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|
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|
|
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Delaware
|
|
1-3863
|
|
34-0276860
|
|
|
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|
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(State or other jurisdiction
of incorporation)
|
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(Commission
File Number)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
1025 West NASA Blvd., Melbourne, Florida
|
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32919
|
|
|
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(Address of principal executive offices)
|
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(Zip Code)
|
No change
|
|
(Former name or former address, if changed since last report)
|
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|
|
o
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
|
o
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
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|
o
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
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|
o
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
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
|
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LHX
|
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New York Stock Exchange
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
|
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Emerging growth company
o
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|
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
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L3HARRIS TECHNOLOGIES, INC.
(Registrant)
|
|
||
|
By:
|
/s/ Jay Malave Jr.
|
|
|
|
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Name:
|
Jay Malave Jr.
|
|
|
|
Title:
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
Page
No.
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
|
(Unaudited)
|
|
|
||||
|
June 28,
2019 |
|
December 31,
2018 |
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
1,195
|
|
|
$
|
1,066
|
|
Billed receivables, net of allowances of $15 in 2019 and $12 in 2018
|
807
|
|
|
919
|
|
||
Contract assets
|
1,767
|
|
|
1,590
|
|
||
Inventories
|
915
|
|
|
879
|
|
||
Prepaid expenses and other current assets
|
425
|
|
|
356
|
|
||
Total current assets
|
5,109
|
|
|
4,810
|
|
||
Property, plant and equipment, net
|
1,176
|
|
|
1,169
|
|
||
Operating lease right-of-use assets
|
626
|
|
|
—
|
|
||
Goodwill
|
6,825
|
|
|
6,808
|
|
||
Identifiable intangible assets
|
367
|
|
|
390
|
|
||
Other assets
|
354
|
|
|
341
|
|
||
Total assets
|
$
|
14,457
|
|
|
$
|
13,518
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable, trade
|
$
|
699
|
|
|
$
|
699
|
|
Accrued employment costs
|
369
|
|
|
491
|
|
||
Accrued expenses
|
221
|
|
|
251
|
|
||
Contract liabilities
|
740
|
|
|
669
|
|
||
Income taxes payable
|
74
|
|
|
49
|
|
||
Other current liabilities
|
320
|
|
|
288
|
|
||
Total current liabilities
|
2,423
|
|
|
2,447
|
|
||
Pension and postretirement benefits
|
1,178
|
|
|
1,211
|
|
||
Deferred income taxes
|
209
|
|
|
196
|
|
||
Other liabilities
|
449
|
|
|
436
|
|
||
Operating lease liabilities
|
580
|
|
|
—
|
|
||
Long-term debt
|
3,323
|
|
|
3,321
|
|
||
Total liabilities
|
8,162
|
|
|
7,611
|
|
||
Commitments and contingencies (see Note 17)
|
|
|
|
||||
Equity:
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Common stock: $.01 par value; 300,000,000 shares authorized, 79,632,956 shares outstanding at June 28, 2019 and 78,800,714 shares outstanding at December 31, 2018
|
6,967
|
|
|
6,866
|
|
||
Treasury stock (at cost), 84,999,711 shares at June 28, 2019 and December 31, 2018
|
(7,726
|
)
|
|
(7,726
|
)
|
||
Retained earnings
|
7,713
|
|
|
7,424
|
|
||
Accumulated other comprehensive loss
|
(728
|
)
|
|
(725
|
)
|
||
Total shareholders’ equity
|
6,226
|
|
|
5,839
|
|
||
Noncontrolling interests
|
69
|
|
|
68
|
|
||
Total equity
|
6,295
|
|
|
5,907
|
|
||
Total liabilities and equity
|
$
|
14,457
|
|
|
$
|
13,518
|
|
|
Second Quarter Ended
|
||||||
|
June 28,
2019 |
|
June 29,
2018 |
||||
Net sales:
|
|
|
|
||||
Products
|
$
|
1,809
|
|
|
$
|
1,786
|
|
Services
|
822
|
|
|
797
|
|
||
Total net sales
|
2,631
|
|
|
2,583
|
|
||
Operating costs and expenses:
|
|
|
|
||||
Cost of sales — Products
|
(1,290
|
)
|
|
(1,349
|
)
|
||
Cost of sales — Services
|
(578
|
)
|
|
(578
|
)
|
||
General and administrative expenses
|
(442
|
)
|
|
(383
|
)
|
||
Total operating costs and expenses
|
(2,310
|
)
|
|
(2,310
|
)
|
||
Gain on sale of the Crestview Aerospace and TCS businesses
|
—
|
|
|
48
|
|
||
Merger, acquisition and divestiture related expenses and losses
|
(27
|
)
|
|
—
|
|
||
Operating income
|
294
|
|
|
321
|
|
||
Interest expense
|
(38
|
)
|
|
(44
|
)
|
||
Interest and other income, net
|
11
|
|
|
8
|
|
||
Debt retirement charges
|
(3
|
)
|
|
(48
|
)
|
||
Income from continuing operations before income taxes
|
264
|
|
|
237
