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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 2024
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ______________
Commission File Number 1-3863
L3HARRIS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 34-0276860
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1025 West NASA Boulevard
Melbourne,Florida 32919
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (321727-9100
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $1.00 per shareLHXNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.          þ   Yes   o  No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).          þ  Yes   o  No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ  Accelerated filer 
Non-accelerated filer 
¨
  Smaller reporting company 
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes þ No  
The number of shares outstanding of the registrant’s common stock as of April 19, 2024 was 189,680,354.



L3HARRIS TECHNOLOGIES, INC.
FORM 10-Q
For the Quarter Ended March 29, 2024
TABLE OF CONTENTS
 Page No.
Part I. Financial Information:
Condensed Consolidated Statement of Operations for the Quarters Ended March 29, 2024 and March 31, 2023
Condensed Consolidated Statement of Comprehensive Income for the Quarters Ended March 29, 2024 and March 31, 2023
Condensed Consolidated Balance Sheet at March 29, 2024 and December 29, 2023
Condensed Consolidated Statement of Cash Flows for the Quarters Ended March 29, 2024 and March 31, 2023
Condensed Consolidated Statement of Equity for the Quarters Ended March 29, 2024 and March 31, 2023
Notes to Condensed Consolidated Financial Statements
Part II. Other Information:
ITEM 6.      Exhibits
This Quarterly Report on Form 10-Q (this “Report”) contains trademarks, service marks and registered marks of L3Harris Technologies, Inc. and its subsidiaries. All other trademarks are the property of their respective owners.
_____________________________________________________________________
1



PART I. FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS.
L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
 Quarter Ended
(In millions, except per share amounts)March 29, 2024March 31, 2023
 
Revenue$5,211 $4,471 
Cost of revenue(3,863)(3,305)
General and administrative expenses(970)(773)
Operating income378 393 
Non-service FAS pension income and other, net(1)
88 82 
Interest expense, net(176)(102)
Income before income taxes290 373 
Income taxes(5)(34)
Net income285 339 
Noncontrolling interests, net of income taxes(2)(2)
Net income attributable to L3Harris Technologies, Inc.$283 $337 
Net income per common share attributable to L3Harris Technologies, Inc. common shareholders
Basic$1.49 $1.77 
Diluted$1.48 $1.76 
Basic weighted-average common shares outstanding189.8 190.2 
Diluted weighted-average common shares outstanding190.8 191.2 
_______________
(1)“FAS” is defined as Financial Accounting Standards.

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

_____________________________________________________________________
2


L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
 Quarter Ended
(In millions)March 29, 2024March 31, 2023
 
Net income$285 $339 
Other comprehensive loss:
Foreign currency translation (loss) income, net of income taxes(26)7 
Net unrealized (loss) income on hedging derivatives, net of income taxes(3)5 
Other comprehensive (loss) income recognized during the period(29)12 
Reclassification adjustments for gains included in net income(7)(12)
Other comprehensive loss, net of income taxes(36) 
Total comprehensive income249 339 
Comprehensive income attributable to noncontrolling interest(2)(2)
Total comprehensive income attributable to L3Harris Technologies, Inc.$247 $337 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
_____________________________________________________________________
3


L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 Quarter Ended
(In millions)March 29, 2024March 31, 2023
Operating Activities
Net income$285 $339 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Amortization of acquisition-related intangibles217 165 
Depreciation and other amortization103 85 
Share-based compensation26 23 
Share-based matching contributions under defined contribution plans70 57 
Pension and other postretirement benefit plan income(72)(71)
Deferred income taxes(111)(115)
(Increase) decrease in:
Receivables, net7 48 
Contract assets(340)(269)
Inventories(21)(86)
Other current assets10 (40)
Increase (decrease) in:
Accounts payable9 90 
Contract liabilities(152)97 
Compensation and benefits(170)(115)
Other accrued items(18)63 
Income taxes103 130 
Other operating activities(50)(51)
Net cash (used in) provided by operating activities(104)350 
Investing Activities
Net cash paid for acquired businesses (1,973)
Additions to property, plant and equipment(115)(71)
Other investing activities(1)(4)
Net cash used in investing activities(116)(2,048)
Financing Activities
Proceeds from borrowings, net of issuance cost2,237 2,248 
Repayments of borrowings(2,250)(255)
Change in commercial paper, maturities under 90 days, net326  
Proceeds from commercial paper, maturities over 90 days480  
Repayments of commercial paper, maturities over 90 days(205) 
Proceeds from exercises of employee stock options35 11 
Repurchases of common stock(233)(396)
Cash dividends(224)(220)
Other financing activities(22)(27)
Net cash provided by financing activities144 1,361 
Effect of exchange rate changes on cash and cash equivalents(7)2 
Net decrease in cash and cash equivalents(83)(335)
Cash and cash equivalents, beginning of period560 880 
Cash and cash equivalents, end of period$477 $545 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
_____________________________________________________________________
4


L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(In millions, except shares)March 29, 2024December 29, 2023
Assets
Current assets
Cash and cash equivalents$477 $560 
Receivables, net of allowances for collection losses of $13 and $15, respectively
1,209 1,230 
Contract assets3,502 3,196 
Inventories1,476 1,472 
Other current assets466 491 
Assets of business held for sale1,136 1,106 
Total current assets8,266 8,055 
Non-current assets
Property, plant and equipment, net2,836 2,862 
Goodwill20,070 19,979 
Other intangible assets, net8,340 8,540 
Deferred income taxes113 91 
Other non-current assets2,191 2,160 
Total assets$41,816 $41,687 
Liabilities and equity
Current liabilities
Short-term debt$2,203 $1,602 
Current portion of long-term debt, net365 363 
Accounts payable2,112 2,106 
Contract liabilities1,777 1,900 
Compensation and benefits379 544 
Other accrued items1,174 1,129 
Income taxes payable182 88 
Liabilities of business held for sale 245 272 
Total current liabilities8,437 8,004 
Non-current liabilities
Long-term debt, net11,140 11,160 
Deferred income taxes683 815 
Other long-term liabilities2,826 2,879 
Total liabilities23,086 22,858 
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 189,463,015 and 189,808,581 shares at March 29, 2024 and December 29, 2023, respectively
189 190 
Paid-in capital15,472 15,553 
Retained earnings3,239 3,220 
Accumulated other comprehensive loss(234)(198)
Total shareholders’ equity18,666 18,765 
Noncontrolling interests64 64 
Total equity18,730 18,829 
Total liabilities and equity$41,816 $41,687 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
_____________________________________________________________________
5


