contributions could be material. We had net defined benefit plan assets of $789 million as of January 3, 2025 compared with $66 million as of December 29, 2023 .
Government spending priorities or ability to win competitively awarded contracts; an inability to meet our forecast; the rescission of significant contract awards as a result of competitors protesting or challenging contracts awarded to us; or an increase in interest rates without a corresponding increase in future revenue. Fiscal 2022 Impairment Tests.
Government spending priorities or ability to win competitively awarded contracts; an inability to meet our forecast; the rescission of significant contract awards as a result of competitors protesting or challenging contracts awarded to us; or an increase in interest rates without a corresponding increase in future revenue. Goodwill-Related Fair Value Estimates.
Our Consolidated Balance Sheet as of December 29, 2023 included deferred tax assets of $91 million and deferred tax liabilities of $815 million. For all jurisdictions in which we have net deferred tax assets, we expect that our existing levels of pre-tax earnings are sufficient to generate the amount of future taxable income needed to realize these tax assets.
Our Consolidated Balance Sheet as of January 3, 2025 included deferred tax assets of $120 million and deferred tax liabilities of $942 million . For all jurisdictions in which we have net deferred tax assets, we expect that our existing levels of pre-tax earnings are sufficient to generate the amount of future taxable income needed to realize these tax assets.
If we successfully retire risks associated with the technical, schedule and cost aspects of a contract, we may lower our estimated total cost at completion commensurate with the retirement of these risks. Conversely, if we are not successful in retiring these risks, we may increase our estimated total cost at completion.
If we successfully retire risks associated with the technical, schedule and cost aspects of a contract, we may lower our estimated total cost at completion commensurate with the retirement of these risks.
With this program we are investing in enterprise tools and optimized, revamped processes to unlock further opportunities for margin expansion and create additional value for our shareholders. Our strategic priorities continue to be performance, growth and innovation, with “Performance First” continuing to be our primary focus.
With this program we are investing in enterprise tools and optimized, revamped processes to unlock further opportunities for margin expansion and create additional value for our shareholders. _____________________________________________________________________ 22 Our strategic priorities continue to be p erformance, growth and innovation .
With customers’ mission-critical needs in mind, we deliver end-to-end technology solutions connecting the space, air, land, sea and cyber domains. We support government customers in more than 100 countries, with our largest customers being various departments and agencies of the U.S. Government and their prime contractors.
OVERVIEW We are the Trusted Disruptor in the defense industry. With customers’ mission-critical needs in mind, we deliver end-to-end technology solutions connecting the space, air, land, sea and cyber domains in the interest of global security. We support government customers in more than 100 countries, with our largest customers being various departments and agencies of the U.S.
We recognize revenue from numerous contracts with multiple performance obligations. For these contracts, we allocate the transaction price to each performance obligation based on the relative standalone selling price of the product or service underlying each performance obligation.
For these contracts, we allocate the transaction price to each performance obligation based on the relative standalone selling price of the product or service underlying each performance obligation.
These contracts are subject to the FAR and the prices of our contract deliverables are typically based on our estimated or actual costs plus a reasonable profit margin.
These contracts are subject to the Federal Acquisition Regulation (“ FAR ”) and the prices of our contract deliverables are typically based on our estimated or actual costs plus margin.
Gross margin Gross margin for fiscal 2023 increased compared to fiscal 2022, largely due to the increases in revenue noted above, partially offset by an unfavorable net change in EAC adjustments which decreased gross margin by $121 million and a higher mix of lower margin revenue, primarily in our CS segment.
Gross Margin. Gross margin for fiscal 2024 increased compared to fiscal 2023 , largely due to the increases in revenue noted above and a favorable net change in e stimate at completion (“ EAC ”) adjustments which increased gross margin by $124 million , partially offset by a higher mix of lower margin revenue, primarily in our CS segment.
Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 30, 2022 (our “Fiscal 2022 Form 10-K”) .
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2023 (our “ Fiscal 2023 Form 10-K ”) .
The improvement in the funded status as of December 29, 2023 is primarily due to more favorable than expected return on plan assets, partially offset by increased pension obligations resulting from lower discount rates. See Note 9: Retirement Benefits in the Notes for further information regarding our pension plans.
The improvement in funded status as of January 3, 2025 is primarily due to more favorable than expected return on plan assets and decreased pension obligations resulting from higher discount rates. See Note 9: Retirement Benefits in the Notes for further information regarding our pension plans.
CRITICAL ACCOUNTING ESTIMATES Preparation of this Report in accordance with GAAP requires us to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue, expenses and backlog as well as disclosure of contingent assets and liabilities.
