☑
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Delaware
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34-0276860
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1025 West NASA Boulevard
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Melbourne,
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Florida
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32919
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(Address of principal executive offices)
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(Zip Code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $1.00 per share
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LHX
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New York Stock Exchange
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page No.
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Part I:
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Information about our Executive Officers
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Part II:
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Part III:
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Part IV:
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ITEM 16. Form 10-K Summary
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Signatures
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ITEM 1.
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BUSINESS.
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•
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Communication Systems, serving markets in tactical communications and defense products, including tactical ground and airborne radio communications solutions and night vision technology, and in public safety networks;
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•
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Electronic Systems, providing electronic warfare, avionics, and command, control, communications, computers, intelligence, surveillance and reconnaissance (“C4ISR”) solutions for defense and classified customers and mission-critical communication systems for civil and military aviation and other customers; and
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•
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Space and Intelligence Systems, providing intelligence, space protection, geospatial, complete Earth observation, universe exploration, positioning, navigation and timing (“PNT”), and environmental solutions for national security, defense, civil and commercial customers, using advanced sensors, antennas and payloads, as well as ground processing and information analytics.
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•
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Integrated Mission Systems, including intelligence, surveillance and reconnaissance (“ISR”); advanced electro optical and infrared solutions; and maritime power and navigation;
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Space and Airborne Systems, including space payloads, sensors and full-mission solutions; classified intelligence and cyber defense; avionics; and electronic warfare;
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Communication Systems, including tactical communications; broadband communications; night vision; and public safety; and
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•
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Aviation Systems, including defense aviation products; security, detection and other commercial aviation products; air traffic management; and commercial and military pilot training.
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Our widely deployed Single Channel Ground and Airborne Radio System (“SINCGARS”) family of very high frequency (“VHF”) backpack, vehicle-mounted, handheld and airborne radios used by U.S. and allied military forces.
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Our multiband manpack radio, the AN/PRC-117G, for narrowband and wideband communications and for which we have been providing Mobile User Objective System (“MUOS”) waveform software upgrades to enable connectivity to DoD’s next-generation MUOS satellite system;
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Our multiband handheld radios, the AN/PRC-152 and AN/PRC-152A;
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Our multi-channel manpack radio, the AN/PRC-158, which is a commercially developed radio offering two channels integrated into the same chassis;
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Our 2-channel handheld radio, the AN/PRC-163, for the U.S. Special Operations Command (“SOCOM”) Special Operations Forces Tactical Communications (“STC”) program and the U.S. Army 2-Channel Leader Radio program;
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Our wideband rifleman team radio, the RF-330E, which is the commercially developed U.S. variant of our widely fielded international soldier personal radio;
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Our wideband ground radio family for international customers, the RF-7850x;
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Our wideband high frequency (“HF”) manpack radios, the RF-300H for the U.S. military and the RF-7800H for international customers, for wideband beyond-line-of-sight transmission in circumstances where satellite communication (“SATCOM”) is denied;
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Our single-channel airborne radios, which include the RF-300M-DL Small Secure Data Link multiband radio and the ARC-201D and ARC-201E radios; and
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Our multi-channel airborne radios, which include the RF-7850A and a 2-channel airborne radio platform we provide to ViaSat, Inc. for the KOR-24A multi-channel, Link-16 Small Tactical Terminal.
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A 10-year, multi-award Indefinite Delivery Indefinite Quantity (“IDIQ”) contract from the U.S. Army in fiscal 2019 for 2-channel handheld radios under its 2-Channel Leader Radio program
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A 5-year, single-award IDIQ contract from the U.S. Navy in fiscal 2018 for HF and multiband handheld and manpack radio systems and accessories;
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A 5-year, sole source IDIQ contract from the U.S. Air Force in fiscal 2018 to develop and deliver Handheld Video Data-Link (“HH-VDL”) radios;
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A 5-year, single-award contract from the Australian Defence Forces in fiscal 2018 for integrated network modernization;
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A 6-year, single-award IDIQ contract from SOCOM in fiscal 2017 to supply next-generation multi-channel multiband manpack radios to enable superior communications for U.S. Special Operations Forces;
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A 5-year, single-award IDIQ contract from the U.S. Defense Logistics Agency in fiscal 2017 to provide tactical radio spare parts to the U.S. Army and Federal civilian agencies;
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A 10-year (5-year base, one 5-year option), multi-award IDIQ contract from the U.S. Air Force in fiscal 2017 for cryptographic and information assurance products;
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A 10-year (5-year base, one 5-year option), multi-award IDIQ contract from the U.S. Army in fiscal 2016 for multi-channel manpack radios under the HMS program;
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A 6-year, single-award IDIQ contract from SOCOM in fiscal 2016 for a new integrated 2-channel handheld tactical radio;
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A 5-year, single-award follow-on foreign military sales IDIQ contract from the U.S. Army Communications-Electronics Command (“CECOM”) in fiscal 2016 to supply secure tactical communication solutions;
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A 5-year, single-award foreign military sales IDIQ contract from CECOM in fiscal 2016 to supply SINCGARS tactical solutions; and
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A 10-year (5-year base, one 5-year option), multi-award IDIQ contract from the U.S. Army in fiscal 2015 for rifleman radios and associated services under the HMS program.
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Our advanced integrated defense electronic warfare systems (“AIDEWS”) that provide integrated and podded self-protection and jamming;
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Our integrated defensive electronic countermeasures (“IDECM”) system for the F/A 18;
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Our counter-radio controlled IED technology that protects ground forces in asymmetrical combat environments;
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Our land-based surveillance radar that provides three-dimensional radar capability for airborne defensive surveillance for the U.S. Navy; and
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Our state-of-the-art wireless voice and data products and solutions.
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ITEM 1A.
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RISK FACTORS.
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The U.S. Government could reduce or delay its spending on, or reprioritize its spending away from, the government programs in which we participate;
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U.S. Government spending could be impacted by alternate arrangements to sequestration, which increases the uncertainty as to, and the difficulty in predicting, U.S. Government spending priorities and levels; and
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We may experience declines in revenue, profitability and cash flows as a result of reduced or delayed orders or payments or other factors caused by economic difficulties of our customers and prospective customers, including U.S. Federal, state and local governments.
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Disrupt the proper functioning of these networks and systems and, therefore, our operations and/or those of certain of our customers;
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Result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours, our customers or our employees, including trade secrets, which could be used to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes;
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Compromise national security and other sensitive government functions;
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Require significant management attention and resources to remedy the damages that result;
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Result in costs which exceed our insurance coverage and/or indemnification arrangements;
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Subject us to claims for contract breach, damages, credits, penalties or termination; and
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Damage our reputation with our customers (particularly agencies of the U.S. Government) and the general public.
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Currency exchange controls, fluctuations of currency and currency revaluations;
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The laws, regulations and policies of foreign governments relating to investments and operations, as well as U.S. laws affecting the activities of U.S. companies abroad, including the Foreign Corrupt Practices Act (“FCPA”);
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Import and export licensing requirements and regulations, including ITAR, as well as unforeseen changes in export controls and other trade regulations;
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Changes in regulatory requirements, including business or operating license requirements, imposition of tariffs or embargoes;
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Uncertainties and restrictions concerning the availability of funding, credit or guarantees;
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Risk of non-payment or delayed payment by foreign governments;
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Contractual obligations to non-U.S. customers may include specific in-country purchases, investments, manufacturing agreements or financial or other support arrangements or obligations, known as offset obligations, that may extend over several years, may require teaming with local companies and may result in significant penalties if not satisfied;
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The complexity and necessity of using, and disruptions involving our, international dealers, distributors, sales representatives and consultants;
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The difficulties of managing a geographically dispersed organization and culturally diverse workforces, including compliance with local laws and practices;
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Difficulties associated with repatriating cash generated or held abroad in a tax-efficient manner and changes in tax laws;
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Uncertainties as to local laws and enforcement of contract and intellectual property rights and occasional requirements for onerous contract terms;
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Rapid changes in government, economic and political policies, political or civil unrest, acts of terrorism or the threat of international boycotts or U.S. anti-boycott legislation; and
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Increased risk of an incident resulting in damage or destruction to our facilities or products or resulting in injury or loss of life to our employees, subcontractors or other third parties.
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Identify market needs and growth opportunities;
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Identify emerging technological trends in our current and target markets;
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Identify additional uses for our existing technology to address customer needs;
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Develop and maintain competitive products, systems, services and technologies;
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Enhance our offerings by adding innovative hardware, software or other features that differentiate our products, systems, services and technologies from those of our competitors;
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Develop, manufacture and bring to market cost-effective offerings quickly;
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Enhance product designs for export and releasability to international markets; and
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Effectively structure our businesses to reflect the competitive environment, including through the use of joint ventures, collaborative agreements and other forms of alliances.
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Difficulty in identifying and evaluating potential mergers and acquisitions, including the risk that our due diligence does not identify or fully assess valuation issues, potential liabilities or other merger or acquisition risks;
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Difficulty and expense in integrating newly merged or acquired businesses and operations, including combining product and service offerings, and in entering into new markets in which we are not experienced, in an efficient and cost-effective manner while maintaining adequate standards, controls and procedures, and the risk that we encounter significant unanticipated costs or other problems associated with integration;
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Difficulty and expense in consolidating and rationalizing IT infrastructure, which may include multiple legacy systems from various mergers and acquisitions and integrating software code;
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Challenges in achieving strategic objectives, cost savings and other benefits expected from mergers and acquisitions;
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Risk that our markets do not evolve as anticipated and that the strategic mergers, acquisitions and divestitures do not prove to be those needed to be successful in those markets;
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Risk that we assume or retain, or that companies we have merged with or acquired have assumed or retained or otherwise become subject to, significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying parties;
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Risk that indemnification related to businesses divested or spun off that we may be required to provide or otherwise bear may be significant and could negatively impact our business;
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Risk that mergers, acquisitions, divestitures, spin offs and other strategic transactions, including the L3Harris Merger, fail to qualify for the intended tax treatment for U.S. Federal income tax purposes, such as a tax-free reorganization in the case of the L3Harris Merger;
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Risk that we are not able to complete strategic divestitures on satisfactory terms and conditions, including non-competition arrangements applicable to certain of our business lines, or within expected timeframes;
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Potential loss of key employees or customers of the businesses merged with or acquired or to be divested; and
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Risk of diverting the attention of senior management from our existing operations.
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The jurisdictions in which profits are determined to be earned and taxed;
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Adjustments to estimated taxes upon finalization of various tax returns;
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Increases in expenses not fully deductible for tax purposes, including write-offs of acquired in-process R&D and impairment of goodwill or other long-term assets in connection with mergers or acquisitions;
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Changes in available tax credits;
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Changes in share-based compensation expense;
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Changes in the valuation of our deferred tax assets and liabilities;
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•
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Changes in domestic or international tax laws or the interpretation of such tax laws; and
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The resolution of issues arising from tax audits with various tax authorities.
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the diversion of management’s attention to integration matters;
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difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the combination;
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difficulties in the integration of operations and systems;
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conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the companies;
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difficulties in the assimilation of employees;
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difficulties in managing the expanded operations of a significantly larger and more complex company;
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difficulties in establishing effective uniform controls, systems, procedures and policies for the combined company;
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challenges in keeping existing customers and obtaining new customers;
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challenges in attracting and retaining key personnel; and
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•
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coordinating a geographically dispersed organization.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS.
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ITEM 2.
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PROPERTIES.
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Segment
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Approximate
Total Sq. Ft.
Owned
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Approximate
Total Sq. Ft.
Leased
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Approximate
Total
Sq. Ft.
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(In millions)
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Communication Systems
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1.5
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0.5
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2.0
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Electronic Systems
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2.0
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1.4
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3.4
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Space and Intelligence Systems
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2.6
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1.0
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3.6
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Corporate
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0.4
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0.2
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0.6
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Total
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6.5
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3.1
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9.6
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ITEM 3.
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LEGAL PROCEEDINGS.
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ITEM 4.
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MINE SAFETY DISCLOSURES.
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Name and Age
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Position Currently Held and Past Business Experience
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William M. Brown, 56
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Chairman and Chief Executive Officer since June 29, 2019. Chairman, President and Chief Executive Officer from April 2014 to June 2019. President and Chief Executive Officer from November 2011 to April 2014. Formerly with United Technologies Corporation (“UTC”), as Senior Vice President, Corporate Strategy and Development from April 2011 to October 2011; as President of UTC’s Fire & Security division from 2006 to 2011; and in U.S. and international roles at UTC’s Carrier Corporation from 2000 to 2006, including President of the Carrier Asia Pacific Operations; and as Director, Corporate Strategy and Business Development from 1997 to 2000. Before joining UTC in 1997, Mr. Brown worked for McKinsey & Company as a senior engagement manager, and prior to that, at Air Products and Chemicals, Inc. as a project engineer.
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Todd W. Gautier, 55
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President, Aviation Systems since June 29, 2019. Served with L3 as Senior Vice President and President of Electronic Systems Segment from March 2017 to June 2019; as President of Precision Engagement and Training Sector from January 2014 to March 2017; as President of Precision Engagement Sector from January 2010 to January 2014; and as Vice President of Business Development and Strategy for the Sensors and Simulation Group from January 2005 to January 2010. Before joining L3 in 2001, Mr. Gautier served in the U.S. Navy for 15 years as a Strike/Fighter Pilot; was Vice President of Navy Operations for BGI, LLC; and worked for United Airlines as a flight crew member.
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James P. Girard, 43
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Vice President and Chief Human Resources Officer since June 29, 2019. Vice President, Human Resources from July 2015 to June 2019. Vice President, Human Resources - Government Communications Systems from May 2014 to June 2015. Before joining L3Harris in May 2014, Mr. Girard worked for UTC, as Vice President, Human Resources at Sikorsky Aircraft from February 2014 to April 2014; as Director, Talent Resources from November 2011 to January 2014; as Vice President, Human Resources at UTC’s Global Fire Products from June 2010 to October 2011; and served in various Human Resources roles from 1995 to 2010.
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Christopher E. Kubasik, 58
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Vice Chairman, President and Chief Operating Officer since June 29, 2019. Served with L3, as Chairman, Chief Executive Officer and President from May 2018 to June 2019; as Chief Executive Officer and President from January 2018 to May 2018; and as President and Chief Operating Officer from October 2015 to December 2017. Before joining L3 in October 2015, Mr. Kubasik worked for Seabury Advisory Group as President and Chief Executive Officer from March 2014 to October 2015; for Ackuity Advisors, Inc., as President and Chief Executive Officer from January 2013 to March 2014; and for Lockheed Martin Corporation, where he held various senior executive and finance roles from 1999 to 2012, including Vice Chairman, President and Chief Operating Officer from 2010 to 2012. Prior to that, he worked for Ernst & Young, LLP, including as a partner from 1996 to 1999.
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Jesus “Jay” Malave Jr., 50
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Senior Vice President and Chief Financial Officer since June 29, 2019. Before joining L3Harris, Mr. Malave worked at UTC, as Vice President and Chief Financial Officer of UTC’s Carrier Corporation from April 2018 to June 2019; as Chief Financial Officer of UTC’s Aerospace Systems from January 2015 to April 2018; as Head of Investor Relations from June 2012 to December 2014; as Vice President, Financial Planning and Treasury at Hamilton Sundstrand, with responsibility for planning the integration of Goodrich Corporation from May 2011 to June 2012; as Director of Investor Relations from June 2009 to May 2011; and prior to that, in other roles of increasing responsibility in financial planning and analysis, treasury and accounting.
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Dana A. Mehnert, 57
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President, Communication Systems since September 2018. Senior Vice President, Chief Global Business Development Officer from July 2015 to September 2018. Group President, RF Communications from May 2009 to July 2015. President, RF Communications from July 2006 to May 2009. Mr. Mehnert joined L3Harris in 1984.
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Scott T. Mikuen, 57
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Senior Vice President, General Counsel and Secretary since February 2013. Vice President, General Counsel and Secretary from October 2010 to February 2013. Vice President, Associate General Counsel and Secretary from October 2004 to October 2010. Vice President — Counsel, Corporate and Commercial Operations and Assistant Secretary from November 2000 to October 2004. Mr. Mikuen joined L3Harris in 1996 as Finance Counsel.
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Sean J. Stackley, 61
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President, Integrated Mission Systems since June 29, 2019. Served with L3 as Senior Vice President and President of Communications & Networked Systems Segment from September 2018 to June 2019; and as Corporate Vice President, Strategic Advance Programs and Technologies from January 2018 to September 2018. Before joining L3 in January 2018, (Hon.) Mr. Stackley spent four decades in public service, including a 27-year career with the U.S. Navy, where he most recently was Acting Secretary of the Navy from January 2017 to July 2017 and Secretary of the Navy for Research, Development and Acquisition from 2008 to 2017.
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Todd A. Taylor, 46
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Vice President, Principal Accounting Officer since May 2015. Vice President from April 2015 to May 2015. Formerly with Molex, Inc., as Vice President, Chief Accounting Officer and Corporate Controller from September 2012 to April 2015; as Director of Finance and Corporate Controller from September 2010 to September 2012; and as Director of Accounting from June 2008 to September 2010; Before joining Molex, Mr. Taylor worked for PricewaterhouseCoopers as Internal Audit Advisory Director from March 2003 to June 2008; for Wells Fargo as Internal Controls Manager from September 1999 to February 2003; and for RSM McGladrey.
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Edward J. Zoiss, 54
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President, Space and Airborne Systems since June 29, 2019. President, Electronic Systems from July 2015 to June 2019. Vice President and General Manager, Defense Programs, Government Communications Systems from June 2013 to July 2015. Vice President, C4ISR Electronics, Government Communications Systems from June 2012 to June 2013; Vice President, Advanced Programs and Technology, Government Communications Systems from July 2010 to June 2012. Mr. Zoiss joined L3Harris in 1995.
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
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L3HARRIS FISCAL YEAR END
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2014
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2015
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2016
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2017
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2018
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2019
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||||||||||||
L3Harris (Prior to L3Harris Merger)
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$
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100
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|
$
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105
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$
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114
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$
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154
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$
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208
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$
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276
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S&P 500
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$
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100
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$
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108
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$
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112
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$
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132
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$
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151
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$
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167
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S&P 500 Aerospace & Defense
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$
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100
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$
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108
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$
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122
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$
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157
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$
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196
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$
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217
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Period*
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Total number of
shares purchased
|
|
Average price
paid per share
|
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Total number of
shares purchased as part of publicly
announced plans or programs(1)
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Maximum
approximate
dollar value
of shares that may
yet be purchased
under the plans
or programs(1)
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||||||
Month No. 1
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||||||
(March 30, 2019-April 26, 2019)
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||||||
Repurchase program(1)
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—
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|
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—
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|
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—
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|
|
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$501,279,637
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|
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Employee transactions(2)
|
717
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|
|
$
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164.76
|
|
|
—
|
|
|
—
|
|
|
Month No. 2
|
|
|
|
|
|
|
|
||||||
(April 27, 2019-May 24, 2019)
|
|
|
|
|
|
|
|
||||||
Repurchase program(1)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
$501,279,637
|
|
Employee transactions(2)
|
5,629
|
|
|
$
|
180.78
|
|
|
—
|
|
|
—
|
|
|
Month No. 3
|
|
|
|
|
|
|
|
||||||
(May 25, 2019-June 28, 2019)
|
|
|
|
|
|
|
|
||||||
Repurchase program(1)
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
$501,279,637
|
|
Employee transactions(2)
|
1,409
|
|
|
$
|
190.84
|
|
|
—
|
|
|
—
|
|
|
Total
|
7,755
|
|
|
|
|
—
|
|
|
|
$501,279,637
|
|
(1)
|
On February 2, 2017, we announced that on January 26, 2017, our Board of Directors approved a share repurchase program (our “2017 Repurchase Program”) authorizing us to repurchase up to $1 billion in shares of our common stock through open-market purchases, private transactions, transactions structured through investment banking institutions or any combination thereof. As of June 28, 2019, $501,279,637 (as reflected in the table above) was the approximate dollar amount of our common stock that could still be purchased under the 2017 Repurchase Program. As discussed in more detail in Note 26: Subsequent Events in the Notes, on July 1, 2019, we announced that our Board of Directors approved a new $4 billion share repurchase authorization (our “2019 Repurchase Program”) that replaced our 2017 Repurchase Program as well as the prior share repurchase program of L3. Although the 2019 Repurchase Program does not have a stated expiration date, we announced that we currently expect to repurchase up to $2.5 billion in shares in the next twelve months, but we can give no assurances regarding the level and timing of shares repurchases.
|
(2)
|
Represents a combination of (a) shares of our common stock delivered to us in satisfaction of the tax withholding obligation of holders of performance units, restricted units or restricted shares that vested during the quarter and (b) performance units, restricted units or restricted shares returned to us upon retirement or employment termination of employees. Our equity incentive plans provide that the value of shares delivered to us to pay the exercise price of options or to cover tax withholding obligations shall be the closing price of our common stock on the date the relevant transaction occurs.