|
|
||
Provision for income taxes
|
(50
|
)
|
|
(48
|
)
|
||
Income from continuing operations
|
214
|
|
|
189
|
|
||
Income from discontinued operations, net of income taxes
|
—
|
|
|
190
|
|
||
Net income
|
214
|
|
|
379
|
|
||
Net income from continuing operations attributable to noncontrolling interests
|
(6
|
)
|
|
(4
|
)
|
||
Net income attributable to L3
|
$
|
208
|
|
|
$
|
375
|
|
|
First Half Ended
|
||||||
|
June 28,
2019 |
|
June 29,
2018 |
||||
Net sales:
|
|
|
|
||||
Products
|
$
|
3,741
|
|
|
$
|
3,432
|
|
Services
|
1,590
|
|
|
1,522
|
|
||
Total net sales
|
5,331
|
|
|
4,954
|
|
||
Operating costs and expenses:
|
|
|
|
||||
Cost of sales — Products
|
(2,732
|
)
|
|
(2,540
|
)
|
||
Cost of sales — Services
|
(1,143
|
)
|
|
(1,110
|
)
|
||
General and administrative expenses
|
(824
|
)
|
|
(780
|
)
|
||
Total operating costs and expenses
|
(4,699
|
)
|
|
(4,430
|
)
|
||
Gain on sale of the Crestview Aerospace and TCS businesses
|
—
|
|
|
48
|
|
||
Merger, acquisition and divestiture related expenses and losses
|
(45
|
)
|
|
—
|
|
||
Operating income
|
587
|
|
|
572
|
|
||
Interest expense
|
(75
|
)
|
|
(85
|
)
|
||
Interest and other income, net
|
15
|
|
|
14
|
|
||
Debt retirement charges
|
(3
|
)
|
|
(48
|
)
|
||
Income from continuing operations before income taxes
|
524
|
|
|
453
|
|
||
Provision for income taxes
|
(87
|
)
|
|
(72
|
)
|
||
Income from continuing operations
|
437
|
|
|
381
|
|
||
Income from discontinued operations, net of income taxes
|
—
|
|
|
206
|
|
||
Net income
|
437
|
|
|
587
|
|
||
Net income from continuing operations attributable to noncontrolling interests
|
(12
|
)
|
|
(9
|
)
|
||
Net income attributable to L3
|
$
|
425
|
|
|
$
|
578
|
|
|
Second Quarter Ended
|
|
First Half Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
Net income
|
$
|
214
|
|
|
$
|
379
|
|
|
$
|
437
|
|
|
$
|
587
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(19
|
)
|
|
(72
|
)
|
|
4
|
|
|
(39
|
)
|
||||
Unrealized losses on hedging instruments
(1)
|
(16
|
)
|
|
(10
|
)
|
|
(22
|
)
|
|
(11
|
)
|
||||
Pension and postretirement benefit plans:
|
|
|
|
|
|
|
|
||||||||
Amortization of net loss and prior service cost previously recognized
(2)
|
8
|
|
|
13
|
|
|
15
|
|
|
27
|
|
||||
Total other comprehensive loss
|
(27
|
)
|
|
(69
|
)
|
|
(3
|
)
|
|
(23
|
)
|
||||
Comprehensive income
|
187
|
|
|
310
|
|
|
434
|
|
|
564
|
|
||||
Comprehensive income attributable to noncontrolling interests
|
(6
|
)
|
|
(4
|
)
|
|
(12
|
)
|
|
(9
|
)
|
||||
Comprehensive income attributable to L3
|
$
|
181
|
|
|
$
|
306
|
|
|
$
|
422
|
|
|
$
|
555
|
|
(1)
|
Net of income tax benefits of
$5 million
and $3 million for the quarterly periods ended June 28, 2019 and June 29, 2018, respectively, and net of income tax benefits of $7 million and $3 million for the first half periods ended June 28, 2019 and June 29, 2018, respectively.
|
(2)
|
Net of income taxes of $2 million and $4 million for the quarterly periods ended June 28, 2019 and June 29, 2018, respectively, and net of income taxes of $4 million and $8 million for the first half periods ended June 28, 2019 and June 29, 2018, respectively.
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Treasury Stock
|
|
Retained
Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Noncontrolling Interests
|
|
Total Equity
|
|||||||||||||||||
|
Shares
Outstanding
|
|
Par Value
|
|
||||||||||||||||||||||||||
For the Second Quarter Ended June 28, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
March 29, 2019
|
79.4
|
|
|
$
|
1
|
|
|
$
|
6,903
|
|
|
$
|
(7,726
|
)
|
|
$
|
7,574
|
|
|
$
|
(701
|
)
|
|
$
|
67
|
|
|
$
|
6,118
|
|
Net income
|
|
|
|
|
|
|
|
|
208
|
|
|
|
|
6
|
|
|
214
|
|
||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
(27
|
)
|
|
|
|
(27
|
)
|
|||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
(4
|
)
|
|||||||||||||
Cash dividends declared ($0.85 per share)
|
|
|
|
|
|
|
|
|
(69
|
)
|
|
|
|
|
|
(69
|
)
|
|||||||||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Employee savings plans
|
0.1
|
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
35
|
|
||||||||||||
Exercise of stock options
|
0.1
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
11
|
|
||||||||||||
Repurchases of common stock to satisfy tax withholding obligations
|
—
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
||||||||||||
Stock-based compensation expense
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|||||||||||||
Other
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|||||||||||||
June 28, 2019
|
79.6
|
|
|
$
|
1
|
|
|
$
|
6,966
|
|
|
$
|
(7,726
|
)
|
|
$
|
7,713
|
|
|
$
|
(728
|
)
|
|
$
|
69
|
|
|
$
|
6,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
For the Second Quarter Ended June 29, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
March 30, 2018
|
78.4
|
|
|
$
|
1
|
|
|
$
|
6,606
|
|
|
$
|
(7,523
|
)
|
|
$
|
6,814
|
|
|
$
|
(645
|
)
|
|
$
|
67
|
|
|
$
|
5,320
|
|
Net income
|
|
|
|
|
|
|
|
|
375
|
|
|
|
|
4
|
|
|
379
|
|
||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