Our capital expenditures for fiscal 2025 are expected to be approximately 2% of revenu e . CRITICAL ACCOUNTING ESTIMATES Preparation of this Report in accordance with GAAP requires us to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue, expenses and backlog as well as disclosure of contingent assets and liabilities.
As of December 29, 2023, we had $652 million of unrecognized tax benefits, of which $509 million would favorably impact our future tax rates in the event that the tax benefits are eventually recognized.
As of January 3, 2025 , we had $758 million of unrecognized tax benefits, of which $666 million would favorably impact our future tax rates in the event that the tax benefits are eventually recognized.
We structure our operations primarily around the products, systems and services we sell and the markets we serve, and we report the financial results of our continuing operations in the four segments: SAS, IMS, CS and AR.
We structure our operations primarily around the products, systems and services we sell and the markets we serve, and we report our financial results in four business segments : SAS, IMS, CS and AR. See Note 14: Business Segments in the Notes for further information regarding our business segments .
See “Item 1: Business” of this Report for a description of the sectors in SAS.
Business” of this Report for a description of the sectors in IMS.
Funding of Pension Plans With respect to our U.S. qualified defined benefit pension plans, we intend to contribute annually no less than the required minimum funding thresholds. As a result of prior voluntary contributions and plan performance, we made no material contributions to our U.S. qualified defined benefit pension plans in fiscal 2023.
With respect to our U.S. qualified defined benefit pension plans, we intend to contribute annually no less than the required minimum funding thresholds. In fiscal 2024 , we made approximately $30 million of contributions to our U.S. qualified defined benefit pension plans.
There is also a frozen pension equity benefit that assumes a 4.25% interest crediting rate. Expected Return on Plan Assets. Substantially all of our plan assets are managed on a commingled basis in a master investment trust. We determine our expected return on plan assets by evaluating both historical returns and estimates of future returns.
Substantially all of our plan assets are managed on a commingled basis in a master investment trust. We determine our expected return on plan assets by evaluating both historical returns and estimates of future returns.
Revenue As described in more detail in Note 13: Acquisitions, Divestitures and Asset Sales and elsewhere in the Notes, during fiscal 2023 and 2022, we completed certain asset group sales and business divestitures. There was no significant revenue attributable to divested businesses.
(2) “ EPS ” is defined as Earnings Per Share. _____________________________________________________________________ 23 Revenue . As described in more detail in Note 13: Acquisitions and Divestitures and elsewhere in the Notes, during fiscal 2024 and 2023 , we completed certain business divestitures. There was no significant revenue attributable to divested businesses . Products revenue .
We have announced that share repurchases will be moderated in the near-term, but the level and timing of our repurchases depends on a number of factors, including our financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors our Board and management may deem relevant.
T he level and timing of our repurchases depends on a number of factors, including our financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors our Board and management may deem relevant.
See the “Discussion of Business Segment Results of Operations” discussion below in this MD&A for further information.
See the “Business Segment Results of Operations” discussion below in this MD&A for further information. Cost of Revenue. C ost of products revenue.
Government customers, including foreign military sales funded through the U.S. Government, whether directly or through prime contractors, was 76%, 74% and 75%, in fiscal 2023, 2022 and 2021, respectively.
U.S. and International Budget Environment The percentage of our revenue that was derived from sales to U.S. Government customers, including foreign military sales funded through the U.S. Government, whether directly or through prime contractors, was 76% , 76% and 74% , in fiscal 2024 , 2023 and 2022 , respectively.
We use these measures, along with our key financial performance measures above, to assess the success of our business and our ability to create shareholder value. We believe these measures are balanced among long-term and short-term performance, growth and innovation.
We use these measures, along with other performance measures that are not defined by U.S. Generally Accepted Accounting Principles (“ GAAP ”), to assess the success of our business and our ability to create shareholder value. We believe these measures are balanced among long-term and short-term performance, growth and innovation.
Our primary capital deployment priorities involve a focus on funding the business, debt repayment to be achieved through the prioritization of capital allocation, potentially accelerated with proceeds from non-core asset divestitures, and returning cash to our shareholders through dividends and share repurchases.
Our primary capital deployment priorities involve a focus on funding the business, including investing in training, facilities and digital infrastructure , debt repayment to be achieved through the prioritization of capital allocation and returning cash to our shareholders through dividends and share repurchases.
