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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)


☑			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 32, ~~2025~~2026


☐			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: (321) 727-9100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $1.00 per share

LHX

New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

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. Yes ☑ No ☐

~~Act~~Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of ~~1934~~Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to ~~file~~submit such ~~reports~~files)~~, and (2) has been~~ . Yes ☑ No ☐

~~subject~~Indicate toby ~~such~~check ~~filing~~mark ~~requirements~~whether ~~for~~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 ~~past~~definitions ~~90 days~~of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~Yes ☑ 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). Yes ☑ 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

☑

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. ☐

~~with~~Indicate ~~any~~by ~~new~~check ormark ~~revised~~whether ~~financial~~the ~~accounting~~registrant ~~standards~~has ~~provided~~filed ~~pursuant~~a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 13404(ab) of the ~~Exchange~~Sarbanes-Oxley Act (15 U.S.C. ☐ 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

~~Indicate~~If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the ~~registrant~~financial ~~has~~statements ~~filed~~of athe ~~report~~registrant onincluded ~~and~~in ~~attestation~~the tofiling ~~its~~reflect ~~management’s~~the ~~assessment~~correction of ~~the~~an ~~effectiveness~~error ofto ~~its~~previously issued financial statements.☐

~~internal~~ ~~control~~Indicate ~~over~~by ~~financial~~check ~~reporting~~mark ~~under~~whether ~~Section~~any ~~404(b)~~ of ~~the~~those ~~Sarbanes-Oxley~~error ~~Act~~corrections ~~(15~~are ~~U.S.C.~~restatements ~~7262(b))~~that required a recovery analysis of incentive-based compensation received by any of the ~~registered~~registrant’s ~~public~~executive ~~accounting~~officers during the relevant recovery period pursuant to §240.10D-1(b).☐

firm that prepared or issued its audit report. ☑

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant

included in the filing reflect the correction of an error to previously issued financial statements.☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based

compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The aggregate market value of the voting common equity held by non-affiliates of the registrant at June 2827, ~~2024~~2025 was $4246,~~471~~020,~~412~~545,~~123~~333 (based on the quoted closing sale price per share of the stock on the New York Stock Exchange). For purposes of this calculation, the registrant has assumed that its directors and executive officers as of June 27, 2025 are affiliates.

~~(based~~The onnumber ~~the~~of ~~quoted~~shares ~~closing~~outstanding ~~sale price per share~~ of the ~~stock~~registrant’s oncommon ~~the~~stock ~~New~~as ~~York Stock Exchange). For purposes~~ of ~~this calculation~~February 6, ~~the~~2026 ~~registrant~~was 186,776,263.

has assumed that its directors and executive officers as of June 28, 2024 are affiliates.

The number of shares outstanding of the registrant’s common stock as of February 7, 2025 was 188,313,839.

Documents Incorporated by Reference:

Portions of the registrant’s definitive Proxy Statement for the ~~2025~~2026 Annual Meeting of Shareholders scheduled to be held on ~~April~~May 1811, 2026, which will be filed with the Securities and Exchange Commission within 120 days after the end of the registrant’s fiscal year ended January 2, 2026, are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent described therein.

2025, which will be filed with the Securities and Exchange Commission within 120 days after the end of the registrant’s fiscal year ended

January 3, 2025, are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent described therein.

L3HARRIS TECHNOLOGIES, INC.

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 32, ~~2025~~2026

TABLE OF CONTENTS


		Page No.

Part I:
	ITEM 1. Business	1
	ITEM 1A. Risk Factors	5
	ITEM 1B. Unresolved Staff Comments	16
	ITEM 1 C . Cybersecurity	16
	ITEM 2. Properties	17
	ITEM 3. Legal Proceedings	17
	ITEM 4. Mine Safety Disclosures	18
	Information about our Executive Officers	18

Part II:
	ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
	ITEM 6. [Reserved]	20
	ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk	35
	ITEM 8. Financial Statements and Supplementary Data	36
	ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	83
	ITEM 9A. Controls and Procedures	83
	ITEM 9B. Other Information	85
	ITEM 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections	85

Part III:
	ITEM 10. Directors, Executive Officers and Corporate Governance	85
	ITEM 11. Executive Compensation	86
	ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	86
	ITEM 13 . Certain Relationships and Related Transactions, and Director Independence	86
	ITEM 14. Principal Accounting Fees and Services	86

Part IV:
	ITEM 15. Exhibits, Financial Statement Schedules	87
	ITEM 16. Form 10-K Summary	91

Signatures		92

		Page No.
Part I:
	ITEM 1. Business .................................................................................................................................	1
	ITEM 1A. Risk Factors ............................................................................................................................	5
	ITEM 1B. Unresolved Staff Comments ...............................................................................................	15
	ITEM 1C. Cybersecurity .........................................................................................................................	15
	ITEM 2. Properties ...............................................................................................................................	17
	ITEM 3. Legal Proceedings .................................................................................................................	17
	ITEM 4. Mine Safety Disclosures .......................................................................................................	17
	Information about our Executive Officers ..............................................................................................	18
Part II:
	ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...........................................................................................	18
	ITEM 6. [Reserved] ...............................................................................................................................	20
	ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .............................................................................................................................	20
	ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk ........................................	35
	ITEM 8. Financial Statements and Supplementary Data ..............................................................	36
	ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..............................................................................................................................	88
	ITEM 9A. Controls and Procedures .....................................................................................................	88
	ITEM 9B. Other Information .................................................................................................................	91
	ITEM 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections .......................	91
Part III:
	ITEM 10. Directors, Executive Officers and Corporate Governance .............................................	91
	ITEM 11. Executive Compensation .....................................................................................................	92
	ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .............................................................................................................	92
	ITEM 13. Certain Relationships and Related Transactions, and Director Independence .........	92
	ITEM 14. Principal Accounting Fees and Services ...........................................................................	92
Part IV:
	ITEM 15. Exhibits, Financial Statement Schedules .........................................................................	93
	ITEM 16. Form 10-K Summary ...........................................................................................................	98
Signatures .....................................................................................................................................................................		99

_____________________________________________________________________

PART I


ITEM 1.			BUSINESS.

General

L3Harris Technologies, Inc. is the Trusted Disruptor ~~for~~in the defense industry. With customers’ mission-critical needs in mind, we deliver end-to-end technology solutions connecting the space, air, land, sea and cyber domains in the interest of national security. We support customers in more than 100 countries, with our largest customers being various departments and agencies of the U.S. Government, their prime contractors and international allies. Our capabilities have defense and civil government applications, as well as commercial applications.

~~needs~~Our infiscal ~~mind~~year ends on the Friday nearest December 31. The fiscal year ended January 2, we2026 ~~deliver~~(“fiscal ~~end-to-end~~2025”) ~~technology~~included ~~solutions~~52 ~~connecting~~weeks, fiscal year ended January 3, 2025 (“fiscal 2024”) included 53 weeks, and the ~~space~~fiscal year ended December 29, ~~air~~2023 (“fiscal 2023”) included 52 weeks. Unless the context otherwise requires, ~~land~~the terms “we,” ~~sea~~“our,” “us,” “Company” and ~~cyber~~“L3Harris” ~~domains~~as used in this Annual Report on Form 10-K (this “Report”) mean L3Harris Technologies, Inc. and its subsidiaries.

the interest of global security. We support government customers in more than 100 countries, with our largest

customers being various departments and agencies of the U.S. Government, their prime contractors and

international allies. Our products and services have defense and civil government applications, as well as

commercial applications.

Our fiscal year ends on the Friday nearest December 31. The fiscal year ended January 3, 2025 (“fiscal 2024”)

included 53 weeks and fiscal years ended December 29, 2023 (“fiscal 2023”) and December 30, 2022 (“fiscal

2022”) included 52 weeks. Unless the context otherwise requires, the terms “we,” “our,” “us,” “Company” and

“L3Harris” as used in this Report mean L3Harris Technologies, Inc. and its subsidiaries.

Description of Business Segments

We structure our operations primarily around the ~~products~~capabilities we provide and we report our financial results in four operating segments, ~~systems~~which are also our reportable segments or business segments. From time to time, we acquire or divest businesses and ~~services~~strategically realign businesses within and across our business segments to optimize existing capabilities and enhance the efficiency with which we ~~sell~~develop and deliver on our contracts. For financial information with respect to our business segments, see Note 14: Business Segments in the ~~markets~~Notes to Consolidated Financial Statements in this Report (the “Notes”). Beginning fiscal 2026, we streamlined our business segments from four business segments to three business segments, more closely aligning common capabilities and business models. See Note 16: Subsequent Events in the Notes.

~~serve,~~Our ~~and~~business wesegments ~~report~~provide ~~our~~a ~~financial~~wide-range ~~results~~of incapabilities ~~four~~to ~~operating~~various ~~segments,~~customers ~~which~~and are ~~also~~described ~~our~~below. ~~reportable segments or~~

~~business~~Communication ~~segments~~Systems (“CS”). ~~From~~Enables ~~time~~warfighters across all domains with solutions critical to ~~time,~~mission wesuccess ~~acquire~~even orin ~~divest~~the ~~businesses~~most contested environments. We are a leading provider of resilient communication solutions for the U.S. Department of War (“DoW”) and ~~strategically~~international, ~~realign~~federal, ~~businesses~~and ~~within~~state agency customers in the following business sectors:

Tactical Communications: Design, manufacture and ~~across~~sustainment ~~our~~of ~~business~~resilient ~~segments~~and tointeroperable ~~optimize~~secure ~~existing~~communication ~~capabilities~~solutions ~~and~~that ~~enhance~~include ~~the~~tactical ~~efficiency~~radios, ~~with~~software, ~~which~~waveforms, wesatellite terminals and end-to-end battlefield systems.

~~develop~~Broadband Communications: Design, manufacture and ~~deliver~~sustainment ~~our~~of ~~products~~resilient and ~~services.~~secure ~~Our~~communication ~~business~~solutions ~~segments~~that ~~provide~~include aintelligence, ~~wide-range~~reconnaissance ofand ~~products~~surveillance (“ISR”) and tactical data links, ~~systems~~software and integrated broadband networks.

~~and~~Integrated ~~services~~Vision toSolutions: ~~various~~Design, ~~customers~~manufacture and ~~are~~sustainment ~~described~~of ~~below.~~a ~~For~~full ~~financial~~suite ~~information~~of helmet-mounted integrated night vision goggles with ~~respect~~leading-edge toimage ~~our~~intensifier ~~business~~tubes, as well as weapon-mounted sights, aiming lasers, and range finders.

~~segments,~~Public ~~see~~Safety ~~Note~~and 14Professional Communications (“PSPC”): ~~Business~~State-of-the-art ~~Segments~~communication inequipment, ~~the~~systems ~~Notes~~and applications for federal agencies, state and local government first responders, utilities and transit agencies.

~~Space~~Integrated &Mission ~~Airborne~~ Systems (“~~SAS~~IMS”). ~~Supplies~~Delivers ~~full~~differentiated mission ~~solutions~~capabilities asand a prime systems integration to support multi-mission ISR, passive sensing and ~~subsystem~~targeting, ~~integrator~~electronic attack, autonomy, power and communications, networks and sensors. IMS specializes in system design, development, integration, production, modernization and sustainment for national security and international customers in the following business sectors:

~~space,~~ISR: ~~airborne~~Airborne passive sensing and ~~cyber~~targeting, ~~domains.~~mission Wesystems ~~provide~~development, ~~top~~integration and life-~~tier~~cycle ~~capabilities~~management infor ~~the~~strategic ~~design~~reconnaissance and air superiority platforms, ~~development~~national command and control, ~~integration~~tactical surveillance, electronic attack, agile strike, mobility, and classified platforms.

~~production~~Maritime: ~~and~~Power, ~~sustainment~~electrical, ofimaging, ~~weapons~~communication and sensor systems for ~~national~~naval ~~security,~~platforms; ~~civil~~integrated ~~government~~autonomous vessels for surface and ~~international~~undersea ~~customers~~operations; fleet management; in-service support; missionization prototyping; and naval integration.

inTargeting ~~the~~& ~~following~~Sensor ~~business~~Systems ~~sectors~~(“TSS”): Multi-domain, multi-spectral electro-optical (“EO”) and infrared (“IR”) sensor systems supporting ISR and target acquisition missions; manufacturing of specialty laser and filter glass materials, laser range finders, target designators and transmitters; and highly scalable autonomous solutions.

~~Space Systems: Intelligence, surveillance and reconnaissance (“ISR”); position, navigation and timing; weather~~ _____________________________________________________________________1

Defense Electronics(“DE”): Space communications and ~~climate~~space ~~monitoring~~flight avionics; ~~missile~~360-degree ~~defense~~visible/midwave IR passive surveillance; protected GPS communications, navigation and ~~ground~~range-~~based~~testing ~~space~~solutions; ~~surveillance~~and ~~networks~~precision electronic components.

~~Intel~~Commercial &Aviation ~~Cyber~~Solutions (“CAS disposal group”): ~~Situational~~On ~~awareness~~March 28, ~~optical~~2025, ~~networks~~the CAS disposal group was divested. See Note 13: Acquisitions and ~~advanced~~Divestitures ~~wireless~~in ~~solutions~~the Notes for ~~classified~~further ~~intelligence~~ information.

Space & Airborne Systems (“SAS”). Supplies full mission solutions as a prime and ~~defense~~subsystem ~~customers~~integrator in the space, airborne and cyber domains. We provide top-tier capabilities in the design, development, integration, production and sustainment of weapons systems for national security, civil government and international customers in the following business sectors:

Space Systems: ISR; position, navigation and timing; weather and climate monitoring; missile defense and ground-based space surveillance networks.

Intel & Cyber: Situational awareness, optical networks and advanced wireless solutions for classified intelligence and defense customers.

Mission Networks: Communications and networking solutions for air traffic management.

Airborne Combat Systems: Sensors, processors, hardened electronics, unmanned aircraft systems, precision weapons, infrared search and tracking, distributed aperture systems and precision pointing, weapons release systems; antennas for aircraft platforms; and threat warning and countermeasures for airborne, ground and maritime platforms.

~~weapons~~Aerojet Rocketdyne (“AR”). Provides propulsion, ~~infrared~~power ~~search~~and armament products and ~~tracking~~systems to U.S. Government, ~~distributed~~including ~~aperture~~the ~~systems~~DoW, National Aeronautics and ~~precision~~Space ~~pointing,~~Administration ~~weapons~~("NASA") ~~release~~and major aerospace and defense prime contractors in the following business sectors:

~~systems;~~Missile ~~antennas~~Solutions: ~~for~~Propulsion ~~aircraft~~technologies ~~platforms;~~ and ~~threat~~armament ~~warning~~systems ~~and~~for ~~countermeasures~~strategic ~~for~~defense, ~~airborne~~missile defense, ~~ground~~hypersonic, tactical and fuzing systems.

~~maritime~~Space ~~platforms~~Propulsion and Power Systems (“SPPS”): Premier propulsion and power systems for national security, space and exploration missions.

Integrated Mission Systems (“IMS”). Delivers differentiated mission capabilities and prime systems integration

to support intelligence, reconnaissance and surveillance (ISR), passive sensing and targeting, electronic attack,

autonomy, power and communications, networks and sensors. IMS specializes in system design, development,

integration, production, modernization and sustainment for national security and international customers in the

following business sectors:

ISR: Airborne passive sensing and targeting, mission systems development, integration and life-cycle

management for strategic reconnaissance, national command and control, tactical surveillance, electronic attack,

agile strike, mobility, and classified platforms.

Maritime: Power, electrical, imaging, communication and sensor systems for naval platforms; integrated

autonomous vessels for surface and undersea operations; fleet management; in-service support; missionization

prototyping; and naval integration.

Global Optical Systems: Multi-domain, multi-spectral electro-optical and infrared (EO/IR) sensor systems

supporting ISR and target acquisition missions; manufacturing of specialty laser and filter glass materials, laser

range finders, target designators and transmitters; and highly scalable autonomous solutions. On January 4, 2025,

we realigned our software solutions business from the ISR sector into Global Optical Solutions and renamed the

sector Targeting & Sensor Systems.

_____________________________________________________________________

Defense Electronics: Space communications and space flight avionics; 360-degree visible/midwave IR passive

surveillance; fuzing, navigation and range-testing solutions; and precision electronic components.

Commercial Aviation Solutions: Integrated aircraft avionics, pilot training and data analytics services for the

commercial aviation industry. At January 3, 2025, Commercial Aviation Solutions (“CAS disposal group”) was

classified as held for sale in our Consolidated Balance Sheet. See Note 13: Acquisitions and Divestitures in the Notes

for further information.

Communication Systems (“CS”). Enables warfighters across all domains with solutions critical to mission

success even in the most contested environments. We are a leading provider of resilient communication solutions

for the U.S. Department of Defense (“DoD”), international, federal, and state agency customers in the following

business sectors:

Tactical Communications: Design, manufacture and sustainment of resilient and interoperable secure

communication solutions that include tactical radios, software, waveforms, satellite terminals and end-to-end

battlefield systems.

Broadband Communications: Design, manufacture and sustainment of resilient and secure communication

solutions that include ISR and tactical data links, software and integrated broadband networks.

Integrated Vision Solutions: Design, manufacture and sustainment of a full suite of helmet-mounted integrated

night vision goggles with leading-edge image intensifier tubes and weapon-mounted sights, aiming lasers, and range

finders.

Public Safety and Professional Communications: State-of-the-art communication equipment, systems and

applications for federal agencies, state and local government first responders, utilities and transit agencies.

Aerojet Rocketdyne (“AR”). Provides propulsion, power and armament products and systems to U.S.

Government, including the DoD, National Aeronautics and Space Administration ("NASA") and major aerospace and

defense prime contractors in the following business sectors:

Missile Solutions: Propulsion technologies and armament systems for strategic defense, missile defense,

hypersonic and tactical systems.

Space Propulsion and Power Systems: Premier propulsion and power systems for national security, space and

exploration missions.

International Business

In fiscal ~~2024~~2025, revenue ~~from products and services~~ where the end consumer is located outside the U.S., including foreign military sales funded through the U.S. Government, whether directly or through prime contractors, was $4.8 billion (22% of our revenue) and came from over 100 countries with no single foreign country accounting for more than 5% of our total revenue. For financial information regarding our domestic and international operations, including long-lived assets, see Note 14: Business Segments in the Notes.

~~including~~The ~~foreign~~majority ~~military~~of ~~sales~~our ~~funded~~international marketing activities are conducted through subsidiaries that operate in the UEurope, Middle East and Africa (“EMEA”) and Asia-Pacific (“APAC”) regions and Canada.S. ~~Government,~~We ~~whether~~also ~~directly~~have orestablished ~~through~~international ~~prime~~marketing ~~contractors,~~organizations and several regional sales offices.

was $4.4 billion (21% of our revenue) and came from a large number of countries with no single foreign country

accounting for more than 5% of our total revenue. For financial information regarding our domestic and international

operations, including long-lived assets, see Note 14: Business Segments in the Notes.

The majority of our international marketing activities are conducted through subsidiaries that operate in the

Europe, Middle East and Africa (“EMEA”) and Asia-Pacific (“APAC”) regions and Canada. We also have established

international marketing organizations and several regional sales offices.

Competitive Conditions and Trends in Market Demand

We operate in highly-competitive markets that are sensitive to technological advances. Some of our competitors in each of our markets are larger than we are and can maintain higher levels of expenditures for research and development (“R&D”). We concentrate on the opportunities that we believe are compatible with our resources, overall technological capabilities and objectives. We also collaborate with innovative partners, such as our strategic partnerships with Palantir Technologies, Shield Capital, Anduril and Amazon Kuiper to develop new capabilities to meet the demands of our customers. Such collaboration is driven by modern market dynamics where competing in our markets requires the ability to fuse hardware, software and artificial intelligence (“AI”). Principal competitive factors are quality and reliability; technological capabilities; service; past performance; ability to develop and implement complex, integrated solutions; ability to meet delivery schedules; and cost-effectiveness. We frequently “partner” or are involved in subcontracting and teaming relationships with companies that are, from time to time, competitors on other programs. We compete domestically and internationally against large defense companies; principally BAE Systems, Boeing, General Dynamics, Lockheed Martin, Northrop Grumman, RTX, Thales and non-traditional defense contractors, such as Anduril, Ursa Major and Silvus Technologies. For further discussion of trends in market demand, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report.

~~in each of our markets are larger than we are and can maintain higher levels of expenditures for research and~~ _____________________________________________________________________2

~~development~~Contractual ~~(“R&D”). We concentrate on the opportunities that we believe are compatible with our resources,~~ Backlog

~~overall~~As ~~technological~~of ~~capabilities~~the ~~and~~end ~~objectives~~of fiscal 2025, our contractual backlog was $38.7 billion. We ~~also~~expect ~~collaborate~~to recognize approximately 45% of the revenue associated with ~~innovative~~such ~~partners~~contractual backlog by the end of fiscal 2026 and approximately 70% by the end of fiscal 2027, ~~such~~with asthe ~~our~~remainder ~~strategic~~to be recognized thereafter. See Note 1: Significant Accounting Policies in the Notes for additional information regarding contractual backlog.

partnerships with Palantir Technologies and Shield Capital to develop new capabilities to meet the demands of our

customers. Such collaboration is required by modern market dynamics where competing in our markets requires the

ability to fuse hardware, software and artificial intelligence (“AI”). Principal competitive factors are product and

system quality and reliability; technological capabilities; service; past performance; ability to develop and

implement complex, integrated solutions; ability to meet delivery schedules; and cost-effectiveness. We frequently

“partner” or are involved in subcontracting and teaming relationships with companies that are, from time to time,

competitors on other programs. We compete domestically and internationally against large defense companies;

principally BAE Systems, Boeing, General Dynamics, Lockheed Martin, Northrop Grumman, RTX, Thales and non-

traditional defense contractors. For further discussion of trends in market demand, see “Item 7. Management’s

Discussion and Analysis of Financial Condition and Results of Operations” of this Report.

_____________________________________________________________________

Backlog

Company-wide total backlog was $34.2 billion and $32.7 billion at January 3, 2025 and December 29, 2023,

respectively. We expect to recognize approximately 45% of the revenue associated with Company-wide total

backlog by the end of fiscal 2025 and approximately 75% of the revenue associated with Company-wide total

backlog by the end of fiscal 2026, with the remainder to be recognized thereafter. See Note 1: Significant Accounting

Policies in the Notes for additional information regarding Company-wide total backlog.

R&D

We conduct R&D activities using our own funds (company-funded R&D) and under contractual arrangements (customer-funded R&D). See Note 1: Significant Accounting Policies in the Notes for further information on company-funded R&D.

(customer-funded R&D). See Note 1: Significant Accounting Policies in the Notes for further information on company-

funded R&D.