(69
|
)
|
|
|
|
(69
|
)
|
|||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
(3
|
)
|
|||||||||||||
Cash dividends declared ($0.80 per share)
|
|
|
|
|
|
|
|
|
(63
|
)
|
|
|
|
|
|
(63
|
)
|
|||||||||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Employee savings plans
|
0.1
|
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
38
|
|
||||||||||||
Exercise of stock options
|
0.6
|
|
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
48
|
|
||||||||||||
Employee stock purchase plan
|
—
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
17
|
|
||||||||||||
Repurchases of common stock to satisfy tax withholding obligations
|
—
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
||||||||||||
Stock-based compensation expense
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|||||||||||||
Treasury stock purchased
|
(0.9
|
)
|
|
|
|
|
|
(168
|
)
|
|
|
|
|
|
|
|
(168
|
)
|
||||||||||||
June 29, 2018
|
78.2
|
|
|
$
|
1
|
|
|
$
|
6,722
|
|
|
$
|
(7,691
|
)
|
|
$
|
7,126
|
|
|
$
|
(714
|
)
|
|
$
|
68
|
|
|
$
|
5,512
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Treasury Stock
|
|
Retained
Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Noncontrolling Interests
|
|
Total Equity
|
|||||||||||||||||
|
Shares
Outstanding
|
|
Par Value
|
|
||||||||||||||||||||||||||
For the First Half Ended June 28, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balance at December 31, 2018
|
78.8
|
|
|
$
|
1
|
|
|
$
|
6,865
|
|
|
$
|
(7,726
|
)
|
|
$
|
7,424
|
|
|
$
|
(725
|
)
|
|
$
|
68
|
|
|
$
|
5,907
|
|
Net income
|
|
|
|
|
|
|
|
|
425
|
|
|
|
|
12
|
|
|
437
|
|
||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
(3
|
)
|
|||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
(11
|
)
|
|
(11
|
)
|
|||||||||||||
Cash dividends declared ($1.70 per share)
|
|
|
|
|
|
|
|
|
(136
|
)
|
|
|
|
|
|
(136
|
)
|
|||||||||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Employee savings plans
|
0.3
|
|
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
65
|
|
||||||||||||
Exercise of stock options
|
0.2
|
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
30
|
|
||||||||||||
Employee stock purchase plan
|
0.1
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||||
Vesting of restricted stock and performance units
|
0.3
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||||
Repurchases of common stock to satisfy tax withholding obligations
|
(0.1
|
)
|
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
(23
|
)
|
||||||||||||
Stock-based compensation expense
|
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
28
|
|
|||||||||||||
Other
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|||||||||||||
Balance at June 28, 2019
|
79.6
|
|
|
$
|
1
|
|
|
$
|
6,966
|
|
|
$
|
(7,726
|
)
|
|
$
|
7,713
|
|
|
$
|
(728
|
)
|
|
$
|
69
|
|
|
$
|
6,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
For the First Half Ended June 29, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2017 - as reported
|
77.9
|
|
|
$
|
1
|
|
|
$
|
6,518
|
|
|
$
|
(7,404
|
)
|
|
$
|
6,659
|
|
|
$
|
(691
|
)
|
|
$
|
68
|
|
|
$
|
5,151
|
|
Cumulative effect adjustment of ASC 606 on January 1, 2018, net of taxes
|
|
|
|
|
|
|
|
|
13
|
|
|
|
|
|
|
13
|
|
|||||||||||||
Net income
|
|
|
|
|
|
|
|
|
578
|
|
|
|
|
9
|
|
|
587
|
|
||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
(23
|
)
|
|
|
|
(23
|
)
|
|||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
(9
|
)
|
|
(9
|
)
|
|||||||||||||
Cash dividends declared ($1.60 per share)
|
|
|
|
|
|
|
|
|
(126
|
)
|
|
|
|
|
|
(126
|
)
|
|||||||||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Employee savings plans
|
0.3
|
|
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
72
|
|
||||||||||||
Exercise of stock options
|
1.2
|
|
|
|
|
103
|
|
|
|
|
|
|
|
|
|
|
103
|
|
||||||||||||
Employee stock purchase plan
|
0.1
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
17
|
|
||||||||||||
Vesting of restricted stock and performance units
|
0.3
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||||
Repurchases of common stock to satisfy tax withholding obligations
|
(0.1
|
)
|
|
|
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
(24
|
)
|
||||||||||||
Stock-based compensation expense
|
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
34
|
|
|||||||||||||
Treasury stock purchased
|
(1.5
|
)
|
|
|
|
|
|
(287
|
)
|
|
|
|
|
|
|
|
(287
|
)
|
||||||||||||
Other
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
|
|
4
|
|
||||||||||||
Balance at June 29, 2018
|
78.2
|
|
|
$
|
1
|
|
|
$
|
6,722
|
|
|
$
|
(7,691
|
)
|
|
$
|
7,126
|
|
|
$
|
(714
|
)
|
|
$
|
68
|
|
|
$
|
5,512
|
|
|
First Half Ended
|
||||||
|
June 28,
2019 |
|
June 29,
2018 |
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
437
|
|
|
$
|
587
|
|
Less: income from discontinued operations, net of tax
|
—
|
|
|
(206
|
)
|
||
Income from continuing operations
|
437
|
|
|
381
|
|
||
Depreciation of property, plant and equipment
|
86
|
|
|
90
|
|
||
Amortization of intangibles and other assets
|
31
|
|
|
26
|
|
||