Purchase obligations mainly consist of outstanding commitments on open purchase orders made to suppliers, subcontractors and other outsourcing partners under U.S. government contracts. Our risk associated with these purchase obligations is generally limited to the termination liability provisions within such contracts. As such, we do not believe there to be a material liquidity risk associated with outstanding purchase obligations.
Our risk associated with these purchase obligations is generally limited to the termination liability provisions within such contracts. As such, we do not believe there to be a material liquidity risk associated with outstanding purchase obligations. Operating and finance lease commitments.
From time to time, we use borrowings under the CP Program for general corporate purposes, including the funding of acquisitions, debt refinancing, dividend payments and repurchases of our common stock. We terminated our prior existing $1.0 billion commercial paper program during fiscal 2023.
Under the CP Program , we may issue unsecured commercial paper notes up to a maximum aggregate amount of $3.0 billion . From time to time, we use borrowings under the CP Program for general corporate purposes, including the funding of acquisitions, debt repayment, dividend payments and repurchases of our common stock.
This year, we embarked on the next phase of the L3Harris evolution, known as LHX NeXt, a targeted three-year program designed to enhance organizational agility and performance by leveraging our scale and relationships across segments, driving operational efficiency and competitiveness for the enterprise.
In fiscal 2024 , we made considerable progress with our LHX NeXt initiative, our targeted three-year program designed to enhance organizational agility and performance by leveraging our scale and relationships across segments, driving operational efficiency and competitiveness for the enterprise.
As of December 29, 2023, we had cash and cash equivalents of $560 million, of which $343 million was held by our foreign subsidiaries, a significant portion of which we believe can be repatriated to the U.S. with minimal tax cost. Additionally, we have two credit facilities and a commercial paper program.
Capital Resources As of January 3, 2025 , we had cash and cash equivalents of $615 million , of which $300 million was held by our foreign subsidiaries, a significant portion of which we believe can be repatriated to the U.S. with minimal tax cost.
Our valuation allowance related to deferred income taxes, which is reflected in our Consolidated Balance Sheet, was $240 million as of December 29, 2023.
Our valuation allowance related to our deferred tax assets, which is reflected in our Consolidated Balance Sheet , was $238 million as of January 3, 2025 .
For information related to fiscal 2022 impairment tests and resulting impairments see Note 6: Goodwill and Intangible Assets in the Notes. Goodwill-Related Fair Value Estimates.
For information related to the Antenna disposal group divestiture, including goodwill allocation, impairment testing and resulting impairment see Note 6: Goodwill and Intangible Assets in the Notes. Fiscal 2023 Impairment Tests. For information related to fiscal 2023 impairment tests and resulting impairments see Note 6: Goodwill and Intangible Assets in the Notes. At-risk goodwill.
A 25 basis point change in the long-term expected rate of return on plan assets and discount rate would have the following effect on the combined U.S. defined benefit pension plans’ pension expense for the next twelve months: Increase/(Decrease) in Pension Expense (In millions) 25 Basis Point Increase 25 Basis Point Decrease Long-term rate of return on assets used to determine net periodic benefit cost $ (21) $ 21 Discount rate used to determine net periodic benefit cost $ 9 $ (9) PBO.
We estimate that a 25 basis point change in the discount rate of our combined U.S. defined benefit pension plans would have the following impact on our PBO at January 3, 2025 and net periodic benefit income for the next twelve months: (In millions) 25 Basis Point Increase 25 Basis Point Decrease PBO $ (155) $ 161 Net periodic benefit income $ 7 $ (8) Expected Return on Plan Assets.
Based on this approach, the weighted average long-term annual rate of return on assets was estimated to be 7.46% for both fiscal 2023 and 2024. Discount Rate. The discount rate is used to calculate the present value of expected future benefit payments at the measurement date.
Based on this approach, the weighted average long-term annual rate of return on assets was estimated to be 7.45% for both fiscal 2024 and 2025. Sensitivity Analysis.
On January 26, 2024, we replaced the 2023 Credit Agreement with a new $1.5 billion, 364-day senior unsecured revolving credit facility maturing no later than January 24, 2025. 2022 Credit Agreement .
On January 26, 2024 , we established a new $1.5 billion , 364 -day senior unsecured revolving credit facility (“ 2024 Credit Facility ”) by entering into a 364 -day credit agreement with a syndicate of lenders which matured on January 24, 2025 (“ 2024 Credit Agreement ”).
Also in fiscal 2023, we invested $480 million (2% of total revenue) in company-funded R&D focused on technologies that expand our capabilities across our domains. As noted in the “Acquisitions and Pending Divestitures” section above, during fiscal 2023, we closed on two acquisitions.