Intellectual Property

We own a large portfolio of patents, trade secrets, know-how, confidential information, trademarks, copyrights and other intellectual property and we routinely apply for new patents and copyrights. We also license intellectual property to and from third parties. With regard to certain patents, the U.S. Government has an irrevocable, non-exclusive, royalty-free license, pursuant to which the U.S. Government may use or authorize others to use the inventions covered by such patents. Pursuant to similar arrangements, the U.S. Government may consent to our use of inventions covered by patents owned by other persons.

and other intellectual property and we routinely apply for new patents, trademarks and copyrights. We also license

intellectual property to and from third parties. With regard to certain patents, the U.S. Government has an

irrevocable, non-exclusive, royalty-free license, pursuant to which the U.S. Government may use or authorize others

to use the inventions covered by such patents. Pursuant to similar arrangements, the U.S. Government may consent

to our use of inventions covered by patents owned by other persons. Numerous trademarks used on or in connection

with our products are also considered to be valuable assets.

Government Regulations

Our company is subject to various federal, state, local and international laws and regulations relating to the development, manufacture, sale and distribution of our products and services. Regulations include, but are not limited to, those related to import and export controls, corruption, bribery, the environment, government procurement, competition, product safety, workplace health and safety, employment, labor and data privacy. The following describes significant regulations that may impact our businesses. For further discussion of risks relating to government regulations, see “Item 1A. Risk Factors” of this Report.

~~development~~Government Contracts. In fiscal 2025, ~~manufacture~~the percentage of our revenue that was derived from sales to U.S. Government customers, ~~sale~~whether directly or through prime contractors, including foreign military sales funded through the U.S. Government, was 75% and ~~distribution~~no other customer accounted for more than 5% of our ~~products~~revenue. ~~and~~Additional ~~services,~~information ~~and~~regarding itcustomers isfor each of our ~~policy~~segments tois ~~comply~~provided ~~with~~under ~~the~~“Item 1. Business — Description of Business Segments” of this Report.

~~applicable~~Cost-type ~~laws~~contracts. inOur ~~each~~U.S. ~~jurisdiction~~Government incost-type contracts provide for the reimbursement of allowable costs plus payment of a fee and fall into three basic types: (i) cost-plus fixed-fee contracts, which provide for payment of a fixed fee irrespective of the final cost of performance; (ii) cost-plus incentive-fee contracts, which provide for payment of a fee that may increase or decrease, within specified limits, based on actual results compared with contractual targets relating to factors such as cost, performance and delivery schedule; and (iii) cost-plus award-fee contracts, which provide for payment of an award fee determined at the customer’s discretion based on our performance against pre-established performance criteria. Under our U.S. Government cost-type contracts, we ~~conduct~~are ~~business~~reimbursed periodically for allowable costs and are paid a portion of the fee based on contract progress. ~~Regulations~~Some costs are partially or wholly unallowable for reimbursement by statute or regulation. Examples include certain merger and acquisition costs, ~~but~~lobbying ~~are~~costs, ~~not~~charitable ~~limited~~contributions, tointerest expense, ~~those~~financing costs and certain litigation defense costs.

~~related~~Fixed-price contracts. Our U.S. Government fixed-price contracts are either firm fixed-price contracts or fixed-price incentive contracts. Under our U.S. Government firm fixed-price contracts, we agree to ~~import~~perform a specific scope of work or sell a specific product for a fixed price and, ~~export~~as ~~controls~~a result, ~~corruption~~benefit from cost savings or carry the burden of cost overruns. Under our U.S. Government fixed-price incentive contracts, ~~bribery~~we share with the U.S. Government both savings accrued for performance at less than target cost as well as costs incurred in excess of target cost up to a negotiated ceiling price, which is higher than the ~~protection~~target cost, but carry the entire burden of costs exceeding the ~~environment~~negotiated ceiling price. Under such incentive contracts, ~~government~~profit may also be adjusted up or down depending on whether specified performance objectives are met. Under our U.S. Government firm fixed-price and fixed-price incentive contracts, we generally receive either milestone payments totaling 100% of the contract price or monthly progress payments in amounts equaling 80% of costs incurred under the contract. The remaining amounts, including profits or incentive fees, are billed upon delivery and final acceptance of end items and deliverables under the contract.

~~procurement,~~Our ~~competition,~~production ~~product~~contracts ~~safety,~~are ~~workplace~~mainly ~~health~~fixed-price contracts and ~~safety,~~development ~~employment~~contracts are generally cost-type contracts, ~~labor~~although ~~and~~we ~~data~~have ~~privacy~~some fixed-price development contracts. ~~The~~Time-and-material contracts are considered fixed-price contracts as they specify a fixed hourly rate for each labor hour charged.

~~following describes significant regulations that may impact our businesses. For further discussion of risks relating to~~ _____________________________________________________________________3

~~government~~For ~~regulations~~further discussion of risks relating to U.S. Government contracts, see “Item 1A. Risk Factors,” “Item 3. Legal Proceedings” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report.

~~Government Contracts~~Environmental. InOur ~~fiscal~~operations ~~2024~~are subject to and affected by U.S. federal, state, local and foreign laws and regulations relating to the ~~percentage~~protection of ~~our~~the ~~revenue~~environment. ~~that~~We ~~was~~have ~~derived~~incurred ~~from~~and, ~~sales~~based on currently available information, we expect to continue to incur capital and operating costs to comply with existing and pending environmental laws and regulations. See “Item 1A. Risk Factors” and “Item 3. Legal Proceedings” of this Report and Note 1: Significant Accounting Policies and Note 15: Legal Proceedings, Commitments and Contingencies in the Notes.

~~U.S. Government~~Acquisition ~~customers, including foreign military sales funded through the U.S. Government, whether directly~~ Reform

orWe ~~through~~are ~~prime~~pursuing ~~contractors~~our Trusted Disruptor strategy against the backdrop of acquisition reform, ~~was~~prioritizing ~~76%~~engaging with our customers and nodelivering ~~other~~the ~~customer~~innovation, ~~accounted~~agility ~~for~~and ~~more~~affordability ~~than~~our 5%customers demand from the defense industrial base. Recent reforms to the U.S. Government’s acquisition strategy, including the transformation of ~~our~~the ~~revenue~~Defense Acquisition System into the Warfighting Acquisition System, are fundamentally shifting procurement priorities toward speed, flexibility, and mission outcomes. Under this new approach, the DoW is streamlining contracting processes, delegating greater authority to empowered portfolio acquisition executives, and increasing the use of commercial solutions and alternative contracting methods to accelerate the delivery of urgently needed capabilities. These changes are designed to expand competition, incentivize private investment, and enhance supply chain resilience, which may result in new opportunities and requirements for defense contractors, as well as increased emphasis on rapid innovation and responsiveness in fulfilling government contracts.

Additional information regarding customers for each of our segments is provided under “Item 1. Business —

Description of Business Segments” of this Report.

Cost-type contracts. Our U.S. Government cost-reimbursable contracts provide for the reimbursement of

allowable costs plus payment of a fee and fall into three basic types: (i) cost-plus fixed-fee contracts, which provide

for payment of a fixed fee irrespective of the final cost of performance; (ii) cost-plus incentive-fee contracts, which

provide for payment of a fee that may increase or decrease, within specified limits, based on actual results

compared with contractual targets relating to factors such as cost, performance and delivery schedule; and (iii) cost-

plus award-fee contracts, which provide for payment of an award fee determined at the customer’s discretion based

on our performance against pre-established performance criteria. Under our U.S. Government cost-reimbursable

contracts, we are reimbursed periodically for allowable costs and are paid a portion of the fee based on contract

progress. Some costs are partially or wholly unallowable for reimbursement by statute or regulation. Examples

include certain merger and acquisition costs, lobbying costs, charitable contributions, interest expense, financing

costs and certain litigation defense costs.

Fixed-price contracts. Our U.S. Government fixed-price contracts are either firm fixed-price contracts or fixed-

price incentive contracts. Under our U.S. Government firm fixed-price contracts, we agree to perform a specific

scope of work or sell a specific product for a fixed price and, as a result, benefit from cost savings or carry the

burden of cost overruns. Under our U.S. Government fixed-price incentive contracts, we share with the

U.S. Government both savings accrued for performance at less than target cost as well as costs incurred in excess of

target cost up to a negotiated ceiling price, which is higher than the target cost, but carry the entire burden of costs

exceeding the negotiated ceiling price. Under such incentive contracts, profit may also be adjusted up or down

depending on whether specified performance objectives are met. Under our U.S. Government firm fixed-price and

fixed-price incentive contracts, we generally receive either milestone payments totaling 100% of the contract price

or monthly progress payments in amounts equaling 80% of costs incurred under the contract. The remaining

amounts, including profits or incentive fees, are billed upon delivery and final acceptance of end items and

deliverables under the contract.

_____________________________________________________________________

Our production contracts are mainly fixed-price contracts and development contracts are generally cost-

reimbursable contracts, although we have some fixed-price development contracts. Time-and-material contracts

are considered fixed-price contracts as they specify a fixed hourly rate for each labor hour charged.

For further discussion of risks relating to U.S. Government contracts, see “Item 1A. Risk Factors,” “Item 3.

Legal Proceedings” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of

Operations” of this Report.

Environmental. Our operations are subject to and affected by U.S. federal, state, local and foreign laws and

regulations relating to the protection of the environment. We have incurred and, based on currently available

information, we expect to continue to incur capital and operating costs to comply with existing and pending

environmental laws and regulations. See “Item 1A. Risk Factors” and “Item 3. Legal Proceedings” of this Report and

Note 1: Significant Accounting Policies and Note 15: Legal Proceedings, Commitments and Contingencies in the Notes.

Materials, Suppliers and Seasonality

Because of the diversity of our products and services, as well as the wide geographic dispersion of our facilities, we use numerous sources for the wide array of materials, such as electronic components, printed circuit boards, metals and plastics needed for our operations and products. We depend on suppliers and subcontractors for a large number of components and subsystems. We also rely on a limited number of certified microelectronics component suppliers for our products. We have experienced component shortages from vendors as a result of the global pandemic, natural disasters, or the shifting regulatory landscape. These events or regulations may cause a spike in demand for certain electronic components resulting in industry-wide supply chain disruptions. For further discussion of risks relating to subcontractors and suppliers, see “Item 1A. Risk Factors” of this Report.

weWe ~~use~~do ~~numerous~~not ~~sources~~consider ~~for~~any material portion of our business to be seasonal. Various factors can affect the ~~wide~~distribution ~~array~~of our revenue between accounting periods, including the timing of ~~materials~~contract awards and the timing and availability of U.S. Government funding, ~~such~~as well as ~~electronic~~the ~~components,~~timing ~~printed~~of ~~circuit~~product ~~boards,~~deliveries and customer acceptance.

~~metals~~Human ~~and plastics needed for our operations and products. We depend on suppliers and subcontractors for a large~~ Capital

~~number~~Our ofsuccess ~~components~~depends on our skilled workforce. Attracting, developing, motivating and ~~subsystems~~retaining highly-skilled people, particularly those with technical, engineering and science backgrounds, and in many cases, security clearances, is critical to our ability to execute our strategic priorities. We ~~also~~use ~~rely~~human oncapital ameasures ~~limited~~to ~~number~~set ofgoals ~~certified~~and ~~microelectronics~~monitor ~~component~~performance in several areas, including health and safety and talent.

~~suppliers~~Workforce ~~for~~Demographics. We had approximately 45,000 employees as of January 2, 2026, including approximately 18,000 engineers and scientists. Of our ~~products~~total employees, 90% were located in the U.S. WeAs ~~have~~of ~~experienced~~January 2, ~~component~~2026, ~~shortages~~approximately ~~from~~2,600, ~~vendors~~or 6%, of our U.S. employees were covered by various collective bargaining agreements, which we expect will be renegotiated as athey ~~result~~expire, ofas ~~the~~we ~~global~~historically have done without significant disruption to operating activities.

~~pandemic,~~Health ~~natural~~and ~~disasters,~~Safety. orWe prioritize the ~~shifting~~safety ~~regulatory~~of ~~landscape~~our employees through maintaining a proactive safety culture and implementing programs designed to eliminate workplace incidents, risks and hazards. ~~These~~Throughout ~~events~~the oryear, ~~regulations~~we ~~may~~review ~~cause~~and amonitor ~~spike~~our inperformance closely to reduce incidents.

~~demand~~Talent ~~for~~Strategy. ~~certain~~We ~~electronic~~are ~~components~~focused ~~resulting~~on inensuring ~~industry-wide~~we ~~supply~~maintain ~~chain~~a ~~disruptions~~balanced talent portfolio. ~~For~~Attracting ~~further~~new perspectives, ideas and capabilities, recognizing and rewarding performance, offering professional development and career growth opportunities, and providing an engaging employee experience that retains talent are strategic priorities. We strive to attract employees in all stages of their careers.

~~discussion~~We ofhired ~~risks~~approximately ~~relating~~6,000 tonew ~~subcontractors~~employees in fiscal 2025. We offer competitive salaries and ~~suppliers~~comprehensive benefit packages, ~~see~~including ~~“Item 1A.~~health ~~Risk~~care, ~~Factors”~~retirement ofplanning ~~this~~and ~~Report~~employer retirement contributions, educational assistance, child and elder back-up care, paid parental leave, and a discretionary paid time off program.

~~We do not consider any material portion of our business to be seasonal. Various factors can affect the~~ _____________________________________________________________________4

distribution of our revenue between accounting periods, including the timing of contract awards and the timing and

availability of U.S. Government funding, as well as the timing of product deliveries and customer acceptance.

Human Capital and Sustainability

Our success depends on our skilled workforce. Attracting, developing, motivating and retaining highly-skilled

people, particularly those with technical, engineering and science backgrounds, and in many cases, security

clearances, is critical to our ability to execute our strategic priorities. We use human capital measures to set goals

and monitor performance in several areas, including health and safety and talent.

Additional information regarding our human capital strategy and sustainability goals are available in our 2024

Sustainability Report which we expect to be published in fiscal 2025 on our company website. Information on our

website, including our 2024 Sustainability Report, is not incorporated by reference into this Report.

Workforce Demographics. We had approximately 47,000 employees at January 3, 2025, including

approximately 18,000 engineers and scientists. Of our total employees, 89% were located in the U.S. As of

January 3, 2025, approximately 2,600, or 6%, of our U.S. employees were covered by various collective bargaining

agreements, which we expect will be renegotiated as they expire, as we historically have done without significant

disruption to operating activities.

Health and Safety. We prioritize the safety of our employees through maintaining a proactive safety culture and

implementing programs designed to eliminate workplace incidents, risks and hazards. Throughout the year, we

review and monitor our performance closely to reduce Occupational Safety and Health Administration reportable

incidents.

Talent Strategy. We are focused on ensuring we maintain a balanced talent portfolio. Attracting new

perspectives, ideas and capabilities, recognizing and rewarding performance, offering professional development and

career growth opportunities, and providing an engaging employee experience that retains talent are strategic

priorities. We strive to attract employees in all stages of their careers.

We hired approximately 4,500 new employees in fiscal 2024. We offer competitive salaries and comprehensive

benefit packages, including health care, retirement planning and employer retirement contributions, educational

assistance, child and elder back-up care, paid parental leave, and a discretionary paid time off program.

Sustainability. During fiscal 2024, we updated our environmental sustainability goals: by 2030 we plan to

reduce our Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions by 60%, water usage by 20%, solid waste by

10% from 2021 levels and source 40% of our electricity from renewable sources.

_____________________________________________________________________

Available Information

Our principal executive offices are located at 1025 West NASA Boulevard, Melbourne, Florida 32919. Our website address is https://www.l3harris.com.

~~website~~Our ~~address~~annual isreports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, current reports on Form 8-K and amendments to such reports are available free of charge on our website https://www.l3harris.com/investors, as soon as reasonably practicable after these reports are electronically filed with or furnished to the U.S. Securities and Exchange Commission (“SEC”). We also will provide the reports in electronic or paper form, free of charge, upon written request. Our website and the information posted thereon are not incorporated into this Report or any current or other periodic report that we file with or furnish to the SEC. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, including L3Harris, that file electronically with the SEC.

~~Our~~Additional ~~annual~~information ~~reports~~regarding our human capital strategy and sustainability goals are available in our 2025 Sustainability Report which we expect to be published in fiscal 2026 on ~~Form 10-K,~~our ~~quarterly~~company ~~reports~~website. Information on ~~Form 10-Q~~our website, ~~proxy~~including ~~statements~~our 2025 Sustainability Report, ~~current~~is ~~reports~~not onincorporated ~~Form 8-~~by reference into this Report.

K and amendments to such reports are available free of charge on our website https://www.l3harris.com/investors,

as soon as reasonably practicable after these reports are electronically filed with or furnished to the U.S. Securities

and Exchange Commission (“SEC”). We also will provide the reports in electronic or paper form, free of charge, upon

written request. Our website and the information posted thereon are not incorporated into this Report or any current

or other periodic report that we file with or furnish to the SEC.

Cautionary Statement Regarding Forward-Looking Statements

This Report, including “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that involve risks and uncertainties, as well as assumptions that may not materialize or prove correct, which could cause our results to differ materially from those expressed in or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, statements concerning: our plans, strategies and objectives for future operations; new products, systems, technologies, services or developments; future economic conditions, performance or outlook; future political conditions; the outcome of contingencies or litigation; environmental remediation cost estimates; the potential level of share repurchases, dividends or pension contributions; potential acquisitions or divestitures; the integration of our acquisitions; the value of contract awards and programs; expected revenue; expected cash flows or capital expenditures; our beliefs or expectations; activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future; and assumptions underlying any of the foregoing. Forward-looking statements may be identified by their use of forward-looking terminology, such as “believes,” “expects,” “may,” “could,” “should,” “would,” “will,” “intends,” “plans,” “estimates,” “anticipates,” “projects” and similar words or expressions. You should not place undue reliance on these forward-looking statements, which reflect our management’s opinions only as of the date of filing of this Report and are not guarantees of future performance or actual results. Factors that might cause our results to differ materially from those expressed in or implied by these forward-looking statements, from our current expectations or projections or from our historical results include, but are not limited to, those discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” most notably those listed in the following section of this Report. All forward-looking statements are qualified by, and should be read in conjunction with, those risk factors. Forward-looking statements are made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are made as of the date of filing of this Report, and we disclaim any intention or obligation, other than imposed by law, to update or revise any forward-looking statements, whether as a result of new information, future events or developments or otherwise, after the date of filing of this Report or, in the case of any document incorporated by reference, the date of that document.

Operations,” contains forward-looking statements that involve risks and uncertainties, as well as assumptions that

may not materialize or prove correct, which could cause our results to differ materially from those expressed in or

implied by such forward-looking statements. All statements other than statements of historical fact are statements

that could be deemed forward-looking statements, including, but not limited to, statements concerning: our plans,

strategies and objectives for future operations; new products, systems, technologies, services or developments;

future economic conditions, performance or outlook; future political conditions; the outcome of contingencies or

litigation; environmental remediation cost estimates; the potential level of share repurchases, dividends or pension

contributions; potential acquisitions or divestitures; the integration of our acquisitions; the value of contract awards

and programs; expected revenue; expected cash flows or capital expenditures; our beliefs or expectations;

activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the

future; and assumptions underlying any of the foregoing. Forward-looking statements may be identified by their use

of forward-looking terminology, such as “believes,” “expects,” “may,” “could,” “should,” “would,” “will,” “intends,”

“plans,” “estimates,” “anticipates,” “projects” and similar words or expressions. You should not place undue

reliance on these forward-looking statements, which reflect our management’s opinions only as of the date of filing

of this Report and are not guarantees of future performance or actual results. Factors that might cause our results to

differ materially from those expressed in or implied by these forward-looking statements, from our current

expectations or projections or from our historical results include, but are not limited to, those discussed in “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations,” most notably those listed

in the following section of this Report. All forward-looking statements are qualified by, and should be read in

conjunction with, those risk factors. Forward-looking statements are made in reliance on the safe harbor provisions

of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities

Exchange Act of 1934, as amended (the “Exchange Act”), and are made as of the date of filing of this Report, and we

disclaim any intention or obligation, other than imposed by law, to update or revise any forward-looking statements,

whether as a result of new information, future events or developments or otherwise, after the date of filing of this

Report or, in the case of any document incorporated by reference, the date of that document.


ITEM 1A.			RISK FACTORS.

Our business, financial condition, results of operations, cash flows and equity are subject to, and could be materially adversely affected by, various risks and uncertainties, including, without limitation, those set forth below, any one of which could cause our actual results to vary materially from recent results or our anticipated future results.

materially adversely affected by, various risks and uncertainties, including, without limitation, those set forth below,

any one of which could cause our actual results to vary materially from recent results or our anticipated future

results.

Macroeconomic, Industry and Governmental Risks

We depend on winning profitable business in competitive markets from U.S. Government customers for a significant portion of our revenue. We are highly dependent on revenue from U.S. Government customers, primarily defense-related programs with the DoW and other government agencies.

~~portion~~The ofmarket ~~our~~for ~~revenue~~sales to U.S. WeGovernment ~~are~~customers is highly ~~dependent~~competitive onand ~~revenue~~the ~~from~~U.S. Government may choose to use other contractors as part of competitive bidding processes or otherwise. The U.S. Government ~~customers~~has increasingly relied on certain types of contracts that are subject to multiple competitive bidding processes, ~~primarily~~including ~~defense~~multi-vendor indefinite-delivery, indefinite-quantity (“IDIQ”), government-wide acquisition contracts, General

~~related programs with the DoD and other government agencies.~~_____________________________________________________________________5

Services Administration Schedules and other multi-award contracts, which has resulted in greater competition and increased pricing pressure. The ~~market~~DoW’s ~~for~~current ~~sales~~procurement reform initiative, including the increased use of other transaction authority (“OTA”) agreements, could reduce barriers to Uentry and result in even greater competition and increased pricing pressure.S. ~~Government~~OTAs ~~customers~~are isnot ~~highly~~subject ~~competitive~~to many traditional procurement laws, including the Federal Acquisition Regulation (“FAR”), and in some instances, an OTA award may require that a significant part of the Uwork be carried out by a non-traditional defense contractor or that a portion of the prototype project's costs be covered by non-governmental sources.S Some of our competitors, including non-traditional new entrants to defense-related programs, have greater financial resources than we do and may have more extensive or more specialized engineering, manufacturing and marketing capabilities than we do in some areas. ~~Government~~We may not be able to continue to win competitively awarded contracts or to obtain task orders under multi-award contracts, especially with increased competition. We may choose not to bid in certain competitive bidding processes, which would result in the potential loss of opportunities, or we may choose to partner with competitors, which could expose our business to additional factors beyond our control. Additionally, bid protests from unsuccessful bidders can result in significant expense or delay, contract modification or contract rescission as a result of our competitors protesting or challenging contracts awarded to us.

toA ~~use~~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, cash flows and equity. Our U.S. Government programs must compete with programs managed by other government contractors asand ~~part~~with other policy imperatives for consideration for limited resources and for uncertain levels of ~~competitive~~funding ~~bidding~~during ~~processes~~the orbudget ~~otherwise~~and appropriations process. ~~The~~Although multi-year contracts may be authorized and appropriated in connection with major procurements, Congress generally appropriates funds on a U.S. Government ~~has~~fiscal year (“GFY”) basis. Procurement funds are typically disbursed over the course of one to three years. Consequently, programs often initially receive only partial funding, and additional funds are obligated only as Congress authorizes further appropriations.

