See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Basis of Presentation

The closing of the L3Harris Merger occurred on Form 10-KJune 29, 2019 (the “Closing Date”), the day after Harris’ fiscal 2019 ended and the first day of the fiscal transition period ended January 3, 2020 (the “Fiscal Transition Period”). Upon completion of the L3Harris Merger, Harris was renamed “L3Harris Technologies, Inc.” (“L3Harris”), and each share of L3 common stock converted into the right to receive 1.30 shares (“Exchange Ratio”) of L3Harris common stock. Shares of L3Harris common stock, which previously traded under ticker symbol “HRS” on the New York Stock Exchange prior to completion of the L3Harris Merger, are traded under ticker symbol “LHX” following completion of the L3Harris Merger. L3Harris was owned on a fully diluted basis approximately 54 percent by Harris shareholders and 46 percent by L3 shareholders immediately following the completion of the L3Harris Merger.

We implemented a new organizational structure effective on June 29, 2018 (our “Fiscal 2018 Form 10-K”)2019, which resulted in changes to our operating segments, which are also reportable segments and referred to as our business segments. The historical results, discussion and presentation of our business segments as set forth in our Current Report on Form 8-K filed with the SEC on December 13, 2018 (our “Fiscal 2017-2018 Update 8-K”), which updatedaccompanying Condensed Consolidated Financial Statements (Unaudited) and superseded historical fiscal 2018 and fiscal 2017 financial information contained in Item 7, Item 8 and certain other Items in our Fiscal 2018 Form 10-K tothese Notes reflect the impact of these changes for those two fiscal yearsall periods presented in order to present segment information on a comparable basis. There is no impact on our previously reported consolidated statements of retrospective applicationincome, balance sheets, statements of Accounting Standards Update (“ASU”) 2014-09, Accounting Standards Codification (“ASC”) 606, Revenuecash flows or statements of equity resulting from Contracts with Customers (Topic 606)these changes.

On September 13, 2019, we completed the sale of the Harris Night Vision business to Elbit Systems of America, LLC, a subsidiary of Elbit Systems Ltd., for $350 million (net cash proceeds of $343 million after selling costs and estimated purchase price adjustments), subject to final customary purchase price adjustments as amended (“ASC 606”),set forth in the definitive agreement. The Harris Night Vision business was not included in any of the operating segments in our new organizational structure and ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentationoperating results of Net Periodic Pension Costthe Harris Night Vision business through the date of the divestiture are discussed and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”), eachpresented as part of which we adopted effective June 30, 2018. See “Adoption of New Accounting Standards” below“Other non-reportable business segments” in this Report.

Amounts contained in this Report may not always add to totals due to rounding.

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

Adoption of New Accounting Standards

On October 12, 2018, Harris entered into the Merger Agreement with L3 and consequently, entitiesMerger Sub, pursuant to which Harris and L3 agreed to combine their respective businesses in an all-stock merger, at the closing of which Merger Sub would merge with and into L3, with L3 continuing as the surviving corporation and a direct wholly owned subsidiary of Harris.

We are accounting for the L3Harris Merger under the acquisition method of accounting. Under the acquisition method of accounting, we are required to use more judgmentmeasure identifiable assets acquired, liabilities assumed and make more estimates than under prior guidance, including identifying contract performance obligations, estimating variable consideration to includeany noncontrolling interests in the acquiree at their fair values as of the Closing Date.

Additionally, we acquired certain off-market customer contracts in connection with the L3Harris Merger, and have recorded liabilities as well as separate identifiable intangible assets for the acquisition-date fair value of the off-market components of these customer contracts. In aggregate, the estimated acquisition-date fair value of the off-market components is a net liability of $103 million. We measured the fair value of these components as the present value of the amount by which the terms of the contract price and allocatingwith the transaction pricecustomer deviate from the terms that a market participant could have achieved on the Closing Date. The off-market components of these contracts will be recognized as an increase to, separateor reduction of, revenue as we incur costs to satisfy the associated performance obligations. The core principleWe recognized $23 million of this standard isrevenue in the quarter ended April 3, 2020 for amortization of net off-market contract liabilities (including the cumulative effect of amortization that entities should recognizewould have been recognized in the Fiscal Transition Period). Future estimated revenue to depictfrom the transferamortization of promised goods or services to customers in an amount that reflectsnet off-market contract liabilities (based on the consideration to which the entity expectsestimated pattern of cash flows to be entitledincurred to satisfy associated performance obligations) is as follows: $28 million in exchangethe remainder of 2020, $12 million in 2021, $9 million in 2022, $7 million in 2023 and $5 million in 2024.

The goodwill resulting from the L3Harris Merger was primarily associated with L3’s market presence and leading positions, growth opportunities in the markets in which L3 businesses operate, experienced work force and established operating infrastructures. Most of the goodwill related to the L3Harris Merger is nondeductible for those goodstax purposes.

See Note K — Goodwill and services. To help financial statement users better understandOther Intangible Assets in these Notes for more information regarding the nature, amount,preliminary allocation of goodwill by business segment.

In conjunction with the assignment of this update resulted in reclassificationgoodwill to the “Non-operating income” line itemEOTech business, we tested goodwill assigned to the disposal group and goodwill assigned to the retained businesses of non-service costthe reporting unit for impairment and concluded that 0 goodwill impairment existed at the time the held for sale criteria were met.

The carrying amounts that were includedof the major classes of assets and liabilities of the EOTech business classified as held for sale at April 3, 2020 are as follows:

We assigned $2 million of goodwill to adopting ASU 2017-07.

