☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the transition period from _______________ to ______________ |
Delaware | 34-0276860 | ||||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1025 West NASA Boulevard | ||||||||||||||
Melbourne, | Florida | 32919 | ||||||||||||
(Address of principal executive offices) | (Zip Code) |
Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common Stock, par value $1.00 per share | LHX | New York Stock Exchange |
Large accelerated filer | þ | Accelerated filer | ¨ | |||||||||||||||||
Non-accelerated filer | ¨ | Smaller reporting company | ☐ | |||||||||||||||||
Emerging growth company | ☐ |
Page No. | ||||||||
Part I: | ||||||||
Information about our Executive Officers | ||||||||
Part II: | ||||||||
Part III: | ||||||||
Part IV: | ||||||||
ITEM | ||||||||
Signatures |
ITEM 1. | BUSINESS. |
Overall | Executive | ||||||||||
Female population | 24% | 31% | |||||||||
Persons of color | 24% | 17% | |||||||||
Persons with disabilities | 6% | 4% | |||||||||
Veterans | 15% | 14% | |||||||||
Generational breakout(1): | |||||||||||
Boomers (1945-1964) | 31% | 35% | |||||||||
Generation X (1965-1980) | 35% | 55% | |||||||||
Millennials (1981-1996) | 32% | 10% | |||||||||
Generation Z (after 1996) | 2% | —% |
ITEM 1A. | RISK FACTORS. |
ITEM 1B. | UNRESOLVED STAFF COMMENTS. |
ITEM 2. | PROPERTIES. |
(In millions) | (In millions) | Approximate Total Sq. Ft. Owned | Approximate Total Sq. Ft. Leased | Approximate Total Sq. Ft. | |||||||||||||||||||||
Segment | Approximate Total Sq. Ft. Owned | Approximate Total Sq. Ft. Leased | Approximate Total Sq. Ft. | ||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||
Integrated Mission Systems | Integrated Mission Systems | 1.9 | 6.9 | 8.8 | |||||||||||||||||||||
Space and Airborne Systems | Space and Airborne Systems | 4.5 | 2.4 | 6.9 | |||||||||||||||||||||
Communication Systems | 1.5 | 0.5 | 2.0 | Communication Systems | 1.7 | 1.6 | 3.3 | ||||||||||||||||||
Electronic Systems | 2.0 | 1.4 | 3.4 | ||||||||||||||||||||||
Space and Intelligence Systems | 2.6 | 1.0 | 3.6 | ||||||||||||||||||||||
Aviation Systems | Aviation Systems | 2.6 | 3.5 | 6.1 | |||||||||||||||||||||
Corporate | 0.4 | 0.2 | 0.6 | Corporate | 0.3 | 0.3 | 0.6 | ||||||||||||||||||
Total | 6.5 | 3.1 | 9.6 | Total | 11.0 | 14.7 | 25.7 |
ITEM 3. | LEGAL PROCEEDINGS. |
ITEM 4. | MINE SAFETY DISCLOSURES. |
Name and Age | Position Currently Held and Past Business Experience | |||||||
William M. Brown, | Chairman and Chief Executive Officer since June 29, 2019. Chairman, President and Chief Executive Officer from April 2014 to June 2019. President and Chief Executive Officer from November 2011 to April 2014. Formerly with United Technologies Corporation (“UTC”), as Senior Vice President, Corporate Strategy and Development from April 2011 to October 2011; as President of UTC’s Fire & Security division from 2006 to 2011; and in U.S. and international roles at UTC’s Carrier Corporation from 2000 to 2006, including President of the Carrier Asia Pacific Operations; and as Director, Corporate Strategy and Business Development from 1997 to 2000. | |||||||
Todd W. Gautier, | President, Aviation Systems since June 29, 2019. Served with L3 as Senior Vice President and President of Electronic Systems Segment from March 2017 to June 2019; as President of Precision Engagement and Training Sector from January 2014 to March 2017; as President of Precision Engagement Sector from January 2010 to January 2014; and as Vice President of Business Development and Strategy for the Sensors and Simulation Group from January 2005 to January 2010. Before joining L3 in 2001, Mr. Gautier served in the U.S. Navy for 15 years as a Strike/Fighter | |||||||
James P. Girard, | Vice President and Chief Human Resources Officer since June 29, 2019. Vice President, Human Resources from July 2015 to June 2019. Vice President, Human Resources - Government Communications Systems from May 2014 to June 2015. Before joining L3Harris in May 2014, Mr. Girard worked for UTC, as Vice President, Human Resources at Sikorsky Aircraft from February 2014 to April 2014; as Director, Talent Resources from November 2011 to January 2014; as Vice President, Human Resources at UTC’s Global Fire Products from June 2010 to October 2011; and served in various Human Resources roles from 1995 to 2010. | |||||||
Christopher E. Kubasik, | Vice Chairman, President and Chief Operating Officer since June 29, 2019. Served with L3, as Chairman, Chief Executive Officer and President from May 2018 to June 2019; as Chief Executive Officer and President from January 2018 to May 2018; and as President and Chief Operating Officer from October 2015 to December 2017. Before joining L3 in October 2015, Mr. Kubasik worked for Seabury Advisory Group as President and Chief Executive Officer from March 2014 to October 2015; for Ackuity Advisors, Inc., as President and Chief Executive Officer from January 2013 to March 2014; and for Lockheed Martin Corporation, where he held various senior executive and finance roles from 1999 to 2012, including Vice Chairman, President and Chief Operating Officer from 2010 to 2012. | |||||||
Jesus “Jay” Malave Jr., | Senior Vice President and Chief Financial Officer since June 29, 2019. Before joining L3Harris, Mr. Malave worked at UTC, as Vice President and Chief Financial Officer of UTC’s Carrier Corporation from April 2018 to June 2019; as Chief Financial Officer of UTC’s Aerospace Systems from January 2015 to April 2018; as Head of Investor Relations from June 2012 to December 2014; as Vice President, Financial Planning and Treasury at Hamilton Sundstrand, with responsibility for planning the integration of Goodrich Corporation from May 2011 to June 2012; as Director of Investor Relations from June 2009 to May 2011; and prior to that, in other roles of increasing responsibility in financial planning and analysis, treasury and accounting. | |||||||
Dana A. Mehnert, | President, Communication Systems since September 2018. Senior Vice President, Chief Global Business Development Officer from July 2015 to September 2018. Group President, RF Communications from May 2009 to July 2015. President, RF Communications from July 2006 to May 2009. Mr. Mehnert joined L3Harris in 1984. | |||||||
Scott T. Mikuen, | Senior Vice President, General Counsel and Secretary since February 2013. Vice President, General Counsel and Secretary from October 2010 to February 2013. Vice President, Associate General Counsel and Secretary from October 2004 to October 2010. Vice President — Counsel, Corporate and Commercial Operations and Assistant Secretary from November 2000 to October 2004. Mr. Mikuen joined L3Harris in 1996 as Finance Counsel. |
Sean J. Stackley, | President, Integrated Mission Systems since June 29, 2019. Served with L3 as Senior Vice President and President of Communications & Networked Systems Segment from September 2018 to June 2019; and as Corporate Vice President, Strategic Advance Programs and Technologies from January 2018 to September 2018. Before joining L3 in January 2018, (Hon.) Mr. Stackley spent four decades in public service, including a 27-year career with the U.S. Navy, where he most recently was Acting Secretary of the Navy from January 2017 to July 2017 and Secretary of the Navy for Research, Development and Acquisition from 2008 to 2017. | |||||||
Todd A. Taylor, | Vice President, Principal Accounting Officer since May 2015. Vice President from April 2015 to May 2015. Formerly with Molex, Inc., as Vice President, Chief Accounting Officer and Corporate Controller from September 2012 to April 2015; as Director of Finance and Corporate Controller from September 2010 to September 2012; and as Director of Accounting from June 2008 to September 2010; Before joining Molex, Mr. Taylor worked for PricewaterhouseCoopers as Internal Audit Advisory Director from March 2003 to June | |||||||
Edward J. Zoiss, | President, Space and Airborne Systems since June 29, 2019. President, Electronic Systems from July 2015 to June 2019. Vice President and General Manager, Defense Programs, Government Communications Systems from June 2013 to July 2015. Vice President, C4ISR Electronics, Government Communications Systems from June 2012 to June 2013; Vice President, Advanced Programs and Technology, Government Communications Systems from July 2010 to June 2012. Mr. Zoiss joined L3Harris in 1995. |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
L3HARRIS PERIOD END | July 3, 2015 | July 1, 2016 | June 30, 2017 | June 29, 2018 | June 28, 2019 | January 3, 2020 | January 1, 2021 | ||||||||||||||||
L3Harris Technologies, Inc. | $ | 100 | $ | 109 | $ | 147 | $ | 198 | $ | 263 | $ | 295 | $ | 270 | |||||||||
S&P 500 | $ | 100 | $ | 104 | $ | 122 | $ | 139 | $ | 154 | $ | 171 | $ | 202 | |||||||||
S&P 500 Aerospace & Defense | $ | 100 | $ | 112 | $ | 144 | $ | 181 | $ | 200 | $ | 219 | $ | 177 |
L3HARRIS FISCAL YEAR END | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||
L3Harris (Prior to L3Harris Merger) | $ | 100 | $ | 105 | $ | 114 | $ | 154 | $ | 208 | $ | 276 | ||||||
S&P 500 | $ | 100 | $ | 108 | $ | 112 | $ | 132 | $ | 151 | $ | 167 | ||||||
S&P 500 Aerospace & Defense | $ | 100 | $ | 108 | $ | 122 | $ | 157 | $ | 196 | $ | 217 |
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) | 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) | |||||||||||||||||||||||||||
Month No. 1 | Month No. 1 | |||||||||||||||||||||||||||||||||||
(March 30, 2019-April 26, 2019) | ||||||||||||||||||||||||||||||||||||
(October 3, 2020-October 30, 2020) | (October 3, 2020-October 30, 2020) | |||||||||||||||||||||||||||||||||||
Repurchase program(1) | — | — | — | $501,279,637 | Repurchase program(1) | — | $ | — | — | $650,336,263 | ||||||||||||||||||||||||||
Employee transactions(2) | 717 | $ | 164.76 | — | — | Employee transactions(2) | 5,652 | $ | 170.67 | — | — | |||||||||||||||||||||||||
Month No. 2 | Month No. 2 | |||||||||||||||||||||||||||||||||||
(April 27, 2019-May 24, 2019) | ||||||||||||||||||||||||||||||||||||
(October 31, 2020-November 27, 2020) | (October 31, 2020-November 27, 2020) | |||||||||||||||||||||||||||||||||||
Repurchase program(1) | — | $ | — | — | $501,279,637 | Repurchase program(1) | 1,155,755 | $ | 192.17 | 1,155,755 | $428,238,336 | |||||||||||||||||||||||||
Employee transactions(2) | 5,629 | $ | 180.78 | — | — | Employee transactions(2) | 3,289 | $ | 176.29 | — | — | |||||||||||||||||||||||||
Month No. 3 | Month No. 3 | |||||||||||||||||||||||||||||||||||
(May 25, 2019-June 28, 2019) | ||||||||||||||||||||||||||||||||||||
(November 28, 2020-January 1, 2021) | (November 28, 2020-January 1, 2021) | |||||||||||||||||||||||||||||||||||
Repurchase program(1) | — | $ | — | — | $501,279,637 | Repurchase program(1) | 1,138,598 | $ | 191.34 | 1,138,598 | $210,383,051 | |||||||||||||||||||||||||
Employee transactions(2) | 1,409 | $ | 190.84 | — | — | Employee transactions(2) | 3,051 | $ | 189.62 | — | — | |||||||||||||||||||||||||
Total | 7,755 | — | $501,279,637 | Total | 2,306,345 | 2,294,353 | $210,383,051 |
(2)Represents a combination of (a) shares of our common stock delivered to us in satisfaction of the tax withholding obligation of holders of performance units, restricted units or restricted shares that vested during the quarter and (b) performance units, restricted units or restricted shares returned to us upon retirement or employment termination of employees. Our equity incentive plans provide that the value of shares delivered to us to pay the exercise price of options or to cover tax withholding obligations shall be the closing price of our common stock on the date the relevant transaction occurs. |
ITEM 6. | [RESERVED.] | ||||
Fiscal Years Ended | |||||||||||||||||||
2019(1) | 2018(2) | 2017(3) | 2016(4) | 2015(5) | |||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||
Results of Operations: | |||||||||||||||||||
Revenue from product sales and services | $ | 6,801 | $ | 6,168 | $ | 5,897 | $ | 5,992 | $ | 3,885 | |||||||||
Cost of product sales and services | 4,467 | 4,066 | 3,854 | 3,832 | 2,304 | ||||||||||||||
Interest expense | 169 | 170 | 172 | 183 | 130 | ||||||||||||||
Income from continuing operations before income taxes | 1,113 | 908 | 889 | 884 | 396 | ||||||||||||||
Income taxes | 160 | 206 | 261 | 273 | 109 | ||||||||||||||
Income from continuing operations | 953 | 702 | 628 | 611 | 287 | ||||||||||||||
Discontinued operations, net of income taxes | (4 | ) | (3 | ) | (85 | ) | (287 | ) | 47 | ||||||||||
Net income | 949 | 699 | 543 | 324 | 334 | ||||||||||||||
Average shares outstanding (diluted) | 120.5 | 121.1 | 124.3 | 125.0 | 106.8 | ||||||||||||||
Per Share Data (Diluted): | |||||||||||||||||||
Income from continuing operations | $ | 7.89 | $ | 5.78 | $ | 5.04 | $ | 4.87 | $ | 2.67 | |||||||||
Income (loss) from discontinued operations, net of income taxes | (0.03 | ) | (0.02 | ) | (0.68 | ) | (2.28 | ) | 0.44 | ||||||||||
Net income | 7.86 | 5.76 | 4.36 | 2.59 | 3.11 | ||||||||||||||
Cash dividends | 2.74 | 2.28 | 2.12 | 2.00 | 1.88 | ||||||||||||||
Financial Position at Fiscal Year-End: | |||||||||||||||||||
Net working capital(6) | $ | 310 | $ | 374 | $ | 105 | $ | 643 | $ | 909 | |||||||||
Net property, plant and equipment | 894 | 900 | 904 | 924 | 1,031 | ||||||||||||||
Long-term debt, net | 2,763 | 3,408 | 3,396 | 4,120 | 5,053 | ||||||||||||||
Total assets | 10,117 | 9,851 | 10,112 | 12,009 | 13,127 | ||||||||||||||
Equity | 3,363 | 3,278 | 2,903 | 3,057 | 3,402 | ||||||||||||||
Book value per share | 28.37 | 27.71 | 24.27 | 24.53 | 27.51 |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
•Business Considerations— a general description of our business; the value drivers of our business; fiscal 2020 results of operations and liquidity and capital resources key indicators; and industry-wide opportunities, challenges and risks that are relevant to us in defense, government and commercial markets. |
• | Operations Review — an analysis of our consolidated results of operations and of the results in each |
Fiscal Year Ended | Four Quarters Ended | ||||||||||
January 1, 2021 | January 3, 2020 | ||||||||||
(In millions) | As Reported | Pro Forma(6) | |||||||||
Revenue attributable to divested businesses(1): | |||||||||||
Harris Night Vision business(2) | $ | — | $ | 23 | |||||||
Airport security and automation business(3) | 147 | 495 | |||||||||
Applied Kilovolts and Analytical Instrumentation business(4) | 7 | 16 | |||||||||
EOTech business(5) | 48 | 52 | |||||||||
Total | $ | 202 | $ | 586 |
Fiscal Year Ended | Four Quarters Ended | Two Quarters Ended | Fiscal Year Ended | ||||||||||||||||||||||||||
January 1, 2021 | January 3, 2020 | January 3, 2020 | June 28, 2019 | ||||||||||||||||||||||||||
(In millions) | As Reported | As Reported (Unaudited) | Pro Forma | As Reported | |||||||||||||||||||||||||
Equity award acceleration charges, recognized upon change in control | $ | — | $ | 70 | $ | 70 | $ | 70 | $ | — | |||||||||||||||||||
Transaction costs, recognized as incurred | — | 105 | 83 | 83 | 31 | ||||||||||||||||||||||||
Additional cost of sales related to the fair value step-up in inventory sold | 31 | 142 | 142 | 142 | — | ||||||||||||||||||||||||
Restructuring charges | 10 | 117 | 117 | 117 | — | ||||||||||||||||||||||||
Facility consolidation costs | — | 48 | 48 | 48 | — | ||||||||||||||||||||||||
Integration costs, recognized as incurred | 130 | 102 | 132 | 72 | 34 | ||||||||||||||||||||||||
Total L3Harris Merger-related charges | $ | 171 | $ | 584 | $ | 592 | $ | 532 | $ | 65 |
Fiscal Year Ended | Four Quarters Ended | ||||||||||||||||||||||||||||||||||
January 1, 2021 | January 3, 2020 | % Inc/(Dec) | January 3, 2020 | % Inc/(Dec) | |||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts) | As Reported | As Reported (Unaudited) | Pro Forma | ||||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||||||
Integrated Mission Systems | $ | 5,538 | $ | 2,783 | * | $ | 5,360 | 3 | % | ||||||||||||||||||||||||||
Space and Airborne Systems | 4,946 | 4,352 | 14 | % | 4,689 | 5 | % | ||||||||||||||||||||||||||||
Communication Systems | 4,443 | 3,340 | 33 | % | 4,278 | 4 | % | ||||||||||||||||||||||||||||
Aviation Systems | 3,448 | 2,368 | * | 3,917 | (12) | % | |||||||||||||||||||||||||||||
Other non-reportable business segments | — | 102 | * | 23 | * | ||||||||||||||||||||||||||||||
Corporate eliminations | (181) | (89) | * | (170) | 6 | % | |||||||||||||||||||||||||||||
Total revenue | 18,194 | 12,856 | 42 | % | 18,097 | 1 | % | ||||||||||||||||||||||||||||
Total cost of product sales and services | (12,886) | (9,088) | 42 | % | (12,907) | — | % | ||||||||||||||||||||||||||||
% of total revenue | 71 | % | 71 | % | 71 | % | |||||||||||||||||||||||||||||
Gross margin | 5,308 | 3,768 | 41 | % | 5,190 | 2 | % | ||||||||||||||||||||||||||||
% of total revenue | 29 | % | 29 | % | 29 | % | |||||||||||||||||||||||||||||
Engineering, selling and administrative expenses | (3,315) | (2,540) | 31 | % | (3,588) | (8) | % | ||||||||||||||||||||||||||||
% of total revenue | 18 | % | 20 | % | 20 | % | |||||||||||||||||||||||||||||
Business divestiture-related (losses) gains | (51) | 229 | * | 229 | * | ||||||||||||||||||||||||||||||
Impairment of goodwill and other assets | (767) | (46) | * | (46) | * | ||||||||||||||||||||||||||||||
Non-operating income | 401 | 286 | 40 | % | 309 | 30 | % | ||||||||||||||||||||||||||||
Net interest expense | (254) | (204) | 25 | % | (253) | — | % | ||||||||||||||||||||||||||||
Income from continuing operations before income taxes | 1,322 | 1,493 | (11) | % | 1,841 | (28) | % | ||||||||||||||||||||||||||||
Income taxes | (234) | (146) | 60 | % | (189) | 24 | % | ||||||||||||||||||||||||||||
Effective tax rate | 18 | % | 10 | % | 10 | % | |||||||||||||||||||||||||||||
Income from continuing operations | 1,088 | 1,347 | (19) | % | 1,652 | (34) | % | ||||||||||||||||||||||||||||
Noncontrolling interests, net of income taxes | 33 | (12) | * | (24) | * | ||||||||||||||||||||||||||||||
Income from continuing operations attributable to L3Harris common shareholders | $ | 1,121 | $ | 1,335 | (16) | % | $ | 1,628 | (31) | % | |||||||||||||||||||||||||
% of total revenue | 6 | % | 10 | % | 9 | % | |||||||||||||||||||||||||||||
Income from continuing operations per diluted common share attributable to L3Harris common shareholders | $ | 5.19 | $ | 7.90 | (34) | % | $ | 7.25 | (28) | % |
Fiscal Years Ended | |||||||||||||||||
2019 | 2018 | 2019/2018 Percent Increase/ (Decrease) | 2017 | 2018/2017 Percent Increase/ (Decrease) | |||||||||||||
(Dollars in millions, except per share amounts) | |||||||||||||||||
Revenue: | |||||||||||||||||
Communication Systems | $ | 2,177 | $ | 1,904 | 14 | % | $ | 1,754 | 9 | % | |||||||
Electronic Systems | 2,583 | 2,365 | 9 | % | 2,245 | 5 | % | ||||||||||
Space and Intelligence Systems | 2,057 | 1,913 | 8 | % | 1,904 | — | |||||||||||
Corporate eliminations | (16 | ) | (14 | ) | * | (6 | ) | * | |||||||||
Total revenue | 6,801 | 6,168 | 10 | % | 5,897 | 5 | % | ||||||||||
Cost of product sales and services: | |||||||||||||||||
Cost of product sales | (3,615 | ) | (3,239 | ) | 12 | % | (3,058 | ) | 6 | % | |||||||
% of revenue from product sales | 64 | % | 64 | % | 66 | % | |||||||||||
Cost of services | (852 | ) | (827 | ) | 3 | % | (796 | ) | 4 | % | |||||||
% of revenue from services | 73 | % | 73 | % | 65 | % | |||||||||||
Total cost of product sales and services | (4,467 | ) | (4,066 | ) | 10 | % | (3,854 | ) | 6 | % | |||||||
% of total revenue | 66 | % | 66 | % | 65 | % | |||||||||||
Gross margin | 2,334 | 2,102 | 11 | % | 2,043 | 3 | % | ||||||||||
% of total revenue | 34 | % | 34 | % | 35 | % | |||||||||||
Engineering, selling and administrative expenses | (1,242 | ) | (1,182 | ) | 5 | % | (1,150 | ) | 3 | % | |||||||
% of total revenue | 18 | % | 19 | % | 20 | % | |||||||||||
Non-operating income | 188 | 156 | 21 | % | 166 | (6 | )% | ||||||||||
Net interest expense | (167 | ) | (168 | ) | (1 | )% | (170 | ) | (1 | )% | |||||||
Income from continuing operations before income taxes | 1,113 | 908 | 23 | % | 889 | 2 | % | ||||||||||
Income taxes | (160 | ) | (206 | ) | (22 | )% | (261 | ) | (21 | )% | |||||||
Effective tax rate | 14 | % | 23 | % | 29 | % | |||||||||||
Income from continuing operations | $ | 953 | $ | 702 | 36 | % | $ | 628 | 12 | % | |||||||
% of total revenue | 14 | % | 11 | % | 11 | % | |||||||||||
Income from continuing operations per diluted common share | $ | 7.89 | $ | 5.78 | 37 | % | $ | 5.04 | 15 | % |
Two Quarters Ended | |||||||||||||||||||||||||||||
January 3, 2020 | December 28, 2018 | % Inc/(Dec) | December 28, 2018 | % Inc/(Dec) | |||||||||||||||||||||||||
(Dollars in millions, except per share amounts) | As Reported | As Reported (Unaudited) | Pro Forma | ||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||
Integrated Mission Systems | $ | 2,758 | $ | 28 | * | $ | 2,497 | 10 | % | ||||||||||||||||||||
Space and Airborne Systems | 2,377 | 1,736 | 37 | % | 2,059 | 15 | % | ||||||||||||||||||||||
Communication Systems | 2,151 | 1,018 | 111 | % | 1,949 | 10 | % | ||||||||||||||||||||||
Aviation Systems | 2,038 | 342 | * | 1,970 | 3 | % | |||||||||||||||||||||||
Other non-reportable business segments | 23 | 86 | (73) | % | 12 | 92 | % | ||||||||||||||||||||||
Corporate eliminations | (84) | (2) | * | (83) | 1 | % | |||||||||||||||||||||||
Total revenue | 9,263 | 3,208 | 189 | % | 8,404 | 10 | % | ||||||||||||||||||||||
Total cost of product sales and services | (6,726) | (2,105) | 220 | % | (5,939) | 13 | % | ||||||||||||||||||||||
% of total revenue | 73 | % | 66 | % | 71 | % | |||||||||||||||||||||||
Gross margin | 2,537 | 1,103 | 130 | % | 2,465 | 3 | % | ||||||||||||||||||||||
% of total revenue | 27 | % | 34 | % | 29 | % | |||||||||||||||||||||||
Engineering, selling and administrative expenses | (1,881) | (583) | 223 | % | (1,598) | 18 | % | ||||||||||||||||||||||
% of total revenue | 20 | % | 18 | % | 19 | % | |||||||||||||||||||||||
Business divestiture-related (losses) gains | 229 | — | * | (6) | * | ||||||||||||||||||||||||
Impairment of goodwill and other assets | (46) | — | * | — | * | ||||||||||||||||||||||||
Non-operating income | 192 | 94 | 104 | % | 122 | 57 | % | ||||||||||||||||||||||
Net interest expense | (123) | (86) | 43 | % | (143) | (14) | % | ||||||||||||||||||||||
Income from continuing operations before income taxes | 908 | 528 | 72 | % | 840 | 8 | % | ||||||||||||||||||||||