~~increasingly~~We ~~relied~~cannot onpredict ~~certain~~the ~~types~~extent to which total funding and/or funding for individual programs will be changed as part of ~~contracts~~the ~~that~~annual appropriations process ultimately approved by Congress and the President or in separate supplemental appropriations or continuing resolutions, as applicable. Budget and appropriations decisions made by the U.S. Government are ~~subject~~outside of our control and may have long-term consequences for our business. U.S. Government spending priorities and levels remain uncertain and difficult to ~~multiple~~predict. ~~competitive~~This ~~bidding~~uncertainty ~~processes~~could be exacerbated by procurement reform initiatives that could result in more frequent changes to program funding, ~~including~~scope, or priorities, increasing the risk of contract modifications, terminations, or delays, and making it more difficult to forecast revenue and resource needs. A change in U.S. Government spending priorities or an increase in non-procurement spending at the expense of our programs, or a reduction in total U.S. Government spending on an absolute or inflation-adjusted basis, could have material adverse consequences on our current or future business.

~~multi-vendor~~Any ~~indefinite-delivery,~~inability ~~indefinite-quantity~~of the U.S. Government to complete its budget process for any GFY and resulting operation on funding levels equivalent to its prior fiscal year pursuant to a Continuing Resolution (“~~IDIQ~~CR”) or shut down, ~~government~~also could have material adverse consequences on our current or future business. For more information see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations -~~wide~~ ~~acquisition~~U.S. ~~contracts,~~and ~~General~~International Budget Environment” of this Report.

~~Services~~Our ~~Administration~~results ~~Schedules~~of operations and ~~other~~cash ~~multi~~flows are substantially affected by our contract mix. Fixed-~~award~~price contracts, ~~which~~particularly ~~has~~for ~~resulted~~development inprograms, could subject us to losses from cost overruns or inflation. In fiscal 2025, 75% of our revenue was derived from fixed-price contracts that allow us to benefit from cost savings, but subject us to the risk of potential cost overruns, including due to greater ~~competition~~than ~~and~~anticipated or a sustained period of increased inflation or unexpected delays because we assume all of the cost burden. If our initial estimates are incorrect, we can lose money (or make more or less money than estimated) on these contracts. Fixed-price U.S. Government contracts can expose us to potentially large losses because the U.S. Government can hold us responsible for completing a project or, in limited circumstances, paying the entire cost of its replacement by another provider.

~~increased~~Contracts ~~pricing~~for ~~pressure~~development programs include complex design and technical requirements and are generally contracted on a cost-type basis, however, some existing development programs are contracted on a fixed-price basis or include cost-type contracting for the development phase with fixed-price production options. ~~Some~~Because many of these contracts involve new technologies and applications and can last for years, unforeseen events, such as technological difficulties, increases in the price of materials, a significant increase in or a sustained period of increased inflation, problems with our ~~competitors~~suppliers, labor market conditions and cost overruns, can result in less favorable economics or even losses over time (which, especially in the case of sharp and significant sustained inflation, could happen quickly and have ~~greater~~long ~~financial~~lasting ~~resources~~impacts). ~~than~~Furthermore, if we do ~~and~~not meet contract deadlines or specifications, we may need to renegotiate contracts on less favorable terms, be forced to pay penalties or liquidated damages or suffer losses if the customer exercises its right to terminate. Some of our contracts have

~~more extensive or more specialized engineering, manufacturing and marketing capabilities than we do in some~~ _____________________________________________________________________6

~~areas.~~provisions Werelating to cost controls and audit rights, and if we fail to meet the terms specified in those contracts, we may not berealize ~~able~~their tofull ~~continue~~benefits. Cost overruns would adversely impact our results of operations, which are dependent on our ability to ~~win~~maximize ~~competitively~~our ~~awarded~~earnings from our contracts, orand tothe ~~obtain~~potential ~~task~~risk ~~orders~~would ~~under~~be ~~multi~~greater if our contracts shifted toward a greater percentage of fixed-price contracts, particularly firm fixed-price contracts, as opposed to cost-type and time-and-material contracts.

~~award~~To the extent feasible, we have consistently followed the practice of contractually adjusting our prices to reflect the impact of inflation on salaries and fringe benefits for employees and the cost of purchased materials and services and in some cases seeking the inclusion of adjustment clauses to incorporate certain cost adjustments in fixed-price contracts for unexpected inflation. ~~Further~~However, ~~competitive~~we ~~bidding~~may ~~processes~~not ~~involve~~be ~~significant~~successful ~~cost~~in accurately accounting for all increased costs, and ~~managerial~~our ~~time~~fixed-price contracts could subject us to ~~prepare~~losses ~~bids~~in the event of cost overruns or a significant increase in or a sustained period of increased inflation if we are unable to account for and receive cost adjustments in our fixed-price contracts.

~~_____________________________________________________________________~~Any or all of the foregoing could have a negative impact on our business, financial condition, results of operations, cash flows and equity.

6The application or impact of negative audit findings, contract termination, unilateral government action, or regulation on our government contracts could have an adverse impact on our business, financial condition, results of operations, cash flows and equity. U.S. Government contracts are generally subject to U.S. Government oversight audits, which could result in adjustments to our contract costs. Any costs found to be improperly allocated to a specific contract will not be reimbursed, and such costs already reimbursed must be refunded. We have recorded contract revenue based on costs we expect to realize upon final audit. However, we do not know the outcome of any future audits and adjustments, and we may be required to materially reduce our revenue or profits upon completion and final negotiation of audits. Negative audit findings could also result in termination of a contract, forfeiture of profits, suspension of payments, fines or suspension or debarment from U.S. Government contracting or subcontracting for a period of time.

~~and~~In ~~proposals~~addition, ~~for~~U.S. Government contracts generally contain provisions permitting termination, in whole or in part, without prior notice at the U.S. Government’s convenience upon payment only for work done and commitments made at the ~~risk~~time ~~that~~of termination. For some contracts, we ~~may~~are ~~fail~~a tosubcontractor ~~accurately~~and ~~estimate~~the U.S. Government could terminate the ~~resources~~prime ~~and~~contractor ~~costs~~for ~~required~~convenience without regard for our performance as a subcontractor. We may be unable to secure new contracts to offset revenue or contractual backlog lost as a result of any termination of our U.S. Government contracts.

~~fulfill~~From ~~any~~time to time, we may begin performance of a U.S. Government contract ~~awarded~~under an undefinitized contract action with a not-to-exceed usprice before the terms, specifications or price are agreed to between the parties. WeIn ~~may~~these ~~choose~~arrangements, ~~not~~the U.S. Government has the ability to ~~bid~~unilaterally indefinitize ~~certain~~the ~~competitive~~contract ~~bidding~~if ~~processes~~a mutual agreement regarding terms, ~~which~~specifications ~~would~~and price cannot be reached. These uncertainties or loss of negotiating leverage associated with long delays could have a material adverse impact on our business, financial condition, results of operations, cash flows and equity.

~~result~~Our inbusiness ~~the~~with ~~potential~~government ~~loss~~customers is also subject to a variety of ~~opportunities.~~procurement ~~Additionally~~regulations and a variety of socioeconomic, ~~bid~~environmental ~~protests~~and ~~from~~other ~~unsuccessful~~requirements ~~bidders~~that ~~can~~increase ~~result~~our operational and compliance costs, including governmental action through Executive Orders. These costs might increase in the future, particularly for certain international markets and customers, thereby reducing our margins.

~~significant~~Failure ~~expense~~to comply with applicable regulations and requirements could lead to fines, penalties, repayments or ~~delay~~compensatory or treble damages, ~~contract~~or ~~modification~~suspension or debarment from U.S. Government contracting or subcontracting for a period of time. The termination of a U.S. Government contract ~~rescission~~or relationship in particular as a result of any of these acts would have an adverse impact on our ~~competitors~~operations ~~protesting~~and orcould have an adverse effect on our standing and eligibility for future U.S. Government contracts.

~~challenging~~Because a significant portion of our revenue is dependent on our performance and payment under our government contracts, ~~awarded~~the toloss usof one or more large contracts could have a significant adverse impact on our business, financial condition, results of operations, cash flows and equity.

AWe ~~reduction~~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 participate in U.S. and ~~Government~~international ~~funding~~markets that are subject to uncertain economic conditions which could experience increasing price sensitivity due to economic conditions or seek solutions which could adversely affect demand for our products, systems, services or technologies. As a ~~change~~result of that uncertainty, it is difficult to develop accurate estimates of the level of growth in Uthe markets we serve.S. ~~Government~~Because ~~spending~~those ~~priorities~~estimates ~~could~~underpin ~~have~~all ancomponents of our budgeting and

~~adverse impact on our business, financial condition, results of operations, cash flows and equity. We expect~~ _____________________________________________________________________7

~~changes~~forecasting, inour ~~policy~~estimates ~~positions~~or guidance for future revenue, income and ~~spending~~expenditures ~~priorities~~may ~~from~~be ~~the~~inaccurate, ~~new~~and ~~Administration.~~we ~~Our~~may ~~U.S.~~make ~~Government~~significant ~~programs~~investments and expenditures but never realize the anticipated benefits.

~~must~~We ~~compete~~cannot ~~with~~predict ~~programs~~the ~~managed~~consequences byof ~~other~~future ~~government~~geo-political ~~contractors~~events, but they may adversely affect the markets in which we operate, our ability to insure against risks, our operations or our profitability. Ongoing instability and ~~with~~current conflicts in global markets, including in Ukraine and Eastern Europe, the Middle East and Asia, and the potential for other conflicts and future terrorist activities and geo-political events throughout the world have created and may continue to create economic and political uncertainties and impacts that could have a material adverse effect on our business, operations and profitability. Geo-political events and changes in foreign policy ~~imperatives~~could cause isolationism or increased implementation of local solutions by international customers, which could adversely affect demand for our products, systems, services or technologies. Uncertainty in financial and insurance markets may significantly increase the political, economic and social instability in the geographic areas in which we operate which could further impact demand.

~~consideration~~Unfavorable ~~for~~credit ~~limited~~conditions ~~resources~~in financial markets outside of the U.S. or changes in U.S. aid or financial support could adversely affect the ability of our international customers and ~~for~~suppliers ~~uncertain~~to ~~levels~~obtain financing and could result in a decrease in or cancellation of ~~funding~~orders ~~during~~for our products and services or impact the ~~budget~~ability of our customers to make payments. These matters also may cause us to experience increased costs, such as for insurance coverage and ~~appropriations~~performance ~~process~~bonds (or for them to be unavailable altogether), as well as difficulty with financing our operating, investing or financing (or refinancing) activities.

~~Although~~We ~~multi-year~~are ~~contracts~~subject ~~may~~to government investigations, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity. U.S. Government contractors are subject to extensive legal and regulatory requirements, including the International Traffic in Arms Regulations (“ITAR”), the Export Administration Regulations (“EAR”), and U.S. Foreign Corrupt Practices Act (“FCPA”). From time to time agencies of the U.S. Government investigate whether we have been and are operating in accordance with these and/or applicable contractual requirements. Under U.S. Government regulations, an indictment of L3Harris by a federal grand jury, or an administrative finding against us as to our present responsibility to be ~~authorized~~a U.S. Government contractor or subcontractor, could result in us being suspended for a period of time from eligibility for awards of new government contracts or task orders or in a loss of export privileges, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and ~~appropriated~~equity. A conviction, or an administrative finding against us that satisfies the requisite level of seriousness, could result in ~~connection~~civil and/or criminal penalties, including fines, seizure of our products and debarment from contracting with ~~major~~the ~~procurements~~U.S. Government for a specific term, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity.

~~Congress~~We ~~generally~~derive ~~appropriates~~a ~~funds~~significant portion of our revenue from international operations and are subject to the risks of doing business internationally. We are dependent on asales to customers outside the U.S. ~~Government~~We ~~fiscal~~expect ~~year~~that ~~(“GFY”)~~international ~~basis~~revenue will continue to account for a significant portion of our total revenue. ~~Procurement~~Also, ~~funds~~a ~~are~~portion of our international revenue is from, and a portion of our business activity is being conducted with or in, less-developed countries and sometimes countries with unstable governments, or in areas of military conflict or at military installations. Other risks of doing business internationally include:

~~typically~~•Laws, ~~disbursed~~regulations ~~over~~and ~~the~~policies ~~course~~ of ~~one~~foreign governments relating to ~~three~~investments ~~years.~~and ~~Consequently~~operations, ~~programs~~including ~~often~~laws ~~initially~~restricting ~~receive~~our ~~only~~ability ~~partial~~to transact in certain countries and/or markets;

funding, and additional funds are obligated only as Congress authorizes further appropriations.

We cannot predict the extent to which total funding and/or funding for individual programs will be changed as

part of the annual appropriations process ultimately approved by Congress and the President or in separate

supplemental appropriations or continuing resolutions, as applicable. Budget and appropriations decisions made by

the U.S. Government are outside of our control and may have long-term consequences for our business. U.S.

Government spending priorities and levels remain uncertain and difficult to predict, especially with a new

administration, and are affected by numerous factors, including the U.S. Government’s budget deficit and the

national debt. A change in U.S. Government spending priorities or an increase in non-procurement spending at the

expense of our programs, or a reduction in total U.S. Government spending on an absolute or inflation-adjusted

basis, could have material adverse consequences on our current or future business.

If Congress does not enact a full-year GFY 2025 appropriations bill, the U.S. Government may not be able to

fulfill its funding obligations, and there could be significant disruption to all discretionary programs and

corresponding impacts on the entire defense industry, which could adversely affect our business, results of

operations, financial condition and cash flow. Any inability of the U.S. Government to complete its budget process

for any GFY and resulting operation on funding levels equivalent to its prior fiscal year pursuant to a Continuing

Resolution (“CR”) or shut down, also could have material adverse consequences on our current or future business.

For more information see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of

Operations - U.S. and International Budget Environment” of this Report.

Our results of operations and cash flows are substantially affected by our mix of fixed-price, cost-type and

time-and-material type contracts. Fixed-price contracts, particularly for development programs, could subject us to

losses from cost overruns or inflation. In fiscal 2024, 73% of our revenue was derived from fixed-price contracts

that allow us to benefit from cost savings, but subject us to the risk of potential cost overruns, including due to

greater than anticipated or a sustained period of increased inflation or unexpected delays because we assume all of

the cost burden. If our initial estimates are incorrect, we can lose money (or make more or less money than

estimated) on these contracts. Fixed-price U.S. Government contracts can expose us to potentially large losses

because the U.S. Government can hold us responsible for completing a project or, in limited circumstances, paying

the entire cost of its replacement by another provider.

Contracts for development programs include complex design and technical requirements and are generally

contracted on a cost-reimbursable basis, however, some existing development programs are contracted on a fixed-

price basis or include cost-type contracting for the development phase with fixed-price production options. Because

many of these contracts involve new technologies and applications and can last for years, unforeseen events, such

as technological difficulties, increases in the price of materials, a significant increase in or a sustained period of

increased inflation, problems with our suppliers, labor market conditions and cost overruns, can result in less

favorable economics or even losses over-time (which, especially in the case of sharp and significant sustained

inflation, could happen quickly and have long lasting impacts). Furthermore, if we do not meet contract deadlines or

specifications, we may need to renegotiate contracts on less favorable terms, be forced to pay penalties or

liquidated damages or suffer losses if the customer exercises its right to terminate. Some of our contracts have

provisions relating to cost controls and audit rights, and if we fail to meet the terms specified in those contracts, we

may not realize their full benefits. Cost overruns would adversely impact our results of operations, which are

dependent on our ability to maximize our earnings from our contracts, and the potential risk would be greater if our

contracts shifted toward a greater percentage of fixed-price contracts, particularly firm fixed-price contracts, as

opposed to cost-type and time-and-material contracts.

_____________________________________________________________________

To the extent feasible, we have consistently followed the practice of contractually adjusting our prices to reflect

the impact of inflation on salaries and fringe benefits for employees and the cost of purchased materials and

services and in some cases seeking the inclusion of adjustment clauses to incorporate certain cost adjustments in

fixed-price contracts for unexpected inflation. However, our fixed-price contracts could subject us to losses in the

event of cost overruns or a significant increase in or a sustained period of increased inflation if these measures are

not effective.

Any or all of the foregoing could have a negative impact on our business, financial condition, results of

operations, cash flows and equity.

The application or impact of regulations, unilateral government action, termination or negative audit findings

for one or more of our contracts could have an adverse impact on our business, financial condition, results of

operations, cash flows and equity. U.S. Government contracts are generally subject to U.S. Government oversight

audits, which could result in adjustments to our contract costs. Any costs found to be improperly allocated to a

specific contract will not be reimbursed, and such costs already reimbursed must be refunded. We have recorded

contract revenue based on costs we expect to realize upon final audit. However, we do not know the outcome of any

future audits and adjustments, and we may be required to materially reduce our revenue or profits upon completion

and final negotiation of audits. Negative audit findings could also result in termination of a contract, forfeiture of

profits, suspension of payments, fines or suspension or debarment from U.S. Government contracting or

subcontracting for a period of time.

In addition, U.S. Government contracts generally contain provisions permitting termination, in whole or in part,

without prior notice at the U.S. Government’s convenience upon payment only for work done and commitments

made at the time of termination. For some contracts, we are a subcontractor and the U.S. Government could

terminate the prime contractor for convenience without regard for our performance as a subcontractor. We may be

unable to secure new contracts to offset revenue or backlog lost as a result of any termination of our

U.S. Government contracts. Because a significant portion of our revenue is dependent on our performance and

payment under our U.S. Government contracts, the loss of one or more large contracts could have an adverse impact

on our business, financial condition, results of operations, cash flows and equity.

From time to time, we may begin performance of a U.S. Government contract under an undefinitized contract

action with a not-to-exceed price before the terms, specifications or price are agreed to between the parties. In

these arrangements, the U.S. Government has the ability to unilaterally definitize the contract if a mutual agreement

regarding terms, specifications and price cannot be reached. These uncertainties or loss of negotiating leverage

associated with long delays could have a material adverse impact on our business, financial condition, results of

operations, cash flows and equity.

Our U.S. Government business also is subject to specific procurement regulations and a variety of

socioeconomic and other requirements that, although customary in U.S. Government contracts, increase our

performance and compliance costs. These costs might increase in the future, thereby reducing our margins, which

could have an adverse effect on our business, financial condition, results of operations, cash flows and equity. In

addition, the U.S. Government has and may continue to implement initiatives focused on efficiencies, affordability

and cost growth and other changes to its procurement practices. These initiatives and changes to procurement

practices may change the way U.S. Government contracts are solicited, negotiated and managed, which may affect

whether and how we pursue opportunities to provide our products and services to the U.S. Government, including

the terms and conditions under which we do so, which may have an adverse impact on our business, financial

condition, results of operations, cash flows and equity.

Failure to comply with applicable regulations and requirements could lead to fines, penalties, repayments or

compensatory or treble damages, or suspension or debarment from U.S. Government contracting or subcontracting

for a period of time. The termination of a U.S. Government contract or relationship as a result of any of these acts

would have an adverse impact on our operations and could have an adverse effect on our standing and eligibility for

future U.S. Government contracts.

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 participate in U.S. and

international markets that are subject to uncertain economic conditions. In particular, U.S. federal, state and local

government spending priorities and levels remain uncertain and difficult to predict and are affected by numerous

factors. In addition, certain of our non-U.S. customers, including in the Middle East and other oil or natural gas-

producing countries, could be impacted by weakness or volatility in oil or natural gas prices, or negative

expectations about future prices or volatility, which could adversely affect demand for our products, systems,

services or technologies. As a result of that uncertainty, it is difficult to develop accurate estimates of the level of

_____________________________________________________________________

growth in the markets we serve. Because those estimates underpin all components of our budgeting and

forecasting, our estimates or guidance for future revenue, income and expenditures may be inaccurate, and we may

make significant investments and expenditures but never realize the anticipated benefits.

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. Ongoing instability and

current conflicts in global markets, including in the Ukraine and Eastern Europe, the Middle East and Asia, and the

potential for other conflicts and future terrorist activities and geo-political events throughout the world, including

new or increased economic and trade sanctions, including tariffs, have created and may continue to create economic

and political uncertainties and impacts that could have a material adverse effect on our business, operations and

profitability. These types of matters cause uncertainty in financial and insurance markets and may significantly

increase the political, economic and social instability in the geographic areas in which we operate.

Unfavorable credit conditions in financial markets outside of the U.S. could adversely affect the ability of our

international customers and suppliers to obtain financing and could result in a decrease in or cancellation of orders

for our products and services or impact the ability of our customers to make payments. These matters also may

cause us to experience increased costs, such as for insurance coverage and performance bonds (or for them to be

unavailable altogether), as well as difficulty with financing our operating, investing or financing (or refinancing)

activities.

We are subject to government investigations, which could have a material adverse effect on our business,

financial condition, results of operations, cash flows and equity. U.S. Government contractors are subject to

extensive legal and regulatory requirements, including International Traffic in Arms Regulations (“ITAR”) and U.S.

Foreign Corrupt Practices Act (“FCPA”), and from time to time agencies of the U.S. Government investigate whether

we have been and are operating in accordance with these requirements. Under U.S. Government regulations, an

indictment of L3Harris by a federal grand jury, or an administrative finding against us as to our present responsibility

to be a U.S. Government contractor or subcontractor, could result in us being suspended for a period of time from

eligibility for awards of new government contracts or task orders or in a loss of export privileges, which could have a

material adverse effect on our business, financial condition, results of operations, cash flows and equity. A

conviction, or an administrative finding against us that satisfies the requisite level of seriousness, could result in

debarment from contracting with the U.S. Government for a specific term, which could have a material adverse

effect on our business, financial condition, results of operations, cash flows and equity.