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ITEM 6.
|
SELECTED FINANCIAL DATA.
|
|
Fiscal Years Ended
|
||||||||||||||||||
|
2019(1)
|
|
2018(2)
|
|
2017(3)
|
|
2016(4)
|
|
2015(5)
|
||||||||||
|
(In millions, except per share amounts)
|
||||||||||||||||||
Results of Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue from product sales and services
|
$
|
6,801
|
|
|
$
|
6,168
|
|
|
$
|
5,897
|
|
|
$
|
5,992
|
|
|
$
|
3,885
|
|
Cost of product sales and services
|
4,467
|
|
|
4,066
|
|
|
3,854
|
|
|
3,832
|
|
|
2,304
|
|
|||||
Interest expense
|
169
|
|
|
170
|
|
|
172
|
|
|
183
|
|
|
130
|
|
|||||
Income from continuing operations before income taxes
|
1,113
|
|
|
908
|
|
|
889
|
|
|
884
|
|
|
396
|
|
|||||
Income taxes
|
160
|
|
|
206
|
|
|
261
|
|
|
273
|
|
|
109
|
|
|||||
Income from continuing operations
|
953
|
|
|
702
|
|
|
628
|
|
|
611
|
|
|
287
|
|
|||||
Discontinued operations, net of income taxes
|
(4
|
)
|
|
(3
|
)
|
|
(85
|
)
|
|
(287
|
)
|
|
47
|
|
|||||
Net income
|
949
|
|
|
699
|
|
|
543
|
|
|
324
|
|
|
334
|
|
|||||
Average shares outstanding (diluted)
|
120.5
|
|
|
121.1
|
|
|
124.3
|
|
|
125.0
|
|
|
106.8
|
|
|||||
Per Share Data (Diluted):
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
7.89
|
|
|
$
|
5.78
|
|
|
$
|
5.04
|
|
|
$
|
4.87
|
|
|
$
|
2.67
|
|
Income (loss) from discontinued operations, net of income taxes
|
(0.03
|
)
|
|
(0.02
|
)
|
|
(0.68
|
)
|
|
(2.28
|
)
|
|
0.44
|
|
|||||
Net income
|
7.86
|
|
|
5.76
|
|
|
4.36
|
|
|
2.59
|
|
|
3.11
|
|
|||||
Cash dividends
|
2.74
|
|
|
2.28
|
|
|
2.12
|
|
|
2.00
|
|
|
1.88
|
|
|||||
Financial Position at Fiscal Year-End:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net working capital(6)
|
$
|
310
|
|
|
$
|
374
|
|
|
$
|
105
|
|
|
$
|
643
|
|
|
$
|
909
|
|
Net property, plant and equipment
|
894
|
|
|
900
|
|
|
904
|
|
|
924
|
|
|
1,031
|
|
|||||
Long-term debt, net
|
2,763
|
|
|
3,408
|
|
|
3,396
|
|
|
4,120
|
|
|
5,053
|
|
|||||
Total assets
|
10,117
|
|
|
9,851
|
|
|
10,112
|
|
|
12,009
|
|
|
13,127
|
|
|||||
Equity
|
3,363
|
|
|
3,278
|
|
|
2,903
|
|
|
3,057
|
|
|
3,402
|
|
|||||
Book value per share
|
28.37
|
|
|
27.71
|
|
|
24.27
|
|
|
24.53
|
|
|
27.51
|
|
(1)
|
Results for fiscal 2019 included $65 million ($49 million after-tax or $.40 per diluted common share) of L3Harris Merger-related transaction and integration costs.
|
(2)
|
Results for fiscal 2018 included: (i) $47 million of charges related to our decision to transition and exit a commercial air-to-ground LTE radio communications line of business and other items; (ii) $27 million of losses and other costs related to debt refinancing; (iii) $20 million of charges related to non-cash adjustments for deferred compensation and the impact of tax reform; and (iv) a $5 million charge related to consolidation of certain Exelis facilities initiated in fiscal 2017. The net after-tax impact from these fiscal 2018 items was $74 million or $.60 per diluted common share.
|
(3)
|
Results for fiscal 2017 included a $51 million after-tax ($.41 per diluted common share) charge for Exelis acquisition-related and other items.
|
(4)
|
Results for fiscal 2016 included: (i) $121 million for integration and other costs associated with our acquisition of Exelis in the fourth quarter of fiscal 2015, including $11 million for amortization of a step-up in inventory; (ii) a net liability reduction of $101 million for certain post-employment benefit plans; (iii) $33 million of charges for restructuring and other items; and (iv) a $10 million net gain on the sale of Aerostructures. The net after-tax impact from these fiscal 2016 items was $34 million or $.27 per diluted common share.
|
(5)
|
Results for fiscal 2015 included results of Exelis following the close of the acquisition on May 29, 2015 and a $205 million after-tax ($1.91 per diluted share) charge for transaction, financing, integration, restructuring and other costs, primarily related to our acquisition of Exelis.
|
(6)
|
Net working capital decreased in fiscal 2017 compared with fiscal 2016 primarily due to a $172 million increase in current portion of long-term debt and a $161 million decrease associated with net working capital of discontinued operations.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
•
|
Business Considerations — a general description of our business; the value drivers of our business; fiscal 2019 results of operations and liquidity and capital resources key indicators; and industry-wide opportunities, challenges and risks that are relevant to us in defense, government and commercial markets.
|
•
|
Operations Review — an analysis of our consolidated results of operations and of the results in each of our business segments, to the extent the segment operating results are helpful to an understanding of our business as a whole, for the three years presented in our financial statements.
|
•
|
Liquidity, Capital Resources and Financial Strategies — an analysis of cash flows, funding of pension plans, common stock repurchases, dividends, capital structure and resources, contractual obligations, off-balance sheet arrangements, commercial commitments, financial risk management, impact of foreign exchange and impact of inflation.
|
•
|
Critical Accounting Policies and Estimates — a discussion of accounting policies and estimates that require the most judgment and a discussion of accounting pronouncements that have been issued but not yet implemented by us and their potential impact on our financial condition, results of operations and cash flows.
|
•
|
Forward-Looking Statements and Factors that May Affect Future Results — cautionary information about forward-looking statements and a description of certain risks and uncertainties that could cause our actual results to differ materially from our historical results or our current expectations or projections.
|
•
|
Integrated Mission Systems, including intelligence, surveillance and reconnaissance; advanced electro optical and infrared solutions; and maritime power and navigation;
|
•
|
Space and Airborne Systems, including space payloads, sensors and full-mission solutions; classified intelligence and cyber defense; avionics; and electronic warfare;
|
•
|
Communication Systems, including tactical communications; broadband communications; night vision; and public safety; and
|
•
|
Aviation Systems, including defense aviation products; security, detection and other commercial aviation products; air traffic management; and commercial and military pilot training.
|
•
|
Communication Systems, serving markets in tactical communications and defense products, including tactical ground and airborne radio communications solutions and night vision technology, and in public safety networks;
|
•
|
Electronic Systems, providing electronic warfare, avionics, and C4ISR solutions for defense and classified customers and mission-critical communication systems for civil and military aviation and other customers; and
|
•
|
Space and Intelligence Systems, providing intelligence, space protection, geospatial, complete Earth observation, universe exploration, PNT, and environmental solutions for national security, defense, civil and commercial customers, using advanced sensors, antennas and payloads, as well as ground processing and information analytics.
|
•
|
Revenue increased 10 percent to $6.8 billion in fiscal 2019 from $6.2 billion in fiscal 2018;
|
•
|
Income from continuing operations increased 36 percent to $953 million in fiscal 2019 from $702 million in fiscal 2018;
|
•
|
Income from continuing operations as a percentage of revenue increased to 14 percent in fiscal 2019 from 11 percent in fiscal 2018; and
|
•
|
Income from continuing operations per diluted common share increased 37 percent to $7.89 in fiscal 2019 from $5.78 in fiscal 2018, reflecting both the increase in income from continuing operations as noted above and fewer diluted common shares outstanding due to repurchases of shares of common stock under our repurchase program during fiscal 2019.
|
•
|
Net cash provided by operating activities increased to $1,185 million in fiscal 2019 from $751 million in fiscal 2018;
|
•
|
Return on invested capital (defined as after-tax operating income from continuing operations divided by the two-point average of invested capital at the beginning and end of the fiscal year, where invested capital equals equity plus debt, less cash and cash equivalents) increased to 14 percent in fiscal 2019 from 11 percent in fiscal 2018;
|
•
|
Return on average equity (defined as income from continuing operations divided by the two-point average of equity at the beginning and end of the fiscal year) increased to 29 percent in fiscal 2019 from 23 percent in fiscal 2018;
|
•
|
Our consolidated total indebtedness to total capital ratio at June 28, 2019 was 51 percent, compared with our 65 percent covenant limitation under our senior unsecured revolving credit facility; and
|
•
|
Our net unfunded defined benefit plans liability increased $460 million in fiscal 2019 to $1,174 million at June 28, 2019 compared with $714 million at June 29, 2018, primarily due to a lower discount rate.
|
|
Fiscal Years Ended
|
||||||||||||||||
|
2019
|
|
2018
|
|
2019/2018
Percent Increase/ (Decrease) |
|
2017
|
|
2018/2017
Percent Increase/ (Decrease) |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
(Dollars in millions, except per share amounts)
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||
Communication Systems
|
$
|
2,177
|
|
|
$
|
1,904
|
|
|
14
|
%
|
|
$
|
1,754
|
|
|
9
|
%
|
Electronic Systems
|
2,583
|
|
|
2,365
|
|
|
9
|
%
|
|
2,245
|
|
|
5
|
%
|
|||
Space and Intelligence Systems
|
2,057
|
|
|
1,913
|
|
|
8
|
%
|
|
1,904
|
|
|
—
|
|
|||
Corporate eliminations
|
(16
|
)
|
|
(14
|
)
|
|
*
|
|
|
(6
|
)
|
|
*
|
|
|||
Total revenue
|
6,801
|
|
|
6,168
|
|
|
10
|
%
|
|
5,897
|
|
|
5
|
%
|
|||
Cost of product sales and services:
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of product sales
|
(3,615
|
)
|
|
(3,239
|
)
|
|
12
|
%
|
|
(3,058
|
)
|
|
6
|
%
|
|||
% of revenue from product sales
|
64
|
%
|
|
64
|
%
|
|
|
|
66
|
%
|
|
|
|||||
Cost of services
|
(852
|
)
|
|
(827
|
)
|
|
3
|
%
|
|
(796
|
)
|
|
4
|
%
|
|||
% of revenue from services
|
73
|
%
|
|
73
|
%
|
|
|
|
65
|
%
|
|
|
|||||
Total cost of product sales and services
|
(4,467
|
)
|
|
(4,066
|
)
|
|
10
|
%
|
|
(3,854
|
)
|
|
6
|
%
|
|||
% of total revenue
|
66
|
%
|
|
66
|
%
|
|
|
|
65
|
%
|
|
|
|||||
Gross margin
|
2,334
|
|
|
2,102
|
|
|
11
|
%
|
|
2,043
|
|
|
3
|
%
|
|||
% of total revenue
|
34
|
%
|
|
34
|
%
|
|
|
|
35
|
%
|
|
|
|||||
Engineering, selling and administrative expenses
|
(1,242
|
)
|
|
(1,182
|
)
|
|
5
|
%
|
|
(1,150
|
)
|
|
3
|
%
|
|||
% of total revenue
|
18
|
%
|
|
19
|
%
|
|
|
|
20
|
%
|
|
|
|||||
Non-operating income
|
188
|
|
|
156
|
|
|
21
|
%
|
|
166
|
|
|
(6
|
)%
|
|||
Net interest expense
|
(167
|
)
|
|
(168
|
)
|
|
(1
|
)%
|
|
(170
|
)
|
|
(1
|
)%
|
|||
Income from continuing operations before income taxes
|
1,113
|
|
|
908
|
|
|
23
|
%
|
|
889
|
|
|
2
|
%
|
|||
Income taxes
|
(160
|
)
|
|
(206
|
)
|
|
(22
|
)%
|
|
(261
|
)
|
|
(21
|
)%
|
|||
Effective tax rate
|
14
|
%
|
|
23
|
%
|
|
|
|
29
|
%
|
|
|
|||||
Income from continuing operations
|
$
|
953
|
|
|
$
|
702
|
|
|
36
|
%
|
|
$
|
628
|
|
|
12
|
%
|
% of total revenue
|
14
|
%
|
|
11
|
%
|
|
|
|
11
|
%
|
|
|
|||||
Income from continuing operations per diluted common share
|
$
|
7.89
|
|
|
$
|
5.78
|
|
|
37
|
%
|
|
$
|
5.04
|
|
|
15
|
%
|
•
|
Legislative changes from the Tax Cuts and Jobs Act which became applicable to Harris during fiscal 2019, such as: (i) a reduction in our U.S. statutory corporate income tax rate from the blended rate of 28.1% in fiscal 2018 to a flat 21% rate in fiscal 2019; (ii) the recent clarification that foreign military sales qualify for the foreign derived intangible income deduction; (iii) tax planning to allow for the utilization of foreign tax credits that were previously valued; and (iv) the loss of the U.S. domestic manufacturing deduction;
|
•
|
The favorable impact of excess tax benefits related to equity-based compensation; and
|
•
|
Additional research credits claimed on our prior year tax returns.
|
•
|
The enactment of a lower U.S. statutory corporate income tax rate in fiscal 2018;
|
•
|
Additional research credits claimed on our fiscal 2017 tax return compared with our recorded estimates at the end of fiscal 2017; and
|
•
|
The favorable impact of releasing provisions for uncertain tax positions.
|
•
|
The favorable impact of excess tax benefits related to equity-based compensation;
|
•
|
Several differences between U.S. generally accepted accounting principles (“GAAP”) and tax accounting related to investments; and
|
•
|
Additional deductions and additional research credits claimed on our fiscal 2016 tax return compared with our recorded estimates at the end of fiscal 2016.
|
|
2019
|
|
2018
|
|
2019/2018
Percent Increase/ (Decrease) |
|
2017
|
|
2018/2017
Percent Increase/ (Decrease) |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
(Dollars in millions)
|
||||||||||||||||
Revenue
|
$
|
2,177
|
|
|
$
|
1,904
|
|
|
14
|
%
|
|
$
|
1,754
|
|
|
9
|
%
|
Cost of product sales and services
|
(1,158
|
)
|
|
(982
|
)
|
|
18
|
%
|
|
(882
|
)
|
|
11
|
%
|
|||
Gross margin
|
1,019
|
|
|
922
|
|
|
11
|
%
|
|
872
|
|
|
6
|
%
|
|||
% of revenue
|
47
|
%
|
|
48
|
%
|
|
|
|
50
|
%
|
|
|
|||||
ESA expenses
|
(365
|
)
|
|
(356
|
)
|
|
3
|
%
|
|
(358
|
)
|
|
(1
|
)%
|
|||
% of revenue
|
17
|
%
|
|
19
|
%
|
|
|
|
20
|
%
|
|
|
|||||
Segment operating income
|
$
|
654
|
|
|
$
|
566
|
|
|
16
|
%
|
|
$
|
514
|
|
|
10
|
%
|
% of revenue
|
30
|
%
|
|
30
|
%
|
|
|
|
29
|
%
|
|
|
|
2019
|
|
2018
|
|
2019/2018
Percent Increase/ (Decrease) |
|
2017
|
|
2018/2017
Percent Increase/ (Decrease) |
|||||||
|
|
|
|
|
|
|
|
|
|
|||||||
|
(Dollars in millions)
|
|||||||||||||||
Revenue
|
$
|
2,583
|
|
|
$
|
2,365
|
|
|
9
|
|
$
|
2,245
|
|
|
5
|
%
|
Cost of product sales and services
|
(1,789
|
)
|
|
(1,652
|
)
|
|
8
|
|
(1,530
|
)
|
|
8
|
%
|
|||
Gross margin
|
794
|
|
|
713
|
|
|
11
|
|
715
|
|
|
—
|
|
|||
% of revenue
|
31
|
%
|
|
30
|
%
|
|
|
|
32
|
%
|
|
|
||||
ESA expenses
|
(295
|
)
|
|
(281
|
)
|
|
5
|
|
(258
|
)
|
|
9
|
%
|
|||
% of revenue
|
11
|
%
|
|
12
|
%
|
|
|
|
11
|
%
|
|
|
||||
Segment operating income
|
$
|
499
|
|
|
$
|
432
|
|
|
16
|
|
$
|
457
|
|
|
(5
|
)%
|
% of revenue
|
19
|
%
|
|
18
|
%
|
|
|
|
20
|
%
|
|
|
|
2019
|
|
2018
|
|
2019/2018
Percent Increase/ (Decrease) |
|
2017
|
|
2018/2017
Percent Increase/ (Decrease) |
|||||||
|
|
|
|
|
|
|
|
|
|
|||||||
|
(Dollars in millions)
|
|||||||||||||||
Revenue
|
$
|
2,057
|
|
|
$
|
1,913
|
|
|
8
|
|
$
|
1,904
|
|
|
—
|
|
Cost of product sales and services
|
(1,386
|
)
|
|
(1,299
|
)
|
|
7
|
|
(1,316
|
)
|
|
(1
|
)%
|
|||
Gross margin
|
671
|
|
|
614
|
|
|
9
|
|
588
|
|
|
4
|
%
|
|||
% of revenue
|
33
|
%
|
|
32
|
%
|
|
|
|
31
|
%
|
|
|
||||
ESA expenses
|
(312
|
)
|
|
(283
|
)
|
|
10
|
|
(274
|
)
|
|
3
|
%
|
|||
% of revenue
|
15
|
%
|
|
15
|
%
|
|
|
|
14
|
%
|
|
|
||||
Segment operating income
|
$
|
359
|
|
|
$
|
331
|
|
|
8
|
|
$
|
314
|
|
|
5
|
%
|
% of revenue
|
17
|
%
|
|
17
|
%
|
|
|
|
16
|
%
|
|
|
|
|
2019
|
|
2018
|
|
2019/2018
Percent Increase/ (Decrease) |
|
2017
|
|
2018/2017
Percent Increase/ (Decrease) |
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
(Dollars in millions)
|
||||||||||||||||
Unallocated corporate expense and corporate eliminations
|
$
|
133
|
|
|
$
|
124
|
|
|
7
|
%
|
|
$
|
119
|
|
|
4
|
%
|
|
Amortization of intangible assets from Exelis Inc. acquisition
|
101
|
|
|
101
|
|
|
—
|
%
|
|
109
|
|
|
(7
|
%)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Years Ended
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(Dollars in millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
1,185
|
|
|
$
|
751
|
|
|
$
|
569
|
|
Net cash provided by (used in) investing activities
|
(159
|
)
|
|
(141
|
)
|
|
870
|
|
|||
Net cash used in financing activities
|
(781
|
)
|
|
(805
|
)
|
|
(1,438
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(3
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
242
|
|
|
(196
|
)
|
|
(3
|
)
|
|||
Cash and cash equivalents, beginning of year
|
288
|
|
|
484
|
|
|
487
|
|
|||
Cash and cash equivalents, end of year
|
$
|
530
|
|
|
$
|
288
|
|
|
$
|
484
|
|
•
|
$1,185 million of net cash provided by operating activities; and
|
•
|
$50 million of proceeds from exercises of employee stock options; partially offset by
|
•
|
$325 million used to pay cash dividends;
|
•
|
$281 million used for net repayments of borrowings, including repayment at maturity of the entire outstanding $300 million aggregate principal amount of the Floating Rate Notes due February 27, 2019;
|
•
|
$200 million used to repurchase shares of our common stock;
|
•
|
$161 million used for net additions of property, plant and equipment; and
|
•
|
$25 million used in other financing activities.
