filings.toolsItem 1. FINANCIAL STATEMENTS.
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Item 1. FINANCIAL STATEMENTS.
L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
| Third Quarter | Year to Date | ||||||||||||||||||||||
| (In millions, except per share amounts) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Revenue | $ | 5,659 | $ | 5,292 | $ | 16,217 | $ | 15,802 | |||||||||||||||
| Cost of revenue | (4,165) | (3,873) | (12,038) | (11,675) | |||||||||||||||||||
| General and administrative expenses | (873) | (924) | (2,462) | (2,778) | |||||||||||||||||||
| Operating income | 621 | 495 | 1,717 | 1,349 | |||||||||||||||||||
| Non-service FAS pension income and other, net(1) | 98 | 101 | 287 | 275 | |||||||||||||||||||
| Interest expense, net | (152) | (166) | (454) | (514) | |||||||||||||||||||
| Income before income taxes | 567 | 430 | 1,550 | 1,110 | |||||||||||||||||||
| Income taxes | (105) | (26) | (244) | (54) | |||||||||||||||||||
| Net income | 462 | 404 | 1,306 | 1,056 | |||||||||||||||||||
| Noncontrolling interests, net of income taxes | — | (4) | — | (7) | |||||||||||||||||||
| Net income attributable to L3Harris | $ | 462 | $ | 400 | $ | 1,306 | $ | 1,049 | |||||||||||||||
| Earnings per share attributable to common shareholders | |||||||||||||||||||||||
| Basic | $ | 2.47 | $ | 2.11 | $ | 6.96 | $ | 5.53 | |||||||||||||||
| Diluted | $ | 2.46 | $ | 2.10 | $ | 6.92 | $ | 5.50 |
(1)“FAS” is defined as Financial Accounting Standards.
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
_____________________________________________________________________
L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
| Third Quarter | Year to Date | ||||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net income | $ | 462 | $ | 404 | $ | 1,306 | $ | 1,056 | |||||||||||||||
| Other comprehensive (loss) income, net of income taxes: | |||||||||||||||||||||||
| Foreign currency translation and other, net | (1) | 48 | 67 | 24 | |||||||||||||||||||
| Pension and other postretirement benefits | — | — | (43) | 3 | |||||||||||||||||||
| Other comprehensive (loss) income recognized during the period | (1) | 48 | 24 | 27 | |||||||||||||||||||
| Reclassification adjustments for gains included in net income | (8) | (8) | (29) | (23) | |||||||||||||||||||
| Other comprehensive (loss) income | (9) | 40 | (5) | 4 | |||||||||||||||||||
| Other comprehensive income | 453 | 444 | 1,301 | 1,060 | |||||||||||||||||||
| Comprehensive income attributable to noncontrolling interest | — | (4) | — | (7) | |||||||||||||||||||
| Other comprehensive income attributable to L3Harris | $ | 453 | $ | 440 | $ | 1,301 | $ | 1,053 |
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
_____________________________________________________________________
L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
| (In millions, except shares) | October 3, 2025 | January 3, 2025 | |||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 339 | $ | 615 | |||||||
| Receivables, net | 1,528 | 1,072 | |||||||||
| Contract assets | 3,677 | 3,230 | |||||||||
| Inventories, net | 1,291 | 1,330 | |||||||||
| Income taxes receivable | 281 | 379 | |||||||||
| Other current assets | 477 | 461 | |||||||||
| Assets of business held for sale | — | 1,131 | |||||||||
| Total current assets | 7,593 | 8,218 | |||||||||
| Non-current assets | |||||||||||
| Property, plant and equipment, net | 2,761 | 2,806 | |||||||||
| Goodwill | 20,370 | 20,325 | |||||||||
| Intangible assets, net | 7,072 | 7,639 | |||||||||
| Deferred income taxes | 87 | 120 | |||||||||
| Other non-current assets | 3,131 | 2,893 | |||||||||
| Total assets | $ | 41,014 | $ | 42,001 | |||||||
| Liabilities and equity | |||||||||||
| Current liabilities | |||||||||||
| Short-term debt | $ | 725 | $ | 515 | |||||||
| Accounts payable | 1,902 | 2,005 | |||||||||
| Contract liabilities | 2,231 | 2,142 | |||||||||
| Compensation and benefits | 486 | 419 | |||||||||
| Other current liabilities | 1,294 | 2,317 | |||||||||
| Liabilities of business held for sale | — | 235 | |||||||||
| Total current liabilities | 6,638 | 7,633 | |||||||||
| Non-current liabilities | |||||||||||
| Long-term debt, net of current portion of $120 and $640, respectively | 10,997 | 11,081 | |||||||||
| Deferred income taxes | 1,039 | 942 | |||||||||
| Other non-current liabilities | 2,808 | 2,766 | |||||||||
| Total liabilities | 21,482 | 22,422 | |||||||||
| Equity | |||||||||||
| Shareholders’ Equity: | |||||||||||
| Common stock, $1.00 par value; 500,000,000 shares authorized; issued and outstanding 187,166,752 and 189,794,911 shares at October 3, 2025 and January 3, 2025, respectively | 187 | 190 | |||||||||
| Paid-in capital | 15,152 | 15,558 | |||||||||
| Retained earnings | 4,171 | 3,739 | |||||||||
| Accumulated other comprehensive income | 22 | 27 | |||||||||
| Total shareholders’ equity | 19,532 | 19,514 | |||||||||
| Noncontrolling interests | — | 65 | |||||||||
| Total equity | 19,532 | 19,579 | |||||||||
| Total liabilities and equity | $ | 41,014 | $ | 42,001 |
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
_____________________________________________________________________
L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
| Year to Date | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Operating Activities | |||||||||||
| Net income | $ | 1,306 | $ | 1,056 | |||||||
| Adjustments to reconcile to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 913 | 963 | |||||||||
| Share-based compensation | 83 | 76 | |||||||||
| Net periodic benefit income | (216) | (215) | |||||||||
| Share-based matching contributions under defined contribution plans | 200 | 199 | |||||||||
| Deferred income taxes | 151 | 220 | |||||||||
| (Increase) decrease in: | |||||||||||
| Receivables, net | (474) | 163 | |||||||||
| Contract assets | (454) | (372) | |||||||||
| Inventories, net | 53 | 46 | |||||||||
| Other current assets | (18) | (32) | |||||||||
| Increase (decrease) in: | |||||||||||
| Accounts payable | (93) | (45) | |||||||||
| Contract liabilities | 91 | (150) | |||||||||
| Compensation and benefits | 67 | (145) | |||||||||
| Other current liabilities | (495) | 59 | |||||||||
| Income taxes | 144 | (258) | |||||||||
| Other operating activities | (114) | (135) | |||||||||
| Net cash provided by operating activities | 1,144 | 1,430 | |||||||||
| Investing Activities | |||||||||||
| Capital expenditures | (266) | (290) | |||||||||
| Proceeds from sales of businesses, net of cash divested | 831 | 158 | |||||||||
| Other investing activities | (28) | (19) | |||||||||
| Net cash provided by (used in) investing activities | 537 | (151) | |||||||||
| Financing Activities | |||||||||||
| Proceeds from issuances of long-term debt, net | — | 2,826 | |||||||||
| Repayments of long-term debt | (614) | (2,609) | |||||||||
| Change in commercial paper, maturities under 90 days, net | 210 | 93 | |||||||||
| Proceeds from commercial paper, maturities over 90 days | — | 688 | |||||||||
| Repayments of commercial paper, maturities over 90 days | — | (1,205) | |||||||||
| Repurchases of common stock | (998) | (512) | |||||||||
| Dividends paid | (678) | (665) | |||||||||
| Other financing activities | 105 | 75 | |||||||||
| Net cash used in financing activities | (1,975) | (1,309) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 18 | 9 | |||||||||
| Net decrease in cash and cash equivalents | (276) | (21) | |||||||||