We derive a significant portion of our revenue from international operations and are subject to the risks of doing

business internationally. We are dependent on sales to customers outside the U.S. We expect that international

revenue will continue to account for a significant portion of our total revenue. Also, a portion of our international

revenue is from, and a portion of our business activity is being conducted with or in, less-developed countries and

sometimes countries with unstable governments, or in areas of military conflict or at military installations. Other

risks of doing business internationally include:

•Laws, regulations and policies of foreign governments relating to investments and operations;

•Unforeseen changes in export controls and other trade regulations;

•Changes in regulatory requirements, including business or operating license requirements, currency exchange controls or embargoes;

exchange controls or embargoes;

•Uncertainties and restrictions concerning the availability of funding, credit or guarantees;

•Risk of non-payment or delayed payment by non-U.S. customers;

•Contractual obligations to non-U.S. customers that may include specific in-country purchases, investments, manufacturing agreements or financial or other support obligations, known as offset obligations, that may extend for years, require teaming with local companies and result in significant penalties if not satisfied;

manufacturing agreements or financial or other support obligations, known as offset obligations, that may

extend for years, require teaming with local companies and result in significant penalties if not satisfied;

•Issues related to involving international dealers, distributors, sales representatives and consultants;

•Difficulties of managing a geographically dispersed organization and culturally diverse workforces, including compliance with local laws and practices;

~~compliance~~•Fluctuations of currency, currency revaluations, difficulties with ~~local~~repatriating ~~laws~~cash generated or held abroad in a tax-efficient manner and ~~practices~~changes in tax laws;

•~~Fluctuations~~Uncertainties as to local laws and enforcement of ~~currency,~~contract ~~currency~~and ~~revaluations,~~intellectual ~~difficulties~~property ~~with~~rights ~~repatriating~~and ~~cash~~occasional ~~generated~~requirements orfor ~~held~~onerous ~~abroad~~contract terms;

~~in a tax-efficient manner and changes in tax laws;~~_____________________________________________________________________8

•~~Uncertainties~~Changes asin togovernment, ~~local~~economic ~~laws~~ and ~~enforcement~~political policies, political or civil unrest, acts of ~~contract~~terrorism, ~~and~~threats ~~intellectual~~of ~~property~~international ~~rights~~boycotts, ~~and~~U.S. anti-boycott ~~occasional~~legislation or sanctions against U.S. defense companies; and

~~requirements~~•Increased ~~for~~risk ~~onerous~~of ~~contract~~an ~~terms;~~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.

•Changes in government, economic and political policies, political or civil unrest, acts of terrorism, threats of

international boycotts, U.S. anti-boycott legislation or sanctions against U.S. defense companies; and

•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.

_____________________________________________________________________

Business and Operational Risks

We depend on our subcontractors and suppliers, and failures in or disruptions to our supply chain could cause our products and or services to be produced or delivered in an untimely or unsatisfactory manner. Our ability to manufacture and deliver products and services to our customers requires our U.S. and non-U.S. subcontractors and suppliers to provide a variety of materials, components, subsystems and services. In some instances, we depend upon a single supplier for certain components, which adds risk because that supplier may at times be unable to meet our needs and because we may have limited negotiating leverage with sole-source suppliers. Identifying and qualifying dual and second-source suppliers can be difficult, time-consuming and may result in increased costs. Any inability to timely develop cost-effective alternative sources of supply could materially impact our ability to manufacture and deliver products and services to our customers.

~~our~~In ~~products~~addition, we are required to procure certain materials and orcomponents, ~~services~~including microelectronic components, from U.S. Government-approved supply sources. Heightened regulatory requirements that may apply to bethese ~~produced~~sources can further limit the subcontractors and suppliers we may utilize. Legislation, regulatory changes or ~~delivered~~other ingovernmental anactions, ~~untimely~~including product certification or ~~unsatisfactory~~stewardship ~~manner.~~requirements, ~~Our~~sourcing ~~ability~~restrictions, totariffs, export controls, embargoes, product authenticity, cybersecurity regulation, and environmental standards may all impact our subcontractors and suppliers.

~~manufacture~~From time to time, our subcontractors and ~~deliver~~suppliers ~~products~~experience financial and ~~services~~operational todifficulties outside of our ~~customers~~direct ~~requires~~control, ~~our~~which ~~U.S.~~may ~~and~~impact ~~non-U.S.~~their ~~subcontractors~~ability to deliver the materials, components, subsystems and services we need.

In recent years, global supply chains, including ours, have experienced significant disruption from material availability and supplier performance, as well as extended lead times, pricing volatility, inflationary pressures and labor issues. We and our subcontractors and suppliers tohave ~~provide~~also aexperienced ~~variety~~difficulties in the timely procurement of necessary materials, and components, ~~subsystems~~including microelectronics. Current geopolitical conditions, including sanctions and ~~services~~other trade restrictive activities and strained inter-country relations, have contributed to issues procuring necessary materials and components. InFor example, some ~~instances~~materials and components in our supply chain have previously been sourced from areas now under sanctions or other trade restrictions, wesuch ~~depend~~as specialty metals from Russia and certain equipment from China, or are currently sourced from areas which are at risk of sanctions or other trade restrictive actions, not just by the United States but by other nations or groups, such as the European Union.

~~upon~~While awe ~~single~~continuously ~~supplier~~work ~~for~~to ~~components~~implement supply chain resiliency initiatives, ~~which~~we ~~adds~~cannot ~~risk~~guarantee ~~because~~the ~~that~~success ~~supplier~~of any of these efforts. Material supply disruptions may atstill ~~times~~occur bein ~~unable~~the tofuture. ~~meet~~Any supply chain disruption could result in delayed deliveries, increased costs, loss of customers, contractual penalties or damages, claims or litigation, regulatory investigations or actions, loss of future business opportunities, or reputational harm, any of which could materially and adversely affect our business, operational results, financial condition and cash flow.

~~needs~~Changes ~~and~~in ~~because~~trade policies, including tariffs, could cause adverse impacts to our business. Beginning in first quarter 2025, we ~~may~~observed ~~have~~a ~~little~~significant ~~negotiating~~shift ~~leverage~~in U.S. trade policy, with ~~sole-source~~increased ~~suppliers~~tariffs and the imposition of new tariffs that could impact our supply chain and our business. ~~Identifying~~While certain of such tariffs have been paused, ultimately trade policy decisions are outside of our control and ~~qualifying~~may have consequences for our business. Changes in trade policies, such as new tariffs or increases in tariffs, or reactionary measures including retaliatory tariffs, legal challenges, or currency manipulation, could adversely impact us.

~~dual~~Even though we primarily sell our products and ~~second-source~~services to U.S. Government customers and our suppliers ~~can~~are beprimarily ~~difficult~~domestic, ~~time~~we ~~consuming~~still rely on imported materials, components, or finished goods, and if tariffs increase, our supply chain costs may rise, adversely affecting our business, results of operations and cash flows. We also operate a business in Canada that supports both domestic and international programs. If we are not granted exemptions from tariffs due to the nature of our business and customers, we could see greater impacts than we currently expect, especially as it relates to tariffs between the U.S. and Canada. Additionally, retaliatory measures, or prolonged uncertainty in trade relationships could result in supply chain disruptions, delayed shipments, or increased ~~costs~~operational complexity, which could also adversely affect our business, results of operations and cash flows. ~~Any~~While ~~inability~~we intend to take steps to mitigate any impacts of tariffs or other impacts resulting from changes in trade policy, our ability to do so may be limited by operational and supply chain constraints, especially in the short term.

~~timely develop cost-effective alternative sources of supply could materially impact our ability to manufacture and~~ _____________________________________________________________________9

~~deliver~~We ~~products~~must attract and ~~services~~retain key employees, and any failure to do so could harm us. Our future success depends to a significant degree upon the continued contributions of our ~~customers~~management and our ability to attract and retain highly-qualified management and technical personnel, including engineers and employees who have, or can obtain, U.S. Government security clearances, particularly clearances of top secret and above. To the extent that the demand for qualified personnel exceeds supply in certain areas, we could experience higher labor, recruiting or training costs in order to attract and retain such employees. Failure to attract and retain such personnel would damage our future prospects and could adversely affect our ability to succeed in our human capital goals and priorities, as well as negatively impact our business and operating results.

InWe ~~addition~~could be negatively impacted by a security breach of our Information Technology (“IT”) networks and related systems. We face the risk of a security breach, wewhether ~~are~~through ~~required~~cyber-attack on our IT infrastructure, insider threat, or threats to ~~procure~~the ~~certain~~physical ~~materials~~security of our facilities and ~~components~~employees or other significant disruption of our IT networks and related systems or those of our suppliers or subcontractors. The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including ~~certain~~by ~~microelectronic~~computer hackers, foreign governments and cyber terrorists, is persistent. The volume, intensity and sophistication of threats from around the world remains elevated. These risks may increase as AI capabilities improve.

~~components~~As a government contractor with access to national security or other sensitive government information, we face a heightened risk of a security breach or disruption from Uthreats to gain unauthorized access to our and our customers’ proprietary information on our IT networks and related systems, our classified networks, and to the IT networks and related systems that we operate, maintain and secure for certain of our customers.S We have implemented various measures to manage the risk of a security breach or disruption. ~~Government-approved~~See ~~supply~~“Item ~~sources~~1C. ~~Certain~~Cybersecurity" ~~heightened~~in ~~regulatory~~this ~~requirements~~Report ~~that~~for ~~may~~further discussion of our risk management and strategy related to cybersecurity threats.

~~apply~~Our efforts and measures have not been entirely effective in the case of every cyber security incident, but no incident has had a material negative impact on us to ~~these~~date. ~~sources~~Even ~~can~~the ~~further~~most ~~limit~~well-protected information, networks, systems and facilities remain potentially vulnerable because attempted security breaches, particularly cyber-attacks and cyber intrusions, or disruptions will occur in the ~~subcontractors~~future, and ~~suppliers~~because wethe techniques used in such attempts are constantly evolving and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may ~~utilize~~not be detected. ~~Legislation~~In some cases, ~~regulatory~~the resources of foreign governments may be behind such attacks due to the nature of our business and the industries in which we operate. Accordingly, we may be unable to anticipate these techniques or to implement adequate security controls or other preventative measures and future cyber security incidents may have a material negative impact on us. A security breach or other significant disruption involving these types of information and IT networks and related systems could:

~~changes~~•Disrupt orproper ~~other~~functioning ~~governmental~~of ~~actions~~these networks and systems and, ~~including~~therefore, ~~product~~our ~~certification~~operations and/or ~~stewardship~~those ~~requirements,~~of ~~sourcing~~certain of our customers;

~~restrictions~~•Result in unauthorized access to, ~~tariffs~~and destruction, ~~embargoes~~loss, ~~product~~theft, ~~authenticity~~misappropriation or release of, ~~cybersecurity~~proprietary, ~~regulation~~confidential, ~~and~~sensitive ~~environmental~~or ~~standards~~otherwise ~~(e.g.~~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;

greenhouse gas emission limitations) may all impact our subcontractors and suppliers, and there continues to be

uncertainty about actions that may be implemented by the new Administration.

From time to time, our subcontractors and suppliers experience financial and operational difficulties outside of

our direct control, which may impact their ability to deliver the materials, components, subsystems and services we

need.

In recent years, global supply chains, including ours, have experienced significant disruption from material

availability and supplier performance, as well as extended lead times, pricing volatility, inflationary pressures and

labor issues. We and our subcontractors and suppliers have also experienced difficulties in the timely procurement

of necessary materials and components, including microelectronics. Current geopolitical conditions, including

sanctions and other trade restrictive activities and strained inter-country relations, have contributed to issues

procuring necessary materials and components. For example, some materials and components in our supply chain

have previously been sourced from areas now under sanctions or other trade restrictions, such as specialty metals

from Russia and certain equipment from China, or are currently sourced from areas which are at risk of sanctions or

other trade restrictive actions, not just by the United States but by other nations or groups, such as the European

Union.

While we continuously work to implement supply chain resiliency initiatives, we cannot guarantee the success of

any of these efforts. Material supply disruptions may still occur in the future, leading to untimely delivery or

unsatisfactory quality of products and services, and potentially adversely affecting our business, operational results,

financial condition and cash flow.

We must attract and retain key employees, and any failure to do so could harm us. Our future success depends

to a significant degree upon the continued contributions of our management and our ability to attract and retain

highly-qualified management and technical personnel, including engineers and employees who have U.S.

Government security clearances, particularly clearances of top secret and above. To the extent that the demand for

qualified personnel exceeds supply in certain areas, we could experience higher labor, recruiting or training costs in

order to attract and retain such employees. Failure to attract and retain such personnel would damage our future

prospects and could adversely affect our ability to succeed in our human capital goals and priorities, as well as

negatively impact our business and operating results.

We could be negatively impacted by a security breach of our Information Technology (“IT”) networks and

related systems. We face the risk of a security breach, whether through cyber-attack on our IT infrastructure, insider

threat, or threats to the physical security of our facilities and employees or other significant disruption of our IT

networks and related systems or those of our suppliers or subcontractors. The risk of a security breach or disruption,

particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber

terrorists, is persistent. The volume, intensity and sophistication of threats from around the world remains elevated.

These risks may increase as AI capabilities improve.

As a government contractor with access to national security or other sensitive government information, we face

a heightened risk of a security breach or disruption from threats to gain unauthorized access to our and our

customers’ proprietary information on our IT networks and related systems, our classified networks, and to the IT

networks and related systems that we operate, maintain and secure for certain of our customers. We have

implemented various measures to manage the risk of a security breach or disruption. See “Item 1C. Cybersecurity"

in this Report for further discussion of our risk management and strategy related to cybersecurity threats.

_____________________________________________________________________

Our efforts and measures have not been entirely effective in the case of every cyber security incident, but no

incident has had a material negative impact on us to date. Even the most well-protected information, networks,

systems and facilities remain potentially vulnerable because attempted security breaches, particularly cyber-

attacks and cyber intrusions, or disruptions will occur in the future, and because the techniques used in such

attempts are constantly evolving and generally are not recognized until launched against a target, and in some cases

are designed not to be detected and, in fact, may not be detected. In some cases, the resources of foreign

governments may be behind such attacks due to the nature of our business and the industries in which we operate.

Accordingly, we may be unable to anticipate these techniques or to implement adequate security controls or other

preventative measures and future cyber security incidents may have a material negative impact on us. A security

breach or other significant disruption involving these types of information and IT networks and related systems

could:

•Disrupt proper functioning of these networks and systems and, therefore, our operations and/or those of

certain of our customers;

•Result in 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;

•Compromise national security and other sensitive government functions;

•Require significant management attention and resources to remedy damages that result;

•Result in costs which exceed our insurance coverage and/or indemnification arrangements;

•Subject us to claims for contract breach, damages, credits, penalties or termination; and

•Damage our reputation with our customers and the general public.

We must also rely on the safeguards of varying levels put in place by customers, suppliers, vendors, subcontractors or other third parties to minimize the impact of cyber threats, other security threats or business disruptions. These third parties may have varying levels of cybersecurity expertise and safeguards. Our commercial arrangements with these third parties include processes designed to require that the third parties and their employees and agents agree to maintain certain standards for the storage, protection and transfer of confidential, personal and proprietary information. However, we remain at risk of a data breach due to the intentional or unintentional non-compliance by a third party’s employee or agent, the breakdown of a third party’s data protection processes, which may not be as sophisticated as ours, or a cyber-attack on a third party’s information network and systems.

~~subcontractors or other third parties to minimize the impact of cyber threats, other security threats or business~~ _____________________________________________________________________10

~~disruptions.~~Any ~~These~~or ~~third~~all ~~parties~~of ~~may~~the foregoing could have ~~varying~~a ~~levels~~negative impact on our business, financial condition, results of ~~cybersecurity~~operations, ~~expertise~~cash flows and ~~safeguards.~~equity, ~~Our~~reputation, ~~commercial~~ability to protect data, assets, and intellectual property, maintenance of customer and vendor relationships, competitive posture, and could lead to litigation or regulatory investigations or actions.

~~arrangements~~Our ~~with~~future ~~these~~success ~~third~~will ~~parties~~depend ~~include~~on ~~processes~~our ~~designed~~ability to ~~require~~develop new products and services that ~~the~~achieve ~~third~~market ~~parties~~acceptance in our current and ~~their~~future markets. Our businesses are characterized by rapidly changing technologies and evolving industry standards. To remain competitive, we need to continue to design, develop, manufacture, assemble, test, market and support new products and services, which will require the investment of significant financial resources in new technologies such as AI.

~~employees~~We have allocated funds for such investments through customer-funded and ~~agents~~internal ~~agree~~R&D, strategic alliances and other teaming arrangements, but we may not be able to ~~maintain~~successfully ~~certain~~identify ~~standards~~new ~~for~~opportunities and may not have the ~~storage~~necessary resources to develop new products and services in a timely or cost-effective manner. Furthermore, ~~protection~~we cannot be sure that these expenditures ultimately will lead to the timely development of new products and ~~transfer~~services. Due to the design complexity of ~~confidential~~some of our products and services, we may experience delays in completing development and introducing new products and services or incorporating new technologies into our existing products and services in the future. Any delays could result in increased costs of development or divert resources from other projects.

~~personal~~The ~~and~~competitive ~~proprietary~~landscape ~~information~~is also evolving, with increased competition from non-traditional new entrants, including technology start-ups. ~~However~~While these competitors may lack our scale, weproduction ~~remain~~capacity, atand ~~risk~~established ofcustomer atrust, ~~data~~they ~~breach~~may ~~due~~possess toinnovative or low-cost technologies and the ~~intentional~~ability to rapidly deploy new solutions. The emergence of such players may intensify pricing pressure and threaten our market share or competitive advantage.

~~unintentional~~In addition, the markets for our products and services may not develop as we currently anticipate, we may not be as successful in newly identified markets as anticipated, and joint ventures, partnerships, strategic alliances or other teaming arrangements we may enter into to pursue developing new products and services may not be successful. Our competitors, including non-~~compliance~~traditional bynew aentrants, ~~third~~may ~~party’s~~incorporate ~~employee~~AI technologies into their products or ~~agent~~services more quickly or more successfully than us, ~~the~~which ~~breakdown~~could impair our ability to compete. Furthermore, competitors may develop competing products and services or incorporate new technologies into their existing products and services that either gain market acceptance in advance of aour ~~third~~products ~~party’s~~and ~~data~~services ~~protection~~or cause our existing products and services or technologies to become non-competitive or obsolete, which could adversely affect our results of operations and harm our business.

~~processes~~We have significant operations in locations that could be materially and adversely impacted in the event of a natural disaster or other significant disruption. Our corporate headquarters and significant business operations are located in Florida, which ~~may~~is ~~not~~subject to the risk of major hurricanes. Our worldwide operations and operations of our suppliers and customers could be assubject ~~sophisticated~~to asnatural ~~ours~~disasters or other significant disruptions, including hurricanes, typhoons, tsunamis, floods, earthquakes, fires, water shortages, other extreme weather conditions, epidemics, pandemics, acts of terrorism, power shortages and blackouts, telecommunications failures and other natural and man-made disasters or disruptions. In the event of such a ~~cyber-attack~~natural ondisaster or other disruption, we could experience disruptions or interruptions to our operations or the operations of our suppliers, subcontractors, distributors, resellers or customers, including inability of employees to work; destruction of facilities; and/or loss of life, all of which could materially increase our costs and expenses, delay or decrease orders and revenue from our customers and have a ~~third~~material ~~party’s~~adverse ~~information~~effect ~~network~~on the continuity of our business, financial condition, results of operations, cash flows and equity.

~~systems~~Risk of the release, unplanned ignition, explosion, or improper handling of dangerous materials used in our business could disrupt our operations and adversely affect our financial results. Our business operations are subject to risk in connection with the handling, production, and disposition of potentially explosive and ignitable energetic materials and other dangerous chemicals, including motors and other materials used in rocket propulsion. The handling, production, transport, and disposition of hazardous materials could result in incidents that temporarily shut down or otherwise disrupt our manufacturing operations and could cause production delays. A release of these chemicals or an unplanned ignition or explosion could result in death or significant injuries to employees and others. Material property damage to us or third parties could also occur.

~~Any~~The oruse ~~all~~ of ~~the~~these ~~foregoing~~products in applications by our customers could ~~have~~also aresult ~~negative~~in ~~impact~~liability onif ~~our~~an ~~business~~explosion, ~~financial~~unplanned ~~condition~~ignition or fire were to occur. Extensive regulations apply to the handling of explosive and energetic materials, ~~results~~including but not limited to, regulations governing hazardous substances and hazardous waste. The failure to properly store and ultimately dispose of such materials could create significant liability and/or result in

~~operations, cash flows and equity, reputation, ability to protect data, assets, and intellectual property, maintenance~~ _____________________________________________________________________11

ofregulatory ~~customer~~sanctions. ~~and~~Any ~~vendor relationships~~release, ~~competitive~~unplanned ~~posture,~~ignition ~~and~~or explosion could ~~lead~~expose us to ~~litigation~~adverse publicity or ~~regulatory~~liability ~~investigations~~for damages or cause production delays, any of which could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity.

The failure to effectively maintain and modernize our IT systems and infrastructure could adversely affect our business. Rapid development cycles and the growth and expansion of our business has created technical debt within our enterprise. As part of our digital transformation, we are modernizing our infrastructure, applications, and information ecosystem, inclusive of cloud migrations, increasing automation and expanding the use of AI. Until our digital transformation is fully complete, we will continue to rely on significant manual processes and procedures that subject us to increased risk of error and internal control failure compared to automated processes. Our ability to modernize our technology systems and infrastructure requires us to execute large-scale, complex programs and projects, which rely on the commitment of significant financial and managerial resources and effective planning and management processes. We also rely on third party outsourcing, so the speed and effectiveness of our digital transformation may be subject to additional factors beyond our control. Additionally, integrating AI capabilities could increase technical complexity, potentially exacerbating these challenges. As a result, we may be unable to complete our digital transformation and manage our technical debt efficiently or in a timely manner, which could result in operational resiliency issues, delivery delays, cost overruns, additional expenses, reputational harm, legal and regulatory actions, and other adverse consequences.

Our future success will depend on our ability to develop new products and services that achieve market

acceptance in our current and future markets. Our businesses are characterized by rapidly changing technologies

and evolving industry standards. To remain competitive, we need to continue to design, develop, manufacture,

assemble, test, market and support new products and services, which will require the investment of significant

financial resources in new technologies such as AI.

We have allocated funds for such investments through customer-funded and internal R&D, strategic alliances

and other teaming arrangements, but we may not be able to successfully identify new opportunities and may not

have the necessary resources to develop new products and services in a timely or cost-effective manner.

Furthermore, we cannot be sure that these expenditures ultimately will lead to the timely development of new

products and services. Due to the design complexity of some of our products and services, we may experience

delays in completing development and introducing new products and services or incorporating new technologies

into our existing products and services in the future. Any delays could result in increased costs of development or

divert resources from other projects.

In addition, the markets for our products and services may not develop as we currently anticipate, we may not

be as successful in newly identified markets as anticipated, and joint ventures, partnerships, strategic alliances or

other teaming arrangements we may enter into to pursue developing new products and services may not be

successful. Our competitors may incorporate AI technologies into their products or services more quickly or more

successfully than us, which could impair our ability to compete. Furthermore, competitors may develop competing

products and services or incorporate new technologies into our existing products and services that either gain

market acceptance in advance of our products and services or cause our existing products and services or

_____________________________________________________________________

technologies to become non-competitive or obsolete, which could adversely affect our results of operations and

harm our business.

We have significant operations in locations that could be materially and adversely impacted in the event of a

natural disaster or other significant disruption. Our corporate headquarters and significant business operations are

located in Florida, which is subject to the risk of major hurricanes. Our worldwide operations and operations of our

suppliers and customers could be subject to natural disasters (including those as a result of climate change) or other

significant disruptions, including hurricanes, typhoons, tsunamis, floods, earthquakes, fires, water shortages, other

extreme weather conditions, epidemics, pandemics, acts of terrorism, power shortages and blackouts,

telecommunications failures and other natural and man-made disasters or disruptions. In the event of such a natural

disaster or other disruption, we could experience disruptions or interruptions to our operations or the operations of

our suppliers, subcontractors, distributors, resellers or customers, including inability of employees to work;

destruction of facilities; and/or loss of life, all of which could materially increase our costs and expenses, delay or

decrease orders and revenue from our customers and have a material adverse effect on the continuity of our

business and our business, financial condition, results of operations, cash flows and equity.