L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(Unaudited)
(In millions, except per share amounts)Common StockOther CapitalRetained EarningsAccumulated Other Comprehensive LossNon-controlling InterestsTotal Equity
Balance at December 29, 2023$190 $15,553 $3,220 $(198)$64 $18,829 
Net income— — 283 — 2 285 
Other comprehensive loss, net of income taxes— — — (36)— (36)
Shares issued under stock incentive plans— 35 — — — 35 
Shares issued under defined contribution plans— 70 — — — 70 
Share-based compensation expense— 26 — — — 26 
Tax withholding payments on share-based awards— (20)— — — (20)
Repurchases and retirement of common stock(1)(192)(40)— — (233)
Cash dividends ($1.16 per share)
— — (224)— — (224)
Other— — — — (2)(2)
Balance at March 29, 2024$189 $15,472 $3,239 $(234)$64 $18,730 
 
Balance as of December 30, 2022$191 $15,677 $2,943 $(288)$101 $18,624 
Net income— — 337 — 2 339 
Shares issued under stock incentive plans— 11 — — — 11 
Shares issued under defined contribution plans— 57 — — — 57 
Share-based compensation expense— 23 — — — 23 
Tax withholding payments on share-based awards— (26)— — — (26)
Repurchases and retirement of common stock(2)(332)(62)— — (396)
Cash dividends ($1.14 per share)
— — (220)— — (220)
Other— (3)— — (1)(4)
Balance as of March 31, 2023$189 $15,407 $2,998 $(288)$102 $18,408 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
_____________________________________________________________________
6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying Condensed Consolidated Financial Statements include the accounts of L3Harris Technologies, Inc. and its consolidated subsidiaries. As used in these notes to Condensed Consolidated Financial Statements (these “Notes”), the terms “L3Harris,” “Company,” “we,” “our” and “us” refer to L3Harris Technologies, Inc. and its consolidated subsidiaries. Intracompany transactions and accounts have been eliminated.
The accompanying Condensed Consolidated Financial Statements have been prepared by L3Harris in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, such interim financial statements do not include all information and footnotes necessary for a complete presentation of financial condition, results of operations, cash flows and equity in conformity with GAAP for annual financial statements and are not necessarily indicative of the results that may be expected for the full fiscal year or any subsequent period.
In the opinion of management, such interim financial statements reflect all adjustments (including normal recurring adjustments) considered necessary for a fair presentation of our financial condition, results of operations, cash flows and equity for the periods presented therein. The balance sheet at December 29, 2023 has been derived from our audited financial statements, but does not include all of the information and footnotes required by GAAP for annual financial statements. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with Part II: Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2023 (our “Fiscal 2023 Form 10-K”).
Use of Estimates
The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the accompanying Condensed Consolidated Financial Statements and these Notes and related disclosures. These estimates and assumptions are based on experience and other information available prior to issuance of the accompanying Condensed Consolidated Financial Statements and these Notes. Materially different results can occur as circumstances change and additional information becomes known.
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07). This accounting standard requires additional segment disclosures on an annual and interim basis, including significant segment expenses that are regularly provided to the chief operating decision maker. The standard does not change how operating segments and reportable segments are determined. ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023 and interim reporting periods beginning after December 15, 2024. The standard is required to be applied retrospectively to all periods presented in the consolidated financial statements. We plan to adopt the standard for fiscal 2024. We are evaluating the impact of ASU 2023-07 and expect the standard will only impact our segment disclosures with no material impact to the consolidated financial statements.
In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09). This accounting standard requires disaggregated income tax disclosures on an annual basis, including information on our effective income tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, and may be applied prospectively or retrospectively. We are evaluating the impact of ASU 2023-09 and expect the standard will only impact our income taxes disclosures with no material impact to the consolidated financial statements.
Significant Accounting Policies Update
There have been no material changes to our significant accounting policies described in our Fiscal 2023 Form 10-K.
_____________________________________________________________________
7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE B: EARNINGS PER SHARE
We define EPS as net income attributable to L3Harris common shareholders divided by either our weighted average number of basic or diluted shares outstanding. Potential dilutive common shares primarily consist of employee stock options and restricted and performance unit awards.
The weighted-average number of common shares outstanding used to compute basic and diluted EPS are as follows:
Quarter Ended
(In millions)March 29, 2024March 31, 2023
Basic weighted-average common shares outstanding189.8 190.2 
Impact of dilutive share-based awards1.0 1.0 
Diluted weighted-average common shares outstanding190.8 191.2 
Income from continuing operations per diluted common share (“diluted EPS”) excludes the antidilutive impact of 0.8 million and 1.2 million weighted-average share-based awards outstanding for the quarters ended March 29, 2024 and March 31, 2023, respectively.
NOTE C: ACCOUNTS RECEIVABLE, CONTRACT ASSETS AND CONTRACT LIABILITIES
Accounts Receivable
We have two receivable sales agreements (“RSAs”) with two separate third-party financial institutions that permit us to sell, on a non-recourse basis, up to $100 million each of outstanding receivables. From time to time, we have sold certain customer receivables under the RSAs, which we continue to service and collect on behalf of the third-party financial institutions and which we account for as sales of receivables with sale proceeds included in net cash from operating activities. Outstanding accounts receivable sold pursuant to the RSAs were approximately $98 million at March 29, 2024, for net cash proceeds of approximately $97 million. We did not have outstanding accounts receivable sold pursuant to the RSAs at March 31, 2023.
Contract Assets and Contract Liabilities
Contract assets include unbilled amounts typically resulting from revenue recognized exceeding amounts billed to customers for contracts utilizing the percentage of completion (“POC”) cost-to-cost revenue recognition method. We bill customers as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, upon achievement of contractual milestones or upon deliveries and, in certain arrangements, the customer may withhold payment of a small portion of the contract price until contract completion. Contract liabilities include advance payments and billings in excess of revenue recognized, including deferred revenue associated with extended product warranties. Contract assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period.
Contract assets and contract liabilities are summarized below:
(In millions)March 29, 2024December 29, 2023
Contract assets$3,502 $3,196 
Contract liabilities, current(1,777)(1,900)
Contract liabilities, non-current(1)
(88)(94)
Net contract assets$1,637 $1,202 
_______________
(1)The non-current portion of contract liabilities is included as a component of the “Other long-term liabilities” line item in our Condensed Consolidated Balance Sheet.

