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What changed in L3Harris's 10-K — 2025 vs 2026

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Paragraph-level year-over-year comparison of L3Harris's 2025 and 2026 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 2026 report.

+327 added−329 removedSource: 10-K (2026-02-12) vs 10-K (2025-02-14)

Top changes in L3Harris's 2026 10-K

327 paragraphs added · 329 removed · 247 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

46 edited+8 added−6 removed15 unchanged
Biggest changeBroadband 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.
Biggest changeIntegrated Vision Solutions : Design, manufacture and sustainment of a full suite of helmet-mounted integrated night vision goggles with leading-edge image intensifier tubes, as well as weapon-mounted sights, aiming lasers, and range finders. Public Safety and Professional Communications (“PSPC”): State-of-the-art communication equipment, systems and applications for federal agencies, state and local government first responders, utilities and transit agencies.
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.
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 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.
Fixed-price contracts. Our U.S. Government fixed-price contracts are either firm fixed-price contracts or fixed- price incentive contracts. Under our U.S. Government firm fixed-price contracts, we agree to perform a specific scope of work or sell a specific product for a fixed price and, as a result, benefit from cost savings or carry the burden of cost overruns. Under our U.S.
Our U.S. Government fixed-price contracts are either firm fixed-price contracts or fixed-price incentive contracts. Under our U.S. Government firm fixed-price contracts, we agree to perform a specific scope of work or sell a specific product for a fixed price and, as a result, benefit from cost savings or carry the burden of cost overruns. Under our U.S.
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.
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 Our success depends on our skilled workforce.
Government cost-reimbursable contracts provide for the reimbursement of allowable costs plus payment of a fee and fall into three basic types: (i) cost-plus fixed-fee contracts, which provide for payment of a fixed fee irrespective of the final cost of performance; (ii) cost-plus incentive-fee contracts, which provide for payment of a fee that may increase or decrease, within specified limits, based on actual results compared with contractual targets relating to factors such as cost, performance and delivery schedule; and (iii) cost- plus award-fee contracts, which provide for payment of an award fee determined at the customer’s discretion based on our performance against pre-established performance criteria.
Government cost-type contracts provide for the reimbursement of allowable costs plus payment of a fee and fall into three basic types: (i) cost-plus fixed-fee contracts, which provide for payment of a fixed fee irrespective of the final cost of performance; (ii) cost-plus incentive-fee contracts, which provide for payment of a fee that may increase or decrease, within specified limits, based on actual results compared with contractual targets relating to factors such as cost, performance and delivery schedule; and (iii) cost-plus award-fee contracts, which provide for payment of an award fee determined at the customer’s discretion based on our performance against pre-established performance criteria.
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.
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 and air superiority platforms, national command and control, tactical surveillance, electronic attack, agile strike, mobility, and classified platforms.
Attracting, 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.
Attracting, 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. Workforce Demographics.
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.
Time-and-material contracts are considered fixed-price contracts as they specify a fixed hourly rate for each labor hour charged. _____________________________________________________________________ 3 For further discussion of risks relating to U.S. Government contracts, see “Item 1A. Risk Factors,” “Item 3. Legal Proceedings” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report. Environmental.
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.
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.
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.
We support 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 capabilities have defense and civil government applications, as well as commercial applications. Our fiscal year ends on the Friday nearest December 31.
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 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: ISR; position, navigation and timing; weather and climate monitoring; missile defense and ground-based space surveillance networks.
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.
As of January 2, 2026, 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.
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.
ITEM 1. BUSINESS. General L3Harris Technologies, Inc. is 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 national security.
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.
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, Shield Capital, Anduril and Amazon Kuiper to develop new capabilities to meet the demands of our customers.
The remaining amounts, including profits or incentive fees, are billed upon delivery and final acceptance of end items and deliverables under the contract. _____________________________________________________________________ 4 Our production contracts are mainly fixed-price contracts and development contracts are generally cost- reimbursable contracts, although we have some fixed-price development contracts.
The remaining amounts, including profits or incentive fees, are billed upon delivery and final acceptance of end items and deliverables under the contract. Our production contracts are mainly fixed-price contracts and development contracts are generally cost-type contracts, although we have some fixed-price development contracts.
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.
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.
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.
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 incidents. Talent Strategy. We are focused on ensuring we maintain a balanced talent portfolio.
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.
Regulations include, but are not limited to, those related to import and export controls, corruption, bribery, 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. Risk Factors” of this Report.
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.
Government, including the DoW, 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, tactical and fuzing systems. Space Propulsion and Power Systems (“SPPS”): Premier propulsion and power systems for national security, space and exploration missions.
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.
Under our U.S. Government cost-type contracts, we are reimbursed periodically for allowable costs and are paid a portion of the fee based on contract progress. Some costs are 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. Fixed-price contracts.
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.
Department of War (“DoW”) and 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.
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 .
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 6,000 new employees in fiscal 2025.
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”).
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.
Such collaboration is driven by modern market dynamics where competing in our markets requires the ability to fuse hardware, software and artificial intelligence (“AI”). Principal competitive factors are quality and reliability; technological capabilities; service; past performance; ability to develop and implement complex, integrated solutions; ability to meet delivery schedules; and cost-effectiveness.
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.
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.
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.
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. Securities and Exchange Commission (“SEC”).
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.
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.
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.
Government Contracts. In fiscal 2025, the percentage of our revenue that was derived from sales to U.S. Government customers, whether directly or through prime contractors, including foreign military sales funded through the U.S. Government, was 75% and no other customer accounted for more than 5% of our revenue.
Unless the context otherwise requires, the terms “we,” “our,” “us,” “Company” and “L3Harris” as used in this Report mean L3Harris Technologies, Inc. and its subsidiaries.
Unless the context otherwise requires, the terms “we,” “our,” “us,” “Company” and “L3Harris” as used in this Annual Report on Form 10-K (this “Report”) mean L3Harris Technologies, Inc. and its subsidiaries.
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.
Integrated Mission Systems (“IMS”). Delivers differentiated mission capabilities and prime systems integration to support multi-mission ISR, passive sensing and targeting, electronic attack, autonomy, power and communications, networks and sensors.
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.
Description of Business Segments We structure our operations primarily around the capabilities we provide and we report our financial results in four operating segments, which are also our reportable segments or business segments.
We frequently “partner” or are involved in subcontracting and teaming relationships with companies that are, from time to time, competitors on other programs. We compete domestically and internationally against large defense companies; principally BAE Systems, Boeing, General Dynamics, Lockheed Martin, Northrop Grumman, RTX, Thales and non- traditional defense contractors. For further discussion of trends in market demand, see “Item 7.
We frequently “partner” or are involved in subcontracting and teaming relationships with companies that are, from time to time, competitors on other programs. We compete domestically and internationally against large defense companies; principally BAE Systems, Boeing, General Dynamics, Lockheed Martin, Northrop Grumman, RTX, Thales and non-traditional defense contractors, such as Anduril, Ursa Major and Silvus Technologies.
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.
Our business segments provide a wide-range of capabilities to various customers and are described below. Communication Systems (“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.
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.
We had approximately 45,000 employees as of January 2, 2026, including approximately 18,000 engineers and scientists. Of our total employees, 90% were located in the U.S.
Government Regulations Our company is subject to various federal, state, local and international laws and regulations relating to the development, manufacture, sale and distribution of our products and services, and it is our policy to comply with the applicable laws in each jurisdiction in which we conduct business.
Government Regulations Our company is subject to various federal, state, local and international laws and regulations relating to the development, manufacture, sale and distribution of our products and services.
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 ”).
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. Aerojet Rocketdyne (“AR”). Provides propulsion, power and armament products and systems to U.S.
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.
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 on our contracts.
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.
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.
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 financial information regarding our domestic and international operations, including long-lived assets, see Note 14: Business Segments in the Notes. 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.
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.
The fiscal year ended January 2, 2026 (“fiscal 2025”) included 52 weeks, fiscal year ended January 3, 2025 (“fiscal 2024”) included 53 weeks, and the fiscal year ended December 29, 2023 (“fiscal 2023”) included 52 weeks.
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 .
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. _____________________________________________________________________ 4 Available Information Our principal executive offices are located at 1025 West NASA Boulevard, Melbourne, Florida 32919. Our website address is https://www.l3harris.com .
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.
Targeting & Sensor Systems (“TSS”) : Multi-domain, multi-spectral electro-optical (“EO”) and infrared (“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. _____________________________________________________________________ 1 Defense Electronics(“DE”): Space communications and space flight avionics; 360-degree visible/midwave IR passive surveillance; protected GPS communications, navigation and range-testing solutions; and precision electronic components.
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.
We expect to recognize approximately 45% of the revenue associated with such contractual backlog by the end of fiscal 2026 and approximately 70% by the end of fiscal 2027, with the remainder to be recognized thereafter. See Note 1: Significant Accounting Policies in the Notes for additional information regarding contractual backlog.