Also in fiscal 2024 , we investe d $515 million ( 2% of total revenue) in company-funded R&D focused on technologies that expand our capabilities across our domains.
See Note 8: Debt and Credit Arrangements in the Notes for further information. Income taxes Our effective tax rate (income taxes as a percentage of income from continuing operations before income taxes) was 1.9% in fiscal 2023 compared with 16.7% in fiscal 2022.
See the “Liquidity and Capital Resources” discussion below in this MD&A and Note 8: Debt and Credit Arrangements in the Notes for further information. Income Taxes. Our effective tax rate increased to 5.3% in fiscal 2024 compared with 1.9% in fiscal 2023 .
Such increases were partially offset by $40 million change in EAC adjustments from program execution during fiscal 2023. IMS Segment Our IMS segment includes ISR; passive sensing and targeting; electronic attack; autonomy; power and communications; networks; sensors; aviation products; and pilot training operations. See “Item 1: Business” of this Report for a description of the sectors in IMS.
Such increase was partially offset by unfavorable EAC adjustments from program execution on classified fixed-price development programs in Space Systems that are in the later stages of completion. _____________________________________________________________________ 26 IMS. Our IMS segment includes ISR; passive sensing and targeting; electronic attack; autonomy; power and communications; networks; sensors; aviation products; and pilot training operations . See “Item 1.
The increase in CS operating margin was partially offset by a higher mix of lower margin revenue, principally in Public Safety and IVS. AR Segment Our AR segment includes missile solutions with propulsion technologies for strategic defense, missile defense, and hypersonic and tactical systems; and space propulsion and power systems for national security space and exploration missions.
AR. Our AR segment includes missile solutions with propulsion technologies for strategic defense, missile defense, and hypersonic and tactical systems; and space propulsion and power systems for national security space and exploration missions. See “Item 1. Business” of this Report for a description of the sectors in AR.
At December 29, 2023, we had no outstanding borrowings under the 2023 Credit Agreement, had available borrowing capacity of $800 million, net of outstanding CP Program borrowings, and were in compliance with all covenants under the 2023 Credit Agreement.
At January 3, 2025 , we had no outstanding borrowings under our credit facilities , had available borrowing capacity of $2,985 million , net of outstanding borrowings under our CP Program , and we re in compliance wit h all covenants under both of the following: 2024 Credit Facility.
Government or international spending priorities have and could in the future impact our business. For a discussion of U.S. Government funding risks and international business risks see “Item 1. Business -Government Contracts,” “Item 1. Business - International Business,” “Item 1A. Risk Factors” and “Item 3. Legal Proceedings” of this Report.
The overall defense spending environment, both in the U.S. and internationally, reflects the continued impacts of global conflicts and geopolitical tensions, and changes to U.S. Government or international spending priorities have and could in the future impact our business . For a discussion of U.S. Government funding risks and international business risks see “Item 1.
Goodwill We test our goodwill for impairment annually as of the first business day of our fourth fiscal quarter, which was October 2, 2023 for fiscal 2023, or under certain circumstances more frequently, such as when events or circumstances indicate there may be impairment or when we reorganize our reporting structure such that the composition of one or more of our reporting units is affected.
We estimate that a 25 basis point change in the expected return on plan assets of our combined U.S. defined benefit pension plans would have the following impact on net periodic benefit income for the next twelve months: (In millions) 25 Basis Point Increase 25 Basis Point Decrease Net periodic benefit income $ (20) $ 20 Goodwill We test our goodwill for impairment annually as of the first business day of our fourth fiscal quarter, which was September 30 in fiscal 2024 , or under certain circumstances more frequently, such as when events or circumstances indicate there may be impairment or when we reorganize our reporting structure such that the composition of one or more of our reporting units is affected.
We also use some of these and other performance metrics for executive compensation purposes. _____________________________________________________________________ 26 OPERATIONS REVIEW Consolidated Results of Operations Fiscal Year Ended (Dollars in millions, except per share amounts) December 29, 2023 December 30, 2022 Revenue $ 19,419 $ 17,062 Cost of revenue (14,306) (12,135) % of total revenue 74 % 71 % Gross margin 5,113 4,927 % of total revenue 26 % 29 % General and administrative expenses (3,262) (3,006) % of total revenue 17 % 18 % Asset group and business divestiture-related (losses) gains, net (51) 8 Impairment of goodwill and other assets (374) (802) Operating income 1,426 1,127 Non-service FAS pension income and other, net 1 338 425 Interest expense, net (543) (279) Income from continuing operations before income taxes 1,221 1,273 Income taxes (23) (212) Effective tax rate 1.9 % 16.7 % Net income 1,198 1,061 Noncontrolling interests, net of income taxes 29 1 Net income attributable to L3Harris Technologies, Inc. $ 1,227 $ 1,062 % of total revenue 6 % 6 % Net income from continuing operations per diluted common share attributable to L3Harris Technologies, Inc common shareholders $ 6.44 $ 5.49 _____ 1 “FAS” is defined as Financial Accounting Standards.