Deferred income tax provision
|
12
|
|
|
21
|
|
||
Stock-based employee compensation expense
|
28
|
|
|
34
|
|
||
Contributions to employee savings plans in common stock
|
65
|
|
|
68
|
|
||
Amortization of pension and postretirement benefit plans net loss and prior service cost
|
19
|
|
|
35
|
|
||
Gain on sale of the Crestview Aerospace and TCS businesses
|
—
|
|
|
(48
|
)
|
||
Debt retirement charges
|
3
|
|
|
48
|
|
||
Other non-cash items
|
6
|
|
|
1
|
|
||
Changes in operating assets and liabilities, excluding amounts from acquisitions and divestitures, and discontinued operations:
|
|
|
|
||||
Billed receivables
|
119
|
|
|
(137
|
)
|
||
Contract assets
|
(178
|
)
|
|
(266
|
)
|
||
Inventories
|
(40
|
)
|
|
(10
|
)
|
||
Prepaid expenses and other current assets
|
(85
|
)
|
|
(82
|
)
|
||
Accounts payable, trade
|
19
|
|
|
61
|
|
||
Accrued employment costs
|
(111
|
)
|
|
(38
|
)
|
||
Accrued expenses
|
(25
|
)
|
|
63
|
|
||
Contract liabilities
|
73
|
|
|
(2
|
)
|
||
Income taxes
|
32
|
|
|
(22
|
)
|
||
All other operating activities
|
(96
|
)
|
|
(45
|
)
|
||
Net cash from operating activities from continuing operations
|
395
|
|
|
178
|
|
||
|
|
|
|
||||
Investing activities:
|
|
|
|
||||
Business acquisitions, net of cash acquired
|
(10
|
)
|
|
(69
|
)
|
||
Proceeds from the sale of businesses, net of closing date cash balances
|
1
|
|
|
535
|
|
||
Working capital adjustment on prior divestitures
|
(20
|
)
|
|
—
|
|
||
Capital expenditures
|
(104
|
)
|
|
(108
|
)
|
||
Dispositions of property, plant and equipment
|
6
|
|
|
1
|
|
||
Other investing activities
|
(18
|
)
|
|
(29
|
)
|
||
Net cash (used in) from investing activities from continuing operations
|
(145
|
)
|
|
330
|
|
||
|
|
|
|
||||
Financing activities:
|
|
|
|
||||
Proceeds from sale of senior notes
|
—
|
|
|
1,798
|
|
||
Repurchases and redemptions of senior notes
|
—
|
|
|
(1,263
|
)
|
||
Borrowings under revolving credit facility
|
—
|
|
|
501
|
|
||
Repayments of borrowings under revolving credit facility
|
—
|
|
|
(501
|
)
|
||
Common stock repurchased
|
—
|
|
|
(287
|
)
|
||
Dividends paid
|
(138
|
)
|
|
(128
|
)
|
||
Proceeds from exercises of stock options
|
30
|
|
|
103
|
|
||
Proceeds from employee stock purchase plan
|
—
|
|
|
17
|
|
||
Repurchases of common stock to satisfy tax withholding obligations
|
(23
|
)
|
|
(24
|
)
|
||
Debt issue costs
|
—
|
|
|
(13
|
)
|
||
Other financing activities
|
(11
|
)
|
|
(6
|
)
|
||
Net cash (used in) from financing activities from continuing operations
|
(142
|
)
|
|
197
|
|
||
Effect of foreign currency exchange rate changes on cash and cash equivalents
|
2
|
|
|
(8
|
)
|
||
Net cash from (used in) discontinued operations:
|
|
|
|
||||
Operating activities
|
19
|
|
|
9
|
|
||
Investing activities
|
—
|
|
|
(2
|
)
|
||
Net cash from discontinued operations
|
19
|
|
|
7
|
|
||
Net increase cash and cash equivalents
|
129
|
|
|
704
|
|
||
Cash and cash equivalents, beginning of the period
|
1,066
|
|
|
662
|
|
||
Cash and cash equivalents, end of the period
|
$
|
1,195
|
|
|
$
|
1,366
|
|
|
Second Quarter Ended
|
|
First Half Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
|
(in millions)
|
||||||||||||||
Operating income
|
$
|
27
|
|
|
$
|
50
|
|
|
$
|
84
|
|
|
$
|
99
|
|
|
First Half Ended
|
||||
|
June 28,
2019 |
|
June 29,
2018 |
||
|
|
|
|
||
Over time (cost-to-cost method)
|
75
|
%
|
|
76
|
%
|
Point in time
|
19
|
%
|
|
18
|
%
|
Output method
|
4
|
%
|
|
3
|
%
|
Billing method
|
2
|
%
|
|
3
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
|
Second Quarter Ended
|
|
First Half Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
|
(in millions)
|
||||||||||||||
Pro forma net sales
|
$
|
2,633
|
|
|
$
|
2,606
|
|
|
$
|
5,334
|
|
|
$
|
5,016
|
|
Pro forma income from continuing operations attributable to L3
|
$
|
209
|
|
|
$
|
185
|
|
|
$
|
427
|
|
|
$
|
375
|
|
Pro forma net income attributable to L3
|
$
|
209
|
|
|
$
|
375
|
|
|
$
|
427
|
|
|
$
|
581
|
|
|
Second Quarter Ended
|
|
First Half Ended
|
||||
|
June 29, 2018
|
|
June 29, 2018
|
||||
|
(in millions)
|
||||||
Net sales
|
$
|
31
|
|
|
$
|
64
|
|
Gain on sale of businesses
|
$
|
48
|
|
|
$
|
48
|
|
Income from continuing operations before income taxes
|
$
|
2
|
|
|
$
|
3
|
|
|
Second Quarter Ended
|
|
First Half Ended
|
||||
|
June 29, 2018
|
|
June 29, 2018
|
||||
|
(in millions)
|
||||||
Net sales
|
$
|
226
|
|
|
$
|
597
|
|
Operating costs and expenses
(1)
|
(212
|
)
|
|
(561
|
)
|
||
Operating income from discontinued operations
|
14
|
|
|
36
|
|
||
Interest expense allocated to discontinued operations
|
—
|
|
|
(1
|
)
|
||
Gain on sale of businesses
|
237
|
|
|
237
|
|
||
Income from discontinued operations before income taxes
|
251
|
|
|
272
|
|
||
Income tax expense
|
(61
|
)
|
|
(66
|
)
|
||
Income from discontinued operations, net of income taxes
|
$
|
190
|
|
|
$
|
206
|
|
(1)
|
For the quarterly and first half periods ended
June 29, 2018
, the Company recognized
$3 million
of trailing expenses related to the sale of National Security Solutions.