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.
International Business In fiscal 2025, revenue where the end consumer is located outside the U.S., including foreign military sales funded through the U.S. Government, whether directly or through prime contractors, was $4.8 billion (22% of our revenue) and came from over 100 countries with no single foreign country accounting for more than 5% of our total revenue.
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.
The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, including L3Harris, that file electronically with the SEC. Additional information regarding our human capital strategy and sustainability goals are available in our 2025 Sustainability Report which we expect to be published in fiscal 2026 on our company website.
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.
Commercial Aviation Solutions (“CAS disposal group”) : On March 28, 2025, the CAS disposal group was divested. See Note 13: Acquisitions and Divestitures in the Notes for further information. Space & Airborne Systems (“SAS”). Supplies full mission solutions as a prime and subsystem integrator in the space, airborne and cyber domains.
Removed
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.
Added
For financial information with respect to our business segments, see Note 14: Business Segments in the Notes to Consolidated Financial Statements in this Report (the “Notes”). Beginning fiscal 2026, we streamlined our business segments from four business segments to three business segments, more closely aligning common capabilities and business models. See Note 16: Subsequent Events in the Notes.
Removed
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 ”).
Added
Broadband Communications: Design, manufacture and sustainment of resilient and secure communication solutions that include intelligence, reconnaissance and surveillance (“ISR”) and tactical data links, software and integrated broadband networks.
Removed
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.
Added
For further discussion of trends in market demand, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report. _____________________________________________________________________ 2 Contractual Backlog As of the end of fiscal 2025, our contractual backlog was $38.7 billion.
Removed
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.
Added
Acquisition Reform We are pursuing our Trusted Disruptor strategy against the backdrop of acquisition reform, prioritizing engaging with our customers and delivering the innovation, agility and affordability our customers demand from the defense industrial base. Recent reforms to the U.S.
Removed
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 .
Added
Government’s acquisition strategy, including the transformation of the Defense Acquisition System into the Warfighting Acquisition System, are fundamentally shifting procurement priorities toward speed, flexibility, and mission outcomes.
Removed
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.
Added
Under this new approach, the DoW is streamlining contracting processes, delegating greater authority to empowered portfolio acquisition executives, and increasing the use of commercial solutions and alternative contracting methods to accelerate the delivery of urgently needed capabilities.
Added
These changes are designed to expand competition, incentivize private investment, and enhance supply chain resilience, which may result in new opportunities and requirements for defense contractors, as well as increased emphasis on rapid innovation and responsiveness in fulfilling government contracts.
Added
Information on our website, including our 2025 Sustainability Report, is not incorporated by reference into this Report. Cautionary Statement Regarding Forward-Looking Statements This Report, including “Item 7.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

72 edited+23 added−18 removed72 unchanged
Biggest changeOther 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.
Biggest changeOther risks of doing business internationally include: • Laws, regulations and policies of foreign governments relating to investments and operations, including laws restricting our ability to transact in certain countries and/or markets; • 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; _____________________________________________________________________ 8 • 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.
Any inability to timely develop cost-effective alternative sources of supply could materially impact our ability to manufacture and deliver products and services to our customers. In addition, we are required to procure certain materials and components, including certain microelectronic components, from U.S. Government-approved supply sources.
Any inability to timely develop cost-effective alternative sources of supply could materially impact our ability to manufacture and deliver products and services to our customers. In addition, we are required to procure certain materials and components, including microelectronic components, from U.S. Government-approved supply sources.
In the event of such a natural disaster or other disruption, we could experience disruptions or interruptions to our operations or the operations of our suppliers, subcontractors, distributors, resellers or customers, including inability of employees to work; destruction of facilities; and/or loss of life, all of which could materially increase our costs and expenses, delay or decrease orders and revenue from our customers and have a material adverse effect on the continuity of our business and our business, financial condition, results of operations, cash flows and equity.
In the event of such a natural disaster or other disruption, we could experience disruptions or interruptions to our operations or the operations of our suppliers, subcontractors, distributors, resellers or customers, including inability of employees to work; destruction of facilities; and/or loss of life, all of which could materially increase our costs and expenses, delay or decrease orders and revenue from our customers and have a material adverse effect on the continuity of our business, financial condition, results of operations, cash flows and equity.
Other examples of unforeseen problems that could result, either directly or indirectly, in the loss of life or property or otherwise negatively affect revenue and profitability include loss on launch of spacecraft, premature failure of products that cannot be accessed for repair or replacement, problems with quality and workmanship, country of origin, delivery of subcontractor components or services and unplanned degradation of product performance.
Other examples of unforeseen problems that _____________________________________________________________________ 14 could result, either directly or indirectly, in the loss of life or property or otherwise negatively affect revenue and profitability include loss on launch of spacecraft, premature failure of products that cannot be accessed for repair or replacement, problems with quality and workmanship, country of origin, delivery of subcontractor components or services and unplanned degradation of product performance.
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.
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.
Because those estimates underpin all components of our budgeting and forecasting, our estimates or guidance for future revenue, income and expenditures may be inaccurate, and we may make significant investments and expenditures but never realize the anticipated benefits.
Because those estimates underpin all components of our budgeting and _____________________________________________________________________ 7 forecasting, our estimates or guidance for future revenue, income and expenditures may be inaccurate, and we may make significant investments and expenditures but never realize the anticipated benefits.
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.
Contracts for development programs include complex design and technical requirements and are generally contracted on a cost-type 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.
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.
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 flows for future periods. We may not be successful in obtaining the necessary export licenses and Congress may prevent proposed sales to certain foreign governments.
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).
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 losses over time (which, especially in the case of sharp and significant sustained inflation, could happen quickly and have long lasting impacts).
As a result of that uncertainty, it is difficult to develop accurate estimates of the level of _____________________________________________________________________ 8 growth in the markets we serve.
As a result of that uncertainty, it is difficult to develop accurate estimates of the level of growth in the markets we serve.
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 _____________________________________________________________________ 11 regulatory sanctions.
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.
Furthermore, competitors may develop competing products and services or incorporate new technologies into their existing products and services that either gain market acceptance in advance of our products and services or cause our existing products and services or technologies to become non-competitive or obsolete, which could adversely affect our results of operations and harm our business.
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.
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.
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.
If we are not successful in obtaining or maintaining the necessary licenses or authorizations in a timely manner, our transactions 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 some instances, we depend upon a single supplier for components, which adds risk because that supplier may at times be unable to meet our needs and because we may have little negotiating leverage with sole-source suppliers. Identifying and qualifying dual and second-source suppliers can be difficult, time consuming and may result in increased costs.
In some instances, we depend upon a single supplier for certain components, which adds risk because that supplier may at times be unable to meet our needs and because we may have limited negotiating leverage with sole-source suppliers. Identifying and qualifying dual and second-source suppliers can be difficult, time-consuming and may result in increased costs.
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.
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 have allocated funds for such investments th rough customer-funded and internal R&D, strategic alliances and other teaming arrangements, but we may not be able to successfully identify new opportunities and may not have the necessary resources to develop new products and services in a timely or cost-effective manner.
We have allocated funds for such investments through customer-funded and internal R&D, strategic alliances and other teaming arrangements, but we may not be able to successfully identify new opportunities and may not have the necessary resources to develop new products and services in a timely or cost-effective manner.
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.
Macroeconomic, Industry and Governmental Risks We depend on winning profitable 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 DoW and other government agencies. The market for sales to U.S. Government customers is highly competitive and the U.S.
Unfavorable credit conditions in financial markets outside of the U.S. could adversely affect the ability of our international customers and suppliers to obtain financing and could result in a decrease in or cancellation of orders for our products and services or impact the ability of our customers to make payments.
Unfavorable credit conditions in financial markets outside of the U.S. or changes in U.S. aid or financial support could adversely affect the ability of our international customers and suppliers to obtain financing and could result in a decrease in or cancellation of orders for our products and services or impact the ability of our customers to make payments.
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.
Strategic transactions in which we have engaged and may engage in the future, including mergers, acquisitions and divestitures, and the planned IPO of the Missile Solutions business, 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 transaction risks; • Difficulty, delays and expense in integrating newly merged or acquired businesses and operations, including combining capabilities, 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 transactions 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 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.
In fiscal 2025, 75% 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.
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 .
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 contract mix. Fixed-price contracts, particularly for development programs, could subject us to losses from cost overruns or inflation.
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 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 _____________________________________________________________________ 5 Services Administration Schedules and other multi-award contracts, which has resulted in greater competition and increased pricing pressure.
To remain competitive, we need to continue to design, develop, manufacture, assemble, test, market and support new products and services, which will require the investment of significant financial resources in new technologies suc h as AI .