|
•
|
$751 million of net cash provided by operating activities, reflecting the impact of a $300 million voluntary pension contribution; and
|
•
|
$34 million of proceeds from exercises of employee stock options; more than offset by
|
•
|
$272 million used to pay cash dividends;
|
•
|
$272 million used to repurchase shares of our common stock;
|
•
|
$271 million used for net repayments of borrowings, including:
|
◦
|
$850 million in proceeds from the issuance of our 4.40% Notes due June 15, 2028,
|
◦
|
$300 million in proceeds from the issuance of our Floating Rate Notes due February 27, 2019,
|
◦
|
$250 million in proceeds from the issuance of our Floating Rate Notes due April 30, 2020,
|
◦
|
$500 million used for repayment at maturity of the entire outstanding aggregate principal amount of our 1.999% Notes due April 27, 2018,
|
◦
|
$415 million used for the optional redemption of our 4.40% Notes due December 15, 2020,
|
◦
|
$429 million used for the optional redemption of our 5.55% Notes due October 1, 2021,
|
◦
|
$269 million used for repayment of our remaining outstanding indebtedness under the 5-year tranche of our variable-rate term loans due May 29, 2020, and
|
•
|
$136 million used for net additions of property, plant and equipment; and
|
•
|
$24 million used in other financing activities.
|
|
|
|
|
Obligations Due
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Total
|
|
Less than 1 Year
|
|
Years
1 - 3
|
|
Years
3 - 5
|
|
After
5 Years
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(Dollars in millions)
|
||||||||||||||||||
Long-term debt
|
$
|
3,443
|
|
|
$
|
657
|
|
|
$
|
7
|
|
|
$
|
3
|
|
|
$
|
2,776
|
|
|
Purchase obligations (1)
|
1,736
|
|
|
1,160
|
|
|
533
|
|
|
42
|
|
|
1
|
|
||||||
Operating lease commitments
|
313
|
|
|
68
|
|
|
109
|
|
|
72
|
|
|
64
|
|
||||||
Interest on long-term debt
|
1,899
|
|
|
147
|
|
|
264
|
|
|
264
|
|
|
1,224
|
|
||||||
Minimum pension contributions (2)
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total contractual cash obligations (3)
|
$
|
7,394
|
|
|
$
|
2,035
|
|
|
$
|
913
|
|
|
$
|
381
|
|
|
$
|
4,065
|
|
•
|
Any obligation under certain guarantee contracts;
|
•
|
A retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets;
|
•
|
Any obligation, including a contingent obligation, under certain derivative instruments; and
|
•
|
Any obligation, including a contingent obligation, under a material variable interest in an unconsolidated entity that is held by, and material to, the registrant, where such entity provides financing, liquidity, market risk or credit risk support to the registrant, or engages in leasing, hedging or R&D services with the registrant.
|
|
|
|
Expiration of Commitments
|
||||||||||||||||
|
Total
|
|
Less than
1 Year
|
|
Year 2
|
|
Year 3
|
|
After 3 years
|
||||||||||
|
(Dollars in millions)
|
||||||||||||||||||
Surety bonds used for:
|
|
|
|
|
|
|
|
|
|
||||||||||
Bids
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Performance
|
512
|
|
|
362
|
|
|
34
|
|
|
58
|
|
|
58
|
|
|||||
|
515
|
|
|
365
|
|
|
34
|
|
|
58
|
|
|
58
|
|
|||||
Standby letters of credit used for:
|
|
|
|
|
|
|
|
|
|
||||||||||
Down payments
|
60
|
|
|
60
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Performance
|
148
|
|
|
93
|
|
|
6
|
|
|
5
|
|
|
44
|
|
|||||
Warranty
|
16
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
|
224
|
|
|
168
|
|
|
6
|
|
|
5
|
|
|
45
|
|
|||||
Total commitments
|
$
|
739
|
|
|
$
|
533
|
|
|
$
|
40
|
|
|
$
|
63
|
|
|
$
|
103
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Favorable adjustments
|
$
|
138
|
|
|
$
|
127
|
|
|
$
|
117
|
|
Unfavorable adjustments
|
(121
|
)
|
|
(146
|
)
|
|
(118
|
)
|
|||
Net operating income adjustments
|
$
|
17
|
|
|
$
|
(19
|
)
|
|
$
|
(1
|
)
|
Obligation assumptions as of:
|
June 28, 2019
|
|
June 29, 2018
|
Discount rate
|
3.35%
|
|
4.05%
|
Rate of future compensation increase
|
2.76%
|
|
2.76%
|
|
|
|
|
Cost assumptions for fiscal years:
|
2019
|
|
2018
|
Discount rate to determine service cost
|
3.89%
|
|
3.48%
|
Discount rate to determine interest cost
|
3.75%
|
|
3.28%
|
Expected return on plan assets
|
7.66%
|
|
7.66%
|
Rate of future compensation increase
|
2.76%
|
|
2.76%
|
|
Increase/(Decrease)
in Pension Expense |
||||||
|
25 Basis
Point Increase |
|
25 Basis
Point Decrease |
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Long-term rate of return on assets used to determine net periodic benefit cost
|
$
|
(12.0
|
)
|
|
$
|
12.0
|
|
Discount rate used to determine net periodic benefit cost
|
$
|
7.7
|
|
|
$
|
(2.6
|
)
|
•
|
We depend on U.S. Government customers for a significant portion of our revenue, and the loss of these relationships, a reduction in U.S. Government funding or a change in U.S. Government spending priorities could have an adverse impact on our business, financial condition, results of operations and cash flows.
|
•
|
We depend significantly on U.S. Government contracts, which often are only partially funded, subject to immediate termination, and heavily regulated and audited. The termination or failure to fund, or negative audit findings for, one or more of these contracts could have an adverse impact on our business, financial condition, results of operations and cash flows.
|
•
|
The U.S. Government’s budget deficit, the national debt and sequestration, as well as any inability of the U.S. Government to complete its budget process for any government fiscal year and consequently having to shut down or operate on funding levels equivalent to its prior fiscal year pursuant to a “continuing resolution,” could have an adverse impact on our business, financial condition, results of operations and cash flows.
|
•
|
We could be negatively impacted by a security breach, through cyber attack, cyber intrusion, insider threats or otherwise, or other significant disruption of our IT networks and related systems or of those we operate for certain of our customers.
|
•
|
Our ability to successfully manage ongoing business and organizational changes could impact our business results.
|
•
|
Our results of operations and cash flows are substantially affected by our mix of fixed-price, cost-plus and time-and-material type contracts. In particular, our fixed-price contracts could subject us to losses in the event of cost overruns or a significant increase in inflation.
|
•
|
We use estimates in accounting for many of our programs, and changes in our estimates could adversely affect our future financial results.
|
•
|
We derive a significant portion of our revenue from international operations and are subject to the risks of doing business internationally, including fluctuations in currency exchange rates.
|
•
|
The level of returns on defined benefit plan assets, changes in interest rates and other factors could affect our financial condition, results of operations and cash flows in future periods.
|
•
|
We may not be successful in obtaining the necessary export licenses to conduct certain operations abroad, and Congress may prevent proposed sales to certain foreign governments.
|
•
|
Disputes with our subcontractors or the inability of our subcontractors to perform, or our key suppliers to timely deliver our components, parts or services, could cause our products, systems or services to be produced or delivered in an untimely or unsatisfactory manner.
|
•
|
Our reputation and ability to do business may be impacted by the improper conduct of our employees, agents or business partners.
|
•
|
Our future success will depend on our ability to develop new products, systems, services and technologies that achieve market acceptance in our current and future markets.
|
•
|
We participate in markets that are often subject to uncertain economic conditions, which makes it difficult to estimate growth in our markets and, as a result, future income and expenditures.
|
•
|
We cannot predict the consequences of future geo-political events, but they may adversely affect the markets in which we operate, our ability to insure against risks, our operations or our profitability.
|
•
|
Strategic transactions, including acquisitions and divestitures, involve significant risks and uncertainties that could adversely affect our business, financial condition, results of operations and cash flows.
|
•
|
The outcome of litigation or arbitration in which we are involved from time to time is unpredictable, and an adverse decision in any such matter could have a material adverse effect on our financial condition, results of operations and cash flows.
|
•
|
We are subject to government investigations, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and future prospects.
|
•
|
Third parties have claimed in the past and may claim in the future that we are infringing directly or indirectly upon their intellectual property rights, and third parties may infringe upon our intellectual property rights.
|
•
|
Our commercial aviation products, systems and services business (which was a portion of L3’s business prior to the L3Harris Merger) is affected by global demand and economic factors that could negatively impact our financial results.
|
•
|
We face certain significant risk exposures and potential liabilities that may not be covered adequately by insurance or indemnity.
|
•
|
Changes in our effective tax rate may have an adverse effect on our results of operations.
|
•
|
Our level of indebtedness and our ability to make payments on or service our indebtedness and our unfunded defined benefit plans liability may adversely affect our financial and operating activities or our ability to incur additional debt.
|
•
|
A downgrade in our credit ratings could materially adversely affect our business.
|
•
|
Unforeseen environmental issues could have a material adverse effect on our business, financial condition, results of operations and cash flows.
|
•
|
We have significant operations in locations that could be materially and adversely impacted in the event of a natural disaster or other significant disruption.
|
•
|
Changes in future business or other market conditions could cause business investments and/or recorded goodwill or other long-term assets to become impaired, resulting in substantial losses and write-downs that would adversely affect our results of operations.
|
•
|
We must attract and retain key employees, and any failure to do so could seriously harm us.
|
•
|
Some of our workforce is represented by labor unions, so our business could be harmed in the event of a prolonged work stoppage.
|
•
|
We may fail to realize all of the anticipated benefits of the L3Harris Merger or those benefits may take longer to realize than expected. We may also encounter significant difficulties in integrating the businesses.
|
•
|
Certain business uncertainties arising from the L3Harris Merger could adversely affect our businesses and operations.
|
•
|
We have incurred and will incur direct and indirect costs as a result of the L3Harris Merger.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
|
Page
|
Consolidated Statement of Income — Fiscal Years ended June 28, 2019; June 29, 2018; and June 30, 2017
|
|
Consolidated Statement of Comprehensive Income — Fiscal Years ended June 28, 2019; June 29, 2018; and June 30, 2017
|
|
Consolidated Balance Sheet — June 28, 2019 and June 29, 2018
|
|
Consolidated Statement of Cash Flows — Fiscal Years ended June 28, 2019; June 29, 2018; and June 30, 2017
|
|
Consolidated Statement of Equity — Fiscal Years ended June 28, 2019; June 29, 2018; and June 30, 2017
|
|
Schedule II — Valuation and Qualifying Accounts — Fiscal Years ended June 28, 2019; June 29, 2018; and June 30, 2017
|
|
Fiscal Years Ended
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(In millions, except per share amounts)
|
||||||||||
Revenue from product sales and services
|
|
|
|
|
|
||||||
Revenue from product sales
|
$
|
5,638
|
|
|
$
|
5,038
|
|
|
$
|
4,667
|
|
Revenue from services
|
1,163
|
|
|
1,130
|
|
|
1,230
|
|
|||
|
6,801
|
|
|
6,168
|
|
|
5,897
|
|
|||
Cost of product sales and services
|
|
|
|
|
|
||||||
Cost of product sales
|
(3,615
|
)
|
|
(3,239
|
)
|
|
(3,058
|
)
|
|||
Cost of services
|
(852
|
)
|
|
(827
|
)
|
|
(796
|
)
|
|||
|
(4,467
|
)
|
|
(4,066
|
)
|
|
(3,854
|
)
|
|||
Engineering, selling and administrative expenses
|
(1,242
|
)
|
|
(1,182
|
)
|
|
(1,150
|
)
|
|||
Non-operating income
|
188
|
|
|
156
|
|
|
166
|
|
|||
Interest income
|
2
|
|
|
2
|
|
|
2
|
|
|||
Interest expense
|
(169
|
)
|
|
(170
|
)
|
|
(172
|
)
|
|||
Income from continuing operations before income taxes
|
1,113
|
|
|
908
|
|
|
889
|
|
|||
Income taxes
|
(160
|
)
|
|
(206
|
)
|
|
(261
|
)
|
|||
Income from continuing operations
|
953
|
|
|
702
|
|
|
628
|
|
|||
Discontinued operations, net of income taxes
|
(4
|
)
|
|
(3
|
)
|
|
(85
|
)
|
|||
Net income
|
$
|
949
|
|
|
$
|
699
|
|
|
$
|
543
|
|
Net income per common share
|
|
|
|
|
|
||||||
Basic
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
8.06
|
|
|
$
|
5.90
|
|
|
$
|
5.11
|
|
Discontinued operations
|
(0.03
|
)
|
|
(0.02
|
)
|
|
(0.69
|
)
|
|||
|
$
|
8.03
|
|
|
$
|
5.88
|
|
|
$
|
4.42
|
|
Diluted
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
7.89
|
|
|
$
|
5.78
|
|
|
$
|
5.04
|
|
Discontinued operations
|
(0.03
|
)
|
|
(0.02
|
)
|
|
(0.68
|
)
|
|||
|
$
|
7.86
|
|
|
$
|
5.76
|
|
|
$
|
4.36
|
|
|
Fiscal Years Ended
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(In millions)
|
||||||||||
Net income
|
$
|
949
|
|
|
$
|
699
|
|
|
$
|
543
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation gain (loss), net of income taxes
|
(7
|
)
|
|
15
|
|
|
(34
|
)
|
|||
Net unrealized gain (loss) on hedging derivatives, net of income taxes
|
(18
|
)
|
|
1
|
|
|
1
|
|
|||
Net unrecognized gain (loss) on postretirement obligations, net of income taxes
|
(480
|
)
|
|
93
|
|
|
200
|
|
|||
Other comprehensive income (loss), net of income taxes
|
(505
|
)
|
|
109
|
|
|
167
|
|
|||
Total comprehensive income
|
$
|
444
|
|
|
$
|
808
|
|
|
$
|
710
|
|
|
June 28, 2019
|
|
June 29, 2018
|
||||
|
|
|
|
||||
|
(In millions, except shares)
|
||||||
Assets
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
530
|
|
|
$
|
288
|
|
Receivables
|
457
|
|
|
466
|
|
||
Contract assets
|
807
|
|
|
782
|
|
||
Inventories
|
360
|
|
|
411
|
|
||
Income taxes receivable
|
191
|
|
|
174
|
|
||
Other current assets
|
100
|
|
|
103
|
|
||
Assets of disposal group held for sale
|
133
|
|
|
—
|
|
||
Total current assets
|
2,578
|
|
|
2,224
|
|
||
Non-current Assets
|
|
|
|
||||
Property, plant and equipment
|
894
|
|
|
900
|
|
||
Goodwill
|
5,340
|
|
|
5,372
|
|
||
Other intangible assets
|
870
|
|
|
989
|
|
||
Non-current deferred income taxes
|
173
|
|
|
119
|
|
||
Other non-current assets
|
262
|
|
|
247
|
|
||
Total non-current assets
|
7,539
|
|
|
7,627
|
|
||
|
$
|
10,117
|
|
|
$
|
9,851
|
|
Liabilities and Equity
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Short-term debt
|
$
|
103
|
|
|
$
|
78
|
|
Accounts payable
|
525
|
|
|
622
|
|
||
Contract liabilities
|
496
|
|
|
372
|
|
||
Compensation and benefits
|
161
|
|
|
142
|
|
||
Other accrued items
|
283
|
|
|
317
|
|
||
Income taxes payable
|
8
|
|
|
15
|
|
||
Current portion of long-term debt, net
|
656
|
|
|
304
|
|
||
Liabilities of disposal group held for sale
|
36
|
|
|
—
|
|
||
Total current liabilities
|
2,268
|
|
|
1,850
|
|
||
Non-current Liabilities
|
|
|
|
||||
Defined benefit plans
|
1,174
|
|
|
714
|
|
||
Long-term debt, net
|
2,763
|
|
|
3,408
|
|
||
Non-current deferred income taxes
|
12
|
|
|
79
|
|
||
Other long-term liabilities
|
537
|
|
|
522
|
|
||
Total non-current liabilities
|
4,486
|
|
|
4,723
|
|
||
Equity
|
|
|
|
||||
Shareholders’ Equity:
|
|
|
|
||||
Preferred stock, without par value; 1,000,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Common stock, $1.00 par value; 500,000,000 shares authorized; issued and outstanding 118,552,599 shares at June 28, 2019 and 118,280,120 shares at June 29, 2018
|
119
|
|
|
118
|
|
||
Other capital
|
1,778
|
|
|
1,714
|
|
||
Retained earnings
|
2,173
|
|
|
1,648
|
|
||
Accumulated other comprehensive loss
|
(707
|
)
|
|
(202
|
)
|
||
Total shareholders’ equity
|
3,363
|
|
|
3,278
|
|
||
|
$
|
10,117
|
|
|
$
|
9,851
|
|
|
Fiscal Years Ended
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Operating Activities
|
|
|
|
|
|
||||||
Net income
|
$
|
949
|
|
|
$
|
699
|
|
|
$
|
543
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Amortization of acquisition-related intangibles
|
115
|
|
|
117
|
|
|
151
|
|
|||
Depreciation and other amortization
|
143
|
|
|
142
|
|
|
160
|
|
|||
Share-based compensation
|
141
|
|
|
82
|
|
|
42
|
|
|||
Qualified pension plan contributions
|
(1
|
)
|
|
(301
|
)
|
|
(589
|
)
|
|||
Pension income
|
(136
|
)
|
|
(135
|
)
|
|
(97
|
)
|
|||
Impairment of goodwill and other assets
|
—
|
|
|
—
|
|
|
240
|
|
|||
Loss on sales of businesses, net
|
—
|
|
|
—
|
|
|
14
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
24
|
|
|
—
|
|
|||
(Increase) decrease in:
|
|
|
|
|
|
||||||
Accounts receivable
|
(9
|
)
|
|
(101
|
)
|
|
24
|
|
|||
Contract assets
|
(25
|
)
|
|
(76
|
)
|
|
156
|
|
|||
Inventories
|
(1
|
)
|
|
(19
|
)
|
|
(32
|
)
|
|||
Increase (decrease) in:
|
|
|
|
|
|
||||||
Accounts payable
|
(84
|
)
|
|
82
|
|
|
18
|
|
|||
Contract liabilities
|
124
|
|
|
81
|
|
|
(31
|
)
|
|||
Income taxes
|
22
|
|
|
202
|
|
|
111
|
|
|||
Other
|
(53
|
)
|
|
(46
|
)
|
|
(141
|
)
|
|||
Net cash provided by operating activities
|
1,185
|
|
|
751
|
|
|
569
|
|
|||
Investing Activities
|
|
|
|
|
|
||||||
Net additions of property, plant and equipment
|
(161
|
)
|
|
(136
|
)
|
|
(119
|
)
|
|||
Proceeds from sales of businesses, net
|
—
|
|
|
—
|
|
|
1,014
|
|
|||
Adjustment to proceeds from sale of business
|
—
|
|
|
(2
|
)
|
|
(25
|
)
|
|||
Other investing activities
|
2
|
|
|
(3
|
)
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
(159
|
)
|
|
(141
|
)
|
|
870
|
|
|||
Financing Activities
|
|
|
|
|
|
||||||
Net proceeds from borrowings
|
27
|
|
|
1,387
|
|
|
85
|
|
|||
Repayments of borrowings
|
(308
|
)
|
|
(1,658
|
)
|
|
(584
|
)
|
|||
Proceeds from exercises of employee stock options
|
50
|
|
|
34
|
|
|
54
|
|
|||
Repurchases of common stock
|
(200
|
)
|
|
(272
|
)
|
|
(710
|
)
|
|||
Cash dividends
|
(325
|
)
|
|
(272
|
)
|
|
(262
|
)
|
|||
Other financing activities
|
(25
|
)
|
|
(24
|
)
|
|
(21
|
)
|
|||
Net cash used in financing activities
|
(781
|
)
|
|
(805
|
)
|
|
(1,438
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(3
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
242
|
|
|
(196
|
)
|
|
(3
|
)
|
|||
Cash and cash equivalents, beginning of year
|
288
|
|
|
484
|
|
|
487
|
|
|||
Cash and cash equivalents, end of year
|
$
|
530
|
|
|
$
|
288
|
|
|
$
|
484
|
|
|
Common
Stock
|
|
Other
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions, except per share amounts)
|
||||||||||||||||||||||
Balance at July 1, 2016 — As Reported
|
$
|
125
|
|
|
$
|
2,096
|
|
|
$
|
1,330
|
|
|
$
|
(495
|
)
|
|
$
|
1
|
|
|
$
|
3,057
|
|
Cumulative effect of adopting ASC 606
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
|
|
(15
|
)
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
543
|
|
|
—
|
|
|
—
|
|
|
543
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
167
|
|
|
—
|
|
|
167
|
|
||||||
Net accumulated foreign currency loss reclassified to earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
52
|
|
||||||
Shares issued under stock incentive plans
|
1
|
|
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54
|
|
||||||
Share-based compensation expense
|
—
|
|
|
40
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
||||||
Repurchases and retirement of common stock
|
(6
|
)
|
|
(410
|
)
|
|
(278
|
)
|
|
—
|
|
|
—
|
|
|
(694
|
)
|
||||||
Forward contract component of accelerated share repurchase
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
||||||
Cash dividends ($2.12 per share)
|
—
|
|
|
—
|
|
|
(262
|
)
|
|
—
|
|
|
—
|
|
|
(262
|
)
|
||||||
Other activity related to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Balance at June 30, 2017
|
120
|
|
|
1,741
|
|
|
1,318
|
|
|
(276
|
)
|
|
—
|
|
|
2,903
|
|
||||||
Reclassifications due to adoption of accounting standards updates
|
—
|
|
|
—
|
|
|
35
|
|
|
(35
|
)
|
|
—
|
|
|
—
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
699
|
|
|
—
|
|
|
—
|
|
|
699
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
109
|
|
|
—
|
|
|
109
|
|
||||||
Shares issued under stock incentive plans
|
—
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
||||||
Shares issued under defined contribution plans
|
—
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
||||||
Share-based compensation expense
|
—
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49
|
|
||||||
Repurchases and retirement of common stock
|
(2
|
)
|
|
(178
|
)
|
|
(132
|
)
|
|
—
|
|
|
—
|
|
|
(312
|
)
|
||||||
Forward contract component of accelerated share repurchase
|
—
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
||||||
Cash dividends ($2.28 per share)
|
—
|
|
|
—
|
|
|
(272
|
)
|
|
—
|
|
|
—
|
|
|
(272
|
)
|
||||||
Balance at June 29, 2018
|
118
|
|
|
1,714
|
|
|
1,648
|
|
|
(202
|
)
|
|
—
|
|
|
3,278
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
949
|
|
|
—
|
|
|
—
|
|
|
949
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
(505
|
)
|
|
—
|
|
|
(505
|
)
|
||||||
Shares issued under stock incentive plans
|
1
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50
|
|
||||||
Shares issued under defined contribution plans
|
1
|
|
|
82
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83
|
|
||||||
Share-based compensation expense
|
—
|
|
|
57
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
||||||
Repurchases and retirement of common stock
|
(1
|
)
|
|
(124
|
)
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|
(224
|
)
|
||||||
Cash dividends ($2.74 per share)
|
—
|
|
|
—
|
|
|
(325
|
)
|
|
—
|
|
|
—
|
|
|
(325
|
)
|
||||||
Balance at June 28, 2019
|
$
|
119
|
|
|
$
|
1,778
|
|
|
$
|
2,173
|
|
|
$
|
(707
|
)
|
|
$
|
—
|
|
|
$
|
3,363
|
|
•
|
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 markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are observable or are derived principally from, or corroborated by, observable market data by correlation or other means.