OPERATIONS REVIEW Consolidated Results of Operations Fiscal Year Ended (Dollars in millions, except per share amounts) January 3, 2025 December 29, 2023 Revenue Products $ 15,134 $ 13,694 Services 6,191 5,725 Total revenue 21,325 19,419 Cost of revenue Products (11,019) (9,711) Services (4,782) (4,595) Cost of revenue (15,801) (14,306) Gross margin 5,524 5,113 General and administrative expenses (3,568) (3,313) Impairment of goodwill and other assets (38) (374) Operating income 1,918 1,426 Non-service FAS pension income and other, net (1) 354 338 Interest expense, net (675) (543) Income before income taxes 1,597 1,221 Income taxes (85) (23) Effective Tax Rate 5.3 % 1.9 % Net income 1,512 1,198 Noncontrolling interests, net of income taxes (10) 29 Net income attributable to L3Harris Technologies, Inc. $ 1,502 $ 1,227 Diluted EPS (2) $ 7.87 $ 6.44 ______________ (1) “FAS” is defined as Financial Accounting Standards.
Actual results that differ from our assumptions are accumulated and generally amortized for each plan to the extent required over the estimated future life expectancy or, if applicable, the future working lifetime of the plan’s active participants. _____________________________________________________________________ 38 Significant Assumptions. We develop assumptions using relevant experience, in conjunction with market-related data for each plan.
Assumptions are reviewed annually with third-party experts and adjusted as appropriate. Actual resu l ts that differ _____________________________________________________________________ 32 from our assumptions are accumulated and generally amortized for each plan to the extent required over the estimated future life expectancy or, if applicable, the average remaining service period of the plan’s active participants.
Other non-operating income, net of $28 million in fiscal 2023 increased $44 million from non-operating expense, net of $16 million in fiscal 2022 primarily from changes in the market value of our rabbi trust assets, gains and losses on our equity investments in nonconsolidated affiliates and royalty income.
See Note 9: Retirement Benefits in the Notes for more information on the composition of non-service FAS pension income. (2) Other, net primarily includes changes in the market value of our rabbi trust assets, gains and losses on our equity investments in nonconsolidated affiliates and royalty income. Interest Expense, Net.
Cost of services revenue increased $815 million, primarily from the inclusion of $259 million of cost of services revenue from AR and an increase of $245 million, higher costs of services revenue at CS primarily from the inclusion of TDL, and $190 million and $130 million higher costs of services revenue at SAS and IMS respectively, primarily due to a larger volume of lower margin service sales. _____________________________________________________________________ 28 General and administrative expenses Major components of General and administrative expenses (“G&A”) were as follows: Fiscal Year Ended (In millions) December 29, 2023 December 30, 2022 Amortization of acquisition-related intangibles $ (687) $ (532) Company-funded R&D costs (480) (603) Merger, acquisition, and divestiture related expenses (174) (162) LHX NeXt (1) (115) — Selling and marketing (450) (483) Other G&A expenses (2) (1,356) (1,226) Total G&A expenses $ (3,262) $ (3,006) ______________ (1) Costs associated with transforming multiple functions, systems and processes to increase agility and competitiveness, including third-party consulting, workforce optimization and incremental IT expenses for implementation of new systems.
The following table presents the components of G&A expenses : Fiscal Year Ended (In millions) January 3, 2025 December 29, 2023 Amortization of acquisition-related intangibles $ (779) $ (687) LHX NeXt implementation costs (1) (267) (115) Merger, acquisition, and divestiture-related expenses (102) (174) Business divestiture-related losses, net (2) (19) (51) Company-funded R&D costs (515) (480) Selling and marketing (445) (450) Other G&A expenses (3) (1,441) (1,356) G&A expenses $ (3,568) $ (3,313) ______________ (1) Costs associated with transforming multiple functions, systems and processes to increase agility and competitiveness, including third-party consulting, workforce optimization and incremental IT expenses for implementation of new systems.