Risk of the release, unplanned ignition, explosion, or improper handling of dangerous materials used in our

business could disrupt our operations and adversely affect our financial results. Our business operations are

subject to risk in connection with the handling, production, and disposition of potentially explosive and ignitable

energetic materials and other dangerous chemicals, including motors and other materials used in rocket propulsion.

The handling, production, transport, and disposition of hazardous materials could result in incidents that temporarily

shut down or otherwise disrupt our manufacturing operations and could cause production delays. A release of these

chemicals or an unplanned ignition or explosion could result in death or significant injuries to employees and others.

Material property damage to us or third parties could also occur.

The use of these products in applications by our customers could also result in liability if an explosion,

unplanned ignition or fire were to occur. Extensive regulations apply to the handling of explosive and energetic

materials, including but not limited to, regulations governing hazardous substances and hazardous waste. The

failure to properly store and ultimately dispose of such materials could create significant liability and/or result in

regulatory sanctions. Any release, unplanned ignition or explosion could expose us to adverse publicity or liability for

damages or cause production delays, any of which could have a material adverse effect on our business, financial

condition, results of operations, cash flows and equity.

Failure to achieve the expected results of LHX NeXt could adversely affect our future financial condition and

results of operations. In fiscal 2023, we announced LHX NeXt, a targeted three-year program designed to enhance

organizational agility and performance by leveraging our scale and relationships across segments to drive

operational efficiency and competitiveness for the enterprise. We have seen significant progress on LHX NeXt in

fiscal 2024, however, there can be no assurances that such progress will continue in fiscal 2025, that the initiatives

that are part of LHX NeXt will achieve their desired results or that costs savings achieved as a result of LHX NeXt will

impact our results of operations on the time frame or in the manner we currently expect.

Financial Risks

Changes in estimates we use in accounting for many of our programs could adversely affect our future financial condition and results of operations. Accounting for our contracts requires judgment relative to assessing risks, including estimating contract revenue and costs and assumptions for schedule and technical issues. Due to the size and nature of many of our contracts, the estimation of total revenue and cost at completion is complicated and subject to many variables. For example, we must make assumptions regarding: (i) the nature and complexity of the work to be performed; (ii) subcontractors’ and suppliers’ expected performance; (iii) availability and costs of labor, materials, components subsystems and services (including expected increases in wages and prices); (iv) the length of time to complete the contract; (v) the allocation of transaction price to one or more performance obligations based on the products and services promised to the customer; (vi) incentives or penalties related to performance on contracts in estimating revenue and profit rates, and recording them when there is sufficient information for us to assess anticipated performance; and (vii) estimates of award fees in estimating revenue and profit rates based on actual and anticipated awards.

~~condition~~ Our profitability can be adversely affected when estimated contract costs increase from our initial estimates, especially without comparable increases in revenue. There are many reasons estimated contract costs can increase, including: (i) supply chain disruptions, inflation and labor issues; (ii) design or other development challenges; and (iii) program execution challenges (including from technical or quality issues and other performance concerns). Because of the significance of the judgments and the difficulties inherent in estimating future costs, we cannot guarantee that estimated revenues and contract costs will not change in the future. Any cost growth or changes in estimated contract revenues and costs may adversely affect results of operations and financial condition. ~~Accounting~~For ~~for~~additional information regarding our ~~contracts~~critical ~~requires~~accounting ~~judgment~~estimates ~~relative~~applicable to ~~assessing~~our ~~risks~~accounting for our contracts, see “Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations - Critical Accounting Estimates” of this Report.

~~including~~Our ~~estimating~~level ~~contract~~of ~~revenue~~indebtedness and ~~costs~~our ~~and~~ability ~~assumptions~~to ~~for~~make ~~schedule~~payments on or service our indebtedness may materially adversely affect our financial and ~~technical~~operating ~~issues~~activities or our ability to incur additional debt. ~~Due~~As of January 2, 2026, we had $10.9 billion in aggregate principal amount of outstanding fixed-rate debt, which reflects our total long-term debt, including current portion but excluding finance leases. Our ability to ~~the~~make ~~size~~payments on and to refinance our current or future indebtedness, will depend on our ability to generate cash from operations, financings and investments, which may be subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

If we are not able to repay or refinance our debt as it becomes due, we may be forced to divest businesses, sell assets or take other disadvantageous actions, including reducing financing for working capital, capital expenditures and ~~nature~~general ofcorporate ~~many~~purposes; reducing our cash dividend rate and/or share repurchases; or dedicating an unsustainable level of our ~~contracts,~~cash flow from operations to the ~~estimation~~payment of ~~total~~principal ~~revenue~~ and ~~cost~~interest aton ~~completion~~our isindebtedness. ~~complicated~~In addition, our ability to withstand competitive pressures and to react to changes in the defense technology industry could be impaired. The lenders who hold such debt could also accelerate amounts due, which could potentially trigger a default or acceleration of any of our other debt.

~~subject to many variables. For example, we must make assumptions regarding: (i) the nature and complexity of the~~ _____________________________________________________________________12

work to be performed; (ii) subcontractors’ and suppliers’ expected performance; (iii) availability and costs of labor,

materials, components subsystems and services (including expected increases in wages and prices); (iv) the length

of time to complete the contract; (v) the allocation of transaction price to one or more performance obligations

based on the products and services promised to the customer; (vi) incentives or penalties related to performance on

contracts in estimating revenue and profit rates, and recording them when there is sufficient information for us to

assess anticipated performance; and (vii) estimates of award fees in estimating revenue and profit rates based on

actual and anticipated awards.

Our profitability can be adversely affected when estimated contract costs increase from our initial estimates,

especially without comparable increases in revenue. There are many reasons estimated contract costs can increase,

including: (i) supply chain disruptions, inflation and labor issues; (ii) design or other development challenges; and (iii)

program execution challenges (including from technical or quality issues and other performance concerns).

However, because of the significance of the judgments and the difficulties inherent in estimating future costs, we

cannot guarantee that estimated revenues and contract costs will not change in the future. Any cost growth or

_____________________________________________________________________

changes in estimated contract revenues and costs may adversely affect results of operations and financial condition.

For additional information regarding our critical accounting estimates applicable to our accounting for our contracts,

see “Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations - Critical

Accounting Estimates” of this Report.

Our level of indebtedness and our ability to make payments on or service our indebtedness and our unfunded

defined benefit plans liability may materially adversely affect our financial and operating activities or our ability to

incur additional debt. A substantial portion of our retired employee population and a portion of our current

employee population are covered by defined benefit pension and other postretirement defined benefit plans

(collectively, “defined benefit plans”). At January 3, 2025, we had $11.8 billion in aggregate principal amount of

outstanding fixed-rate debt, which reflects our total long-term debt, including current portion but excluding finance

leases, and $205 million of unfunded defined benefit plan liabilities. Our ability to make payments on and to

refinance our current or future indebtedness, and our ability to make contributions to our unfunded defined benefit

plans liability, will depend on our ability to generate cash from operations, financings and investments, which may

be subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our

control.

While our outstanding long-term debt is all fixed rate and our repayment schedule is known, the costs and

returns related to our defined benefit plans are variable. Accordingly, our defined benefit plan liabilities could

increase, which could require us to make significant funding contributions to our defined benefit plans and affect

cash flows in future periods.

If we are not able to repay or refinance our debt as it becomes due or make contributions to our unfunded

defined benefit plans liability, we may be forced to divest businesses, sell assets or take other disadvantageous

actions, including reducing financing for working capital, capital expenditures and general corporate purposes;

reducing our cash dividend rate and/or share repurchases; or dedicating an unsustainable level of our cash flow

from operations to the payment of principal and interest on our indebtedness. In addition, our ability to withstand

competitive pressures and to react to changes in the defense technology industry could be impaired. The lenders

who hold such debt could also accelerate amounts due, which could potentially trigger a default or acceleration of

any of our other debt.

Legal, Tax and Regulatory Risks

Changes in our effective tax rate or additional tax exposures may have an adverse effect on our results of operations and cash flows. We are subject to income taxes in the U.S. and numerous international jurisdictions. There are transactions and calculations in the ordinary course of business where the application of tax law may be uncertain, require significant judgment or be subject to differing interpretations. Our worldwide income tax provision may be adversely affected by a number of factors, which include:

operations and cash flows. We are subject to income taxes in the U.S. and numerous international jurisdictions.

There are transactions and calculations in the ordinary course of business where the application of tax law may be

uncertain, require significant judgment or be subject to differing interpretations. Our worldwide income tax provision

may be adversely affected by a number of factors, which include:

•Changes in domestic or international tax laws or the interpretation of such tax laws;

•The jurisdictions in which profits are determined to be earned and taxed;

•Adjustments to estimated taxes upon finalization of various tax returns;

•Increases in expenses not fully deductible for tax purposes, including impairment of goodwill or other long-term assets acquired in connection with mergers or acquisitions;

term assets acquired in connection with mergers or acquisitions;

•Changes in available tax credits;

•Changes in share-based compensation expense;

•Changes in the valuation of our deferred tax assets and liabilities; and

•The resolution of issues arising from tax audits with various tax authorities.

Any significant increase in our future effective tax rates, or timing of deductions, credits, or payments, could adversely impact our results of operations and cash flows for future periods.

~~adversely~~We ~~impact~~may ~~our~~not ~~results~~be ofsuccessful ~~operations~~in obtaining the necessary export licenses and ~~cash~~Congress ~~flow~~may ~~for~~prevent ~~future~~proposed ~~periods~~sales to certain foreign governments. We must first obtain export and other licenses and authorizations from various U.S. Government agencies before we are permitted to engage in international transactions involving certain products and technologies.

Our ability to obtain necessary licenses and authorizations is subject to risks and uncertainties, including changing U.S. Government policies or laws or delays in Congressional action due to several factors, including geopolitical and national security considerations. We may ~~not~~ be ~~successful~~unsuccessful in obtaining ~~the~~ necessary ~~export~~ licenses ~~and~~or authorizations or Congress may prevent ~~proposed~~or delay certain sales. If we are not successful in obtaining or maintaining the necessary licenses or authorizations in a timely manner, our transactions relating to those approvals may be reversed, prevented or delayed, and any significant impairment of our ability to sell products or technologies outside of the U.S. could negatively impact our business, financial condition, results of operations, cash flows and equity.

Environmental issues could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity. Our operations are subject to various U.S. federal, state and local, as well as certain foreign, ~~governments.~~environmental Welaws ~~must~~and ~~first~~regulations ~~obtain~~within ~~export~~the countries in which we operate relating to the discharge, storage, treatment, handling, disposal and ~~other~~remediation ~~licenses~~of certain materials, substances and ~~authorizations~~wastes ~~from~~used in our operations. Our real estate assets in particular are subject to various risks, including that our reserves for estimated future environmental obligations may prove to be insufficient, we may be unable to complete environmental remediation or, we may be unable to have state and federal environmental restrictions lifted.

Compliance with current and future environmental laws and regulations may require significant operating and capital costs. Environmental laws and regulations may institute substantial fines and criminal sanctions as well as facility shutdowns to address violations and may require the installation of costly pollution control equipment or operational changes to limit emissions or discharges. Our suppliers may face similar business interruptions and incur additional costs that may increase the price of materials needed for manufacturing. We also incur, and expect to continue to incur, costs to comply with current environmental laws and regulations related to remediation of conditions in the environment. In addition, if violations of environmental laws result in us, or in one or more of our operations, being identified as an excluded party in the U.S. Government’s ~~agencies~~System ~~before~~for Award Management, then we ~~are~~or ~~permitted~~one or more of our operations would become ineligible to ~~sell~~receive certain ~~products~~contracts, subcontracts and ~~technologies~~other ~~outside~~benefits offrom the Ufederal government or to perform work under a government contract or subcontract.S. ~~For~~Generally, such ineligibility would continue until the basis for the listing has been appropriately addressed.

~~example,~~If our responses to new or evolving legal and regulatory requirements or other sustainability concerns are unsuccessful or perceived as inadequate for the U.S. ~~Department~~ ofor ~~State~~our ~~must~~international ~~notify~~markets, ~~Congress~~we atalso ~~least~~may 15suffer damage to ~~60 days~~our reputation, ~~depending~~which oncould adversely affect our business. Developments such as the ~~size~~adoption of new environmental laws and regulations, stricter enforcement of existing laws and regulations, violations by us of such laws and regulations, discovery of previously unknown or more extensive contamination, litigation involving environmental impacts, our inability to recover costs associated with any such developments under previously priced contracts or financial insolvency of other responsible parties could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity.

~~location of the proposed sale, prior to authorizing certain sales of defense equipment and services to foreign~~ _____________________________________________________________________13

~~governments~~Our reputation and ability to do business may be impacted by the improper conduct of our employees, agents or business partners. ~~During~~We ~~that~~have ~~time~~implemented compliance controls, ~~Congress~~training, ~~may~~policies ~~take~~and ~~action~~procedures designed to ~~block~~ensure compliance with, and prevent and detect reckless or criminal acts from being committed by our employees, agents or business partners that would violate the ~~proposed~~laws ~~sale~~of the jurisdictions in which we operate. WeSuch ~~may~~laws beinclude ~~unsuccessful~~laws ingoverning payments to government officials, the FCPA, export controls, such as ITAR and the EAR, false claims, procurement integrity, cost accounting and billing, competition, information security and data privacy and the terms of our contracts.

~~obtaining~~We ~~necessary~~cannot ~~licenses~~ensure, however, that our controls, training, policies and procedures will prevent or ~~authorizations~~detect all such reckless or ~~Congress~~criminal ~~may~~acts, ~~prevent~~and we have been adversely impacted by such acts in the past. If not prevented, such acts could subject us to civil or ~~delay~~criminal ~~certain~~investigations, ~~sales~~monetary and non-monetary penalties and suspension and debarment by the U.S. Government and could have a material adverse effect on our business, results of operations and reputation. In addition, misconduct involving data security lapses resulting in the compromise of personal information or the improper use of our customers’ sensitive or classified information could result in remediation costs, regulatory sanctions against us and serious harm to our reputation and could adversely impact our ability to continue to contract with the U.S. Government.

~~Our~~The ~~ability~~outcome of litigation or arbitration in which we are involved from time to ~~obtain~~time ~~necessary~~is ~~licenses~~unpredictable, and ~~authorizations~~an ~~timely~~adverse decision in any such matter could have a material adverse effect on our financial condition, results of operations, cash flows and equity. The size, nature and complexity of our business make us susceptible to investigations, claims, disputes, enforcement actions, litigation and other legal proceedings, particularly those involving governments. From time to time, we are defendants in a number of litigation matters and are involved in a number of arbitration matters. These actions may divert financial and management resources that would otherwise be used to benefit our operations. The results of these or atnew matters may be unfavorable to us. Although we maintain insurance policies, they may not be adequate to protect us from all material judgments and expenses related to current or future claims and may not cover the conduct that is the subject of the litigation or arbitration. Desired levels of insurance may not be available in the future at economical prices or at all. In addition, the results of litigation or arbitration can be difficult to ~~risks~~predict, ~~and~~including ~~uncertainties~~litigation involving jury trials. Accordingly, our current judgment as to the likelihood of our loss (or our current estimate as to the potential range of loss, if applicable) with respect to any particular litigation or arbitration matter may be wrong. A significant judgment or arbitration award against us arising out of any of our current or future litigation or arbitration matters could have a material adverse effect on our business, financial condition, results of operations, cash flows and equity.

~~including~~We ~~changing~~may Ubecome subject to intellectual property infringement claims, and third parties may infringe upon our intellectual property rights.S Many of the markets we serve are characterized by vigorous protection and pursuit of intellectual property rights. ~~Government~~Our ~~policies~~competitive orposition ~~laws~~in orthe ~~delays~~market depends in ~~Congressional~~part ~~action~~on ~~due~~our proprietary technology and our ability to ~~geopolitical~~ensure it is protected when necessary. Third parties have claimed in the past, and ~~other~~may claim in the future, that we are infringing upon their intellectual property rights. Such claims may result in us having potential defense costs, royalty agreements, damage awards or injunctions granted against certain capabilities.

~~factors~~We rely on a combination of patents, copyrights, trademarks, trade secrets, know-how, confidentiality provisions, proper use of data rights assertions with our government customers and licensing arrangements to establish and protect our intellectual property rights. In addition, the laws concerning intellectual property vary among nations and the protection provided to our intellectual property by the laws and courts of foreign nations may differ from those of the U.S. If we ~~are~~fail ~~not~~to ~~successful~~successfully inprotect ~~obtaining~~and enforce these rights, our competitive position could suffer. Our pending patent and trademark registration applications may not be allowed, or ~~maintaining~~competitors may challenge the ~~necessary~~validity ~~licenses~~or scope of our patents or ~~authorizations~~trademark inregistrations. aOur ~~timely~~U.S. Government customers may challenge our data rights assertions. We may be required to spend significant resources to monitor and enforce our intellectual property rights. Litigation to determine the scope of intellectual property rights, even if ultimately successful, could be costly and could divert management’s attention away from other aspects of our business. We may not be able to detect infringement, and our competitive position may be harmed before we do so. In addition, competitors may design around our technology or develop competing technologies.

~~_____________________________________________________________________~~We face certain significant risk exposures and potential liabilities that may not be covered adequately by insurance or indemnity. We are exposed to liabilities that are unique to the products and services we provide. A significant portion of our business relates to designing, developing and manufacturing advanced defense, technology and communications systems and products. New technologies associated with these systems and products may be untested or unproven. Components of certain defense systems and products we develop are inherently dangerous. Failures of satellites, missile systems, air traffic control systems, electronic warfare systems, space superiority systems, command, control, computers, communications, cyber, ISR, homeland security applications and aircraft have the potential to cause loss of life and extensive property damage. Other examples of unforeseen problems that

13_____________________________________________________________________14

~~manner~~could result, ~~our~~either ~~sales~~directly ~~relating~~or indirectly, in the loss of life or property or otherwise negatively affect revenue and profitability include loss on launch of spacecraft, premature failure of products that cannot be accessed for repair or replacement, problems with quality and workmanship, country of origin, delivery of subcontractor components or services and unplanned degradation of product performance. In addition, problems and delays in development or delivery as a result of issues with respect to ~~those~~design, ~~approvals~~technology, licensing and patent rights, labor, learning curve assumptions or materials and components could prevent us from achieving contractual requirements. In many circumstances, we may receive indemnification from the U.S. Government. We generally do not receive indemnification from foreign governments. Although we maintain insurance for certain risks, including certain cybersecurity exposures, the amount of our insurance coverage may not be ~~reversed~~adequate to cover all claims or liabilities, ~~prevented~~and we may be forced to bear substantial costs from an accident or ~~delayed~~incident. It also is not possible for us to obtain insurance to protect against all operational risks and liabilities. Substantial claims resulting from an incident in excess of U.S. Government indemnity and our insurance coverage would harm our financial condition, results of operations, cash flows and equity. Other factors that may affect revenue and profits include loss of follow-on work, and, in the case of certain contracts, liquidated damages, penalties and repayment to the customer of contract cost and fee payments we previously received. Moreover, any ~~significant~~accident or incident for which we are liable, even if fully insured, could negatively affect our standing with our customers and the public, thereby making it more difficult for us to compete effectively, and could significantly impact the cost and availability of adequate insurance in the future.

impairment of our ability to sell products or technologies outside of the U.S. could negatively impact our business,

financial condition, results of operations, cash flows and equity.

Environmental issues could have a material adverse effect on our business, financial condition, results of

operations, cash flows and equity. Our operations are subject to various U.S. federal, state and local, as well as

certain foreign, environmental laws and regulations within the countries in which we operate relating to the

discharge, storage, treatment, handling, disposal and remediation of certain materials, substances and wastes used

in our operations. Our real estate assets in particular are subject to various risks, including that our reserves for

estimated future environmental obligations may prove to be insufficient, we may be unable to complete

environmental remediation or, we may be unable to have state and federal environmental restrictions lifted.

Compliance with current and future environmental laws and regulations may require significant operating and

capital costs. Environmental laws and regulations may institute substantial fines and criminal sanctions as well as

facility shutdowns to address violations and may require the installation of costly pollution control equipment or

operational changes to limit emissions or discharges. Our suppliers may face similar business interruptions and

incur additional costs that may increase the price of materials needed for manufacturing. We also incur, and expect

to continue to incur, costs to comply with current environmental laws and regulations related to remediation of

conditions in the environment. In addition, if violations of environmental laws result in us, or in one or more of our

operations, being identified as an excluded party in the U.S. Government’s System for Award Management, then we

or one or more of our operations would become ineligible to receive certain contracts, subcontracts and other

benefits from the federal government or to perform work under a government contract or subcontract. Generally,

such ineligibility would continue until the basis for the listing has been appropriately addressed.

If our responses to new or evolving legal and regulatory requirements or other sustainability concerns are

unsuccessful or perceived as inadequate for the U.S. or our international markets, we also may suffer damage to our

reputation, which could adversely affect our business. Developments such as the adoption of new environmental

laws and regulations, stricter enforcement of existing laws and regulations, violations by us of such laws and

regulations, discovery of previously unknown or more extensive contamination, litigation involving environmental

impacts, our inability to recover costs associated with any such developments under previously priced contracts or

financial insolvency of other responsible parties could have a material adverse effect on our business, financial

condition, results of operations, cash flows and equity.

Our reputation and ability to do business may be impacted by the improper conduct of our employees, agents or

business partners. We have implemented compliance controls, training, policies and procedures designed to

prevent and detect reckless or criminal acts from being committed by our employees, agents or business partners

that would violate the laws of the jurisdictions in which we operate, including laws governing payments to

government officials, such as the FCPA, the protection of export-controlled or classified information, such as ITAR,

false claims, procurement integrity, cost accounting and billing, competition, information security and data privacy

and the terms of our contracts.

We cannot ensure, however, that our controls, training, policies and procedures will prevent or detect all such

reckless or criminal acts, and we have been adversely impacted by such acts in the past. If not prevented, such acts

could subject us to civil or criminal investigations, monetary and non-monetary penalties and suspension and

debarment by the U.S. Government and could have a material adverse effect on our business, results of operations

and reputation. In addition, misconduct involving data security lapses resulting in the compromise of personal

information or the improper use of our customers’ sensitive or classified information could result in remediation

costs, regulatory sanctions against us and serious harm to our reputation and could adversely impact our ability to

continue to contract with the U.S. Government.

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, cash flows and equity. The size, nature and complexity of our business make us susceptible to

investigations, claims, disputes, enforcement actions, litigation and other legal proceedings, particularly those

involving governments. From time to time, we are defendants in a number of litigation matters and are involved in a

number of arbitration matters. These actions may divert financial and management resources that would otherwise

be used to benefit our operations. The results of these or new matters may be unfavorable to us. Although we

maintain insurance policies, they may not be adequate to protect us from all material judgments and expenses

related to current or future claims and may not cover the conduct that is the subject of the litigation or arbitration.