| Cash and cash equivalents, beginning of period | 615 | 560 | |||||||||
| Cash and cash equivalents, end of period | $ | 339 | $ | 539 |
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
_____________________________________________________________________
L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(Unaudited)
| Third Quarter | Year to Date | ||||||||||||||||||||||
| (In millions, except per share amounts) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Common Stock | |||||||||||||||||||||||
| Beginning balance | $ | 187 | $ | 190 | $ | 190 | $ | 190 | |||||||||||||||
| Share-based compensation | 1 | — | 2 | 2 | |||||||||||||||||||
| Repurchases and retirement of common stock | (1) | — | (5) | (2) | |||||||||||||||||||
| Ending balance | 187 | 190 | 187 | 190 | |||||||||||||||||||
| Paid-in Capital | |||||||||||||||||||||||
| Beginning balance | 15,090 | 15,516 | 15,558 | 15,553 | |||||||||||||||||||
| Share-based compensation and other, net | 201 | 127 | 391 | 355 | |||||||||||||||||||
| Repurchases and retirement of common stock | (139) | (156) | (797) | (421) | |||||||||||||||||||
| Ending balance | 15,152 | 15,487 | 15,152 | 15,487 | |||||||||||||||||||
| Retained Earnings | |||||||||||||||||||||||
| Beginning balance | 3,970 | 3,368 | 3,739 | 3,220 | |||||||||||||||||||
| Net income and other | 462 | 401 | 1,306 | 1,049 | |||||||||||||||||||
| Repurchases and retirement of common stock | (36) | (34) | (196) | (89) | |||||||||||||||||||
| Cash dividends | (225) | (220) | (678) | (665) | |||||||||||||||||||
| Ending balance | 4,171 | 3,515 | 4,171 | 3,515 | |||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||
| Beginning balance | 31 | (234) | 27 | (198) | |||||||||||||||||||
| Other comprehensive income, net of income taxes | (9) | 40 | (5) | 4 | |||||||||||||||||||
| Ending balance | 22 | (194) | 22 | (194) | |||||||||||||||||||
| Noncontrolling Interests | |||||||||||||||||||||||
| Beginning balance | — | 64 | 65 | 64 | |||||||||||||||||||
| Derecognized with divestiture | — | — | (63) | — | |||||||||||||||||||
| Net income and other | — | — | (2) | — | |||||||||||||||||||
| Ending balance | — | 64 | — | 64 | |||||||||||||||||||
| Total Equity | $ | 19,532 | $ | 19,062 | $ | 19,532 | $ | 19,062 | |||||||||||||||
| Cash dividends per share | $ | 1.20 | $ | 1.16 | $ | 3.60 | $ | 3.48 |
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: BASIS OF PRESENTATION
Principles of Consolidation
The accompanying Condensed Consolidated Financial Statements include the accounts of L3Harris Technologies, Inc. and its consolidated subsidiaries. As used in these notes to Condensed Consolidated Financial Statements (these “Notes”), the terms “L3Harris,” “Company,” “we,” “our” and “us” refer to L3Harris Technologies, Inc. and its consolidated subsidiaries. Intercompany transactions and accounts have been eliminated.
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, such interim financial statements do not include all information and footnotes necessary for a complete presentation of financial condition, results of operations, cash flows and equity in conformity with GAAP for annual financial statements and are not necessarily indicative of the results that may be expected for the full fiscal year or any subsequent period.
In the opinion of management, these interim financial statements reflect all adjustments (including normal recurring adjustments) considered necessary for a fair presentation of our financial condition, results of operations, cash flows and equity for the periods presented therein. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended January 3, 2025 (our “Fiscal 2024 Form 10-K”).
Our fiscal year is based on a 52- or 53-week period ending on the Friday nearest December 31. The fiscal quarters ended October 3, 2025 (“third quarter 2025”) and September 27, 2024 (“third quarter 2024”) include 14 and 13 weeks, respectively. The year-to-date periods ended October 3, 2025 (“year to date 2025”) and September 27, 2024 (“year to date 2024”) both include 39 weeks.
Description of Business Segments
We structure our operations primarily around the products, systems and services we sell and the markets we serve and report our financial results in the following four reportable segments:
Communication Systems (“CS”): Software defined communication products and waveforms for domestic and international customers; broadband communications; integrated vision solutions; and public safety radios, system applications and equipment; and
Integrated Mission Systems (“IMS”): Multi-mission intelligence, surveillance and reconnaissance (“ISR”) systems; passive sensing and targeting; electronic attack platforms; autonomy; power and communications; networks; and Commercial Aviation Solutions (“CAS disposal group”), which includes aviation products and pilot training operations and was divested on March 28, 2025; and
Space & Airborne Systems (“SAS”): Satellites and space payloads, sensors and full-mission solutions; classified intelligence and cyber; airborne combat systems; and mission networks for air traffic management operations; and
Aerojet Rocketdyne (“AR”): Missile solutions with propulsion technologies for strategic defense, missile defense, hypersonic and tactical systems and fuzing; and space propulsion and power systems for national security and space exploration missions.
Business realignment. Effective in first quarter 2025, we realigned our fuzing and ordnance (“FOS”) business from our IMS segment to our AR segment. Information on the reallocation of goodwill in connection with the realignment can be found under the “Reallocation of Goodwill in Business Realignment” heading in Note E: Goodwill and Intangible Assets in our Form 10-Q for first quarter 2025, which information is incorporated herein by reference.
The historical results, discussion and presentation of our business segments as set forth in the accompanying Condensed Consolidated Financial Statements and these Notes reflect the impact of these changes for all periods presented in order to present segment information on a comparable basis. There is no impact on our previously reported consolidated statements of operations, balance sheets, statements of cash flows or statements of equity resulting from these changes.
Use of Estimates
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 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 and these Notes. Materially different results can occur as circumstances change and additional information becomes known.
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Reclassifications
The classification of certain prior year amounts have been adjusted in our Condensed Consolidated Financial Statements and these Notes to conform to current year classifications.
Supplemental Cash Flow Information
During year to date 2025, we recognized $150 million of operating lease right-of-use (“ROU”) assets and corresponding liabilities in connection with new or modified lease agreements in our SAS segment. These transactions did not involve cash and therefore are excluded from Investing and Financing Activities in our Condensed Consolidated Statement of Cash Flows. Operating lease ROU assets are included in the “Other non-current assets” line item and the corresponding liabilities are included in the “Other current liabilities” and “Other non-current liabilities” line items in our Condensed Consolidated Balance Sheet.