Contract assets increased $306 million as of March 29, 2024 compared with December 29, 2023, primarily due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the quarter ended March 29, 2024 for which we have not yet billed our customers. There were no significant credit or impairment losses related to our contract assets during the quarter ended March 29, 2024.
Contract liabilities decreased $129 million as of March 29, 2024 compared with December 29, 2023, primarily due to decreased advanced payments and timing of contractual billing milestones. Revenue recognized related to contract liabilities that were outstanding at the end of the respective prior fiscal year were $695 million and $603 million for the quarters ended March 29, 2024 and March 31, 2023, respectively.
NOTE D: INVENTORIES
Inventories are summarized below:
(In millions)March 29, 2024December 29, 2023
Finished products
$238 $217 
Work in process436 427 
Materials and supplies802 828 
Inventories
$1,476 $1,472 
NOTE E: GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The assignment of goodwill and changes in the carrying amount of goodwill, by business segment, are as follows:
(In millions)SASIMSCSARTotal
Balance at December 29, 2023(1)
$6,110 $6,564 $4,940 $2,365 $19,979 
Goodwill from AJRD acquisition(2)
— — — 108 108 
Currency translation adjustments(8)(8)(1) (17)
Balance at March 29, 2024$6,102 $6,556 $4,939 $2,473 $20,070 
_______________
(1)During fiscal 2023, we assigned $534 million of goodwill associated with the pending divestiture of Commercial Aviation Solutions (“CAS Disposal Group”) to “Assets of business held for sale” in our Condensed Consolidated Balance Sheet. See Note 13: Acquisitions, Divestitures and Asset Sales in our Fiscal 2023 Form 10-K for additional information regarding divestitures and businesses held for sale.
(2)Represents a measurement period adjustment associated with the acquisition of Aerojet Rocketdyne Holdings, Inc. (“AJRD”) in the quarter ended March 29, 2024. See Note O: Acquisitions and Divestitures in these Notes for further information.
At March 29, 2024, accumulated goodwill impairment losses totaled $80 million, $1,126 million and $355 million at our Space & Airborne Systems (“SAS”), Integrated Mission Systems (“IMS”) and Communication System (“CS”) segments, respectively. There are no accumulated impairments for our Aerojet Rocketdyne (“AR”) segment.
Reallocation of Goodwill in Business Realignment. Effective in fiscal 2024, to better align our businesses, we adjusted our IMS segment by realigning our Electro Optical (“EO”) and Maritime sectors, which are also reporting units, splitting EO into two sectors, Global Optical Systems (“GOS”) and Defense Electronics (“DE”), and moving one EO business to the Maritime sector. GOS and DE represent one reporting unit. Immediately before and after the realignment, we performed a quantitative impairment assessment under our former and new reporting unit structure. These assessments indicated no impairment existed either before or after the realignment. See Note P: Business Segment Information in these Notes for further information.
_____________________________________________________________________
8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Other Intangible Assets
Other identifiable intangible assets, net are summarized below:
March 29, 2024December 29, 2023
(In millions)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated Amortization
Net Carrying Amount(1)
Customer relationships
$8,907 $2,923 $5,984 $8,892 $2,733 $6,159 
Developed technologies
854 432 422 856 413 443 
Trade names — divisions
185 54 131 185 50 135 
Other, including contract backlog
4 4  4 4  
Total finite-lived identifiable intangible assets9,950 3,413 6,537 9,937 3,200 6,737 
Trade names — corporate1,803 — 1,803 1,803 — 1,803 
Total identifiable intangible assets, net$11,753 $3,413 $8,340 $11,740 $3,200 $8,540 
_______________
(1)During fiscal 2023, we assigned $263 million of intangible assets associated with the pending divestiture of the CAS Disposal Group to "Assets of business held for sale" in our Condensed Consolidated Balance Sheet. See Note 13: Acquisitions, Divestitures and Asset Sales in our Fiscal 2023 Form 10-K for additional information regarding divestitures and businesses held for sale.
The most significant identifiable intangible asset that is separately recognized for our business combinations is customer relationships. For further description of our accounting policies related to intangible assets acquired in the AJRD acquisition, see Note O: Acquisitions and Divestitures in these Notes, and for our accounting policies related to all other intangible assets, see Note 6: Goodwill and Intangible Assets in our Fiscal 2023 Form 10-K.
Amortization expense for identifiable finite-lived intangible assets was $217 million and $165 million for the quarters ended March 29, 2024 and March 31, 2023, respectively, which primarily related to assets acquired in connection with business combinations.
Future estimated amortization expense for identifiable intangible assets is as follows:
(In millions)
Next 12 months$835 
Months 13-24766 
Months 25-36632 
Months 37-48562 
Months 49-60468 
Thereafter3,274 
Total$6,537 
NOTE F: INCOME TAXES
Our effective tax rate was 1.7% for the quarter ended March 29, 2024 compared with 9.1% for the quarter ended March 31, 2023. The effective tax rate for quarter ended March 29, 2024 was lower than the quarter ended March 31, 2023, primarily due to additional resolutions of specific audit uncertainties in the quarter ended March 29, 2024, incremental research and development (“R&D”) credits attributable to the recently acquired AJRD and an increase in favorable impacts of excess tax benefits related to equity-based compensation. The rates for both periods benefited from foreign derived intangible income (“FDII”) deductions.
The Organisation for Economic Co-operation and Development (“OECD”) has introduced a new 15% global minimum tax, known as Pillar Two. Certain jurisdictions, including European Union member states and the United Kingdom, have enacted Pillar Two legislation that became effective January 1, 2024. The OECD, and its member countries, continue to release new guidance and legislation on Pillar Two and we continue to evaluate the impact on our financial statements. Based on enacted laws, Pillar Two is not expected to have a material impact on our financial statements in fiscal 2024.
_____________________________________________________________________
9