|
•
|
Level 3 — Unobservable inputs that are supported by little or no market activity, are significant to the fair value of the assets or liabilities, and reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability developed using the best information available in the circumstances.
|
Segment
|
|
Average Warranty Period
|
Communication Systems
|
|
One to five years
|
Electronic Systems
|
|
One to two years
|
Space and Intelligence Systems
|
|
60 days to two years
|
•
|
The customer simultaneously receives and consumes the benefits provided by our performance as we perform;
|
•
|
Our performance creates or enhances an asset (for example, work in process) that the customer controls as the asset is created or enhanced; or
|
•
|
Our performance does not create an asset with an alternative use to us, and we have an enforceable right to payment for performance completed to date.
|
|
Fiscal Year Ended June 29, 2018
|
||||||||||||||
|
As Previously Reported
|
|
Effect of Adopting ASC 606
|
|
Effect of Adopting ASU 2017-07
|
|
As Recast
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(In millions, except per share amounts)
|
||||||||||||||
Revenue from product sales and services
|
|
|
|
|
|
|
|
||||||||
Revenue from product sales
|
$
|
5,062
|
|
|
$
|
(24
|
)
|
|
$
|
—
|
|
|
$
|
5,038
|
|
Revenue from services
|
1,120
|
|
|
10
|
|
|
—
|
|
|
1,130
|
|
||||
|
6,182
|
|
|
(14
|
)
|
|
—
|
|
|
6,168
|
|
||||
Cost of product sales and services
|
|
|
|
|
|
|
|
||||||||
Cost of product sales
|
(3,106
|
)
|
|
14
|
|
|
(147
|
)
|
|
(3,239
|
)
|
||||
Cost of services
|
(825
|
)
|
|
(2
|
)
|
|
—
|
|
|
(827
|
)
|
||||
|
(3,931
|
)
|
|
12
|
|
|
(147
|
)
|
|
(4,066
|
)
|
||||
Engineering, selling and administrative expenses
|
(1,129
|
)
|
|
(16
|
)
|
|
(37
|
)
|
|
(1,182
|
)
|
||||
Non-operating income (loss)
|
(28
|
)
|
|
—
|
|
|
184
|
|
|
156
|
|
||||
Interest income
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Interest expense
|
(170
|
)
|
|
—
|
|
|
—
|
|
|
(170
|
)
|
||||
Income from continuing operations before income taxes
|
926
|
|
|
(18
|
)
|
|
—
|
|
|
908
|
|
||||
Income taxes
|
(205
|
)
|
|
(1
|
)
|
|
—
|
|
|
(206
|
)
|
||||
Income from continuing operations
|
721
|
|
|
(19
|
)
|
|
—
|
|
|
702
|
|
||||
Discontinued operations, net of income taxes
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||
Net income
|
$
|
718
|
|
|
$
|
(19
|
)
|
|
$
|
—
|
|
|
$
|
699
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
6.06
|
|
|
$
|
(0.16
|
)
|
|
$
|
—
|
|
|
$
|
5.90
|
|
Discontinued operations
|
(0.02
|
)
|
|
—
|
|
|
—
|
|
|
(0.02
|
)
|
||||
|
$
|
6.04
|
|
|
$
|
(0.16
|
)
|
|
$
|
—
|
|
|
$
|
5.88
|
|
Diluted
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
5.94
|
|
|
$
|
(0.16
|
)
|
|
$
|
—
|
|
|
$
|
5.78
|
|
Discontinued operations
|
(0.02
|
)
|
|
—
|
|
|
—
|
|
|
(0.02
|
)
|
||||
|
$
|
5.92
|
|
|
$
|
(0.16
|
)
|
|
$
|
—
|
|
|
$
|
5.76
|
|
|
Fiscal Year Ended June 30, 2017
|
||||||||||||||
|
As Previously Reported
|
|
Effect of Adopting ASC 606
|
|
Effect of Adopting ASU 2017-07
|
|
As Recast
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(In millions, except per share amounts)
|
||||||||||||||
Revenue from product sales and services
|
|
|
|
|
|
|
|
||||||||
Revenue from product sales
|
$
|
4,667
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,667
|
|
Revenue from services
|
1,233
|
|
|
(3
|
)
|
|
—
|
|
|
1,230
|
|
||||
|
5,900
|
|
|
(3
|
)
|
|
—
|
|
|
5,897
|
|
||||
Cost of product sales and services
|
|
|
|
|
|
|
|
||||||||
Cost of product sales
|
(2,964
|
)
|
|
10
|
|
|
(104
|
)
|
|
(3,058
|
)
|
||||
Cost of services
|
(770
|
)
|
|
2
|
|
|
(28
|
)
|
|
(796
|
)
|
||||
|
(3,734
|
)
|
|
12
|
|
|
(132
|
)
|
|
(3,854
|
)
|
||||
Engineering, selling and administrative expenses
|
(1,093
|
)
|
|
(25
|
)
|
|
(32
|
)
|
|
(1,150
|
)
|
||||
Non-operating income
|
2
|
|
|
—
|
|
|
164
|
|
|
166
|
|
||||
Interest income
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Interest expense
|
(172
|
)
|
|
—
|
|
|
—
|
|
|
(172
|
)
|
||||
Income from continuing operations before income taxes
|
905
|
|
|
(16
|
)
|
|
—
|
|
|
889
|
|
||||
Income taxes
|
(267
|
)
|
|
6
|
|
|
—
|
|
|
(261
|
)
|
||||
Income from continuing operations
|
638
|
|
|
(10
|
)
|
|
—
|
|
|
628
|
|
||||
Discontinued operations, net of income taxes
|
(85
|
)
|
|
—
|
|
|
—
|
|
|
(85
|
)
|
||||
Net income
|
$
|
553
|
|
|
$
|
(10
|
)
|
|
$
|
—
|
|
|
$
|
543
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
5.19
|
|
|
$
|
(0.08
|
)
|
|
$
|
—
|
|
|
$
|
5.11
|
|
Discontinued operations
|
(0.69
|
)
|
|
—
|
|
|
—
|
|
|
(0.69
|
)
|
||||
|
$
|
4.50
|
|
|
$
|
(0.08
|
)
|
|
$
|
—
|
|
|
$
|
4.42
|
|
Diluted
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
5.12
|
|
|
$
|
(0.08
|
)
|
|
$
|
—
|
|
|
$
|
5.04
|
|
Discontinued operations
|
(0.68
|
)
|
|
—
|
|
|
—
|
|
|
(0.68
|
)
|
||||
|
$
|
4.44
|
|
|
$
|
(0.08
|
)
|
|
$
|
—
|
|
|
$
|
4.36
|
|
|
June 29, 2018
|
|
June 30, 2017
|
||||||||||||||||||||
|
As Previously Reported
|
|
Effect of Adopting ASC 606
|
|
As Recast
|
|
As Previously Reported
|
|
Effect of adopting ASC 606
|
|
As Recast
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
288
|
|
|
$
|
—
|
|
|
$
|
288
|
|
|
$
|
484
|
|
|
$
|
—
|
|
|
$
|
484
|
|
Receivables
|
735
|
|
|
(269
|
)
|
|
466
|
|
|
623
|
|
|
(258
|
)
|
|
365
|
|
||||||
Contract assets
|
—
|
|
|
782
|
|
|
782
|
|
|
—
|
|
|
706
|
|
|
706
|
|
||||||
Inventories
|
925
|
|
|
(514
|
)
|
|
411
|
|
|
841
|
|
|
(449
|
)
|
|
392
|
|
||||||
Income taxes receivable
|
174
|
|
|
—
|
|
|
174
|
|
|
24
|
|
|
—
|
|
|
24
|
|
||||||
Other current assets
|
101
|
|
|
2
|
|
|
103
|
|
|
101
|
|
|
—
|
|
|
101
|
|
||||||
Total current assets
|
2,223
|
|
|
1
|
|
|
2,224
|
|
|
2,073
|
|
|
(1
|
)
|
|
2,072
|
|
||||||
Non-current Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Property, plant and equipment
|
900
|
|
|
—
|
|
|
900
|
|
|
904
|
|
|
—
|
|
|
904
|
|
||||||
Goodwill
|
5,372
|
|
|
—
|
|
|
5,372
|
|
|
5,366
|
|
|
—
|
|
|
5,366
|
|
||||||
Other intangible assets
|
989
|
|
|
—
|
|
|
989
|
|
|
1,104
|
|
|
—
|
|
|
1,104
|
|
||||||
Non-current deferred income taxes
|
116
|
|
|
3
|
|
|
119
|
|
|
409
|
|
|
15
|
|
|
424
|
|
||||||
Other non-current assets
|
239
|
|
|
8
|
|
|
247
|
|
|
234
|
|
|
8
|
|
|
242
|
|
||||||
Total non-current assets
|
7,616
|
|
|
11
|
|
|
7,627
|
|
|
8,017
|
|
|
23
|
|
|
8,040
|
|
||||||
|
$
|
9,839
|
|
|
$
|
12
|
|
|
$
|
9,851
|
|
|
$
|
10,090
|
|
|
$
|
22
|
|
|
$
|
10,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-term debt
|
$
|
78
|
|
|
$
|
—
|
|
|
$
|
78
|
|
|
$
|
80
|
|
|
$
|
—
|
|
|
$
|
80
|
|
Accounts payable
|
622
|
|
|
—
|
|
|
622
|
|
|
540
|
|
|
—
|
|
|
540
|
|
||||||
Advanced payments and unearned income
|
314
|
|
|
(314
|
)
|
|
—
|
|
|
252
|
|
|
(252
|
)
|
|
$
|
—
|
|
|||||
Contract liabilities
|
—
|
|
|
372
|
|
|
372
|
|
|
—
|
|
|
291
|
|
|
291
|
|
||||||
Compensation and benefits
|
142
|
|
|
—
|
|
|
142
|
|
|
140
|
|
|
—
|
|
|
140
|
|
||||||
Other accrued items
|
313
|
|
|
4
|
|
|
317
|
|
|
329
|
|
|
3
|
|
|
332
|
|
||||||
Income taxes payable
|
15
|
|
|
—
|
|
|
15
|
|
|
31
|
|
|
(1
|
)
|
|
30
|
|
||||||
Current portion of long-term debt, net
|
304
|
|
|
—
|
|
|
304
|
|
|
554
|
|
|
—
|
|
|
554
|
|
||||||
Total current liabilities
|
1,788
|
|
|
62
|
|
|
1,850
|
|
|
1,926
|
|
|
41
|
|
|
1,967
|
|
||||||
Non-current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Defined benefit plans
|
714
|
|
|
—
|
|
|
714
|
|
|
1,278
|
|
|
—
|
|
|
1,278
|
|
||||||
Long-term debt, net
|
3,408
|
|
|
—
|
|
|
3,408
|
|
|
3,396
|
|
|
—
|
|
|
3,396
|
|
||||||
Non-current deferred income taxes
|
90
|
|
|
(11
|
)
|
|
79
|
|
|
34
|
|
|
—
|
|
|
34
|
|
||||||
Other long-term liabilities
|
517
|
|
|
5
|
|
|
522
|
|
|
528
|
|
|
6
|
|
|
534
|
|
||||||
Total non-current liabilities
|
4,729
|
|
|
(6
|
)
|
|
4,723
|
|
|
5,236
|
|
|
6
|
|
|
5,242
|
|
||||||
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Shareholders’ Equity:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Common stock
|
118
|
|
|
—
|
|
|
118
|
|
|
120
|
|
|
—
|
|
|
120
|
|
||||||
Other capital
|
1,714
|
|
|
—
|
|
|
1,714
|
|
|
1,741
|
|
|
—
|
|
|
1,741
|
|
||||||
Retained earnings
|
1,692
|
|
|
(44
|
)
|
|
1,648
|
|
|
1,343
|
|
|
(25
|
)
|
|
1,318
|
|
||||||
Accumulated other comprehensive loss
|
(202
|
)
|
|
—
|
|
|
(202
|
)
|
|
(276
|
)
|
|
—
|
|
|
(276
|
)
|
||||||
Total equity
|
3,322
|
|
|
(44
|
)
|
|
3,278
|
|
|
2,928
|
|
|
(25
|
)
|
|
2,903
|
|
||||||
|
$
|
9,839
|
|
|
$
|
12
|
|
|
$
|
9,851
|
|
|
$
|
10,090
|
|
|
$
|
22
|
|
|
$
|
10,112
|
|
|
Fiscal Year Ended
|
||||||||||||||||||||||
|
June 29, 2018
|
|
June 30, 2017
|
||||||||||||||||||||
|
As Previously Reported
|
|
Effect of Adopting ASC 606
|
|
As Recast
|
|
As Previously Reported
|
|
Effect of Adopting ASC 606
|
|
As Recast
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Net income
|
$
|
718
|
|
|
(19
|
)
|
|
$
|
699
|
|
|
$
|
553
|
|
|
$
|
(10
|
)
|
|
$
|
543
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amortization of acquisition-related intangibles(1)
|
117
|
|
|
—
|
|
|
117
|
|
|
151
|
|
|
—
|
|
|
151
|
|
||||||
Depreciation and other amortization(1)
|
142
|
|
|
—
|
|
|
142
|
|
|
160
|
|
|
—
|
|
|
160
|
|
||||||
Share-based compensation
|
82
|
|
|
—
|
|
|
82
|
|
|
42
|
|
|
—
|
|
|
42
|
|
||||||
Qualified pension plan contributions
|
(301
|
)
|
|
—
|
|
|
(301
|
)
|
|
(589
|
)
|
|
—
|
|
|
(589
|
)
|
||||||
Pension income
|
(135
|
)
|
|
—
|
|
|
(135
|
)
|
|
(97
|
)
|
|
—
|
|
|
(97
|
)
|
||||||
Impairment of goodwill and other assets
|
—
|
|
|
—
|
|
|
—
|
|
|
240
|
|
|
—
|
|
|
240
|
|
||||||
Los on sales of businesses, net
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
||||||
Loss on extinguishment of debt
|
24
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
(Increase) decrease in:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts receivable
|
(112
|
)
|
|
11
|
|
|
(101
|
)
|
|
111
|
|
|
(87
|
)
|
|
24
|
|
||||||
Contract assets
|
—
|
|
|
(76
|
)
|
|
(76
|
)
|
|
—
|
|
|
156
|
|
|
156
|
|
||||||
Inventories
|
(84
|
)
|
|
65
|
|
|
(19
|
)
|
|
28
|
|
|
(60
|
)
|
|
(32
|
)
|
||||||
Increase (decrease) in:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts payable
|
82
|
|
|
—
|
|
|
82
|
|
|
18
|
|
|
—
|
|
|
18
|
|
||||||
Advance payments and unearned income
|
63
|
|
|
(63
|
)
|
|
—
|
|
|
(42
|
)
|
|
42
|
|
|
—
|
|
||||||
Contract liabilities
|
—
|
|
|
81
|
|
|
81
|
|
|
—
|
|
|
(31
|
)
|
|
(31
|
)
|
||||||
Income taxes
|
202
|
|
|
—
|
|
|
202
|
|
|
131
|
|
|
(20
|
)
|
|
111
|
|
||||||
Other
|
(47
|
)
|
|
1
|
|
|
(46
|
)
|
|
(151
|
)
|
|
10
|
|
|
(141
|
)
|
||||||
Net cash provided by operating activities
|
$
|
751
|
|
|
$
|
—
|
|
|
$
|
751
|
|
|
$
|
569
|
|
|
$
|
—
|
|
|
$
|
569
|
|
(1)
|
“Amortization of acquisition-related intangibles” includes amortization of non-Exelis Inc. acquisition-related intangibles, which was previously included in the “Depreciation and amortization” line item in our Consolidated Statement of Cash Flows in our Fiscal 2018 Annual Report on Form 10-K.