Income taxes | (73) | (87) | (16) | % | (80) | (9) | % | ||||||||||||||||||||||
Effective tax rate | 8 | % | 16 | % | 10 | % | |||||||||||||||||||||||
Income from continuing operations | 835 | 441 | 89 | % | 760 | 10 | % | ||||||||||||||||||||||
Noncontrolling interests, net of income taxes | (12) | — | * | (12) | — | % | |||||||||||||||||||||||
Income from continuing operations attributable to L3Harris common shareholders | $ | 823 | $ | 441 | 87 | % | $ | 748 | 10 | % | |||||||||||||||||||
% of total revenue | 9 | % | 14 | % | 9 | % | |||||||||||||||||||||||
Income from continuing operations per diluted common share attributable to L3Harris common shareholders | $ | 3.68 | $ | 3.66 | 1 | % | $ | 3.27 | 13 | % |
Fiscal Years Ended | |||||||||||||||||
(Dollars in millions, except per share amounts) | June 28, 2019 | June 29, 2018 | % Inc/(Dec) | ||||||||||||||
Revenue: | |||||||||||||||||
Integrated Mission Systems | $ | 52 | $ | 55 | (5) | % | |||||||||||
Space and Airborne Systems | 3,711 | 3,294 | 13 | % | |||||||||||||
Communication Systems | 2,208 | 2,015 | 10 | % | |||||||||||||
Aviation Systems | 672 | 668 | 1 | % | |||||||||||||
Other non-reportable business segments | 165 | 148 | 11 | % | |||||||||||||
Corporate eliminations | (7) | (12) | (42) | % | |||||||||||||
Total revenue | 6,801 | 6,168 | 10 | % | |||||||||||||
Total cost of product sales and services | (4,467) | (4,066) | 10 | % | |||||||||||||
% of total revenue | 66 | % | 66 | % | |||||||||||||
Gross margin | 2,334 | 2,102 | 11 | % | |||||||||||||
% of total revenue | 34 | % | 34 | % | |||||||||||||
Engineering, selling and administrative expenses | (1,242) | (1,182) | 5 | % | |||||||||||||
% of total revenue | 18 | % | 19 | % | |||||||||||||
Non-operating income | 188 | 156 | 21 | % | |||||||||||||
Net interest expense | (167) | (168) | (1) | % | |||||||||||||
Income from continuing operations before income taxes | 1,113 | 908 | 23 | % | |||||||||||||
Income taxes | (160) | (206) | (22) | % | |||||||||||||
Effective tax rate | 14 | % | 23 | % | |||||||||||||
Income from continuing operations attributable to L3Harris common shareholders | $ | 953 | $ | 702 | 36 | % | |||||||||||
% of total revenue | 14 | % | 11 | % | |||||||||||||
Income from continuing operations per diluted common share attributable to L3Harris common shareholders | $ | 7.89 | $ | 5.78 | 37 | % |
Unaudited Pro Forma Condensed Combined Statement of Income | |||||||||||||||||||||||||||||||||||||||||
For the Four Quarters Ended January 3, 2020 | |||||||||||||||||||||||||||||||||||||||||
Two Quarters Ended June 28, 2019 | Two Quarters Ended January 3, 2020 | Four Quarters Ended January 3, 2020 | |||||||||||||||||||||||||||||||||||||||
(In millions, except per share amounts) | Historical Harris | Historical L3 | Pro Forma Adjustments | Note Ref | Pro Forma | L3Harris As Reported | Pro Forma | ||||||||||||||||||||||||||||||||||
Revenue from product sales and services | $ | 3,593 | $ | 5,331 | $ | (11) | a | $ | 8,834 | $ | 9,263 | $ | 18,097 | ||||||||||||||||||||||||||||
(79) | b | ||||||||||||||||||||||||||||||||||||||||
Cost of product sales and services | (2,362) | (3,875) | 11 | a | (6,181) | (6,726) | (12,907) | ||||||||||||||||||||||||||||||||||
54 | b | ||||||||||||||||||||||||||||||||||||||||
(9) | c | ||||||||||||||||||||||||||||||||||||||||
Engineering, selling and administrative expenses | (659) | (824) | 11 | b | (1,707) | (1,881) | (3,588) | ||||||||||||||||||||||||||||||||||
(228) | c | ||||||||||||||||||||||||||||||||||||||||
38 | d | ||||||||||||||||||||||||||||||||||||||||
(4) | e | ||||||||||||||||||||||||||||||||||||||||
4 | f | ||||||||||||||||||||||||||||||||||||||||
(45) | j | ||||||||||||||||||||||||||||||||||||||||
Business divestiture-related gains | — | — | — | — | 229 | 229 | |||||||||||||||||||||||||||||||||||
Impairment of right-of-use asset | — | — | — | — | (46) | (46) | |||||||||||||||||||||||||||||||||||
Merger, acquisition and divestiture related expenses | — | (45) | 45 | j | — | — | — | ||||||||||||||||||||||||||||||||||
Non-operating income | 94 | — | 23 | j | 117 | 192 | 309 | ||||||||||||||||||||||||||||||||||
Interest and other income, net | — | 15 | 19 | g | — | — | — | ||||||||||||||||||||||||||||||||||
(34) | j | ||||||||||||||||||||||||||||||||||||||||
Debt retirement charges | — | (3) | 3 | j | — | — | — | ||||||||||||||||||||||||||||||||||
Interest income | 1 | — | 8 | j | 9 | 12 | 21 | ||||||||||||||||||||||||||||||||||
Interest expense | (82) | (75) | 4 | h | (139) | (135) | (274) | ||||||||||||||||||||||||||||||||||
14 | i | ||||||||||||||||||||||||||||||||||||||||
Income from continuing operations before income taxes | 585 | 524 | (176) | 933 | 908 | 1,841 | |||||||||||||||||||||||||||||||||||
Income taxes | (73) | (87) | 44 | k | (116) | (73) | (189) | ||||||||||||||||||||||||||||||||||
Income from continuing operations | 512 | 437 | (132) | 817 | 835 | 1,652 | |||||||||||||||||||||||||||||||||||
Noncontrolling interests, net of income taxes | — | (12) | — | (12) | (12) | (24) | |||||||||||||||||||||||||||||||||||
Income from continuing operations attributable to common shareholders | $ | 512 | $ | 425 | $ | (132) | $ | 805 | $ | 823 | $ | 1,628 | |||||||||||||||||||||||||||||
Income from continuing operations per basic common share attributable to common shareholders | $ | 4.32 | $ | 3.62 | $ | 3.72 | $ | 7.34 | |||||||||||||||||||||||||||||||||
Income from continuing operations per diluted common share attributable to common shareholders | $ | 4.23 | $ | 3.57 | $ | 3.68 | $ | 7.25 | |||||||||||||||||||||||||||||||||
Basic weighted average common shares outstanding | 118.1 | 104.1 | l | 222.2 | 221.2 | 221.7 | |||||||||||||||||||||||||||||||||||
Diluted weighted average common shares outstanding | 120.7 | 104.6 | l | 225.3 | 223.7 | 224.5 |
Weighted Average Amortization Period | Fair Value(1) | Two Quarters Ended June 28, 2019 | |||||||||||||||
(In years) | (In millions) | ||||||||||||||||
Identifiable Intangible Assets Acquired: | |||||||||||||||||
Customer relationships | 15 | $ | 5,417 | $ | 222 | ||||||||||||
Trade names — Divisions | 9 | 123 | 6 | ||||||||||||||
Adjustment to engineering, selling and administrative expenses | 228 | ||||||||||||||||
Developed technology | 7 | 562 | 33 | ||||||||||||||
Less: L3 historical amortization | (24) | ||||||||||||||||
Adjustment to cost of product sales and services | 9 | ||||||||||||||||
Total net adjustment to amortization expense | $ | 237 | |||||||||||||||
_________ | |||||||||||||||||
(1) As of May 4, 2020, the date of filing our Current Report on Form 8-K. |
Fiscal Year Ended | Four Quarters Ended | ||||||||||||||||||||||||||||
January 1, 2021 | January 3, 2020 | % Inc/(Dec) | January 3, 2020 | % Inc/(Dec) | |||||||||||||||||||||||||
(Dollars in millions) | As Reported | As Reported (Unaudited) | Pro forma | ||||||||||||||||||||||||||
Revenue | $ | 5,538 | $ | 2,783 | * | $ | 5,360 | 3 | % | ||||||||||||||||||||
Operating income | $ | 847 | $ | 377 | * | $ | 698 | 21 | % | ||||||||||||||||||||
% of revenue | 15 | % | 14 | % | 13 | % |
2019 | 2018 | 2019/2018 Percent Increase/ (Decrease) | 2017 | 2018/2017 Percent Increase/ (Decrease) | |||||||||||||
(Dollars in millions) | |||||||||||||||||
Revenue | $ | 2,177 | $ | 1,904 | 14 | % | $ | 1,754 | 9 | % | |||||||
Cost of product sales and services | (1,158 | ) | (982 | ) | 18 | % | (882 | ) | 11 | % | |||||||
Gross margin | 1,019 | 922 | 11 | % | 872 | 6 | % | ||||||||||
% of revenue | 47 | % | 48 | % | 50 | % | |||||||||||
ESA expenses | (365 | ) | (356 | ) | 3 | % | (358 | ) | (1 | )% | |||||||
% of revenue | 17 | % | 19 | % | 20 | % | |||||||||||
Segment operating income | $ | 654 | $ | 566 | 16 | % | $ | 514 | 10 | % | |||||||
% of revenue | 30 | % | 30 | % | 29 | % |
Two Quarters Ended | Fiscal Years Ended | ||||||||||||||||||||||||||||||||||
January 3, 2020 | December 28, 2018 | % Inc/(Dec) | June 28, 2019 | June 29, 2018 | % Inc/(Dec) | ||||||||||||||||||||||||||||||
(Dollars in millions) | As Reported | As Reported (Unaudited) | As Reported | ||||||||||||||||||||||||||||||||
Revenue | $ | 2,758 | $ | 28 | * | $ | 52 | $ | 55 | (5 | %) | ||||||||||||||||||||||||
Operating income | $ | 371 | $ | 4 | * | $ | 10 | $ | 9 | 11 | % | ||||||||||||||||||||||||
% of revenue | 13 | % | 14 | % | 19 | % | 16 | % |
2019 | 2018 | 2019/2018 Percent Increase/ (Decrease) | 2017 | 2018/2017 Percent Increase/ (Decrease) | ||||||||||||
(Dollars in millions) | ||||||||||||||||
Revenue | $ | 2,583 | $ | 2,365 | 9 | $ | 2,245 | 5 | % | |||||||
Cost of product sales and services | (1,789 | ) | (1,652 | ) | 8 | (1,530 | ) | 8 | % | |||||||
Gross margin | 794 | 713 | 11 | 715 | — | |||||||||||
% of revenue | 31 | % | 30 | % | 32 | % | ||||||||||
ESA expenses | (295 | ) | (281 | ) | 5 | (258 | ) | 9 | % | |||||||
% of revenue | 11 | % | 12 | % | 11 | % | ||||||||||
Segment operating income | $ | 499 | $ | 432 | 16 | $ | 457 | (5 | )% | |||||||
% of revenue | 19 | % | 18 | % | 20 | % |
Fiscal Year Ended | Four Quarters Ended | ||||||||||||||||||||||||||||
January 1, 2021 | January 3, 2020 | % Inc/(Dec) | January 3, 2020 | % Inc/(Dec) | |||||||||||||||||||||||||
(Dollars in millions) | As Reported | As Reported (Unaudited) | Pro forma | ||||||||||||||||||||||||||
Revenue | $ | 4,946 | $ | 4,352 | 14 | % | $ | 4,689 | 5 | % | |||||||||||||||||||
Operating income | $ | 932 | $ | 816 | 14 | % | $ | 873 | 7 | % | |||||||||||||||||||
% of revenue | 19 | % | 19 | % | 19 | % |
Two Quarters Ended | Fiscal Years Ended | ||||||||||||||||||||||||||||||||||
January 3, 2020 | December 28, 2018 | % Inc/(Dec) | June 28, 2019 | June 29, 2018 | % Inc/(Dec) | ||||||||||||||||||||||||||||||
(Dollars in millions) | As Reported | As Reported (Unaudited) | As Reported | ||||||||||||||||||||||||||||||||
Revenue | $ | 2,377 | $ | 1,736 | 37 | % | $ | 3,711 | $ | 3,294 | 13 | % | |||||||||||||||||||||||
Operating income | $ | 447 | $ | 327 | 37 | % | $ | 696 | $ | 626 | 11 | % | |||||||||||||||||||||||
% of revenue | 19 | % | 19 | % | 19 | % | 19 | % | |||||||||||||||||||||||||||
2019 | 2018 | 2019/2018 Percent Increase/ (Decrease) | 2017 | 2018/2017 Percent Increase/ (Decrease) | ||||||||||||
(Dollars in millions) | ||||||||||||||||
Revenue | $ | 2,057 | $ | 1,913 | 8 | $ | 1,904 | — | ||||||||
Cost of product sales and services | (1,386 | ) | (1,299 | ) | 7 | (1,316 | ) | (1 | )% | |||||||
Gross margin | 671 | 614 | 9 | 588 | 4 | % | ||||||||||
% of revenue | 33 | % | 32 | % | 31 | % | ||||||||||
ESA expenses | (312 | ) | (283 | ) | 10 | (274 | ) | 3 | % | |||||||
% of revenue | 15 | % | 15 | % | 14 | % | ||||||||||
Segment operating income | $ | 359 | $ | 331 | 8 | $ | 314 | 5 | % | |||||||
% of revenue | 17 | % | 17 | % | 16 | % |
Fiscal Year Ended | Four Quarters Ended | ||||||||||||||||||||||||||||
January 1, 2021 | January 3, 2020 | % Inc/(Dec) | January 3, 2020 | % Inc/(Dec) | |||||||||||||||||||||||||
(Dollars in millions) | As Reported | As Reported (Unaudited) | Pro forma | ||||||||||||||||||||||||||
Revenue | $ | 4,443 | $ | 3,340 | 33 | % | $ | 4,278 | 4 | % | |||||||||||||||||||
Operating income | $ | 1,084 | $ | 836 | 30 | % | $ | 958 | 13 | % | |||||||||||||||||||
% of revenue | 24 | % | 25 | % | 22 | % |
Two Quarters Ended | Fiscal Years Ended | ||||||||||||||||||||||||||||||||||
January 3, 2020 | December 28, 2018 | % Inc/(Dec) | June 28, 2019 | June 29, 2018 | % Inc/(Dec) | ||||||||||||||||||||||||||||||
(Dollars in millions) | As Reported | As Reported (Unaudited) | As Reported | ||||||||||||||||||||||||||||||||
Revenue | $ | 2,151 | $ | 1,018 | 111 | % | $ | 2,208 | $ | 2,015 | 10 | % | |||||||||||||||||||||||
Operating income | $ | 493 | $ | 294 | 68 | % | $ | 637 | $ | 561 | 14 | % | |||||||||||||||||||||||
% of revenue | 23 | % | 29 | % | 29 | % | 28 | % | |||||||||||||||||||||||||||
Fiscal Year Ended | Four Quarters Ended | ||||||||||||||||||||||||||||
January 1, 2021 | January 3, 2020 | % Inc/(Dec) | January 3, 2020 | % Inc/(Dec) | |||||||||||||||||||||||||
(Dollars in millions) | As Reported | As Reported (Unaudited) | Pro forma | ||||||||||||||||||||||||||
Revenue | $ | 3,448 | $ | 2,368 | * | $ | 3,917 | (12 | %) | ||||||||||||||||||||
Operating income (loss) | $ | (177) | $ | 325 | * | $ | 503 | * | |||||||||||||||||||||
% of revenue | (5) | % | 14 | % | 13 | % |
Two Quarters Ended | Fiscal Years Ended | ||||||||||||||||||||||||||||||||||
January 3, 2020 | December 28, 2018 | % Inc/(Dec) | June 28, 2019 | June 29, 2018 | % Inc/(Dec) | ||||||||||||||||||||||||||||||
(Dollars in millions) | As Reported | As Reported (Unaudited) | As Reported | ||||||||||||||||||||||||||||||||
Revenue | $ | 2,038 | $ | 342 | * | $ | 672 | $ | 668 | 1 | % | ||||||||||||||||||||||||
Operating income | $ | 289 | $ | 40 | * | $ | 76 | $ | 54 | 41 | % | ||||||||||||||||||||||||
% of revenue | 14 | % | 12 | % | 11 | % | 8 | % | |||||||||||||||||||||||||||
Fiscal Year Ended | Four Quarters Ended | ||||||||||||||||||||||||||||
January 1, 2021 | January 3, 2020 | % Inc/(Dec) | January 3, 2020 | % Inc/(Dec) | |||||||||||||||||||||||||
(Dollars in millions) | As Reported | As Reported (Unaudited) | Pro forma | ||||||||||||||||||||||||||
Unallocated corporate expenses and corporate eliminations | $ | 109 | $ | 140 | (22 | %) | $ | 145 | (25 | %) | |||||||||||||||||||
L3Harris Merger-related transaction, integration and other expenses and losses | 130 | 325 | (60 | %) | 333 | (61 | %) | ||||||||||||||||||||||
L3Harris Merger-related restructuring costs | 10 | 117 | (91 | %) | 117 | (91 | %) | ||||||||||||||||||||||
Amortization of acquisition-related intangibles | 709 | 339 | 109 | % | 601 | 18 | % | ||||||||||||||||||||||
Impairment of identifiable intangible assets | 113 | — | * | — | * | ||||||||||||||||||||||||
Business divestiture-related losses (gains) | 51 | (229) | * | (229) | * | ||||||||||||||||||||||||
2019 | 2018 | 2019/2018 Percent Increase/ (Decrease) | 2017 | 2018/2017 Percent Increase/ (Decrease) | ||||||||||||||
(Dollars in millions) | ||||||||||||||||||
Unallocated corporate expense and corporate eliminations | $ | 133 | $ | 124 | 7 | % | $ | 119 | 4 | % | ||||||||
Amortization of intangible assets from Exelis Inc. acquisition | 101 | 101 | — | % | 109 | (7 | %) | |||||||||||
Two Quarters Ended | Fiscal Years Ended | ||||||||||||||||||||||||||||||||||
January 3, 2020 | December 28, 2018 | % Inc/(Dec) | June 28, 2019 | June 29, 2018 | % Inc/(Dec) | ||||||||||||||||||||||||||||||
(Dollars in millions) | As Reported | As Reported (Unaudited) | As Reported | ||||||||||||||||||||||||||||||||
Unallocated corporate expenses and corporate eliminations | $ | 139 | $ | 2 | * | $ | 2 | $ | 65 | (97 | %) | ||||||||||||||||||||||||
L3Harris Merger-related transaction, integration and other expenses and losses | 273 | 13 | * | 65 | — | * | |||||||||||||||||||||||||||||
L3Harris Merger-related restructuring costs | 117 | — | * | — | — | * | |||||||||||||||||||||||||||||
Amortization of acquisition-related intangibles | 289 | 50 | 478 | % | 101 | 101 | — | % | |||||||||||||||||||||||||||
Business divestiture-related losses (gains) | (229) | — | * | — | — | * | |||||||||||||||||||||||||||||
Fiscal Year Ended | Four Quarters Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||||||||||||||||||||||||
Fiscal Years Ended | January 1, 2021 | January 3, 2020 | January 3, 2020 | December 28, 2018 | June 28, 2019 | June 29, 2018 | ||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | ||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | As Reported | As Reported (Unaudited) | As Reported | As Reported (Unaudited) | As Reported | ||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||||||||
Net cash provided by operating activities | $ | 1,185 | $ | 751 | $ | 569 | Net cash provided by operating activities | $ | 2,790 | $ | 1,655 | $ | 939 | $ | 469 | $ | 1,185 | $ | 751 | |||||||||||||||||||||||||||
Net cash provided by (used in) investing activities | (159 | ) | (141 | ) | 870 | Net cash provided by (used in) investing activities | 751 | 1,228 | 1,320 | (67) | (159) | (141) | ||||||||||||||||||||||||||||||||||
Net cash used in financing activities | (781 | ) | (805 | ) | (1,438 | ) | Net cash used in financing activities | (3,112) | (2,410) | (1,971) | (342) | (781) | (805) | |||||||||||||||||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (3 | ) | (1 | ) | (4 | ) | Effect of exchange rate changes on cash and cash equivalents | 23 | 8 | 6 | (5) | (3) | (1) | |||||||||||||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 242 | (196 | ) | (3 | ) | Net increase (decrease) in cash and cash equivalents | 452 | 481 | 294 | 55 | 242 | (196) | ||||||||||||||||||||||||||||||||||
Cash and cash equivalents, beginning of year | 288 | 484 | 487 | |||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents, end of year | $ | 530 | $ | 288 | $ | 484 | ||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents, beginning of period | Cash and cash equivalents, beginning of period | 824 | 343 | 530 | 288 | 288 | 484 | |||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents, end of period | Cash and cash equivalents, end of period | $ | 1,276 | $ | 824 | $ | 824 | $ | 343 | $ | 530 | $ | 288 |
Payment Due by Period | |||||||||||||||||||||||||||||||||||||||||||||||||
Obligations Due | |||||||||||||||||||||||||||||||||||||||||||||||||
Total | Less than 1 Year | Years 1 - 3 | Years 3 - 5 | After 5 Years | |||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | Total | Less than 1 Year | Years 1 - 3 | Years 3 - 5 | More than 5 Years | |||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt | Long-term debt | $ | 3,443 | $ | 657 | $ | 7 | $ | 3 | $ | 2,776 | Long-term debt | $ | 6,832 | $ | 8 | $ | 1,062 | $ | 955 | $ | 4,807 | |||||||||||||||||||||||||||
Purchase obligations (1) | Purchase obligations (1) | 1,736 | 1,160 | 533 | 42 | 1 | Purchase obligations (1) | 3,676 | 3,051 | 586 | 32 | 7 | |||||||||||||||||||||||||||||||||||||
Operating lease commitments | Operating lease commitments | 313 | 68 | 109 | 72 | 64 | Operating lease commitments | 997 | 148 | 243 | 181 | 425 | |||||||||||||||||||||||||||||||||||||
Interest on long-term debt | Interest on long-term debt | 1,899 | 147 | 264 | 264 | 1,224 | Interest on long-term debt | 2,520 | 268 | 518 | 433 | 1,301 | |||||||||||||||||||||||||||||||||||||
Minimum pension contributions (2) | Minimum pension contributions (2) | 3 | 3 | — | — | — | Minimum pension contributions (2) | 6 | 6 | — | — | — | |||||||||||||||||||||||||||||||||||||
Total contractual cash obligations (3) | $ | 7,394 | $ | 2,035 | $ | 913 | $ | 381 | $ | 4,065 | |||||||||||||||||||||||||||||||||||||||
Total(3) | Total(3) | $ | 14,031 | $ | 3,481 | $ | 2,409 | $ | 1,601 | $ | 6,540 |
Expiration of Commitments | ||||||||||||||||||||||||||||||||||||||||||||||||
Expiration of Commitments | ||||||||||||||||||||||||||||||||||||||||||||||||
Total | Less than 1 Year | Year 2 | Year 3 | After 3 years | ||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | Total | Less than 1 Year | Year 2 | Year 3 | After 3 years | ||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
Surety bonds used for: | Surety bonds used for: | |||||||||||||||||||||||||||||||||||||||||||||||
Bids | $ | 3 | $ | 3 | $ | — | $ | — | $ | — | Bids | $ | 3 | $ | 3 | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||
Performance | 512 | 362 | 34 | 58 | 58 | Performance | 488 | 354 | 17 | 109 | 8 | |||||||||||||||||||||||||||||||||||||
515 | 365 | 34 | 58 | 58 | 491 | 357 | 17 | 109 | 8 | |||||||||||||||||||||||||||||||||||||||
Standby letters of credit used for: | Standby letters of credit used for: | |||||||||||||||||||||||||||||||||||||||||||||||
Down payments | 60 | 60 | — | — | — | Down payments | 351 | 172 | 83 | 37 | 59 | |||||||||||||||||||||||||||||||||||||
Performance | 148 | 93 | 6 | 5 | 44 | Performance | 305 | 147 | 65 | 14 | 79 | |||||||||||||||||||||||||||||||||||||
Warranty | 16 | 15 | — | — | 1 | Warranty | 72 | 67 | 4 | — | 1 | |||||||||||||||||||||||||||||||||||||
224 | 168 | 6 | 5 | 45 | 728 | 386 | 152 | 51 | 139 | |||||||||||||||||||||||||||||||||||||||
Total commitments | $ | 739 | $ | 533 | $ | 40 | $ | 63 | $ | 103 | Total commitments | $ | 1,219 | $ | 743 | $ | 169 | $ | 160 | $ | 147 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | ||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | ||||||||||||||||||||||||||||||||
(In millions) | (In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||
Favorable adjustments | $ | 138 | $ | 127 | $ | 117 | Favorable adjustments | $ | 714 | $ | 303 | $ | 138 | $ | 127 | |||||||||||||||||||
Unfavorable adjustments | (121 | ) | (146 | ) | (118 | ) | Unfavorable adjustments | (314) | (166) | (121) | (146) | |||||||||||||||||||||||
Net operating income adjustments | $ | 17 | $ | (19 | ) | $ | (1 | ) | Net operating income adjustments | $ | 400 | $ | 137 | $ | 17 | $ | (19) |
Obligation assumptions as of: | June 28, 2019 | June 29, 2018 | |
Discount rate | 3.35% | 4.05% | |
Rate of future compensation increase | 2.76% | 2.76% | |
Cost assumptions for fiscal years: | 2019 | 2018 | |
Discount rate to determine service cost | 3.89% | 3.48% | |
Discount rate to determine interest cost | 3.75% | 3.28% | |
Expected return on plan assets | 7.66% | 7.66% | |
Rate of future compensation increase | 2.76% | 2.76% |
Obligation assumptions as of: | January 1, 2021 | January 3, 2020 | |||||||||||||||
Discount rate | 2.31% | 3.14% | |||||||||||||||
Rate of future compensation increase | 3.01% | 2.80% | |||||||||||||||
Cash balance interest crediting rate | 3.50% | 3.50% | |||||||||||||||
Cost assumptions for fiscal periods ended: | January 1, 2021 | January 3, 2020 | |||||||||||||||
Discount rate to determine service cost | 2.87% | 3.11% | |||||||||||||||
Discount rate to determine interest cost | 2.74% | 2.94% | |||||||||||||||
Expected return on plan assets | 7.68% | 7.68% | |||||||||||||||
Rate of future compensation increase | 2.80% | 2.97% | |||||||||||||||
Cash balance interest crediting rate | 3.50% | 3.50% |
Increase/(Decrease) in Pension Expense | |||||||||||
(In millions) | 25 Basis Point Increase | 25 Basis Point Decrease | |||||||||
Long-term rate of return on assets used to determine net periodic benefit cost | $ | (20) | $ | 20 | |||||||
Discount rate used to determine net periodic benefit cost | $ | 3 | $ | (3) |
Increase/(Decrease) in Pension Expense | |||||||