Recently Issued Accounting Pronouncements
Accounting pronouncements issued during third quarter 2025, but not yet adopted, are not expected to have a material impact on our operating results, financial position, or cash flows. For information on accounting pronouncements issued prior to third quarter 2025, see Note 1: Significant Accounting Policies in our Fiscal 2024 Form 10-K.
NOTE B: EARNINGS PER SHARE (“EPS”)
EPS is calculated as net income attributable to common shareholders divided by our weighted-average number of basic or diluted common shares outstanding. Potential dilutive common shares primarily consist of employee stock options, restricted stock units (“RSUs”) and performance share units (“PSUs”).
The weighted-average number of shares outstanding used to compute basic and diluted EPS are as follows:
| Third Quarter | Year to Date | ||||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Basic weighted-average common shares outstanding | 187.1 | 189.6 | 187.6 | 189.7 | |||||||||||||||||||
| Impact of dilutive share-based awards | 1.0 | 0.9 | 1.0 | 1.0 | |||||||||||||||||||
| Diluted weighted-average common shares outstanding | 188.1 | 190.5 | 188.6 | 190.7 |
Anti-dilutive share-based awards excluded from diluted EPS were 2.0 million for year to date 2025 and 1.0 million and 2.7 million for third quarter and year to date 2024, respectively. There were no anti-dilutive share-based awards excluded from diluted EPS for third quarter 2025.
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE C: CONTRACT ASSETS AND CONTRACT LIABILITIES
Contract assets mainly represent unbilled amounts typically resulting from revenue recognized exceeding amounts billed to customers for contracts utilizing the percentage of completion (“POC”) cost-to-cost revenue recognition method. Contract assets become receivables as we bill customers as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, upon achievement of contractual milestones or upon deliveries and, in certain arrangements, the customer may defer payment of a portion of the contract price until contract completion. Contract liabilities include advance payments and billings in excess of revenue recognized, including deferred revenue. Contract assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period.
Contract assets and contract liabilities are summarized below:
| (In millions) | October 3, 2025 | January 3, 2025 | |||||||||
| Contract assets | $ | 3,677 | $ | 3,230 | |||||||
| Contract liabilities, current | (2,231) | (2,142) | |||||||||
| Contract liabilities, non-current(1) | (94) | (91) | |||||||||
| Net contract assets | $ | 1,352 | $ | 997 |
(1)Included as a component of the “Other non-current liabilities” line item in our Condensed Consolidated Balance Sheet.
During third quarter and year to date 2025, we recognized revenue of $270 million and $1,485 million, respectively, related to contract liabilities that were outstanding as of January 3, 2025. During third quarter and year to date 2024, we recognized revenue of $193 million and $1,241 million, respectively, related to contract liabilities that were outstanding as of December 29, 2023.
NOTE D: INVENTORIES, NET
Inventories, net are summarized below:
| (In millions) | October 3, 2025 | January 3, 2025 | |||||||||
| Finished products | $ | 268 | $ | 211 | |||||||
| Work in process | 327 | 332 | |||||||||
| Materials and supplies | 696 | 787 | |||||||||
| Inventories, net | $ | 1,291 | $ | 1,330 |
NOTE E: GOODWILL AND INTANGIBLE ASSETS
Goodwill
Changes in the carrying amount of goodwill, by business segment, were as follows:
| (In millions) | CS | IMS | SAS | AR | Total | ||||||||||||||||||||||||
| Balance as of January 3, 2025(1) | $ | 4,938 | $ | 6,422 | $ | 5,999 | $ | 2,966 | $ | 20,325 | |||||||||||||||||||
| Currency translation adjustments | — | 19 | 26 | — | 45 | ||||||||||||||||||||||||
| Balance as of October 3, 2025 | $ | 4,938 | $ | 6,441 | $ | 6,025 | $ | 2,966 | $ | 20,370 |
(1)Balances reflect impact of FOS business realignment from our IMS segment to our AR segment effective in first quarter 2025, as discussed under the “Reallocation of Goodwill in Business Realignment” heading in Note E: Goodwill and Intangible Assets in our Form 10-Q for first quarter 2025, which information is incorporated herein by reference.
Accumulated goodwill impairment losses in our CS, SAS and AR segments were $355 million, $80 million and $172 million, respectively, as of both October 3, 2025 and January 3, 2025. Accumulated goodwill impairment losses in our IMS segment were $195 million and $954 million as of October 3, 2025 and January 3, 2025, respectively. IMS accumulated impairment losses decreased $759 million in first quarter 2025 in connection with the CAS disposal group divestiture.
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Intangible Assets
Intangible assets, net are summarized below:
| October 3, 2025 | January 3, 2025 | ||||||||||||||||||||||||||||||||||
| (In millions) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||
| Finite-lived | |||||||||||||||||||||||||||||||||||
| Customer relationships | $ | 8,833 | $ | (3,999) | $ | 4,834 | $ | 8,817 | $ | (3,470) | $ | 5,347 | |||||||||||||||||||||||
| Developed technologies | 852 | (533) | 319 | 849 | (482) | 367 | |||||||||||||||||||||||||||||
| Trade names and other | 192 | (76) | 116 | 188 | (66) | 122 | |||||||||||||||||||||||||||||
| Indefinite-lived | |||||||||||||||||||||||||||||||||||
| Trade name | 1,803 | — | 1,803 | 1,803 | — | 1,803 | |||||||||||||||||||||||||||||
| Intangible assets, net | $ | 11,680 | $ | (4,608) | $ | 7,072 | $ | 11,657 | $ | (4,018) | $ | 7,639 |
Amortization expense for intangible assets was $192 million and $579 million for third quarter and year to date 2025, respectively, and $210 million and $642 million for third quarter and year to date 2024, respectively.
The following table presents future estimated amortization expense for intangible assets:
| (In millions) | |||||
| Next 12 months | $ | 718 | |||
| Months 13-24 | 570 | ||||
| Months 25-36 | 518 | ||||
| Months 37-48 | 439 | ||||
| Months 49-60 | 421 | ||||
| Thereafter | 2,603 | ||||
| Total | $ | 5,269 |
NOTE F: INCOME TAXES
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing amendments to the U.S. federal income tax code, including permanent reinstatement of immediate expensing for domestic research expenditures, a reduction in the benefit of the research and development (“R&D”) credit, restoration of full expensing for qualified machinery, equipment and other short-lived assets, and several modifications to existing international tax provisions. Certain provisions are effective for 2025, the effects of which have been recognized in third quarter 2025 and are reflected in the Condensed Consolidated Financial Statements and these Notes. Certain other provisions are effective in future fiscal years.
| Third Quarter | Year to Date | ||||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Income tax expense | $ | (105) | $ | (26) | $ | (244) | $ | (54) | |||||||||||||||
| Effective tax rate (“ETR”) | 18.5 | % | 6.0 | % | 15.7 | % | 4.9 | % |
ETR for all periods benefited from favorable impacts of R&D credits, tax deductions for foreign derived intangible income (“FDII”) and adjustments recognized upon finalization of our tax returns. Both year to date 2025 and 2024 ETR also benefited from favorable resolution of audit uncertainties.