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Revenue from product sales and services
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,039
|
|
Cost of product sales and services
|
—
|
|
|
—
|
|
|
(885
|
)
|
|||
Engineering, selling and administrative expenses
|
—
|
|
|
—
|
|
|
(91
|
)
|
|||
Impairment of goodwill and other assets
|
—
|
|
|
—
|
|
|
(240
|
)
|
|||
Non-operating loss, net(1)
|
(5
|
)
|
|
(8
|
)
|
|
(7
|
)
|
|||
Loss before income taxes
|
(5
|
)
|
|
(8
|
)
|
|
(184
|
)
|
|||
Loss on sale of discontinued operations, net(2)
|
—
|
|
|
—
|
|
|
(11
|
)
|
|||
Income tax benefit
|
1
|
|
|
5
|
|
|
110
|
|
|||
Discontinued operations, net of income taxes
|
$
|
(4
|
)
|
|
$
|
(3
|
)
|
|
$
|
(85
|
)
|
(1)
|
“Non-operating loss, net” included a loss of $2 million in fiscal 2017 related to our former broadcast communications business (“Broadcast Communications”), which was divested in fiscal 2013.
|
(2)
|
“Loss on sale of discontinued operations, net” in fiscal 2017 included a $3 million decrease to the loss on the sale of Broadcast Communications.
|
|
2017
|
||
|
|
||
|
(In millions)
|
||
Depreciation and amortization
|
$
|
39
|
|
Capital expenditures
|
4
|
|
|
Significant non-cash items:
|
|
||
Impairment of goodwill and other assets
|
(240
|
)
|
|
Loss on sale of discontinued operations, net
|
(11
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Revenue from product sales and services
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
895
|
|
Cost of product sales and services
|
—
|
|
|
—
|
|
|
(777
|
)
|
|||
Engineering, selling and administrative expenses
|
—
|
|
|
—
|
|
|
(68
|
)
|
|||
Impairment of goodwill and other assets
|
—
|
|
|
—
|
|
|
(240
|
)
|
|||
Non-operating loss
|
(1
|
)
|
|
(4
|
)
|
|
(9
|
)
|
|||
Loss before income taxes
|
(1
|
)
|
|
(4
|
)
|
|
(199
|
)
|
|||
Loss on sale of discontinued operations, net
|
—
|
|
|
—
|
|
|
(28
|
)
|
|||
Income tax benefit
|
—
|
|
|
5
|
|
|
69
|
|
|||
Discontinued operations, net of income taxes
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
$
|
(158
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Revenue from product sales and services
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
144
|
|
Cost of product sales and services
|
—
|
|
|
—
|
|
|
(108
|
)
|
|||
Engineering, selling and administrative expenses
|
—
|
|
|
—
|
|
|
(23
|
)
|
|||
Non-operating income (loss)
|
(3
|
)
|
|
(4
|
)
|
|
4
|
|
|||
Income (loss) before income taxes
|
(3
|
)
|
|
(4
|
)
|
|
17
|
|
|||
Gain on sale of discontinued operations
|
—
|
|
|
—
|
|
|
14
|
|
|||
Income tax benefit
|
1
|
|
|
—
|
|
|
41
|
|
|||
Discontinued operations, net of income taxes
|
$
|
(2
|
)
|
|
$
|
(4
|
)
|
|
$
|
72
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Revenue from product sales and services
|
$
|
166
|
|
|
$
|
148
|
|
|
$
|
121
|
|
Income before income taxes
|
27
|
|
|
23
|
|
|
11
|
|
|||
|
|
|
|
|
|
||||||
Receivables
|
$
|
18
|
|
|
|
|
|
||||
Inventories
|
52
|
|
|
|
|
|
|||||
Property, plant and equipment
|
29
|
|
|
|
|
|
|||||
Goodwill
|
30
|
|
|
|
|
|
|||||
Other intangible assets
|
4
|
|
|
|
|
|
|||||
Assets of disposal group held for sale
|
$
|
133
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
13
|
|
|
|
|
|
||||
Contract liabilities
|
1
|
|
|
|
|
|
|||||
Compensation and benefits
|
3
|
|
|
|
|
|
|||||
Other accrued items
|
3
|
|
|
|
|
|
|||||
Defined benefit plans
|
16
|
|
|
|
|
|
|||||
Liabilities of disposal group held for sale
|
$
|
36
|
|
|
|
|
|
|
June 28, 2019
|
|
June 29, 2018
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Accounts receivable
|
$
|
459
|
|
|
$
|
468
|
|
Less allowances for collection losses
|
(2
|
)
|
|
(2
|
)
|
||
|
$
|
457
|
|
|
$
|
466
|
|
|
June 28, 2019
|
|
June 29, 2018
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Contract assets
|
$
|
807
|
|
|
$
|
782
|
|
Contract liabilities, current
|
(496
|
)
|
|
(372
|
)
|
||
Contract liabilities, noncurrent(1)
|
(42
|
)
|
|
(35
|
)
|
||
Net contract assets
|
$
|
269
|
|
|
$
|
375
|
|
(1)
|
Non-current portion of contract liabilities are included as a component of the “Other long-term liabilities” line item in our Consolidated Balance Sheet.
|
|
June 28, 2019
|
|
June 29, 2018
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Unbilled contract receivables, gross
|
$
|
916
|
|
|
$
|
881
|
|
Progress payments
|
(109
|
)
|
|
(99
|
)
|
||
|
$
|
807
|
|
|
$
|
782
|
|
|
June 28, 2019
|
|
June 29, 2018
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Finished products
|
$
|
77
|
|
|
$
|
91
|
|
Work in process
|
90
|
|
|
121
|
|
||
Raw materials and supplies
|
193
|
|
|
199
|
|
||
|
$
|
360
|
|
|
$
|
411
|
|
|
June 28, 2019
|
|
June 29, 2018
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Land
|
$
|
40
|
|
|
$
|
43
|
|
Software capitalized for internal use
|
187
|
|
|
171
|
|
||
Buildings
|
631
|
|
|
620
|
|
||
Machinery and equipment
|
1,429
|
|
|
1,349
|
|
||
|
2,287
|
|
|
2,183
|
|
||
Less accumulated depreciation and amortization
|
(1,393
|
)
|
|
(1,283
|
)
|
||
|
$
|
894
|
|
|
$
|
900
|
|
|
Communication
Systems |
|
Electronic
Systems |
|
Space and Intelligence
Systems |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(In millions)
|
||||||||||||||
Balance at June 30, 2017
|
$
|
785
|
|
|
$
|
3,104
|
|
|
$
|
1,477
|
|
|
$
|
5,366
|
|
Currency translation adjustments
|
—
|
|
|
3
|
|
|
3
|
|
|
6
|
|
||||
Balance at June 29, 2018
|
785
|
|
|
3,107
|
|
|
1,480
|
|
|
5,372
|
|
||||
Currency translation adjustments
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
||||
Decrease from reclassification to assets of disposal group held for sale(1)
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
||||
Balance at June 28, 2019
|
$
|
755
|
|
|
$
|
3,106
|
|
|
$
|
1,479
|
|
|
$
|
5,340
|
|
(1)
|
In connection with our pending divestiture of the Harris Night Vision business, which is reported as part of our Communication Systems segment, we assigned $30 million of goodwill to the Harris Night Vision business during the quarter ended June 28, 2019 on a relative fair value basis, because the pending divestiture of the Harris Night Vision business represents the disposal of a portion of a reporting unit. Harris Night Vision assets, including assigned goodwill, are presented as “Assets of disposal group held for sale” in our Consolidated Balance Sheet as of June 28, 2019. See Note 3: Discontinued Operations and Divestitures and Note 26: Subsequent Events in these Notes for additional information.
|
|
June 28, 2019
|
|
June 29, 2018
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Customer relationships
|
$
|
1,203
|
|
|
$
|
419
|
|
|
$
|
784
|
|
|
$
|
1,206
|
|
|
$
|
327
|
|
|
$
|
879
|
|
Developed technologies
|
206
|
|
|
136
|
|
|
70
|
|
|
208
|
|
|
119
|
|
|
89
|
|
||||||
Trade names
|
42
|
|
|
26
|
|
|
16
|
|
|
43
|
|
|
22
|
|
|
21
|
|
||||||
Other
|
2
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|
—
|
|
||||||
Total intangible assets
|
$
|
1,453
|
|
|
$
|
583
|
|
|
$
|
870
|
|
|
$
|
1,459
|
|
|
$
|
470
|
|
|
$
|
989
|
|
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Balance at beginning of fiscal year
|
$
|
24
|
|
|
$
|
26
|
|
Warranty provision for sales
|
16
|
|
|
13
|
|
||
Settlements
|
(11
|
)
|
|
(14
|
)
|
||
Other, including adjustments for divestitures and foreign currency translation
|
(4
|
)
|
|
(1
|
)
|
||
Balance at end of fiscal year
|
$
|
25
|
|
|
$
|
24
|
|
|
June 28, 2019
|
|
June 29, 2018
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Variable-rate debt:
|
|
|
|
||||
Floating rate notes, due February 27, 2019
|
$
|
—
|
|
|
$
|
300
|
|
Floating rate notes, due April 30, 2020
|
250
|
|
|
250
|
|
||
Total variable-rate debt
|
250
|
|
|
550
|
|
||
Fixed-rate debt:
|
|
|
|
||||
2.7% notes, due April 27, 2020
|
400
|
|
|
400
|
|
||
3.832% notes, due April 27, 2025
|
600
|
|
|
600
|
|
||
7.0% debentures, due January 15, 2026
|
100
|
|
|
100
|
|
||
6.35% debentures, due February 1, 2028
|
26
|
|
|
26
|
|
||
4.400% notes, due June 15, 2028
|
850
|
|
|
850
|
|
||
4.854% notes, due April 27, 2035
|
400
|
|
|
400
|
|
||
6.15% notes, due December 15, 2040
|
300
|
|
|
300
|
|
||
5.054% notes, due April 27, 2045
|
500
|
|
|
500
|
|
||
Other
|
17
|
|
|
14
|
|
||
Total fixed-rate debt
|
3,193
|
|
|
3,190
|
|
||
Total debt
|
3,443
|
|
|
3,740
|
|
||
Less: unamortized discounts and issuance costs
|
(24
|
)
|
|
(28
|
)
|
||
Total debt, net
|
3,419
|
|
|
3,712
|
|
||
Less: current portion of long-term debt, net
|
(656
|
)
|
|
(304
|
)
|
||
Total long-term debt, net
|
$
|
2,763
|
|
|
$
|
3,408
|
|
•
|
$400 million in aggregate principal amount of 2.700% notes due April 27, 2020 (the “2.700% 2020 Notes”),
|
•
|
$600 million in aggregate principal amount of 3.832% notes due April 27, 2025 (the “2025 Notes”),
|
•
|
$400 million in aggregate principal amount of 4.854% notes due April 27, 2035 (the “2035 Notes”), and
|
•
|
$500 million in aggregate principal amount of 5.054% notes due April 27, 2045 (the “2045 Notes” and collectively with the 2.700% 2020 Notes, 2025 Notes and 2035 Notes, the “Exelis Notes”).
|
|
|
June 28, 2019
|
|
June 29, 2018
|
||||||||||||
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(In millions)
|
||||||||||||||
Long-term debt (including current portion)(1)
|
$
|
3,419
|
|
|
$
|
3,802
|
|
|
$
|
3,712
|
|
|
$
|
3,848
|
|
(1)
|
The fair value was estimated using a market approach based on quoted market prices for our debt traded in the secondary market. If our long-term debt in our balance sheet were measured at fair value, it would be categorized in Level 2 of the fair value hierarchy.
|
|
|
June 28, 2019
|
|
June 29, 2018
|
||||||||||||
|
|
Total
|
|
Level 1
|
|
Total
|
|
Level 1
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(In millions)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|||||||||
Deferred compensation plan assets:(1)
|
|
|
|
|
|
|
|
|||||||||
Equity and fixed income securities
|
$
|
38
|
|
|
$
|
38
|
|
|
$
|
46
|
|
|
$
|
46
|
|
|
Investments measured at NAV:
|
|
|
|
|
|
|
|
|||||||||
Equity and fixed income funds
|
61
|
|
|
|
|
63
|
|
|
|
|||||||
Corporate-owned life insurance
|
28
|
|
|
|
|
27
|
|
|
|
|||||||
Total investments measured at NAV
|
89
|
|
|
|
|
90
|
|
|
|
|||||||
Total fair value of deferred compensation plan assets
|
$
|
127
|
|
|
|
|
$
|
136
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|||||||||
Deferred compensation plan liabilities:(2)
|
|
|
|
|
|
|
|
|||||||||
Equity securities and mutual funds
|
$
|
25
|
|
|
$
|
25
|
|
|
$
|
38
|
|
|
$
|
38
|
|
|
Investments measured at NAV:
|
|
|
|
|
|
|
|
|||||||||
Common/collective trusts and guaranteed investment contracts
|
132
|
|
|
|
|
111
|
|
|
|
|||||||
Total fair value of deferred compensation plan liabilities
|
$
|
157
|
|
|
|
|
$
|
149
|
|
|
|
(1)
|
Represents diversified assets held in a “rabbi trust” associated with our non-qualified deferred compensation plans, which we include in the “Other current
|
(2)
|
Primarily represents obligations to pay benefits under certain non-qualified deferred compensation plans, which we include in the “Compensation and
|
|
June 28, 2019
|
|
June 29, 2018
|
||||||||||||||||||||
|
Pension
|
|
Other
Benefits
|
|
Total
|
|
Pension
|
|
Other
Benefits |
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Fair value of plan assets
|
$
|
4,958
|
|
|
$
|
201
|
|
|
$
|
5,159
|
|
|
$
|
5,098
|
|
|
$
|
207
|
|
|
$
|
5,305
|
|
Projected benefit obligation
|
(6,123
|
)
|
|
(221
|
)
|
|
(6,344
|
)
|
|
(5,774
|
)
|
|
(233
|
)
|
|
(6,007
|
)
|
||||||
Funded status
|
$
|
(1,165
|
)
|
|
$
|
(20
|
)
|
|
$
|
(1,185
|
)
|
|
$
|
(676
|
)
|
|
$
|
(26
|
)
|
|
$
|
(702
|
)
|
Consolidated Balance Sheet line item amounts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other non-current assets
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
15
|
|
Compensation and benefits
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(3
|
)
|
||||||
Liabilities of disposal group held for sale
|
(16
|
)
|
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Defined benefit plans
|
(1,154
|
)
|
|
(20
|
)
|
|
(1,174
|
)
|
|
(689
|
)
|
|
(25
|
)
|
|
(714
|
)
|
|
June 28, 2019
|
|
June 29, 2018
|
||||||||||||||||||||
|
Pension
|
|
Other
Benefits
|
|
Total
|
|
Pension
|
|
Other
Benefits
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Net actuarial loss (gain)
|
$
|
781
|
|
|
$
|
(36
|
)
|
|
$
|
745
|
|
|
$
|
156
|
|
|
$
|
(46
|
)
|
|
$
|
110
|
|
Net prior service cost (credit)
|
6
|
|
|
(1
|
)
|
|
5
|
|
|
4
|
|
|
(1
|
)
|
|
3
|
|
||||||
|
$
|
787
|
|
|
$
|
(37
|
)
|
|
$
|
750
|
|
|
$
|
160
|
|
|
$
|
(47
|
)
|
|
$
|
113
|
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
Pension
|
|
Other
Benefits
|
|
Total
|
|
Pension
|
|
Other
Benefits
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Benefit obligation at beginning of fiscal year
|
$
|
5,774
|
|
|
$
|
233
|
|
|
$
|
6,007
|
|
|
$
|
6,140
|
|
|
$
|
265
|
|
|
$
|
6,405
|
|
Service cost
|
36
|
|
|
—
|
|
|
36
|
|
|
39
|
|
|
1
|
|
|
40
|
|
||||||
Interest cost
|
209
|
|
|
8
|
|
|
217
|
|
|
195
|
|
|
7
|
|
|
202
|
|
||||||
Actuarial loss (gain)
|
514
|
|
|
(1
|
)
|
|
513
|
|
|
(169
|
)
|
|
(22
|
)
|
|
(191
|
)
|
||||||
Amendments
|
3
|
|
|
—
|
|
|
3
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||
Benefits paid
|
(381
|
)
|
|
(19
|
)
|
|
(400
|
)
|
|
(402
|
)
|
|
(18
|
)
|
|
(420
|
)
|
||||||
Expenses paid
|
(30
|
)
|
|
—
|
|
|
(30
|
)
|
|
(35
|
)
|
|
—
|
|
|
(35
|
)
|
||||||
Curtailments
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Foreign exchange
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Benefit obligation at end of fiscal year
|
$
|
6,123
|
|
|
$
|
221
|
|
|
$
|
6,344
|
|
|
$
|
5,774
|
|
|
$
|
233
|
|
|
$
|
6,007
|
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
Pension
|
|
Other
Benefits
|
|
Total
|
|
Pension
|
|
Other
Benefits
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Change in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Plan assets at beginning of fiscal year
|
$
|
5,098
|
|
|
$
|
207
|
|
|
$
|
5,305
|
|
|
$
|
4,921
|
|
|
$
|
212
|
|
|
$
|
5,133
|
|
Actual return on plan assets
|
271
|
|
|
11
|
|
|
282
|
|
|
307
|
|
|
14
|
|
|
321
|
|
||||||
Employer contributions
|
3
|
|
|
2
|
|
|
5
|
|
|
303
|
|
|
(1
|
)
|
|
302
|
|
||||||
Benefits paid
|
(381
|
)
|
|
(19
|
)
|
|
(400
|
)
|
|
(402
|
)
|
|
(18
|
)
|
|
(420
|
)
|
||||||
Expenses paid
|
(30
|
)
|
|
—
|
|
|
(30
|
)
|
|
(35
|
)
|
|
—
|
|
|
(35
|
)
|
||||||
Foreign exchange
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Plan assets at end of fiscal year
|
$
|
4,958
|
|
|
$
|
201
|
|
|
$
|
5,159
|
|
|
$
|
5,098
|
|
|
$
|
207
|
|
|
$
|
5,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Funded status at end of fiscal year
|
$
|
(1,165
|
)
|
|
$
|
(20
|
)
|
|
$
|
(1,185
|
)
|
|
$
|
(676
|
)
|
|
$
|
(26
|
)
|
|
$
|
(702
|
)
|
|
June 28, 2019
|
|
June 29, 2018
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Projected benefit obligation
|
$
|
6,041
|
|
|
$
|
5,694
|
|
Accumulated benefit obligation
|
6,041
|
|
|
5,694
|
|
||
Fair value of plan assets
|
4,864
|
|
|
5,004
|
|
|
Pension
|
|
Other Benefits
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Net periodic benefit income(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
36
|
|
|
$
|
39
|
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
209
|
|
|
195
|
|
|
184
|
|
|
8
|
|
|
7
|
|
|
8
|
|
||||||
Expected return on plan assets
|
(382
|
)
|
|
(369
|
)
|
|
(340
|
)
|
|
(16
|
)
|
|
(16
|
)
|
|
(17
|
)
|
||||||
Amortization of net actuarial loss (gain)
|
—
|
|
|
—
|
|
|
1
|
|
|
(6
|
)
|
|
(1
|
)
|
|
—
|
|
||||||
Effect of curtailments or settlements
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit income
|
(136
|
)
|
|
(135
|
)
|
|
(97
|
)
|
|
(14
|
)
|
|
(9
|
)
|
|
(8
|
)
|
||||||
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net actuarial loss (gain)
|
$
|
626
|
|
|
$
|
(106
|
)
|
|
$
|
(284
|
)
|
|
$
|
4
|
|
|
$
|
(20
|
)
|
|
$
|
(38
|
)
|
Curtailment loss recognized
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Prior service cost
|
3
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recognized prior service (cost) credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of net actuarial gain (loss)
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
6
|
|
|
1
|
|
|
—
|
|
||||||
Amortization of prior service cost
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total change recognized in other comprehensive loss
|
627
|
|
|
(104
|
)
|
|
(285
|
)
|
|
10
|
|
|
(19
|
)
|
|
(38
|
)
|
||||||
Total impact from net periodic benefit cost and changes in other comprehensive loss
|
$
|
491
|
|
|
$
|
(239
|
)
|
|
$
|
(382
|
)
|
|
$
|
(4
|
)
|
|
$
|
(28
|
)
|
|
$
|
(46
|
)
|
|
Pension
|
|
Other
Benefits |
|
Total
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Net actuarial (gain) loss
|
$
|
1
|
|
|
$
|
(5
|
)
|
|
$
|
(4
|
)
|
Prior service cost
|
1
|
|
|
—
|
|
|
1
|
|
|||
|
$
|
2
|
|
|
$
|
(5
|
)
|
|
$
|
(3
|
)
|
Obligation assumptions as of:
|
June 28, 2019
|
|
June 29, 2018
|
|
|
|||
Discount rate
|
3.35
|
%
|
|
4.05
|
%
|
|
|
|
Rate of future compensation increase
|
2.76
|
%
|
|
2.76
|
%
|
|
|
|
|
|
|
|
|
|
|||
Cost assumptions for fiscal years:
|
2019
|
|
2018
|
|
2017
|
|||
Discount rate to determine service cost
|
3.89
|
%
|
|
3.48
|
%
|
|
3.80
|
%
|
Discount rate to determine interest cost
|
3.75
|
%
|
|
3.28
|
%
|
|
2.94
|
%
|
Expected return on plan assets
|
7.66
|
%
|
|
7.66
|
%
|
|
7.65
|
%
|
Rate of future compensation increase
|
2.76
|
%
|
|
2.76
|
%
|
|
2.75
|
%
|
Obligation assumptions as of:
|
June 28, 2019
|
|
June 29, 2018
|
|
|
|||
Discount rate
|
3.21
|
%
|
|
3.99
|
%
|
|
|
|
Rate of future compensation increase
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|||
Cost assumptions for fiscal year:
|
2019
|
|
2018
|
|
2017
|
|||
Discount rate to determine service cost
|
4.14
|
%
|
|
3.62
|
%
|
|
3.52
|
%
|
Discount rate to determine interest cost
|
3.62
|
%
|
|
3.04
|
%
|
|
2.60
|
%
|
Rate of future compensation increase
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Target Asset
Allocation
|
|||
Equity investments
|
45
|
%
|
—
|
75%
|
Fixed income investments
|
20
|
%
|
—
|
42%
|
Hedge funds
|
5
|
%
|
—
|
15%
|
Cash and cash equivalents
|
0
|
%
|
—
|
10%
|
•
|
Domestic and international equities, which include common and preferred shares, domestic listed and foreign listed equity securities, open-ended and closed-ended mutual funds and exchange traded funds, are generally valued at the closing price reported on the major market exchanges on which the individual securities are traded at the measurement date. Because these assets are traded predominantly on liquid, widely traded public exchanges, equity securities are categorized as Level 1 assets.