25 Basis Point Increase | 25 Basis Point Decrease | ||||||
(In millions) | |||||||
Long-term rate of return on assets used to determine net periodic benefit cost | $ | (12.0 | ) | $ | 12.0 | ||
Discount rate used to determine net periodic benefit cost | $ | 7.7 | $ | (2.6 | ) |
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
Page | |||||
Consolidated Statement of Income — Fiscal Year Ended January 1, 2021, Two Quarters Ended January 3, 2020, and Fiscal Years | |||||
Consolidated Statement of Comprehensive Income — Fiscal Year Ended January 1, 2021, Two Quarters Ended January 3, 2020, and Fiscal Years | |||||
Consolidated Balance Sheet — | |||||
Consolidated Statement of Equity — Fiscal Year Ended January 1, 2021, Two Quarters Ended January 3, 2020, and Fiscal Years | |||||
Cost estimation for revenue recognition on development and production contracts | |||||
Description of the Matter | As described in Note 1 of the consolidated financial statements, the Company recognized revenue for certain of its development and production contracts over time, typically using a percentage of completion cost-to-cost method, which required estimates of the total cost to be incurred for each contract at completion. At the outset of the contract, the Company establishes an estimated total cost to complete, taking into consideration the complexity and perceived risks associated with the technical, schedule, and cost aspects of the contract. After establishing the estimated total cost to complete, the Company reviews the progress and performance on its ongoing development and production contracts at least quarterly and updates the estimated total cost to complete as needed. Such estimates are subject to change during the performance of the contract and significant changes in estimates could have a material effect on the Company’s results of operations. Auditing the cost estimation for development and production contracts involved subjective auditor judgment because the Company’s development of the estimated total cost at completion required estimates of the cost of the work to be completed based on the Company’s assumptions around achieving the technical, schedule and cost aspects of its development and production contracts. In determining the estimates of the cost of the work to be completed, the Company considered the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. Estimates of total cost at completion were also affected by management’s assessment of the current status of the contract and expectation for performance on the contract, as well as historical experience. | ||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s accounting for cost estimation for development and production contracts. For example, we tested certain controls over management’s review of the estimate at completion analyses and the significant assumptions underlying the estimated total costs to complete. We also tested certain of management’s controls to validate that the data used in the estimate at completion analyses was complete and accurate. To test the cost estimation for development and production contracts, our audit procedures included, among others, obtaining an understanding of the contract, meeting with program management to confirm our understanding of the risks associated with the arrangement and the current contract performance, review of customer correspondence and contractual milestones, and comparing cost estimates to historical cost experience with similar contracts, when applicable. Additionally, we obtained an understanding of the Company’s past performance of estimating total costs to complete by reviewing changes in the cost estimates from previous periods and reviewing the overall accuracy of management’s cost to completion estimations through lookback analyses. |
Valuation of Goodwill | |||||
Description of the Matter | At January 1, 2021, the Company’s goodwill was $19 billion. As discussed in Note 1 to the consolidated financial statements, the Company tests goodwill for impairment annually (or under certain circumstances, more frequently) at the reporting unit level using either a qualitative or quantitative approach. Under the quantitative approach to test for goodwill impairment, the Company compares the fair value of a reporting unit to its carrying amount, including goodwill. Generally, the Company estimates the fair value of its reporting units using a combination of a discounted cash flows analysis and market-based valuation methodologies.As further discussed in Note 10, during the year ended January 1, 2021, the Company recorded a $475 million goodwill impairment charge at a reporting unit within the Aviation Systems segment. Auditing the Company’s quantitative goodwill impairment tests involved subjective auditor judgment due to the significant estimation required in management’s determination of the fair value of the reporting units. The significant estimation was primarily due to the sensitivity of the underlying assumptions including changes in the weighted average cost of capital, projected revenue growth rates, projected operating margins, and terminal growth rate. These assumptions relate to the expected future operating performance of the Company’s reporting units, are forward-looking, and are sensitive to and affected by economic, industry and company-specific qualitative factors. | ||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of relevant internal controls over the Company’s goodwill impairment review process, including controls over management’s review of the valuation models and significant assumptions described above. We also tested management’s controls to validate that the data used in the valuation models was complete and accurate. To test the estimated fair value of the Company’s reporting units, we performed audit procedures that included, among others, assessing the valuation methodologies used by the Company, involving our valuation specialists to assist in testing the significant assumptions discussed above, and testing the completeness and accuracy of the underlying data the Company used in its valuation analyses. For example, we compared the significant assumptions used by management to current industry, market and economic trends, the historical results of the reporting units, and other relevant factors. We also assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions used in the annual impairment test to evaluate the change in the fair value of the reporting unit resulting from changes in the significant assumptions. In addition, we reviewed the reconciliation of the fair value of the reporting units based on the annual impairment test to the market capitalization of the Company. |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | ||||||||||||||||||||||||||||||||
Fiscal Years Ended | ||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | ||||||||||||||||||||||||||||||||
(In millions, except per share amounts) | (In millions, except per share amounts) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||||||||||||||||
Revenue from product sales and services | Revenue from product sales and services | |||||||||||||||||||||||||||||||||
Revenue from product sales | $ | 5,638 | $ | 5,038 | $ | 4,667 | Revenue from product sales | $ | 13,581 | $ | 6,908 | $ | 5,638 | $ | 5,038 | |||||||||||||||||||
Revenue from services | 1,163 | 1,130 | 1,230 | Revenue from services | 4,613 | 2,355 | 1,163 | 1,130 | ||||||||||||||||||||||||||
6,801 | 6,168 | 5,897 | 18,194 | 9,263 | 6,801 | 6,168 | ||||||||||||||||||||||||||||
Cost of product sales and services | Cost of product sales and services | |||||||||||||||||||||||||||||||||
Cost of product sales | (3,615 | ) | (3,239 | ) | (3,058 | ) | Cost of product sales | (9,464) | (4,996) | (3,615) | (3,239) | |||||||||||||||||||||||
Cost of services | (852 | ) | (827 | ) | (796 | ) | Cost of services | (3,422) | (1,730) | (852) | (827) | |||||||||||||||||||||||
(4,467 | ) | (4,066 | ) | (3,854 | ) | (12,886) | (6,726) | (4,467) | (4,066) | |||||||||||||||||||||||||
Engineering, selling and administrative expenses | (1,242 | ) | (1,182 | ) | (1,150 | ) | Engineering, selling and administrative expenses | (3,315) | (1,881) | (1,242) | (1,182) | |||||||||||||||||||||||
Business divestiture-related (losses) gains | Business divestiture-related (losses) gains | (51) | 229 | 0 | 0 | |||||||||||||||||||||||||||||
Impairment of goodwill and other assets | Impairment of goodwill and other assets | (767) | (46) | 0 | 0 | |||||||||||||||||||||||||||||
Non-operating income | 188 | 156 | 166 | Non-operating income | 401 | 192 | 188 | 156 | ||||||||||||||||||||||||||
Interest income | 2 | 2 | 2 | Interest income | 16 | 12 | 2 | 2 | ||||||||||||||||||||||||||
Interest expense | (169 | ) | (170 | ) | (172 | ) | Interest expense | (270) | (135) | (169) | (170) | |||||||||||||||||||||||
Income from continuing operations before income taxes | 1,113 | 908 | 889 | Income from continuing operations before income taxes | 1,322 | 908 | 1,113 | 908 | ||||||||||||||||||||||||||
Income taxes | (160 | ) | (206 | ) | (261 | ) | Income taxes | (234) | (73) | (160) | (206) | |||||||||||||||||||||||
Income from continuing operations | 953 | 702 | 628 | Income from continuing operations | 1,088 | 835 | 953 | 702 | ||||||||||||||||||||||||||
Discontinued operations, net of income taxes | (4 | ) | (3 | ) | (85 | ) | Discontinued operations, net of income taxes | (2) | (1) | (4) | (3) | |||||||||||||||||||||||
Net income | $ | 949 | $ | 699 | $ | 543 | Net income | 1,086 | 834 | 949 | 699 | |||||||||||||||||||||||
Net income per common share | ||||||||||||||||||||||||||||||||||
Noncontrolling interests, net of income taxes | Noncontrolling interests, net of income taxes | 33 | (12) | 0 | 0 | |||||||||||||||||||||||||||||
Net income attributable to L3Harris Technologies, Inc. | Net income attributable to L3Harris Technologies, Inc. | $ | 1,119 | $ | 822 | $ | 949 | $ | 699 | |||||||||||||||||||||||||
Amount attributable to L3Harris Technologies, Inc. common shareholders | Amount attributable to L3Harris Technologies, Inc. common shareholders | |||||||||||||||||||||||||||||||||
Income from continuing operations | Income from continuing operations | $ | 1,121 | $ | 823 | $ | 953 | $ | 702 | |||||||||||||||||||||||||
Discontinued operations, net of income taxes | Discontinued operations, net of income taxes | (2) | (1) | (4) | (3) | |||||||||||||||||||||||||||||
Net income | Net income | $ | 1,119 | $ | 822 | $ | 949 | $ | 699 | |||||||||||||||||||||||||
Net income per common share attributable to L3Harris Technologies, Inc. common shareholders | Net income per common share attributable to L3Harris Technologies, Inc. common shareholders | |||||||||||||||||||||||||||||||||
Basic | Basic | |||||||||||||||||||||||||||||||||
Continuing operations | $ | 8.06 | $ | 5.90 | $ | 5.11 | Continuing operations | $ | 5.24 | $ | 3.72 | $ | 8.06 | $ | 5.90 | |||||||||||||||||||
Discontinued operations | (0.03 | ) | (0.02 | ) | (0.69 | ) | Discontinued operations | (0.01) | 0 | (0.03) | (0.02) | |||||||||||||||||||||||
$ | 8.03 | $ | 5.88 | $ | 4.42 | $ | 5.23 | $ | 3.72 | $ | 8.03 | $ | 5.88 | |||||||||||||||||||||
Diluted | Diluted | |||||||||||||||||||||||||||||||||
Continuing operations | $ | 7.89 | $ | 5.78 | $ | 5.04 | Continuing operations | $ | 5.19 | $ | 3.68 | $ | 7.89 | $ | 5.78 | |||||||||||||||||||
Discontinued operations | (0.03 | ) | (0.02 | ) | (0.68 | ) | Discontinued operations | 0 | (0.01) | (0.03) | (0.02) | |||||||||||||||||||||||
$ | 7.86 | $ | 5.76 | $ | 4.36 | $ | 5.19 | $ | 3.67 | $ | 7.86 | $ | 5.76 |
Fiscal Years Ended | |||||||||||
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Net income | $ | 949 | $ | 699 | $ | 543 | |||||
Other comprehensive income (loss): | |||||||||||
Foreign currency translation gain (loss), net of income taxes | (7 | ) | 15 | (34 | ) | ||||||
Net unrealized gain (loss) on hedging derivatives, net of income taxes | (18 | ) | 1 | 1 | |||||||
Net unrecognized gain (loss) on postretirement obligations, net of income taxes | (480 | ) | 93 | 200 | |||||||
Other comprehensive income (loss), net of income taxes | (505 | ) | 109 | 167 | |||||||
Total comprehensive income | $ | 444 | $ | 808 | $ | 710 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Net income | $ | 1,086 | $ | 834 | $ | 949 | $ | 699 | |||||||||||||||
Other comprehensive (loss) income: | |||||||||||||||||||||||
Foreign currency translation gain (loss), net of income taxes | 16 | 25 | (7) | 15 | |||||||||||||||||||
Net unrealized (loss) gain on hedging derivatives, net of income taxes | (31) | (17) | (18) | 1 | |||||||||||||||||||
Net unrecognized (loss) gain on postretirement obligations, net of income taxes | (313) | 178 | (480) | 93 | |||||||||||||||||||
Other comprehensive (loss) income, recognized during the period | (328) | 186 | (505) | 109 | |||||||||||||||||||
Less: reclassification adjustments for (gains) losses included in net income | (3) | 13 | 0 | 0 | |||||||||||||||||||
Other comprehensive (loss) income, net of income taxes | (331) | 199 | (505) | 109 | |||||||||||||||||||
Total comprehensive income | 755 | 1,033 | 444 | 808 | |||||||||||||||||||
Comprehensive loss (income) attributable to noncontrolling interests | 33 | (12) | 0 | 0 | |||||||||||||||||||
Total comprehensive income attributable to L3Harris Technologies, Inc. | $ | 788 | $ | 1,021 | $ | 444 | $ | 808 |
June 28, 2019 | June 29, 2018 | |||||||||||||||||
(In millions, except shares) | (In millions, except shares) | January 1, 2021 | January 3, 2020 | |||||||||||||||
(In millions, except shares) | ||||||||||||||||||
Assets | Assets | |||||||||||||||||
Current Assets | Current Assets | |||||||||||||||||
Cash and cash equivalents | $ | 530 | $ | 288 | Cash and cash equivalents | $ | 1,276 | $ | 824 | |||||||||
Receivables | 457 | 466 | Receivables | 1,344 | 1,216 | |||||||||||||
Contract assets | 807 | 782 | Contract assets | 2,437 | 2,459 | |||||||||||||
Inventories | 360 | 411 | Inventories | 973 | 1,219 | |||||||||||||
Income taxes receivable | 191 | 174 | Income taxes receivable | 295 | 202 | |||||||||||||
Other current assets | 100 | 103 | Other current assets | 307 | 392 | |||||||||||||
Assets of disposal group held for sale | 133 | — | Assets of disposal group held for sale | 35 | 0 | |||||||||||||
Total current assets | 2,578 | 2,224 | Total current assets | 6,667 | 6,312 | |||||||||||||
Non-current Assets | Non-current Assets | |||||||||||||||||
Property, plant and equipment | 894 | 900 | Property, plant and equipment | 2,102 | 2,117 | |||||||||||||
Operating lease right-of-use assets | Operating lease right-of-use assets | 766 | 837 | |||||||||||||||
Goodwill | 5,340 | 5,372 | Goodwill | 18,876 | 20,001 | |||||||||||||
Other intangible assets | 870 | 989 | Other intangible assets | 7,908 | 8,458 | |||||||||||||
Non-current deferred income taxes | 173 | 119 | ||||||||||||||||
Deferred income taxes | Deferred income taxes | 119 | 102 | |||||||||||||||
Other non-current assets | 262 | 247 | Other non-current assets | 522 | 509 | |||||||||||||
Total non-current assets | 7,539 | 7,627 | Total non-current assets | 30,293 | 32,024 | |||||||||||||
$ | 10,117 | $ | 9,851 | $ | 36,960 | $ | 38,336 | |||||||||||
Liabilities and Equity | Liabilities and Equity | |||||||||||||||||
Current Liabilities | Current Liabilities | |||||||||||||||||
Short-term debt | $ | 103 | $ | 78 | Short-term debt | $ | 2 | $ | 3 | |||||||||
Accounts payable | 525 | 622 | Accounts payable | 1,406 | 1,261 | |||||||||||||
Contract liabilities | 496 | 372 | Contract liabilities | 1,198 | 1,214 | |||||||||||||
Compensation and benefits | 161 | 142 | Compensation and benefits | 496 | 460 | |||||||||||||
Other accrued items | 283 | 317 | Other accrued items | 1,068 | 790 | |||||||||||||
Income taxes payable | 8 | 15 | Income taxes payable | 49 | 24 | |||||||||||||
Current portion of long-term debt, net | 656 | 304 | Current portion of long-term debt, net | 8 | 257 | |||||||||||||
Liabilities of disposal group held for sale | 36 | — | Liabilities of disposal group held for sale | 13 | 0 | |||||||||||||
Total current liabilities | 2,268 | 1,850 | Total current liabilities | 4,240 | 4,009 | |||||||||||||
Non-current Liabilities | Non-current Liabilities | |||||||||||||||||
Defined benefit plans | 1,174 | 714 | Defined benefit plans | 1,906 | 1,819 | |||||||||||||
Operating lease liabilities | Operating lease liabilities | 734 | 781 | |||||||||||||||
Long-term debt, net | 2,763 | 3,408 | Long-term debt, net | 6,908 | 6,694 | |||||||||||||
Non-current deferred income taxes | 12 | 79 | ||||||||||||||||
Deferred income taxes | Deferred income taxes | 1,237 | 1,481 | |||||||||||||||
Other long-term liabilities | 537 | 522 | Other long-term liabilities | 1,094 | 808 | |||||||||||||
Total non-current liabilities | 4,486 | 4,723 | Total non-current liabilities | 11,879 | 11,583 | |||||||||||||
Equity | Equity | |||||||||||||||||
Shareholders’ Equity: | Shareholders’ Equity: | |||||||||||||||||
Preferred stock, without par value; 1,000,000 shares authorized; none issued | — | — | ||||||||||||||||
Common stock, $1.00 par value; 500,000,000 shares authorized; issued and outstanding 118,552,599 shares at June 28, 2019 and 118,280,120 shares at June 29, 2018 | 119 | 118 | ||||||||||||||||
Preferred stock, without par value; 1,000,000 shares authorized; NaN issued | Preferred stock, without par value; 1,000,000 shares authorized; NaN issued | 0 | 0 | |||||||||||||||
Common stock, $1.00 par value; 500,000,000 shares authorized; issued and outstanding 208,230,353 and 218,226,614 shares at January 1, 2021 and January 3, 2020, respectively | Common stock, $1.00 par value; 500,000,000 shares authorized; issued and outstanding 208,230,353 and 218,226,614 shares at January 1, 2021 and January 3, 2020, respectively | 208 | 218 | |||||||||||||||
Other capital | 1,778 | 1,714 | Other capital | 19,008 | 20,694 | |||||||||||||
Retained earnings | 2,173 | 1,648 | Retained earnings | 2,347 | 2,183 | |||||||||||||
Accumulated other comprehensive loss | (707 | ) | (202 | ) | Accumulated other comprehensive loss | (839) | (508) | |||||||||||
Total shareholders’ equity | 3,363 | 3,278 | Total shareholders’ equity | 20,724 | 22,587 | |||||||||||||
Noncontrolling interests | Noncontrolling interests | 117 | 157 | |||||||||||||||
Total equity | Total equity | 20,841 | 22,744 | |||||||||||||||
$ | 10,117 | $ | 9,851 | $ | 36,960 | $ | 38,336 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | ||||||||||||||||||||||||||||||||
Fiscal Years Ended | ||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | ||||||||||||||||||||||||||||||||
(In millions) | (In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||
Operating Activities | Operating Activities | |||||||||||||||||||||||||||||||||
Net income | $ | 949 | $ | 699 | $ | 543 | Net income | $ | 1,086 | $ | 834 | $ | 949 | $ | 699 | |||||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||||||||||||
Amortization of acquisition-related intangibles | 115 | 117 | 151 | Amortization of acquisition-related intangibles | 709 | 289 | 115 | 117 | ||||||||||||||||||||||||||
Depreciation and other amortization | 143 | 142 | 160 | Depreciation and other amortization | 323 | 153 | 143 | 142 | ||||||||||||||||||||||||||
Share-based compensation | 141 | 82 | 42 | Share-based compensation | 94 | 125 | 58 | 51 | ||||||||||||||||||||||||||
Share-based matching contributions under defined contribution plans | Share-based matching contributions under defined contribution plans | 216 | 102 | 83 | 31 | |||||||||||||||||||||||||||||
Qualified pension plan contributions | (1 | ) | (301 | ) | (589 | ) | Qualified pension plan contributions | (8) | (328) | (1) | (301) | |||||||||||||||||||||||
Pension income | (136 | ) | (135 | ) | (97 | ) | ||||||||||||||||||||||||||||
Pension and other postretirement benefit plan income | Pension and other postretirement benefit plan income | (321) | (129) | (150) | (144) | |||||||||||||||||||||||||||||
Gain on pension plan curtailment | Gain on pension plan curtailment | 0 | (23) | 0 | 0 | |||||||||||||||||||||||||||||
Impairment of goodwill and other assets | — | — | 240 | Impairment of goodwill and other assets | 767 | 46 | 0 | 0 | ||||||||||||||||||||||||||
Loss on sales of businesses, net | — | — | 14 | |||||||||||||||||||||||||||||||
Loss on extinguishment of debt | — | 24 | — | |||||||||||||||||||||||||||||||
Business divestiture-related losses (gains) | Business divestiture-related losses (gains) | 51 | (229) | 0 | 0 | |||||||||||||||||||||||||||||
Gain on sale of property, plant and equipment | Gain on sale of property, plant and equipment | (22) | 0 | 0 | 0 | |||||||||||||||||||||||||||||
Gain on sale of asset group | Gain on sale of asset group | 0 | (12) | 0 | 0 | |||||||||||||||||||||||||||||
(Gain) loss on extinguishment of debts | (Gain) loss on extinguishment of debts | (2) | 2 | 0 | 24 | |||||||||||||||||||||||||||||
Deferred income taxes | Deferred income taxes | (215) | 0 | 44 | 320 | |||||||||||||||||||||||||||||
(Increase) decrease in: | (Increase) decrease in: | |||||||||||||||||||||||||||||||||
Accounts receivable | (9 | ) | (101 | ) | 24 | Accounts receivable | (250) | 74 | (9) | (101) | ||||||||||||||||||||||||
Contract assets | (25 | ) | (76 | ) | 156 | Contract assets | (116) | 15 | (25) | (76) | ||||||||||||||||||||||||
Inventories | (1 | ) | (19 | ) | (32 | ) | Inventories | 60 | 158 | (1) | (19) | |||||||||||||||||||||||
Increase (decrease) in: | Increase (decrease) in: | |||||||||||||||||||||||||||||||||
Accounts payable | (84 | ) | 82 | 18 | Accounts payable | 173 | (148) | (84) | 82 | |||||||||||||||||||||||||
Contract liabilities | 124 | 81 | (31 | ) | Contract liabilities | 14 | 0 | 124 | 81 | |||||||||||||||||||||||||
Compensation and benefits | Compensation and benefits | 43 | (28) | 19 | 2 | |||||||||||||||||||||||||||||
Other accrued items | Other accrued items | 19 | (128) | (78) | (38) | |||||||||||||||||||||||||||||
Income taxes | 22 | 202 | 111 | Income taxes | 61 | 47 | (23) | (117) | ||||||||||||||||||||||||||
Other | (53 | ) | (46 | ) | (141 | ) | Other | 108 | 119 | 21 | (2) | |||||||||||||||||||||||
Net cash provided by operating activities | 1,185 | 751 | 569 | Net cash provided by operating activities | 2,790 | 939 | 1,185 | 751 | ||||||||||||||||||||||||||
Investing Activities | Investing Activities | |||||||||||||||||||||||||||||||||