The increase in ETR for third quarter 2025 compared with third quarter 2024 was primarily due to the enactment of OBBBA and the CAS disposal group divestiture, representing unfavorable impacts of 7.4% and 3.7%, respectively.
The increase in ETR for year to date 2025 compared with year to date 2024 was primarily due to the enactment of OBBBA, the CAS disposal group divestiture, and a state legislative change that required us to establish a valuation allowance on state R&D credit carryforwards, representing unfavorable impacts of 3.9%, 3.5% and 2.1%, respectively.
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE G: DEBT AND CREDIT ARRANGEMENTS
Long-Term Debt
Long-term debt is summarized below:
| (In millions) | October 3, 2025 | January 3, 2025 | |||||||||
| Fixed-rate debt(1) | $ | 10,876 | $ | 11,476 | |||||||
| Finance lease obligations and other | 284 | 288 | |||||||||
| Unamortized discounts and issuance costs, net of bond premium | (43) | (43) | |||||||||
| Total long-term debt | 11,117 | 11,721 | |||||||||
| Less: current portion(2) | 120 | 640 | |||||||||
| Long-term debt, net of current portion | $ | 10,997 | $ | 11,081 |
(1)See Note 8: Debt and Credit Arrangements in our Fiscal 2024 Form 10-K for information on our fixed-rate debt.
(2)Included in “Other current liabilities” line item in our Condensed Consolidated Balance Sheet.
Repayments. On April 27, 2025, we repaid the entire outstanding $600 million of our 3.832% notes, due April 27, 2025 (“3.832% 2025 Notes”) with proceeds from the issuance and sale of $600 million 5.50% notes, due August 15, 2054 (“5.50% 2054 Notes”) in fiscal 2024.
Fair Value. As of October 3, 2025 and January 3, 2025, the estimated fair value of long-term debt was $11.3 billion and $11.5 billion, respectively. These values were estimated using a market approach based on quoted market prices for our debt in the secondary market and would be classified as Level 2 in the fair value hierarchy. See Note K: Fair Value Measurements in these Notes for further information on fair value.
Commercial Paper Program
Under our commercial paper program (“CP Program”), we may issue unsecured commercial paper notes up to a maximum aggregate amount of $3.0 billion. The CP Program is supported by amounts available under our credit agreements, discussed below.
The commercial paper notes are sold at par less a discount representing an interest factor or, if interest bearing, at par, and the maturities vary but may not exceed 397 days from the date of issue. The commercial paper notes rank at least pari passu with all other unsecured and unsubordinated indebtedness.
As of October 3, 2025 and January 3, 2025, we had $725 million and $515 million in outstanding notes under our CP Program, respectively, which is included in the “Short-term debt” line item in our Condensed Consolidated Balance Sheet. The outstanding notes under our CP Program had a weighted-average interest rate of 4.35% and 4.70% as of October 3, 2025 and January 3, 2025, respectively.
Credit Agreements
Five-Year Credit Facility. On February 18, 2025, we established a new $2.5 billion, five-year senior unsecured revolving credit facility (the “2025 Five-Year Credit Facility”) by entering into a Revolving Credit Agreement (“2025 Five-Year Credit Agreement”) maturing on February 18, 2030 with a syndicate of lenders. The 2025 Five-Year Credit Facility replaced the prior $2.0 billion, five-year senior unsecured revolving credit facility established under the Revolving Credit Agreement, dated July 29, 2022 (“2022 Credit Agreement”), and provides for revolving loans, swingline loans and letters of credit, with a sub-limit of $200 million for swingline loans and a sub-limit of $350 million for letters of credit, with the option to request an increase of the maximum amount of commitments up to $3.5 billion.
At our election, borrowings in U.S. Dollars under the 2025 Five-Year Credit Agreement will bear interest at the sum of the secured overnight funding rate (“SOFR”) or the Base Rate (as defined in the 2025 Five-Year Credit Agreement), plus an applicable margin that varies based on the ratings of our senior unsecured long-term debt securities (“Senior Debt Ratings”). In addition to interest payable on the principal amount of indebtedness outstanding, we are required to pay a quarterly unused commitment fee and letter of credit fees based on our Senior Debt Ratings.
364-Day Credit Facility. On February 18, 2025, we established a new $500 million 364-day senior unsecured revolving credit facility (“2025 364-Day Credit Facility”) by entering into a 364-day Credit Agreement (“2025 364-Day Credit Agreement”) maturing no later than February 17, 2026 with a syndicate of lenders. The 2025 364-Day Credit Agreement replaced the prior $1.5 billion 364-day credit agreement (“2024 Credit Agreement”), which matured on January 24, 2025.
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
At our election, borrowings in U.S. Dollars under the 2025 364-Day Credit Agreement, will bear interest at the sum of the applicable SOFR or the Base Rate (as defined in the 2025 364-Day Credit Agreement), plus an applicable margin that varies based on our Senior Debt Ratings. In addition to interest payable on the principal amount of indebtedness outstanding, we are required to pay a quarterly unused commitment fee that varies based on our Senior Debt Ratings.
Both the 2025 Five-Year Credit Agreement and the 2025 364-Day Credit Agreement contain customary representations, warranties, covenants and events of default for investment grade borrowers and financings of this type.
As of October 3, 2025, we had no outstanding borrowings under either the 2025 Five-Year Credit Agreement or the 2025 364-Day Credit Agreement, had available borrowing capacity of $2.3 billion, net of outstanding borrowings under our CP Program and were in compliance with all covenants under both aforementioned credit agreements.