To remain competitive, we need to continue to design, develop, manufacture, assemble, test, market and support new products and services, which will require the investment of significant financial resources in new technologies such as AI.
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.
If we are not able to repay or refinance our debt as it becomes due or make contributions to our unfunded defined benefit plans liability, we may be forced to divest businesses, sell assets or take other disadvantageous actions, including reducing financing for working capital, capital expenditures and general corporate purposes; reducing our cash dividend rate and/or share repurchases; or dedicating an unsustainable level of our cash flow from operations to the payment of principal and interest on our indebtedness.
If we are not able to repay or refinance our debt as it becomes due, we may be forced to divest businesses, sell assets or take other disadvantageous actions, including reducing financing for working capital, capital expenditures and general corporate purposes; reducing our cash dividend rate and/or share repurchases; or dedicating an unsustainable level of our cash flow from operations to the payment of principal and interest on our indebtedness.
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.
Ongoing instability and current conflicts in global markets, including in 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 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.
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.
Some of our contracts have _____________________________________________________________________ 6 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.
Our worldwide operations and operations of our suppliers and customers could be subject to natural disasters (including those as a result of climate change) or other significant disruptions, including hurricanes, typhoons, tsunamis, floods, earthquakes, fires, water shortages, other extreme weather conditions, epidemics, pandemics, acts of terrorism, power shortages and blackouts, telecommunications failures and other natural and man-made disasters or disruptions.
Our worldwide operations and operations of our suppliers and customers could be subject to natural disasters or other significant disruptions, including hurricanes, typhoons, tsunamis, floods, earthquakes, fires, water shortages, other extreme weather conditions, epidemics, pandemics, acts of terrorism, power shortages and blackouts, telecommunications failures and other natural and man-made disasters or disruptions.
A conviction, or an administrative finding against us that satisfies the requisite level of seriousness, could result in debarment from contracting with the U.S. Government for a specific term, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity.
A conviction, or an administrative finding against us that satisfies the requisite level of seriousness, could result in civil and/or criminal penalties, including fines, seizure of our products and debarment from contracting with the U.S. Government for a specific term, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity.
Our ability to make payments on and to refinance our current or future indebtedness, and our ability to make contributions to our unfunded defined benefit plans liability, will depend on our ability to generate cash from operations, financings and investments, which may be subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
Our ability to make payments on and to refinance our current or future indebtedness, will depend on our ability to generate cash from operations, financings and investments, which may be subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
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.
From time to time agencies of the U.S. Government investigate whether we have been and are operating in accordance with these and/or applicable contractual 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.
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.
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. Our U.S. Government customers may challenge our data rights assertions. We may be required to spend significant resources to monitor and enforce our intellectual property rights.
Developments such as the adoption of new environmental laws and regulations, stricter enforcement of existing laws and regulations, violations by us of such laws and regulations, discovery of previously unknown or more extensive contamination, litigation involving environmental impacts, our inability to recover costs associated with any such developments under previously priced contracts or financial insolvency of other responsible parties could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity.
Developments such as the adoption of new environmental laws and regulations, stricter enforcement of existing laws and regulations, violations by us of such laws and regulations, discovery of previously unknown or more extensive contamination, litigation involving environmental impacts, our inability to recover costs associated with any such developments under previously priced contracts or financial insolvency of other responsible parties could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity. _____________________________________________________________________ 13 Our reputation and ability to do business may be impacted by the improper conduct of our employees, agents or business partners.
Our competitors may incorporate AI technologies into their products or services more quickly or more successfully than us, which could impair our ability to compete.
Our competitors, including non-traditional new entrants, may incorporate AI technologies into their products or services more quickly or more successfully than us, which could impair our ability to compete.
Our level of indebtedness and our ability to make payments on or service our indebtedness and our unfunded defined benefit plans liability may materially adversely affect our financial and operating activities or our ability to incur additional debt.
Our level of indebtedness and our ability to make payments on or service our indebtedness may materially adversely affect our financial and operating activities or our ability to incur additional debt.
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.
Government contract or relationship in particular 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.
Any release, unplanned ignition or explosion could expose us to adverse publicity or liability for damages or cause production delays, any of which could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity.
Any release, unplanned ignition or explosion could expose us to adverse publicity or liability for damages or cause production delays, any of which could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity. The failure to effectively maintain and modernize our IT systems and infrastructure could adversely affect our business.
There are transactions and calculations in the ordinary course of business where the application of tax law may be uncertain, require significant judgment or be subject to differing interpretations.
We are subject to income taxes in the U.S. and numerous international jurisdictions. There are transactions and calculations in the ordinary course of business where the application of tax law may be uncertain, require significant judgment or be subject to differing interpretations.
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.
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 the International Traffic in Arms Regulations (“ITAR”), the Export Administration Regulations (“EAR”), and U.S. Foreign Corrupt Practices Act (“FCPA”).
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.
Strategic Transactions and Investments Risks Strategic transactions, including mergers, acquisitions and divestitures, and the planned initial public offering (“IPO”) of the Missile Solutions business, involve significant risks and uncertainties that could adversely affect our business, financial condition, results of operations, cash flows and equity.
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.
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, or can obtain, U.S. Government security clearances, particularly clearances of top secret and above.
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.
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 contractual backlog lost as a result of any termination of our U.S. Government contracts. From time to time, we may begin performance of a U.S.
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.
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.
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.
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. Any inability of the U.S.
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.
Government contracts are generally 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.
Our success depends in large part on our proprietary technology. We rely on a combination of patents, copyrights, trademarks, trade secrets, know-how, confidentiality provisions and licensing arrangements to establish and protect our intellectual property rights.
We rely on a combination of patents, copyrights, trademarks, trade secrets, know-how, confidentiality provisions, proper use of data rights assertions with our government customers and licensing arrangements to establish and protect our intellectual property rights.
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.
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. Government funding or a change in U.S.
Assumptions and judgments in determining initial acquisition price may subsequently prove to have been inaccurate and unforeseen issues could arise, which could adversely affect the anticipated returns or which are otherwise not recoverable as an adjustment to the purchase price.
Assumptions and judgments used in determining the initial purchase price of an acquisition may subsequently prove to be inaccurate due to changes in business, market, or economic conditions, or as a result of unforeseen developments, which could adversely affect the anticipated returns or which are otherwise not recoverable as an adjustment to the purchase _____________________________________________________________________ 15 price.
These uncertainties or loss of negotiating leverage associated with long delays could have a material adverse impact on our business, financial condition, results of operations, cash flows and equity. Our U.S. Government business also is subject to specific procurement regulations and a variety of socioeconomic and other requirements that, although customary in U.S.
These uncertainties or loss of negotiating leverage associated with long delays could have a material adverse impact on our business, financial condition, results of operations, cash flows and equity.
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.
Any or all of the foregoing could have a negative impact on our business, financial condition, results of operations, cash flows and equity. The application or impact of negative audit findings, contract termination, unilateral government action, or regulation on our government contracts could have an adverse impact on our business, financial condition, results of operations, cash flows and equity. 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.
Because a significant portion of our revenue is dependent on our performance and payment under our government contracts, the loss of one or more large contracts could have a significant adverse impact on our business, financial condition, results of operations, cash flows and equity.
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.
Government policies or laws or delays in Congressional action due to several factors, including geopolitical and national security considerations. We may be unsuccessful in obtaining necessary licenses or authorizations or Congress may prevent or delay certain sales.
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.
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.
We have implemented various measures to manage the risk of a security breach or disruption. See “Item 1C.
We have implemented various measures to manage the risk of a security breach or disruption. See “Item 1C. Cybersecurity" in this Report for further discussion of our risk management and strategy related to cybersecurity threats.
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.
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.
Any or all of the foregoing could have a negative impact on our business, financial condition, results of operations, cash flows and equity, reputation, ability to protect data, assets, and intellectual property, maintenance of customer and vendor relationships, competitive posture, and could lead to litigation or regulatory investigations or actions.
However, we remain at risk of a data breach due to the intentional or unintentional non-compliance by a third party’s employee or agent, the breakdown of a third party’s data protection processes, which may not be as sophisticated as ours, or a cyber-attack on a third party’s information network and systems. _____________________________________________________________________ 10 Any or all of the foregoing could have a negative impact on our business, financial condition, results of operations, cash flows and equity, reputation, ability to protect data, assets, and intellectual property, maintenance of customer and vendor relationships, competitive posture, and could lead to litigation or regulatory investigations or actions.
Procurement funds are typically disbursed over the course of one to three years. Consequently, programs often initially receive only partial funding, and additional funds are obligated only as Congress authorizes further appropriations.
Although multi-year contracts may be authorized and appropriated in connection with major procurements, Congress generally appropriates funds on a U.S. Government fiscal year (“GFY”) basis. Procurement funds are typically disbursed over the course of one to three years. Consequently, programs often initially receive only partial funding, and additional funds are obligated only as Congress authorizes further appropriations.
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.
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.
We have implemented compliance controls, training, policies and procedures designed to prevent and detect reckless or criminal acts from being committed by our employees, agents or business partners that would violate the laws of the jurisdictions in which we operate, including laws governing payments to government officials, such as the FCPA, the protection of export-controlled or classified information, such as ITAR, false claims, procurement integrity, cost accounting and billing, competition, information security and data privacy and the terms of our contracts.
We have implemented compliance controls, training, policies and procedures designed to ensure compliance with, and prevent and detect reckless or criminal acts from being committed by our employees, agents or business partners that would violate the laws of the jurisdictions in which we operate.
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.
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, export controls, embargoes, product authenticity, cybersecurity regulation, and environmental standards may all impact our subcontractors and suppliers.
At January 3, 2025 , we ha d $11.8 billion in aggregate principal amount of outstanding fixed-rate debt, which reflects our total long-term debt, including current portion but excluding finance leases, and $205 million of unfun ded defined benefit plan liabilities.
As of January 2, 2026, we had $10.9 billion in aggregate principal amount of outstanding fixed-rate debt, which reflects our total long-term debt, including current portion but excluding finance leases.
We must first obtain export and other licenses and authorizations from various U.S. Government agencies before we are permitted to sell certain products and technologies outside of the U.S. For example, the U.S.
We must first obtain export and other licenses and authorizations from various U.S. Government agencies before we are permitted to engage in international transactions involving certain products and technologies. Our ability to obtain necessary licenses and authorizations is subject to risks and uncertainties, including changing U.S.
Some of our competitors have greater financial resources than we do and may have more extensive or more specialized engineering, manufacturing and marketing capabilities than we do in some areas. We may not be able to continue to win competitively awarded contracts or to obtain task orders under multi- award contracts.
Some of our competitors, including non-traditional new entrants to defense-related programs, have greater financial resources than we do and may have more extensive or more specialized engineering, manufacturing and marketing capabilities than we do in some areas.
However, our fixed-price contracts could subject us to losses in the event of cost overruns or a significant increase in or a sustained period of increased inflation if these measures are not effective. Any or all of the foregoing could have a negative impact on our business, financial condition, results of operations, cash flows and equity.
However, we may not be successful in accurately accounting for all increased costs, and our fixed-price contracts could subject us to losses in the event of cost overruns or a significant increase in or a sustained period of increased inflation if we are unable to account for and receive cost adjustments in our fixed-price contracts.
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.
In addition, our ability to withstand competitive pressures and to react to changes in the defense technology industry could be impaired.
Third parties have claimed in the past, and may claim in the future, that we are infringing directly or indirectly upon their intellectual property rights, and we may be found to be infringing or to have infringed directly or indirectly upon those intellectual property rights. Claims of infringement might also require us to enter into costly royalty or license agreements.
Third parties have claimed in the past, and may claim in the future, that we are infringing upon their intellectual property rights. Such claims may result in us having potential defense costs, royalty agreements, damage awards or injunctions granted against certain capabilities.
Government funding or a change in U.S. Government spending priorities could have an adverse impact on our business, financial condition, results of operations, cash flows and equity. We expect changes in policy positions and spending priorities from the new Administration. Our U.S.
Government spending priorities could have an adverse impact on our business, financial condition, results of operations, cash flows and equity. Our U.S. Government programs must compete with programs managed by other government contractors and with other policy imperatives for consideration for limited resources and for uncertain levels of funding during the budget and appropriations process.
Government, including the terms and conditions under which we do so, which may have an adverse impact on our business, financial condition, results of operations, cash flows and equity. Failure to comply with applicable regulations and requirements could lead to fines, penalties, repayments or compensatory or treble damages, or suspension or debarment from U.S.
Failure to comply with applicable regulations and requirements could lead to fines, penalties, repayments or compensatory or treble damages, or suspension or debarment from U.S. Government contracting or subcontracting for a period of time. The termination of a U.S.
Legal, Tax and Regulatory Risks Changes in our effective tax rate or additional tax exposures may have an adverse effect on our results of operations and cash flows. We are subject to income taxes in the U.S. and numerous international jurisdictions.
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. _____________________________________________________________________ 12 Legal, Tax and Regulatory Risks Changes in our effective tax rate or additional tax exposures may have an adverse effect on our results of operations and cash flows.
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.
Many of the markets we serve are characterized by vigorous protection and pursuit of intellectual property rights. Our competitive position in the market depends in part on our proprietary technology and our ability to ensure it is protected when necessary.
These types of matters cause uncertainty in financial and insurance markets and may significantly increase the political, economic and social instability in the geographic areas in which we operate.
Geo-political events and changes in foreign policy could cause isolationism or increased implementation of local solutions by international customers, which could adversely affect demand for our products, systems, services or technologies. Uncertainty in financial and insurance markets may significantly increase the political, economic and social instability in the geographic areas in which we operate which could further impact demand.
Removed
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.
Added
The DoW’s current procurement reform initiative, including the increased use of other transaction authority (“OTA”) agreements, could reduce barriers to entry and result in even greater competition and increased pricing pressure.
Removed
Government programs must compete with programs managed by other government contractors and with other policy imperatives for consideration for limited resources and for uncertain levels of funding during the budget and appropriations process. Although multi-year contracts may be authorized and appropriated in connection with major procurements, Congress generally appropriates funds on a U.S. Government fiscal year (“ GFY ”) basis.
Added
OTAs are not subject to many traditional procurement laws, including the Federal Acquisition Regulation (“FAR”), and in some instances, an OTA award may require that a significant part of the work be carried out by a non-traditional defense contractor or that a portion of the prototype project's costs be covered by non-governmental sources.
Removed
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.
Added
We may not be able to continue to win competitively awarded contracts or to obtain task orders under multi-award contracts, especially with increased competition.
Removed
Government contracts, increase our performance and compliance costs. These costs might increase in the future, thereby reducing our margins, which could have an adverse effect on our business, financial condition, results of operations, cash flows and equity. In addition, the U.S.
Added
We may choose not to bid in certain competitive bidding processes, which would result in the potential loss of opportunities, or we may choose to partner with competitors, which could expose our business to additional factors beyond our control.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAdditionally, 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.
Biggest changeThe 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. _____________________________________________________________________ 16 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.
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.
See “Item 1A. Risk Factors” in this Report for further discussion of specific risks related to cybersecurity threats. 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.
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 ”).
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”).
The Innovation and Cyber Committee also reviews our IT, data security and other systems, processes, policies, procedures and controls at least annually to (a) identify, assess, monitor and mitigate cybersecurity risks; (b) identify measures to protect and safeguard against cybersecurity threats and breaches of confidential information and data and IT infrastructure and our other assets or assets of our customers or other third parties in our possession or custody; (c) support the response and management of cybersecurity threats and data breach incidents; and (d) aid in compliance with legal and regulatory requirements governing cybersecurity or data security reporting requirements.
The Board also reviews our IT, data security and other systems, processes, policies, procedures and controls at least annually to (a) identify, assess, monitor and mitigate cybersecurity risks; (b) identify measures to protect and safeguard against cybersecurity threats and breaches of confidential information and data and IT infrastructure and our other assets or assets of our customers or other third parties in our possession or custody; (c) support the response and management of cybersecurity threats and data breach incidents; and (d) aid in compliance with legal and regulatory requirements governing cybersecurity or data security reporting requirements.
The Innovation and Cyber Committee reviews our cybersecurity risk across the enterprise at least annually, including IT, supply chain and products and our cybersecurity strategy framework and operational posture.
The Audit Committee reviews our cybersecurity risk across the enterprise at least annually, including IT, supply chain and our products and our cybersecurity strategy framework and operational posture.
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.
ITEM 1C. CYBERSECURITY. Risk Management and Strategy We assess and identify material risks from cybersecurity threats primarily through the work of our Global Technology and Business Solutions 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.
The CIO 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”).
The Innovation and Cyber Committee receives regular briefings from our CIO , Chief Information Security Officer and other members of senior management on cybersecurity threats and related matters and assists the Audit Committee in its oversight and review of our ERM process.
The Audit Committee receives regular briefings from our CIO, Chief Information Security Officer and other members of senior management on cybersecurity threats and related matters and provides oversight and review of our 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.
Our Global Technology and Business Solutions organization, is led by our Chief Information Officer (“CIO”), who has extensive experience leading information technology for global 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.
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 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.
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.
As a defense contractor, we must comply with the DoW's cybersecurity regulations, including the Defense Federal Acquisition Regulation Supplement, relating to the protection of Controlled Unclassified Information and prompt reporting of cybersecurity incidents.
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.
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.
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.
Activities and cybersecurity incidents are reported to our CIO, who briefs senior management, including our CEO, as well as our Board, as appropriate. Our Cybersecurity Team also routinely engages with third parties, including government agencies focused on cyber resiliency, to manage risks from cybersecurity threats.
Our Cybersecurity Team also routinely engages with third parties, including government agencies focused on cyber resiliency, to manage risks from cybersecurity threats. For example, we are members of the DoD Defense Industrial Base Collaborative Information Sharing Environment, the National Defense Information Sharing and Analysis Center, and the National Security Agency Enduring Security Framework.
For example, we are members of the DoW Defense Industrial Base Collaborative Information Sharing Environment, the National Defense Information Sharing and Analysis Center, and the National Security Agency’s Cybersecurity Collaboration Center. These organizations share real-time cybersecurity threat information and best practices in protecting, detecting and recovering from cybersecurity threats.
Removed
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.
Removed
The Innovation and Cyber Committee reports its activities to the full Board on a regular basis and makes such recommendations to the Board and management with respect to risks from cybersecurity threats and other matters as it deems necessary or appropriate.

Item 2. Properties

Properties — owned and leased real estate

4 edited+1 added−2 removed0 unchanged
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.
Biggest changeAs of January 2, 2026, we had major operations at the following locations: CS — Rochester, New York; Salt Lake City, Utah; Londonderry, New Hampshire; Lynchburg, Virginia; Tempe, Arizona; Carlsbad, California; Farnborough, United Kingdom; Brisbane, Australia; Melbourne and Sunrise, Florida; and Abu Dhabi, United Arab Emirates.
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 2. PROPERTIES. As of January 2, 2026, we operated approximately 230 locations in the U.S., Canada, EMEA, and APAC, consisting of approximately 25 million square feet of manufacturing, administrative, R&D, warehousing, engineering and office space, of which we owned approximately 11 million square feet and leased approximately 14 million square feet.
See Note 5: Property, Plant and Equipment, Net and Note 11: Leases in the Notes for more information on our owned properties and our lease obligations, respectively.
We will add, improve, replace or reduce facilities as appropriate to support our operational needs. See Note 5: Property, Plant and Equipment, Net and Note 11: Leases in the Notes for more information on our owned properties and our lease obligations, respectively.
IMS — Greenville, Waco, Rockwall and Plano, Texas; Mirabel and Waterdown, Canada; Camden, New Jersey; Anaheim, California; Mason and Cincinnati, Ohio; Tulsa, Oklahoma; Salt Lake City, Utah; Philadelphia, Pennsylvania; Crawley, United Kingdom; and Grand Rapids, Michigan.
IMS — Greenville, Waco, Rockwall and Plano, Texas; Mirabel and Waterdown, Canada; Camden, New Jersey; Anaheim, California; Tulsa, Oklahoma; Mason, Ohio; Salt Lake City, Utah; and Philadelphia, Pennsylvania. SAS — Palm Bay, Melbourne and Malabar, Florida; Rochester and Amityville, New York; Clifton, New Jersey; San Diego, California; Colorado Springs, Colorado; Fort Wayne, Indiana; Herndon, Virginia; Wilmington, Massachusetts; and Alpharetta, Georgia.
Removed
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.
Added
AR — Camden, Arkansas; Chatsworth, California; Huntsville, Alabama; West Palm Beach, Florida; Cincinnati, Ohio; Orange, Virginia; Redmond, Washington; Hancock County, Mississippi; and Orlando, Florida. Corporate — Melbourne, Florida; and Arlington, VA. Our facilities are maintained in good operating condition and we believe have adequate capacity to meet current contractual and operational requirements and those expected in the foreseeable future.
Removed
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.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

4 edited+1 added−4 removed0 unchanged
Biggest changeMehta 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.
Biggest change(“L3”) (2018-2019) Samir Mehta 53 President, Space & Mission Systems (1) January 2026 President, CS (2023-2025); President of Advanced Structures, Collins Aerospace (2018-2022); President, Aftermarket Services for UTL Aerospace Systems (2017-2018) Melanie Rakita 48 VP & 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 Rambeau 53 President, Communication & Spectrum Dominance (1) January 2026 President, IMS (2022-2025); 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) _______________ (1) Following our fiscal 2026 segment reorganization, see Note 16: Subsequent Events in the Notes.
ITEM 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.
ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS. Our executive officers as of February 12, 2026, 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.
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.
(“Epirus”) (2022-2023); President and Chief Operating Officer, Epirus (2022); CFO, Epirus (2020-2022); CFO, Northrop Grumman (2015-2020), Aerospace Sector CFO, Northrop Grumman (2013-2015) John Cantillon 59 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 Feddersen 54 Senior VP, General Counsel & Secretary December 2025 VP, General Counsel & Secretary, (2024-2025); VP, General Counsel of L3Harris SAS (2024); VP and General Counsel, Collins Aerospace Systems (2018-2023) Christopher Kubasik 64 Chairman 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.
All of our executive officers are elected annually and serve at the pleasure of our Board. PART II
There is no family relationship between any of our executive officers or directors. All of our executive officers serve at the pleasure of our Board. PART II
Removed
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.
Added
Name Age Position Held Since Recent Business Experience Kenneth Bedingfield 53 Senior Vice President (“VP”), Chief Financial Officer (“CFO”) President, Missile Solutions (1) December 2023 January 2026 President, AR (2024-2025); CEO, Epirus, Inc.
Removed
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.
Removed
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.
Removed
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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed5 unchanged
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 $3,381 _______________ * Periods represent our fiscal months.
Biggest changeRecent Sales of Unregistered Securities During fiscal 2025, we did not issue or sell any unregistered securities. _____________________________________________________________________ 19 Issuer Purchases of Equity Securities The following table sets forth information with respect to repurchases by us of our common stock during the fiscal quarter ended January 2, 2026: Period* Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (1) Maximum approximate dollar value of shares that may yet be purchased under the plans or programs (1) ($ in millions) Month No. 1 (October 4, 2025 - October 31, 2025) Repurchase program (1) 203,853 $ 294.29 203,853 $ 2,323 Employee transactions (2) 736 $ 291.98 — — Month No. 2 (November 1, 2025 - November 28, 2025) Repurchase program (1) 117,121 $ 281.64 117,121 $ 2,290 Employee transactions (2) 5,255 $ 288.29 — — Month No. 3 (November 29, 2025 - January 2, 2026) Repurchase program (1) 227,189 $ 280.02 227,189 $ 2,227 Employee transactions (2) 423 $ 281.63 — — Total 554,577 548,163 $ 2,227 _______________ * Periods represent our fiscal months.
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.
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 December 31, 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.
(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.
(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.
(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.
(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. The $6.0 billion authorization was fully utilized during first quarter 2025.
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.
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 6, 2026, there were 8,747 holders of record of our common stock. _____________________________________________________________________ 18 Dividends During fiscal 2025, 2024 and 2023, we paid quarterly per share cash dividends on our common stock of $1.20, $1.16 and $1.14, respectively.

Item 7. Management's Discussion & Analysis

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

94 edited+47 added−48 removed46 unchanged
Biggest changeFiscal Year Ended (Dollars in millions) January 3, 2025 December 29, 2023 % Inc/(Dec) Revenue $ 6,869 $ 6,856 —% Operating income 812 756 7% Operating margin 11.8 % 11.0 % SAS segment revenue remained flat in fiscal 2024 compared with fiscal 2023 due to higher revenues of $138 million in Intel & Cyber , primarily from program growth and $82 million in Mission Networks from higher volumes, offset by lower revenues of $217 million in Airborne Combat Systems , from lower revenue of $115 million associated with the divestiture of the Antenna disposal group and the remaining decrease primarily from lower F-35 related volume as TR-3 development transitions from development to a more gradual production ramp .
Biggest changeFiscal Year (Dollars in millions) 2025 2024 % Inc/(Dec) Revenue $ 6,946 $ 6,869 1 % Operating income 852 812 5 % Operating margin 12.3 % 11.8 % Ending contractual backlog $ 11,384 $ 9,427 SAS revenue increased in fiscal 2025 compared with fiscal 2024 due to higher revenue of $375 million in Mission Networks from higher FAA volume, offset by lower revenues of $166 million in Space Systems from lower volume associated with program timing, $129 million in Intel & Cyber from lower classified program volume and $76 million in Airborne Combat Systems from the May 2024 Antenna disposal group divestiture.
If we determine it is more-likely- than-not that the fair value of the reporting unit is less than its carrying amount, we perform a quantitative assessment. Our qualitative assessment of the recoverability of goodwill, whether performed annually or based on specific events or circumstances, considers various macroeconomic, industry-specific and company-specific factors.
If we determine it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, we perform a quantitative assessment. _____________________________________________________________________ 32 Our qualitative assessment of the recoverability of goodwill, whether performed annually or based on specific events or circumstances, considers various macroeconomic, industry-specific and company-specific factors.
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.
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 performance on the contract.
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 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 _____________________________________________________________________ 30 and performance on our ongoing contracts.
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 .
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 2025.
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.
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. Business - International Business,” “Item 1A.
Senior management has discussed the development and selection of the critical accounting estimates and the related disclosure included herein with the Audit Committee of our Board. Actual results may differ from those estimates. Revenue Recognition A significant portion of our business is derived from development and production contracts.
Senior management has discussed the development and selection of the critical accounting estimates and the related disclosure included herein with the Audit Committee of our Board. Actual results may differ from those estimates. Revenue Recognition A significant portion of our business is derived from long-term development and production contracts.
Allocation of goodwill to several reporting units could make it more likely that we will have an impairment charge in the future. An impairment charge to any one of our reporting units could have a material impact on our financial condition and results of operations.
Allocation of goodwill to multiple reporting units could make it more likely that we will have an impairment charge in the future. An impairment charge to any one of our reporting units could have a material impact on our financial condition and results of operations.
Significant Assumptions The determination of the projected benefit obligation (“ PBO ”) and recognition of net periodic benefit income related to defined benefit plans depend on various assumptions, including discount rates, expected return on plan assets, rate of future compensation increases, mortality, termination and other factors. We develop assumptions using relevant experience, in conjunction with market-related data for each plan.
Significant Assumptions The determination of the projected benefit obligation (“PBO”) and recognition of net periodic benefit income related to defined benefit plans depend on various assumptions, including discount rates, expected return on plan assets, rate of future compensation increases, mortality, termination and other factors. We develop assumptions using relevant experience, in conjunction with market-related data for each plan.
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.
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 national security. We support customers in more than 100 countries, with our largest customers being various departments and agencies of the U.S.
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.
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.
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.
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.
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 multiple reporting units.
Impact of Recently Adopted and Issued Accounting Pronouncements See Note 1: Significant Accounting Policies in the Notes for information relating to the impact of recently adopted and issued accounting pronouncements. _____________________________________________________________________ 35
Impact of Recently Adopted and Issued Accounting Pronouncements See Note 1: Significant Accounting Policies in the Notes for information relating to the impact of recently adopted and issued accounting pronouncements. _____________________________________________________________________ 34
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.
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.
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 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 $ (17) $ 17 Goodwill We test our goodwill for impairment annually as of the first business day of our fourth fiscal quarter, which was October 6 in fiscal 2025, 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.
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.
U.S. and International Budget Environment The percentage of our revenue that was derived from sales to U.S. Government customers, whether directly or through prime contractors, including foreign military sales funded through the U.S. Government, was 75%, 76% and 76%, in fiscal 2025, 2024 and 2023, respectively.
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.
Assumptions are reviewed annually with third-party experts and adjusted as appropriate. 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 average remaining service period of the plan’s active participants.
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.
We expect to make approximately $18 million of contributions to these plans in fiscal 2026 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.
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.
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 and projected discounted cash flows. The _____________________________________________________________________ 33 process of evaluating the potential impairment of goodwill is highly subjective and requires significant judgment.
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.
Our strategic priorities continue to be performance, growth and innovation. 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.
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.
Based on this approach, the weighted average long-term annual rate of return on assets was estimated to be 7.46% for both fiscal 2025 and 2026. Sensitivity Analysis.
Our products are used across many customer platforms and this platform-agnostic approach gives us a unique advantage in rapidly adapting to the changing threat environment while effectively partnering with new entrants and non-traditional contractors. Customer demand for our solutions remains robust, and we ended fiscal 2024 with backlog of $34.2 billion , a 5% increase over the prior year.
Our products are used across many customer platforms and this platform-agnostic approach gives us a unique advantage in rapidly adapting to the changing threat environment while effectively partnering with new entrants and non-traditional contractors. Customer demand for our solutions remains robust, and we ended fiscal 2025 with contractual backlog of $38.7 billion, a 13% increase over the prior year.
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.
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 2025 compared with fiscal 2024. A discussion of fiscal 2024 compared to fiscal 2023 can be found in Part II. Item 7.
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.
These contracts are subject to the FAR and the prices of our contract deliverables are typically based on our estimated or actual costs plus margin.
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.
Our primary capital deployment priorities involve a focus on funding the business through capital expenditures, including investing in training, facilities and digital infrastructure, debt repayment and returning cash to our shareholders through dividends and share repurchases.
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.
Our capital expenditures for fiscal 2026 are expected to be approximately $600 million. 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 contractual backlog as well as disclosure of contingent assets and liabilities.
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 .
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 $1.2 billion as of January 2, 2026 compared with $789 million as of January 3, 2025.
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.
Our Consolidated Balance Sheet as of January 2, 2026 included deferred tax assets of $76 million and deferred tax liabilities of $1,114 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.
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.
In fiscal 2025, we continued to make progress with our LHX NeXt initiative, our targeted program designed to enhance organizational agility and performance by leveraging our scale and relationships across segments, driving operational efficiency and competitiveness for the enterprise.
We use the following key financial performance measures to manage our business, which are discussed in detail below in the “Operations Review” and “Liquidity and Capital Resources” sections of this MD&A: • Revenue; • Operating income and margin; and • Net cash provided by operating activities.
We use the following key financial performance measures to manage our business, which are discussed in detail below in the “Operations Review” and “Liquidity and Capital Resources” sections of this MD&A: • Revenue; • Operating income and margin; and • Net cash provided by operating activities. _____________________________________________________________________ 22 We use these measures, along with other performance measures that are not defined by U.S.
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.
Also in fiscal 2025, we invested $536 million (2% of total revenue) in company-funded R&D focused on technologies that expand our capabilities across our domains.
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.
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 as of January 2, 2026 and net periodic benefit income for the next twelve months: (In millions) 25 Basis Point Increase 25 Basis Point Decrease PBO $ (128) $ 133 Net periodic benefit income 6 (7) Expected Return on Plan Assets.
Commercial Commitments We have entered into commercial commitments in the normal course of business including surety bonds, standby letter of credit agreements and other arrangements with financial institutions and customers primarily relating to the guarantee of future performance on certain contracts to provide products and services to customers or to obtain insurance policies with our insurance carriers.
See Note 9: Retirement Benefits in the Notes for further information regarding our pension plans. _____________________________________________________________________ 29 Commercial Commitments We have entered into commercial commitments in the normal course of business including surety bonds, standby letter of credit agreements and other arrangements with financial institutions and customers primarily relating to the guarantee of future performance on certain contracts to provide products and services to customers or to obtain insurance policies with our insurance carriers.
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 .
Our valuation allowance related to our deferred tax assets, which is reflected in our Consolidated Balance Sheet, was $260 million as of January 2, 2026.
Impairment of Goodwill and Other Assets. In fiscal 2024 , we recognized a $14 million non-cash charge for impairment of goodwill in connection with the divestiture of our antenna and related businesses (“ Antenna disposal group ”) and a $24 million non-cash charge for impairment of other assets at CS associated with the Tactical Data Links (“TDL”) acquisition .
In fiscal 2024, we recognized a $14 million non-cash charge for impairment of goodwill in connection with the divestiture of our antenna and related businesses (“Antenna disposal group”) and a $24 million non-cash charge for impairment of other assets in our CS segment associated with the Tactical Data Links (“TDL”) acquisition. Non-service FAS Pension Income and Other, Net.
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.
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.
Liquidity Assessment Given our current cash position, outlook for funds generated from operations, credit ratings, available credit facilities, cash needs and debt structure, we have not experienced to date, and do not expect to experience, any material issues with liquidity for the next 12 months and in the longer term, although we can give no assurances concerning our future liquidity, particularly in light of our overall level of debt, U.S.
Liquidity Assessment Given our current cash position, outlook for funds generated from operations, credit ratings, available credit facilities, cash needs and debt structure, we have not experienced to date, and do not expect to experience, any material issues with liquidity for the next 12 months and in the longer term.
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.
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 2025 Impairment Tests. We completed our annual goodwill impairment assessment for all reporting units as of October 6, 2025 and concluded that no impairment existed for any of the reporting units. Business realignment.
The 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.
The following table presents the significant assumptions used to determine the PBO: January 2, 2026 January 3, 2025 Pension Other Benefits Pension Other Benefits Discount rate 5.29 % 5.13 % 5.46 % 5.38 % _____________________________________________________________________ 31 The following table presents the significant assumptions used to determine net periodic benefit income: Fiscal Year 2025 2024 Pension Other Benefits Pension Other Benefits Discount rate to determine service cost 5.30 % 5.43 % 4.92 % 5.00 % Discount rate to determine interest cost 4.96 % 5.08 % 4.80 % 4.78 % Expected return on plan assets 7.46 % 7.50 % 7.45 % 7.50 % Discount Rate.
CS segment operating income increased in fiscal 2024 compared with fiscal 2023 primarily due to L HX NeXt driven cost savings realized during fiscal 2024 , partially offset by a higher mix of domestic radios related to competitive IDIQ contracts and a $24 million non-cash charge for impairment of other assets at Broadband Communications related to the TDL acquisition .
CS segment operating income increased in fiscal 2025 compared with fiscal 2024 primarily due to LHX NeXt driven cost savings realized during fiscal 2025 and the absence of a $24 million non-cash charge for impairment of other assets at Broadband Communications that occurred in fiscal 2024 related to the TDL acquisition, partially offset by unfavorable mix associated with a higher proportion of domestic development volume.
If we perform a quantitative assessment for a certain reporting unit, we calculate the fair value of that reporting unit and compare the fair value to the reporting unit’s net book value. We estimate fair values of our reporting units based on projected cash flows.
If we perform a quantitative assessment for a certain reporting unit, we calculate the fair value of that reporting unit and compare the fair value to the reporting unit’s net book value.
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 .
Government, their prime contractors and international allies. Our capabilities have defense _____________________________________________________________________ 20 and civil government applications, as well as commercial applications. As of January 2, 2026, we had approximately 45,000 employees, including approximately 18,000 engineers and scientists.
Divestitures. During fiscal 2024 , we completed the divestitures of our Antenna disposal group and Aerojet Ordnance Tennessee, Inc. (“ AOT disposal group ”) for net cash proceeds of $170 million and $103 million , respectively. During fiscal 2023 , we completed the divestiture of Visual Information Solutions for net cash proceeds of $71 million .
Divestitures. During fiscal 2025, we completed the divestiture of our CAS disposal group for net cash proceeds of $820 million. During fiscal 2024, we completed the divestitures of our Antenna disposal group and Aerojet Ordnance Tennessee, Inc. (“AOT disposal group”) for net cash proceeds of $170 million and $103 million, respectively.
An impairment of goodwill could result from a number of circumstances, including different assumptions used in determining the fair value of the reporting units; changes to U.S.
Based on the fiscal 2024 annual impairment testing, all of our reporting units had clearances above 25%. An impairment of goodwill could result from a number of circumstances, including different assumptions used in determining the fair value of the reporting units; changes to U.S.
Gross margin as a percentage of revenue remained flat compared to fiscal 2023 . For discussion of operating income by segment see “Business Segment Results of Operations” below in this MD&A for further information. General and Administrative (“G&A”) Expenses .
For discussion of operating income by segment see “Business Segment Results of Operations” below in this MD&A for further information. _____________________________________________________________________ 23 General and Administrative (“G&A”) Expenses.
See Note 13: Acquisitions and Divestitures in the Notes for further information . Financing Activities. Our primary financing activities include issuances of long-term debt and commercial paper, exercises of employee stock options , repayments of long-term debt and commercial paper, dividend payments and repurchases of common stock.
See Note 13: Acquisitions and Divestitures in the Notes for further information . Financing Activities. Our primary financing activities include issuing and repaying long-term debt and commercial paper, exercising employee stock options, paying dividends and repurchasing common stock.
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.
See Note 11: Leases in the Notes for further information regarding our lease commitments. Defined Benefit Pension Contributions. 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 2025, we made approximately $23 million of contributions to our U.S. qualified defined benefit pension plans.
Values derived from projected cash flows are corroborated through review of revenue and/or earnings multiples applied to the latest twelve months’ revenue and earnings of our reporting units.
We estimate fair values of our reporting units based on projected cash flows and review of revenue and/or earnings multiples applied to the latest twelve months’ revenue and earnings of our reporting units.
The majority of our fixed-rate debt has been incurred in connection with merger and acquisition activity. Additionally, we have outstanding interest on fixed-rate debt of $4.9 billion , of which $534 million is due within the next 12 months. See Note 8: Debt and Credit Arrangements in the Notes for further information regarding our fixed- rate debt. Purchase Obligations.
The majority of our fixed-rate debt has been incurred in connection with merger and acquisition activity. See Note 8: Debt and Credit Arrangements in the Notes for further information regarding our fixed-rate debt. Purchase Obligations. As of January 2, 2026, we had purchase obligations of approximately $10.2 billion, of which approximately 60% are due within the next 12 months.
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.
As of January 2, 2026, we had no outstanding borrowings under our credit facilities, had available borrowing capacity of $3.0 billion, net of outstanding borrowings under our CP Program, and were in compliance with all covenants under both of the following: 2025 Five-Year Credit Facility.
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 ”) .
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 January 3, 2025 (our “Fiscal 2024 Form 10-K”) .
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.
Capital Resources As of January 2, 2026, we had cash and cash equivalents of $1,069 million, of which $356 million was held by our foreign subsidiaries, a significant portion of which we believe can be repatriated to the U.S. with minimal tax impact. CP Program. As of January 2, 2026, we had no outstanding notes under our CP Program.
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.
Economic Environment The ongoing uncertainty related to the impacts of inflation, as well as the interest rate environment and ongoing federal deficits could in the future impact U.S. Government spending priorities for our products and services. For a discussion of inflation-related risks, see “Item 1A. Risk Factors” of this Report.
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.
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. We also use these and other performance metrics for executive compensation purposes.
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.
See Note 9: Retirement Benefits in the Notes for further information. (2) Primarily includes gains and losses on our equity investments in nonconsolidated affiliates and royalty income. Interest Expense, Net.
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.
Our AR segment includes missile solutions with propulsion technologies for strategic defense, missile defense, hypersonic, tactical and fuzing systems; and space propulsion and power systems for national security space and exploration missions.
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.
OPERATIONS REVIEW Consolidated Results of Operations Fiscal Year (Dollars in millions, except per share amounts) 2025 2024 Revenue $ 21,865 $ 21,325 Cost of revenue (16,240) (15,801) Gross margin 5,625 5,524 General and administrative expenses (3,430) (3,568) Impairment of goodwill and other assets (85) (38) Operating income 2,110 1,918 Non-service FAS pension income and other, net (1) 419 354 Interest expense, net (597) (675) Income before income taxes 1,932 1,597 Income taxes (326) (85) Effective Tax Rate 16.9 % 5.3 % Net income 1,606 1,512 Noncontrolling interests, net of tax — (10) Net income attributable to L3Harris $ 1,606 $ 1,502 Diluted EPS (2) $ 8.53 $ 7.87 ______________ (1) “FAS” is defined as Financial Accounting Standards.
Business Segment Results of Operations SAS. Our SAS segment includes space payloads, sensors and full-mission solutions; classified intelligence and cyber; airborne combat systems, and mission networks for air traffic management operations. See “Item 1. Business” of this Report for a description of the sectors in SAS.
Our SAS segment includes satellites and space payloads, sensors and full-mission solutions; classified intelligence and cyber; airborne combat systems, and mission networks for air traffic management operations.
Cash Flow The following table provides a summary of our cash flow information: Fiscal Year Ended (In millions) January 3, 2025 December 29, 2023 Cash and cash equivalents, beginning of period $ 560 $ 880 Operating Activities: Net income 1,512 1,198 Non-cash adjustments 1,576 1,162 Changes in working capital 66 286 Other, net (595) (550) Net cash provided by operating activities $ 2,559 $ 2,096 Net cash used in investing activities (263) (7,021) Net cash (used in) provided by financing activities (2,224) 4,594 Effect of exchange rate changes on cash and cash equivalents (17) 11 Net increase (decrease) in cash and cash equivalents $ 55 $ (320) Cash and cash equivalents, end of period $ 615 $ 560 Operating Activities.
See Note 8: Debt and Credit Arrangements in the Notes for further information regarding our credit facilities. _____________________________________________________________________ 27 Cash Flow The following table provides a summary of our cash flow information: Fiscal Year (In millions) 2025 2024 Cash and cash equivalents, beginning of period $ 615 $ 560 Operating Activities: Net income 1,606 1,512 Non-cash adjustments 1,551 1,576 Changes in working capital (7) 66 Other, net (44) (595) Net cash provided by operating activities 3,106 2,559 Net cash provided by (used in) investing activities 407 (263) Net cash used in financing activities (3,082) (2,224) Effect of exchange rate changes on cash and cash equivalents 23 (17) Net increase (decrease) in cash and cash equivalents 454 55 Cash and cash equivalents, end of period $ 1,069 $ 615 Operating Activities.
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 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.
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 .
The $670 million change in net cash provided by investing activities in fiscal 2025 compared with net cash used in investing activities in fiscal 2024 was primarily due to a $547 million increase in proceeds from the sale of businesses in fiscal 2025 (see “Divestitures” section below), net of cash divested, and the absence of a $100 million contribution to our rabbi trust assets made in fiscal 2024.
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.