Through fiscal 2019, the Harris Night Vision business was reported as part of our former Communication Systems segment. As a result of the then-pending divestiture, the Harris Night Vision business was not included in any of our new business segments and, consequently, the operating results of the business are included in “Other non-reportable business segments” for the quarters ended April 3, 2020 and March 30, 2018:

During the three quarters ended March 29, 2019,As of April 3, 2020, we had options or other share-based compensation outstanding under two2 Harris shareholder-approved employee stock incentive plans (“SIPs”), the Harris Corporation 2005 Equity Incentive Plan (As Amended and Restated Effective August 27, 2010) and the Harris Corporation 2015 Equity Incentive Plan (the “2015 EIP”). Grants, as well as under employee stock incentive plans of share-based awards after October 23, 2015 were made under our 2015 EIP. We believe that share-based awards more closely align the interests of participants with those of shareholders. Certain share-based awards provide for accelerated vesting if there is a change in control (as defined under our SIPs)L3 assumed by L3Harris (collectively, “L3Harris SIPs”).

The compensation cost related to our share-based awards that was charged against income was $14$17 million and $43$14 million for the quarter and three quarters ended April 3, 2020 and March 29, 2019, respectively, and $13 million and $37 million for the quarter and three quarters ended March 30, 2018, respectively.

Awards granted to participants under our 2015 EIPL3Harris SIPs during the quarter ended March 29, 2019April 3, 2020 consisted of 1,044206,366 restricted shares and restricted units. There were no stock options or performance units, granted during the quarter ended March 29, 2019. Awards granted to participants under our 2015 EIP during the three quarters endedMarch 29, 2019 consisted of 270,963583,200 stock options 93,802 restricted shares and restricted units and 135,629203,606 performance stock units. The fair value as of the grant date of each stock option awardaward was determined using the Black-Scholes-Merton option-pricing model and the following assumptions: expected dividend yield of 1.611.55 percent; expected volatility of 19.8722.74 percent; risk-free interest rates averaging 2.720.89 percent; and expected term of 5.035.04 years. The fair value as of the grant date of each restricted share award and restrictedstock unit award was based on the closing price of our common stock on the grant date. The fair value as of the grant date of each performance stock unit award was determined based on the fair value from a multifactor Monte Carlo valuation model that simulates our stock price and total shareholder return (“TSR”) relative to companies in our TSR peer group, less a discount to reflect the delay in payments of cash dividend-equivalents that are made only upon vesting.group.

We record charges for restructuring and other exit activities related to sales or terminations of product lines, closures or relocations of business activities, changes in management structure and fundamental reorganizations that affect the nature and focus of operations. Such charges include termination benefits, contract termination costs and costs to consolidate facilities or relocate employees. We record these charges at their fair value when incurred. In cases where employees are required to render service until they are terminated in order to receive the termination benefits and will be retained beyond the minimum retention period, we record the expense ratably over the future service period. These charges are included as a component of the “Cost of product sales and services” and “Engineering, selling and administrative expenses” line itemsitem in our Condensed Consolidated Statement of Income (Unaudited).

During the fourth quarter ended April 3, 2020, we did not record any restructuring charges in connection with the L3Harris Merger. At April 3, 2020, we had recorded liabilities of fiscal 2018,$38 million associated with previous L3Harris Merger-related restructuring actions, of which substantially all will be paid in the next twelve months.

Prior to the L3Harris Merger, we recorded a $5 million charge for consolidation of certain Exelis Inc. (collectively with its subsidiaries, “Exelis”) facilities initiated in fiscal 2017. This charge is included as a component of the “Engineering, selling and administrative expenses” line item in our Consolidated Statement of Income in our Fiscal 2017-2018 Update 8-K. We had liabilities of $16 million and $27 million at March 29, 2019 and June 29, 2018, respectively, associated with this integration activity and with previous restructuring actions. The majority of the remaining liabilities at March 29, 2019 representfor lease obligations associated with exited facilities with remaining terms of fivethree years or less.less, of which $7 million remained outstanding at April 3, 2020.

Receivables are summarized below:

We have a receivables sale agreement (“RSA”) with a third-party financial institution that permits us to sell, on a non-recourse basis, up to $50$100 million of outstanding receivables at any given time. From time to time, we have sold certain customer receivables under the RSA, which we continue to service and collect on behalf of the third-party financial institution. Receivables sold pursuant to the RSA meet the requirementsinstitution and which we account for as sales accounting under ASC 860, Transfers and Servicing, and, accordingly, are derecognizedof receivables with sale proceeds included in net cash from our Condensed Consolidated Balance Sheet (Unaudited) at the time of sale.operating activities. Outstanding accounts receivable sold pursuant to the RSA were not material at March 29, 2019 and June 29, 2018. Impairment losses related to receivables from contracts with customers were not material during the quarterApril 3, 2020 or three quarters ended March 29, 2019 or the quarter or three quarters ended March 30, 2018.January 3, 2020.

Contract assets and contract liabilities are summarized below:

The components of contract assets are summarized below:

We recorded impairment losses of $13 million at our Aviation Systems segment to reflect an increase in expected credit losses associated with the COVID-19-related downturn in the Commercial Aviation Solutions sector and its impact on customer operations. Impairment losses related to our contract assets were not material duringfor the quarter or three quarters ended March 29, 2019 or the quarter or three quarters ended March 30, 2018.2019. For the quarter and three quartersended April 3, 2020, we recognized as revenue $484 million of contract liabilities that were outstanding at January 3, 2020. For the quarter ended March 29, 2019, we recognized as revenue of $52 million and $259 million, respectively, related toof contract liabilities that were outstanding at June 29, 2018. For the quarter and three quarters ended March 30, 2018, we recognized revenue of $24 million and $187 million, respectively, related to contract liabilities that were outstanding at June 30, 2017.

Property, plant and equipment are summarized below: