United States securities and exchange commission logo
December 22, 2023
Kenneth L. Bedingfield
Senior Vice President and Chief Financial Officer
L3Harris Technologies, Inc.
1025 West NASA Boulevard
Melbourne, FL 32919
Re: L3Harris
Technologies, Inc.
Form 10-K for the
Fiscal Year Ended December 30, 2022
Filed February 24,
2023
Form 8-K furnished
October 26, 2023
File No. 001-03863
Dear Kenneth L. Bedingfield:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comment(s).
Please respond to this letter within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to this letter, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 30, 2022
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Operations Review, page 33
1. Where you describe two
or more business reasons that contributed to a material change in
a financial statement
line item between periods, please quantify, where possible, the extent
to which each factor
contributed to the overall change in that line item, including any
offsetting factors. In
addition, where you identify intermediate causes of changes in your
operating results, also
describe the reasons underlying the intermediate causes. For
example, you disclose
on page 34 that the changes in gross margin and gross margin
percentages for the
periods discussed from fiscal 2021 to 2022 were due to several factors,
such as higher input
costs, supply chain disruptions, Estimate At Completion adjustments
and revenue mix. To the
extent possible, quantify the impact of each contributing factor in
dollars and/or margin
percentage, disclose the reasons driving these change,
and provide greater
transparency into the material components and potential variability of
Kenneth L. Bedingfield
FirstName LastNameKenneth
L3Harris Technologies, Inc. L. Bedingfield
Comapany22,
December NameL3Harris
2023 Technologies, Inc.
December
Page 2 22, 2023 Page 2
FirstName LastName
your cost of product sales and services and gross margin. Ensure your
overall revised
disclosures assist in satisfying the requirements of Item 303(a)-(b)
of Regulation S-K and
the three principal objectives of MD&A, as noted in SEC Release No.
33-8350:
to provide a narrative explanation of a company s financial
statements that enables
investors to see the company through the eyes of management;
to enhance the overall financial disclosure and provide the
context within which
financial information should be analyzed; and
to provide information about the quality of, and potential
variability of, a company s
earnings and cash flow, so that investors can ascertain the
likelihood that past
performance is indicative of future performance
Engineering, Selling and Administrative Expenses, page 35
2. We note that your presentation for "Engineering, Selling and
Administrative Expenses," a
material statement of operations line item, is limited to a table
quantifying the "major
components" included within the line item and that such amounts
represent less than half
of the consolidated amounts for all periods presented. Please revise
future filings to
include a discussion and analysis of the amounts, trends, events,
demands and
uncertainties impacting the full consolidated balances.
Note 1: Significant Accounting Policies
Revenue Recognition, page 69
3. We note your disclosures that "a substantial majority" of your
revenues is derived from
long-term development and production contracts accounted for as a
single performance
obligation and that "a significant amount" of your revenue is derived
from contracts to
provide multiple distinct goods where the goods are accounted for as
separate
performance obligations. We further note your accounting policy
disclosures regarding
revenues recognized at a point-in time and over-time. Please clarify
for us how you derive
the product and service categories presented on the face of your
statements of
operations. In doing so, explain whether or not your product revenues
are all recognized at
a point-in-time or if it also consists of over-time revenues. Also
clarify if contract
revenues accounted for as a single performance obligation are
allocated between product
and services and, if so, explain the methodology used.
Note 9: Goodwill, page 79
4. Please revise future filings to disclose accumulated goodwill
impairment losses at the
beginning and the end of the periods presented. Refer to ASC
350-20-50-1(a) and (h).
Note 15: Stock Options and Other Share-based Compensation, page 97
5. You disclose on page 99 that you issue performance share unit awards
"subject to
Kenneth L. Bedingfield
FirstName LastNameKenneth
L3Harris Technologies, Inc. L. Bedingfield
Comapany22,
December NameL3Harris
2023 Technologies, Inc.
December
Page 3 22, 2023 Page 3
FirstName LastName
performance criteria...and market conditions." Within the following
paragraph, you
indicate that awards with market conditions are recognized as
compensation cost "if
achievement of the performance measures is considered probable."
Please tell us if all
performance share unit awards include both performance and market
conditions and, if so,
consider clarifying your disclosures accordingly. If you issue any
awards with only market
conditions, clarify your expense recognition accounting policy.
Note 25: Legal Proceedings and Contingencies, page 113
6. We note your disclosure that "it is reasonably possible that some
lawsuits, claims or
proceedings may be disposed of or decided unfavorably to us and in
excess of the amounts
currently accrued." Please provide the applicable disclosures required
by ASC 450-20-50-
3 through -4, including the amount or range of reasonably possible
losses in excess of
recorded amounts. If an estimate of reasonably possible additional
losses can be made and
that amount, both for each individual matter and in the aggregate, is
not material to your
consolidated financial position, results of operations or cash flows,
we will not object to a
statement to that effect. Although we recognize that there are a
number of uncertainties
and potential outcomes associated with loss contingencies, please note
that ASC 450 does
not require estimation of a reasonably possible range of loss with
precision or certainty.
Form 8-K furnished October 26, 2023
Exhibit 99.2 Investor Letter, page 21
7. Please address the following comments related to the non-GAAP
financial measures
presented in your Investor Letter:
On pages 7, 8, and 26, it appears you use the term "Operating
income" on a segment
basis and when referencing the GAAP measure and use either
"Segment operating
income" or "Non-GAAP operating income" when referencing the
non-GAAP
measure. It also appears on page 26 you may be using "Segment
Operating income
(loss)" on a consolidated basis as a GAAP measure. In order to
minimize any
confusion, consider re-naming your measures so that readers can
clearly identify
which measures represent your ASC 280 GAAP measures and which
measures
represent the "adjusted" non-GAAP segment amounts.
We note that you present consolidated "Segment operating
income," representing the
sum of the corresponding individual segment amounts, as well as a
related
"Operating income margin," but do not appear to clearly identify
the consolidated
figures as non-GAAP measures or provide all related disclosures
required by Item
10(e) of Regulation S-K. Since total "Segment operating income"
is not a required
measure under ASC 280, ensure you provide all non-GAAP
disclosures required Item
10(e), including reconciliations to the most directly comparable
GAAP measures.
Confirm whether or not you consider net income and net income
margin to be the
most directly comparable GAAP measures.
Kenneth L. Bedingfield
L3Harris Technologies, Inc.
December 22, 2023
Page 4
We note your disclosure of the non-GAAP effective tax rate on
page 22 without
presentation of and reconciliation to the most directly
comparable GAAP measure.
Please present the GAAP effective tax rates wherever the non-GAAP
effective tax
rates are presented and reconcile the non-GAAP effective tax
rates to the
corresponding GAAP figures. Refer to Items 10(e)(1)(i)(A) and
10(e)(1)(i)(B) of
Regulation S-K.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
Please contact Stephany Yang at 202-551-3167 or Andrew Blume at
202-551-3254 with
any questions.
FirstName LastNameKenneth L. Bedingfield Sincerely,
Comapany NameL3Harris Technologies, Inc.
Division of
Corporation Finance
December 22, 2023 Page 4 Office of
Manufacturing
FirstName LastName