Net additions of property, plant and equipment | (161 | ) | (136 | ) | (119 | ) | ||||||||||||||||||||||||||||
Net cash acquired in L3Harris Merger | Net cash acquired in L3Harris Merger | 0 | 1,130 | 0 | 0 | |||||||||||||||||||||||||||||
Additions to property, plant and equipment | Additions to property, plant and equipment | (368) | (173) | (161) | (136) | |||||||||||||||||||||||||||||
Proceeds from sale of property, plant and equipment, net | Proceeds from sale of property, plant and equipment, net | 91 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
Proceeds from sales of businesses, net | — | — | 1,014 | Proceeds from sales of businesses, net | 1,040 | 343 | 0 | 0 | ||||||||||||||||||||||||||
Adjustment to proceeds from sale of business | — | (2 | ) | (25 | ) | |||||||||||||||||||||||||||||
Proceeds from sale of asset group | Proceeds from sale of asset group | 0 | 20 | 0 | 0 | |||||||||||||||||||||||||||||
Other investing activities | 2 | (3 | ) | — | Other investing activities | (12) | 0 | 2 | (5) | |||||||||||||||||||||||||
Net cash provided by (used in) investing activities | (159 | ) | (141 | ) | 870 | Net cash provided by (used in) investing activities | 751 | 1,320 | (159) | (141) | ||||||||||||||||||||||||
Financing Activities | Financing Activities | |||||||||||||||||||||||||||||||||
Net proceeds from borrowings | 27 | 1,387 | 85 | Net proceeds from borrowings | 901 | 396 | 27 | 1,387 | ||||||||||||||||||||||||||
Repayments of borrowings | (308 | ) | (1,658 | ) | (584 | ) | Repayments of borrowings | (931) | (505) | (308) | (1,658) | |||||||||||||||||||||||
Payments of interest rate derivative obligations | Payments of interest rate derivative obligations | (113) | (32) | 0 | 0 | |||||||||||||||||||||||||||||
Proceeds from exercises of employee stock options | 50 | 34 | 54 | Proceeds from exercises of employee stock options | 56 | 109 | 50 | 34 | ||||||||||||||||||||||||||
Repurchases of common stock | (200 | ) | (272 | ) | (710 | ) | Repurchases of common stock | (2,290) | (1,500) | (200) | (272) | |||||||||||||||||||||||
Cash dividends | (325 | ) | (272 | ) | (262 | ) | Cash dividends | (725) | (337) | (325) | (272) | |||||||||||||||||||||||
Tax withholding payments associated with vested share-based awards | Tax withholding payments associated with vested share-based awards | (4) | (86) | (24) | (17) | |||||||||||||||||||||||||||||
Other financing activities | (25 | ) | (24 | ) | (21 | ) | Other financing activities | (6) | (16) | (1) | (7) | |||||||||||||||||||||||
Net cash used in financing activities | (781 | ) | (805 | ) | (1,438 | ) | Net cash used in financing activities | (3,112) | (1,971) | (781) | (805) | |||||||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (3 | ) | (1 | ) | (4 | ) | Effect of exchange rate changes on cash and cash equivalents | 23 | 6 | (3) | (1) | |||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 242 | (196 | ) | (3 | ) | Net increase (decrease) in cash and cash equivalents | 452 | 294 | 242 | (196) | ||||||||||||||||||||||||
Cash and cash equivalents, beginning of year | 288 | 484 | 487 | |||||||||||||||||||||||||||||||
Cash and cash equivalents, end of year | $ | 530 | $ | 288 | $ | 484 | ||||||||||||||||||||||||||||
Cash and cash equivalents, beginning of period | Cash and cash equivalents, beginning of period | 824 | 530 | 288 | 484 | |||||||||||||||||||||||||||||
Cash and cash equivalents, end of period | Cash and cash equivalents, end of period | $ | 1,276 | $ | 824 | $ | 530 | $ | 288 |
(In millions, except per share amounts) | (In millions, except per share amounts) | Common Stock | Other Capital | Retained Earnings | Accumulated Other Comprehensive Income | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Other Capital | Retained Earnings | Accumulated Other Comprehensive Income | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at July 1, 2016 — As Reported | $ | 125 | $ | 2,096 | $ | 1,330 | $ | (495 | ) | $ | 1 | $ | 3,057 | |||||||||||||||||||||||||||||||||||||||||||||
Cumulative effect of adopting ASC 606 | — | — | (15 | ) | — | (15 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | 543 | — | — | 543 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | 167 | — | 167 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net accumulated foreign currency loss reclassified to earnings | — | — | — | 52 | — | 52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued under stock incentive plans | 1 | 53 | — | — | — | 54 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | 40 | — | — | — | 40 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchases and retirement of common stock | (6 | ) | (410 | ) | (278 | ) | — | — | (694 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Forward contract component of accelerated share repurchase | — | (38 | ) | — | — | — | (38 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends ($2.12 per share) | — | — | (262 | ) | — | — | (262 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other activity related to noncontrolling interests | — | — | — | — | (1 | ) | (1 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2017 | 120 | 1,741 | 1,318 | (276 | ) | — | 2,903 | Balance at June 30, 2017 | $ | 120 | $ | 1,741 | $ | 1,318 | $ | (276) | $ | 0 | $ | 2,903 | ||||||||||||||||||||||||||||||||||||||
Reclassifications due to adoption of accounting standards updates | — | — | 35 | (35 | ) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassifications due to adoption of accounting standards update | Reclassifications due to adoption of accounting standards update | — | — | 35 | (35) | — | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | 699 | — | — | 699 | Net income | — | — | 699 | — | — | 699 | |||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | 109 | — | 109 | Other comprehensive income | — | — | — | 109 | — | 109 | |||||||||||||||||||||||||||||||||||||||||||||
Shares issued under stock incentive plans | — | 33 | — | — | — | 33 | Shares issued under stock incentive plans | — | 33 | — | — | — | 33 | |||||||||||||||||||||||||||||||||||||||||||||
Shares issued under defined contribution plans | — | 31 | — | — | — | 31 | Shares issued under defined contribution plans | — | 31 | — | — | — | 31 | |||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | 49 | — | — | — | 49 | Share-based compensation expense | — | 49 | — | — | — | 49 | |||||||||||||||||||||||||||||||||||||||||||||
Tax withholding payments on share-based awards | Tax withholding payments on share-based awards | — | (17) | — | — | — | (17) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchases and retirement of common stock | (2 | ) | (178 | ) | (132 | ) | — | — | (312 | ) | Repurchases and retirement of common stock | (2) | (161) | (132) | — | — | (295) | |||||||||||||||||||||||||||||||||||||||||
Forward contract component of accelerated share repurchase | — | 38 | — | — | — | 38 | Forward contract component of accelerated share repurchase | — | 38 | — | — | — | 38 | |||||||||||||||||||||||||||||||||||||||||||||
Cash dividends ($2.28 per share) | — | — | (272 | ) | — | — | (272 | ) | Cash dividends ($2.28 per share) | — | — | (272) | — | — | (272) | |||||||||||||||||||||||||||||||||||||||||||
Balance at June 29, 2018 | 118 | 1,714 | 1,648 | (202 | ) | — | 3,278 | Balance at June 29, 2018 | 118 | 1,714 | 1,648 | (202) | 0 | 3,278 | ||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | 949 | — | — | 949 | Net income | — | — | 949 | — | — | 949 | |||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | (505 | ) | — | (505 | ) | Other comprehensive income | — | — | — | (505) | — | (505) | |||||||||||||||||||||||||||||||||||||||||||
Shares issued under stock incentive plans | 1 | 49 | — | — | — | 50 | Shares issued under stock incentive plans | 1 | 49 | — | — | — | 50 | |||||||||||||||||||||||||||||||||||||||||||||
Shares issued under defined contribution plans | 1 | 82 | — | — | — | 83 | Shares issued under defined contribution plans | 1 | 82 | — | — | — | 83 | |||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | 57 | — | — | — | 57 | Share-based compensation expense | — | 57 | — | — | — | 57 | |||||||||||||||||||||||||||||||||||||||||||||
Tax withholding payments on share-based awards | Tax withholding payments on share-based awards | — | (24) | — | — | — | (24) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchases and retirement of common stock | (1 | ) | (124 | ) | (99 | ) | — | — | (224 | ) | Repurchases and retirement of common stock | (1) | (100) | (99) | — | — | (200) | |||||||||||||||||||||||||||||||||||||||||
Cash dividends ($2.74 per share) | — | — | (325 | ) | — | — | (325 | ) | Cash dividends ($2.74 per share) | — | — | (325) | — | — | (325) | |||||||||||||||||||||||||||||||||||||||||||
Balance at June 28, 2019 | $ | 119 | $ | 1,778 | $ | 2,173 | $ | (707 | ) | $ | — | $ | 3,363 | Balance at June 28, 2019 | 119 | 1,778 | 2,173 | (707) | 0 | 3,363 | ||||||||||||||||||||||||||||||||||||||
Net income | Net income | — | — | 822 | — | 12 | 834 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | Other comprehensive income | — | — | — | 199 | — | 199 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued for L3Harris Merger | Shares issued for L3Harris Merger | 104 | 19,696 | — | — | — | 19,800 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued under stock incentive plans | Shares issued under stock incentive plans | 2 | 107 | — | — | — | 109 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued under defined contribution plans | Shares issued under defined contribution plans | — | 101 | — | — | — | 101 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | Share-based compensation expense | — | 122 | — | — | — | 122 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Tax withholding payments on share-based awards | Tax withholding payments on share-based awards | — | (86) | — | — | — | (86) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchases and retirement of common stock | Repurchases and retirement of common stock | (7) | (1,018) | (475) | — | — | (1,500) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends ($1.50 per share) | Cash dividends ($1.50 per share) | — | — | (337) | — | — | (337) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of noncontrolling interest recognized in purchase accounting | Fair value of noncontrolling interest recognized in purchase accounting | — | — | — | — | 155 | 155 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other, including distributions to noncontrolling interests | Other, including distributions to noncontrolling interests | — | (6) | — | — | (10) | (16) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 3, 2020 | Balance at January 3, 2020 | 218 | 20,694 | 2,183 | (508) | 157 | 22,744 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | Net income | — | — | 1,119 | — | (33) | 1,086 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | Other comprehensive income | — | — | — | (331) | — | (331) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued under stock incentive plans | Shares issued under stock incentive plans | 1 | 55 | — | — | — | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued under defined contribution plans | Shares issued under defined contribution plans | 1 | 215 | — | — | — | 216 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | Share-based compensation expense | — | 93 | — | — | — | 93 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Tax withholding payments on share-based awards | Tax withholding payments on share-based awards | — | (4) | — | — | — | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchases and retirement of common stock | Repurchases and retirement of common stock | (12) | (2,046) | (232) | — | — | (2,290) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends ($3.40 per share) | Cash dividends ($3.40 per share) | — | — | (725) | — | — | (725) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other, including distributions to noncontrolling interests | Other, including distributions to noncontrolling interests | — | 1 | 2 | — | (7) | (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2021 | Balance at January 1, 2021 | $ | 208 | $ | 19,008 | $ | 2,347 | $ | (839) | $ | 117 | $ | 20,841 |
Segment | Average Warranty Period | |||||||
Integrated Mission Systems | One to three years | |||||||
Space and Airborne Systems | One to three years | |||||||
Communication Systems | One to five years | |||||||
One to two years | ||||||||
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions, except per share amounts) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Net EAC adjustments, before income taxes | $ | 400 | $ | 137 | $ | 17 | $ | (19) | |||||||||||||||
Net EAC adjustments, net of income taxes | $ | 300 | $ | 103 | $ | 13 | $ | (13) | |||||||||||||||
Net EAC adjustments, net of income taxes, per diluted share | $ | 1.39 | $ | 0.46 | $ | 0.10 | $ | (0.11) |
Fiscal Year Ended June 29, 2018 | |||||||||||||||
As Previously Reported | Effect of Adopting ASC 606 | Effect of Adopting ASU 2017-07 | As Recast | ||||||||||||
(In millions, except per share amounts) | |||||||||||||||
Revenue from product sales and services | |||||||||||||||
Revenue from product sales | $ | 5,062 | $ | (24 | ) | $ | — | $ | 5,038 | ||||||
Revenue from services | 1,120 | 10 | — | 1,130 | |||||||||||
6,182 | (14 | ) | — | 6,168 | |||||||||||
Cost of product sales and services | |||||||||||||||
Cost of product sales | (3,106 | ) | 14 | (147 | ) | (3,239 | ) | ||||||||
Cost of services | (825 | ) | (2 | ) | — | (827 | ) | ||||||||
(3,931 | ) | 12 | (147 | ) | (4,066 | ) | |||||||||
Engineering, selling and administrative expenses | (1,129 | ) | (16 | ) | (37 | ) | (1,182 | ) | |||||||
Non-operating income (loss) | (28 | ) | — | 184 | 156 | ||||||||||
Interest income | 2 | — | — | 2 | |||||||||||
Interest expense | (170 | ) | — | — | (170 | ) | |||||||||
Income from continuing operations before income taxes | 926 | (18 | ) | — | 908 | ||||||||||
Income taxes | (205 | ) | (1 | ) | — | (206 | ) | ||||||||
Income from continuing operations | 721 | (19 | ) | — | 702 | ||||||||||
Discontinued operations, net of income taxes | (3 | ) | — | — | (3 | ) | |||||||||
Net income | $ | 718 | $ | (19 | ) | $ | — | $ | 699 | ||||||
Net income per common share | |||||||||||||||
Basic | |||||||||||||||
Continuing operations | $ | 6.06 | $ | (0.16 | ) | $ | — | $ | 5.90 | ||||||
Discontinued operations | (0.02 | ) | — | — | (0.02 | ) | |||||||||
$ | 6.04 | $ | (0.16 | ) | $ | — | $ | 5.88 | |||||||
Diluted | |||||||||||||||
Continuing operations | $ | 5.94 | $ | (0.16 | ) | $ | — | $ | 5.78 | ||||||
Discontinued operations | (0.02 | ) | — | — | (0.02 | ) | |||||||||
$ | 5.92 | $ | (0.16 | ) | $ | — | $ | 5.76 |
Fiscal Year Ended June 30, 2017 | |||||||||||||||
As Previously Reported | Effect of Adopting ASC 606 | Effect of Adopting ASU 2017-07 | As Recast | ||||||||||||
(In millions, except per share amounts) | |||||||||||||||
Revenue from product sales and services | |||||||||||||||
Revenue from product sales | $ | 4,667 | $ | — | $ | — | $ | 4,667 | |||||||
Revenue from services | 1,233 | (3 | ) | — | 1,230 | ||||||||||
5,900 | (3 | ) | — | 5,897 | |||||||||||
Cost of product sales and services | |||||||||||||||
Cost of product sales | (2,964 | ) | 10 | (104 | ) | (3,058 | ) | ||||||||
Cost of services | (770 | ) | 2 | (28 | ) | (796 | ) | ||||||||
(3,734 | ) | 12 | (132 | ) | (3,854 | ) | |||||||||
Engineering, selling and administrative expenses | (1,093 | ) | (25 | ) | (32 | ) | (1,150 | ) | |||||||
Non-operating income | 2 | — | 164 | 166 | |||||||||||
Interest income | 2 | — | — | 2 | |||||||||||
Interest expense | (172 | ) | — | — | (172 | ) | |||||||||
Income from continuing operations before income taxes | 905 | (16 | ) | — | 889 | ||||||||||
Income taxes | (267 | ) | 6 | — | (261 | ) | |||||||||
Income from continuing operations | 638 | (10 | ) | — | 628 | ||||||||||
Discontinued operations, net of income taxes | (85 | ) | — | — | (85 | ) | |||||||||
Net income | $ | 553 | $ | (10 | ) | $ | — | $ | 543 | ||||||
Net income per common share | |||||||||||||||
Basic | |||||||||||||||
Continuing operations | $ | 5.19 | $ | (0.08 | ) | $ | — | $ | 5.11 | ||||||
Discontinued operations | (0.69 | ) | — | — | (0.69 | ) | |||||||||
$ | 4.50 | $ | (0.08 | ) | $ | — | $ | 4.42 | |||||||
Diluted | |||||||||||||||
Continuing operations | $ | 5.12 | $ | (0.08 | ) | $ | — | $ | 5.04 | ||||||
Discontinued operations | (0.68 | ) | — | — | (0.68 | ) | |||||||||
$ | 4.44 | $ | (0.08 | ) | $ | — | $ | 4.36 |
June 29, 2018 | June 30, 2017 | ||||||||||||||||||||||
As Previously Reported | Effect of Adopting ASC 606 | As Recast | As Previously Reported | Effect of adopting ASC 606 | As Recast | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Current Assets | |||||||||||||||||||||||
Cash and cash equivalents | $ | 288 | $ | — | $ | 288 | $ | 484 | $ | — | $ | 484 | |||||||||||
Receivables | 735 | (269 | ) | 466 | 623 | (258 | ) | 365 | |||||||||||||||
Contract assets | — | 782 | 782 | — | 706 | 706 | |||||||||||||||||
Inventories | 925 | (514 | ) | 411 | 841 | (449 | ) | 392 | |||||||||||||||
Income taxes receivable | 174 | — | 174 | 24 | — | 24 | |||||||||||||||||
Other current assets | 101 | 2 | 103 | 101 | — | 101 | |||||||||||||||||
Total current assets | 2,223 | 1 | 2,224 | 2,073 | (1 | ) | 2,072 | ||||||||||||||||
Non-current Assets | |||||||||||||||||||||||
Property, plant and equipment | 900 | — | 900 | 904 | — | 904 | |||||||||||||||||
Goodwill | 5,372 | — | 5,372 | 5,366 | — | 5,366 | |||||||||||||||||
Other intangible assets | 989 | — | 989 | 1,104 | — | 1,104 | |||||||||||||||||
Non-current deferred income taxes | 116 | 3 | 119 | 409 | 15 | 424 | |||||||||||||||||
Other non-current assets | 239 | 8 | 247 | 234 | 8 | 242 | |||||||||||||||||
Total non-current assets | 7,616 | 11 | 7,627 | 8,017 | 23 | 8,040 | |||||||||||||||||
$ | 9,839 | $ | 12 | $ | 9,851 | $ | 10,090 | $ | 22 | $ | 10,112 | ||||||||||||
Liabilities and Equity | |||||||||||||||||||||||
Current Liabilities | |||||||||||||||||||||||
Short-term debt | $ | 78 | $ | — | $ | 78 | $ | 80 | $ | — | $ | 80 | |||||||||||
Accounts payable | 622 | — | 622 | 540 | — | 540 | |||||||||||||||||
Advanced payments and unearned income | 314 | (314 | ) | — | 252 | (252 | ) | $ | — | ||||||||||||||
Contract liabilities | — | 372 | 372 | — | 291 | 291 | |||||||||||||||||
Compensation and benefits | 142 | — | 142 | 140 | — | 140 | |||||||||||||||||
Other accrued items | 313 | 4 | 317 | 329 | 3 | 332 | |||||||||||||||||
Income taxes payable | 15 | — | 15 | 31 | (1 | ) | 30 | ||||||||||||||||
Current portion of long-term debt, net | 304 | — | 304 | 554 | — | 554 | |||||||||||||||||
Total current liabilities | 1,788 | 62 | 1,850 | 1,926 | 41 | 1,967 | |||||||||||||||||
Non-current Liabilities | |||||||||||||||||||||||
Defined benefit plans | 714 | — | 714 | 1,278 | — | 1,278 | |||||||||||||||||
Long-term debt, net | 3,408 | — | 3,408 | 3,396 | — | 3,396 | |||||||||||||||||
Non-current deferred income taxes | 90 | (11 | ) | 79 | 34 | — | 34 | ||||||||||||||||
Other long-term liabilities | 517 | 5 | 522 | 528 | 6 | 534 | |||||||||||||||||
Total non-current liabilities | 4,729 | (6 | ) | 4,723 | 5,236 | 6 | 5,242 | ||||||||||||||||
Equity | |||||||||||||||||||||||
Shareholders’ Equity: | |||||||||||||||||||||||
Common stock | 118 | — | 118 | 120 | — | 120 | |||||||||||||||||
Other capital | 1,714 | — | 1,714 | 1,741 | — | 1,741 | |||||||||||||||||
Retained earnings | 1,692 | (44 | ) | 1,648 | 1,343 | (25 | ) | 1,318 | |||||||||||||||
Accumulated other comprehensive loss | (202 | ) | — | (202 | ) | (276 | ) | — | (276 | ) | |||||||||||||
Total equity | 3,322 | (44 | ) | 3,278 | 2,928 | (25 | ) | 2,903 | |||||||||||||||
$ | 9,839 | $ | 12 | $ | 9,851 | $ | 10,090 | $ | 22 | $ | 10,112 |
Fiscal Year Ended | |||||||||||||||||||||||
June 29, 2018 | June 30, 2017 | ||||||||||||||||||||||
As Previously Reported | Effect of Adopting ASC 606 | As Recast | As Previously Reported | Effect of Adopting ASC 606 | As Recast | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Net income | $ | 718 | (19 | ) | $ | 699 | $ | 553 | $ | (10 | ) | $ | 543 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||
Amortization of acquisition-related intangibles(1) | 117 | — | 117 | 151 | — | 151 | |||||||||||||||||
Depreciation and other amortization(1) | 142 | — | 142 | 160 | — | 160 | |||||||||||||||||
Share-based compensation | 82 | — | 82 | 42 | — | 42 | |||||||||||||||||
Qualified pension plan contributions | (301 | ) | — | (301 | ) | (589 | ) | — | (589 | ) | |||||||||||||
Pension income | (135 | ) | — | (135 | ) | (97 | ) | — | (97 | ) | |||||||||||||
Impairment of goodwill and other assets | — | — | — | 240 | — | 240 | |||||||||||||||||
Los on sales of businesses, net | — | — | — | 14 | — | 14 | |||||||||||||||||
Loss on extinguishment of debt | 24 | — | 24 | — | — | — | |||||||||||||||||
(Increase) decrease in: | |||||||||||||||||||||||
Accounts receivable | (112 | ) | 11 | (101 | ) | 111 | (87 | ) | 24 | ||||||||||||||
Contract assets | — | (76 | ) | (76 | ) | — | 156 | 156 | |||||||||||||||
Inventories | (84 | ) | 65 | (19 | ) | 28 | (60 | ) | (32 | ) | |||||||||||||
Increase (decrease) in: | |||||||||||||||||||||||
Accounts payable | 82 | — | 82 | 18 | — | 18 | |||||||||||||||||
Advance payments and unearned income | 63 | (63 | ) | — | (42 | ) | 42 | — | |||||||||||||||
Contract liabilities | — | 81 | 81 | — | (31 | ) | (31 | ) | |||||||||||||||
Income taxes | 202 | — | 202 | 131 | (20 | ) | 111 | ||||||||||||||||
Other | (47 | ) | 1 | (46 | ) | (151 | ) | 10 | (141 | ) | |||||||||||||
Net cash provided by operating activities | $ | 751 | $ | — | $ | 751 | $ | 569 | $ | — | $ | 569 |
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Revenue from product sales and services | $ | — | $ | — | $ | 1,039 | |||||
Cost of product sales and services | — | — | (885 | ) | |||||||
Engineering, selling and administrative expenses | — | — | (91 | ) | |||||||
Impairment of goodwill and other assets | — | — | (240 | ) | |||||||
Non-operating loss, net(1) | (5 | ) | (8 | ) | (7 | ) | |||||
Loss before income taxes | (5 | ) | (8 | ) | (184 | ) | |||||
Loss on sale of discontinued operations, net(2) | — | — | (11 | ) | |||||||
Income tax benefit | 1 | 5 | 110 | ||||||||
Discontinued operations, net of income taxes | $ | (4 | ) | $ | (3 | ) | $ | (85 | ) |