NOTE H: RETIREMENT BENEFITS
The components of net periodic benefit income for our defined benefit pension plans and other postretirement benefit plans (“other benefits”) (collectively, “defined benefit plans”) were as follows:
| Third Quarter | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| (In millions) | Pension | Other Benefits | Total | Pension | Other Benefits | Total | |||||||||||||||||||||||||||||
| Operating | |||||||||||||||||||||||||||||||||||
| Service cost(1) | $ | 7 | $ | — | $ | 7 | $ | 8 | $ | — | $ | 8 | |||||||||||||||||||||||
| Non-operating | |||||||||||||||||||||||||||||||||||
| Interest cost | 77 | 3 | 80 | 99 | 3 | 102 | |||||||||||||||||||||||||||||
| Expected return on plan assets | (136) | (6) | (142) | (165) | (5) | (170) | |||||||||||||||||||||||||||||
| Amortization of net actuarial gains | (1) | (3) | (4) | (1) | (4) | (5) | |||||||||||||||||||||||||||||
| Amortization of prior service credits | (7) | — | (7) | (7) | — | (7) | |||||||||||||||||||||||||||||
| Non-service cost net periodic benefit income(2) | (67) | (6) | (73) | (74) | (6) | (80) | |||||||||||||||||||||||||||||
| Net periodic benefit income | $ | (60) | $ | (6) | $ | (66) | $ | (66) | $ | (6) | $ | (72) | |||||||||||||||||||||||
| Year to Date | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| (In millions) | Pension | Other Benefits | Total | Pension | Other Benefits | Total | |||||||||||||||||||||||||||||
| Operating | |||||||||||||||||||||||||||||||||||
| Service cost(1) | $ | 19 | $ | 1 | $ | 20 | $ | 25 | $ | 1 | $ | 26 | |||||||||||||||||||||||
| Non-operating | |||||||||||||||||||||||||||||||||||
| Interest cost | 242 | 8 | 250 | 296 | 8 | 304 | |||||||||||||||||||||||||||||
| Expected return on plan assets | (423) | (16) | (439) | (495) | (15) | (510) | |||||||||||||||||||||||||||||
| Amortization of net actuarial gains | (4) | (10) | (14) | (3) | (13) | (16) | |||||||||||||||||||||||||||||
| Amortization of prior service (credits) costs | (20) | 1 | (19) | (20) | 1 | (19) | |||||||||||||||||||||||||||||
| Effect of settlements | (14) | — | (14) | — | — | — | |||||||||||||||||||||||||||||
| Non-service cost net periodic benefit income(2) | (219) | (17) | (236) | (222) | (19) | (241) | |||||||||||||||||||||||||||||
| Net periodic benefit income | $ | (200) | $ | (16) | $ | (216) | $ | (197) | $ | (18) | $ | (215) |
(1)Included in the “Cost of revenue” and “General and administrative expenses” line items in our Condensed Consolidated Statement of Operations.
(2)Included in the “Non-service FAS pension income and other, net” line item in our Condensed Consolidated Statement of Operations.
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Pension Group Annuity Purchase
In first quarter 2025, we executed nonparticipating single premium group annuity contracts to transfer $1.2 billion of our Consolidated Pension Plan benefit obligation to an insurance provider. For additional information, see the “Pension Group Annuity Purchase” heading in Note H: Retirement Benefits in our Form 10-Q for first quarter 2025, which information is incorporated herein by reference.
NOTE I: SHARE-BASED COMPENSATION
As of October 3, 2025, we had stock options and other share-based compensation awards outstanding under our 2024 Equity Incentive Plan and predecessor plans (collectively, the “L3Harris SIPs”).
Awards granted to participants under the L3Harris SIPs and the weighted-average grant-date fair value per share or unit were as follows:
| Year to Date | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (In thousands, except per share/unit amounts) | Shares or Units | Weighted-Average Grant-Date Fair Value Per Share or Unit | Shares or Units | Weighted-Average Grant-Date Fair Value Per Share or Unit | |||||||||||||||||||
| Stock option shares granted(1) | 388 | $ | 49.20 | 415 | $ | 50.99 | |||||||||||||||||
| RSUs granted(2) | 237 | 214.88 | 151 | 214.00 | |||||||||||||||||||
| PSUs granted(3) | 185 | 217.67 | 172 | 230.09 |
(1)Other than certain stock options granted in connection with new hires, our stock options generally vest ratably in equal amounts over a three-year period.
(2)The majority of our RSUs, including those granted annually to executives under our long-term incentive plan, cliff vest after three years.
(3)Our PSUs are subject to performance criteria and generally vest after the three-year performance period.
The aggregate number of shares of our common stock issued under the L3Harris SIPs, net of shares withheld for tax purposes, was 0.7 million and 1.1 million for third quarter and year to date 2025, respectively, and 0.4 million and 1.2 million for third quarter and year to date 2024, respectively.
Share-based compensation expense was $35 million and $83 million for third quarter and year to date 2025, respectively, and $23 million and $76 million for third quarter and year to date 2024, respectively.
NOTE J: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Changes in the components of accumulated other comprehensive income (loss), net of income taxes, were as follows:
| (In millions) | Foreign currency translation and other, net**(1)** | Pension and other postretirement benefits**(2)** | Total accumulated other comprehensive income (loss) | ||||||||||||||
| Balance at January 3, 2025 | $ | (331) | $ | 358 | $ | 27 | |||||||||||
| Other comprehensive income (loss) before reclassifications | 67 | (43) | 24 | ||||||||||||||
| Losses (gains) reclassified to earnings | 15 | (44) | (29) | ||||||||||||||
| Other comprehensive income (loss) | 82 | (87) | (5) | ||||||||||||||
| Balance at October 3, 2025 | $ | (249) | $ | 271 | $ | 22 | |||||||||||
| Balance at December 29, 2023 | $ | (266) | $ | 68 | $ | (198) | |||||||||||
| Other comprehensive income before reclassifications | 24 | 3 | 27 | ||||||||||||||
| Losses (gains) reclassified to earnings | 4 | (27) | (23) | ||||||||||||||
| Other comprehensive income (loss) | 28 | (24) | 4 | ||||||||||||||
| Balance at September 27, 2024 | $ | (238) | $ | 44 | $ | (194) |
(1)Other, net consists of hedging derivatives.
(2)For additional information see Note H: Retirement Benefits in these Notes.
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE K: FAIR VALUE MEASUREMENTS
We measure certain assets and liabilities at fair value on a recurring basis utilizing a three-level fair value hierarchy that prioritizes inputs based on market observability:
-
Level 1 — Quoted prices in active markets for identical assets or liabilities.
-
Level 2 — Observable inputs other than quoted prices included within Level 1, including: quoted prices for similar assets or liabilities in active or inactive markets; quoted prices for identical assets or liabilities in inactive markets; and inputs derived from or corroborated by observable market data.
-
Level 3 — Unobservable inputs with little or no market activity that are significant to the fair value of the assets or liabilities and reflect our assumptions about market participants’ pricing, using the best available information.
We utilize observable inputs whenever available. In certain instances, fair value is estimated using quoted market prices from external pricing services. We assess the methodologies of these services to ensure valuations reflect fair value, including net asset value (“NAV”). The NAV reported by an asset manager may be adjusted when sufficient evidence indicates NAV is not representative of fair value.
Deferred Compensation Plans
We sponsor certain non-qualified deferred compensation plans which are measured at fair value on a recurring basis in our Condensed Consolidated Balance Sheet. Deferred compensation plan assets represent diversified assets held in rabbi trusts, which include marketable equity and fixed income securities (Level 1) and corporate-owned life insurance (”COLI”) contracts measured at NAV. Liabilities represent participant balances in marketable equity securities (Level 1) and common/collective trusts (“CCTs”) and guaranteed investment contracts (“GICs”) measured at NAV based on participant designed investment options.
The following table summarizes our deferred compensation plan assets and liabilities:
| October 3, 2025 | January 3, 2025 | ||||||||||||||||||||||
| (In millions) | Total | Level 1 | Total | Level 1 | |||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Equity and fixed income securities | $ | 252 | $ | 252 | $ | 219 | $ | 219 | |||||||||||||||
| COLI, measured at NAV | 37 | 41 | |||||||||||||||||||||
| Deferred compensation plan assets(1) | $ | 289 | $ | 260 | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Equity securities | $ | 14 | $ | 14 | $ | 10 | $ | 10 | |||||||||||||||
| CCTs and GICs, measured at NAV | 404 | 357 | |||||||||||||||||||||
| Deferred compensation plan liabilities(2) | $ | 418 | $ | 367 |
(1)Included in the “Other current assets” and “Other non-current assets” line items in our Condensed Consolidated Balance Sheet.