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE G: DEBT AND CREDIT ARRANGEMENTS
Long-Term Debt
Long-term debt, net is summarized below:
(In millions)March 29, 2024December 29, 2023
Variable-rate debt:
Term loan, due November 21, 2025 (“Term Loan 2025”)
$ $2,250 
Fixed-rate debt:
3.95% notes, due May 28, 2024
350 350 
3.832% notes, due April 27, 2025
600 600 
7.00% debentures, due January 15, 2026
100 100 
3.85% notes, due December 15, 2026
550 550 
5.40% notes, due January 15, 2027 (“5.4% 2027 Notes”)
1,250 1,250 
6.35% debentures, due February 1, 2028
26 26 
4.40% notes, due June 15, 2028
1,850 1,850 
5.05% notes, due June 1, 2029 (“5.05% 2029 Notes”)
750  
2.90% notes, due December 15, 2029
400 400 
1.80% notes, due January 15, 2031
650 650 
5.25% notes, due June 1, 2031 (“5.25% 2031 Notes”)
750  
5.40% notes, due July 31, 2033 (“5.4% 2033 Notes”)
1,500 1,500 
5.350% notes, due June 1, 2034 (“5.35% 2034 Notes”)
750  
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 
5.60% notes, due July 31, 2053 (“5.6% 2053 Notes”)
500 500 
Total variable and fixed-rate debt11,226 11,226 
Financing lease obligations and other debt306 300 
Long-term debt, including the current portion of long-term debt11,532 11,526 
Plus: unamortized bond premium47 51 
Less: unamortized discounts and issuance costs(74)(54)
Long-term debt, including the current portion of long-term debt, net11,505 11,523 
Less: current portion of long-term debt, net(365)(363)
Total long-term debt, net$11,140 $11,160 
Long Term Debt Issued
Fixed Rate Debt. On March 13, 2024, we closed the issuance and sale of $2.25 billion aggregate principal amount of new long-term fixed-rate debt consisting of the 5.05% 2029 Notes, the 5.25% 2031 Notes, and the 5.35% 2034 Notes (collectively, the “2024 Notes”). The 2024 Notes were used to repay Term Loan 2025, including related fees and expenses, which had an outstanding balance of $2.25 billion at December 29, 2023.
Interest on the 2024 Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2024.
We may redeem the 5.05% 2029 Notes, 5.25% 2031 Notes and 5.35% 2034 Notes prior to May 1, 2029, April 1, 2031 and March 1, 2034, respectively, in whole or in part, at our option, at a redemption price equal to the greater of: (i) the sum of the present values of the remaining scheduled payments of the principal and interest thereon discounted to the redemption date on a semi-annual basis at the “Treasury Rate,” as defined in the 2024 Notes, plus 15 basis points for the 5.05% 2029 Notes and 20 basis points for the 5.25% 2031 Notes and 5.35% 2034 Notes, less interest accrued to the date of redemption; (ii) or 100% of the principal amount of the respective notes plus, in either case, accrued interest and unpaid interest thereon to the redemption date. After May 1, 2029, April 1, 2031 and March 1, 2034, we may redeem the 5.05% 2029 Notes, 5.25% 2031 Notes, and 5.35% 2034 Notes
_____________________________________________________________________
10

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
respectively, at a redemption price equal to 100% of the principal amount being redeemed plus accrued and unpaid interest thereon to the redemption date.
We incurred a combined total of $20 million of debt issuance costs for the 2024 Notes, which are being amortized over the life of each respective note. Such amortization is included as a component of the “Interest expense, net” line item in our Condensed Consolidated Statement of Operations.
Long-Term Debt Repayments
On March 14, 2024, we repaid the entire outstanding $2.25 billion drawn on Term Loan 2025, which at time of repayment had a variable interest rate of 6.7%, through the issuance of the 2024 Notes, which bear fixed interest rates between 5.05% and 5.35%.
2024 Credit Agreement
On January 26, 2024, we established a new $1.5 billion, 364-day senior unsecured revolving credit facility (“2024 Credit Facility”) by entering into a 364-day credit agreement maturing no later than January 24, 2025 (“2024 Credit Agreement”) with a syndicate of lenders. The 2024 Credit Agreement replaces the prior $2.4 billion 364-Day Credit Agreement (“2023 Credit Agreement”).
At our election, borrowings under the 2024 Credit Agreement, which are designated in U.S. Dollars, bear interest at the sum of the term secured overnight financing rate or the Base Rate (as defined in the 2024 Credit Agreement), plus an applicable margin that varies based on the ratings of our senior unsecured long-term debt securities (“Senior Debt Ratings.”) In addition to interest payable on the principal amount of indebtedness outstanding we are required to pay a quarterly unused commitment fee that varies based on our Senior Debt Ratings.
The 2024 Credit Agreement also contains representations, warranties, covenants and events of default that are substantially similar to the existing Revolving Credit Agreement, dated as of July 29, 2022 (“2022 Credit Agreement”). The 2024 Credit Agreement matures in January 2025, provided that we may extend the maturity of any loans outstanding under the 2024 Credit Agreement by one year, subject to the satisfaction of certain conditions.
At March 29, 2024, we had no outstanding borrowings and were in compliance with all covenants under the 2024 Credit Agreement.
2022 Credit Agreement
On July 29, 2022, we established a $2.0 billion, five-year senior unsecured revolving credit facility (“2022 Credit Facility”) under a Revolving Credit Agreement (the “2022 Credit Agreement”), with a syndicate of lenders. At March 29, 2024, we had no outstanding borrowings and were in compliance with all covenants under the 2022 Credit Agreement. For a description of the 2022 Credit Agreement and related covenants, see Note 8: Debt and Credit Arrangements in our Fiscal 2023 Form 10-K.
Commercial Paper Program
On January 26, 2024, we lowered the maximum amount available under our commercial paper program (“CP Program”) to $3.0 billion from $3.9 billion in accordance with the terms of the CP Program. The CP Program is supported by amounts available under the 2022 Credit Agreement and the 2024 Credit Agreement.
The commercial paper notes are sold at par less a discount representing an interest factor or, if interest bearing, at par, and the maturities vary but may not exceed 397 days from the date of issue. The commercial paper notes will rank at least pari passu with all other unsecured and unsubordinated indebtedness.
At March 29, 2024 and December 29, 2023, we had $2.2 billion and $1.6 billion in outstanding notes under our CP Program, respectively, which is included as a component of the “Short-term debt” line item in our Condensed Consolidated Balance Sheet. The outstanding notes under our CP Program had a weighted-average interest rate of 5.83% and 5.95% at March 29, 2024 and December 29, 2023, respectively.
_____________________________________________________________________
11