As of January 2, 2026, we had $754 million of unrecognized tax benefits, of which $635 million would favorably impact our future tax rates in the event that the tax benefits are eventually recognized. See Note 7: Income Taxes in the Notes for additional information.
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 ”).
On February 18, 2025, we established a new $500 million 364-day senior unsecured revolving credit facility (“2025 364-Day Credit Facility”) by entering into a 364-day Credit Agreement (“2025 364-Day Credit Agreement”). The 2025 364-Day Credit Agreement replaces the prior $1.5 billion 364-day credit agreement (“2024 Credit Agreement”), which matured on January 24, 2025.
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.
For information related to the Antenna disposal group divestiture, including goodwill allocation, impairment testing and resulting impairment s ee Note 6: Goodwill and Intangible Assets in the Notes. At-risk Goodwill. Based on the fiscal 2025 annual impairment testing, all of our reporting units had clearances above 30%.
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.
The following table presents the components of G&A expenses: Fiscal Year (In millions) 2025 2024 Corporate: Acquisition-related intangibles $ (707) $ (779) LHX NeXt implementation costs (1) (167) (267) Change in fair value of deferred compensation plan liabilities (57) (40) Merger, acquisition, and divestiture-related expenses (57) (102) Business divestiture-related losses (2) (82) (19) Other unallocated corporate items (3) (146) (95) Segment: Company-funded R&D costs (536) (515) Selling and marketing (463) (445) Monetization of certain legacy end-of-life assets 184 62 Other (4) (1,399) (1,368) G&A expenses $ (3,430) $ (3,568) ______________ (1) 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.
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.
As such, we do not believe there to be a material liquidity risk associated with outstanding purchase obligations. Operating and finance lease commitments. As of January 2, 2026, we had operating and finance lease commitments of $1.3 billion, of which $193 million is due within the next 12 months.
Our effective tax rate for both years benefited from R&D credits, tax deductions for foreign derived intangible income (“ FDII ”) and favorable resolution of specific audit uncertainties.
Our ETR for both years benefited from favorable impacts of R&D credits, favorable resolution of audit uncertainties, and tax deductions for foreign derived intangible income (“FDII”). See Note 7: Income Taxes in the Notes for further information. Diluted EPS.
(2) See Note 13: Acquisitions and Divestitures in the Notes for further information. (3) Includes other segment G&A expenses such as payroll and benefits, outside services, facilities, insurance and other expenses, as well as unallocated corporate expenses, such as a portion of management and administration, legal, environmental, compensation, retiree benefits and other corporate G&A expenses and eliminations.
(3) Includes a portion of management and administration, legal, environmental, compensation, retiree benefits, the FAS/Cost Accounting Standards (“CAS”) operating adjustment (as defined in Note 1: Significant Accounting Policies), eliminations and other. (4) Includes other segment G&A expenses, primarily payroll and benefits, outside services, facilities and insurance.
At January 3, 2025 , we had purchase obligations of approximately $9.2 billion , of which approximately 60% are due within the next 12 months. Our purchase obligations mainly consist of outstanding commitments on open purchase orders made to suppliers, subcontractors and other outsourcing partners under U.S. Government contracts and managed service agreements .
Our purchase obligations mainly consist of outstanding commitments on open purchase orders made to suppliers, subcontractors and other outsourcing partners under U.S. Government contracts and managed service agreements. Our risk associated with these purchase obligations is generally limited to the termination liability provisions within such contracts.
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.
Investing Activities. Our primary investing activities include capital expenditures and cash proceeds from sales of businesses.
During fiscal 2024 , w e closed the issuance and sale of $2.25 billion aggregate principal amount of the n ew long-term fixed-rate debt consisting of the 5.05% 2029 Notes , the 5.25% 2031 Notes , and the 5.35% _____________________________________________________________________ 29 2034 Notes ( collectively, the “ March Issued 2024 Notes ”) and closed the issuance and sale of $600 million aggregate principal amount of the of the 5.50% Notes due 2054 (“ 5.50% 2054 Notes ”).
During fiscal 2024, we closed the issuance and sale of $2.25 billion aggregate principal amount of long-term fixed-rate debt consisting of 5.05% notes, due June 2029, 5.25% notes, due June 2031 and 5.35% notes, due June 2034 and used the proceeds to repay the entire outstanding $2.25 billion, variable rate-term loan facility utilized to finance the fiscal 2023 acquisition of TDL.
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.
From time to time, we use borrowings under the CP Program for general corporate purposes and working capital management, including the funding of acquisitions, debt repayment, dividend payments and repurchases of our common stock. See the “Financing Activities” discussion below in this MD&A for further information about our CP Program. Credit Facilities .
(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.
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. (3) See Note 13: Acquisitions and Divestitures in the Notes for further information.
The following table presents the components of non-service FAS pension income and other, net: Fiscal Year Ended (In millions) January 3, 2025 December 29, 2023 Non-service FAS pension income (1) $ 322 $ 310 Other, net (2) 32 28 Non-service FAS pension income and other, net $ 354 $ 338 _______________ (1) Includes interest cost, expected return on plan assets, amortization of net actuarial gain, and amortization of prior service (credit) cost components of net periodic benefit income under our defined benefit plans.
The following table presents the components of non-service FAS pension income and other, net: Fiscal Year (In millions) 2025 2024 Non-service FAS pension income (1) $ 356 $ 322 Change in fair value of deferred compensation plan assets 44 22 Other, net (2) 19 10 Non-service FAS pension income and other, net $ 419 $ 354 _______________ (1) Includes the non-service cost components of net periodic benefit income under our defined benefit pension and other postretirement benefit plans (collectively, “defined benefit plans”).
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 .
Our net interest expense decreased $78 million, or 12%, in fiscal 2025 compared with fiscal 2024 primarily due to lower average outstanding notes under our commercial paper program (“CP Program”) _____________________________________________________________________ 24 during 2025. 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.
The $6,818 million change in net cash used in financing activities in fiscal 2024 compared with net cash provided by financing activities in fiscal 2023 was primarily due to a decrease in net proceeds from long-term debt and an increase in net repayments of commercial paper of $4,741 million and $2,683 million , respectively, partially offset by a decrease in repayments of long-term debt of $550 million and an increase in proceeds from exercises of employee stock options of $109 million .
The $858 million increase in net cash used in financing activities in fiscal 2025 compared with fiscal 2024 was primarily due to increases in repayments of long-term debt, net of issuances of $825 million, cash used to repurchase common stock of $600 million and a decrease in net repayments of commercial paper of $569 million in fiscal 2025.
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 .
Our primary financing activities are further discussed below. Common stock repurchases. During fiscal 2025, we repurchased 5.1 million shares of our common stock under our share repurchase program for $1.2 billion. During fiscal 2024, we repurchased 2.5 million shares of our common stock under our share repurchase program for $554 million.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Report. Cash Requirements Total Fixed-Rate Debt. At January 3, 2025 , we had fixed-rate debt, which reflects our total long-term debt, including current portion but excluding finance leases, of $11.5 billion , of which $610 million is due within the next 12 months.
As of January 2, 2026, we had fixed-rate debt of $10.9 billion, reflecting our total long-term debt, including current portion but excluding finance leases, of which $650 million is due within the next 12 months. In addition, cash interest on fixed-rate debt of $520 million is due within the next 12 months.
SAS segment operating income increased in fiscal 2024 compared with fiscal 2023 , primarily due to LHX NeXt driven cost savings realized during fiscal 2024 , higher volume in Mission Networks and $46 million f rom the monetization of legacy end of life assets, aligned with our transformation and value creation priorities, in addition to the impact of a $27 million non-cash charge for impairment of other assets which occurred during fiscal 2023 .
SAS operating income increased in fiscal 2025 compared with fiscal 2024 primarily due to stabilized program performance, an increase in gains of $23 million recognized in connection with the monetization of legacy end-of-life assets aligned with our transformation and value creation priorities and LHX NeXt driven cost savings, partially offset by unfavorable mix. AR.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−2 removed5 unchanged
Biggest changeAt 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.
Biggest changeAs of January 2, 2026, our long-term debt consisted predominately of fixed-rate debt with a carrying value and estimated fair value of $10,876 million and $10,913 million, respectively.
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.
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 borrowings.
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.
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 2025, approximately 10% of our business was transacted in local currency environments.
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 .
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. As of January 2, 2026, 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.
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.
As of January 2, 2026, the cumulative impact of translating the assets and liabilities of these operations to U.S. Dollars was a $185 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.
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.
As of January 2, 2026, 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.
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.
As of January 2, 2026, we had open foreign currency forward contracts with an aggregate notional amount of $203 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.
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
See Note 8: Debt and Credit Arrangements in the Notes for information regarding the maturities of our fixed-rate debt obligations. _____________________________________________________________________ 35
Removed
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.
Removed
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 .

Other LHX 10-K year-over-year comparisons