We have a $2.0 billion, 5-year senior unsecured revolving credit facility (the “2022 Credit Facility”) under a Revolving Credit Agreement (the “2022 Credit Agreement”) entered into on July 29, 2022 with a syndicate of lenders, which the lenders may agree to increase by up to $1.0 billion upon our request.
O n July 29, 2022 , we established a $2.0 billion , 5-year senior unsecured revolving credit facility (the “ 2022 Credit Facility ”) under a Revolving Credit Agreement (the “ 2022 Credit Agreement ”) entered into with a syndicate of lenders. _____________________________________________________________________ 28 In fiscal 2025, we expect to refinance the 2022 Credit Agreement to increase the capacity and extend the maturity of the existing facility.
Pension and Other Postretirement Benefit Plans Certain of our current and former employees participate in defined benefit plans in the United States, Canada, United Kingdom and Germany, which are sponsored by L3Harris. The determination of projected benefit obligations (“PBO”) and the recognition of expenses related to defined benefit plans are dependent on various assumptions.
Defined Benefit Plans Certain of our current and former employees participate in defined benefit plans in the U.S., Canada and United Kingdom, which are sponsored by L3Harris. See Note 9: Retirement Benefits in the Notes for additional information related to our defined benefit plans.
Fiscal Year Ended (Dollars in millions) December 29, 2023 December 30, 2022 % Inc/(Dec) Revenue $ 6,630 $ 6,626 — % Operating income 459 494 (7 %) Operating margin 6.9 % 7.5 % The flat IMS revenue in fiscal 2023 compared with fiscal 2022 was primarily due to lower revenue of $179 million in ISR largely from lower aircraft missionization volume, offset by higher revenues of $69 million in Electro Optical from higher volume in space and sensors, $63 million in Maritime largely from volume in classified programs, power and energy solutions and international and $61 million in Commercial Aviation Solutio ns from volume.
Fiscal Year Ended (Dollars in millions) January 3, 2025 December 29, 2023 % Inc/(Dec) Revenue $ 6,842 $ 6,630 3% Operating income 838 459 83% Operating margin 12.2 % 6.9 % IMS segment revenue increased in fiscal 2024 compared with fiscal 2023 primarily due to higher revenues of $73 million in Defense Electronics from higher demand for advanced electronics, $56 million in ISR f rom higher aircraft missionization volume, $49 million in Commercial Aviation Solutions from higher volume, $31 million in Global Optical Systems from higher commercial revenue for airborne electro-optical sensors and $27 million in Maritime from volume on classified programs.
The pension discount rate is determined by considering an interest rate yield curve comprising AAA/AA bonds, with maturities between zero and thirty years, developed by the plan’s actuaries. Annual benefit payments are then discounted to present value using this yield curve to develop a single discount rate matching the plan’s characteristics. Sensitivity Analysis Pension Expense.
Annual benefit payments are then discounted to present value using this yield curve to develop a single discount rate matching the plan’s characteristics. Sensitivity Analysis . The sensitivity of the PBO to changes in the discount rate varies depending on the magnitude and direction of the change in the discount rate.
Our future results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below in this MD&A under “Forward-Looking Statements and Factors that May Affect Future Results.” OVERVIEW We are the Trusted Disruptor in the defense industry.
Our future results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I. Item 1A. Risk Factors of this Report. For additional information, see Part I. Item 1. Business - Cautionary Statement Regarding Forward-Looking Statements of this Report .
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Report. Dividends Information concerning our dividends is set forth above under “Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Report. Common stock repurchases. During fiscal 2024 , we repurchased 2.5 million shares of our common stock under our share repurchase program for $554 million .
Cash flow from operations was positive in all of our business segments in fiscal 2023.
Cash flow from operations was positive in all of our business segments in fiscal 2024 . Investing Activities . Our primary investing activities include net cash paid for acquired businesses, capital expenditures and cash proceeds from sales of businesses.
An increase in the discount rate decreases the present value of PBO and generally increases pension expense. A decrease in the discount rate increases the present value of the PBO and generally decreases pension expense. The discount rate assumption is based on current investment yields of high-quality fixed income investments during the retirement benefits maturity period.
The discount rate assumption is based on current investment yields of high-quality fixed income investments during the retirement benefits maturity period. The pension discount rate is determined by considering an interest rate yield curve comprising AAA/AA bonds, with maturities between zero and thirty years, developed by the plan’s actuaries.
Immediately before the realignment, we performed a qualitative impairment assessment over our SAS reporting unit and a quantitative impairment assessment over our ADG reporting unit. Immediately after the realignment, we performed a quantitative impairment assessment over the SAS reporting unit.