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE H: RETIREMENT BENEFITS
The following tables provide the components of our net periodic benefit income for our defined benefit plans, including defined benefit pension plans and other postretirement benefit (“OPEB”) plans:
Quarter Ended March 29, 2024Quarter Ended March 31, 2023
(In millions)PensionOther BenefitsPensionOther Benefits
Net periodic benefit income
Operating
Service cost$8 $ $6 $ 
Non-operating
Interest cost99 3 92 3 
Expected return on plan assets(165)(5)(153)(5)
Amortization of net actuarial gain(1)(4)(2)(5)
Amortization of prior service credit(7) (7) 
Non-service cost periodic benefit income
(74)(6)(70)(7)
Net periodic benefit income$(66)$(6)$(64)$(7)
The service cost component of net periodic benefit income is included in the “Cost of revenue” and “General and administrative expenses” line items in our Condensed Consolidated Statement of Operations. The non-service cost components of net periodic benefit income are included in the “Non-service FAS pension income and other, net” line item in our Condensed Consolidated Statement of Operations.
NOTE I: STOCK OPTIONS AND OTHER SHARE-BASED COMPENSATION
At March 29, 2024, we had stock options or other share-based compensation awards outstanding under two shareholder-approved employee stock incentive plans, as well as under employee stock incentive plans assumed by L3Harris (collectively, the “L3Harris SIPs”). The compensation cost related to our share-based awards that was charged against income for the quarters ended March 29, 2024 and March 31, 2023 was $26 million and $23 million, respectively.
Awards granted to participants under L3Harris SIPs and the weighted-average grant-date fair value per share or unit during the quarters ended March 29, 2024 and March 31, 2023 are as follows:
Quarter Ended March 29, 2024Quarter Ended March 31, 2023
(In millions, except per share/units amounts)Shares or UnitsWeighted-Average Grant-Date Fair Value
Per Share or Unit
Shares or UnitsWeighted-Average Grant-Date Fair Value
Per Share or Unit
Stock option shares granted(1)
0.4 $50.97 0.4 $54.81 
Restricted stock units granted(2)
0.1 $213.15 0.1 $210.84 
Performance share units granted(3)
0.2 $230.09 0.2 $223.09 
_______________
(1)Other than certain stock options granted in connection with new hires, our stock options generally ratably vest in equal amounts over a three-year period.
(2)Other than certain restricted stock units granted in connection with new hires, our restricted stock units generally cliff vest after three-years.
(3)Our performance share units are subject to performance criteria and generally vest after the three-year performance period.
The aggregate number of shares of our common stock issued under L3Harris SIPs, net of shares withheld for tax purposes, was 0.5 million and 0.3 million for the quarters ended March 29, 2024 and March 31, 2023, respectively.
See Note 10: Stock Options and Other Share-Based Compensation in our Fiscal 2023 Form 10-K for additional information regarding the L3Harris SIPs.
_____________________________________________________________________
12

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE J: ACCUMULATED OTHER COMPREHENSIVE LOSS (“AOCL”)
The components of AOCL are summarized below:
(In millions)Foreign currency translationNet unrealized losses on hedging derivativesUnrecognized postretirement obligationsTotal AOCL
Balance at December 29, 2023$(201)$(65)$68 $(198)
Other comprehensive loss, before reclassifications to earnings and income taxes(26)(4) (30)
Income taxes 1  1 
Other comprehensive loss before reclassifications to earnings, net of income taxes(26)(3) (29)
Losses (gains) reclassified to earnings, before income taxes 3 (12)(9)
Income taxes (1)3 2 
Losses (gains) reclassified to earnings, net of income taxes(1)
 2 (9)(7)
Other comprehensive loss, net of income taxes(26)(1)(9)(36)
Balance at March 29, 2024$(227)$(66)$59 $(234)
Balance at December 30, 2022$(237)$(79)$28 $(288)
Other comprehensive income, before reclassifications to earnings and income taxes7 6  13 
Income taxes (1) (1)
Other comprehensive income before reclassifications to earnings, net of income taxes7 5  12 
Gains reclassified to earnings, before income taxes (2)(14)(16)
Income taxes 1 3 4 
Gains reclassified to earnings, net of income taxes(1)
 (1)(11)(12)
Other comprehensive income (loss), net of income taxes7 4 (11) 
Balance at March 31, 2023$(230)$(75)$17 $(288)
_______________
(1)Losses (gains) reclassified to earnings are included in the “Revenue,” “Interest expense, net” and “Non-service FAS pension income and other, net” line items in our Condensed Consolidated Statement of Operations.
NOTE K: FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in the principal market (or most advantageous market, in the absence of a principal market) for the asset or liability in an orderly transaction between market participants at the measurement date. Entities are required to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value and to utilize a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows:
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.
_____________________________________________________________________
13

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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.
In certain instances, fair value is estimated using quoted market prices obtained from external pricing services. In obtaining such data from the external pricing services, we have evaluated the methodologies used to develop the estimate of fair value in order to assess whether such valuations are representative of fair value, including net asset value (“NAV”). Additionally, in certain circumstances, the NAV reported by an asset manager may be adjusted when sufficient evidence indicates NAV is not representative of fair value.
The following table presents assets and liabilities measured at fair value on a recurring basis (at least annually) at March 29, 2024 and December 29, 2023:
March 29, 2024December 29, 2023
(In millions)TotalLevel 1TotalLevel 1
Assets
Deferred compensation plan assets:(1)
Equity and fixed income securities$112 $112 $106 $106 
Investments measured at NAV:
Corporate-owned life insurance38 37 
Total fair value of deferred compensation plan assets$150 $143 
Liabilities
Deferred compensation plan liabilities:(2)
Equity securities and mutual funds$10 $10 $18 $18 
Investments measured at NAV:
Common/collective trusts and guaranteed investment contracts289 274 
Total fair value of deferred compensation plan liabilities$299 $292 
_______________
(1)Represents diversified assets held in “rabbi trusts” primarily associated with our non-qualified deferred compensation plans, which we include in the “Other current assets” and “Other non-current assets” line items in our Condensed Consolidated Balance Sheet, and which are measured at fair value.
(2)Primarily represents obligations to pay benefits under certain non-qualified deferred compensation plans, which we include in the “Compensation and benefits” and “Other long-term liabilities” line items in our Condensed Consolidated Balance Sheet. Under these plans, participants designate investment options (including stock and fixed-income funds), which serve as the basis for measurement of the notional value of their accounts.
The following table presents the carrying amounts and estimated fair values of long-term debt that is not carried at fair value in our Condensed Consolidated Balance Sheet:
March 29, 2024December 29, 2023
(In millions)Carrying AmountFair ValueCarrying AmountFair Value
Term Loan 2025(1)
$ $ $2,250 $2,250 
All other long-term debt, net (including current portion)(2)
11,505 11,258 9,273 9,199 
Long-term debt, including the current portion of long-term debt, net$11,505 $11,258 $11,523 $11,449 
_______________
(1)The carrying value of Term Loan 2025 approximates fair value due to its variable interest rate.
(2)The fair value was estimated using a market approach based on quoted market prices for our debt traded in the secondary market. If measured at fair value, it would be categorized in Level 2 of the fair value hierarchy.
The fair value of our short-term debt approximates the carrying value due to its short-term nature. If measured at fair value, the commercial paper would be classified as level 2 and other short-term debt would be classified as level 3 within the fair value hierarchy.
_____________________________________________________________________
14