2017 | |||
(In millions) | |||
Depreciation and amortization | $ | 39 | |
Capital expenditures | 4 | ||
Significant non-cash items: | |||
Impairment of goodwill and other assets | (240 | ) | |
Loss on sale of discontinued operations, net | (11 | ) |
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Revenue from product sales and services | $ | — | $ | — | $ | 895 | |||||
Cost of product sales and services | — | — | (777 | ) | |||||||
Engineering, selling and administrative expenses | — | — | (68 | ) | |||||||
Impairment of goodwill and other assets | — | — | (240 | ) | |||||||
Non-operating loss | (1 | ) | (4 | ) | (9 | ) | |||||
Loss before income taxes | (1 | ) | (4 | ) | (199 | ) | |||||
Loss on sale of discontinued operations, net | — | — | (28 | ) | |||||||
Income tax benefit | — | 5 | 69 | ||||||||
Discontinued operations, net of income taxes | $ | (1 | ) | $ | 1 | $ | (158 | ) |
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Revenue from product sales and services | $ | — | $ | — | $ | 144 | |||||
Cost of product sales and services | — | — | (108 | ) | |||||||
Engineering, selling and administrative expenses | — | — | (23 | ) | |||||||
Non-operating income (loss) | (3 | ) | (4 | ) | 4 | ||||||
Income (loss) before income taxes | (3 | ) | (4 | ) | 17 | ||||||
Gain on sale of discontinued operations | — | — | 14 | ||||||||
Income tax benefit | 1 | — | 41 | ||||||||
Discontinued operations, net of income taxes | $ | (2 | ) | $ | (4 | ) | $ | 72 |
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Revenue from product sales and services | $ | 166 | $ | 148 | $ | 121 | |||||
Income before income taxes | 27 | 23 | 11 | ||||||||
Receivables | $ | 18 | |||||||||
Inventories | 52 | ||||||||||
Property, plant and equipment | 29 | ||||||||||
Goodwill | 30 | ||||||||||
Other intangible assets | 4 | ||||||||||
Assets of disposal group held for sale | $ | 133 | |||||||||
Accounts payable | $ | 13 | |||||||||
Contract liabilities | 1 | ||||||||||
Compensation and benefits | 3 | ||||||||||
Other accrued items | 3 | ||||||||||
Defined benefit plans | 16 | ||||||||||
Liabilities of disposal group held for sale | $ | 36 |
(In millions) | Employee severance-related costs | Facilities consolidation and other exit costs(1) | Total | ||||||||||||||
Balance at June 28, 2019 | $ | 0 | $ | 16 | $ | 16 | |||||||||||
Additional provisions | 117 | 0 | 117 | ||||||||||||||
Payments | (62) | (1) | (63) | ||||||||||||||
Other | 3 | (8) | (5) | ||||||||||||||
Balance at January 3, 2020 | 58 | 7 | 65 | ||||||||||||||
Additional provisions | 26 | 0 | 26 | ||||||||||||||
Payments | (52) | (2) | (54) | ||||||||||||||
Other | 2 | 0 | 2 | ||||||||||||||
Balance at January 1, 2021 | $ | 34 | $ | 5 | $ | 39 |
(In millions, except exchange ratio and per share amounts) | June 29, 2019 | ||||
Outstanding shares of L3 common stock as of June 28, 2019 | 79.63 | ||||
L3 restricted stock unit awards settled in shares of L3Harris common stock | 0.41 | ||||
L3 performance unit awards settled in shares of L3Harris common stock | 0.04 | ||||
80.08 | |||||
Exchange Ratio | 1.30 | ||||
Shares of L3Harris common stock issued for L3 outstanding common stock | 104.10 | ||||
Price per share of L3Harris common stock as of June 28, 2019 | $ | 189.13 | |||
Fair value of L3Harris common stock issued for L3 outstanding common stock | $ | 19,689 | |||
Fair value of replacement restricted stock units attributable to merger consideration | 10 | ||||
Fair value of L3Harris stock options issued to replace L3 outstanding stock options | 101 | ||||
Withholding tax liability incurred for converted L3 share-based awards | 45 | ||||
Fair value of replacement award consideration | 156 | ||||
Fair value of total consideration | 19,845 | ||||
Less cash acquired | (1,195) | ||||
Total net consideration transferred | $ | 18,650 |
(In millions) | Preliminary Fair Value as of September 27, 2019 | Measurement Period Adjustments | Adjusted Fair Value as of July 3, 2020 | ||||||||||||||
Receivables | $ | 849 | $ | (20) | $ | 829 | |||||||||||
Contract assets | 1,708 | (57) | 1,651 | ||||||||||||||
Inventories | 1,056 | (73) | 983 | ||||||||||||||
Other current assets | 517 | (16) | 501 | ||||||||||||||
Property, plant and equipment | 1,176 | 43 | 1,219 | ||||||||||||||
Operating lease right-of-use assets | 704 | 108 | 812 | ||||||||||||||
Goodwill | 15,423 | (841) | 14,582 | ||||||||||||||
Other intangible assets | 6,768 | 1,690 | 8,458 | ||||||||||||||
Other non-current assets | 327 | (13) | 314 | ||||||||||||||
Total assets acquired | $ | 28,528 | $ | 821 | $ | 29,349 | |||||||||||
Accounts payable | $ | 898 | $ | (13) | $ | 885 | |||||||||||
Contract liabilities | 722 | 4 | 726 | ||||||||||||||
Other current liabilities | 772 | 301 | 1,073 | ||||||||||||||
Operating lease liabilities | 715 | 45 | 760 | ||||||||||||||
Defined benefit plans | 1,411 | 0 | 1,411 | ||||||||||||||
Long-term debt, net | 3,548 | 0 | 3,548 | ||||||||||||||
Other long-term liabilities | 1,661 | 480 | 2,141 | ||||||||||||||
Total liabilities assumed | 9,727 | 817 | 10,544 | ||||||||||||||
Net assets acquired | 18,801 | 4 | 18,805 | ||||||||||||||
Noncontrolling interests | (151) | (4) | (155) | ||||||||||||||
Total net consideration transferred | $ | 18,650 | $ | 0 | $ | 18,650 |
Weighted Average Amortization Period | Total | ||||||||||
(In years) | (In millions) | ||||||||||
Identifiable intangible assets acquired: | |||||||||||
Customer relationships — government | 14 | $ | 5,082 | ||||||||
Customer relationships — commercial | 15 | 860 | |||||||||
Contract backlog | 3 | 19 | |||||||||
Trade names — divisions | 9 | 123 | |||||||||
Developed technologies | 7 | 550 | |||||||||
Total identifiable intangible assets subject to amortization | 13 | 6,634 | |||||||||
Trade names — corporate | indefinite | 1,803 | |||||||||
In-process research and development | n/a | 21 | |||||||||
Total identifiable intangible assets | $ | 8,458 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Year Ended | |||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | ||||||||||||||
Equity award acceleration charges, recognized upon change in control | $ | 0 | $ | 70 | $ | 0 | |||||||||||
Transaction costs, recognized as incurred | 0 | 83 | 31 | ||||||||||||||
Additional cost of sales related to the fair value step-up in inventory sold | 31 | 142 | 0 | ||||||||||||||
Restructuring charges, recognized as incurred | 10 | 117 | 0 | ||||||||||||||
Facility consolidation costs | 0 | 48 | 0 | ||||||||||||||
Integration costs, recognized as incurred | 130 | 72 | 34 | ||||||||||||||
Total L3Harris Merger-related charges | $ | 171 | $ | 532 | $ | 65 |
Four Quarters Ended | Two Quarters Ended | ||||||||||
(In millions) | January 3, 2020 | December 28, 2018 | |||||||||
Revenue from product sales and services — as reported | $ | 12,856 | $ | 3,208 | |||||||
Revenue from product sales and services — pro forma | 18,097 | 8,404 | |||||||||
Income from continuing operations — as reported | 1,347 | 441 | |||||||||
Income from continuing operations — pro forma | 1,652 | 760 |
June 28, 2019 | June 29, 2018 | ||||||
(In millions) | |||||||
Accounts receivable | $ | 459 | $ | 468 | |||
Less allowances for collection losses | (2 | ) | (2 | ) | |||
$ | 457 | $ | 466 |
(In millions) | January 1, 2021 | January 3, 2020 | |||||||||||||||
Accounts receivable | $ | 1,369 | $ | 1,228 | |||||||||||||
Less allowances for collection losses | (25) | (12) | |||||||||||||||
$ | 1,344 | $ | 1,216 |
June 28, 2019 | June 29, 2018 | |||||||||||||||||||||||
(In millions) | (In millions) | January 1, 2021 | January 3, 2020 | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Contract assets | $ | 807 | $ | 782 | Contract assets | $ | 2,437 | $ | 2,459 | |||||||||||||||
Contract liabilities, current | (496 | ) | (372 | ) | Contract liabilities, current | (1,198) | (1,214) | |||||||||||||||||
Contract liabilities, noncurrent(1) | (42 | ) | (35 | ) | Contract liabilities, noncurrent(1) | (73) | (87) | |||||||||||||||||
Net contract assets | $ | 269 | $ | 375 | Net contract assets | $ | 1,166 | $ | 1,158 |
June 28, 2019 | June 29, 2018 | ||||||
(In millions) | |||||||
Unbilled contract receivables, gross | $ | 916 | $ | 881 | |||
Progress payments | (109 | ) | (99 | ) | |||
$ | 807 | $ | 782 |
(In millions) | January 1, 2021 | January 3, 2020 | |||||||||||||||
Unbilled contract receivables, gross | $ | 4,192 | $ | 3,690 | |||||||||||||
Progress payments | (1,755) | (1,231) | |||||||||||||||
$ | 2,437 | $ | 2,459 |
June 28, 2019 | June 29, 2018 | ||||||
(In millions) | |||||||
Finished products | $ | 77 | $ | 91 | |||
Work in process | 90 | 121 | |||||
Raw materials and supplies | 193 | 199 | |||||
$ | 360 | $ | 411 |
(In millions) | January 1, 2021 | January 3, 2020 | |||||||||||||||
Finished products | $ | 136 | $ | 216 | |||||||||||||
Work in process | 367 | 386 | |||||||||||||||
Raw materials and supplies | 470 | 617 | |||||||||||||||
$ | 973 | $ | 1,219 |
June 28, 2019 | June 29, 2018 | ||||||
(In millions) | |||||||
Land | $ | 40 | $ | 43 | |||
Software capitalized for internal use | 187 | 171 | |||||
Buildings | 631 | 620 | |||||
Machinery and equipment | 1,429 | 1,349 | |||||
2,287 | 2,183 | ||||||
Less accumulated depreciation and amortization | (1,393 | ) | (1,283 | ) | |||
$ | 894 | $ | 900 |
(In millions) | January 1, 2021 | January 3, 2020 | |||||||||||||||
Land | $ | 90 | $ | 90 | |||||||||||||
Software capitalized for internal use | 417 | 287 | |||||||||||||||
Buildings | 1,097 | 1,073 | |||||||||||||||
Machinery and equipment | 2,265 | 2,194 | |||||||||||||||
3,869 | 3,644 | ||||||||||||||||
Less accumulated depreciation and amortization | (1,767) | (1,527) | |||||||||||||||
$ | 2,102 | $ | 2,117 |
(In millions) | Integrated Mission Systems | Space and Airborne Systems | Communication Systems | Aviation Systems | Total | ||||||||||||||||||||||||||||||
Balance at June 28, 2019 | $ | 64 | $ | 3,737 | $ | 927 | $ | 612 | $ | 5,340 | |||||||||||||||||||||||||
Goodwill acquired | 5,704 | 1,390 | 3,316 | 4,239 | 14,649 | ||||||||||||||||||||||||||||||
Currency translation adjustments | 1 | 4 | 0 | 7 | 12 | ||||||||||||||||||||||||||||||
Balance at January 3, 2020 | 5,768 | 5,131 | 4,243 | 4,859 | 20,001 | ||||||||||||||||||||||||||||||
Goodwill decrease from divestitures(1) | 0 | (2) | (9) | (530) | (541) | ||||||||||||||||||||||||||||||
Impairment of goodwill | 0 | (5) | 0 | (475) | (480) | ||||||||||||||||||||||||||||||
Currency translation adjustments | (10) | (4) | 1 | (1) | (14) | ||||||||||||||||||||||||||||||
Other (including adjustments to previously estimated fair value of assets acquired and liabilities assumed)(2) | 741 | 112 | (82) | (861) | (90) | ||||||||||||||||||||||||||||||
Balance at January 1, 2021 | $ | 6,499 | $ | 5,232 | $ | 4,153 | $ | 2,992 | $ | 18,876 |
Communication Systems | Electronic Systems | Space and Intelligence Systems | Total | ||||||||||||
(In millions) | |||||||||||||||
Balance at June 30, 2017 | $ | 785 | $ | 3,104 | $ | 1,477 | $ | 5,366 | |||||||
Currency translation adjustments | — | 3 | 3 | 6 | |||||||||||
Balance at June 29, 2018 | 785 | 3,107 | 1,480 | 5,372 | |||||||||||
Currency translation adjustments | — | (1 | ) | (1 | ) | (2 | ) | ||||||||
Decrease from reclassification to assets of disposal group held for sale(1) | (30 | ) | — | — | (30 | ) | |||||||||
Balance at June 28, 2019 | $ | 755 | $ | 3,106 | $ | 1,479 | $ | 5,340 |
(2) Commercial Aviation Solutions Impairments. Indications of potential impairment of goodwill related to our Commercial Aviation Solutions reporting unit (which is part of our Aviation Systems segment) were present at April 3, 2020 due to COVID and its impact on global air traffic and customer operations, resulting in a decrease in fiscal 2020 outlook for the reporting unit, which we considered to be a triggering event requiring an interim impairment test. Consequently, in connection with the preparation of our financial statements for the quarter ended April 3, 2020, we performed a quantitative impairment test. To test for potential impairment of goodwill related to our Commercial Aviation Solutions reporting unit, we prepared an estimate of the fair value of the reporting unit based on a combination of market-based valuation techniques, utilizing quoted market prices and comparable publicly reported transactions, and projected discounted cash flows. Given the level of uncertainty in the outlook for the commercial aviation industry caused by the impact of COVID on global air traffic, our methodology for determining the fair value of the reporting unit placed the greatest weight on the expected fair value technique, and was dependent on our best estimates of future sales, operating costs and balance sheet metrics under a range of scenarios for future economic conditions. We assigned a probability to each scenario to calculate a set of probability-weighted projected cash flows, and an appropriate discount rate reflecting the risk in the projected cash flows was used to discount the expected cash flows to present value. As adverse global economic and market conditions attributable to COVID, including projected declines and subsequent recovery in commercial air traffic and original equipment manufacturer production volumes, continued to develop during fiscal 2020, we continued to monitor for facts and circumstances that could negatively impact key valuation assumptions in determining the fair value of our Commercial Aviation Solutions reporting unit, including recent valuations, expectations regarding the timing of a return to pre-COVID commercial flight activity and the associated level of uncertainty, long-term revenue and profitability projections, discount rates and general industry, market and macroeconomic conditions. As a result, we determined indications of further impairment of assets related to our Commercial Aviation Solutions reporting unit existed as of July 3, 2020 and again as of early December 2020. As a result of these impairment tests, we concluded that goodwill and other assets related to our Commercial Aviation Solutions reporting unit were impaired as of April 3, 2020, July 3, 2020 and January 1, 2021, and we recorded the following non-cash impairment charges: •$461 million (including $34 million attributable to noncontrolling interests) for impairment of goodwill during fiscal 2020, including $111 million recognized in the fourth quarter of fiscal 2020; and •$257 million for impairment of long-lived assets recognized during the fourth quarter of fiscal 2020, including $113 million for identifiable intangibles assets, $103 million for property, plant and equipment, $31 million for ROU assets and $10 million for marketable software. These charges are included in the “Impairment of goodwill and other assets” line item in our Consolidated Statement of Income for fiscal 2020 and are primarily not deductible for tax purposes. VSE Disposal Group Impairment. During the quarter ended July 3, 2020, we determined the criteria to be classified as held for sale were met with respect to the VSE disposal group within our Aviation Systems segment and assigned $14 million of goodwill to the VSE disposal group on a relative fair value basis. In connection with the preparation of our financial statements for the quarter ended July 3, 2020, we concluded that goodwill related to the VSE disposal group was impaired and recorded a non-cash impairment charge $14 million, which is included in the “Impairment of goodwill and other assets” line item in our Consolidated Statement of Income for fiscal 2020. |
January 1, 2021 | January 3, 2020 | ||||||||||||||||||||||||||||||||||
(In millions) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount (1) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||
Customer relationships | $ | 6,863 | $ | 1,257 | $ | 5,606 | $ | 6,518 | $ | 653 | $ | 5,865 | |||||||||||||||||||||||
Developed technologies | 653 | 261 | 392 | 768 | 183 | 585 | |||||||||||||||||||||||||||||
Contract backlog | 19 | 17 | 2 | 0 | 0 | 0 | |||||||||||||||||||||||||||||
Trade names — divisions | 129 | 45 | 84 | 165 | 35 | 130 | |||||||||||||||||||||||||||||
Other | 3 | 3 | 0 | 10 | 4 | 6 | |||||||||||||||||||||||||||||
Total identifiable intangible assets subject to amortization | 7,667 | 1,583 | 6,084 | 7,461 | 875 | 6,586 | |||||||||||||||||||||||||||||
In-process research and development | 21 | — | 21 | 69 | — | 69 | |||||||||||||||||||||||||||||
Trade names — corporate | 1,803 | — | 1,803 | 1,803 | — | 1,803 | |||||||||||||||||||||||||||||
Total identifiable intangible assets | $ | 9,491 | $ | 1,583 | $ | 7,908 | $ | 9,333 | $ | 875 | $ | 8,458 | |||||||||||||||||||||||
June 28, 2019 | June 29, 2018 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Customer relationships | $ | 1,203 | $ | 419 | $ | 784 | $ | 1,206 | $ | 327 | $ | 879 | |||||||||||
Developed technologies | 206 | 136 | 70 | 208 | 119 | 89 | |||||||||||||||||
Trade names | 42 | 26 | 16 | 43 | 22 | 21 | |||||||||||||||||
Other | 2 | 2 | — | 2 | 2 | — | |||||||||||||||||
Total intangible assets | $ | 1,453 | $ | 583 | $ | 870 | $ | 1,459 | $ | 470 | $ | 989 |
(In millions) | |||||
2021 | $ | 669 | |||
2022 | 673 | ||||
2023 | 663 | ||||
2024 | 623 | ||||
2025 | 573 | ||||
Thereafter | 2,883 | ||||
Total | $ | 6,084 |
(In millions) | |||
Year 1 | $ | 101 | |
Year 2 | 101 | ||
Year 3 | 101 | ||
Year 4 | 101 | ||
Year 5 | 101 | ||
Thereafter | 365 | ||
Total | $ | 870 |
2019 | 2018 | ||||||
(In millions) | |||||||
Balance at beginning of fiscal year | $ | 24 | $ | 26 | |||
Warranty provision for sales | 16 | 13 | |||||
Settlements | (11 | ) | (14 | ) | |||
Other, including adjustments for divestitures and foreign currency translation | (4 | ) | (1 | ) | |||
Balance at end of fiscal year | $ | 25 | $ | 24 |
(In millions) | January 1, 2021 | January 3, 2020 | |||||||||||||||
Balance at the beginning of the period | $ | 112 | $ | 25 | |||||||||||||
Acquisitions during the period | 0 | 83 | |||||||||||||||
Adjustments to previously estimated fair value of warranty liabilities assumed | 19 | 0 | |||||||||||||||
Decrease from divestitures | (9) | 0 | |||||||||||||||
Accruals for product warranties issued during the period | 72 | 23 | |||||||||||||||
Settlements made during the period | (61) | (23) | |||||||||||||||
Other, including foreign currency translation adjustments | 0 | 4 | |||||||||||||||
Balance at the end of the period | $ | 133 | $ | 112 |
June 28, 2019 | June 29, 2018 | ||||||
(In millions) | |||||||
Variable-rate debt: | |||||||
Floating rate notes, due February 27, 2019 | $ | — | $ | 300 | |||
Floating rate notes, due April 30, 2020 | 250 | 250 | |||||
Total variable-rate debt | 250 | 550 | |||||
Fixed-rate debt: | |||||||
2.7% notes, due April 27, 2020 | 400 | 400 | |||||
3.832% notes, due April 27, 2025 | 600 | 600 | |||||
7.0% debentures, due January 15, 2026 | 100 | 100 | |||||
6.35% debentures, due February 1, 2028 | 26 | 26 | |||||
4.400% notes, due June 15, 2028 | 850 | 850 | |||||
4.854% notes, due April 27, 2035 | 400 | 400 | |||||
6.15% notes, due December 15, 2040 | 300 | 300 | |||||
5.054% notes, due April 27, 2045 | 500 | 500 | |||||
Other | 17 | 14 | |||||
Total fixed-rate debt | 3,193 | 3,190 | |||||
Total debt | 3,443 | 3,740 | |||||
Less: unamortized discounts and issuance costs | (24 | ) | (28 | ) | |||
Total debt, net | 3,419 | 3,712 | |||||
Less: current portion of long-term debt, net | (656 | ) | (304 | ) | |||
Total long-term debt, net | $ | 2,763 | $ | 3,408 |
(In millions) | January 1, 2021 | January 3, 2020 | |||||||||||||||
Variable-rate debt: | |||||||||||||||||
Floating rate notes, due April 30, 2020 | $ | 0 | $ | 250 | |||||||||||||
Floating rate notes, due March 10, 2023 | 250 | 0 | |||||||||||||||
Total variable-rate debt | 250 | 250 | |||||||||||||||
Fixed-rate debt: | |||||||||||||||||
4.95% notes, due February 15, 2021 | 0 | 650 | |||||||||||||||
3.85% notes, due June 15, 2023 | 800 | 800 | |||||||||||||||
3.95% notes, due May 28, 2024 | 350 | 350 | |||||||||||||||
3.832% notes, due April 27, 2025 | 600 | 600 | |||||||||||||||
7.00% debentures, due January 15, 2026 | 100 | 100 | |||||||||||||||
3.85% notes, due December 15, 2026 | 550 | 550 | |||||||||||||||
6.35% debentures, due February 1, 2028 | 26 | 26 | |||||||||||||||
4.40% notes, due June 15, 2028 | 1,850 | 1,850 | |||||||||||||||
2.90% notes, due December 15, 2029 | 400 | 400 | |||||||||||||||
1.80% notes, due January 15, 2031 | 650 | 0 | |||||||||||||||
4.854% notes, due April 27, 2035 | 400 | 400 | |||||||||||||||
6.15% notes, due December 15, 2040 | 300 | 300 | |||||||||||||||
5.054% notes, due April 27, 2045 | 500 | 500 | |||||||||||||||
Other | 56 | 49 | |||||||||||||||
Total fixed-rate debt | 6,582 | 6,575 | |||||||||||||||
Total debt | 6,832 | 6,825 | |||||||||||||||
Plus: unamortized bond premium | 116 | 154 | |||||||||||||||
Less: unamortized discounts and issuance costs | (32) | (28) | |||||||||||||||
Total debt, net | 6,916 | 6,951 | |||||||||||||||
Less: current portion of long-term debt, net | (8) | (257) | |||||||||||||||
Total long-term debt, net | $ | 6,908 | $ | 6,694 |
(In millions) | Aggregate Principal Amount of L3 Notes (prior to debt exchange) | Aggregate Principal Amount of New L3Harris Notes Issued | Aggregate Principal Amount of Remaining L3 Notes | ||||||||||||||
4.95% notes due February 15, 2021 (“4.95% 2021 Notes”) | $ | 650 | $ | 501 | $ | 149 | |||||||||||
3.85% notes due June 15, 2023 (“3.85% 2023 Notes”) | 800 | 741 | 59 | ||||||||||||||
3.95% notes due May 28, 2024 (“3.95% 2024 Notes”) | 350 | 326 | 24 | ||||||||||||||
3.85% notes due December 15, 2026 (“3.85% 2026 Notes”) | 550 | 535 | 15 | ||||||||||||||
4.40% notes due June 15, 2028 (“4.40% 2028 Notes”) | 1,000 | 918 | 82 | ||||||||||||||
Total | $ | 3,350 | $ | 3,021 | $ | 329 |
June 28, 2019 | June 29, 2018 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
(In millions) | ||||||||||||||||
Long-term debt (including current portion)(1) | $ | 3,419 | $ | 3,802 | $ | 3,712 | $ | 3,848 |
January 1, 2021 | January 3, 2020 | |||||||||||||||||||||||||||||||||||||
(In millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||||||||||||||||
Long-term debt (including current portion)(1) | $ | 6,916 | $ | 7,948 | $ | 6,951 | $ | 7,536 |
June 28, 2019 | June 29, 2018 | |||||||||||||||
Total | Level 1 | Total | Level 1 | |||||||||||||
(In millions) | ||||||||||||||||