Immediately before and after the realignment, we performed a quantitative impairment assessment under our former and new reporting unit structure. These assessments indicated no impairment existed either before or after the realignment. Antenna disposal group divestiture .
Economic Environment The macroeconomic environment continues to present challenges, which have impacted and may continue to impact our future results. The ongoing uncertainty related to the impacts of inflation, as well as increased interest rates, which raises the cost of borrowing for the federal government, could in the future impact U.S. Government spending priorities and the demand for our products.
The ongoing uncertainty relates to the impacts of inflation, interest rates and ongoing federal deficits , which could raise the cost of borrowing for the federal government impacting U.S. Government spending priorities and the demand for our products. For a discussion of inflation-related risks, see “Item 1A. Risk Factors” of this Report.
See “Item 1: Business” of this Report for a description of the sectors in CS.
Our CS segment includes tactical communications with global communications solutions; broadband communications; integrated vision solutions; and public safety radios, system applications and equipment. See “Item 1. Business” of this Report for a description of the sectors in CS.
LHX NeXt implementation costs. LHX NeXt is our initiative to transform multiple functions, systems and processes to increase agility and competitiveness. Costs related to the LHX NeXt effort are expected to continue through 2025, and are expected to include workforce optimization costs, incremental IT expenses for implementation of new systems, third-party consulting expenses and other related costs.
(5) Includes costs associated with transforming multiple functions, systems and processes to increase agility and competitiveness, including third-party consulting, workforce optimization and incremental IT expenses for implementation of new systems. For further information on our LHX NeXt initiative and implementation costs see Note 14: Business Segments in the Notes and the “General and Administrative Expenses” discussion above in this MD&A.
Our products and services have defense and civil government _____________________________________________________________________ 24 applications, as well as commercial applications. As of December 29, 2023, we had approximately 50,000 employees, including approximately 20,000 engineers and scientists. We generally sell directly to our customers, and we utilize agents and intermediaries to sell and market some products and services, especially in international markets.
Government, their prime contractors and international allies. Our products and _____________________________________________________________________ 21 services have defense and civil government applications, as well as commercial applications. As of January 3, 2025 , we had approximately 47,000 employees, including approximately 18,000 engineers and scientists .
Net cash used in investing activities : The $6.8 billion increase in net cash used in investing activities in fiscal 2023 compared with fiscal 2022 was primarily due to the $6.7 billion cash used for the acquisitions of TDL and AJRD during the first quarter and third quarter of fiscal 2023, respectively.
The $6,758 million decrease in net cash used in investing activities in fiscal 2024 compared with fiscal 2023 was primarily due to the $6,688 million cash used for the acquisitions of TDL and AJRD in fiscal 2023 and an increase of $202 million in net cash proceeds from the sale of businesses in fiscal 2024 (see “Divestitures” section below), partially offset by $100 million of contributions to our rabbi trust assets in fiscal 2024 .
Interest expense, net Our net interest expense increased in fiscal 2023 compared with fiscal 2022 primarily due to interest expense of $207 million on the $5.5 billion of long-term debt issued in fiscal 2023 and $69 million increase in interest expense on outstanding notes under our commercial paper program (“CP Program”) during fiscal 2023, both of which were primarily due to the acquisitions of TDL and AJRD.
Our net interest expense increased $132 million in fiscal 2024 compared with fiscal 2023 primarily due to a full year of interest on the $3.25 billion aggregate principal amount of fixed-rate debt issued in July 2023 in connection with the AJRD acquisition, the issuance of $2.25 billion aggregate principal amount of long- term fixed-rate debt in March 2024 and higher average outstanding notes under our commercial paper program (“ CP Program ”) during fiscal 2024 , partially offset by repayment of the entire outstanding $2.25 billion , three-year senior unsecured term loan facility (“ Term Loan 2025 ”) in March 2024.
Impairment of goodwill and other assets Impairment of goodwill and other assets consisted of the following non-cash charges: Fiscal Year Ended (In millions) December 29, 2023 December 30, 2022 Goodwill: (1) IMS $ 296 $ 367 CS — 355 SAS — 80 Total impairment of goodwill $ 296 $ 802 Other assets: Impairment of customer contracts 48 — Facility closure 9 — In-process R&D impairment (1) 21 — Total impairment of other assets $ 78 $ — Total impairment of goodwill and other assets $ 374 $ 802 _____________________________________________________________________ 29 ______________ (1) See Note 6: Goodwill and Intangible Assets in the Notes for further information.