|
•
|
Private equity funds, which include buy-out, mezzanine, venture capital, distressed asset and secondary funds, are typically limited partnership investment structures. Private equity funds are valued using a market approach based on NAV calculated by the funds and are not publicly available. Private equity funds generally have liquidity restrictions that extend for ten or more years. At June 28, 2019 and June 29, 2018, our defined benefit plans had future unfunded commitments totaling $355 million and $246 million, respectively, related to private equity fund investments.
|
•
|
Hedge funds, which include equity long/short, event-driven, fixed-income arbitrage and global macro strategies, are typically limited partnership investment structures. Limited partnership interests in hedge funds are valued using a market approach based on NAV calculated by the funds and are not publicly available. Hedge funds generally permit redemption on a quarterly or more frequent basis with 90 or fewer days-notice. At each of June 28, 2019 and June 29, 2018, our defined benefit plans had no future unfunded commitments related to hedge fund investments.
|
•
|
Fixed income investments, which include U.S. Government securities and investment and non-investment grade corporate bonds, are generally valued using pricing models that use verifiable, observable market data such as interest rates, benchmark yield curves and credit spreads, bids provided by brokers or dealers, or quoted prices of securities with similar characteristics. Fixed income investments are generally categorized as Level 2 assets.
|
•
|
Other is primarily comprised of guaranteed insurance contracts valued at book value, which approximates fair value, calculated using the prior-year balance adjusted for investment returns and changes in cash flows.
|
•
|
Cash and cash equivalents are primarily comprised of short-term money market funds valued at cost, which approximates fair value, or valued at quoted market prices of identical instruments. Cash and currency are categorized as Level 1 assets; cash equivalents, such as money market funds or short-term commingled funds, are categorized as Level 2 assets.
|
•
|
Certain investments that are valued using the NAV per share (or its equivalent) as a practical expedient are not categorized in the fair value hierarchy and are included in the table to permit reconciliation of the fair value hierarchy to the aggregate postretirement benefit plan assets.
|
|
June 28, 2019
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(In millions)
|
||||||||||||||
Asset Category
|
|
|
|
|
|
|
|
||||||||
Equities:
|
|
|
|
|
|
|
|
||||||||
Domestic equities
|
$
|
1,173
|
|
|
$
|
1,173
|
|
|
$
|
—
|
|
|
$
|
—
|
|
International equities
|
896
|
|
|
896
|
|
|
—
|
|
|
—
|
|
||||
Fixed income:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
923
|
|
|
—
|
|
|
906
|
|
|
17
|
|
||||
Government securities
|
332
|
|
|
—
|
|
|
332
|
|
|
—
|
|
||||
Other
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Cash and cash equivalents
|
59
|
|
|
12
|
|
|
47
|
|
|
—
|
|
||||
Total
|
3,385
|
|
|
$
|
2,081
|
|
|
$
|
1,285
|
|
|
$
|
19
|
|
|
Investments Measured at NAV
|
|
|
|
|
|
|
|
||||||||
Equity funds
|
703
|
|
|
|
|
|
|
|
|||||||
Fixed income funds
|
362
|
|
|
|
|
|
|
|
|||||||
Hedge funds
|
331
|
|
|
|
|
|
|
|
|||||||
Private equity funds
|
294
|
|
|
|
|
|
|
|
|||||||
Total Investments Measured at NAV
|
1,690
|
|
|
|
|
|
|
|
|||||||
Receivables, net
|
84
|
|
|
|
|
|
|
|
|||||||
Total fair value of plan assets
|
$
|
5,159
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
|
June 29, 2018
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3(1)
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(In millions)
|
||||||||||||||
Asset Category
|
|
|
|
|
|
|
|
||||||||
Equities:
|
|
|
|
|
|
|
|
||||||||
Domestic equities
|
$
|
1,221
|
|
|
$
|
1,189
|
|
|
$
|
32
|
|
|
$
|
—
|
|
International equities
|
903
|
|
|
899
|
|
|
4
|
|
|
—
|
|
||||
Fixed income:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
811
|
|
|
—
|
|
|
800
|
|
|
11
|
|
||||
Government securities
|
335
|
|
|
—
|
|
|
335
|
|
|
—
|
|
||||
Other
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Cash and cash equivalents
|
209
|
|
|
6
|
|
|
203
|
|
|
—
|
|
||||
Total
|
3,481
|
|
|
$
|
2,094
|
|
|
$
|
1,374
|
|
|
$
|
13
|
|
|
Investments Measured at NAV
|
|
|
|
|
|
|
|
||||||||
Equity funds
|
714
|
|
|
|
|
|
|
|
|||||||
Fixed income funds
|
318
|
|
|
|
|
|
|
|
|||||||
Hedge funds(1)
|
395
|
|
|
|
|
|
|
|
|||||||
Private equity funds(1)
|
401
|
|
|
|
|
|
|
|
|||||||
Total Investments Measured at NAV
|
1,828
|
|
|
|
|
|
|
|
|||||||
Payables, net
|
(4
|
)
|
|
|
|
|
|
|
|||||||
Total fair value of plan assets
|
$
|
5,305
|
|
|
|
|
|
|
|
(1)
|
We have reclassified certain prior-year amounts to conform with current-year classifications. Reclassifications include certain alternative investments that were previously included as “Level 3” and are now reflected in “Hedge funds” and “Private equity funds” under “Investments Measured at NAV.”
|
|
Fixed Income
|
|
Other
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Level 3 balance — June 30, 2017
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Purchases, net
|
11
|
|
|
—
|
|
|
11
|
|
|||
Level 3 balance — June 29, 2018
|
11
|
|
|
2
|
|
|
13
|
|
|||
Unrealized gains, net
|
1
|
|
|
—
|
|
|
1
|
|
|||
Purchases, net
|
5
|
|
|
—
|
|
|
5
|
|
|||
Level 3 balance — June 28, 2019
|
$
|
17
|
|
|
$
|
2
|
|
|
$
|
19
|
|
|
Pension
|
|
Other
Benefits(1)
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Estimated benefit payments due:
|
|
|
|
|
|
||||||
Year 1
|
$
|
414
|
|
|
$
|
22
|
|
|
$
|
436
|
|
Year 2
|
392
|
|
|
22
|
|
|
414
|
|
|||
Year 3
|
392
|
|
|
21
|
|
|
413
|
|
|||
Year 4
|
390
|
|
|
20
|
|
|
410
|
|
|||
Year 5
|
387
|
|
|
20
|
|
|
407
|
|
|||
Years 6 to 10
|
1,859
|
|
|
78
|
|
|
1,937
|
|
(1)
|
Projected payments for Other Benefits reflect gross payments from the Company, excluding subsidies, which are expected to approximate 10 percent of gross payments.
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Total expense
|
$
|
58
|
|
|
$
|
51
|
|
|
$
|
42
|
|
Included in:
|
|
|
|
|
|
||||||
Cost of product sales and services
|
$
|
12
|
|
|
$
|
8
|
|
|
$
|
3
|
|
Engineering, selling and administrative expenses
|
46
|
|
|
43
|
|
|
39
|
|
|||
Income from continuing operations
|
58
|
|
|
51
|
|
|
42
|
|
|||
Tax effect on share-based compensation expense
|
(14
|
)
|
|
(16
|
)
|
|
(16
|
)
|
|||
Total share-based compensation expense after-tax
|
$
|
44
|
|
|
$
|
35
|
|
|
$
|
26
|
|
|
2019
|
|
2018
|
|
2017
|
|||
|
|
|
|
|
|
|||
Expected dividends
|
1.6
|
%
|
|
1.8
|
%
|
|
2.4
|
%
|
Expected volatility
|
19.9
|
%
|
|
19.3
|
%
|
|
21.8
|
%
|
Risk-free interest rates
|
2.7
|
%
|
|
1.8
|
%
|
|
1.2
|
%
|
Expected term (years)
|
5.03
|
|
|
5.00
|
|
|
5.03
|
|
|
Shares
|
|
Weighted
Average
Exercise
Price
Per Share
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic Value
|
|||||
|
|
|
|
|
(In years)
|
|
(In millions)
|
|||||
Stock options outstanding June 29, 2018
|
4,698,370
|
|
|
$
|
74.50
|
|
|
|
|
|
||
Stock options forfeited or expired
|
(37,059
|
)
|
|
$
|
111.47
|
|
|
|
|
|
||
Stock options granted
|
270,963
|
|
|
$
|
163.23
|
|
|
|
|
|
||
Stock options exercised
|
(737,073
|
)
|
|
$
|
69.07
|
|
|
|
|
|
||
Stock options outstanding June 28, 2019
|
4,195,201
|
|
|
$
|
80.86
|
|
|
5.81
|
|
$
|
454.20
|
|
Stock options exercisable June 28, 2019
|
3,338,448
|
|
|
$
|
70.32
|
|
|
5.24
|
|
$
|
396.63
|
|
|
Shares
|
|
Weighted-Average
Grant-Date Fair Value
Per Share
|
|||
Nonvested stock options June 29, 2018
|
1,613,401
|
|
|
$
|
14.66
|
|
Stock options granted
|
270,963
|
|
|
$
|
30.05
|
|
Stock options vested
|
(1,027,611
|
)
|
|
$
|
14.04
|
|
Nonvested stock options June 28, 2019
|
856,753
|
|
|
$
|
20.28
|
|
|
Shares or Units
|
|
Weighted-Average
Grant Price Per Share or Unit
|
|||
Restricted stock and restricted stock units outstanding at June 29, 2018
|
414,690
|
|
|
$
|
127.70
|
|
Restricted stock and restricted stock units granted
|
94,163
|
|
|
$
|
160.05
|
|
Restricted stock and restricted stock units vested
|
(119,748
|
)
|
|
$
|
130.77
|
|
Restricted stock and restricted stock units forfeited
|
(23,107
|
)
|
|
$
|
142.86
|
|
Restricted stock and restricted stock units outstanding at June 28, 2019
|
365,998
|
|
|
$
|
134.06
|
|
|
Shares or Units
|
|
Weighted-Average
Grant Price
Per Share or Unit
|
|||
Performance share units outstanding at June 29, 2018
|
625,293
|
|
|
$
|
98.11
|
|
Performance share units granted
|
168,913
|
|
|
$
|
155.12
|
|
Performance share units vested
|
(266,203
|
)
|
|
$
|
77.80
|
|
Performance share units forfeited
|
(18,254
|
)
|
|
$
|
124.83
|
|
Performance share units outstanding at June 28, 2019
|
509,749
|
|
|
$
|
126.73
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions, except per share amounts)
|
||||||||||
Income from continuing operations
|
$
|
953
|
|
|
$
|
702
|
|
|
$
|
628
|
|
Adjustments for participating securities outstanding
|
(2
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||
Income from continuing operations used in per basic and diluted common share calculations (A)
|
$
|
951
|
|
|
$
|
700
|
|
|
$
|
627
|
|
Basic weighted average common shares outstanding (B)
|
118.0
|
|
|
118.6
|
|
|
122.6
|
|
|||
Impact of dilutive share-based awards
|
2.5
|
|
|
2.5
|
|
|
1.7
|
|
|||
Diluted weighted average common shares outstanding (C)
|
120.5
|
|
|
121.1
|
|
|
124.3
|
|
|||
Income from continuing operations per basic common share (A)/(B)
|
$
|
8.06
|
|
|
$
|
5.90
|
|
|
$
|
5.11
|
|
Income from continuing operations per diluted common share (A)/(C)
|
$
|
7.89
|
|
|
$
|
5.78
|
|
|
$
|
5.04
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Pension income(1)
|
$
|
186
|
|
|
$
|
184
|
|
|
$
|
164
|
|
Loss on extinguishment of debt(2)
|
—
|
|
|
(24
|
)
|
|
—
|
|
|||
Adjustment to gain on sale of business
|
—
|
|
|
—
|
|
|
2
|
|
|||
Net income (loss) related to intellectual property matters
|
1
|
|
|
(1
|
)
|
|
—
|
|
|||
Gain on sale of investment
|
1
|
|
|
—
|
|
|
—
|
|
|||
Other
|
—
|
|
|
(3
|
)
|
|
—
|
|
|||
|
$
|
188
|
|
|
$
|
156
|
|
|
$
|
166
|
|
(1)
|
Non-service components of net periodic pension and postretirement benefit costs, including interest cost, expected return on plan assets and amortization of net actuarial gain is reported as part of the “Non-operating income” line item in our Consolidated Statement of Income as a result of our adoption of ASU 2017-07 as discussed in Note 2: Accounting Changes or Recent Accounting Pronouncements.
|
(2)
|
Losses associated with our optional redemption of the entire outstanding $400 million principal amount of our 4.4% Notes due December 15, 2020 and $400 million principal amount of our 5.55% Notes due October 1, 2021, the repayment in full of $253 million in remaining outstanding indebtedness under the 5-year tranche of our $1.3 billion senior unsecured term loan facility and the termination of our 2015 Credit Agreement in fiscal 2018. See. Note 13: Debt for additional information.
|
|
June 28, 2019
|
|
June 29, 2018
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Foreign currency translation, net of income taxes of $2 million at each of June 28, 2019 and June 29, 2018
|
$
|
(106
|
)
|
|
$
|
(99
|
)
|
Net unrealized loss on hedging derivatives, net of income taxes of $13 million and $7 million at June 28, 2019 and June 29, 2018, respectively
|
(38
|
)
|
|
(20
|
)
|
||
Unrecognized postretirement obligations, net of income taxes of $188 million and $30 million at June 28, 2019 and June 29, 2018, respectively
|
(563
|
)
|
|
(83
|
)
|
||
|
$
|
(707
|
)
|
|
$
|
(202
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
United States
|
$
|
105
|
|
|
$
|
(141
|
)
|
|
$
|
117
|
|
International
|
9
|
|
|
12
|
|
|
9
|
|
|||
State and local
|
8
|
|
|
(11
|
)
|
|
6
|
|
|||
|
122
|
|
|
(140
|
)
|
|
132
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
United States
|
15
|
|
|
324
|
|
|
121
|
|
|||
International
|
(3
|
)
|
|
(3
|
)
|
|
1
|
|
|||
State and local
|
26
|
|
|
25
|
|
|
7
|
|
|||
|
38
|
|
|
346
|
|
|
129
|
|
|||
|
$
|
160
|
|
|
$
|
206
|
|
|
$
|
261
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Continuing operations
|
$
|
160
|
|
|
$
|
206
|
|
|
$
|
261
|
|
Discontinued operations
|
(1
|
)
|
|
(5
|
)
|
|
(110
|
)
|
|||
Total income tax provision
|
$
|
159
|
|
|
$
|
201
|
|
|
$
|
151
|
|
|
2019
|
|
2018
|
|
2017
|
|||
U.S. statutory income tax rate
|
21.0
|
%
|
|
28.1
|
%
|
|
35.0
|
%
|
State taxes
|
2.4
|
|
|
1.9
|
|
|
1.0
|
|
International income
|
(0.5
|
)
|
|
(0.5
|
)
|
|
(1.3
|
)
|
Research and development tax credit
|
(4.5
|
)
|
|
(2.9
|
)
|
|
(2.0
|
)
|
Foreign derived intangibles income deduction
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
Change in valuation allowance
|
(1.8
|
)
|
|
0.2
|
|
|
(0.2
|
)
|
U.S. production activity benefit
|
—
|
|
|
(0.9
|
)
|
|
(0.5
|
)
|
Excess tax benefits on equity-based compensation
|
(2.2
|
)
|
|
(1.8
|
)
|
|
(2.6
|
)
|
Settlement of tax audits
|
—
|
|
|
(2.2
|
)
|
|
—
|
|
U.S. tax reform
|
—
|
|
|
0.4
|
|
|
—
|
|
Other items
|
1.3
|
|
|
0.4
|
|
|
(0.1
|
)
|
Effective income tax rate
|
14.4
|
%
|
|
22.7
|
%
|
|
29.3
|
%
|
|
June 28, 2019
|
|
June 29, 2018
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Inventory valuations
|
$
|
24
|
|
|
$
|
21
|
|
Accruals
|
152
|
|
|
178
|
|
||
Deferred revenue
|
12
|
|
|
7
|
|
||
Domestic tax loss and credit carryforwards
|
54
|
|
|
86
|
|
||
International tax loss and credit carryforwards
|
38
|
|
|
33
|
|
||
Share-based compensation
|
28
|
|
|
26
|
|
||
Capital loss carryforwards
|
95
|
|
|
101
|
|
||
Pension and other post-employment benefits
|
305
|
|
|
188
|
|
||
Unrealized loss on interest rate hedges
|
13
|
|
|
7
|
|
||
Unrecognized tax benefits
|
4
|
|
|
4
|
|
||
Other
|
10
|
|
|
13
|
|
||
Total deferred tax assets
|
735
|
|
|
664
|
|
||
Less: valuation allowance(1)
|
(159
|
)
|
|
(181
|
)
|
||
Total deferred tax assets, net of valuation allowance
|
576
|
|
|
483
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Property, plant and equipment
|
(71
|
)
|
|
(65
|
)
|
||
Unbilled receivables
|
(65
|
)
|
|
(86
|
)
|
||
Acquired intangibles
|
(260
|
)
|
|
(268
|
)
|
||
Unremitted earnings of foreign subsidiaries
|
(19
|
)
|
|
(24
|
)
|
||
Total deferred tax liabilities
|
(415
|
)
|
|
(443
|
)
|
||
Total deferred tax assets, net of valuation allowance
|
$
|
161
|
|
|
$
|
40
|
|
|
June 28, 2019
|
|
June 29, 2018
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Non-current deferred income tax assets
|
$
|
173
|
|
|
$
|
119
|
|
Non-current deferred income tax liabilities
|
(12
|
)
|
|
(79
|
)
|
||
|
$
|
161
|
|
|
$
|
40
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Balance at beginning of fiscal year
|
$
|
102
|
|
|
$
|
90
|
|
|
$
|
63
|
|
Additions based on tax positions taken during current fiscal year
|
31
|
|
|
17
|
|
|
52
|
|
|||
Additions based on tax positions taken during prior fiscal years
|
80
|
|
|
23
|
|
|
—
|
|
|||
Decreases based on tax positions taken during prior fiscal years
|
(9
|
)
|
|
(28
|
)
|
|
(25
|
)
|
|||
Balance at end of fiscal year
|
$
|
204
|
|
|
$
|
102
|
|
|
$
|
90
|
|
•
|
Communication Systems, serving markets in tactical communications and defense products, including tactical ground and airborne radio communications solutions and night vision technology, and in public safety networks;
|
•
|
Electronic Systems, providing electronic warfare, avionics, and command, control, communications, computers, intelligence, surveillance and reconnaissance solutions for defense and classified customers and mission-critical communication systems for civil and military aviation and other customers; and
|
•
|
Space and Intelligence Systems, providing intelligence, space protection, geospatial, complete Earth observation, universe exploration, positioning, navigation and timing, and environmental solutions for national security, defense, civil and commercial customers, using advanced sensors, antennas and payloads, as well as ground processing and information analytics.