|
|
June 28,
2019 |
|
December 31,
2018 |
||||
|
(in millions)
|
||||||
Contract assets
|
$
|
1,767
|
|
|
$
|
1,590
|
|
Contract liabilities — current
|
(740
|
)
|
|
(669
|
)
|
||
Contract liabilities — non-current
|
(28
|
)
|
|
(31
|
)
|
||
Net contract assets
|
$
|
999
|
|
|
$
|
890
|
|
|
June 28,
2019 |
|
December 31,
2018 |
||||
|
(in millions)
|
||||||
Unbilled contract receivables, gross
|
$
|
3,046
|
|
|
$
|
2,716
|
|
Unliquidated progress payments and advances
|
(1,279
|
)
|
|
(1,126
|
)
|
||
Total contract assets
|
$
|
1,767
|
|
|
$
|
1,590
|
|
|
June 28,
2019 |
|
December 31,
2018 |
||||
|
(in millions)
|
||||||
Raw materials, components and sub-assemblies
|
$
|
368
|
|
|
$
|
351
|
|
Work in process
|
331
|
|
|
330
|
|
||
Finished goods
|
216
|
|
|
198
|
|
||
Total
|
$
|
915
|
|
|
$
|
879
|
|
|
Consolidated Total
|
||
|
(in millions)
|
||
Goodwill
|
$
|
6,912
|
|
Accumulated impairment losses
|
(104
|
)
|
|
December 31, 2018
|
6,808
|
|
|
Business acquisitions
(1)
|
10
|
|
|
Foreign currency translation adjustments
|
7
|
|
|
June 28, 2019
|
6,825
|
|
|
Goodwill
|
6,929
|
|
|
Accumulated impairment losses
|
(104
|
)
|
|
|
$
|
6,825
|
|
(1)
|
The increase was due to a purchase price allocation adjustment for the ASV Global business acquisition, the acquisition of the Flight Data Services business and a purchase price allocation adjustment for the C.K. Industrial Engineers business acquisition.
|
|
|
|
June 28, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Weighted Average
Amortization Period
|
|
Gross
Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
|
(in years)
|
|
(in millions)
|
||||||||||||||||||||||
Customer contractual relationships
|
17
|
|
$
|
470
|
|
|
$
|
303
|
|
|
$
|
167
|
|
|
$
|
468
|
|
|
$
|
288
|
|
|
$
|
180
|
|
Technology
|
10
|
|
246
|
|
|
141
|
|
|
105
|
|
|
245
|
|
|
132
|
|
|
113
|
|
||||||
Other
|
12
|
|
48
|
|
|
19
|
|
|
29
|
|
|
49
|
|
|
18
|
|
|
31
|
|
||||||
Total subject to amortization
|
|
|
764
|
|
|
463
|
|
|
301
|
|
|
762
|
|
|
438
|
|
|
324
|
|
||||||
IPR&D
|
indefinite
|
|
66
|
|
|
—
|
|
|
66
|
|
|
66
|
|
|
—
|
|
|
66
|
|
||||||
Total
|
|
|
$
|
830
|
|
|
$
|
463
|
|
|
$
|
367
|
|
|
$
|
828
|
|
|
$
|
438
|
|
|
$
|
390
|
|
|
Second Quarter Ended
|
|
First Half Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
|
(in millions)
|
||||||||||||||
Amortization expense
|
$
|
12
|
|
|
$
|
11
|
|
|
$
|
24
|
|
|
$
|
22
|
|
|
Year Ending December 31,
|
||||||||||||||||||
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Estimated amortization expense
|
$
|
51
|
|
|
$
|
48
|
|
|
$
|
43
|
|
|
$
|
37
|
|
|
$
|
28
|
|
|
June 28,
2019 |
|
December 31,
2018 |
||||
|
(in millions)
|
||||||
Other current liabilities:
|
|
|
|
|
|
||
Operating lease liabilities
|
$
|
75
|
|
|
$
|
—
|
|
Accrued product warranty costs
|
60
|
|
|
66
|
|
||
Estimated costs in excess of estimated contract value to complete contracts in process in a loss position
|
41
|
|
|
40
|
|
||
Accrued interest
|
16
|
|
|
18
|
|
||
Estimated contingent purchase price payable for acquired businesses (see Note 13)
|
12
|
|
|
10
|
|
||
Other
|
116
|
|
|
154
|
|
||
Total other current liabilities
|
$
|
320
|
|
|
$
|
288
|
|
|
June 28,
2019 |
|
December 31,
2018 |
||||
|
(in millions)
|
||||||
Other liabilities:
|
|
|
|
|
|
||
Non-current income taxes payable (see Note 10)
|
$
|
163
|
|
|
$
|
161
|
|
Deferred compensation
|
59
|
|
|
53
|
|
||
Notes payable and other debt
|
43
|
|
|
22
|
|
||
Contract liabilities (see Note 5)
|
28
|
|
|
31
|
|
||
Accrued product warranty costs
|
23
|
|
|
22
|
|
||
Accrued workers' compensation
|
21
|
|
|
20
|
|
||
Estimated contingent purchase price payable for acquired businesses (see Note 13)
|
4
|
|
|
10
|
|
||
Other
|
108
|
|
|
117
|
|
||
Total other liabilities
|
$
|
449
|
|
|
$
|
436
|
|
|
First Half Ended
|
||||||
|
June 28,
2019 |
|
June 29,
2018 |
||||
|
(in millions)
|
||||||
Accrued product warranty costs:
|
|
|
|
|
|
||
Balance at January 1
|
$
|
88
|
|
|
$
|
99
|
|
Accruals for product warranties issued during the period
|
28
|
|
|
25
|
|
||
Changes to accruals for product warranties existing before January 1
|
(1
|
)
|
|
1
|
|
||
Settlements made during the period
|
(32
|
)
|
|
(26
|
)
|
||
Foreign currency translation adjustments
|
—
|
|
|
(1
|
)
|
||
Balance at end of period
|
$
|
83
|
|
|
$
|
98
|
|
|
June 28,
2019 |
|
December 31,
2018 |
||||
|
(in millions)
|
||||||
Borrowings under Revolving Credit Facility
(1)
|
$
|
—
|
|
|
$
|
—
|
|
4.95% Senior Notes due 2021
|
650
|
|
|
650
|
|
||
3.85% Senior Notes due 2023
|
800
|
|
|
800
|
|
||
3.95% Senior Notes due 2024
|
350
|
|
|
350
|
|
||
3.85% Senior Notes due 2026
|
550
|
|
|
550
|
|
||
4.40% Senior Notes due 2028
|
1,000
|
|
|
1,000
|
|
||
Principal amount of long-term debt
|
3,350
|
|
|
3,350
|
|
||
Unamortized discounts
|
(6
|
)
|
|
(7
|
)
|
||
Deferred debt issue costs
|
(21
|
)
|
|
(22
|
)
|
||
Carrying amount of long-term debt
|
$
|
3,323
|
|
|
$
|
3,321
|
|
(1)
|
During the first half period ended June 28, 2019, L3 had no borrowings or repayments under the Credit Facility. In connection with the Exchange Offer discussed below, the Credit Facility was terminated on June 28, 2019. This termination resulted in a $3 million debt retirement charge for the quarterly and first half period ended June 28, 2019.