Desired levels of insurance may not be available in the future at economical prices or at all. In addition, the results of

litigation or arbitration can be difficult to predict, including litigation involving jury trials. Accordingly, our current

_____________________________________________________________________

judgment as to the likelihood of our loss (or our current estimate as to the potential range of loss, if applicable) with

respect to any particular litigation or arbitration matter may be wrong. A significant judgment or arbitration award

against us arising out of any of our current or future litigation or arbitration matters could have a material adverse

effect on our business, financial condition, results of operations, cash flows and equity.

We may become subject to intellectual property infringement claims, and third parties may infringe upon our

intellectual property rights. Many of the markets we serve are characterized by vigorous protection and pursuit of

intellectual property rights, which often has resulted in protracted and expensive litigation. Our competitive position

in the market depends in part on our ability to ensure that our intellectual property is protected, that our intellectual

property rights are not diluted or subject to misuse, and that we are able to license certain third-party intellectual

property on reasonable terms. 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 we may be found to be infringing or to have

infringed directly or indirectly upon those intellectual property rights. Claims of infringement might also require us to

enter into costly royalty or license agreements. Our patents and other intellectual property may be challenged,

invalidated, misappropriated or circumvented by third parties. Moreover, we may not be able to obtain royalty or

license agreements on terms acceptable to us, or at all.

We also may be subject to significant damages or injunctions against development and sale of certain of our

products, services and solutions. Our success depends in large part on our proprietary technology. We rely on a

combination of patents, copyrights, trademarks, trade secrets, know-how, confidentiality provisions and licensing

arrangements to establish and protect our intellectual property rights. In addition, the laws concerning intellectual

property vary among nations and the protection provided to our intellectual property by the laws and courts of

foreign nations may differ from those of the U.S. If we fail to successfully protect and enforce these rights, our

competitive position could suffer. Our pending patent and trademark registration applications may not be allowed,

or competitors may challenge the validity or scope of our patents or trademark registrations. We may be required to

spend significant resources to monitor and enforce our intellectual property rights. Litigation to determine the scope

of intellectual property rights, even if ultimately successful, could be costly and could divert management’s

attention away from other aspects of our business. We may not be able to detect infringement, and our competitive

position may be harmed before we do so. In addition, competitors may design around our technology or develop

competing technologies.

We face certain significant risk exposures and potential liabilities that may not be covered adequately by

insurance or indemnity. We are exposed to liabilities that are unique to the products and services we provide. A

significant portion of our business relates to designing, developing and manufacturing advanced defense, technology

and communications systems and products. New technologies associated with these systems and products may be

untested or unproven. Components of certain defense systems and products we develop are inherently dangerous.

Failures of satellites, missile systems, air traffic control systems, electronic warfare systems, space superiority

systems, command, control, computers, communications, cyber, ISR, homeland security applications and aircraft

have the potential to cause loss of life and extensive property damage. Other examples of unforeseen problems that

could result, either directly or indirectly, in the loss of life or property or otherwise negatively affect revenue and

profitability include loss on launch of spacecraft, premature failure of products that cannot be accessed for repair or

replacement, problems with quality and workmanship, country of origin, delivery of subcontractor components or

services and unplanned degradation of product performance. In addition, problems and delays in development or

delivery as a result of issues with respect to design, technology, licensing and patent rights, labor, learning curve

assumptions or materials and components could prevent us from achieving contractual requirements. In many

circumstances, we may receive indemnification from the U.S. Government. We generally do not receive

indemnification from foreign governments. Although we maintain insurance for certain risks, including certain

cybersecurity exposures, the amount of our insurance coverage may not be adequate to cover all claims or liabilities,

and we may be forced to bear substantial costs from an accident or incident. It also is not possible for us to obtain

insurance to protect against all operational risks and liabilities. Substantial claims resulting from an incident in

excess of U.S. Government indemnity and our insurance coverage would harm our financial condition, results of

operations, cash flows and equity. Other factors that may affect revenue and profits include loss of follow-on work,

and, in the case of certain contracts, liquidated damages, penalties and repayment to the customer of contract cost

and fee payments we previously received. Moreover, any accident or incident for which we are liable, even if fully

insured, could negatively affect our standing with our customers and the public, thereby making it more difficult for

us to compete effectively, and could significantly impact the cost and availability of adequate insurance in the future.

Strategic Transactions and Investments Risks

Strategic transactions, including mergers, acquisitions and divestitures, and the planned initial public offering (“IPO”) of the Missile Solutions business, involve significant risks and uncertainties that could adversely affect our business, financial condition, results of operations, cash flows and equity. Strategic transactions in which we have engaged and may engage in the future, including mergers, acquisitions and divestitures, and the planned IPO of the Missile Solutions business, present significant risks and uncertainties that could adversely affect our business, financial condition, results of operations, cash flows and equity, which include:

~~uncertainties~~•Difficulty ~~that~~in ~~could~~identifying ~~adversely~~and ~~affect~~evaluating ~~our~~potential ~~business,~~mergers ~~financial~~and ~~condition~~acquisitions, ~~results~~including ofthe ~~operations~~risk that our due diligence does not identify or fully assess valuation issues, ~~cash~~potential ~~flows~~liabilities ~~and~~or other transaction risks;

~~_____________________________________________________________________~~•Difficulty, delays and expense in integrating newly merged or acquired businesses and operations, including combining capabilities, 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;

15•Differences in business backgrounds, corporate cultures and management philosophies that may delay successful integration;

~~equity. Strategic mergers~~•Difficulty, ~~acquisitions~~delays and ~~divestitures~~expense wein ~~have~~consolidating ~~made~~and inrationalizing ~~the~~IT ~~past~~infrastructure, ~~and~~which may ~~make~~include inmultiple ~~the~~legacy ~~future~~systems from transactions and integrating software code;

present significant risks and uncertainties that could adversely affect our business, financial condition, results of

operations, cash flows and equity, which include:

•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;

•Difficulty, delays 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;

•Differences in business backgrounds, corporate cultures and management philosophies that may delay

successful integration;

•Difficulty, delays and expense in consolidating and rationalizing IT infrastructure, which may include

multiple legacy systems from various mergers and acquisitions and integrating software code;

•Challenges in achieving strategic objectives, cost savings and other expected benefits;

•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;

~~divestitures~~•Risk dothat ~~not~~we ~~prove~~assume toor beretain, ~~those~~or ~~needed~~that companies we have merged with or acquired have assumed or retained or otherwise become subject to, besignificant ~~successful~~liabilities inthat ~~those~~exceed ~~markets~~the limitations of any applicable indemnification provisions or the financial resources of any indemnifying parties;

•Risk that weindemnification ~~assume~~related orto ~~retain,~~businesses divested or ~~that~~spun ~~companies~~off that we ~~have~~may ~~merged~~be ~~with~~required to provide or ~~acquired~~otherwise ~~have~~bear ~~assumed~~may orbe significant and could negatively impact our business;

~~retained~~•Risk orthat ~~otherwise~~mergers, ~~become~~acquisitions, ~~subject~~divestitures, spin offs and other strategic transactions fail to, ~~significant~~qualify ~~liabilities~~for ~~that~~the ~~exceed~~intended tax treatment for U.S. federal income tax purposes and the ~~limitations~~possibility ofthat ~~any~~the ~~applicable~~full tax benefits anticipated to result from such transactions may not be realized;

~~indemnification~~•Risk ~~provisions~~that orwe ~~the~~are ~~financial~~not ~~resources~~able to complete strategic divestitures on satisfactory terms and conditions, including non-competition arrangements applicable to certain of ~~any~~our ~~indemnifying~~business ~~parties~~lines, or within expected timeframes;

•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;

•Risk that mergers, acquisitions, divestitures, spin offs and other strategic transactions fail to qualify for the

intended tax treatment for U.S. federal income tax purposes and the possibility that the full tax benefits

anticipated to result from such transactions may not be realized;

•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;

•Potential loss of key employees or customers of the businesses acquired or to be divested; and

•Risk of diverting the attention of senior management from our existing operations.

Changes in future business or other market conditions could cause business investments and/or recorded goodwill or other intangible assets to become impaired, resulting in substantial losses and write-downs that would materially adversely affect our results of operations and financial condition. A significant portion of our assets consist of goodwill and other intangible assets, primarily recorded as the result of acquisitions. Assumptions and judgments used in determining the initial purchase price of an acquisition may subsequently prove to be inaccurate due to changes in business, market, or economic conditions, or as a result of unforeseen developments, which could adversely affect the anticipated returns or which are otherwise not recoverable as an adjustment to the purchase

~~goodwill or other intangible assets to become impaired, resulting in substantial losses and write-downs that would~~ _____________________________________________________________________15

~~materially~~price. ~~adversely~~We ~~affect~~evaluate the recoverability of recorded goodwill annually, as well as when we change reporting units (either as a result of a reorganization or as the result of divestiture activity) and when events or circumstances indicate there may be an impairment. If an impairment exists, we record the charge in the period of determination. Because of the significance of our goodwill and other intangible assets, any future impairment of these assets could have a material adverse effect on our results of operations and financial condition. AFor ~~significant~~additional ~~portion~~information on our accounting policies related to impairment of goodwill, see our ~~assets~~discussion under “Critical Accounting Estimates” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report and Note 1: Significant Accounting Policies and Note 6: Goodwill and Intangible Assets in the Notes.

consist of goodwill and other intangible assets, primarily recorded as the result of acquisitions. Assumptions and

judgments in determining initial acquisition price may subsequently prove to have been inaccurate and unforeseen

issues could arise, which could adversely affect the anticipated returns or which are otherwise not recoverable as an

adjustment to the purchase price. We evaluate the recoverability of recorded goodwill annually, as well as when we

change reporting units (either as a result of a reorganization or as the result of divestiture activity) and when events

or circumstances indicate there may be an impairment. If an impairment exists, we record the charge in the period

of determination. Because of the significance of our goodwill and other intangible assets, any future impairment of

these assets could have a material adverse effect on our results of operations and financial condition. For additional

information on our accounting policies related to impairment of goodwill, see our discussion under “Critical

Accounting Estimates” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of

Operations” of this Report and Note 1: Significant Accounting Policies and Note 6: Goodwill and Intangible Assets in

the Notes.


ITEM 1B.			UNRESOLVED STAFF COMMENTS.

Not applicable.


ITEM 1C.			CYBERSECURITY.

Risk Management and Strategy

We assess and identify material risks from cybersecurity threats primarily through the work of our Global Technology and Business Solutions organization, which is fully integrated in our enterprise risk management (“ERM”) process in close partnership with other functions such as Engineering, Industrial Security, Internal Audit, and Legal. The ERM process, administered by management with input from each business segment and function, continuously monitors material risks facing L3Harris, including cybersecurity threats. Our Global Technology and Business Solutions organization, is led by our Chief Information Officer (“CIO”), who has extensive experience leading information technology for global organizations across aerospace, defense and industrials, and works directly with our Chief Executive Officer (“CEO”) and other members of senior management to assess cybersecurity threats as part of the ERM process. The CIO oversees the internal cybersecurity organization of more than 100 full-time employees headed by our Chief Information Security Officer (our “Cybersecurity Team”).

~~Security~~Risks ~~organization,~~related ~~which~~to iscybersecurity ~~fully~~threats ~~integrated~~are reflected in ~~our~~an enterprise risk ~~management~~“heat map,” along with other material risks identified through the ERM process, and any mitigation plans developed to manage such risks are reported to our Board of Directors (“~~ERM~~Board”). ~~process~~The in“heat ~~close~~map” includes risks related to cybersecurity threats to L3Harris and our customers, suppliers, vendors, subcontractors or other third parties, and the possibility of a data breach of our confidential, personal and proprietary information through a cybersecurity incident impacting L3Harris or any third party.

~~partnership~~To ~~with~~actively ~~other~~manage ~~functions~~cybersecurity ~~such~~risks identified as ~~Engineering~~part of the ERM process or otherwise and to manage emerging cybersecurity threats in real time, ~~Industrial~~management has implemented an ISO 27001 certified Information Security Management System. Our Cybersecurity Team operates a Security Operations Center that continuously monitors activity, ~~Internal~~frequently ~~Audit~~scans applications and systems for vulnerabilities to risk from cybersecurity threats and creates action plans to address and track identified cybersecurity threats until they have been remediated. Activities and cybersecurity incidents are reported to our CIO, who briefs senior management, including our CEO, as well as our Board, as appropriate. Our Cybersecurity Team also routinely engages with third parties, including government agencies focused on cyber resiliency, to manage risks from cybersecurity threats. For example, we are members of the DoW Defense Industrial Base Collaborative Information Sharing Environment, the National Defense Information Sharing and ~~Legal~~Analysis Center, and the National Security Agency’s Cybersecurity Collaboration Center. ~~The~~These ~~ERM~~organizations share real-time cybersecurity threat information and best practices in protecting, detecting and recovering from cybersecurity threats.

~~process~~We are committed to safeguarding against both internal and external security threats through a robust counterintelligence and insider threat program that utilizes cutting-edge data analytics and machine learning. As a defense contractor, ~~administered~~we bymust ~~management~~comply with ~~input~~the ~~from~~DoW's ~~each~~cybersecurity ~~business~~regulations, ~~segment~~including the Defense Federal Acquisition Regulation Supplement, relating to the protection of Controlled Unclassified Information and ~~function~~prompt reporting of cybersecurity incidents. Our practices have been rigorously assessed by the Defense Contract Management Agency to meet the Level 2 Cybersecurity Maturity Model Certification requirements, ~~continuously~~reflecting ~~monitors~~our dedication to maintaining stringent security controls.

~~material~~To mitigate cybersecurity risks ~~facing~~introduced ~~L3Harris~~from our supply chain, ~~including~~we ~~cybersecurity~~have ~~threats~~a dedicated Cybersecurity - Supply Chain Risk Management team. ~~Our~~This ~~Information~~team ~~Security~~assesses ~~organization~~new suppliers against best cybersecurity practices, ensures cybersecurity regulations are contractually flowed down and coordinates mitigation actions across the company if a supplier is ~~led~~impacted by a cybersecurity incident. The Supply Chain Risk Management team utilizes industry monitoring services to identify potential supply chain incidents and works closely with our Cybersecurity Team to understand the latest threats affecting our industry.

~~Chief Information Officer (“CIO”), who has extensive experience leading information technology for global~~ _____________________________________________________________________16

~~_____________________________________________________________________~~Additionally, as part of our processes to manage risks related to a breach in our information systems, management requires employees to take annual cybersecurity training and shares regular awareness updates regarding cybersecurity threats. Our Cybersecurity Team regularly tests employees throughout the year to assess the effectiveness of the cybersecurity training. We also periodically conduct penetration testing of our network, hold tabletop exercises of cyber incidents, and undertake cybersecurity assessments led by Internal Audit to improve our risk mitigation and assist in the determination of a potential material impact caused by a cybersecurity incident.

16While we have implemented robust practices to mitigate cybersecurity risks, and prior cybersecurity threats have not materially affected our business strategy, results of operations or financial condition, we could be negatively impacted by a cybersecurity breach, through cyber-attack, cyber intrusion, insider threats, supply chain incidents, or otherwise, or other significant disruption of our IT networks and related systems or of those we operate for certain of our customers. See “Item 1A. Risk Factors” in this Report for further discussion of specific risks related to cybersecurity threats.

organizations across aerospace, defense and industrials, and works directly with our Chief Executive Officer (“CEO”)

and other members of senior management to assess cybersecurity threats as part of the ERM process. The CIO

oversees the internal cybersecurity organization of more than 100 full-time employees headed by our Chief

Information Security Officer (our “Cybersecurity Team”).

Risks related to cybersecurity threats are reflected in an enterprise risk “heat map,” along with other material

risks identified through the ERM process, and any mitigation plans developed to manage such risks are reported to

our Board of Directors (“Board”). The “heat map” includes risks related to cybersecurity threats to L3Harris and our

customers, suppliers, vendors, subcontractors or other third parties, and the possibility of a data breach of our

confidential, personal and proprietary information through a cybersecurity incident impacting L3Harris or any third

party.

To actively manage cybersecurity risks identified as part of the ERM process or otherwise and to manage

emerging cybersecurity threats in real time, management has implemented an ISO 27001 certified Information

Security Management System. Our Cybersecurity Team operates a Security Operations Center that continuously

monitors activity, frequently scans applications and systems for vulnerabilities to risk from cybersecurity threats and

creates action plans to address and track identified cybersecurity threats until they have been remediated. Activities

and cybersecurity incidents are reported to our CIO, who briefs senior management, including our CEO, as well as

the Innovation and Cyber Committee and the Audit Committee of our Board (respectively, the “Innovation and Cyber

Committee” and the “Audit Committee”), as appropriate. Our Cybersecurity Team also routinely engages with third

parties, including government agencies focused on cyber resiliency, to manage risks from cybersecurity threats. For

example, we are members of the DoD Defense Industrial Base Collaborative Information Sharing Environment, the

National Defense Information Sharing and Analysis Center, and the National Security Agency Enduring Security

Framework. These organizations share real-time cybersecurity threat information and best practices in protecting,

detecting and recovering from cybersecurity threats.

We are committed to safeguarding against both internal and external security threats through a robust

counterintelligence and insider threat program that utilizes cutting-edge data analytics and machine learning. As a

defense contractor, we are subject to the Department of Defense's cybersecurity regulations, including the Defense

Federal Acquisition Regulation Supplement, ensuring the protection of Controlled Unclassified Information and

prompt reporting of cybersecurity incidents. Our practices have been rigorously assessed by the Defense Contract

Management Agency to meet the Level 2 Cybersecurity Maturity Model Certification requirements, reflecting our

dedication to maintaining stringent security controls.

To mitigate cybersecurity risks introduced from our supply chain, we have a dedicated Cybersecurity - Supply

Chain Risk Management team. This team assesses new suppliers against best cybersecurity practices, ensures

cybersecurity regulations are contractually flowed down and coordinates mitigation actions across the company if a

supplier is impacted by a cybersecurity incident. The Supply Chain Risk Management team utilizes industry

monitoring services to identify potential supply chain incidents and works closely with our Cybersecurity Team to

understand the latest threats affecting our industry.

Additionally, as part of our processes to manage risks related to a breach in our information systems,

management requires employees to take annual cybersecurity training and shares regular awareness updates

regarding cybersecurity threats. Our Cybersecurity Team regularly tests employees throughout the year to assess

the effectiveness of the cybersecurity training. We also periodically conduct penetration testing of our network, hold

tabletop exercises of cyber incidents, and undertake cybersecurity assessments led by Internal Audit to improve our

risk mitigation and assist in the determination of a potential material impact caused by a cybersecurity incident.

While we have implemented robust practices to mitigate cybersecurity risks, and prior cybersecurity threats

have not materially affected our business strategy, results of operations or financial condition, we could be

negatively impacted by a cybersecurity breach, through cyber-attack, cyber intrusion, insider threats, supply chain

incidents, or otherwise, or other significant disruption of our IT networks and related systems or of those we operate

for certain of our customers. See “Item 1A. Risk Factors” in this Report for further discussion of specific risks related

to cybersecurity threats.

_____________________________________________________________________

Governance

The Audit Committee provides regular oversight and review of our ERM process and other guidelines and policies governing the processes by which our CEO and senior management assess our exposure to risk, including risk from cybersecurity threats. The Audit Committee receives regular briefings from our CIO, Chief Information Security Officer and other members of senior management on cybersecurity threats and related matters and provides oversight and review of our ERM process.

~~policies~~The ~~governing~~Audit Committee reviews our cybersecurity risk across the ~~processes~~enterprise byat ~~which~~least annually, including IT, supply chain and our ~~CEO~~products and ~~senior~~our ~~management~~cybersecurity ~~assess~~strategy framework and operational posture. The Board also reviews our ~~exposure~~IT, data security and other systems, processes, policies, procedures and controls at least annually to ~~risk~~(a) identify, ~~including~~assess, monitor and mitigate cybersecurity risks; (b) identify measures to protect and safeguard against cybersecurity threats and breaches of confidential information and data and IT infrastructure and our other assets or assets of our customers or other third parties in our possession or custody; (c) support the response and management of cybersecurity threats and data breach incidents; and (d) aid in compliance with legal and regulatory requirements governing cybersecurity or data security reporting requirements.

risk from cybersecurity threats. The Innovation and Cyber Committee receives regular briefings from our CIO, Chief

Information Security Officer and other members of senior management on cybersecurity threats and related matters

and assists the Audit Committee in its oversight and review of our ERM process.

The Innovation and Cyber Committee reviews our cybersecurity risk across the enterprise at least annually,

including IT, supply chain and products and our cybersecurity strategy framework and operational posture. The

Innovation and Cyber Committee also reviews our IT, data security and other systems, processes, policies,

procedures and controls at least annually to (a) identify, assess, monitor and mitigate cybersecurity risks; (b) identify

measures to protect and safeguard against cybersecurity threats and breaches of confidential information and data

and IT infrastructure and our other assets or assets of our customers or other third parties in our possession or

custody; (c) support the response and management of cybersecurity threats and data breach incidents; and (d) aid in

compliance with legal and regulatory requirements governing cybersecurity or data security reporting requirements.

The Innovation and Cyber Committee reports its activities to the full Board on a regular basis and makes such

recommendations to the Board and management with respect to risks from cybersecurity threats and other matters

as it deems necessary or appropriate.


ITEM 2.			PROPERTIES.

As of January 32, ~~2025~~2026, we operated approximately ~~250~~230 locations in the U.S., Canada, EMEA, and APAC, consisting of approximately 25 million square feet of manufacturing, administrative, R&D, warehousing, engineering and office space, of which we owned approximately 11 million square feet and leased approximately 14 million square feet. As of January 2, 2026, we had major operations at the following locations:

~~consisting~~CS — Rochester, ofNew ~~approximately~~York; 27Salt ~~million~~Lake ~~square~~City, ~~feet~~Utah; ofLondonderry, ~~manufacturing~~New Hampshire; Lynchburg, ~~administrative~~Virginia; Tempe, ~~R&D~~Arizona; Carlsbad, ~~warehousing~~California; Farnborough, ~~engineering~~United Kingdom; Brisbane, Australia; Melbourne and Sunrise, Florida; and Abu Dhabi, United Arab Emirates.

IMS — Greenville, Waco, Rockwall and ~~office~~Plano, ~~space~~Texas; Mirabel and Waterdown, ofCanada; ~~which~~Camden, weNew ~~owned~~Jersey; ~~approximately~~Anaheim, 12California; ~~million~~Tulsa, ~~square~~Oklahoma; ~~feet~~Mason, ~~and~~Ohio; ~~leased~~Salt ~~approximately~~Lake 15City, ~~million~~Utah; and Philadelphia, Pennsylvania.