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
See Note E: Goodwill and Other Intangible Assets and Note O: Acquisitions and Divestitures in these Notes and Note 13: Acquisitions, Divestitures and Asset Sales in our Fiscal 2023 Form 10-K for additional information regarding fair value measurements associated with acquisitions, divestitures and goodwill.
NOTE L: CHANGES IN ESTIMATES
Many of our contracts utilize the POC cost-to-cost method of revenue recognition. A single estimated profit margin is used to recognize profit for each performance obligation over its period of performance. At the outset of each contract, we gauge its complexity and associated risks and establish an estimated total cost at completion. Due to the long-term nature of many of these contracts, developing these estimates often requires judgment. After establishing the estimated total cost at completion, we follow a standard estimate at completion (“EAC”) process in which we review the progress and performance on our ongoing contracts. As the contracts progress, we may successfully retire risks or complexities and may add additional risks, and we adjust our estimated total cost at completion. For additional discussion of our revenue recognition policies and our EAC process, see “Critical Accounting Estimates” in Part II: Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Fiscal 2023 Form 10-K.
Net EAC adjustments had the following impact to earnings for the periods presented:
Quarter Ended
(In millions, except per share amounts)March 29, 2024March 31, 2023
Net EAC adjustments, before income taxes(1)
$19 $(56)
Net EAC adjustments, net of income taxes$15 $(42)
Net EAC adjustments, net of income taxes, per diluted share$0.08 $(0.22)
_______________
(1)For the quarter ended March 31, 2023, excludes charges of $18 million related to impairments of customer contracts that are included in the “Revenue” and “Cost of revenue” line items in our Condensed Consolidated Statement of Operations.
Revenue recognized from performance obligations satisfied in prior periods was $53 million and $36 million for the quarters ended March 29, 2024 and March 31, 2023, respectively.
NOTE M: BACKLOG
Backlog, which is the equivalent of our remaining performance obligations, represents the future revenue we expect to recognize as we perform on our current contracts. Backlog comprises both funded backlog (i.e., firm orders for which funding is authorized and appropriated) and unfunded backlog. Backlog excludes unexercised contract options and potential orders under ordering-type contracts, such as indefinite delivery, indefinite quantity contracts.
At March 29, 2024, our ending backlog was $32.1 billion. We expect to recognize approximately 50% of the revenue associated with this backlog over the next twelve months and an additional 25% over the following twelve months, with the remainder to be recognized thereafter.
NOTE N: RESTRUCTURING AND OTHER EXIT COSTS
From time to time, we record charges for restructuring and other exit activities related to changes in management structure and fundamental reorganizations that affect the nature and focus of operations, such as our LHX NeXt initiative, described below. Such charges may include severance benefits and costs to consolidate facilities or relocate employees. We record these charges at their fair value when incurred. In cases where employees are required to render service until they are terminated in order to receive the termination benefits and will be retained beyond the minimum retention period, we record the expense ratably over the future service period. These charges are included as a component of the “General and administrative expenses” line item in our Consolidated Statement of Operations.
LHX NeXt initiative. LHX NeXt is our initiative to transform multiple functions, systems and processes to increase agility and competitiveness, as discussed in more detail under the “Operating Environment, Strategic Priorities and Key Performance Measures” section in Part II: Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Fiscal 2023 Form 10-K.
In connection with our LHX NeXt program restructuring activities, we recorded employee severance related charges of $64 million during the quarter ended March 29, 2024. At March 29, 2024, we had remaining liabilities of $55 million, which we expect will be paid in the next twelve months.
_____________________________________________________________________
15

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Our liabilities for restructuring are included in the “Compensation and benefits” line item in our Condensed Consolidated Balance Sheet. Changes to our liabilities for restructuring and other exit costs during the quarter ended March 29, 2024 were as follows:
(In millions)Employee Severance Related Costs
Balance at December 29, 2023$4 
Additional provisions64 
Payments(13)
Total changes51 
Balance at March 29, 2024$55 
NOTE O: ACQUISITIONS AND DIVESTITURES
Acquisition of AJRD
On July 28, 2023, we acquired AJRD, a technology-based engineering and manufacturing company that develops and produces missile solutions and technologies for strategic defense, missile defense, and hypersonic and tactical systems, as well as space propulsion and power systems for national security space and exploration missions. The acquisition provides us access to a new market. We acquired 100% of AJRD for a total net purchase price of $4,715 million. The acquisition was financed through the issuance and sale of $3.25 billion aggregate principal amount of new long-term fixed-rate debt consisting of the 5.4% 2027 Notes, the 5.4% 2033 Notes and the 5.6% 2053 Notes (collectively, the “AJRD Notes”) and a draw down under the 2023 Credit Agreement. See Note 8: Debt and Credit Arrangements in our Fiscal 2023 Form 10-K for further information regarding the financing of the AJRD acquisition.
Net assets and results of operations of AJRD are reflected in our financial results commencing on July 28, 2023, the acquisition date, and are reported in our AR segment, which is also the AR reporting unit, and corporate headquarters.
We accounted for the acquisition of AJRD using the acquisition method of accounting, which required us to measure identifiable assets acquired and liabilities assumed in the acquiree at their fair values as of the acquisition date, with the excess of the consideration transferred over those fair values recorded as goodwill. Our preliminary fair value estimates and assumptions are subject to change as we obtain additional information over the measurement period and our measurement of certain assets and contingencies, such as intangible assets, property, plant and equipment, real estate held for development and leasing, loss contracts, environmental matters and related deferred tax impacts remain preliminary for completion of the related valuations.
As of the acquisition date, the fair value of consideration transferred consisted of the following:
(In millions)July 28, 2023
Cash consideration paid for AJRD outstanding common stock & equity awards$4,748 
AJRD debt settled by L3Harris257 
Cash consideration paid5,005 
Less cash acquired(290)
Fair value of consideration transferred$4,715 
_____________________________________________________________________
16