|
Note
|
|
Aggregate Principal Amount Outstanding
|
|
Exchange Consideration
(1)
|
|
Early Tender Premium
(1)
|
|
Total Exchange Consideration
(1)(2)
|
||
|
|
(in millions)
|
|
|
|
|
|
|
||
4.95% Senior Notes due February 15, 2021
|
|
$
|
650
|
|
|
$970 principal amount of New Harris 4.95% Senior Notes due 2021 and $1 in cash
|
|
$30 principal amount of New Harris 4.95% Senior Notes due 2021
|
|
$1,000 principal amount of New Harris 4.95% Senior Notes due 2021 and $1 in cash
|
3.85% Senior Notes due June 15, 2023
|
|
$
|
800
|
|
|
$970 principal amount of New Harris 3.85% Senior Notes due 2023 and $1 in cash
|
|
$30 principal amount of New Harris 3.85% Senior Notes due 2023
|
|
$1,000 principal amount of New Harris 3.85% Senior Notes due 2023 and $1 in cash
|
3.95% Senior Notes due May 28, 2024
|
|
$
|
350
|
|
|
$970 principal amount of New Harris 3.95% Senior Notes due 2024 and $1 in cash
|
|
$30 principal amount of New Harris 3.95% Senior Notes due 2024
|
|
$1,000 principal amount of New Harris 3.95% Senior Notes due 2024 and $1 in cash
|
3.85% Senior Notes due December 15, 2026
|
|
$
|
550
|
|
|
$970 principal amount of New Harris 3.85% Senior Notes due 2026 and $1 in cash
|
|
$30 principal amount of New Harris 3.85% Senior Notes due 2026
|
|
$1,000 principal amount of New Harris 3.85% Senior Notes due 2026 and $1 in cash
|
4.40% Senior Notes due June 15, 2028
|
|
$
|
1,000
|
|
|
$970 principal amount of New Harris 4.40% Senior Notes due 2028 and $1 in cash
|
|
$30 principal amount of New Harris 4.40% Senior Notes due 2028
|
|
$1,000 principal amount of New Harris 4.40% Senior Notes due 2028 and $1 in cash
|
(1)
|
For each $1,000 principal amount of L3's Senior Notes accepted for exchange.
|
(2)
|
Includes Early Tender Premium.
|
|
|
Foreign
currency
translation
|
|
Unrealized
(losses) gains
on hedging
instruments
|
|
Unrecognized
(losses) gains
and prior service
cost, net
|
|
Total
accumulated
other
comprehensive
loss
|
||||||||
|
|
(in millions)
|
||||||||||||||
Balance at December 31, 2018
|
|
$
|
(136
|
)
|
|
$
|
(10
|
)
|
|
$
|
(579
|
)
|
|
$
|
(725
|
)
|
Other comprehensive income (loss) before reclassifications, net of tax
|
|
4
|
|
|
(22
|
)
|
|
—
|
|
|
(18
|
)
|
||||
Amounts reclassified from AOCI, net of tax
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
||||
Net current period other comprehensive income (loss)
|
|
4
|
|
|
(22
|
)
|
|
15
|
|
|
(3
|
)
|
||||
Balance at June 28, 2019
|
|
$
|
(132
|
)
|
|
$
|
(32
|
)
|
|
$
|
(564
|
)
|
|
$
|
(728
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2017
|
|
$
|
(54
|
)
|
|
$
|
9
|
|
|
$
|
(646
|
)
|
|
$
|
(691
|
)
|
Other comprehensive loss before reclassifications, net of tax
|
|
(39
|
)
|
|
(10
|
)
|
|
—
|
|
|
(49
|
)
|
||||
Amounts reclassified from AOCI, net of tax
|
|
—
|
|
|
(1
|
)
|
|
27
|
|
|
26
|
|
||||
Net current period other comprehensive (loss) income
|
|
(39
|
)
|
|
(11
|
)
|
|
27
|
|
|
(23
|
)
|
||||
Balance at June 29, 2018
|
|
$
|
(93
|
)
|
|
$
|
(2
|
)
|
|
$
|
(619
|
)
|
|
$
|
(714
|
)
|
|
|
Amount Reclassified from AOCI
(a)
|
|
Affected Line Item in the
Unaudited Condensed Consolidated
Statements of Operations
|
||||||||||||||
|
|
Second Quarter Ended
|
|
First Half Ended
|
|
|||||||||||||
Details About AOCI Components
|
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
|
|||||||||
|
|
(in millions)
|
|
|
||||||||||||||
(Loss) gain on hedging instruments
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Cost of sales - Products
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
Income from continuing operations before income taxes
|
||||
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amortization of defined benefit
pension and postretirement items:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
$
|
(10
|
)
|
|
$
|
(17
|
)
|
|
$
|
(19
|
)
|
|
$
|
(35
|
)
|
|
Income from continuing operations before income taxes
|
|
|
2
|
|
|
4
|
|
|
4
|
|
|
8
|
|
|
Provision for income taxes
|
||||
|
|
$
|
(8
|
)
|
|
$
|
(13
|
)
|
|
$
|
(15
|
)
|
|
$
|
(27
|
)
|
|
Income from continuing operations
|
Total reclassification for the period
|
|
$
|
(9
|
)
|
|
$
|
(13
|
)
|
|
$
|
(15
|
)
|
|
$
|
(26
|
)
|
|
Income from continuing operations
|
(a)
|
Amounts in parenthesis indicate charges to the unaudited condensed consolidated statements of operations.