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Revenue
|
|
|
|
|
|
||||||
Communication Systems
|
$
|
2,177
|
|
|
$
|
1,904
|
|
|
$
|
1,754
|
|
Electronic Systems
|
2,583
|
|
|
2,365
|
|
|
2,245
|
|
|||
Space and Intelligence Systems
|
2,057
|
|
|
1,913
|
|
|
1,904
|
|
|||
Corporate eliminations
|
(16
|
)
|
|
(14
|
)
|
|
(6
|
)
|
|||
|
$
|
6,801
|
|
|
$
|
6,168
|
|
|
$
|
5,897
|
|
Income from Continuing Operations before Income Taxes
|
|
|
|
|
|
||||||
Segment Operating Income:
|
|
|
|
|
|
||||||
Communication Systems
|
$
|
654
|
|
|
$
|
566
|
|
|
$
|
514
|
|
Electronic Systems
|
499
|
|
|
432
|
|
|
457
|
|
|||
Space and Intelligence Systems
|
359
|
|
|
331
|
|
|
314
|
|
|||
Unallocated corporate expense and corporate eliminations(1)
|
(234
|
)
|
|
(225
|
)
|
|
(228
|
)
|
|||
Pension adjustment
|
(186
|
)
|
|
(184
|
)
|
|
(164
|
)
|
|||
Non-operating income(2)
|
188
|
|
|
156
|
|
|
166
|
|
|||
Net interest expense
|
(167
|
)
|
|
(168
|
)
|
|
(170
|
)
|
|||
Total
|
$
|
1,113
|
|
|
$
|
908
|
|
|
$
|
889
|
|
(1)
|
Unallocated corporate expense and corporate eliminations includes: (i) $65 million of L3Harris Merger-related transaction and integration costs in fiscal 2019, (ii) $47 million of charges related to our decision to transition and exit a commercial air-to-ground LTE radio communications line of business and other items in fiscal 2018, (iii) a $12 million non-cash adjustment for deferred compensation in fiscal 2018, (iii) $5 million and $58 million of Exelis acquisition-related and other charges in fiscal 2018 and 2017, respectively, and (iv) $101 million in each of fiscal 2019 and 2018 and $109 million in fiscal 2017, for amortization of identifiable intangible assets acquired as a result of our acquisition of Exelis. Because the acquisition of Exelis benefited the entire Company as opposed to any individual segment, the amortization of identifiable intangible assets acquired in the Exelis acquisition was recorded as unallocated corporate expense. Corporate eliminations of intersegment profits were not material in fiscal 2019, 2018 or 2017.
|
(2)
|
Non-operating income in fiscal 2018 includes $27 million of losses and other costs related to debt refinancing. Additional information regarding non-operating income is set forth in Note 20: Non-Operating Income.
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Revenue By Geographical Region
|
|
|
|
|
|
||||||
United States
|
$
|
1,213
|
|
|
$
|
983
|
|
|
$
|
811
|
|
International
|
964
|
|
|
921
|
|
|
943
|
|
|||
|
$
|
2,177
|
|
|
$
|
1,904
|
|
|
$
|
1,754
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Revenue By Customer Relationship
|
|
|
|
|
|
||||||
Prime contractor
|
$
|
1,671
|
|
|
$
|
1,670
|
|
|
$
|
1,653
|
|
Subcontractor
|
912
|
|
|
695
|
|
|
592
|
|
|||
|
$
|
2,583
|
|
|
$
|
2,365
|
|
|
$
|
2,245
|
|
Revenue By Contract Type
|
|
|
|
|
|
||||||
Fixed-price(1)
|
$
|
2,092
|
|
|
$
|
1,900
|
|
|
$
|
1,833
|
|
Cost-reimbursable
|
491
|
|
|
465
|
|
|
412
|
|
|||
|
$
|
2,583
|
|
|
$
|
2,365
|
|
|
$
|
2,245
|
|
Revenue By Geographical Region
|
|
|
|
|
|
||||||
United States
|
$
|
2,095
|
|
|
$
|
1,890
|
|
|
$
|
1,769
|
|
International
|
488
|
|
|
475
|
|
|
476
|
|
|||
|
$
|
2,583
|
|
|
$
|
2,365
|
|
|
$
|
2,245
|
|
(1)
|
Includes revenue derived from time-and-materials contracts.
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Revenue By Customer Relationship
|
|
|
|
|
|
||||||
Prime contractor
|
$
|
1,409
|
|
|
$
|
1,384
|
|
|
$
|
1,369
|
|
Subcontractor
|
648
|
|
|
529
|
|
|
535
|
|
|||
|
$
|
2,057
|
|
|
$
|
1,913
|
|
|
$
|
1,904
|
|
Revenue By Contract Type
|
|
|
|
|
|
||||||
Fixed-price(1)
|
$
|
748
|
|
|
$
|
544
|
|
|
$
|
448
|
|
Cost-reimbursable
|
1,309
|
|
|
1,369
|
|
|
1,456
|
|
|||
|
$
|
2,057
|
|
|
$
|
1,913
|
|
|
$
|
1,904
|
|
Revenue By Geographical Region
|
|
|
|
|
|
||||||
United States
|
$
|
2,003
|
|
|
$
|
1,861
|
|
|
$
|
1,821
|
|
International
|
54
|
|
|
52
|
|
|
83
|
|
|||
|
$
|
2,057
|
|
|
$
|
1,913
|
|
|
$
|
1,904
|
|
(1)
|
Includes revenue derived from time-and-materials contracts.
|
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(In millions)
|
||||||
Total Assets
|
|
|
|
||||
Communication Systems
|
$
|
1,565
|
|
|
$
|
1,567
|
|
Electronic Systems
|
4,188
|
|
|
4,174
|
|
||
Space and Intelligence Systems
|
2,208
|
|
|
2,193
|
|
||
Corporate(1)
|
2,156
|
|
|
1,917
|
|
||
|
$
|
10,117
|
|
|
$
|
9,851
|
|
(1)
|
Identifiable intangible assets acquired in connection with our acquisition of Exelis in the fourth quarter of fiscal 2015 were recorded as Corporate assets because they benefited the entire Company as opposed to any individual segment. Exelis identifiable intangible asset balances of continuing operations recorded as Corporate assets were approximately $869 million and $974 million as of June 28, 2019 and June 29, 2018, respectively. Corporate assets also consisted of cash, income taxes receivable, deferred income taxes, deferred compensation plan investments, buildings and equipment and identifiable intangibles, and also included any assets and liabilities from discontinued operations and divestitures. See Note 3: Discontinued Operations and Divestitures for additional information.
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(In millions)
|
||||||||||
Capital Expenditures
|
|
|
|
|
|
||||||
Communication Systems
|
$
|
33
|
|
|
$
|
26
|
|
|
$
|
14
|
|
Electronic Systems
|
74
|
|
|
57
|
|
|
40
|
|
|||
Space and Intelligence Systems
|
31
|
|
|
33
|
|
|
34
|
|
|||
Corporate
|
23
|
|
|
20
|
|
|
27
|
|
|||
Discontinued operations
|
—
|
|
|
—
|
|
|
4
|
|
|||
|
$
|
161
|
|
|
$
|
136
|
|
|
$
|
119
|
|
Depreciation and Amortization
|
|
|
|
|
|
||||||
Communication Systems
|
$
|
50
|
|
|
$
|
57
|
|
|
$
|
64
|
|
Electronic Systems
|
50
|
|
|
44
|
|
|
29
|
|
|||
Space and Intelligence Systems
|
33
|
|
|
36
|
|
|
37
|
|
|||
Corporate
|
125
|
|
|
122
|
|
|
142
|
|
|||
Discontinued operations
|
—
|
|
|
—
|
|
|
39
|
|
|||
|
$
|
258
|
|
|
$
|
259
|
|
|
$
|
311
|
|
Geographical Information for Continuing Operations
|
|
|
|
|
|
||||||
U.S. operations:
|
|
|
|
|
|
||||||
Revenue
|
$
|
6,530
|
|
|
$
|
5,854
|
|
|
$
|
5,637
|
|
Long-lived assets
|
$
|
866
|
|
|
$
|
892
|
|
|
$
|
896
|
|
International operations:
|
|
|
|
|
|
||||||
Revenue
|
$
|
271
|
|
|
$
|
314
|
|
|
$
|
260
|
|
Long-lived assets
|
$
|
28
|
|
|
$
|
8
|
|
|
$
|
8
|
|
•
|
Integrated Mission Systems, including intelligence, surveillance and reconnaissance; advanced electro optical and infrared solutions; and maritime power and navigation;
|
•
|
Space and Airborne Systems, including space payloads, sensors and full-mission solutions; classified intelligence and cyber defense; avionics; and electronic warfare;
|
•
|
Communication Systems, including tactical communications; broadband communications; night vision; and public safety; and
|
•
|
Aviation Systems, including defense aviation products; security, detection and other commercial aviation products; air traffic management; and commercial and military pilot training.
|
Notes
|
|
Aggregate Principal
Amount of L3 Notes
(prior to debt exchange)
|
|
Aggregate Principal
Amount of
New L3Harris Notes Issued
|
|
Aggregate Principal
Amount of
Remaining L3 Notes
|
||||||
|
|
(In millions)
|
||||||||||
4.95% notes due February 15, 2021 (“4.95% 2021 Notes”)
|
|
$
|
650
|
|
|
$
|
501
|
|
|
$
|
149
|
|
3.85% notes due June 15, 2023 (“3.85% 2023 Notes”)
|
|
$
|
800
|
|
|
$
|
741
|
|
|
$
|
59
|
|
3.95% notes due May 28, 2024 (“3.95% 2024 Notes”)
|
|
$
|
350
|
|
|
$
|
326
|
|
|
$
|
24
|
|
3.85% notes due December 15, 2026 (“3.85% 2026 Notes”)
|
|
$
|
550
|
|
|
$
|
535
|
|
|
$
|
15
|
|
4.40% notes due June 15, 2028 (“4.40% 2028 Notes”)
|
|
$
|
1,000
|
|
|
$
|
918
|
|
|
$
|
82
|
|
|
Quarter Ended
|
|
Total
Year
|
||||||||||||||||
|
9/28/2018
|
|
12/28/2018
|
|
3/29/2019
|
|
6/28/2019
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(In millions, except per share amounts)
|
||||||||||||||||||
Fiscal 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
1,542
|
|
|
$
|
1,666
|
|
|
$
|
1,728
|
|
|
$
|
1,865
|
|
|
$
|
6,801
|
|
Gross profit
|
532
|
|
|
571
|
|
|
589
|
|
|
642
|
|
|
2,334
|
|
|||||
Income from continuing operations before income taxes
|
257
|
|
|
271
|
|
|
283
|
|
|
302
|
|
|
1,113
|
|
|||||
Income from continuing operations(1)
|
216
|
|
|
225
|
|
|
243
|
|
|
269
|
|
|
953
|
|
|||||
Discontinued operations, net of income taxes
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(4
|
)
|
|||||
Net income
|
213
|
|
|
225
|
|
|
243
|
|
|
268
|
|
|
949
|
|
|||||
Per common share data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
1.82
|
|
|
1.91
|
|
|
2.06
|
|
|
2.26
|
|
|
8.06
|
|
|||||
Net income
|
1.81
|
|
|
1.91
|
|
|
2.06
|
|
|
2.26
|
|
|
8.03
|
|
|||||
Diluted
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
1.78
|
|
|
1.88
|
|
|
2.02
|
|
|
2.21
|
|
|
7.89
|
|
|||||
Net income
|
1.77
|
|
|
1.87
|
|
|
2.02
|
|
|
2.20
|
|
|
7.86
|
|
|||||
Cash dividends
|
0.685
|
|
|
0.685
|
|
|
0.685
|
|
|
0.685
|
|
|
2.740
|
|
|||||
Stock prices — High
|
169.98
|
|
|
175.50
|
|
|
167.09
|
|
|
200.77
|
|
|
|
||||||
Low
|
142.95
|
|
|
123.24
|
|
|
129.46
|
|
|
159.29
|
|
|
|
|
Quarter Ended
|
|
Total
Year
|
||||||||||||||||
|
9/29/2017
|
|
12/29/2017
|
|
3/30/2018
|
|
6/29/2018
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(In millions, except per share amounts)
|
||||||||||||||||||
Fiscal 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
1,410
|
|
|
$
|
1,535
|
|
|
$
|
1,562
|
|
|
$
|
1,661
|
|
|
$
|
6,168
|
|
Gross profit
|
491
|
|
|
513
|
|
|
534
|
|
|
564
|
|
|
2,102
|
|
|||||
Income from continuing operations before income taxes
|
228
|
|
|
225
|
|
|
208
|
|
|
247
|
|
|
908
|
|
|||||
Income from continuing operations(1)
|
165
|
|
|
131
|
|
|
198
|
|
|
208
|
|
|
702
|
|
|||||
Discontinued operations, net of income taxes
|
(6
|
)
|
|
—
|
|
|
(2
|
)
|
|
5
|
|
|
(3
|
)
|
|||||
Net income
|
159
|
|
|
131
|
|
|
196
|
|
|
213
|
|
|
699
|
|
|||||
Per common share data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
1.39
|
|
|
1.10
|
|
|
1.66
|
|
|
1.76
|
|
|
5.90
|
|
|||||
Net income
|
1.33
|
|
|
1.10
|
|
|
1.65
|
|
|
1.80
|
|
|
5.88
|
|
|||||
Diluted
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
1.36
|
|
|
1.08
|
|
|
1.63
|
|
|
1.72
|
|
|
5.78
|
|
|||||
Net income
|
1.31
|
|
|
1.08
|
|
|
1.62
|
|
|
1.76
|
|
|
5.76
|
|
|||||
Cash dividends
|
0.570
|
|
|
0.570
|
|
|
0.570
|
|
|
0.570
|
|
|
2.280
|
|
|||||
Stock prices — High
|
132.00
|
|
|
144.94
|
|
|
164.58
|
|
|
170.54
|
|
|
|
||||||
Low
|
109.08
|
|
|
131.52
|
|
|
140.84
|
|
|
142.50
|
|
|
|
(1)
|
Income from continuing operations in fiscal 2019 includes $65 million ($49 million after-tax or $.40 per diluted common share) of L3Harris Merger-related transaction and integration costs. Income from continuing operations in fiscal 2018 includes: (i) $47 million of charges related to our decision to transition and exit a commercial air-to-ground LTE radio communications line of business and other items; (ii) $27 million of losses and other costs related to debt refinancing; (iii) $20 million of charges related to non-cash adjustments for deferred compensation and the impact of tax reform; and (iv) a $5 million charge related to consolidation of certain Exelis facilities initiated in fiscal 2017. The net after-tax impact from the above items in fiscal 2018 was $74 million or $.60 per diluted common share.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
ITEM 9A.
|
CONTROLS AND PROCEDURES.
|
ITEM 9B.
|
OTHER INFORMATION.
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|
ITEM 11.
|
EXECUTIVE COMPENSATION.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
Plan Category
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)(2)
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)(2)
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c)
|
||||
Equity compensation plans approved by shareholders(1)
|
5,070,138
|
|
|
$80.86
|
|
25,740,420
|
|
Equity compensation plans not approved by shareholders
|
—
|
|
—
|
|
—
|
|
|
Total
|
5,070,138
|
|
|
$80.86
|
|
25,740,420
|
|
(1)
|
Consists of the Harris Corporation 2005 Equity Incentive Plan (As Amended and Restated Effective August 27, 2010) (the “2005 Equity Incentive Plan”) and the Harris Corporation 2015 Equity Incentive Plan. No additional awards may be granted under the 2005 Equity Incentive Plan.
|
(2)
|
Under the 2005 Equity Incentive Plan and the Harris Corporation 2015 Equity Incentive Plan, in addition to options, we have granted share-based compensation awards in the form of performance shares, shares of restricted stock, performance share units, restricted stock units, shares of immediately vested common stock and other similar types of share-based awards. As of June 28, 2019, there were awards outstanding under those plans with respect to 875,747 shares, consisting of (i) awards of 810 shares of restricted stock, for which all 810 shares were issued and outstanding; and (ii) awards of 874,937 performance share units and restricted stock units, for which all 874,937 were payable in shares but for which no shares were yet issued and outstanding. The 5,070,138 shares to be issued upon exercise of outstanding options, warrants and rights as listed in column (a) consisted of shares to be issued in respect of the exercise of 4,195,201 outstanding options and in respect of awards of 874,937 performance share units and restricted stock units payable in shares. Because there is no exercise price associated with awards of shares of restricted stock, performance share units or restricted stock units, all of which are granted to employees at no cost, such awards are not included in the weighted-average exercise price calculation in column (b).
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES.
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
|
|
Page
|
(1) List of Financial Statements Filed as Part of this Report:
|
|
The following financial statements and reports of L3Harris Technologies, Inc. and its consolidated subsidiaries are included in Item 8 of this Report at the page numbers referenced below:
|
|
Consolidated Statement of Income — Fiscal Years ended June 28, 2019; June 29, 2018; June 30, 2017
|
|
Consolidated Statement of Comprehensive Income — Fiscal Years ended June 28, 2019; June 29, 2018; and June 30, 2017
|
|
Consolidated Balance Sheet — June 28, 2019; June 29, 2018
|
|
Consolidated Statement of Cash Flows — Fiscal Years ended June 28, 2019; June 29, 2018; June 30, 2017
|
|
Consolidated Statement of Equity — Fiscal Years ended June 28, 2019; June 29, 2018; June 30, 2017
|
|
(2) Financial Statement Schedules:
|
|
Schedule II — Valuation and Qualifying Accounts — Fiscal Years ended June 28, 2019; June 29, 2018; June 30, 2017
|
ITEM 16.
|
FORM 10-K SUMMARY.
|
|
|
L3HARRIS TECHNOLOGIES, INC.
|
||
|
|
(Registrant)
|
||
Date: August 22, 2019
|
|
By:
|
|
/S/ WILLIAM M. BROWN
|
|
|
|
|
William M. Brown
|
|
|
|
|
Chairman and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
||
|
|
|
||||
/s/ WILLIAM M. BROWN
|
|
Chairman and Chief Executive Officer (Principal Executive Officer)
|
|
August 22, 2019
|
||
William M. Brown
|
|
|
||||
|
|
|
||||
/s/ CHRISTOPHER E. KUBASIK
|
|
Vice Chairman, President and Chief Operating Officer
|
|
August 22, 2019
|
||
Christopher E. Kubasik
|
|
|
||||
|
|
|
|
|
||
/s/ JESUS MALAVE JR.