~~square~~SAS — Palm ~~feet.~~Bay, AsMelbourne ofand ~~January 3~~Malabar, ~~2025~~Florida; Rochester and Amityville, weNew ~~had~~York; ~~major~~Clifton, ~~operations~~New atJersey; ~~the~~San ~~following~~Diego, ~~locations:~~California; Colorado Springs, Colorado; Fort Wayne, Indiana; Herndon, Virginia; Wilmington, Massachusetts; and Alpharetta, Georgia.

~~SAS~~ AR — ~~Palm~~ ~~Bay~~Camden, ~~Melbourne~~Arkansas; ~~and~~Chatsworth, ~~Malabar~~California; Huntsville, ~~Florida~~Alabama; ~~Rochester~~West ~~and~~Palm ~~Amityville~~Beach, ~~New~~Florida; ~~York~~Cincinnati, Ohio; ~~Clifton~~Orange, ~~New~~Virginia; ~~Jersey~~Redmond, Washington; ~~Van~~ Hancock County, Mississippi; and Orlando, Florida.

Nuys and San Diego California; Colorado Springs, Colorado; Fort Wayne, Indiana; Herndon, Virginia; Wilmington,

Massachusetts; and Alpharetta, Georgia.

IMS — Greenville, Waco, Rockwall and Plano, Texas; Mirabel and Waterdown, Canada; Camden, New Jersey;

Anaheim, California; Mason and Cincinnati, Ohio; Tulsa, Oklahoma; Salt Lake City, Utah; Philadelphia, Pennsylvania;

Crawley, United Kingdom; and Grand Rapids, Michigan.

CS — Rochester, New York; Salt Lake City, Utah; Londonderry, New Hampshire; Lynchburg, Virginia; Tempe,

Arizona; Carlsbad, California; Farnborough, United Kingdom; Brisbane, Australia; Melbourne, Sunrise, Florida; and

Abu Dhabi, United Arab Emirates.

AR — Camden, Arkansas; Chatsworth, California; Huntsville, Alabama; West Palm Beach, Florida; Orange,

Virginia; Redmond, Washington; Orlando, Florida; and Hancock County, Mississippi.

Corporate — Melbourne, Florida; and Arlington, VA.

Our facilities are ~~suitable~~maintained in good operating condition and we believe have adequate ~~for~~capacity ~~their~~to ~~intended~~meet ~~purposes~~current contractual and operational requirements and those expected in the foreseeable future. We will add, ~~are~~improve, ~~well-maintained~~replace or reduce facilities as appropriate to support our operational needs. See Note 5: Property, ~~are~~Plant ~~generally~~and Equipment, Net and Note 11: Leases in ~~regular~~the Notes for more information on our owned properties and our lease obligations, respectively.

use and have capacities adequate for current and projected needs. We will, from time to time, acquire additional

facilities, expand existing facilities and dispose of existing facilities or parts thereof, as management deems

necessary. See Note 5: Property, Plant and Equipment, Net and Note 11: Leases in the Notes for more information on

our owned properties and our lease obligations, respectively.


ITEM 3.			LEGAL PROCEEDINGS.

See Note 15: Legal Proceedings, Commitments and Contingencies included in our Notes for information relating to our legal proceedings.

~~to our legal proceedings.~~_____________________________________________________________________17


ITEM 4.			MINE SAFETY DISCLOSURES.

Not applicable.

_____________________________________________________________________

INFORMATION ABOUT OUR EXECUTIVE OFFICERS.

Our executive officers as of February 12, 2026, are listed below, along with their ages on that date, position held with us and principal occupation and business experience during at least the past five years.

Our executive officers as of February 14, 2025, are listed below, along with their ages on that date, position held

Name

Age

Position

Held Since

Recent Business Experience

Kenneth Bedingfield

Senior Vice President (“VP”), Chief Financial Officer (“CFO”)

President, Missile Solutions(1)

December 2023

January 2026

President, AR (2024-2025); CEO, Epirus, Inc. (“Epirus”) (2022-2023); President and Chief Operating Officer, Epirus (2022); CFO, Epirus (2020-2022); CFO, Northrop Grumman (2015-2020), Aerospace Sector CFO, Northrop Grumman (2013-2015)

John Cantillon

VP, Principal Accounting Officer

May 2024

VP, Assistant Controller (2023-2024); VP of Finance Manufacturing Operations, Pratt & Whitney (2023); VP and Controller, Pratt & Whitney (2020-2023)

Christoph Feddersen

Senior VP, General Counsel & Secretary

December 2025

VP, General Counsel & Secretary, (2024-2025); VP, General Counsel of L3Harris SAS (2024); VP and General Counsel, Collins Aerospace Systems (2018-2023)

Christopher Kubasik

Chairman and CEO

June 2022

Vice Chair and CEO (2021); Vice Chair, President and Chief Operating Officer (2019-2021); Chairman, CEO and President, L3 Technologies, Inc. (“L3”) (2018-2019)

Samir Mehta

President, Space & Mission Systems(1)

January 2026

President, CS (2023-2025); President of Advanced Structures, Collins Aerospace (2018-2022); President, Aftermarket Services for UTL Aerospace Systems (2017-2018)

Melanie Rakita

VP & Chief Human Resources Officer

April 2023

VP, Human Resources for L3Harris IMS (2023), SAS (2019-2023), and Legacy Harris Corporation Electronic Systems (2018-2019)

Jonathan Rambeau

President, Communication & Spectrum Dominance(1)

January 2026

President, IMS (2022-2025); VP and General Manager, Integrated Warfare Systems and Sensors of the Rotary and Mission Systems business, Lockheed Martin (2020-2022); VP and General Manager, C6ISR, Rotary and Mission Systems, Lockheed Martin (2016-2020)

with us and principal occupation and business experience during at least the past five years.

Name	Age	Position	Held Since	Recent Business Experience
Kenneth L. Bedingfield	52	Chief Financial Officer (“CFO”) and President, AR(1)	December 2023	CEO, Epirus, Inc. (“Epirus”) (2022-2023); President and Chief Operating Officer, Epirus (2022); CFO, Epirus (2020-2022); CFO, Northrop Grumman Corporation (“Northrop Grumman”) (2015-2020), Aerospace Sector CFO, Northrop Grumman (2013-2015)
John P. Cantillon	58	Vice President (“VP”), Principal Accounting Officer	May 2024	VP, Assistant Controller (2023-2024); VP of Finance Manufacturing Operations, Pratt & Whitney (2023); VP and Controller, Pratt & Whitney (2020-2023)
Christoph T. Feddersen	53	VP, General Counsel & Secretary	August 2024	VP, General Counsel of L3Harris SAS (2024); VP and General Counsel, Collins Aerospace Systems (2018-2023)
Christopher E. Kubasik	63	Chair and CEO	June 2022	Vice Chair and CEO (2021); Vice Chair, President and Chief Operating Officer (2019-2021); Chairman, CEO and President, L3 Technologies, Inc. (“L3”) (2018-2019)
Samir B. Mehta	52	President, CS	January 2023	President of Advanced Structures, Collins Aerospace (2018-2022); President, Aftermarket (2017-2018)
Melanie Rakita	47	VP and Chief Human Resources Officer	April 2023	VP, Human Resources for L3Harris IMS (2023), SAS (2019-2023), and Legacy Harris Corporation Electronic Systems (2018-2019)
Jonathan P. Rambeau	52	President, IMS	October 2022	VP and General Manager, Integrated Warfare Systems and Sensors of the Rotary and Mission Systems business, Lockheed Martin (2020-2022); VP and General Manager, C6ISR, Rotary and Mission Systems, Lockheed Martin (2016-2020)
Edward J. Zoiss	60	President, SAS	June 2019	President, Legacy Harris Corporation Electronic Systems (2015-2019)

_______________

(1) Following ~~the~~our ~~retirement~~fiscal of2026 ~~Ross~~segment ~~Niebergall~~reorganization, onsee ~~February~~Note 3,16: ~~2025,~~Subsequent ~~Kenneth~~Events ~~Bedingfield~~in ~~assumed~~ the ~~additional role of President, AR~~Notes.

There is no family relationship between any of our executive officers or directors. All of our executive officers serve ~~are~~at the pleasure of our Board.

elected annually and serve at the pleasure of our Board.

PART II


ITEM 5.			MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock, par value $1.00 per share, is listed and traded on the New York Stock Exchange (“NYSE”), under the ticker symbol “LHX.” According to the records of our transfer agent, as of February 6, 2026, there were 8,747 holders of record of our common stock.

~~under the ticker symbol “LHX.” According to the records of our transfer agent, as of February 7, 2025, there were~~ _____________________________________________________________________18

9,165 holders of record of our common stock.

_____________________________________________________________________

Dividends

During fiscal ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, we paid quarterly per share cash dividends on our common stock of $1.20, $1.16 and $1.14, respectively. We currently expect to continue paying cash dividends in the near future, but we can give no assurances concerning payment of future dividends or future dividend increases. The declaration of dividends by our Board and the amount thereof will depend on a number of factors, including our financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors our Board may deem relevant.

$1.14 and $1.12, respectively. We currently expect to continue paying cash dividends in the near future, but we can

give no assurances concerning payment of future dividends or future dividend increases. The declaration of

dividends by our Board and the amount thereof will depend on a number of factors, including our financial condition,

capital requirements, cash flows, results of operations, future business prospects and other factors our Board may

deem relevant.

Stock Performance Graph

The following graph provides a five year comparison of cumulative total shareholder return (“TSR”), assuming reinvestment of all dividends and an initial investment of $100 at the close of business on December 31, 2020, in L3Harris common stock, the Standard & Poor’s 500 Composite Stock Index (“S&P 500”) and the Standard & Poor’s 500 Aerospace & Defense Index (“S&P 500 Aerospace & Defense”):

reinvestment of all dividends and an initial investment of $100 at the close of business on January 3, 2020, in

L3Harris common stock, the Standard & Poor’s 500 Composite Stock Index (“S&P 500”) and the Standard & Poor’s

500 Aerospace & Defense Index (“S&P 500 Aerospace & Defense”):

FIVE YEAR COMPARISON OF CUMULATIVE TSR(1)

_______________

(1) This performance graph is not deemed to be filed with the SEC or subject to the liabilities of Section 18 of the Exchange Act, and should not be deemed to be incorporated by reference into any other previous or future filings by us under the Securities Act or the Exchange Act.

deemed to be incorporated by reference into any other previous or future filings by us under the Securities Act or the Exchange Act.

Recent Sales of Unregistered Securities

During fiscal ~~2024~~2025, we did not issue or sell any unregistered securities.

~~_____________________________________________________________________~~_____________________________________________________________________19

Issuer Purchases of Equity Securities

The following table sets forth information with respect to repurchases by us of our common stock during the fiscal quarter ended January 2, 2026:

fiscal quarter ended January 3, 2025:


Period*	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs(1)	Maximum approximate dollar value of shares that may yet be purchased under the plans or programs(1) ($ in millions)
Month No. 1
(October 4, 2025 - October 31, 2025)
Repurchase program(1)	203,853	$	294.29	203,853	$	2,323
Employee transactions(2)	736	$	291.98	—	—
Month No. 2
(November 1, 2025 - November 28, 2025)
Repurchase program(1)	117,121	$	281.64	117,121	$	2,290
Employee transactions(2)	5,255	$	288.29	—	—
Month No. 3
(November 29, 2025 - January 2, 2026)
Repurchase program(1)	227,189	$	280.02	227,189	$	2,227
Employee transactions(2)	423	$	281.63	—	—
Total	554,577			548,163	$	2,227

Period*	Total number ofshares purchased	Average pricepaid per share	Total number ofshares purchased as part of publiclyannounced plans or programs(1)	Maximum approximate dollar value of shares that mayyet be purchased under the plans or programs(1) ($ in millions)
Month No. 1
(September 28, 2024 - November 1, 2024)
Repurchase program(1)	—	$—	—	$3,422
Employee transactions(2)	2,042	$243.33	—	—
Month No. 2
(November 2, 2024 - November 29, 2024)
Repurchase program(1)	60,000	$227.72	60,000	$3,407
Employee transactions(2)	5,294	$245.69	—	—
Month No. 3
(November 30, 2024 - January 3, 2025)
Repurchase program(1)	115,000	$225.10	115,000	$3,381
Employee transactions(2)	1,412	$239.47	—	—
Total	183,748		175,000	$3,381

_______________

*Periods represent our fiscal months.

(1)On January 28, 2021 and October 21, 2022, we announced that our Board approved share repurchase authorizations under our repurchase program of $6.0 billion and $3.0 billion, respectively. The $6.0 billion authorization was fully utilized during first quarter 2025. Our repurchase program does not have an expiration date and authorizes us to repurchase shares of our common stock through open market purchases, private transactions, transactions structured through investment banking institutions or any combination thereof.

~~program~~(2)Represents shares of ~~$6.0~~our ~~billion~~common stock delivered to us in satisfaction of the tax withholding obligation of holders of restricted stock units (“RSUs”) and ~~$3.0~~performance ~~billion,~~share ~~respectively~~units (“PSUs”) that vested during the quarter. Our ~~repurchase~~equity ~~program~~incentive ~~does~~plans ~~not~~provide ~~have~~that anthe ~~expiration~~value ~~date~~of ~~and~~shares ~~authorizes~~delivered to us to pay the exercise price of stock options or to cover tax withholding obligations shall be the closing price of our common stock on the date the relevant transaction occurs.

repurchase shares of our common stock through open market purchases, private transactions, transactions structured through investment

banking institutions or any combination thereof.

(2)Represents shares of our common stock delivered to us in satisfaction of the tax withholding obligation of holders of restricted stock units

(“RSUs”) and performance share units (“PSUs”) that vested during the quarter. Our equity incentive plans provide that the value of shares

delivered to us to pay the exercise price of stock options or to cover tax withholding obligations shall be the closing price of our common

stock on the date the relevant transaction occurs.


ITEM 6.			[RESERVED.]


ITEM 7.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following Management’s Discussion and Analysis (“MD&A”) is intended to assist in an understanding of our financial condition and results of operations for fiscal 2025 compared with fiscal 2024. A discussion of fiscal 2024 compared to fiscal 2023 can be found in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended January 3, 2025 (our “Fiscal 2024 Form 10-K”). This MD&A is provided as a supplement to, should be read in conjunction with and is qualified in its entirety by reference to, our Consolidated Financial Statements and accompanying Notes appearing elsewhere in this Report. Except for the historical information contained herein, the discussions in this MD&A contain forward-looking statements that involve risks and uncertainties. Our future results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I. Item 1A. Risk Factors of this Report. For additional information, see Part I. Item 1. Business - Cautionary Statement Regarding Forward-Looking Statements of this Report.

financial condition and results of operations for fiscal 2024 compared with fiscal 2023. A discussion of fiscal 2023

compared to fiscal 2022 can be found in Part II. Item 7. Management's Discussion and Analysis of Financial

Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended

December 29, 2023 (our “Fiscal 2023 Form 10-K”). This MD&A is provided as a supplement to, should be read in

conjunction with and is qualified in its entirety by reference to, our Consolidated Financial Statements and

accompanying Notes appearing elsewhere in this Report. Except for the historical information contained herein, the

discussions in this MD&A contain forward-looking statements that involve risks and uncertainties. Our future results

could differ materially from those discussed herein. Factors that could cause or contribute to such differences

include, but are not limited to, those discussed in Part I. Item 1A. Risk Factors of this Report. For additional

information, see Part I. Item 1. Business - Cautionary Statement Regarding Forward-Looking Statements of this

Report.

OVERVIEW

We are the Trusted Disruptor in the defense industry. With customers’ mission-critical needs in mind, we deliver end-to-end technology solutions connecting the space, air, land, sea and cyber domains in the interest of national security. We support customers in more than 100 countries, with our largest customers being various departments and agencies of the U.S. Government, their prime contractors and international allies. Our capabilities have defense

~~end-to-end technology solutions connecting the space, air, land, sea and cyber domains in the interest of global~~ _____________________________________________________________________20

~~security.~~and Wecivil ~~support~~ government ~~customers~~applications, inas ~~more~~well ~~than~~as ~~100~~commercial ~~countries~~applications. As of January 2, ~~with~~2026, ~~our~~we ~~largest~~had ~~customers~~approximately ~~being~~45,000 ~~various~~employees, including approximately 18,000 engineers and scientists.

~~departments~~We structure our operations primarily around the capabilities we provide and ~~agencies~~we report our financial results in four business segments: CS, SAS, IMS, and AR. Revenue is disaggregated at the segment level into categories that the Chief Operating Decision Maker (“CODM”) believes best depict the nature, amount, timing, and uncertainty of revenue and cash flows. These categories do not distinguish between product and service revenue because management evaluates the Ubusiness on a combined, consolidated revenue and cost of revenue basis.S. ~~Government~~The CODM, ~~their~~as ~~prime~~well ~~contractors~~as segment management, are not provided with and ~~international~~do ~~allies.~~not ~~Our~~review revenue or cost of revenue disaggregated between products and services at the segment or sector level; accordingly, this information is not used in resource allocation decisions. Accordingly, and because we do not believe such disaggregation assists in an understanding of our financial condition and results of operations, product and service revenue and the related cost of revenue are not disaggregated herein. See Note 14: Business Segments in the Notes for further information regarding our business segments.

_____________________________________________________________________

services have defense and civil government applications, as well as commercial applications. As of January 3, 2025,

we had approximately 47,000 employees, including approximately 18,000 engineers and scientists.

We structure our operations primarily around the products, systems and services we sell and the markets we

serve, and we report our financial results in four business segments: SAS, IMS, CS and AR. See Note 14: Business

Segments in the Notes for further information regarding our business segments.

U.S. and International Budget Environment

The percentage of our revenue that was derived from sales to U.S. Government customers, whether directly or through prime contractors, including foreign military sales funded through the U.S. Government, was 75%, 76% and 76%, in fiscal 2025, 2024 and 2023, respectively.

~~military~~On ~~sales~~March ~~funded~~15, ~~through~~2025, the ~~U.S. Government~~President signed into law a full-year CR for GFY 2025, ~~whether~~funding ~~directly~~the orgovernment through ~~prime~~September ~~contractors~~30, 2025, with $893 billion for defense funding, including $851 billion for the DoW. This was 76in line with the 1% increase permitted by the caps under the Fiscal Responsibility Act of 2023 for GFY 2025. Notably, ~~76%~~the CR provided funding at the account level, not the program level, allowing federal agencies more discretion with how they prioritize funding for programs.

On May 2, 2025, the White House released a preliminary GFY 2026 budget that included a flat national defense topline of $893 billion (including $849 billion for DoW) and ~~74%~~included an additional $119 billion from reconciliation funding in 2026 for a total of approximately $1 trillion. The administration requested $557 billion for non-defense funding, down from $721 billion in ~~fiscal~~GFY ~~2024~~2025, ~~2023~~resulting ~~and~~in ~~2022~~material funding declines for some agencies, ~~respectively~~including a $6 billion cut to NASA.

On ~~March~~July 94, ~~2024~~2025, the President signed Congress’ reconciliation package which included $155 billion for national defense spending to fund DoW priorities, including priorities closely aligned with L3Harris interests and opportunities, such as Golden Dome, munitions, and shipbuilding, $165 billion for Department of Homeland Security priorities, $12.5 billion for the ~~first~~Federal ~~tranche~~Aviation Administration (“FAA”) for air traffic control modernization efforts and $10 billion for NASA. The administration has stated that it expects departments and agencies will be able to access significant amounts of this additional funding in GFY ~~2024~~2026, ~~appropriations~~specifically ~~funding~~noting ~~bills~~the ~~into~~expectation ~~law~~that the DoW will access $113 billion in GFY 2026. The reconciliation package also raises the debt ceiling by $5 trillion and enacts key changes to the federal tax code, further discussed under the “U.S. Federal Tax Reform” heading below.

~~which~~On ~~funded~~October ~~six~~1, ~~government agencies~~2025, ~~including~~after ~~the~~Congress ~~National~~failed ~~Aeronautics~~to ~~and~~reach ~~Space~~an ~~Administration~~agreement on a short-term spending deal or full-year appropriation, the ~~National~~federal government experienced its longest shutdown on record, lasting 43 days. It was resolved with a CR lasting until January 30th for agencies that did not yet have full-year appropriations.

The Commerce-Justice-Science appropriations bill, which provides funding for NASA and National Oceanic and Atmospheric Administration (“NOAA”), was signed into law on January 23, 2026. The bill provides $6 billion above the Administration’s GFY 2026 budget request for NASA and rejects the ~~Federal~~proposed ~~Aviation~~termination ~~Administration,~~of ~~through~~the Space Launch System (“SLS”) and Orion following the ~~remainder~~Artemis III mission and directs the inclusion of an SLS-based option in any competition for future Artemis launch services. The bill also provides $6 billion for NOAA, an increase of more than $1.5 billion above the Administration’s GFY 2026 request.

~~2024~~The ~~which~~final ~~ended~~GFY on2027 ~~September~~National ~~30,~~Defense ~~2024.~~Authorization AAct ~~second~~(“NDAA”) ~~funding~~was ~~bill,~~ signed into law onin ~~March~~December 232025. The NDAA provides authorization of appropriations for the DoW, ~~2024~~nuclear weapons programs of the Department of Energy, ~~funded~~and ~~all~~other defense-related activities. In addition to serving as an authorization of appropriations, the NDAA establishes defense policies and restrictions, and addresses organizational administrative matters related to the DoW.

~~remaining~~Congress ~~agencies~~passed the Defense Appropriations bill on February 3, ~~including~~2026, providing $859 billion for DoW programs, an increase of 1% or ~$9 billion over the ~~DoD~~President’s Budget Request. In addition, ~~through~~Congress provided just over $22 billion for the ~~remainder~~FAA ofvia the Transportation-Housing and Urban Development bill, more than $1 billion above the GFY ~~2024~~2025 enacted level. ~~The~~This ~~bill~~includes ~~provided~~$4 billion ~~approximately~~in resources for facilities and equipment, nearly $1 billion more than the prior year.

~~$844 billion in funding for DoD. This was in line with our expectations for 3% growth for defense over GFY 2023~~ _____________________________________________________________________21

~~levels~~Internationally, ~~and~~almost inall ~~line~~NATO ~~with~~allies ~~the~~have ~~first~~committed ~~year~~to spend 5% of GDP annually over the ~~Fiscal~~next ~~Responsibility~~decade ~~Act~~on ofdefense ~~2023~~and ~~(“FRA”)~~security-related ~~caps~~expenditures, with 3.5% on core defense articles and another 1.5% on critical infrastructure, cyber and other key areas.

OnThe ~~March~~overall 11defense spending environment, ~~2024~~both in the U.S. and internationally, reflects the ~~President’s~~continued ~~Budget~~impacts ~~Request~~of ~~for~~global ~~GFY~~conflicts ~~2025~~and ~~was~~geopolitical ~~released~~tensions, and changes to U.S. ~~The~~Government ~~DoD~~or ~~requested~~international spending priorities have and could in the future impact our business.

~~$850 billion,~~For a discussion of U.S. Government funding risks and international business risks see “Item 1%. ~~topline~~Business ~~increase~~- ~~consistent~~International ~~with~~Business,” “Item 1A. Risk Factors” and Note 15: Legal Proceedings, Commitments and Contingencies in the ~~FRA~~Notes ~~caps.~~of this Report.