(2)Included in the “Compensation and benefits” and “Other non-current liabilities” line items in our Condensed Consolidated Balance Sheet.
NOTE L: CHANGES IN ESTIMATES
Many of our contracts utilize the POC cost-to-cost method of revenue recognition. A single estimated profit margin is used to recognize profit for each performance obligation over its period of performance. At the outset of each contract, we gauge its complexity and perceived risks and establish an estimated total cost at completion in line with those expectations. Due to the long-term nature of many of these contracts, developing the estimated total cost at completion and total transaction price often requires judgment. After establishing the estimated total cost at completion, we follow a standard estimate at completion (“EAC”) process in which we review the progress and performance on our ongoing contracts. If we successfully retire risks associated with the technical, schedule and cost aspects of a contract, we may lower our estimated total cost at completion commensurate with the retirement of these risks. Conversely, there are many reasons estimated contract costs can increase, including: (i) supply chain disruptions, inflation and labor issues; (ii) design or other development challenges; and (iii) program execution challenges (including technical schedule or quality issues and other performance concerns). Additionally, as the contract progresses, our estimates of total transaction price may increase or decrease if, for example, we receive incentive or award fees that are higher or lower than expected.
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
For additional discussion of our revenue recognition policies and our EAC process, see “Critical Accounting Estimates” in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Fiscal 2024 Form 10-K.
The following table presents the effect of aggregate net EAC adjustments:
| Third Quarter | Year to Date | ||||||||||||||||||||||
| (In millions, except per share amounts) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Revenue | $ | 45 | $ | 48 | $ | 119 | $ | 135 | |||||||||||||||
| Operating income | 27 | — | (14) | 19 | |||||||||||||||||||
| Net income(1) | 20 | — | (11) | 15 | |||||||||||||||||||
| Diluted EPS | 0.10 | — | (0.06) | 0.08 |
(1)Based on a 25 percent federal and state statutory tax rate.
NOTE M: CONTRACTUAL BACKLOG
Contractual backlog, which is the equivalent of our remaining performance obligations, represents the future revenue we expect to recognize as we perform on our current contracts. Contractual backlog comprises both funded backlog (i.e., firm orders for which funding is authorized and appropriated) and unfunded backlog (i.e., orders for which funds have not been appropriated and/or incrementally funded). Contractual backlog excludes unexercised contract options and potential orders under ordering-type contracts, such as indefinite-delivery, indefinite-quantity contracts.
As of October 3, 2025, our contractual backlog was $36.3 billion. We expect to recognize approximately 45% of our contractual backlog as revenue over the next twelve months and 65% as revenue over the next twenty-four months, with the remainder to be recognized thereafter.
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE N: DIVESTITURES
CAS Disposal Group
On March 28, 2025, we completed the sale of our CAS disposal group, for cash proceeds, net of cash divested, of $831 million. The CAS disposal group, which provided integrated aircraft avionics, pilot training and data analytics services for the commercial aviation industry, was reported in our IMS segment through the date of sale. Income before income taxes attributable to L3Harris was $21 million for year to date 2025 and $31 million and $87 million for third quarter and year to date 2024, respectively.
The carrying amounts of assets and liabilities included in the CAS disposal group divestiture were as follows:
| (In millions) | March 28, 2025 | ||||||||||||||||
| Receivables, net | $ | 117 | |||||||||||||||
| Contract assets | 47 | ||||||||||||||||
| Inventories, net | 139 | ||||||||||||||||
| Other current assets | 22 | ||||||||||||||||
| Property, plant and equipment, net | 46 | ||||||||||||||||
| Goodwill(1) | 535 | ||||||||||||||||
| Intangible assets, net | 263 | ||||||||||||||||
| Other non-current assets | 60 | ||||||||||||||||
| Total assets | 1,229 | ||||||||||||||||
| Accounts payable | 95 | ||||||||||||||||
| Contract liabilities | 49 | ||||||||||||||||
| Compensation and benefits | 6 | ||||||||||||||||
| Other current liabilities | 41 | ||||||||||||||||
| Long-term debt, net of current portion | 2 | ||||||||||||||||
| Other non-current liabilities | 59 | ||||||||||||||||
| Total liabilities | 252 | ||||||||||||||||
| Net assets divested | $ | 977 | |||||||||||||||
(1)Includes $759 million of accumulated goodwill impairment losses reported in our IMS segment through the date of sale.
In connection with the divestiture, we derecognized noncontrolling interest and accumulated other comprehensive income of $63 million and $6 million, respectively, and recognized a $17 million pre-tax loss, inclusive of amounts attributable to noncontrolling interest. The pre-tax loss, which is included in the “General and administrative expenses” line item in our Condensed Consolidated Statement of Operations for year to date 2025, is incremental to the previously recorded CAS disposal group losses recognized in fiscal 2024 and 2023. The final cumulative loss on sale remains subject to certain purchase price adjustments, including final working capital settlement, as set forth in the agreement, and will be finalized in fiscal 2025.
For additional information on the CAS disposal group, including the cumulative pre-tax losses recognized and carrying amounts of assets and liabilities classified as held for sale as of January 3, 2025, see Note 13: Acquisitions and Divestitures in our Fiscal 2024 Form 10-K.
Antenna Disposal Group
On May 31, 2024, we completed the divestiture of our antenna and related businesses (“Antenna disposal group”) from our SAS segment. For additional information, see Note 13: Acquisitions and Divestitures in our Fiscal 2024 Form 10-K.
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE O: BUSINESS SEGMENT INFORMATION
We structure our operations primarily around the products, systems and services we sell and the markets we serve and report our financial results in four reportable segments: CS, IMS, SAS and AR.