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table summarizes the preliminary allocation of the fair value of consideration transferred to assets acquired and liabilities assumed as of the acquisition date:
July 28, 2023
(In millions)Preliminary
Measurement Period Adjustments, Net(1)
Preliminary
Adjusted
Receivables$156 $— $156 
Contract assets338 (69)269 
Inventories14 — 14 
Other current assets117 19 136 
Property, plant and equipment574 11 585 
Goodwill2,348 125 2,473 
Other intangible assets2,860  2,860 
Other non-current assets609 65 674 
Total assets acquired$7,016 $151 $7,167 
Current portion of long-term debt, net$1 $— $1 
Accounts payable145 — 145 
Contract liabilities310 45 355 
Compensation and benefits116 1 117 
Income taxes payable6 (1)5 
Other accrued items278 81 359 
Long-term debt, net41 — 41 
Deferred income taxes398 82 480 
Other long-term liabilities1,006 (57)949 
Total liabilities assumed$2,301 $151 $2,452 
Fair value of consideration transferred$4,715 $ $4,715 
_______________
(1)Fair value adjustments during the measurement period primarily related to EAC updates, refinements to the fair value of fixed assets, as well as an update to the deferred tax liability which was offset by the release of a portion of the uncertain tax position previously booked by AJRD.
We determined the fair value of assets acquired and liabilities assumed by using available market information and various valuation methods that require judgment related to estimates. Our accounting for the acquisition of AJRD remains preliminary. Amounts recorded associated with these assets and liabilities are based on preliminary calculations and estimates. Our preliminary estimates and assumptions are subject to change as we obtain additional information during the measurement period (up to one year from the acquisition date). Any potential adjustments made could be material in relation to the preliminary values presented above.
_____________________________________________________________________
17

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Intangible Assets. All finite-lived intangible assets identified in the AJRD acquisition are subject to amortization. The preliminary fair value and weighted-average amortization period of identifiable intangible assets acquired as of the acquisition date is as follows:
TotalUseful Lives
(In millions)(In Years)
Customer relationships:(1)
Backlog$355 
3
Government programs2,385 
15 - 20
Total customer relationships2,740 
Trade names120 
15
Total identifiable intangible assets acquired$2,860 
_______________
(1)AJRD had backlog and government programs intangible assets that we classified as customer relationships.
The fair value of intangible assets is estimated using the relief from royalty method for the acquired trade names and the multi-period excess earnings method for the acquired customer relationships. Both of these level 3 fair value methods are income-based valuation approaches, which require judgment to estimate appropriate discount rates, royalty rates related to the trade names intangible assets, revenue growth attributable to the intangible assets and remaining useful lives.
Forward Loss Provision. We have recorded a preliminary forward loss provision of $124 million which was included in the ”Other accrued items” line item in our Condensed Consolidated Balance Sheet. The forward loss provisions will be recognized as a reduction to cost of sales as we incur costs to satisfy the associated performance obligations. There will be no net impact on our Condensed Consolidated Statement of Operations. We recognized $14 million of amortization related to the forward loss provision in the quarter ended March 29, 2024.
Off-market Customer Contracts. We have identified certain contractual obligations with customers with economic returns that are higher or lower than could be realized in market transactions as of the acquisition date and have recorded liabilities for the preliminary acquisition date fair value of the off-market components. The preliminary acquisition date fair value of the off-market components is a net liability of $115 million, consisting of $34 million and $81 million included in the “Other accrued items” and “Other long-term liabilities” line items in our Condensed Consolidated Balance Sheet, respectively, and excludes any amounts already recognized in forward loss provisions (see discussion in the preceding paragraph). We measured the fair value of these components as the amount by which the terms of the contract with the customer deviates from the terms that a market participant could have achieved at the acquisition date. The off-market components of these contracts will be recognized as an increase to revenue as we incur costs to satisfy the associated performance obligations. We recognized $8 million of amortization related to off-market contract liabilities in the quarter ended March 29, 2024.
Goodwill. The $2,473 million of goodwill recognized is attributable to AJRD’s market presence as the provider of advanced propulsion and power systems for nearly every major U.S. space and missile program, the assembled workforce and established operating infrastructure. The acquired goodwill is not tax deductible. See Note E: Goodwill and Other Intangible Assets in these Notes for further information.
Financial Results. Revenue and income before income taxes of AR included in our Condensed Consolidated Statement of Operations for the quarter ended March 29, 2024 were $542 million and $72 million, respectively. Unaudited pro forma financial results of the operations acquired with AJRD for the quarter ended March 31, 2023 were $566 million of revenue and $60 million of income before income taxes, which were prepared as if the acquisition was completed on the first day of our fiscal 2023, December 31, 2022. The proforma results include adjustments to remove costs directly attributable to the acquisition, such as transaction-related costs and the impact of purchase price adjustments, and certain corporate expenses such as pension, interest, and amortization. The pro forma results do not include any integration synergies and are not necessarily indicative of our results of operations that actually would have been obtained had the acquisition of AJRD been completed for the period presented, or which may be realized in the future.
Acquisition-Related Costs. Acquisition-related costs have been expensed as incurred. In connection with the AJRD acquisition, we recorded transaction and integration costs of $28 million for the quarter ended March 29, 2024, which were included in the “General and administrative expenses” line item in our Condensed Consolidated Statement of Operations.
_____________________________________________________________________
18