Assets | ||||||||||||||||
Deferred compensation plan assets:(1) | ||||||||||||||||
Equity and fixed income securities | $ | 38 | $ | 38 | $ | 46 | $ | 46 | ||||||||
Investments measured at NAV: | ||||||||||||||||
Equity and fixed income funds | 61 | 63 | ||||||||||||||
Corporate-owned life insurance | 28 | 27 | ||||||||||||||
Total investments measured at NAV | 89 | 90 | ||||||||||||||
Total fair value of deferred compensation plan assets | $ | 127 | $ | 136 | ||||||||||||
Liabilities | ||||||||||||||||
Deferred compensation plan liabilities:(2) | ||||||||||||||||
Equity securities and mutual funds | $ | 25 | $ | 25 | $ | 38 | $ | 38 | ||||||||
Investments measured at NAV: | ||||||||||||||||
Common/collective trusts and guaranteed investment contracts | 132 | 111 | ||||||||||||||
Total fair value of deferred compensation plan liabilities | $ | 157 | $ | 149 |
January 1, 2021 | January 3, 2020 | ||||||||||||||||||||||||||||||||||
(In millions) | Total | Level 1 | Total | Level 1 | |||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||
Deferred compensation plan assets:(1) | |||||||||||||||||||||||||||||||||||
Equity and fixed income securities | $ | 67 | $ | 67 | $ | 58 | $ | 58 | |||||||||||||||||||||||||||
Investments measured at NAV: | |||||||||||||||||||||||||||||||||||
Corporate-owned life insurance | 31 | 29 | |||||||||||||||||||||||||||||||||
Total fair value of deferred compensation plan assets | $ | 98 | $ | 87 | |||||||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||||
Deferred compensation plan liabilities:(2) | |||||||||||||||||||||||||||||||||||
Equity securities and mutual funds | $ | 4 | $ | 4 | $ | 2 | $ | 2 | |||||||||||||||||||||||||||
Investments measured at NAV: | |||||||||||||||||||||||||||||||||||
Common/collective trusts and guaranteed investment contracts | 116 | 69 | |||||||||||||||||||||||||||||||||
Total fair value of deferred compensation plan liabilities | $ | 120 | $ | 71 |
June 28, 2019 | June 29, 2018 | ||||||||||||||||||||||
Pension | Other Benefits | Total | Pension | Other Benefits | Total | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Fair value of plan assets | $ | 4,958 | $ | 201 | $ | 5,159 | $ | 5,098 | $ | 207 | $ | 5,305 | |||||||||||
Projected benefit obligation | (6,123 | ) | (221 | ) | (6,344 | ) | (5,774 | ) | (233 | ) | (6,007 | ) | |||||||||||
Funded status | $ | (1,165 | ) | $ | (20 | ) | $ | (1,185 | ) | $ | (676 | ) | $ | (26 | ) | $ | (702 | ) | |||||
Consolidated Balance Sheet line item amounts: | |||||||||||||||||||||||
Other non-current assets | $ | 12 | $ | — | $ | 12 | $ | 15 | $ | — | $ | 15 | |||||||||||
Compensation and benefits | (7 | ) | — | (7 | ) | (2 | ) | (1 | ) | (3 | ) | ||||||||||||
Liabilities of disposal group held for sale | (16 | ) | — | (16 | ) | — | — | — | |||||||||||||||
Defined benefit plans | (1,154 | ) | (20 | ) | (1,174 | ) | (689 | ) | (25 | ) | (714 | ) |
January 1, 2021 | January 3, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | Pension | Other Benefits | Total | Pension | Other Benefits | Total | |||||||||||||||||||||||||||||||||||||||||||||||
Fair value of plan assets | $ | 9,301 | $ | 299 | $ | 9,600 | $ | 8,618 | $ | 274 | $ | 8,892 | |||||||||||||||||||||||||||||||||||||||||
Projected benefit obligation | (11,045) | (387) | (11,432) | (10,268) | (369) | (10,637) | |||||||||||||||||||||||||||||||||||||||||||||||
Funded status | $ | (1,744) | $ | (88) | $ | (1,832) | $ | (1,650) | $ | (95) | $ | (1,745) | |||||||||||||||||||||||||||||||||||||||||
Consolidated Balance Sheet line item amounts: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other non-current assets | $ | 88 | $ | 8 | $ | 96 | $ | 91 | $ | 1 | $ | 92 | |||||||||||||||||||||||||||||||||||||||||
Compensation and benefits | (10) | (8) | (18) | (10) | (8) | (18) | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities of disposal group held for sale | (4) | 0 | (4) | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||
Defined benefit plans | (1,818) | (88) | (1,906) | (1,731) | (88) | (1,819) |
January 1, 2021 | January 3, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | Pension | Other Benefits | Total | Pension | Other Benefits | Total | |||||||||||||||||||||||||||||||||||||||||||||||
Net actuarial loss (gain) | $ | 1,215 | $ | (28) | $ | 1,187 | $ | 819 | $ | (34) | $ | 785 | |||||||||||||||||||||||||||||||||||||||||
Net prior service (credit) cost | (253) | 7 | (246) | (282) | (1) | (283) | |||||||||||||||||||||||||||||||||||||||||||||||
$ | 962 | $ | (21) | $ | 941 | $ | 537 | $ | (35) | $ | 502 |
June 28, 2019 | June 29, 2018 | ||||||||||||||||||||||
Pension | Other Benefits | Total | Pension | Other Benefits | Total | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Net actuarial loss (gain) | $ | 781 | $ | (36 | ) | $ | 745 | $ | 156 | $ | (46 | ) | $ | 110 | |||||||||
Net prior service cost (credit) | 6 | (1 | ) | 5 | 4 | (1 | ) | 3 | |||||||||||||||
$ | 787 | $ | (37 | ) | $ | 750 | $ | 160 | $ | (47 | ) | $ | 113 |
2019 | 2018 | ||||||||||||||||||||||
Pension | Other Benefits | Total | Pension | Other Benefits | Total | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Change in benefit obligation | |||||||||||||||||||||||
Benefit obligation at beginning of fiscal year | $ | 5,774 | $ | 233 | $ | 6,007 | $ | 6,140 | $ | 265 | $ | 6,405 | |||||||||||
Service cost | 36 | — | 36 | 39 | 1 | 40 | |||||||||||||||||
Interest cost | 209 | 8 | 217 | 195 | 7 | 202 | |||||||||||||||||
Actuarial loss (gain) | 514 | (1 | ) | 513 | (169 | ) | (22 | ) | (191 | ) | |||||||||||||
Amendments | 3 | — | 3 | 2 | — | 2 | |||||||||||||||||
Benefits paid | (381 | ) | (19 | ) | (400 | ) | (402 | ) | (18 | ) | (420 | ) | |||||||||||
Expenses paid | (30 | ) | — | (30 | ) | (35 | ) | — | (35 | ) | |||||||||||||
Curtailments | 1 | — | 1 | — | — | — | |||||||||||||||||
Foreign exchange | (3 | ) | — | (3 | ) | 4 | — | 4 | |||||||||||||||
Benefit obligation at end of fiscal year | $ | 6,123 | $ | 221 | $ | 6,344 | $ | 5,774 | $ | 233 | $ | 6,007 |
January 1, 2021 | January 3, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | Pension | Other Benefits | Total | Pension | Other Benefits | Total | |||||||||||||||||||||||||||||||||||||||||||||||
Change in benefit obligation | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Benefit obligation at beginning of fiscal year | $ | 10,268 | $ | 369 | $ | 10,637 | $ | 6,123 | $ | 221 | $ | 6,344 | |||||||||||||||||||||||||||||||||||||||||
Benefit obligation assumed in L3Harris Merger | 0 | 0 | 0 | 4,474 | 156 | 4,630 | |||||||||||||||||||||||||||||||||||||||||||||||
Service cost | 65 | 2 | 67 | 42 | 1 | 43 | |||||||||||||||||||||||||||||||||||||||||||||||
Interest cost | 273 | 10 | 283 | 149 | 5 | 154 | |||||||||||||||||||||||||||||||||||||||||||||||
Actuarial loss | 1,035 | 24 | 1,059 | 301 | 7 | 308 | |||||||||||||||||||||||||||||||||||||||||||||||
Amendments | 1 | 8 | 9 | (292) | 0 | (292) | |||||||||||||||||||||||||||||||||||||||||||||||
Benefits paid | (569) | (26) | (595) | (342) | (21) | (363) | |||||||||||||||||||||||||||||||||||||||||||||||
Settlements | 0 | 0 | 0 | (5) | 0 | (5) | |||||||||||||||||||||||||||||||||||||||||||||||
Special termination benefits | 1 | 0 | 1 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||
Expenses paid | (42) | 0 | (42) | (43) | 0 | (43) | |||||||||||||||||||||||||||||||||||||||||||||||
Curtailments | 0 | 0 | 0 | (35) | 0 | (35) | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency exchange rate changes | 11 | 0 | 11 | 3 | 0 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
Plan participants’ contributions | 2 | 0 | 2 | 1 | 0 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||
Divestiture | 0 | 0 | 0 | (108) | 0 | (108) | |||||||||||||||||||||||||||||||||||||||||||||||
Benefit obligation at end of fiscal year | $ | 11,045 | $ | 387 | $ | 11,432 | $ | 10,268 | $ | 369 | $ | 10,637 |
January 1, 2021 | January 3, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension | Other Benefits | Total | Pension | Other Benefits | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | Pension | Other Benefits | Total | Pension | Other Benefits | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in plan assets | Change in plan assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Plan assets at beginning of fiscal year | $ | 5,098 | $ | 207 | $ | 5,305 | $ | 4,921 | $ | 212 | $ | 5,133 | Plan assets at beginning of fiscal year | $ | 8,618 | $ | 274 | $ | 8,892 | $ | 4,958 | $ | 201 | $ | 5,159 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Plan assets acquired in L3Harris Merger | Plan assets acquired in L3Harris Merger | 0 | 0 | 0 | 3,183 | 68 | 3,251 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Actual return on plan assets | 271 | 11 | 282 | 307 | 14 | 321 | Actual return on plan assets | 1,263 | 40 | 1,303 | 548 | 18 | 566 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employer contributions | 3 | 2 | 5 | 303 | (1 | ) | 302 | Employer contributions | 20 | 11 | 31 | 406 | 8 | 414 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Benefits paid | (381 | ) | (19 | ) | (400 | ) | (402 | ) | (18 | ) | (420 | ) | Benefits paid | (569) | (26) | (595) | (342) | (21) | (363) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlements | Settlements | 0 | 0 | 0 | (5) | 0 | (5) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses paid | (30 | ) | — | (30 | ) | (35 | ) | — | (35 | ) | Expenses paid | (42) | 0 | (42) | (43) | 0 | (43) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange | (3 | ) | — | (3 | ) | 4 | — | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency exchange rate changes | Foreign currency exchange rate changes | 9 | 0 | 9 | 4 | 0 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Plan participants' contributions | Plan participants' contributions | 2 | 0 | 2 | 1 | 0 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Divestiture | Divestiture | 0 | 0 | 0 | (92) | 0 | (92) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Plan assets at end of fiscal year | $ | 4,958 | $ | 201 | $ | 5,159 | $ | 5,098 | $ | 207 | $ | 5,305 | Plan assets at end of fiscal year | $ | 9,301 | $ | 299 | $ | 9,600 | $ | 8,618 | $ | 274 | $ | 8,892 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Funded status at end of fiscal year | $ | (1,165 | ) | $ | (20 | ) | $ | (1,185 | ) | $ | (676 | ) | $ | (26 | ) | $ | (702 | ) | Funded status at end of fiscal year | $ | (1,744) | $ | (88) | $ | (1,832) | $ | (1,650) | $ | (95) | $ | (1,745) |
June 28, 2019 | June 29, 2018 | ||||||
(In millions) | |||||||
Projected benefit obligation | $ | 6,041 | $ | 5,694 | |||
Accumulated benefit obligation | 6,041 | 5,694 | |||||
Fair value of plan assets | 4,864 | 5,004 |
January 1, 2021 | January 3, 2020 | ||||||||||||||||||||||||||||||||||
(In millions) | Pension | Other Benefits | Pension | Other Benefits | |||||||||||||||||||||||||||||||
Accumulated benefit obligation | $ | 10,469 | N/A | $ | 9,656 | N/A | |||||||||||||||||||||||||||||
Fair value of plan assets | 8,658 | N/A | 7,931 | N/A |
January 1, 2021 | January 3, 2020 | ||||||||||||||||||||||||||||||||||
(In millions) | Pension | Other Benefits | Pension | Other Benefits | |||||||||||||||||||||||||||||||
Projected benefit obligation | $ | 10,522 | $ | 181 | $ | 9,700 | $ | 322 | |||||||||||||||||||||||||||
Fair value of plan assets | 8,689 | $ | 85 | 7,959 | 224 |
Pension | Other Benefits | ||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Net periodic benefit income(1) | |||||||||||||||||||||||
Service cost | $ | 36 | $ | 39 | $ | 58 | $ | — | $ | 1 | $ | 1 | |||||||||||
Interest cost | 209 | 195 | 184 | 8 | 7 | 8 | |||||||||||||||||
Expected return on plan assets | (382 | ) | (369 | ) | (340 | ) | (16 | ) | (16 | ) | (17 | ) | |||||||||||
Amortization of net actuarial loss (gain) | — | — | 1 | (6 | ) | (1 | ) | — | |||||||||||||||
Effect of curtailments or settlements | 1 | — | — | — | — | — | |||||||||||||||||
Net periodic benefit income | (136 | ) | (135 | ) | (97 | ) | (14 | ) | (9 | ) | (8 | ) | |||||||||||
Other changes in plan assets and benefit obligations recognized in other comprehensive loss | |||||||||||||||||||||||
Net actuarial loss (gain) | $ | 626 | $ | (106 | ) | $ | (284 | ) | $ | 4 | $ | (20 | ) | $ | (38 | ) | |||||||
Curtailment loss recognized | (1 | ) | — | — | — | — | — | ||||||||||||||||
Prior service cost | 3 | 2 | — | — | — | — | |||||||||||||||||
Recognized prior service (cost) credit | — | — | — | — | — | — | |||||||||||||||||
Amortization of net actuarial gain (loss) | — | — | (1 | ) | 6 | 1 | — | ||||||||||||||||
Amortization of prior service cost | (1 | ) | — | — | — | — | — | ||||||||||||||||
Total change recognized in other comprehensive loss | 627 | (104 | ) | (285 | ) | 10 | (19 | ) | (38 | ) | |||||||||||||
Total impact from net periodic benefit cost and changes in other comprehensive loss | $ | 491 | $ | (239 | ) | $ | (382 | ) | $ | (4 | ) | $ | (28 | ) | $ | (46 | ) |
Pension | |||||||||||||||||||||||
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Net periodic benefit income | |||||||||||||||||||||||
Service cost | $ | 65 | $ | 42 | $ | 36 | $ | 39 | |||||||||||||||
Interest cost | 273 | 149 | 209 | 195 | |||||||||||||||||||
Expected return on plan assets | (630) | (314) | (382) | (369) | |||||||||||||||||||
Amortization of net actuarial loss | 10 | 1 | 0 | 0 | |||||||||||||||||||
Amortization of prior service credit | (28) | (5) | 0 | 0 | |||||||||||||||||||
Cost for special termination benefits | 1 | 0 | 0 | 0 | |||||||||||||||||||
Effect of curtailments or settlements(1) | 0 | (18) | 1 | 0 | |||||||||||||||||||
Net periodic benefit income | $ | (309) | $ | (145) | $ | (136) | $ | (135) | |||||||||||||||
Other changes in plan assets and benefit obligations recognized in other comprehensive loss | |||||||||||||||||||||||
Net actuarial loss (gain) | $ | 403 | $ | 55 | $ | 625 | $ | (106) | |||||||||||||||
Prior service cost (credit) | 1 | (292) | 3 | 2 | |||||||||||||||||||
Amortization of net actuarial loss | (10) | (5) | 0 | 0 | |||||||||||||||||||
Amortization of prior service credit (cost) | 28 | 5 | (1) | 0 | |||||||||||||||||||
Currency translation adjustment | 2 | 0 | 0 | 0 | |||||||||||||||||||
Recognized net loss due to divestiture | 0 | (13) | 0 | 0 | |||||||||||||||||||
Total change recognized in other comprehensive loss | 424 | (250) | 627 | (104) | |||||||||||||||||||
Total impact from net periodic benefit cost and changes in other comprehensive loss | $ | 115 | $ | (395) | $ | 491 | $ | (239) |
Pension | Other Benefits | Total | |||||||||
(In millions) | |||||||||||
Net actuarial (gain) loss | $ | 1 | $ | (5 | ) | $ | (4 | ) | |||
Prior service cost | 1 | — | 1 | ||||||||
$ | 2 | $ | (5 | ) | $ | (3 | ) |
Other Benefits | |||||||||||||||||||||||
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Net periodic benefit income | |||||||||||||||||||||||
Service cost | $ | 2 | $ | 1 | $ | 0 | $ | 1 | |||||||||||||||
Interest cost | 10 | 5 | 8 | 7 | |||||||||||||||||||
Expected return on plan assets | (21) | (10) | (16) | (16) | |||||||||||||||||||
Amortization of net actuarial gain | (3) | (3) | (6) | (1) | |||||||||||||||||||
Net periodic benefit income | $ | (12) | $ | (7) | $ | (14) | $ | (9) | |||||||||||||||
Other changes in plan assets and benefit obligations recognized in other comprehensive loss | |||||||||||||||||||||||
Net actuarial loss (gain) | $ | 4 | $ | (1) | $ | 4 | $ | (20) | |||||||||||||||
Prior service cost | 8 | 0 | 0 | 0 | |||||||||||||||||||
Amortization of net actuarial gain | 3 | 3 | 6 | 1 | |||||||||||||||||||
Total change recognized in other comprehensive loss | 15 | 2 | 10 | (19) | |||||||||||||||||||
Total impact from net periodic benefit cost and changes in other comprehensive loss | $ | 3 | $ | (5) | $ | (4) | $ | (28) |
Obligation assumptions as of: | June 28, 2019 | June 29, 2018 | Obligation assumptions as of: | January 1, 2021 | January 3, 2020 | ||||||||||||||||||||||||||
Discount rate | 3.35 | % | 4.05 | % | Discount rate | 2.31 | % | 3.14 | % | ||||||||||||||||||||||
Rate of future compensation increase | 2.76 | % | 2.76 | % | Rate of future compensation increase | 3.01 | % | 2.80 | % | ||||||||||||||||||||||
Cash balance interest crediting rate | Cash balance interest crediting rate | 3.50 | % | 3.50 | % | ||||||||||||||||||||||||||
Cost assumptions for fiscal years: | 2019 | 2018 | 2017 | ||||||||||||||||||||||||||||
Cost assumptions for fiscal periods ended: | Cost assumptions for fiscal periods ended: | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | ||||||||||||||||||||||||||
Discount rate to determine service cost | 3.89 | % | 3.48 | % | 3.80 | % | Discount rate to determine service cost | 2.87 | % | 3.11 | % | 3.89 | % | 3.48 | % | ||||||||||||||||
Discount rate to determine interest cost | 3.75 | % | 3.28 | % | 2.94 | % | Discount rate to determine interest cost | 2.74 | % | 2.94 | % | 3.75 | % | 3.28 | % | ||||||||||||||||
Expected return on plan assets | 7.66 | % | 7.66 | % | 7.65 | % | Expected return on plan assets | 7.68 | % | 7.68 | % | 7.66 | % | 7.66 | % | ||||||||||||||||
Rate of future compensation increase | 2.76 | % | 2.76 | % | 2.75 | % | Rate of future compensation increase | 2.80 | % | 2.97 | % | 2.76 | % | 2.76 | % | ||||||||||||||||
Cash balance interest crediting rate | Cash balance interest crediting rate | 3.50 | % | 3.50 | % | 3.50 | % | 3.50 | % |
Obligation assumptions as of: | June 28, 2019 | June 29, 2018 | ||||||
Discount rate | 3.21 | % | 3.99 | % | ||||
Rate of future compensation increase | N/A | N/A | ||||||
Cost assumptions for fiscal year: | 2019 | 2018 | 2017 | |||||
Discount rate to determine service cost | 4.14 | % | 3.62 | % | 3.52 | % | ||
Discount rate to determine interest cost | 3.62 | % | 3.04 | % | 2.60 | % | ||
Rate of future compensation increase | N/A | N/A | N/A |
Obligation assumptions as of: | January 1, 2021 | January 3, 2020 | |||||||||||||||||||||
Discount rate | 2.10 | % | 2.97 | % | |||||||||||||||||||
Rate of future compensation increase | N/A | N/A | |||||||||||||||||||||
Cost assumptions for fiscal periods ended: | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Discount rate to determine service cost | 3.25 | % | 3.47 | % | 4.14 | % | 3.62 | % | |||||||||||||||
Discount rate to determine interest cost | 2.55 | % | 2.74 | % | 3.62 | % | 3.04 | % | |||||||||||||||
Rate of future compensation increase | N/A | N/A | N/A | N/A |
Target Asset Allocation | ||||
Equity investments | 45 | % | — | 75% |
Fixed income investments | 20 | % | — | 42% |
Hedge funds | 5 | % | — | 15% |
Cash and cash equivalents | 0 | % | — | 10% |
Target Asset Allocation | |||||||||||
Equity investments | 40 | % | — | 60% | |||||||
Fixed income investments | 25 | % | — | 35% | |||||||
Alternative investments | 10 | % | — | 25% | |||||||
Cash and cash equivalents | 0 | % | — | 10% |
January 1, 2021 | |||||||||||||||||||||||
(In millions) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Asset Category | |||||||||||||||||||||||
Equities: | |||||||||||||||||||||||
Domestic equities | $ | 1,513 | $ | 1,513 | $ | 0 | $ | 0 | |||||||||||||||
International equities | 1,280 | 1,280 | 0 | 0 | |||||||||||||||||||
Real Estate Investment Trusts | 197 | 197 | 0 | 0 | |||||||||||||||||||
Fixed income: | |||||||||||||||||||||||
Corporate bonds | 1,447 | 0 | 1,422 | 25 | |||||||||||||||||||
Government securities | 485 | 0 | 485 | 0 | |||||||||||||||||||
Securitized assets | 150 | 0 | 150 | 0 | |||||||||||||||||||
Fixed income funds | 119 | 119 | 0 | 0 | |||||||||||||||||||
Other | 2 | 0 | 0 | 2 | |||||||||||||||||||
Cash and cash equivalents | 202 | 20 | 182 | 0 | |||||||||||||||||||
Total | 5,395 | $ | 3,129 | $ | 2,239 | $ | 27 | ||||||||||||||||
Investments Measured at NAV | |||||||||||||||||||||||
Equity funds | 3,088 | ||||||||||||||||||||||
Fixed income funds | 532 | ||||||||||||||||||||||
Hedge funds | 321 | ||||||||||||||||||||||
Private equity funds | 312 | ||||||||||||||||||||||
Other | 1 | ||||||||||||||||||||||
Total Investments Measured at NAV | 4,254 | ||||||||||||||||||||||
Payables, net | (49) | ||||||||||||||||||||||
Total fair value of plan assets | $ | 9,600 |
June 28, 2019 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
(In millions) | |||||||||||||||
Asset Category | |||||||||||||||
Equities: | |||||||||||||||
Domestic equities | $ | 1,173 | $ | 1,173 | $ | — | $ | — | |||||||
International equities | 896 | 896 | — | — | |||||||||||
Fixed income: | |||||||||||||||
Corporate bonds | 923 | — | 906 | 17 | |||||||||||
Government securities | 332 | — | 332 | — | |||||||||||
Other | 2 | — | — | 2 | |||||||||||
Cash and cash equivalents | 59 | 12 | 47 | — | |||||||||||
Total | 3,385 | $ | 2,081 | $ | 1,285 | $ | 19 | ||||||||
Investments Measured at NAV | |||||||||||||||
Equity funds | 703 | ||||||||||||||
Fixed income funds | 362 | ||||||||||||||
Hedge funds | 331 | ||||||||||||||
Private equity funds | 294 | ||||||||||||||
Total Investments Measured at NAV | 1,690 | ||||||||||||||
Receivables, net | 84 | ||||||||||||||
Total fair value of plan assets | $ | 5,159 | |||||||||||||
June 29, 2018 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3(1) | ||||||||||||
(In millions) | |||||||||||||||
Asset Category | |||||||||||||||
Equities: | |||||||||||||||
Domestic equities | $ | 1,221 | $ | 1,189 | $ | 32 | $ | — | |||||||
International equities | 903 | 899 | 4 | — | |||||||||||
Fixed income: | |||||||||||||||
Corporate bonds | 811 | — | 800 | 11 | |||||||||||
Government securities | 335 | — | 335 | — | |||||||||||
Other | 2 | — | — | 2 | |||||||||||
Cash and cash equivalents | 209 | 6 | 203 | — | |||||||||||
Total | 3,481 | $ | 2,094 | $ | 1,374 | $ | 13 | ||||||||
Investments Measured at NAV | |||||||||||||||
Equity funds | 714 | ||||||||||||||
Fixed income funds | 318 | ||||||||||||||
Hedge funds(1) | 395 | ||||||||||||||
Private equity funds(1) | 401 | ||||||||||||||
Total Investments Measured at NAV | 1,828 | ||||||||||||||
Payables, net | (4 | ) | |||||||||||||
Total fair value of plan assets | $ | 5,305 |
Fixed Income | Other | Total | |||||||||
(In millions) | |||||||||||
Level 3 balance — June 30, 2017 | $ | — | $ | 2 | $ | 2 | |||||
Purchases, net | 11 | — | 11 | ||||||||
Level 3 balance — June 29, 2018 | 11 | 2 | 13 | ||||||||
Unrealized gains, net | 1 | — | 1 | ||||||||
Purchases, net | 5 | — | 5 | ||||||||
Level 3 balance — June 28, 2019 | $ | 17 | $ | 2 | $ | 19 |
January 3, 2020 | |||||||||||||||||||||||
(In millions) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Asset Category | |||||||||||||||||||||||
Equities: | |||||||||||||||||||||||
Domestic equities | $ | 2,968 | $ | 2,968 | $ | 0 | $ | 0 | |||||||||||||||
International equities | 1,217 | 1,217 | 0 | 0 | |||||||||||||||||||
Real Estate Investment Trusts | 211 | 211 | 0 | 0 | |||||||||||||||||||
Fixed income: | |||||||||||||||||||||||
Corporate bonds | 1,176 | 0 | 1,159 | 17 | |||||||||||||||||||
Government securities | 489 | 0 | 489 | 0 | |||||||||||||||||||
Securitized assets | 131 | 0 | 131 | 0 | |||||||||||||||||||
Fixed income funds | 101 | 101 | 0 | 0 | |||||||||||||||||||
Other | 2 | 0 | 0 | 2 | |||||||||||||||||||
Cash and cash equivalents | 691 | 17 | 674 | 0 | |||||||||||||||||||
Total | 6,986 | $ | 4,514 | $ | 2,453 | $ | 19 | ||||||||||||||||
Investments Measured at NAV | |||||||||||||||||||||||
Equity funds | 933 | ||||||||||||||||||||||
Fixed income funds | 323 | ||||||||||||||||||||||
Hedge funds | 342 | ||||||||||||||||||||||
Private equity funds | 302 | ||||||||||||||||||||||
Other | 1 | ||||||||||||||||||||||
Total Investments Measured at NAV | 1,901 | ||||||||||||||||||||||
Receivables, net | 5 | ||||||||||||||||||||||
Total fair value of plan assets | $ | 8,892 |
(In millions) | Pension | Other Benefits(1) | Total | ||||||||||||||
Fiscal Years: | |||||||||||||||||
2021 | $ | 581 | $ | 31 | $ | 612 | |||||||||||
2022 | 584 | 30 | 614 | ||||||||||||||
2023 | 585 | 29 | 614 | ||||||||||||||
2024 | 585 | 28 | 613 | ||||||||||||||
2025 | 583 | 26 | 609 | ||||||||||||||
2026 — 2030 | 2,872 | 111 | 2,983 |
Pension | Other Benefits(1) | Total | |||||||||
(In millions) | |||||||||||
Estimated benefit payments due: | |||||||||||
Year 1 | $ | 414 | $ | 22 | $ | 436 | |||||
Year 2 | 392 | 22 | 414 | ||||||||
Year 3 | 392 | 21 | 413 | ||||||||
Year 4 | 390 | 20 | 410 | ||||||||
Year 5 | 387 | 20 | 407 | ||||||||
Years 6 to 10 | 1,859 | 78 | 1,937 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020(1) | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Total expense | $ | 94 | $ | 125 | $ | 58 | $ | 51 | |||||||||||||||
Included in: | |||||||||||||||||||||||
Cost of product sales and services | $ | 11 | $ | 5 | $ | 12 | $ | 8 | |||||||||||||||
Engineering, selling and administrative expenses | 83 | 120 | 46 | 43 | |||||||||||||||||||
Income from continuing operations | 94 | 125 | 58 | 51 | |||||||||||||||||||
Tax effect on share-based compensation expense | (24) | (31) | (14) | (16) | |||||||||||||||||||
Total share-based compensation expense after-tax | $ | 70 | $ | 94 | $ | 44 | $ | 35 |
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Total expense | $ | 58 | $ | 51 | $ | 42 | |||||
Included in: | |||||||||||
Cost of product sales and services | $ | 12 | $ | 8 | $ | 3 | |||||
Engineering, selling and administrative expenses | 46 | 43 | 39 | ||||||||
Income from continuing operations | 58 | 51 | 42 | ||||||||
Tax effect on share-based compensation expense | (14 | ) | (16 | ) | (16 | ) | |||||
Total share-based compensation expense after-tax | $ | 44 | $ | 35 | $ | 26 |
2019 | 2018 | 2017 | ||||||
Expected dividends | 1.6 | % | 1.8 | % | 2.4 | % | ||
Expected volatility | 19.9 | % | 19.3 | % | 21.8 | % | ||
Risk-free interest rates | 2.7 | % | 1.8 | % | 1.2 | % | ||
Expected term (years) | 5.03 | 5.00 | 5.03 |
Fiscal Year Ended | Fiscal Years Ended | Fiscal Years Ended | |||||||||||||||||||||
January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | ||||||||||||||||||||
Expected dividends | 1.55 | % | 1.70 | % | 1.61 | % | 1.80 | % | |||||||||||||||
Expected volatility | 22.74 | % | 22.18 | % | 19.87 | % | 19.30 | % | |||||||||||||||
Risk-free interest rates | 0.89 | % | 1.68 | % | 2.72 | % | 1.80 | % | |||||||||||||||
Expected term (years) | 5.04 | 5.65 | 5.03 | 5.00 |
Shares | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||
(In years) | (In millions) | |||||||||||
Stock options outstanding June 29, 2018 | 4,698,370 | $ | 74.50 | |||||||||
Stock options forfeited or expired | (37,059 | ) | $ | 111.47 | ||||||||
Stock options granted | 270,963 | $ | 163.23 | |||||||||
Stock options exercised | (737,073 | ) | $ | 69.07 | ||||||||
Stock options outstanding June 28, 2019 | 4,195,201 | $ | 80.86 | 5.81 | $ | 454.20 | ||||||
Stock options exercisable June 28, 2019 | 3,338,448 | $ | 70.32 | 5.24 | $ | 396.63 |
Shares | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||||||||||
(In years) | (In millions) | ||||||||||||||||||||||
Stock options outstanding January 3, 2020 | 4,545,978 | $ | 110.48 | ||||||||||||||||||||
Granted | 583,200 | $ | 197.73 | ||||||||||||||||||||
Exercised | (774,458) | $ | 74.98 | ||||||||||||||||||||
Forfeited or expired | (33,084) | $ | 196.83 | ||||||||||||||||||||
Stock options outstanding January 1, 2021 | 4,321,636 | $ | 127.93 | 6.23 | $ | 280.42 | |||||||||||||||||
Stock options exercisable January 1, 2021 | 3,032,005 | $ | 96.53 | 5.11 | $ | 280.42 |
Shares | Weighted-Average Grant-Date Fair Value Per Share | |||||
Nonvested stock options June 29, 2018 | 1,613,401 | $ | 14.66 | |||
Stock options granted | 270,963 | $ | 30.05 | |||
Stock options vested | (1,027,611 | ) | $ | 14.04 | ||
Nonvested stock options June 28, 2019 | 856,753 | $ | 20.28 |
Shares | Weighted-Average Grant-Date Fair Value Per Share | ||||||||||
Nonvested stock options January 3, 2020 | 738,956 | $ | 38.61 | ||||||||
Granted | 583,200 | $ | 34.49 | ||||||||
Vested | (32,525) | $ | 35.86 | ||||||||
Nonvested stock options January 1, 2021 | 1,289,631 | $ | 36.81 |
Shares or Units | Weighted-Average Grant Price Per Share or Unit | |||||
Restricted stock and restricted stock units outstanding at June 29, 2018 | 414,690 | $ | 127.70 | |||
Restricted stock and restricted stock units granted | 94,163 | $ | 160.05 | |||
Restricted stock and restricted stock units vested | (119,748 | ) | $ | 130.77 | ||
Restricted stock and restricted stock units forfeited | (23,107 | ) | $ | 142.86 | ||
Restricted stock and restricted stock units outstanding at June 28, 2019 | 365,998 | $ | 134.06 |
Shares or Units | Weighted-Average Grant Price Per Share or Unit | ||||||||||
Restricted stock and restricted stock units outstanding at January 3, 2020 | 535,767 | $ | 196.22 | ||||||||
Granted | 272,146 | $ | 195.66 | ||||||||
Vested | (78,828) | $ | 177.23 | ||||||||
Forfeited | (30,165) | $ | 186.22 | ||||||||
Restricted stock and restricted stock units outstanding at January 1, 2021 | 698,920 | $ | 196.26 |
Shares or Units | Weighted-Average Grant Price Per Share or Unit | |||||
Performance share units outstanding at June 29, 2018 | 625,293 | $ | 98.11 | |||
Performance share units granted | 168,913 | $ | 155.12 | |||
Performance share units vested | (266,203 | ) | $ | 77.80 | ||
Performance share units forfeited | (18,254 | ) | $ | 124.83 | ||
Performance share units outstanding at June 28, 2019 | 509,749 | $ | 126.73 |
Shares or Units | Weighted-Average Grant Price Per Share or Unit | ||||||||||
Performance share units outstanding at January 3, 2020 | 55,020 | $ | 204.85 | ||||||||
Granted | 203,606 | $ | 228.29 | ||||||||
Forfeited | (8,931) | $ | 228.29 | ||||||||
Performance share units outstanding at January 1, 2021 | 249,695 | $ | 223.28 |
2019 | 2018 | 2017 | |||||||||
(In millions, except per share amounts) | |||||||||||
Income from continuing operations | $ | 953 | $ | 702 | $ | 628 | |||||
Adjustments for participating securities outstanding | (2 | ) | (2 | ) | (1 | ) | |||||
Income from continuing operations used in per basic and diluted common share calculations (A) | $ | 951 | $ | 700 | $ | 627 | |||||
Basic weighted average common shares outstanding (B) | 118.0 | 118.6 | 122.6 | ||||||||
Impact of dilutive share-based awards | 2.5 | 2.5 | 1.7 | ||||||||
Diluted weighted average common shares outstanding (C) | 120.5 | 121.1 | 124.3 | ||||||||
Income from continuing operations per basic common share (A)/(B) | $ | 8.06 | $ | 5.90 | $ | 5.11 | |||||
Income from continuing operations per diluted common share (A)/(C) | $ | 7.89 | $ | 5.78 | $ | 5.04 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions, except per share amounts) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Income from continuing operations | $ | 1,121 | $ | 823 | $ | 953 | $ | 702 | |||||||||||||||
Adjustments for participating securities outstanding | 0 | 0 | (2) | (2) | |||||||||||||||||||
Income from continuing operations used in per basic and diluted common share calculations (A) | $ | 1,121 | $ | 823 | $ | 951 | $ | 700 | |||||||||||||||
Basic weighted average common shares outstanding (B) | 214.0 | 221.2 | 118.0 | 118.6 | |||||||||||||||||||
Impact of dilutive share-based awards | 1.9 | 2.5 | 2.5 | 2.5 | |||||||||||||||||||
Diluted weighted average common shares outstanding (C) | 215.9 | 223.7 | 120.5 | 121.1 | |||||||||||||||||||
Income from continuing operations per basic common share (A)/(B) | $ | 5.24 | $ | 3.72 | $ | 8.06 | $ | 5.90 | |||||||||||||||
Income from continuing operations per diluted common share (A)/(C) | $ | 5.19 | $ | 3.68 | $ | 7.89 | $ | 5.78 |
(In millions) | January 1, 2021 | January 3, 2020 | |||||||||
Operating lease ROU assets | $ | 766 | $ | 837 | |||||||
Other accrued items | 116 | 129 | |||||||||
Operating lease liabilities | 734 | 781 | |||||||||
Total operating lease liabilities | $ | 850 | $ | 910 |
Fiscal Year Ended | Two Quarters Ended | ||||||||||
(In millions, except lease term and discount rate) | January 1, 2021 | January 3, 2020 | |||||||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 171 | $ | 91 | |||||||
ROU assets obtained in exchange for new operating lease liabilities | 103 | 17 | |||||||||
Weighted average remaining lease term — operating leases (in years) | 8.7 | 9.4 | |||||||||
Weighted average discount rate — operating leases | 3.0 | % | 3.1 | % |
(In millions) | |||||||||||
Fiscal Years | |||||||||||
2021 | $ | 148 | |||||||||
2022 | 131 | ||||||||||
2023 | 112 | ||||||||||
2024 | 95 | ||||||||||
2025 | 86 | ||||||||||
Thereafter | 425 | ||||||||||
Total future lease payments required | 997 | ||||||||||
Less: imputed interest | 147 | ||||||||||
Total | $ | 850 |
(In millions) | January 1, 2021 | January 3, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency forward contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other current assets | $ | 21 | $ | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other non-current assets | 3 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other accrued items | 4 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other long-term liabilities | 0 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Pension income(1) | $ | 186 | $ | 184 | $ | 164 | |||||
Loss on extinguishment of debt(2) | — | (24 | ) | — | |||||||
Adjustment to gain on sale of business | — | — | 2 | ||||||||
Net income (loss) related to intellectual property matters | 1 | (1 | ) | — | |||||||
Gain on sale of investment | 1 | — | — | ||||||||
Other | — | (3 | ) | — | |||||||
$ | 188 | $ | 156 | $ | 166 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Pension adjustment(1) | $ | 389 | $ | 172 | $ | 186 | $ | 184 | |||||||||||||||
Gain on pension plan curtailment | 0 | 23 | 0 | 0 | |||||||||||||||||||
Gain (loss) on extinguishment of debt(2) | 2 | (2) | 0 | (24) | |||||||||||||||||||
Other | 10 | (1) | 2 | (4) | |||||||||||||||||||
$ | 401 | $ | 192 | $ | 188 | $ | 156 |
(1)The non-service components of net periodic pension and postretirement benefit costs include interest cost, expected return on plan assets, amortization of net actuarial gain or loss and effect of curtailments or settlements. (2)Gain associated with our optional redemption of the entire outstanding $650 million principal amount of our 4.95% 2021 Notes in fiscal 2020; loss associated with our optional redemption of the entire outstanding $400 million principal amount of our 2.7% 2020 Notes in the two quarters ended January 3, 2020; and losses associated with our optional redemption of the entire outstanding $800 million aggregate principal amount of our 2018 Redeemed Notes and the repayment in full of $253 million in remaining outstanding indebtedness under the 5-year tranche of our $1.3 billion senior unsecured term loan facility and the termination of our 2015 credit agreement in fiscal 2018. See. Note 14: Debt in these Notes for additional information. |
(In millions) | Foreign currency translation | Net unrealized losses on hedging derivatives | Unrecognized postretirement obligations | Total AOCI | |||||||||||||||||||
Balance at June 28, 2019 | $ | (106) | $ | (38) | $ | (563) | $ | (707) | |||||||||||||||
Other comprehensive income (loss), before income taxes | 25 | (23) | 231 | 233 | |||||||||||||||||||
Income taxes | 0 | 6 | (53) | (47) | |||||||||||||||||||
Other comprehensive income (loss) before reclassifications to earnings, net of income taxes | 25 | (17) | 178 | 186 | |||||||||||||||||||
Losses reclassified to earnings(1) | 0 | 0 | 18 | 18 | |||||||||||||||||||
Income taxes | 0 | 0 | (5) | (5) | |||||||||||||||||||
Losses reclassified to earnings, net of income taxes | 0 | 0 | 13 | 13 | |||||||||||||||||||
Other comprehensive income (loss), net of income taxes | 25 | (17) | 191 | 199 | |||||||||||||||||||
Balance at January 3, 2020 | (81) | (55) | (372) | (508) | |||||||||||||||||||
Other comprehensive income (loss), before income taxes | 16 | (41) | (418) | (443) | |||||||||||||||||||
Income taxes | 0 | 10 | 105 | 115 | |||||||||||||||||||
Other comprehensive income (loss) before reclassifications to earnings, net of income taxes | 16 | (31) | (313) | (328) | |||||||||||||||||||
Losses (gains) reclassified to earnings(1) | 7 | 8 | (21) | (6) | |||||||||||||||||||
Income taxes | 0 | (2) | 5 | 3 | |||||||||||||||||||
Losses (gains) reclassified to earnings, net of income taxes | 7 | 6 | (16) | (3) | |||||||||||||||||||
Other comprehensive income (loss), net of income taxes | 23 | (25) | (329) | (331) | |||||||||||||||||||
Balance at January 1, 2021 | $ | (58) | $ | (80) | $ | (701) | $ | (839) |
June 28, 2019 | June 29, 2018 | ||||||
(In millions) | |||||||
Foreign currency translation, net of income taxes of $2 million at each of June 28, 2019 and June 29, 2018 | $ | (106 | ) | $ | (99 | ) | |
Net unrealized loss on hedging derivatives, net of income taxes of $13 million and $7 million at June 28, 2019 and June 29, 2018, respectively | (38 | ) | (20 | ) | |||
Unrecognized postretirement obligations, net of income taxes of $188 million and $30 million at June 28, 2019 and June 29, 2018, respectively | (563 | ) | (83 | ) | |||
$ | (707 | ) | $ | (202 | ) |
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Current: | |||||||||||
United States | $ | 105 | $ | (141 | ) | $ | 117 | ||||
International | 9 | 12 | 9 | ||||||||
State and local | 8 | (11 | ) | 6 | |||||||
122 | (140 | ) | 132 | ||||||||
Deferred: | |||||||||||
United States | 15 | 324 | 121 | ||||||||
International | (3 | ) | (3 | ) | 1 | ||||||
State and local | 26 | 25 | 7 | ||||||||
38 | 346 | 129 | |||||||||
$ | 160 | $ | 206 | $ | 261 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Current: | |||||||||||||||||||||||
United States | $ | 337 | $ | 11 | $ | 105 | $ | (141) | |||||||||||||||
International | 76 | 37 | 9 | 12 | |||||||||||||||||||
State and local | 45 | 16 | 8 | (11) | |||||||||||||||||||
458 | 64 | 122 | (140) | ||||||||||||||||||||
Deferred: | |||||||||||||||||||||||
United States | (150) | 33 | 15 | 324 | |||||||||||||||||||
International | (73) | (15) | (3) | (3) | |||||||||||||||||||
State and local | (1) | (9) | 26 | 25 | |||||||||||||||||||
(224) | 9 | 38 | 346 | ||||||||||||||||||||
$ | 234 | $ | 73 | $ | 160 | $ | 206 |
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Continuing operations | $ | 160 | $ | 206 | $ | 261 | |||||
Discontinued operations | (1 | ) | (5 | ) | (110 | ) | |||||
Total income tax provision | $ | 159 | $ | 201 | $ | 151 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Continuing operations | $ | 234 | $ | 73 | $ | 160 | $ | 206 | |||||||||||||||
Discontinued operations | 0 | 0 | (1) | (5) | |||||||||||||||||||
Total income tax provision | $ | 234 | $ | 73 | $ | 159 | $ | 201 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | ||||||||||||||||||||
U.S. statutory income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | 28.1 | % | |||||||||||||||
State taxes | 3.2 | 1.4 | 2.4 | 1.9 | |||||||||||||||||||
International income | 0.4 | 0.9 | (0.5) | (0.5) | |||||||||||||||||||
Non-deductible goodwill impairment | 5.8 | 0 | 0 | 0 | |||||||||||||||||||
Research and development tax credit | (9.2) | (4.7) | (4.5) | (2.9) | |||||||||||||||||||
Foreign derived intangibles income deduction | (1.3) | (0.8) | (1.3) | 0 | |||||||||||||||||||
Change in valuation allowance | 0.5 | (4.8) | (1.8) | 0.2 | |||||||||||||||||||
U.S. production activity benefit | 0 | 0 | 0 | (0.9) | |||||||||||||||||||
Equity-based compensation(1) | (1.0) | (5.4) | (2.1) | (1.8) | |||||||||||||||||||
Settlement of tax audits | (1.8) | 0 | 0 | (2.2) | |||||||||||||||||||
U.S. tax reform | 0 | 0 | 0 | 0.4 | |||||||||||||||||||
Other items | 0.1 | 0.4 | 1.2 | 0.4 | |||||||||||||||||||
Effective income tax rate | 17.7 | % | 8.0 | % | 14.4 | % | 22.7 | % |
2019 | 2018 | 2017 | ||||||
U.S. statutory income tax rate | 21.0 | % | 28.1 | % | 35.0 | % | ||
State taxes | 2.4 | 1.9 | 1.0 | |||||
International income | (0.5 | ) | (0.5 | ) | (1.3 | ) | ||
Research and development tax credit | (4.5 | ) | (2.9 | ) | (2.0 | ) | ||
Foreign derived intangibles income deduction | (1.3 | ) | — | — | ||||
Change in valuation allowance | (1.8 | ) | 0.2 | (0.2 | ) | |||
U.S. production activity benefit | — | (0.9 | ) | (0.5 | ) | |||
Excess tax benefits on equity-based compensation | (2.2 | ) | (1.8 | ) | (2.6 | ) | ||
Settlement of tax audits | — | (2.2 | ) | — | ||||
U.S. tax reform | — | 0.4 | — | |||||
Other items | 1.3 | 0.4 | (0.1 | ) | ||||
Effective income tax rate | 14.4 | % | 22.7 | % | 29.3 | % |
June 28, 2019 | June 29, 2018 | ||||||
(In millions) | |||||||
Deferred tax assets: | |||||||
Inventory valuations | $ | 24 | $ | 21 | |||
Accruals | 152 | 178 | |||||
Deferred revenue | 12 | 7 | |||||
Domestic tax loss and credit carryforwards | 54 | 86 | |||||
International tax loss and credit carryforwards | 38 | 33 | |||||
Share-based compensation | 28 | 26 | |||||
Capital loss carryforwards | 95 | 101 | |||||
Pension and other post-employment benefits | 305 | 188 | |||||
Unrealized loss on interest rate hedges | 13 | 7 | |||||
Unrecognized tax benefits | 4 | 4 | |||||
Other | 10 | 13 | |||||
Total deferred tax assets | 735 | 664 | |||||
Less: valuation allowance(1) | (159 | ) | (181 | ) | |||
Total deferred tax assets, net of valuation allowance | 576 | 483 | |||||
Deferred tax liabilities: | |||||||
Property, plant and equipment | (71 | ) | (65 | ) | |||
Unbilled receivables | (65 | ) | (86 | ) | |||
Acquired intangibles | (260 | ) | (268 | ) | |||
Unremitted earnings of foreign subsidiaries | (19 | ) | (24 | ) | |||
Total deferred tax liabilities | (415 | ) | (443 | ) | |||
Total deferred tax assets, net of valuation allowance | $ | 161 | $ | 40 |
(In millions) | January 1, 2021 | January 3, 2020 | |||||||||||||||
Deferred tax assets: | |||||||||||||||||
Accruals | $ | 315 | $ | 240 | |||||||||||||
Tax loss and credit carryforwards | 153 | 177 | |||||||||||||||
Share-based compensation | 33 | 27 | |||||||||||||||
Capital loss carryforwards | 2 | 44 | |||||||||||||||
Pension and other post-employment benefits | 457 | 431 | |||||||||||||||
Operating lease obligation | 202 | 213 | |||||||||||||||
Other | 280 | 238 | |||||||||||||||
Valuation allowance(1) | (165) | (185) | |||||||||||||||
Deferred tax assets, net | 1,277 | 1,185 | |||||||||||||||
Deferred tax liabilities: | |||||||||||||||||
Property, plant and equipment | (91) | (159) | |||||||||||||||
Unbilled receivables | (21) | (51) | |||||||||||||||
Acquired intangibles | (1,934) | (2,037) | |||||||||||||||
Operating lease right-of-use asset | (182) | (196) | |||||||||||||||
Other | (167) | (121) | |||||||||||||||
Deferred tax liabilities | (2,395) | (2,564) | |||||||||||||||
Net deferred tax assets (liabilities) | $ | (1,118) | $ | (1,379) |
June 28, 2019 | June 29, 2018 | |||||||||||||||||||||||
(In millions) | (In millions) | January 1, 2021 | January 3, 2020 | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Non-current deferred income tax assets | $ | 173 | $ | 119 | Non-current deferred income tax assets | $ | 119 | $ | 102 | |||||||||||||||
Non-current deferred income tax liabilities | (12 | ) | (79 | ) | Non-current deferred income tax liabilities | (1,237) | (1,481) | |||||||||||||||||
$ | 161 | $ | 40 | $ | (1,118) | $ | (1,379) |
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Balance at beginning of fiscal year | $ | 102 | $ | 90 | $ | 63 | |||||
Additions based on tax positions taken during current fiscal year | 31 | 17 | 52 | ||||||||
Additions based on tax positions taken during prior fiscal years | 80 | 23 | — | ||||||||
Decreases based on tax positions taken during prior fiscal years | (9 | ) | (28 | ) | (25 | ) | |||||
Balance at end of fiscal year | $ | 204 | $ | 102 | $ | 90 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Balance at beginning of period | $ | 438 | $ | 204 | $ | 102 | $ | 90 | |||||||||||||||
Additions based on tax positions taken during current period | 60 | 35 | 31 | 17 | |||||||||||||||||||
Additions based on tax positions taken during prior periods | 21 | 0 | 80 | 23 | |||||||||||||||||||
Additions for tax positions related to acquired entities | 116 | 226 | 0 | 0 | |||||||||||||||||||
Decreases based on tax positions taken during prior periods | (82) | (7) | (9) | (28) | |||||||||||||||||||
Decreases from lapse in statutes of limitations | (3) | (20) | 0 | 0 | |||||||||||||||||||
Decreases from settlements | (8) | 0 | 0 | 0 | |||||||||||||||||||
Balance at end of period | $ | 542 | $ | 438 | $ | 204 | $ | 102 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Revenue | |||||||||||||||||||||||
Integrated Mission Systems | $ | 5,538 | $ | 2,758 | $ | 52 | $ | 55 | |||||||||||||||
Space and Airborne Systems | 4,946 | 2,377 | 3,711 | 3,294 | |||||||||||||||||||
Communication Systems | 4,443 | 2,151 | 2,208 | 2,015 | |||||||||||||||||||
Aviation Systems | 3,448 | 2,038 | 672 | 668 | |||||||||||||||||||
Other non-reportable business segments(1) | 0 | 23 | 165 | 148 | |||||||||||||||||||
Corporate eliminations | (181) | (84) | (7) | (12) | |||||||||||||||||||
$ | 18,194 | $ | 9,263 | $ | 6,801 | $ | 6,168 | ||||||||||||||||
Income from Continuing Operations before Income Taxes | |||||||||||||||||||||||
Segment Operating Income: | |||||||||||||||||||||||
Integrated Mission Systems | $ | 847 | $ | 371 | $ | 10 | $ | 9 | |||||||||||||||
Space and Airborne Systems | 932 | 447 | 696 | 626 | |||||||||||||||||||
Communication Systems | 1,084 | 493 | 637 | 561 | |||||||||||||||||||
Aviation Systems | (177) | 289 | 76 | 54 | |||||||||||||||||||
Other non-reportable business segments(1) | 0 | 0 | 27 | 20 | |||||||||||||||||||
Unallocated corporate expenses and corporate eliminations(2) | (109) | (139) | (2) | (65) | |||||||||||||||||||
L3Harris Merger-related transaction, integration and other expenses and losses | (130) | (273) | (65) | 0 | |||||||||||||||||||
L3Harris Merger-related restructuring costs | (10) | (117) | 0 | 0 | |||||||||||||||||||
Amortization of acquisition-related intangibles(3) | (709) | (289) | (101) | (101) | |||||||||||||||||||
Impairment of identifiable intangible assets | (113) | 0 | 0 | 0 | |||||||||||||||||||
Business divestiture-related (losses) gains | (51) | 229 | 0 | 0 | |||||||||||||||||||
Pension adjustment | (389) | (172) | (186) | (184) | |||||||||||||||||||
Non-operating income | 401 | 192 | 188 | 156 | |||||||||||||||||||
Net interest expense | (254) | (123) | (167) | (168) | |||||||||||||||||||
Total income from continuing operations before income taxes | $ | 1,322 | $ | 908 | $ | 1,113 | $ | 908 |
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Revenue | |||||||||||
Communication Systems | $ | 2,177 | $ | 1,904 | $ | 1,754 | |||||
Electronic Systems | 2,583 | 2,365 | 2,245 | ||||||||
Space and Intelligence Systems | 2,057 | 1,913 | 1,904 | ||||||||
Corporate eliminations | (16 | ) | (14 | ) | (6 | ) | |||||
$ | 6,801 | $ | 6,168 | $ | 5,897 | ||||||
Income from Continuing Operations before Income Taxes | |||||||||||
Segment Operating Income: | |||||||||||
Communication Systems | $ | 654 | $ | 566 | $ | 514 | |||||
Electronic Systems | 499 | 432 | 457 | ||||||||
Space and Intelligence Systems | 359 | 331 | 314 | ||||||||
Unallocated corporate expense and corporate eliminations(1) | (234 | ) | (225 | ) | (228 | ) | |||||
Pension adjustment | (186 | ) | (184 | ) | (164 | ) | |||||
Non-operating income(2) | 188 | 156 | 166 | ||||||||
Net interest expense | (167 | ) | (168 | ) | (170 | ) | |||||
Total | $ | 1,113 | $ | 908 | $ | 889 |
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Revenue By Geographical Region | |||||||||||
United States | $ | 1,213 | $ | 983 | $ | 811 | |||||
International | 964 | 921 | 943 | ||||||||
$ | 2,177 | $ | 1,904 | $ | 1,754 |
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Revenue By Customer Relationship | |||||||||||
Prime contractor | $ | 1,671 | $ | 1,670 | $ | 1,653 | |||||
Subcontractor | 912 | 695 | 592 | ||||||||
$ | 2,583 | $ | 2,365 | $ | 2,245 | ||||||
Revenue By Contract Type | |||||||||||
Fixed-price(1) | $ | 2,092 | $ | 1,900 | $ | 1,833 | |||||
Cost-reimbursable | 491 | 465 | 412 | ||||||||
$ | 2,583 | $ | 2,365 | $ | 2,245 | ||||||
Revenue By Geographical Region | |||||||||||
United States | $ | 2,095 | $ | 1,890 | $ | 1,769 | |||||
International | 488 | 475 | 476 | ||||||||
$ | 2,583 | $ | 2,365 | $ | 2,245 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Revenue By Customer Relationship | |||||||||||||||||||||||
Prime contractor | $ | 3,718 | $ | 1,892 | $ | 27 | $ | 26 | |||||||||||||||
Subcontractor | 1,820 | 866 | 25 | 29 | |||||||||||||||||||
$ | 5,538 | $ | 2,758 | $ | 52 | $ | 55 | ||||||||||||||||
Revenue By Contract Type | |||||||||||||||||||||||
Fixed-price(1) | $ | 4,179 | $ | 2,121 | $ | 52 | $ | 54 | |||||||||||||||
Cost-reimbursable | 1,359 | 637 | 0 | 1 | |||||||||||||||||||
$ | 5,538 | $ | 2,758 | $ | 52 | $ | 55 | ||||||||||||||||
Revenue By Geographical Region | |||||||||||||||||||||||
United States | $ | 4,389 | $ | 2,146 | $ | 30 | $ | 40 | |||||||||||||||
International | 1,149 | 612 | 22 | 15 | |||||||||||||||||||
$ | 5,538 | $ | 2,758 | $ | 52 | $ | 55 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Revenue By Customer Relationship | |||||||||||||||||||||||
Prime contractor | $ | 2,684 | $ | 1,348 | $ | 2,244 | $ | 2,152 | |||||||||||||||
Subcontractor | 2,262 | 1,029 | 1,467 | 1,142 | |||||||||||||||||||
$ | 4,946 | $ | 2,377 | $ | 3,711 | $ | 3,294 | ||||||||||||||||
Revenue By Contract Type | |||||||||||||||||||||||
Fixed-price(1) | $ | 2,838 | $ | 1,384 | $ | 2,093 | $ | 1,625 | |||||||||||||||
Cost-reimbursable | 2,108 | 993 | 1,618 | 1,669 | |||||||||||||||||||
$ | 4,946 | $ | 2,377 | $ | 3,711 | $ | 3,294 | ||||||||||||||||
Revenue By Geographical Region | |||||||||||||||||||||||
United States | $ | 4,195 | $ | 2,043 | $ | 3,255 | $ | 2,936 | |||||||||||||||
International | 751 | 334 | 456 | 358 | |||||||||||||||||||
$ | 4,946 | $ | 2,377 | $ | 3,711 | $ | 3,294 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Revenue By Customer Relationship(1) | |||||||||||||||||||||||
Prime contractor | $ | 3,102 | $ | 1,406 | |||||||||||||||||||
Subcontractor | 1,341 | 745 | |||||||||||||||||||||
$ | 4,443 | $ | 2,151 | ||||||||||||||||||||
Revenue By Contract Type(1) | |||||||||||||||||||||||
Fixed-price(2) | $ | 3,805 | $ | 1,849 | |||||||||||||||||||
Cost-reimbursable | 638 | 302 | |||||||||||||||||||||
$ | 4,443 | $ | 2,151 | ||||||||||||||||||||
Revenue By Geographical Region | |||||||||||||||||||||||
United States | $ | 3,204 | $ | 1,518 | $ | 1,281 | $ | 1,031 | |||||||||||||||
International | 1,239 | 633 | 927 | 984 | |||||||||||||||||||
$ | 4,443 | $ | 2,151 | $ | 2,208 | $ | 2,015 |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Revenue By Customer Relationship | |||||||||||||||||||||||
Prime contractor | $ | 2,258 | $ | 1,246 | $ | 654 | $ | 656 | |||||||||||||||
Subcontractor | 1,190 | 792 | 18 | 12 | |||||||||||||||||||
$ | 3,448 | $ | 2,038 | $ | 672 | $ | 668 | ||||||||||||||||
Revenue By Contract Type | |||||||||||||||||||||||
Fixed-price(1) | $ | 2,809 | $ | 1,688 | $ | 587 | $ | 582 | |||||||||||||||
Cost-reimbursable | 639 | 350 | 85 | 86 | |||||||||||||||||||
$ | 3,448 | $ | 2,038 | $ | 672 | $ | 668 | ||||||||||||||||
Revenue By Geographical Region | |||||||||||||||||||||||
United States | $ | 2,843 | $ | 1,514 | $ | 644 | $ | 627 | |||||||||||||||
International | 605 | 524 | 28 | 41 | |||||||||||||||||||
$ | 3,448 | $ | 2,038 | $ | 672 | $ | 668 |
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Revenue By Customer Relationship | |||||||||||
Prime contractor | $ | 1,409 | $ | 1,384 | $ | 1,369 | |||||
Subcontractor | 648 | 529 | 535 | ||||||||
$ | 2,057 | $ | 1,913 | $ | 1,904 | ||||||
Revenue By Contract Type | |||||||||||
Fixed-price(1) | $ | 748 | $ | 544 | $ | 448 | |||||
Cost-reimbursable | 1,309 | 1,369 | 1,456 | ||||||||
$ | 2,057 | $ | 1,913 | $ | 1,904 | ||||||
Revenue By Geographical Region | |||||||||||
United States | $ | 2,003 | $ | 1,861 | $ | 1,821 | |||||
International | 54 | 52 | 83 | ||||||||
$ | 2,057 | $ | 1,913 | $ | 1,904 |
2019 | 2018 | |||||||||||||||||||||||
(In millions) | (In millions) | January 1, 2021 | January 3, 2020 | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Total Assets | Total Assets | |||||||||||||||||||||||
Integrated Mission Systems | Integrated Mission Systems | $ | 8,906 | $ | 7,888 | |||||||||||||||||||
Space and Airborne Systems | Space and Airborne Systems | 6,943 | 6,837 | |||||||||||||||||||||
Communication Systems | $ | 1,565 | $ | 1,567 | Communication Systems | 5,746 | 5,930 | |||||||||||||||||
Electronic Systems | 4,188 | 4,174 | ||||||||||||||||||||||
Space and Intelligence Systems | 2,208 | 2,193 | ||||||||||||||||||||||
Aviation Systems | Aviation Systems | 5,026 | 7,569 | |||||||||||||||||||||
Corporate(1) | 2,156 | 1,917 | Corporate(1) | 10,339 | 10,112 | |||||||||||||||||||
$ | 10,117 | $ | 9,851 | $ | 36,960 | $ | 38,336 |
(1) |
Fiscal Year Ended | Two Quarters Ended | Fiscal Years Ended | |||||||||||||||||||||
(In millions) | January 1, 2021 | January 3, 2020 | June 28, 2019 | June 29, 2018 | |||||||||||||||||||
Capital Expenditures | |||||||||||||||||||||||
Integrated Mission Systems | $ | 67 | $ | 29 | $ | 1 | $ | 1 | |||||||||||||||
Space and Airborne Systems | 92 | 36 | 48 | 49 | |||||||||||||||||||
Communication Systems | 58 | 22 | 29 | 25 | |||||||||||||||||||
Aviation Systems | 87 | 64 | 54 | 37 | |||||||||||||||||||
Other non-reportable business segments(1) | 0 | 0 | 6 | 4 | |||||||||||||||||||
Corporate | 64 | 22 | 23 | 20 | |||||||||||||||||||
$ | 368 | $ | 173 | $ | 161 | $ | 136 | ||||||||||||||||
Depreciation and Amortization | |||||||||||||||||||||||
Integrated Mission Systems | $ | 70 | $ | 37 | $ | 2 | $ | 2 | |||||||||||||||
Space and Airborne Systems | 66 | 31 | 50 | 54 | |||||||||||||||||||
Communication Systems | 61 | 32 | 49 | 54 | |||||||||||||||||||
Aviation Systems | 103 | 53 | 29 | 22 | |||||||||||||||||||
Other non-reportable business segments(1) | 0 | 0 | 3 | 5 | |||||||||||||||||||
Corporate | 732 | 289 | 125 | 122 | |||||||||||||||||||
$ | 1,032 | $ | 442 | $ | 258 | $ | 259 | ||||||||||||||||
Geographical Information for Continuing Operations | |||||||||||||||||||||||
U.S. operations: | |||||||||||||||||||||||
Revenue | $ | 16,998 | $ | 8,485 | $ | 6,530 | $ | 5,854 | |||||||||||||||
Long-lived assets(2) | $ | 1,949 | $ | 1,865 | $ | 866 | $ | 892 | |||||||||||||||
International operations: | |||||||||||||||||||||||
Revenue | $ | 1,196 | $ | 778 | $ | 271 | $ | 314 | |||||||||||||||
Long-lived assets(2) | $ | 153 | $ | 252 | $ | 28 | $ | 8 |
2019 | 2018 | 2017 | |||||||||
(In millions) | |||||||||||
Capital Expenditures | |||||||||||
Communication Systems | $ | 33 | $ | 26 | $ | 14 | |||||
Electronic Systems | 74 | 57 | 40 | ||||||||
Space and Intelligence Systems | 31 | 33 | 34 | ||||||||
Corporate | 23 | 20 | 27 | ||||||||
Discontinued operations | — | — | 4 | ||||||||
$ | 161 | $ | 136 | $ | 119 | ||||||
Depreciation and Amortization | |||||||||||
Communication Systems | $ | 50 | $ | 57 | $ | 64 | |||||
Electronic Systems | 50 | 44 | 29 | ||||||||
Space and Intelligence Systems | 33 | 36 | 37 | ||||||||
Corporate | 125 | 122 | 142 | ||||||||
Discontinued operations | — | — | 39 | ||||||||
$ | 258 | $ | 259 | $ | 311 | ||||||
Geographical Information for Continuing Operations | |||||||||||
U.S. operations: | |||||||||||
Revenue | $ | 6,530 | $ | 5,854 | $ | 5,637 | |||||
Long-lived assets | $ | 866 | $ | 892 | $ | 896 | |||||
International operations: | |||||||||||
Revenue | $ | 271 | $ | 314 | $ | 260 | |||||
Long-lived assets | $ | 28 | $ | 8 | $ | 8 |
Fiscal Year Ended | Four Quarters Ended | Two Quarters Ended | |||||||||||||||||||||
(In millions, except per share amounts) | January 1, 2021 | January 3, 2020 | January 3, 2020 | December 28, 2018 | |||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||
Revenue from product sales and services | $ | 18,194 | $ | 12,856 | $ | 9,263 | $ | 3,208 | |||||||||||||||
Cost of product sales and services | (12,886) | (9,088) | (6,726) | (2,105) | |||||||||||||||||||
Engineering, selling and administrative expenses | (3,315) | (2,540) | (1,881) | (583) | |||||||||||||||||||
Business divestiture-related (losses) gains | (51) | 229 | 229 | 0 | |||||||||||||||||||
Impairment of goodwill and other assets | (767) | (46) | (46) | 0 | |||||||||||||||||||
Non-operating income | 401 | 286 | 192 | 94 | |||||||||||||||||||
Interest income | 16 | 13 | 12 | 1 | |||||||||||||||||||
Interest expense | (270) | (217) | (135) | (87) | |||||||||||||||||||
Income from continuing operations before income taxes | 1,322 | 1,493 | 908 | 528 | |||||||||||||||||||
Income taxes | (234) | (146) | (73) | (87) | |||||||||||||||||||
Income from continuing operations | 1,088 | 1,347 | 835 | 441 | |||||||||||||||||||
Discontinued operations, net of income taxes | (2) | (2) | (1) | (3) | |||||||||||||||||||
Net income | 1,086 | 1,345 | 834 | 438 | |||||||||||||||||||
Noncontrolling interests, net of income taxes | 33 | (12) | (12) | 0 | |||||||||||||||||||
Net income attributable to L3Harris Technologies, Inc. | $ | 1,119 | $ | 1,333 | $ | 822 | $ | 438 | |||||||||||||||
Net income per common share attributable to L3Harris Technologies, Inc. common shareholders | |||||||||||||||||||||||
Net income per common share | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Continuing operations | $ | 5.24 | $ | 8.04 | $ | 3.72 | $ | 3.74 | |||||||||||||||
Discontinued operations | (0.01) | 0 | 0 | (0.03) | |||||||||||||||||||
$ | 5.23 | $ | 8.04 | $ | 3.72 | $ | 3.71 | ||||||||||||||||
Diluted | |||||||||||||||||||||||
Continuing operations | $ | 5.19 | $ | 7.90 | $ | 3.68 | $ | 3.66 | |||||||||||||||
Discontinued operations | 0 | (0.01) | (0.01) | (0.02) | |||||||||||||||||||
$ | 5.19 | $ | 7.89 | $ | 3.67 | $ | 3.64 | ||||||||||||||||
Basic weighted average common shares outstanding | 214.0 | 166.0 | 221.2 | 117.8 | |||||||||||||||||||
Diluted weighted average common shares outstanding | 215.9 | 169.0 | 223.7 | 120.3 |
Notes | Aggregate Principal Amount of L3 Notes (prior to debt exchange) | Aggregate Principal Amount of New L3Harris Notes Issued | Aggregate Principal Amount of Remaining L3 Notes | |||||||||
(In millions) | ||||||||||||
4.95% notes due February 15, 2021 (“4.95% 2021 Notes”) | $ | 650 | $ | 501 | $ | 149 | ||||||
3.85% notes due June 15, 2023 (“3.85% 2023 Notes”) | $ | 800 | $ | 741 | $ | 59 | ||||||
3.95% notes due May 28, 2024 (“3.95% 2024 Notes”) | $ | 350 | $ | 326 | $ | 24 | ||||||
3.85% notes due December 15, 2026 (“3.85% 2026 Notes”) | $ | 550 | $ | 535 | $ | 15 | ||||||
4.40% notes due June 15, 2028 (“4.40% 2028 Notes”) | $ | 1,000 | $ | 918 | $ | 82 |
Quarter Ended | Total Year | ||||||||||||||||||
9/28/2018 | 12/28/2018 | 3/29/2019 | 6/28/2019 | ||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||
Fiscal 2019 | |||||||||||||||||||
Revenue | $ | 1,542 | $ | 1,666 | $ | 1,728 | $ | 1,865 | $ | 6,801 | |||||||||
Gross profit | 532 | 571 | 589 | 642 | 2,334 | ||||||||||||||
Income from continuing operations before income taxes | 257 | 271 | 283 | 302 | 1,113 | ||||||||||||||
Income from continuing operations(1) | 216 | 225 | 243 | 269 | 953 | ||||||||||||||
Discontinued operations, net of income taxes | (3 | ) | — | — | (1 | ) | (4 | ) | |||||||||||
Net income | 213 | 225 | 243 | 268 | 949 | ||||||||||||||
Per common share data: | |||||||||||||||||||
Basic | |||||||||||||||||||
Income from continuing operations | 1.82 | 1.91 | 2.06 | 2.26 | 8.06 | ||||||||||||||
Net income | 1.81 | 1.91 | 2.06 | 2.26 | 8.03 | ||||||||||||||
Diluted | |||||||||||||||||||
Income from continuing operations | 1.78 | 1.88 | 2.02 | 2.21 | 7.89 | ||||||||||||||
Net income | 1.77 | 1.87 | 2.02 | 2.20 | 7.86 | ||||||||||||||
Cash dividends | 0.685 | 0.685 | 0.685 | 0.685 | 2.740 | ||||||||||||||
Stock prices — High | 169.98 | 175.50 | 167.09 | 200.77 | |||||||||||||||
Low | 142.95 | 123.24 | 129.46 | 159.29 |
Quarter Ended | Total Year | ||||||||||||||||||
9/29/2017 | 12/29/2017 | 3/30/2018 | 6/29/2018 | ||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||
Fiscal 2018 | |||||||||||||||||||
Revenue | $ | 1,410 | $ | 1,535 | $ | 1,562 | $ | 1,661 | $ | 6,168 | |||||||||
Gross profit | 491 | 513 | 534 | 564 | 2,102 | ||||||||||||||
Income from continuing operations before income taxes | 228 | 225 | 208 | 247 | 908 | ||||||||||||||
Income from continuing operations(1) | 165 | 131 | 198 | 208 | 702 | ||||||||||||||
Discontinued operations, net of income taxes | (6 | ) | — | (2 | ) | 5 | (3 | ) | |||||||||||
Net income | 159 | 131 | 196 | 213 | 699 | ||||||||||||||
Per common share data: | |||||||||||||||||||
Basic | |||||||||||||||||||
Income from continuing operations | 1.39 | 1.10 | 1.66 | 1.76 | 5.90 | ||||||||||||||
Net income | 1.33 | 1.10 | 1.65 | 1.80 | 5.88 | ||||||||||||||
Diluted | |||||||||||||||||||
Income from continuing operations | 1.36 | 1.08 | 1.63 | 1.72 | 5.78 | ||||||||||||||
Net income | 1.31 | 1.08 | 1.62 | 1.76 | 5.76 | ||||||||||||||
Cash dividends | 0.570 | 0.570 | 0.570 | 0.570 | 2.280 | ||||||||||||||
Stock prices — High | 132.00 | 144.94 | 164.58 | 170.54 | |||||||||||||||
Low | 109.08 | 131.52 | 140.84 | 142.50 |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
ITEM 9A. | CONTROLS AND PROCEDURES. |
ITEM 9B. | OTHER INFORMATION. |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. |
ITEM 11. | EXECUTIVE COMPENSATION. |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)(2) | Weighted-average exercise price of outstanding options, warrants and rights (b)(2) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)(2) | Weighted-average exercise price of outstanding options, warrants and rights (b)(2) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||||
Equity compensation plans approved by shareholders(1) | 5,070,138 | $80.86 | 25,740,420 | Equity compensation plans approved by shareholders(1) | 5,206,192 | $127.93 | 19,402,884 | |||||||||||
Equity compensation plans not approved by shareholders | — | — | — | Equity compensation plans not approved by shareholders | — | — | — | |||||||||||
Total | 5,070,138 | $80.86 | 25,740,420 | Total | 5,206,192 | $127.93 | 19,402,884 |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES. |
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES. |
Page | |||||
(1) List of Financial Statements Filed as Part of this Report: | |||||
The following financial statements and reports of L3Harris Technologies, Inc. and its consolidated subsidiaries are included in Item 8 of this Report at the page numbers referenced below: | |||||
Consolidated Statement of Income — Fiscal Year Ended January 1, 2021; Two Quarters Ended January 3, 2020; and Fiscal Years | |||||
Consolidated Statement of Comprehensive Income — Fiscal Year Ended January 1, 2021; Two Quarters Ended January 3, 2020; and Fiscal Years Ended June 28, 2019 and June 29, 2018 | |||||
Consolidated Balance Sheet — January 1, 2021 and January 3, 2020 | |||||
Consolidated Statement of Cash Flows — Fiscal Year Ended January 1, 2021; Two Quarters ended January 3, 2020; and Fiscal Years Ended June 28, 2019 and June 29, 2018 | |||||
Consolidated Statement of Equity — Fiscal Year ended January 1, 2021; Two Quarters ended January 3, 2020 and Fiscal Years ended June 28, 2019; June 29, | |||||
(2) Financial Statement Schedules: | |||||
ITEM 16. | FORM 10-K SUMMARY. |
L3HARRIS TECHNOLOGIES, INC. | ||||||||||||||
(Registrant) | ||||||||||||||
Date: | By: | /S/ WILLIAM M. BROWN | ||||||||||||
William M. Brown | ||||||||||||||
Chairman and Chief Executive Officer |
Signature | Title | Date | ||||||||||||||||||
/s/ WILLIAM M. BROWN | Chairman and Chief Executive Officer (Principal Executive Officer) | |||||||||||||||||||
William M. Brown | ||||||||||||||||||||
/s/ CHRISTOPHER E. KUBASIK | Vice Chairman, President and Chief Operating Officer | |||||||||||||||||||
Christopher E. Kubasik | ||||||||||||||||||||
/s/ JESUS MALAVE JR. | Senior Vice President and Chief Financial Officer (Principal Financial Officer) | |||||||||||||||||||
Jesus Malave Jr. | ||||||||||||||||||||
/s/ TODD A. TAYLOR | Vice President, Principal Accounting Officer (Principal Accounting Officer) | |||||||||||||||||||
Todd A. Taylor | ||||||||||||||||||||
/s/ SALLIE B. B | Director | |||||||||||||||||||
Sallie B. Bailey | ||||||||||||||||||||
/s/ PETER W. CHIARELLI* | �� | Director | ||||||||||||||||||
Peter W. Chiarelli | ||||||||||||||||||||
/s/ THOMAS A. CORCORAN* | Director | |||||||||||||||||||
Thomas A. Corcoran | ||||||||||||||||||||
/s/ THOMAS A. DATTILO* | Director | |||||||||||||||||||
Thomas A. Dattilo | ||||||||||||||||||||
/s/ ROGER B. FRADIN* | Director | |||||||||||||||||||
Roger B. Fradin | ||||||||||||||||||||
/s/ LEWIS HAY III* | Director | |||||||||||||||||||
Lewis Hay III | ||||||||||||||||||||
/s/ LEWIS KRAMER* | Director | |||||||||||||||||||
Lewis Kramer | ||||||||||||||||||||
/s/ RITA S. LANE* | Director | |||||||||||||||||||
Rita S. Lane | ||||||||||||||||||||
/s/ ROBERT B. MILLARD* | Director | |||||||||||||||||||
Robert B. Millard | ||||||||||||||||||||
/s/ LLOYD W. NEWTON* | Director | |||||||||||||||||||
Lloyd W. Newton | ||||||||||||||||||||
*By: | /s/ SCOTT T. MIKUEN | |||||||||||||||||||
Scott T. Mikuen | ||||||||||||||||||||
Attorney-in-Fact | ||||||||||||||||||||
pursuant to a power of attorney |
Col. A | Col. B | Col. C | Col. D | Col. E | ||||||||||||||||||
Additions | ||||||||||||||||||||||
Description | Balance at Beginning of Period | Charged to Costs and Expenses | Charged to Other Accounts — Describe | Deductions — Describe | Balance at End of Period | |||||||||||||||||
Year ended June 28, 2019 | ||||||||||||||||||||||
Amounts Deducted From | ||||||||||||||||||||||
Respective Asset Accounts: | ||||||||||||||||||||||
$ | 1 | (A) | ||||||||||||||||||||
31 | (B) | |||||||||||||||||||||
(85 | ) | (C) | ||||||||||||||||||||
266 | (D) | |||||||||||||||||||||
Allowances for collection losses | $ | 2,319 | $ | 8 | $ | — | $ | 213 | $ | 2,114 | ||||||||||||
$ | 468 | (A) | ||||||||||||||||||||
$ | 5,976 | (E) | ||||||||||||||||||||
Allowances for deferred tax assets | $ | 181,005 | $ | (15,510 | ) | $ | — | $ | 6,444 | $ | 159,051 | |||||||||||
Year ended June 29, 2018 | ||||||||||||||||||||||
Amounts Deducted From | ||||||||||||||||||||||
Respective Asset Accounts: | ||||||||||||||||||||||
$ | 8 | (A) | ||||||||||||||||||||
435 | (B) | |||||||||||||||||||||
707 | (C) | |||||||||||||||||||||
Allowances for collection losses | $ | 2,815 | $ | 654 | $ | — | $ | 1,150 | $ | 2,319 | ||||||||||||
$ | (48 | ) | (E) | $ | (425 | ) | (A) | |||||||||||||||
Allowances for deferred tax assets | $ | 183,476 | $ | (2,848 | ) | $ | (48 | ) | $ | (425 | ) | $ | 181,005 | |||||||||
Year ended June 30, 2017 | ||||||||||||||||||||||
Amounts Deducted From | ||||||||||||||||||||||
Respective Asset Accounts: | ||||||||||||||||||||||
$ | 7 | (A) | ||||||||||||||||||||
551 | (B) | |||||||||||||||||||||
3,329 | (C) | |||||||||||||||||||||
3,247 | (D) | |||||||||||||||||||||
Allowances for collection losses | $ | 9,949 | $ | — | $ | — | $ | 7,134 | $ | 2,815 | ||||||||||||
$ | 1,865 | (A) | ||||||||||||||||||||
103,371 | (D) | |||||||||||||||||||||
$ | 354 | (E) | 175 | (F) | ||||||||||||||||||
Allowances for deferred tax assets | $ | 300,159 | $ | (11,626 | ) | $ | 354 | $ | 105,411 | $ | 183,476 |