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
August 22, 2019
|
||
Jesus Malave Jr.
|
|
|
||||
|
|
|
||||
/s/ TODD A. TAYLOR
|
|
Vice President, Principal Accounting Officer (Principal Accounting Officer)
|
|
August 22, 2019
|
||
Todd A. Taylor
|
|
|
||||
|
|
|
|
|
||
/s/ SALLIE B. BAILEY*
|
|
Director
|
|
August 22, 2019
|
||
Sallie B. Bailey
|
|
|
||||
|
|
|
|
|
||
/s/ PETER W. CHIARELLI*
|
|
Director
|
|
August 22, 2019
|
||
Peter W. Chiarelli
|
|
|
||||
|
|
|
|
|
||
/s/ THOMAS A. CORCORAN*
|
|
Director
|
|
August 22, 2019
|
||
Thomas A. Corcoran
|
|
|
||||
|
|
|
||||
/s/ THOMAS A. DATTILO*
|
|
Director
|
|
August 22, 2019
|
||
Thomas A. Dattilo
|
|
|
||||
|
|
|
||||
/s/ ROGER B. FRADIN*
|
|
Director
|
|
August 22, 2019
|
||
Roger B. Fradin
|
|
|
||||
|
|
|
||||
/s/ LEWIS HAY III*
|
|
Director
|
|
August 22, 2019
|
||
Lewis Hay III
|
|
|
||||
|
|
|
||||
/s/ LEWIS KRAMER*
|
|
Director
|
|
August 22, 2019
|
||
Lewis Kramer
|
|
|
||||
|
|
|
||||
/s/ RITA S. LANE*
|
|
Director
|
|
August 22, 2019
|
||
Rita S. Lane
|
|
|
||||
|
|
|
||||
/s/ ROBERT B. MILLARD*
|
|
Director
|
|
August 22, 2019
|
||
Robert B. Millard
|
|
|
||||
|
|
|
||||
/s/ LLOYD W. NEWTON*
|
|
Director
|
|
August 22, 2019
|
||
Lloyd W. Newton
|
|
|
||||
|
|
|
||||
*By:
|
|
/s/ SCOTT T. MIKUEN
|
|
|
|
|
|
|
Scott T. Mikuen
|
|
|
|
|
|
|
Attorney-in-Fact
|
|
|
|
|
|
|
pursuant to a power of attorney
|
|
|
|
|
Col. A
|
|
Col. B
|
|
Col. C
|
|
Col. D
|
|
Col. E
|
||||||||||||||
|
|
|
|
Additions
|
|
|
|
|
||||||||||||||
Description
|
|
Balance at
Beginning
of Period
|
|
Charged to
Costs and
Expenses
|
|
Charged to
Other Accounts
— Describe
|
|
Deductions
— Describe
|
|
Balance at
End of Period
|
||||||||||||
Year ended June 28, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Amounts Deducted From
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Respective Asset Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
$
|
1
|
|
(A)
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
31
|
|
(B)
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
(85
|
)
|
(C)
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
266
|
|
(D)
|
|
|
|||||||||
Allowances for collection losses
|
|
$
|
2,319
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
|
$
|
213
|
|
|
|
$
|
2,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
$
|
468
|
|
(A)
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
$
|
5,976
|
|
(E)
|
|
|
||||||||
Allowances for deferred tax assets
|
|
$
|
181,005
|
|
|
$
|
(15,510
|
)
|
|
$
|
—
|
|
|
|
$
|
6,444
|
|
|
|
$
|
159,051
|
|
Year ended June 29, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Amounts Deducted From
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Respective Asset Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
$
|
8
|
|
(A)
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
435
|
|
(B)
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
707
|
|
(C)
|
|
|
|||||||||
Allowances for collection losses
|
|
$
|
2,815
|
|
|
$
|
654
|
|
|
$
|
—
|
|
|
|
$
|
1,150
|
|
|
|
$
|
2,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
$
|
(48
|
)
|
(E)
|
|
$
|
(425
|
)
|
(A)
|
|
|
||||||
Allowances for deferred tax assets
|
|
$
|
183,476
|
|
|
$
|
(2,848
|
)
|
|
$
|
(48
|
)
|
|
|
$
|
(425
|
)
|
|
|
$
|
181,005
|
|
Year ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Amounts Deducted From
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Respective Asset Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
$
|
7
|
|
(A)
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
551
|
|
(B)
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
3,329
|
|
(C)
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
3,247
|
|
(D)
|
|
|
|||||||||
Allowances for collection losses
|
|
$
|
9,949
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
7,134
|
|
|
|
$
|
2,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
$
|
1,865
|
|
(A)
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
103,371
|
|
(D)
|
|
|
|||||||||
|
|
|
|
|
|
$
|
354
|
|
(E)
|
|
175
|
|
(F)
|
|
|
|||||||
Allowances for deferred tax assets
|
|
$
|
300,159
|
|
|
$
|
(11,626
|
)
|
|
$
|
354
|
|
|
|
$
|
105,411
|
|
|
|
$
|
183,476
|
|
1.
|
Section 4.12(e) (No cessation of benefit payments for legacy Harris employees as of December 31, 2015) shall be replaced in its entirety to read as follows:
|
|
|
|
Name of Subsidiary
|
|
State or Other
Jurisdiction of Incorporation
|
1231670 Ontario Inc.
|
|
Canada
|
AeroElite Limited
|
|
United Kingdom
|
Aerosim Academy, Inc.
|
|
Florida
|
Aerosim Bangkok Company Limited
|
|
Thailand
|
Aerosim Technologies, Inc.
|
|
Minnesota
|
Aerosim Thai Company Limited
|
|
Thailand
|
Airline Placement Limited
|
|
United Kingdom
|
Airline Recruitment Limited
|
|
United Kingdom
|
Applied Defense Solutions, Inc.
|
|
Delaware
|
Applied Kilovolts Group Holdings Limited
|
|
United Kingdom
|
Applied Kilovolts Limited
|
|
United Kingdom
|
Asian Aviation Training Centre Ltd.
|
|
Thailand
|
ASV Global, L.L.C.
|
|
Louisiana
|
Autonomous Surface Vehicles Limited
|
|
United Kingdom
|
Autonomous Surface Vehicles, LLC
|
|
Louisiana
|
Aviation Communication & Surveillance Systems, LLC
|
|
Delaware
|
Aydin Yazilim ve Elektronik Sanayi A.S.
|
|
Turkey
|
Azimuth Security Pty Ltd
|
|
Australia
|
Azimuth Security Trust
|
|
Australia
|
Azimuth Security, LLC
|
|
Florida
|
Beijing MAPPS-SERI Technology Company Ltd.
|
|
China
|
C.K. Industrial Engineers Limited
|
|
United Kingdom
|
Calzoni S.r.l.
|
|
Italy
|
Combat Advanced Propulsion, LLC
|
|
Delaware
|
CR MSA LLC
|
|
Delaware
|
CTC Aviation Group Limited
|
|
United Kingdom
|
CTC Aviation Holdings Limited
|
|
United Kingdom
|
CTC Aviation International Limited
|
|
United Kingdom
|
CTC Aviation Services Limited
|
|
United Kingdom
|
CTC Aviation Training (UK) Limited.
|
|
United Kingdom
|
Defence Investments Limited
|
|
United Kingdom
|
DMRAC-Aviation Corporation - SGPS, Unipessoal LDA
|
|
Portugal
|
EAA – Escola de Aviação Aerocondor, S.A.
|
|
Portugal
|
Eagle Technology, LLC
|
|
Delaware
|
EDO (UK) Ltd.
|
|
United Kingdom
|
EDO MBM Technology Ltd.
|
|
United Kingdom
|
EDO Western Corporation
|
|
Utah
|
Electrodynamics, Inc.
|
|
Arizona
|
EMC S.r.l.
|
|
Italy
|
ESSCO Collins Limited
|
|
Ireland
|
Exelis Arctic Services
|
|
Delaware
|
Exelis Australia Holdings Pty Ltd
|
|
Australia
|
Exelis Australia Pty Ltd
|
|
Australia
|
Exelis Holdings, Inc.
|
|
Delaware
|
Exmac Automation Limited
|
|
United Kingdom
|
FAST Holdings Limited
|
|
United Kingdom
|
Name of Subsidiary
|
|
State or Other
Jurisdiction of Incorporation
|
FAST Training Services Limited
|
|
United Kingdom
|
Felec Services, Inc.
|
|
Delaware
|
Flight Data Services Limited
|
|
United Kingdom
|
Flight Training Acquisitions LLC
|
|
Delaware
|
ForceX, Inc
|
|
Tennessee
|
G Air Advanced Training, Lda
|
|
Portugal
|
G Air II Maintenance, Lda
|
|
Portugal
|
G4U – Gestão de Activos Aeronáuticos, Sociedade, Lda
|
|
Portugal
|
Hamilton BioVentures, L.P.
|
|
Delaware
|
Harris Asia Pacific Sdn. Bhd.
|
|
Malaysia
|
Harris Atlas Systems LLC*
|
|
UAE
|
Harris C4i Pty Ltd
|
|
Australia
|
Harris Canada Systems, Inc.
|
|
Canada
|
Harris Cayman Ltd.
|
|
Cayman Islands
|
Harris Communications (Australia) Pty. Ltd.
|
|
Australia
|
Harris Communications (Spain), S. L.
|
|
Spain
|
Harris Communications FZCO
|
|
UAE
|
Harris Communications GmbH
|
|
Germany
|
Harris Communications Limited
|
|
Hong Kong
|
Harris Communications Malaysia Sdn. Bhd.
|
|
Malaysia
|
Harris Communications MH Spain, S. L.
|
|
Spain
|
Harris Communications Pakistan (Private) Limited
|
|
Pakistan
|
Harris Communications Systems India Private Limited
|
|
India
|
Harris Comunicações e Participações do Brasil Ltda.
|
|
Brazil
|
Harris Defence Ltd.
|
|
United Kingdom
|
Harris Denmark ApS
|
|
Denmark
|
Harris Denmark Holding ApS
|
|
Denmark
|
Harris Geospatial Solutions B.V.
|
|
Netherlands
|
Harris Geospatial Solutions France SARL
|
|
France
|
Harris Geospatial Solutions GmbH
|
|
Germany
|
Harris Geospatial Solutions Italia SRL
|
|
Italy
|
Harris Geospatial Solutions KK
|
|
Japan
|
Harris Geospatial Solutions UK Limited
|
|
United Kingdom
|
Harris Geospatial Solutions, Inc.*
|
|
Colorado
|
Harris Global Communications, Inc.
|
|
New York
|
Harris Holdco LLC
|
|
Delaware
|
Harris International Chile Limitada
|
|
Chile
|
Harris International Holdings, LLC
|
|
Delaware
|
Harris International Saudi Communications
|
|
Saudi Arabia
|
Harris International Venezuela, C.A.
|
|
Venezuela
|
Harris International, Inc.
|
|
Delaware
|
Harris Luxembourg Sarl
|
|
Luxembourg
|
Harris NV
|
|
Belgium
|
Harris Orthogon GmbH
|
|
Germany
|
Harris Pension Management Limited
|
|
United Kingdom
|
Harris Salam*
|
|
Qatar
|
Harris Solid-State (Malaysia) Sdn. Bhd.
|
|
Malaysia
|
Harris Systems Limited
|
|
United Kingdom
|
Honeywell TCAS Inc.
|
|
Delaware
|
Interstate Electronics Corporation
|
|
California
|
Jariet Technologies, Inc.
|
|
Delaware
|
L-3 Afghanistan, LLC
|
|
Delaware
|
Name of Subsidiary
|
|
State or Other
Jurisdiction of Incorporation
|
L3 Applied Technologies, Inc.
|
|
Delaware
|
L3 Australia Group Pty Ltd
|
|
Australia
|
L3 Aviation Products, Inc.
|
|
Delaware
|
L-3 Brasil Importação, Exportação e Comércio Ltda.
|
|
Brazil
|
L-3 Centaur, LLC
|
|
Delaware
|
L3 Cincinnati Electronics Corporation
|
|
Ohio
|
L3 Commercial Training Solutions Limited
|
|
United Kingdom
|
L-3 Communications AIS GP Corporation
|
|
Delaware
|
L-3 Communications ASA Limited
|
|
United Kingdom
|
L-3 Communications Australia Pty Ltd
|
|
Australia
|
L-3 Communications Flight Capital LLC
|
|
Delaware
|
L-3 Communications Holding GmbH
|
|
Germany
|
L-3 Communications Hong Kong Limited
|
|
Hong Kong
|
L-3 Communications India Private Limited
|
|
India
|
L-3 Communications Integrated Systems L.P.
|
|
Delaware
|
L-3 Communications Investments Inc.
|
|
Delaware
|
L-3 Communications Korea Co., Ltd.
|
|
Korea
|
L-3 Communications Limited
|
|
United Kingdom
|
L-3 Communications Link Simulation and Training UK (Overseas) Limited
|
|
United Kingdom
|
L-3 Communications Singapore Pte. Ltd.
|
|
Singapore
|
L-3 Communications U.K. Ltd.
|
|
United Kingdom
|
L3 CTS Airline Academy (NZ) Limited
|
|
New Zealand
|
L3 CTS Airline and Academy Training Limited
|
|
United Kingdom
|
L-3 Domestic Holdings, Inc.
|
|
Delaware
|
L3 Doss Aviation, Inc.
|
|
Texas
|
L3 Electron Devices, Inc.
|
|
Delaware
|
L3 ESSCO, Inc.
|
|
Delaware
|
L3 Foreign Holdings, Inc.
|
|
Delaware
|
L3 Fuzing and Ordnance Systems, Inc.
|
|
Delaware
|
L-3 Global Holding UK Ltd.
|
|
United Kingdom
|
L3 International Australia Pty Ltd
|
|
Australia
|
L-3 International UK Ltd
|
|
United Kingdom
|
L3 Investments UK Holdings Ltd
|
|
United Kingdom
|
L3 Investments, LLC
|
|
Delaware
|
L3 Kenya LTD
|
|
Kenya
|
L3 Kigre, Inc.
|
|
Ohio
|
L3 Latitude, LLC
|
|
Arizona
|
L3 Magnet-Motor GmbH
|
|
Germany
|
L3 MAPPS INC.
|
|
Canada
|
L3 MAPPS Limited
|
|
United Kingdom
|
L3 MAPPS Sdn. Bhd.
|
|
Malaysia
|
L3 Micreo Pty Limited
|
|
Australia
|
L3 Oceania Pty Limited
|
|
Australia
|
L3 Open Water Power, Inc.
|
|
Delaware
|
L-3 Saudi Arabia LLC
|
|
Saudi Arabia
|
L3 Security and Detection Systems, Inc.
|
|
Delaware
|
L-3 Security Equipment Trading (Beijing) Co., Ltd.
|
|
China
|
L-3 Societá Srl.
|
|
Italy
|
L3 Technologies Australia Group Pty Ltd
|
|
Australia
|
L3 Technologies Canada Group Inc.
|
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Canada
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L3 Technologies Canada Inc.
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Canada
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L3 Technologies Investments Limited
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Cyprus
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Name of Subsidiary
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State or Other
Jurisdiction of Incorporation
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L3 Technologies MAS Inc.
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Canada
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L3 Technologies UK Group Ltd
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United Kingdom
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L3 Technologies, Inc.
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Delaware
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L-3 Technology & Services UK Ltd
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United Kingdom
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L3 Unidyne, Inc.
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Delaware
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L3 Unmanned Systems, Inc.
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Texas
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L3 Westwood Corporation
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Nevada
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Linchpin Labs Inc.
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Canada
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Linchpin Labs Inc.
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Delaware
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Linchpin Labs Limited
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United Kingdom
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Linchpin Labs Limited
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New Zealand
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Linchpin Labs Pty Limited
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Australia
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L-Tres Comunicaciones Costa Rica, S.A.
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Costa Rica
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MacDonald Humfrey (Automation) India Private Limited*
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India
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MacDonald Humfrey (Automation) Limited
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United Kingdom
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MacDonald Humfrey (Automation) SEA PTE. Ltd.
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Singapore
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MacDonald Humfrey Automation Middle East Control Systems LLC*
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UAE
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Manatee Investment, LLC
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Delaware
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Manu Kai, LLC*
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Hawaii
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Melbourne Leasing, LLC
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Florida
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Mustang Technology Group, L.P.
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Texas
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Narda Safety Test Solutions GmbH
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Germany
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Narda Safety Test Solutions S.r.l.
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Italy
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NexGen Communications, LLC
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Virginia
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Peak Nano Optics, LLC
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Delaware
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Power Paragon, Inc.
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Delaware
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Riptide Autonomous Solutions LLC
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Delaware
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S.C. Harris Assured Communications SRL
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Romania
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SARL Assured Communications
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Algeria
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Sovcan Star Satellite Communications Inc.
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Canada
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SPD Electrical Systems, Inc.
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Delaware
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Sunshine General Services, LLC
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Iraq
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TRL Electronics Limited
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United Kingdom
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TRL Technology Limited
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United Kingdom
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Wescam Inc.
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Canada
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Wescam USA, Inc.
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Florida
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/s/ WILLIAM M. BROWN
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/s/ THOMAS A. DATTILO
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William M. Brown
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Thomas A. Dattilo
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Chairman and Chief Executive Officer
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Director
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/s/ CHRISTOPHER E. KUBASIK
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/s/ ROGER B. FRADIN
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Christopher E. Kubasik
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Roger B. Fradin
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Vice Chairman, President and Chief Operating Officer
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Director
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/s/ JESUS MALAVE JR.
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/s/ LEWIS HAY III
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Jesus Malave Jr.
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Lewis Hay III
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Senior Vice President and Chief Financial Officer
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Director
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/s/ TODD A. TAYLOR
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/s/ LEWIS KRAMER
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Todd A. Taylor
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Lewis Kramer
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Vice President, Principal Accounting Officer
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Director
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/s/ SALLIE B. BAILEY
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/s/ RITA S. LANE
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Sallie B. Bailey
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Rita S. Lane
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Director
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Director
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/s/ PETER W. CHIARELLI
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/s/ ROBERT B. MILLARD
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Peter W. Chiarelli
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Robert B. Millard
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Director
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Director
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/s/ THOMAS A. CORCORAN
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/s/ LLOYD W. NEWTON
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Thomas A. Corcoran
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Lloyd W. Newton
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Director
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Director
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1.
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I have reviewed this Annual Report on Form 10-K for the fiscal year ended June 28, 2019 of L3Harris Technologies, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: August 22, 2019
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/s/ William M. Brown
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Name:
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William M. Brown
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Title:
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Chairman and Chief Executive Officer
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1.
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I have reviewed this Annual Report on Form 10-K for the fiscal year ended June 28, 2019 of L3Harris Technologies, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: August 22, 2019
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/s/ Jesus Malave Jr.
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Name:
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Jesus Malave Jr.
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Title:
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Senior Vice President and Chief Financial Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of L3Harris as of the dates and for the periods expressed in the Report.
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Date: August 22, 2019
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/s/ William M. Brown
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Name:
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William M. Brown
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Title:
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Chairman and Chief Executive Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of L3Harris as of the dates and for the periods expressed in the Report.
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Date: August 22, 2019
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/s/ Jesus Malave Jr.
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Name:
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Jesus Malave Jr.
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Title:
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Senior Vice President and Chief Financial Officer
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