Business Segment Financial Results
The following table presents operating results by business segment and a reconciliation to total income before income taxes:
| Third Quarter | Year to Date | ||||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| CS | $ | 1,462 | $ | 1,382 | $ | 4,190 | $ | 4,022 | |||||||||||||||
| IMS | 1,700 | 1,608 | 4,914 | 4,906 | |||||||||||||||||||
| SAS | 1,809 | 1,683 | 5,207 | 5,141 | |||||||||||||||||||
| AR | 755 | 669 | 2,082 | 1,886 | |||||||||||||||||||
| Other(1) | (67) | (50) | (176) | (153) | |||||||||||||||||||
| Total revenue | 5,659 | 5,292 | 16,217 | 15,802 | |||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| CS | $ | (911) | $ | (858) | $ | (2,637) | $ | (2,571) | |||||||||||||||
| IMS | (1,308) | (1,203) | (3,808) | (3,743) | |||||||||||||||||||
| SAS | (1,425) | (1,325) | (4,112) | (4,020) | |||||||||||||||||||
| AR | (589) | (535) | (1,627) | (1,466) | |||||||||||||||||||
| Other(1) | 68 | 48 | 146 | 125 | |||||||||||||||||||
| Total cost of revenue | (4,165) | (3,873) | (12,038) | (11,675) | |||||||||||||||||||
| Other segment costs(2) | |||||||||||||||||||||||
| CS | $ | (169) | $ | (165) | $ | (490) | $ | (453) | |||||||||||||||
| IMS | (188) | (201) | (485) | (574) | |||||||||||||||||||
| SAS | (166) | (163) | (481) | (495) | |||||||||||||||||||
| AR | (70) | (58) | (190) | (186) | |||||||||||||||||||
| Other(1) | (1) | 2 | 30 | 28 | |||||||||||||||||||
| Total other segment costs(3) | (594) | (585) | (1,616) | (1,680) | |||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| CS | $ | 382 | $ | 359 | $ | 1,063 | $ | 998 | |||||||||||||||
| IMS | 204 | 204 | 621 | 589 | |||||||||||||||||||
| SAS | 218 | 195 | 614 | 626 | |||||||||||||||||||
| AR | 96 | 76 | 265 | 234 | |||||||||||||||||||
| Unallocated corporate items | (279) | (339) | (846) | (1,098) | |||||||||||||||||||
| Total operating income | 621 | 495 | 1,717 | 1,349 | |||||||||||||||||||
| Non-service FAS pension income and other, net | 98 | 101 | 287 | 275 | |||||||||||||||||||
| Interest expense, net | (152) | (166) | (454) | (514) | |||||||||||||||||||
| Income before income taxes | $ | 567 | $ | 430 | $ | 1,550 | $ | 1,110 |
(1) Includes corporate headquarters and intersegment eliminations.
(2) Other segment costs consist of company-funded R&D costs, selling and marketing costs and other General and Administrative (“G&A”) expenses, which include a portion of depreciation and amortization expenses that are disclosed by segment under the “Other Financial Information” heading below in this Note.
(3) Includes gains recognized in connection with the monetization of certain legacy end-of-life assets.
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Unallocated Corporate Items. Total unallocated corporate items include expenses not included in management’s evaluation of segment operating performance, such as amortization of intangibles; merger, acquisition, and divestiture-related expenses; business divestiture-related losses and any related impairment of goodwill; and LHX NeXt implementation costs. Additionally, unallocated corporate items include a portion of management and administration, legal, environmental, compensation and retiree benefits, the FAS/Cost Accounting Standards (“CAS”) operating adjustment, eliminations and other.
LHX NeXt Initiative. LHX NeXt is our initiative to transform multiple functions, systems and processes to increase agility and competitiveness. The LHX NeXt effort is expected to continue into 2026 with non-recurring costs for workforce optimization, incremental information technology (“IT”) expenses for implementation of new systems, third party consulting and other costs.
Other Financial Information
The following table presents capital expenditures and depreciation and amortization by business segment:
| Third Quarter | Year to Date | ||||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Capital Expenditures | |||||||||||||||||||||||
| CS | $ | 19 | $ | 9 | $ | 40 | $ | 27 | |||||||||||||||
| IMS | 16 | 25 | 51 | 93 | |||||||||||||||||||
| SAS | 31 | 23 | 74 | 107 | |||||||||||||||||||
| AR | 33 | 11 | 62 | 26 | |||||||||||||||||||
| Corporate | 20 | 10 | 39 | 37 | |||||||||||||||||||
| Total capital expenditures | $ | 119 | $ | 78 | $ | 266 | $ | 290 | |||||||||||||||
| Depreciation and Amortization | |||||||||||||||||||||||
| CS | $ | 13 | $ | 14 | $ | 39 | $ | 42 | |||||||||||||||
| IMS | 20 | 15 | 52 | 46 | |||||||||||||||||||
| SAS | 40 | 35 | 106 | 92 | |||||||||||||||||||
| AR | 12 | 14 | 37 | 37 | |||||||||||||||||||
| Corporate | 224 | 246 | 679 | 746 | |||||||||||||||||||
| Total depreciation and amortization | $ | 309 | $ | 324 | $ | 913 | $ | 963 |
Assets
Total assets by business segment were as follows:
| (In millions) | October 3, 2025 | January 3, 2025 | |||||||||
| CS | $ | 7,186 | $ | 7,060 | |||||||
| IMS | 9,741 | 10,389 | |||||||||
| SAS | 9,117 | 8,705 | |||||||||
| AR | 4,811 | 4,826 | |||||||||
| Corporate(1) | 10,159 | 11,021 | |||||||||
| Total assets | $ | 41,014 | $ | 42,001 |
(1)Includes intangible assets acquired in connection with business combinations that benefit the entire Company of $7,072 million and $7,639 million as of October 3, 2025 and January 3, 2025, respectively.
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Disaggregation of Revenue
We disaggregate revenue for all four business segments by customer relationship, contract type and geographical region. We believe these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
| Third Quarter | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | CS | IMS | SAS | AR | CS | IMS | SAS | AR | |||||||||||||||||||||||||||||||||||||||
| Revenue By Customer Relationship | |||||||||||||||||||||||||||||||||||||||||||||||
| Prime contractor | $ | 1,127 | $ | 1,220 | $ | 1,114 | $ | 173 | $ | 977 | $ | 1,036 | $ | 1,008 | $ | 164 | |||||||||||||||||||||||||||||||
| Subcontractor | 317 | 459 | 675 | 574 | 388 | 557 | 663 | 499 | |||||||||||||||||||||||||||||||||||||||
| Intersegment | 18 | 21 | 20 | 8 | 17 | 15 | 12 | 6 | |||||||||||||||||||||||||||||||||||||||
| Total segment | $ | 1,462 | $ | 1,700 | $ | 1,809 | $ | 755 | $ | 1,382 | $ | 1,608 | $ | 1,683 | $ | 669 | |||||||||||||||||||||||||||||||
| Revenue By Contract Type | |||||||||||||||||||||||||||||||||||||||||||||||
| Fixed-price | $ | 1,231 | $ | 1,192 | $ | 1,203 | $ | 490 | $ | 1,146 | $ | 1,196 | $ | 1,012 | $ | 423 | |||||||||||||||||||||||||||||||
| Cost-type | 213 | 487 | 586 | 257 | 219 | 397 | 659 | 240 | |||||||||||||||||||||||||||||||||||||||
| Intersegment | 18 | 21 | 20 | 8 | 17 | 15 | 12 | 6 | |||||||||||||||||||||||||||||||||||||||
| Total segment | $ | 1,462 | $ | 1,700 | $ | 1,809 | $ | 755 | $ | 1,382 | $ | 1,608 | $ | 1,683 | $ | 669 | |||||||||||||||||||||||||||||||
| Revenue By Geographical Region | |||||||||||||||||||||||||||||||||||||||||||||||
| United States | $ | 948 | $ | 1,290 | $ | 1,572 | $ | 619 | $ | 975 | $ | 1,150 | $ | 1,484 | $ | 651 | |||||||||||||||||||||||||||||||
| International | 496 | 389 | 217 | 128 | 390 | 443 | 187 | 12 | |||||||||||||||||||||||||||||||||||||||
| Intersegment | 18 | 21 | 20 | 8 | 17 | 15 | 12 | 6 | |||||||||||||||||||||||||||||||||||||||
| Total segment | $ | 1,462 | $ | 1,700 | $ | 1,809 | $ | 755 | $ | 1,382 | $ | 1,608 | $ | 1,683 | $ | 669 |
| Year to Date | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | CS | IMS | SAS | AR | CS | IMS | SAS | AR | |||||||||||||||||||||||||||||||||||||||
| Revenue By Customer Relationship | |||||||||||||||||||||||||||||||||||||||||||||||