|
|
|
June 28, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
Description
|
|
Level 1
(1)
|
|
Level 2
(2)
|
|
Level 3
(3)
|
|
Level 1
(1)
|
|
Level 2
(2)
|
|
Level 3
(3)
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash equivalents
|
|
$
|
409
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
660
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivatives (foreign currency forward contracts)
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||||
Total assets
|
|
$
|
409
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
660
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Derivatives (foreign currency forward contracts)
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
—
|
|
Derivatives (treasury lock contracts)
(4)
|
|
—
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Contingent consideration
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||||
Total liabilities
|
|
$
|
—
|
|
|
$
|
45
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
20
|
|
(1)
|
Level 1 is based on quoted market prices available in active markets for identical assets or liabilities as of the reporting date. Cash equivalents are primarily held in registered money market funds, which are valued using quoted market prices.
|
(2)
|
Level 2 is based on pricing inputs other than quoted prices in active markets, which are either directly or indirectly observable. The fair value is determined using a valuation model based on observable market inputs, including quoted foreign currency forward exchange rates, interest rates and consideration of non-performance risk.
|
(3)
|
Level 3 is based on pricing inputs that are not observable and not corroborated by market data.
|
(4)
|
See Note 15 for information regarding the treasury lock contracts.
|
|
June 28, 2019
|
||
|
(in millions)
|
||
Balance at beginning of period
|
$
|
20
|
|
Changes in fair value of contingent consideration, net
|
(4
|
)
|
|
Balance at end of period
|
$
|
16
|
|
|
June 28, 2019
|
|
December 31, 2018
|
||||||||||||
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
||||||||
|
(in millions)
|
||||||||||||||
Senior notes
(1)
|
$
|
3,323
|
|
|
$
|
3,522
|
|
|
$
|
3,321
|
|
|
$
|
3,355
|
|
Foreign currency forward contracts
(2)
|
$
|
(5
|
)
|
|
$
|
(5
|
)
|
|
$
|
(16
|
)
|
|
$
|
(16
|
)
|
Treasury lock contracts
(3)
|
$
|
(35
|
)
|
|
$
|
(35
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
The Company measures the fair value of its senior notes using Level 2 inputs based primarily on current market yields for its existing debt traded in the secondary market.
|
(2)
|
The Company measures the fair values of foreign currency forward contracts based on forward exchange rates. See Note 15 for additional disclosures regarding the notional amounts and fair values of foreign currency forward contracts.
|
(3)
|
The Company measures the fair values of treasury lock contracts based on 10-year treasury rates. See Note 15 for additional disclosures regarding the notional amounts and fair values of treasury lock contracts.
|
Currency
|
|
Notional Amounts
|
||
|
|
(in millions)
|
||
Canadian dollar
|
|
$
|
196
|
|
U.S. dollar
|
|
163
|
|
|
Euro
|
|
61
|
|
|
British pound
|
|
10
|
|
|
United Arab Emirates dirham
|
|
9
|
|
|
New Zealand dollar
|
|
6
|
|
|
Total
|
|
$
|
445
|
|
|
June 28, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
|
Other
Current
Assets
|
|
Other
Assets
|
|
Other
Current
Liabilities
|
|
Other
Liabilities
|
|
Other
Current
Assets
|
|
Other
Assets
|
|
Other
Current
Liabilities
|
|
Other
Liabilities
|
||||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||||||
Derivatives designated as
hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
(1)
|
$
|
3
|
|
|
$
|
2
|
|
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
4
|
|
Treasury lock contracts
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total derivative instruments
|
$
|
3
|
|
|
$
|
2
|
|
|
$
|
6
|
|
|
$
|
39
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
4
|
|
(1)
|
See Note 13 for a description of the fair value hierarchy related to the Company’s foreign currency forward contracts and treasury lock contracts.