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Pending Divestiture of CAS Disposal Group
During the quarter ended December 29, 2023, we entered into a definitive agreement to sell our CAS Disposal Group for a cash purchase price of $700 million, with additional contingent consideration of up to $100 million, subject to customary purchase price adjustments and closing conditions as set forth in the agreement. As of March 29, 2024, the fair value less costs to sell of the CAS Disposal Group was $891 million, inclusive of consideration related to noncontrolling interest and accumulated other comprehensive income. Income before income taxes for the quarters ended March 31, 2023 and March 29, 2024 were $17 million and $21 million, respectively. The CAS Disposal Group, which is part of our IMS segment, provides integrated aircraft avionics, pilot training and data analytics services for the commercial aviation industry. The transaction is expected to close in fiscal 2024.
In connection with the preparation of our financial statements for fiscal 2023, we concluded that goodwill related to the CAS Disposal Group was impaired and we recorded a non-cash impairment charge of $296 million, which is included in the Impairment of goodwill and other assets line item. See Note 6: Goodwill and Intangible Assets in our Fiscal 2023 Form 10-K. Additionally, we recognized a pre-tax loss of $77 million included in the “Asset group and business divestiture-related (losses) gains, net” line item in our Consolidated Statement of Operations in our Fiscal 2023 Form 10-K.
The carrying amounts of the assets and liabilities of the CAS Disposal Group is classified as held for sale in our Condensed Consolidated Balance Sheet as of March 29, 2024 were as follows:
(In millions)March 29, 2024
Receivables, net$94 
Contract assets48 
Inventories162 
Other current assets23 
Property, plant and equipment, net41 
Goodwill534 
Other intangible assets, net263 
Other non-current assets48 
Valuation allowance(77)
Total assets held for sale$1,136 
Accounts payable$93 
Contract liabilities49 
Compensation and benefits6 
Other accrued items34 
Other long-term liabilities63 
Total liabilities held for sale$245 
Fair Value of Businesses and Goodwill Allocation. For purposes of allocating goodwill to the disposal groups that represent a portion of a reporting unit, which is our business segment level or one level below the business segment, we determine the fair value of each disposal group based on the respective negotiated selling price, and the fair value of the retained businesses of the respective reporting unit based on a combination of market-based and income based valuation techniques, utilizing quoted market prices, comparable publicly reported transactions and projected discounted cash flows. These fair value determinations are categorized as Level 3 in the fair value hierarchy due to their use of internal projections and unobservable measurement inputs. See Note E: Goodwill and Other Intangible Assets and Note K: Fair Value Measurements in these Notes for additional information.
NOTE P: BUSINESS SEGMENT INFORMATION
We structure our operations primarily around the products, systems and services we sell and the markets we serve and report our financial results in the following four reportable segments:
SAS: including space payloads, sensors and full-mission solutions; classified intelligence and cyber; avionics; electronic warfare; and mission networks for air traffic management operations;
IMS: including multi-mission intelligence, surveillance and reconnaissance (“ISR”) systems; passive sensing and targeting; electronic attack; autonomy; power and communications; networks; sensors; and the CAS Disposal Group, which includes aviation products and pilot training operations, see Note O: Acquisitions and Divestitures;
CS: including tactical communications with global communications solutions; broadband communications; integrated vision solutions; and public safety radios, and system applications and equipment; and
AR: including missile solutions with propulsion technologies for strategic defense, missile defense, and hypersonic and tactical systems; and space propulsion and power systems for national security space and exploration missions.
Business Realignment
Effective for fiscal 2024, to better align our businesses, we adjusted our SAS and IMS segments.
SAS. We combined our Advanced Combat Systems and Mission Avionics sectors into the Airborne Combat Systems (“ACS”) sector, as described below.
ACS: Sensors, processors, hardened electronics, release systems, displays and antennas for aircraft platforms, threat warning, countermeasures and launched efforts for airborne, ground and maritime platforms.
IMS. We split our EO sector into two sectors, as described below, and transferred one business from EO to our Maritime sector.
GOS: passive sensing and targeting and laser imaging and sensor systems.
DE: fuzing, navigation and range-testing solutions and space communications and avionics.
Business Segment Financial Information
Segment revenue, segment operating income and a reconciliation of segment operating income to total income before income taxes are as follows:
Quarter Ended
(In millions)March 29, 2024March 31, 2023
Revenue
SAS$1,751 $1,655 
IMS1,669 1,700 
CS1,294 1,163 
AR542 **
Corporate eliminations(45)(47)
Total revenue$5,211 $4,471 
Income before Income Taxes
Operating income:
SAS
$216 $187 
IMS
190 185 
CS310 266 
AR72 **
Total segment 788 638 
Total unallocated corporate expenses(410)(245)
Total operating income378 393 
Non-service FAS pension income and other, net88 82 
Interest expense, net(176)(102)
Income before income taxes$290 $373 
_______________
**    AR is a reportable segment established during the quarter ended September 29, 2023, which consists of operations of AJRD. As such, there is no comparable prior year information.
Unallocated Corporate Expenses
Total unallocated corporate expenses include corporate items such as a portion of management and administration, legal, environmental, compensation, retiree benefits, other corporate expenses and eliminations and the FAS/Cost Accounting Standards (“CAS”) operating adjustment. Total unallocated corporate expenses also
include the portion of corporate costs not included in management’s evaluation of segment operating performance, such as amortization of acquisition-related intangibles; additional cost of revenue related to the fair value step-up in inventory sold; merger, acquisition, and divestiture-related expenses; asset group and business divestiture-related (losses) gains, net; impairment of goodwill and other assets; gain on sale of property, plant and equipment; LHX NeXt implementation costs; and other items.
FAS/CAS Pension Operating Adjustment
In accordance with CAS, we allocate a portion of pension and OPEB plan costs to our U.S. Government contracts. However, our Condensed Consolidated Financial Statements require pension and OPEB plan income or expense to be calculated in accordance with FAS requirements under GAAP. The “FAS/CAS operating adjustment” line item in the table below represents the difference between the service cost component of FAS pension and OPEB cost and total CAS pension and OPEB cost. The non-service cost components of FAS pension and OPEB income or expense are included as component of the “Non-service FAS pension income and other, net” line item in our Condensed Consolidated Statement of Operations. See Note H: Retirement Benefits in these Notes for more information on the composition of non-service cost components of FAS pension and OPEB income and expense.
The table below is a reconciliation of the FAS/CAS operating adjustment:
Quarter Ended
(In millions)March 29, 2024March 31, 2023
FAS pension service cost$(8)$(6)
Less: CAS pension cost(15)(28)
FAS/CAS operating adjustment7 22 
Non-service FAS pension income80 77 
FAS/CAS pension adjustment, net$87 $99 
Disaggregation of Revenue
We disaggregate revenue for all four business segments by customer relationship, contract type and geographical region. We believe these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
Quarter Ended
March 29, 2024March 31, 2023
(In millions)SASIMSCSARSASIMSCSAR
Revenue By Customer Relationship
Prime contractor$1,108 $1,066 $913 $153 $1,010 $1,154 $807 **
Subcontractor628 587 367 389 632 525 343 **
Intersegment15 16 14  13 21 13 **
Total segment$1,751 $1,669 $1,294 $542 $1,655 $1,700 $1,163 **
Revenue By Contract Type
Fixed-price(1)
$1,108 $1,278 $1,065 $302 $1,022 $1,286 $978 **
Cost-reimbursable628 375 215 240 620 393 172 **
Intersegment15 16 14  13 21 13