| Prime contractor | $ | 3,154 | $ | 3,440 | $ | 3,230 | $ | 473 | $ | 2,805 | $ | 3,176 | $ | 3,192 | $ | 495 | |||||||||||||||||||||||||||||||
| Subcontractor | 989 | 1,418 | 1,927 | 1,586 | 1,164 | 1,691 | 1,909 | 1,370 | |||||||||||||||||||||||||||||||||||||||
| Intersegment | 47 | 56 | 50 | 23 | 53 | 39 | 40 | 21 | |||||||||||||||||||||||||||||||||||||||
| Total segment | $ | 4,190 | $ | 4,914 | $ | 5,207 | $ | 2,082 | $ | 4,022 | $ | 4,906 | $ | 5,141 | $ | 1,886 | |||||||||||||||||||||||||||||||
| Revenue By Contract Type | |||||||||||||||||||||||||||||||||||||||||||||||
| Fixed-price | $ | 3,550 | $ | 3,695 | $ | 3,392 | $ | 1,332 | $ | 3,329 | $ | 3,745 | $ | 3,192 | $ | 1,138 | |||||||||||||||||||||||||||||||
| Cost-type | 593 | 1,163 | 1,765 | 727 | 640 | 1,122 | 1,909 | 727 | |||||||||||||||||||||||||||||||||||||||
| Intersegment | 47 | 56 | 50 | 23 | 53 | 39 | 40 | 21 | |||||||||||||||||||||||||||||||||||||||
| Total segment | $ | 4,190 | $ | 4,914 | $ | 5,207 | $ | 2,082 | $ | 4,022 | $ | 4,906 | $ | 5,141 | $ | 1,886 | |||||||||||||||||||||||||||||||
| Revenue By Geographical Region | |||||||||||||||||||||||||||||||||||||||||||||||
| United States | $ | 2,695 | $ | 3,671 | $ | 4,515 | $ | 1,825 | $ | 2,786 | $ | 3,537 | $ | 4,479 | $ | 1,828 | |||||||||||||||||||||||||||||||
| International | 1,448 | 1,187 | 642 | 234 | 1,183 | 1,330 | 622 | 37 | |||||||||||||||||||||||||||||||||||||||
| Intersegment | 47 | 56 | 50 | 23 | 53 | 39 | 40 | 21 | |||||||||||||||||||||||||||||||||||||||
| Total segment | $ | 4,190 | $ | 4,914 | $ | 5,207 | $ | 2,082 | $ | 4,022 | $ | 4,906 | $ | 5,141 | $ | 1,886 |
_____________________________________________________________________
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE P: LEGAL PROCEEDINGS AND CONTINGENCIES
In the ordinary course of business, we are routinely defendants in, parties to or otherwise subject to many pending and threatened legal actions, claims, disputes, arbitration and other legal proceedings incident to our business, arising from or related to matters, including but not limited to: product liability; personal injury; patents, trademarks, trade secrets or other intellectual property; labor and employment disputes; commercial or contractual disputes; acquisitions or divestitures; the prior sale or use of former products allegedly containing asbestos or other restricted materials; breach of warranty; or environmental matters. Claimed amounts against us may be substantial, but may not bear any reasonable relationship to the merits of the claim or the extent of any real risk of court or arbitration awards. We record accruals for losses related to those matters against us that we consider to be probable and that can be reasonably estimated. Gain contingencies, if any, are recognized when they are realized and legal costs generally are expensed when incurred. As of October 3, 2025, our accrual for the potential resolution of lawsuits, claims or proceedings that we consider probable of being decided unfavorably to us was not material. We cannot at this time estimate the reasonably possible loss or range of loss in excess of our accrual due to the inherent uncertainties and speculative nature of contested proceedings. Although it is not feasible to predict the outcome of these matters with certainty, based on available information, in the opinion of management, settlements, arbitration awards and final judgments, if any, that are considered probable of being rendered against us in litigation or arbitration in existence as of October 3, 2025 were reserved against or would not have a material adverse effect on our financial condition, results of operations, cash flows or equity.
Environmental Matters
We are subject to numerous U.S. Federal, state, local and international environmental laws and regulatory requirements and are involved from time to time in investigations or litigation of various potential environmental issues. We or companies we have acquired are responsible, or alleged to be responsible, for environmental investigation and/or remediation of multiple sites, including sites owned by us and third-party sites. These sites are in various stages of investigation and/or remediation, and in some cases our liability is considered de minimis. Notices from the U.S. Environmental Protection Agency or equivalent state or international environmental agencies allege that several sites formerly or currently owned and/or operated by us or companies we have acquired, and other properties or water supplies that may be or have been impacted from those operations, contain disposed or recycled materials or wastes and require environmental investigation and/or remediation. These sites include instances of us or companies we acquired being identified as a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as the “Superfund Act”), the Resource Conservation Recovery Act and/or equivalent state and international laws, and in some instances, our liability and proportionate share of costs that may be shared among other PRPs have not been determined largely due to uncertainties as to the nature and extent of site conditions and our involvement.
Based on an assessment of relevant factors, we estimated that our liability under applicable environmental statutes and regulations for identified sites was $667 million and $637 million as of October 3, 2025 and January 3, 2025, respectively. The current and non-current portions of our estimated environmental liability are included in the “Other current liabilities” and “Other non-current liabilities” line items, respectively, in our Condensed Consolidated Balance Sheet.
Some of these environmental costs are recoverable from the U.S. Government. We consider the recovery probable based on U.S. Government contracting regulations and, accordingly, record an asset for the recoverable portion of these reserves which was $490 million and $462 million, as of October 3, 2025 and January 3, 2025, respectively. The current and non-current portions of the recoverable costs are included in the “Other current assets” and “Other non-current assets” line items, respectively, in our Condensed Consolidated Balance Sheet.
_____________________________________________________________________
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of L3Harris Technologies, Inc.
Results of Review of Interim Financial Statements
We have reviewed the accompanying condensed consolidated balance sheet of L3Harris Technologies, Inc. and subsidiaries (the Company) as of October 3, 2025, the related condensed consolidated statements of operations, comprehensive income and equity for the quarter and three quarters ended October 3, 2025 and September 27, 2024, the condensed consolidated statements of cash flows for the three quarters ended October 3, 2025 and September 27, 2024, and the related notes (collectively referred to as the “condensed consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company as of January 3, 2025, the related consolidated statements of operations, comprehensive income, cash flows and equity for the year then ended, and the related notes (not presented herein); and in our report dated February 14, 2025, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of January 3, 2025, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
These financial statements are the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ Ernst & Young LLP
Orlando, Florida
October 30, 2025
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