|
|
Second Quarter Ended
|
|
First Half Ended
|
||||
|
June 28, 2019
|
|
June 28, 2019
|
||||
|
(in millions)
|
|
(in millions)
|
||||
Operating lease cost
|
$
|
28
|
|
|
$
|
57
|
|
Short-term and equipment lease cost
|
1
|
|
|
2
|
|
||
Variable lease cost
|
4
|
|
|
8
|
|
||
Sublease income
|
—
|
|
|
(1
|
)
|
||
Net lease cost
|
$
|
33
|
|
|
$
|
66
|
|
|
June 28, 2019
|
||
|
(in millions)
|
||
Operating lease right-of-use assets
|
$
|
626
|
|
|
|
||
Other current liabilities
|
$
|
75
|
|
Operating lease liabilities
|
580
|
|
|
Total operating lease liabilities
|
$
|
655
|
|
|
First Half Ended
|
||
(in millions, except lease term and discount rate)
|
June 28, 2019
|
||
Cash paid for amounts included in the measurement of operating lease liabilities
|
$
|
62
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
$
|
32
|
|
Weighted average remaining lease term - operating leases (in years)
|
10.8
|
|
Weighted average discount rate - operating leases
|
4.4
|
%
|
|
Operating Leases
|
||
|
June 28, 2019
|
||
|
(in millions)
|
||
2019
|
$
|
53
|
|
2020
|
96
|
|
|
2021
|
85
|
|
|
2022
|
77
|
|
|
2023
|
68
|
|
|
Thereafter
|
453
|
|
|
Total future lease payments required
|
832
|
|
|
Less: imputed interest
|
177
|
|
|
Total
|
$
|
655
|
|
|
Operating Leases
|
||
|
December 31, 2018
|
||
|
(in millions)
|
||
2019
|
$
|
115
|
|
2020
|
134
|
|
|
2021
|
82
|
|
|
2022
|
73
|
|
|
2023
|
65
|
|
|
Thereafter
|
506
|
|
|
Total minimum payments required
|
975
|
|
|
Sublease rentals under non-cancelable leases
|
(7
|
)
|
|
Net minimum payments required
|
$
|
968
|
|
|
First Half Ended
|
||||||
|
June 28,
2019 |
|
June 29,
2018 |
||||
|
(in millions)
|
||||||
Interest paid
|
$
|
75
|
|
|
$
|
97
|
|
Income tax payments
|
$
|
50
|
|
|
$
|
54
|
|
Income tax refunds
|
$
|
6
|
|
|
$
|
3
|
|
|
|
Second Quarter Ended
|
|
First Half Ended
|
||||||||||||
End Customer
|
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
|
|
(in millions)
|
||||||||||||||
Total DoD
|
|
$
|
1,749
|
|
|
$
|
1,733
|
|
|
$
|
3,598
|
|
|
$
|
3,295
|
|
Other U.S. Government
|
|
97
|
|
|
93
|
|
|
176
|
|
|
186
|
|
||||
Total U.S. Government
|
|
1,846
|
|
|
1,826
|
|
|
3,774
|
|
|
3,481
|
|
||||
Foreign governments
(1)
|
|
396
|
|
|
371
|
|
|
793
|
|
|
702
|
|
||||
Commercial — foreign
|
|
227
|
|
|
222
|
|
|
438
|
|
|
439
|
|
||||
Commercial — domestic
|
|
162
|
|
|
164
|
|
|
326
|
|
|
332
|
|
||||
Total
|
|
$
|
2,631
|
|
|
$
|
2,583
|
|
|
$
|
5,331
|
|
|
$
|
4,954
|
|
(1)
|
Includes sales under foreign military sales agreements, which are made directly between the U.S. Government and foreign governments.
|
|
|
Second Quarter Ended
|
|
First Half Ended
|
||||||||||||
Contract Type
|
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
|
|
(in millions)
|
||||||||||||||
Fixed-price
(1)
|
|
$
|
2,000
|
|
|
$
|
1,872
|
|
|
$
|
4,030
|
|
|
$
|
3,564
|
|
Cost-plus
(2)
|
|
551
|
|
|
626
|
|
|
1,142
|
|
|
1,222
|
|
||||
Time-and-material
|
|
80
|
|
|
85
|
|
|
159
|
|
|
168
|
|
||||
Total sales
|
|
$
|
2,631
|
|
|
$
|
2,583
|
|
|
$
|
5,331
|
|
|
$
|
4,954
|
|
(1)
|
Includes fixed-price incentive fee type contracts, which contributed approximately 1% to the Company's total net sales for each of the quarterly periods ended June 28, 2019 and June 29, 2018 and approximately 1% and 2% for the first half periods ended June 28, 2019 and June 29, 2018, respectively.
|
(2)
|
Includes cost-plus award and incentive fee type contracts, which contributed approximately 6% and 4% to the Company's total net sales for the quarterly periods ended June 28, 2019 and June 29, 2018, respectively, and approximately 5% and 4% for the first half periods ended June 28, 2019 and June 29, 2018, respectively.
|
|
|
Second Quarter Ended
|
|
First Half Ended
|
||||||||||||
Sales by Deliverable Type
|
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
|
|
(in millions)
|
||||||||||||||
Products
|
|
$
|
1,809
|
|
|
$
|
1,786
|
|
|
$
|
3,741
|
|
|
$
|
3,432
|
|
Services
|
|
822
|
|
|
797
|
|
|
1,590
|
|
|
1,522
|
|
||||
Total sales
|
|
$
|
2,631
|
|
|
$
|
2,583
|
|
|
$
|
5,331
|
|
|
$
|
4,954
|
|
|
|
Second Quarter Ended
|
|
First Half Ended
|
||||||||||||
Revenue Recognition Method
|
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
|
|
(in millions)
|
||||||||||||||
Over time (cost-to-cost method)
|
|
$
|
1,983
|
|
|
$
|
1,942
|
|
|
$
|
4,028
|
|
|
$
|
3,744
|
|
Point in time
|
|
489
|
|
|
484
|
|
|
992
|
|
|
916
|
|
||||
Output method
|
|
103
|
|
|
88
|
|
|
199
|
|
|
162
|
|
||||
Billing method
|
|
56
|
|
|
69
|
|
|
112
|
|
|
132
|
|
||||
Total sales
|
|
$
|
2,631
|
|
|
$
|
2,583
|
|
|
$
|
5,331
|
|
|
$
|
4,954
|
|
|
Second Quarter Ended
|
|
First Half Ended
|
||||||||||||
|
June 28,
2019 |
|
June 29,
2018 |
|
June 28,
2019 |
|
June 29,
2018 |
||||||||
|
(in millions)
|
||||||||||||||
Severance and restructuring related costs
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
11
|
|
|
$
|
14
|
|
|
June 28, 2019
|
||
|
(in millions)
|
||
Balance at beginning of period
|
$
|
14
|
|
Additional provisions
|
11
|
|
|
Cash payments
|
(16
|
)
|
|
Balance at end of period
|
$
|
9
|
|