For fiscal 2023 , includes a $21 million non-cash charge for impairment of in-process R&D associated with a facility closure and an $18 million non-cash charge for impairment of a customer contract. See Note 13: Acquisitions and Divestitures and Note 6: Goodwill and Intangible Assets in the Notes for further information.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+14 added−3 removed0 unchanged
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. In the normal course of business, we are exposed to the risks associated with foreign currency exchange rates and changes in interest rates. We employ established policies and procedures governing the use of financial instruments to manage our exposure to such risks.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Foreign Currency Risk We are exposed to foreign currency risks that arise in normal course of our business operations. These risks include the translation of local currency balances of foreign subsidiaries into U.S. dollars and transactions denominated in currencies other than a subsidiary’s functional currency.
Removed
For a discussion of such policies and procedures and the related risks, see “Financial Risk Management” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report, which is incorporated by reference into this Item 7A. In addition, we are exposed to market return fluctuations on our defined benefit plans.
Added
Assets and liabilities of international subsidiaries that use local currency as the functional currency, are translated at current rates of exchange and income and expense items are translated at the weighted average exchange rate for the year. In fiscal 2024 , approximately 10% of our business was transacted in local currency environments.
Removed
A material adverse decline in the value of these assets and/or the discount rate for PBOs would result in a decrease in the funded status of the defined benefit plans, an increase in net periodic benefit cost and an increase in required funding.
Added
At January 3, 2025 , the cumulative impact of translating the assets and liabilities of these operations to U.S. Dollars was a $265 million loss, which is included as a component of shareholders’ equity. Our U.S. and foreign businesses enter into contracts with customers, subcontractors or vendors that are denominated in currencies other than the functional currencies of such businesses.
Removed
To protect against declines in the discount rate (i.e., interest rates), we will continue to monitor the performance of these assets and market conditions as we evaluate the amount of future contributions. For further information, see Note 9: Retirement Benefits in the Notes, which information is incorporated by reference into this Item 7A.
Added
To manage our exposure to currency risk and market fluctuation risk associated with anticipated cash flows that are probable of occurring in the future, we implement foreign currency forward contracts to hedge both balance sheet and off-balance sheet future foreign currency commitments.
Added
At January 3, 2025 , we had open foreign currency forward contracts with an aggregate notional amount of $201 million , hedging certain forecasted transactions denominated in U.S. Dollars, Canadian Dollars and Australian Dollars. Notional amounts are used to measure the volume of foreign currency forward contracts and do not represent exposure to foreign currency losses.
Added
Factors that could impact the effectiveness of our hedging programs for foreign currency include accuracy of sales estimates, volatility of currency markets and the cost and availability of hedging instruments.
Added
At January 3, 2025 , a hypothetical 10% change in currency exchange rates for our foreign currency derivatives held would not have had a material impact on the fair value of such instruments or our results of operations or cash flows.
Added
This quantification of exposure to the market risk associated with foreign currency financial instruments does not take into account the offsetting impact of changes in the fair value of our foreign denominated assets, liabilities and firm commitments. Interest Rate Risk We have exposure to interest rate risk associated with our financing activities, primarily our long-term debt and short-term debt borrowings.
Added
At January 3, 2025 , our long-term debt consisted exclusively of fixed-rate debt with a carrying value and estimated fair value of $11,530 million and $11,179 million , respectively.
Added
The terms of our fixed- rate debt obligations are not puttable to us (i.e., not required to be redeemed by us prior to maturity) and we currently have no plans to refinance or repurchase outstanding fixed-rate debt prior to maturity.
Added
As such, fluctuation in market interest rates impact the fair value of our long-term debt but do not impact our statement of operations or cash flow. At January 3, 2025 , a hypothetical 10% change in interest rates on our long-term fixed-rate debt obligations would not have had a material impact on the fair value of these obligations .
Added
Additionally, at January 3, 2025 , we had short-term variable-rate debt outstanding under our CP Program of $515 million . Due to its short-term nature, the fair value of our short-term debt approximates the carrying value. Outstanding notes under our CP Program bear interest that is variable based on certain short-term indices, thus exposing us to interest-rate risk.
Added
At January 3, 2025 , a hypothetical 10% change in interest rates on our short-term debt obligations would not have had a material impact on our results of operations or cash flows .
Added
We can give no assurances, however, that interest rates will not change significantly or have a material effect on the fair value of our debt obligations or our results of operations or cash flows over the next twelve months.
Added
See Note 8: Debt and Credit Arrangements in the Notes for information regarding the maturities of our fixed-rate debt obligations and our CP program. _____________________________________________________________________ 36

Other LHX 10-K year-over-year comparisons