OnU.S. ~~April~~Federal ~~24,~~Tax ~~2024, the President signed into law a supplemental GFY 2024 appropriations package that included~~ Reform

~~$67 billion~~In inthird ~~funding~~quarter 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, introducing amendments to the U.S. federal income tax code, including permanent reinstatement of immediate expensing for ~~key~~domestic ~~DoD~~research ~~programs~~expenditures, ~~bringing~~a reduction in the ~~DoD~~benefit ~~funding~~of the R&D credit, restoration of full expensing for ~~GFY~~qualified ~~2024~~machinery, equipment and other short-lived assets, and several modifications to ~~$911 billion~~existing international tax provisions. Certain provisions are effective for 2025, the effects of which have been recognized in third quarter 2025 and are reflected in the Consolidated Financial Statements and the Notes. Certain other provisions are effective in future fiscal years.

Congress has not yet reached a final agreement on GFY 2025 funding. A short-term CR was enacted on

December 21, 2024 that will fund the U.S. Government until March 14, 2025. While operating under a CR,

government agencies are allocated a portion of GFY 2024 enacted funds, and DoD is prohibited from starting new

programs. If Congress does not enact all 12 GFY 2025 appropriations bills by April 30, 2025, a 1% automatic

sequestration cut will go into effect as mandated by the FRA.

Further complicating the budget outlook is the need to raise the debt ceiling in 2025. Congressional inaction

may lead to a default and potentially create economic instability.

The overall defense spending environment, both in the U.S. and internationally, reflects the continued impacts of

global conflicts and geopolitical tensions, and changes to U.S. Government or international spending priorities have

and could in the future impact our business.

For a discussion of U.S. Government funding risks and international business risks see “Item 1. Business -

International Business,” “Item 1A. Risk Factors” and “Item 3. Legal Proceedings” of this Report.

Economic Environment

The ~~macroeconomic~~ongoing ~~environment~~uncertainty ~~continues~~related to ~~present~~the ~~challenges~~impacts of inflation, ~~which~~as ~~have~~well ~~impacted~~as the interest rate environment and ongoing federal deficits could in the future impact U.S. Government spending priorities for our ~~business~~products and ~~may~~services. For a discussion of inflation-related risks, see “Item 1A. Risk Factors” of this Report.

We continue to monitor and evaluate the potential impact ~~our~~of ~~future~~current ~~results.~~and ~~The~~proposed ~~ongoing~~changes ~~uncertainty~~in ~~relates~~trade policies and in particular, tariffs. In response to ~~the~~enacted ~~impacts~~tariffs, we are seeking exemptions, evaluating alternative sources of ~~inflation~~materials and subcontracted components, ~~interest~~as ~~rates~~well as engaging in supplier negotiations to help manage cost impacts and are considering price adjustments and other strategies to support profitability. There was no material impact on our 2025 results.

ongoing federal deficits, which could raise the cost of borrowing for the federal government impacting U.S.

Government spending priorities and the demand for our products. For a discussion of inflation-related risks, see

“Item 1A. Risk Factors” of this Report.

Operating Environment, Strategic Priorities and Key Performance Measures

As a proven alternative to traditional primes and new entrants, our flexible business model allows us to operate as either a prime, merchant supplier, or subcontractor, offering both commercial pricing and traditional government acquisition approaches. Our products are used across many customer platforms and this platform-agnostic approach gives us a unique advantage in rapidly adapting to the changing threat environment while effectively partnering with new entrants and non-traditional contractors. Customer demand for our solutions remains robust, and we ended fiscal 2025 with contractual backlog of $38.7 billion, a 13% increase over the prior year. Also in fiscal 2025, we invested $536 million (2% of total revenue) in company-funded R&D focused on technologies that expand our capabilities across our domains.

asIn ~~either~~fiscal a2025, ~~prime~~we continued to make progress with our LHX NeXt initiative, ~~merchant~~our ~~supplier~~targeted program designed to enhance organizational agility and performance by leveraging our scale and relationships across segments, ordriving ~~subcontractor~~operational efficiency and competitiveness for the enterprise. We are investing in enterprise tools and optimized, ~~offering~~revamped ~~both~~processes ~~commercial~~to ~~pricing~~unlock further opportunities for margin expansion and ~~traditional~~create ~~government~~additional value for our shareholders. Beginning fiscal 2026, LHX NeXt will be fully integrated within our operations as standard practice, with ongoing cost savings measured as operational improvement, which we refer to as e3 (excellence, everywhere, everyday).

~~acquisition~~Our ~~approaches~~strategic priorities continue to be performance, growth and innovation. ~~Our~~We ~~products~~plan ~~are~~to ~~used~~continue ~~across~~to ~~many~~invest, ~~customer~~consistent ~~platforms~~with profitable growth opportunities, and sustain our culture of innovation, while delivering on our commitments to investors, our customers and on every contract we are awarded. We intend to accomplish this ~~platform-agnostic~~by:

approach gives us a unique advantage in rapidly adapting to the changing threat environment while effectively

partnering with new entrants and non-traditional contractors. Customer demand for our solutions remains robust,

and we ended fiscal 2024 with backlog of $34.2 billion, a 5% increase over the prior year. Also in fiscal 2024, we

invested $515 million (2% of total revenue) in company-funded R&D focused on technologies that expand our

capabilities across our domains.

In fiscal 2024, we made considerable progress with our LHX NeXt initiative, our targeted three-year program

designed to enhance organizational agility and performance by leveraging our scale and relationships across

segments, driving operational efficiency and competitiveness for the enterprise. With this program we are investing

in enterprise tools and optimized, revamped processes to unlock further opportunities for margin expansion and

create additional value for our shareholders.

_____________________________________________________________________

Our strategic priorities continue to be performance, growth and innovation. We plan to continue to invest,

consistent with profitable growth opportunities, and sustain our culture of innovation, while delivering on our

commitments to investors, our customers and on every contract we are awarded. We intend to accomplish this by:

•Building upon our solid foundation and operational rigor to execute for our customers;

•Focusing on profitable growth while securing strategic positions as a prime or subcontractor; and

•Leveraging innovation as a competitive advantage to develop rapid solutions.

We use the following key financial performance measures to manage our business, which are discussed in detail below in the “Operations Review” and “Liquidity and Capital Resources” sections of this MD&A:

below in the “Operations Review” and “Liquidity and Capital Resources” sections of this MD&A:

•Revenue;

•Operating income and margin; and

•Net cash provided by operating activities.

~~We use these measures, along with other performance measures that are not defined by U.S. Generally~~ _____________________________________________________________________22

We use these measures, along with other performance measures that are not defined by U.S. Generally Accepted Accounting Principles (“GAAP”), to assess the success of our business and our ability to create shareholder value. We believe these measures are balanced among long-term and short-term performance, growth and innovation. We also use these and other performance metrics for executive compensation purposes.

shareholder value. We believe these measures are balanced among long-term and short-term performance, growth

and innovation. We also use some of these and other performance metrics for executive compensation purposes.

OPERATIONS REVIEW

Consolidated Results of Operations


	Fiscal Year
(Dollars in millions, except per share amounts)	2025			2024

Revenue	$	21,865		$	21,325
Cost of revenue	(16,240)			(15,801)

Gross margin	5,625			5,524

General and administrative expenses	(3,430)			(3,568)

Impairment of goodwill and other assets	(85)			(38)
Operating income	2,110			1,918
Non-service FAS pension income and other, net(1)	419			354
Interest expense, net	(597)			(675)
Income before income taxes	1,932			1,597
Income taxes	(326)			(85)
Effective Tax Rate	16.9		%	5.3		%
Net income	1,606			1,512
Noncontrolling interests, net of tax	—			(10)
Net income attributable to L3Harris	$	1,606		$	1,502

Diluted EPS(2)	$	8.53		$	7.87

	Fiscal Year Ended
(Dollars in millions, except per share amounts)	January 3, 2025	December 29, 2023
Revenue
Products	$15,134	$13,694
Services	6,191	5,725
Total revenue	21,325	19,419
Cost of revenue
Products	(11,019)	(9,711)
Services	(4,782)	(4,595)
Cost of revenue	(15,801)	(14,306)
Gross margin	5,524	5,113
General and administrative expenses	(3,568)	(3,313)
Impairment of goodwill and other assets	(38)	(374)
Operating income	1,918	1,426
Non-service FAS pension income and other, net(1)	354	338
Interest expense, net	(675)	(543)
Income before income taxes	1,597	1,221
Income taxes	(85)	(23)
Effective Tax Rate	5.3%	1.9%
Net income	1,512	1,198
Noncontrolling interests, net of income taxes	(10)	29
Net income attributable to L3Harris Technologies, Inc.	$1,502	$1,227
Diluted EPS(2)	$7.87	$6.44

______________

(1)“FAS” is defined as Financial Accounting Standards.

(2)“EPS” is defined as Earnings Per Share.

~~_____________________________________________________________________~~Revenue. Revenue increased $540 million, or 3%, for fiscal 2025 compared to fiscal 2024 due to higher revenues across all of our segments excluding the impact of the CAS disposal group divestiture, primarily from higher volumes, including new program ramps, and increased international deliveries.

23Gross Margin. Gross margin for fiscal 2025 increased compared to fiscal 2024, largely due to higher volumes, primarily in our AR and CS segments, partially offset by a $204 million decrease reflecting the absence of the CAS disposal group as a result of the March 2025 divestiture. Gross margin as a percentage of revenue remained flat compared to fiscal 2024. For discussion of operating income by segment see “Business Segment Results of Operations” below in this MD&A for further information.

~~Revenue. As described in more detail in Note 13: Acquisitions and Divestitures and elsewhere in the Notes,~~ _____________________________________________________________________23

General and Administrative (“G&A”) Expenses. The following table presents the components of G&A expenses:

during fiscal 2024 and 2023, we completed certain business divestitures. There was no significant revenue


	Fiscal Year
(In millions)	2025		2024

Corporate:
Acquisition-related intangibles	$	(707)	$	(779)
LHX NeXt implementation costs(1)	(167)		(267)
Change in fair value of deferred compensation plan liabilities	(57)		(40)
Merger, acquisition, and divestiture-related expenses	(57)		(102)
Business divestiture-related losses(2)	(82)		(19)
Other unallocated corporate items(3)	(146)		(95)
Segment:
Company-funded R&D costs	(536)		(515)
Selling and marketing	(463)		(445)
Monetization of certain legacy end-of-life assets	184		62
Other(4)	(1,399)		(1,368)
G&A expenses	$	(3,430)	$	(3,568)

attributable to divested businesses.

Products revenue. The following table presents products revenue by segment, net of intersegment:

	Fiscal Year Ended
(In millions)	January 3, 2025	December 29, 2023
SAS	$4,788	$4,879
IMS	4,270	4,006
CS	4,498	4,057
AR	1,578	752
Total products revenue	$15,134	$13,694

Products revenue for fiscal 2024 increased $1,440 million, due to the inclusion of a full year of products revenue

from AR, rather than a partial year of revenue in fiscal 2023 (“the AR Partial Year”) following the July 28, 2023

acquisition of Aerojet Rocketdyne Holdings, Inc. (“AJRD”), as well as increased products revenues of $441 million

and $264 million at CS and IMS, respectively, partially offset by decreased products revenue of $91 million at SAS.

Services revenue. The following table presents services revenue by segment, net of intersegment:

	Fiscal Year Ended
(In millions)	January 3, 2025	December 29, 2023
SAS	$2,029	$1,928
IMS	2,501	2,537
CS	892	960
AR	769	300
Total services revenue	$6,191	$5,725

Services revenue for fiscal 2024 increased $466 million, from the inclusion of a full year of services revenue

from AR rather than the AR Partial Year, as well as increased services revenue of $101 million at SAS, partially offset

by decreased services revenues of $68 million and $36 million at CS and IMS, respectively.

See the “Business Segment Results of Operations” discussion below in this MD&A for further information.

Cost of Revenue.

Cost of products revenue. The following table presents cost of products revenue by segment, net of

intersegment:

	Fiscal Year Ended
(In millions)	January 3, 2025	December 29, 2023
SAS	$(3,763)	$(3,777)
IMS	(3,269)	(3,055)
CS	(2,738)	(2,319)
AR	(1,199)	(558)
Corporate	(50)	(2)
Total cost of products revenue	$(11,019)	$(9,711)

Cost of products revenue increased $1,308 million primarily from the inclusion of a full year of cost of products

revenue from AR rather than the AR Partial Year and increased cost of products revenue of $419 million and $214

million at CS and IMS, respectively.

_____________________________________________________________________

Cost of services revenue. The following table presents cost of services revenue by segment, net of intersegment:

	Fiscal Year Ended
(In millions)	January 3, 2025	December 29, 2023
SAS	$(1,615)	$(1,554)
IMS	(1,897)	(1,944)
CS	(682)	(845)
AR	(603)	(259)
Corporate	15	7
Total cost of services revenue	$(4,782)	$(4,595)

Cost of services revenue increased $187 million, primarily from the inclusion of a full year of cost of services

revenue from AR rather than the AR Partial Year and increased cost of services revenue of $61 million at SAS,

partially offset by decreased cost of services revenue of $163 million and $47 million at CS and IMS, respectively.

Gross Margin. Gross margin for fiscal 2024 increased compared to fiscal 2023, largely due to the increases in

revenue noted above and a favorable net change in estimate at completion (“EAC”) adjustments which increased

gross margin by $124 million, partially offset by a higher mix of lower margin revenue, primarily in our CS segment.

Gross margin as a percentage of revenue remained flat compared to fiscal 2023. For discussion of operating income

by segment see “Business Segment Results of Operations” below in this MD&A for further information.

General and Administrative (“G&A”) Expenses. The following table presents the components of G&A expenses:

	Fiscal Year Ended
(In millions)	January 3, 2025	December 29, 2023
Amortization of acquisition-related intangibles	$(779)	$(687)
LHX NeXt implementation costs(1)	(267)	(115)
Merger, acquisition, and divestiture-related expenses	(102)	(174)
Business divestiture-related losses, net(2)	(19)	(51)
Company-funded R&D costs	(515)	(480)
Selling and marketing	(445)	(450)
Other G&A expenses(3)	(1,441)	(1,356)
G&A expenses	$(3,568)	$(3,313)

______________

(1)~~Costs~~Includes costs associated with transforming multiple functions, systems and processes to increase agility and competitiveness, including third-party consulting, workforce optimization and incremental IT expenses for implementation of new systems. See Note 14: Business Segments in the Notes and the “Operating Environment, Strategic Priorities and Key Performance Measures” section for more detail on our LHX NeXt initiative and implementation costs.

consulting, workforce optimization and incremental IT expenses for implementation of new systems.

(2)See Note 13: Acquisitions and Divestitures in the Notes for further information.

(3)Includes ~~other~~a ~~segment~~portion ~~G&A~~of ~~expenses~~management ~~such~~and asadministration, ~~payroll~~legal, ~~and~~environmental, ~~benefits~~compensation, ~~outside~~retiree ~~services~~benefits, ~~facilities,~~the ~~insurance~~FAS/Cost ~~and~~Accounting ~~other~~Standards ~~expenses,~~(“CAS”) asoperating ~~well~~adjustment (as defined in Note 1: Significant Accounting Policies), eliminations and other.

~~unallocated~~(4)Includes ~~corporate~~other segment G&A expenses, ~~such~~primarily aspayroll ~~a portion of management~~ and ~~administration~~benefits, ~~legal,~~outside ~~environmental~~services, ~~compensation,~~facilities ~~retiree~~and ~~benefits~~ insurance.

~~and other corporate~~ G&A expenses decreased $138 million, or 4%, for fiscal 2025 compared with fiscal 2024 primarily due to an increase in gains recognized in connection with the monetization of certain legacy end-of-life assets, lower LHX NeXt implementation costs, including lower third-party consulting expenses of $59 million, lower amortization of acquisition-related intangibles and ~~eliminations~~merger, acquisition, and divestiture-related expenses, partially offset by an increase in business divestiture-related losses.

~~G&A~~Impairment ~~expenses~~of ~~increased~~Goodwill and Other Assets. In fiscal 2025, we recognized a $~~255~~85 million non-cash charge for impairment of goodwill in connection with execution of the agreement to sell a newly established technology company, consisting of certain product lines of our SPPS sector (“SPPS business”), reported in our AR segment, and our Space Avionics & Communications division (“SA&C business”), reported in our IMS segment (collectively, the “Space Technology disposal group”), as discussed in Note 13: Acquisitions and Divestitures. In fiscal 2024, ~~compared~~we recognized a $14 million non-cash charge for impairment of goodwill in connection with ~~fiscal~~the ~~2023~~divestiture ~~primarily~~of ~~due~~our toantenna ~~increases~~and related businesses (“Antenna disposal group”) and a $24 million non-cash charge for impairment of other assets in our CS segment associated with the Tactical Data Links (“TDL”) acquisition.

~~LHX~~Non-service ~~NeXt~~FAS ~~implementation~~Pension ~~costs~~Income and Other, ~~including~~Net. ~~$42 million~~The ~~related~~following totable ~~employee~~presents ~~severance~~the ~~charges~~components ~~and~~of ~~$110 million~~non-service ~~for~~FAS pension income and other, net:

third-party consulting expenses, incremental IT expenses for implementation of new systems and other costs. G&A


	Fiscal Year
(In millions)	2025		2024

Non-service FAS pension income(1)	$	356	$	322
Change in fair value of deferred compensation plan assets	44		22
Other, net(2)	19		10
Non-service FAS pension income and other, net	$	419	$	354

expenses also increased from higher amortization of acquisition-related intangibles, partially offset by a decrease in

merger, acquisition, and divestiture-related expenses. Additionally, other G&A expenses increased $85 million

primarily due to increases of $97 million in our AR segment from the AR Partial Year and $86 million in corporate,

primarily from increases related to corporate-led initiatives and a $15 million legal reserve, partially offset by

decreases in other G&A costs of $84 million and $15 million in our SAS and CS segments, respectively, primarily

from LHX NeXt driven cost savings.

Impairment of Goodwill and Other Assets. In fiscal 2024, we recognized a $14 million non-cash charge for

impairment of goodwill in connection with the divestiture of our antenna and related businesses (“Antenna disposal

group”) and a $24 million non-cash charge for impairment of other assets at CS associated with the Tactical Data

Links (“TDL”) acquisition. In fiscal 2023, we recognized a $296 million non-cash charge for impairment of goodwill

in connection with the pending divestiture of our CAS disposal group and $78 million of other asset impairments

associated with in-process R&D, customer contracts and a facility closure.

_____________________________________________________________________

Non-service FAS Pension Income and Other, Net. The following table presents the components of non-service

FAS pension income and other, net:

	Fiscal Year Ended
(In millions)	January 3, 2025	December 29, 2023
Non-service FAS pension income(1)	$322	$310
Other, net(2)	32	28
Non-service FAS pension income and other, net	$354	$338

_______________

(1)Includes ~~interest~~the non-service cost, ~~expected~~components ~~return~~of onnet ~~plan~~periodic ~~assets,~~benefit ~~amortization~~income ofunder ~~net~~our ~~actuarial~~defined ~~gain,~~benefit pension and ~~amortization~~other ofpostretirement ~~prior~~benefit ~~service~~plans (~~credit~~collectively, “defined benefit plans”). ~~cost~~See Note 9: Retirement Benefits in the Notes for further information.

~~components~~(2)Primarily ofincludes ~~net~~gains ~~periodic~~and ~~benefit~~losses ~~income~~on ~~under~~ our ~~defined~~equity ~~benefit~~investments ~~plans. See Note 9: Retirement Benefits~~ in ~~the~~nonconsolidated ~~Notes~~affiliates ~~for~~and ~~more~~royalty income.

~~information~~Interest onExpense, ~~the~~Net. ~~composition~~Our ofnet ~~non-service~~interest ~~FAS~~expense ~~pension~~decreased ~~income.~~$78 million, or 12%, in fiscal 2025 compared with fiscal 2024 primarily due to lower average outstanding notes under our commercial paper program (“CP Program”)

~~(2)Other, net primarily includes changes in the market value of our rabbi trust assets, gains and losses on our equity investments in~~ _____________________________________________________________________24

~~nonconsolidated~~during ~~affiliates~~2025. See the “Liquidity and ~~royalty~~Capital ~~income~~Resources” discussion below in this MD&A and Note 8: Debt and Credit Arrangements in the Notes for further information.

~~Interest~~Income ~~Expense, Net~~Taxes. Our ~~net~~effective ~~interest~~tax ~~expense~~rate increased ~~$132~~to ~~million~~16.9% in fiscal ~~2024~~2025 compared with 5.3% in fiscal ~~2023~~2024. The increase in effective tax rate (“ETR”) for fiscal 2025 was primarily due to a state legislative change that required us to establish a valuation allowance on state R&D credit carryforwards, the CAS disposal group divestiture, and the enactment of the OBBBA, representing unfavorable impacts of 3.9%, 2.4% and 1.8%, respectively. Our ETR for both years benefited from favorable impacts of R&D credits, favorable resolution of audit uncertainties, and tax deductions for foreign derived intangible income (“FDII”). See Note 7: Income Taxes in the Notes for further information.

~~primarily~~Diluted ~~due~~EPS. toDiluted aEPS ~~full~~increased ~~year~~8% ofin ~~interest~~fiscal on2025 ~~the~~compared ~~$3.25 billion~~with ~~aggregate~~fiscal ~~principal~~2024 ~~amount~~primarily ofdue ~~fixed-rate~~to ~~debt~~higher ~~issued~~net income from the combined effects of reasons noted in the sections above.

July 2023 in connection with the AJRD acquisition, the issuance of $2.25 billion aggregate principal amount of long-

term fixed-rate debt in March 2024 and higher average outstanding notes under our commercial paper program (“CP

Program”) during fiscal 2024, partially offset by repayment of the entire outstanding $2.25 billion, three-year senior

unsecured term loan facility (“Term Loan 2025”) in March 2024. See the “Liquidity and Capital Resources”

discussion below in this MD&A and Note 8: Debt and Credit Arrangements in the Notes for further information.

Income Taxes. Our effective tax rate increased to 5.3% in fiscal 2024 compared with 1.9% in fiscal 2023. Our

effective tax rate for both years benefited from R&D credits, tax deductions for foreign derived intangible income

(“FDII”) and favorable resolution of specific audit uncertainties. The year-over-year increase in the rate is the result

of favorable impacts of divestitures and internal restructuring in fiscal 2023, partially offset by favorable

adjustments to our valuation allowance position as a result of our ability to utilize certain state tax credits in fiscal

2024. See Note 7: Income Taxes in the Notes for further information.

Diluted EPS. Diluted EPS increased 22% in fiscal 2024 compared with fiscal 2023 primarily due to higher net

income from the combined effects of reasons noted in the sections above, notably the absence of a prior year CAS

disposal group goodwill impairment and an increase in fiscal 2024 gross margin, partially offset by increases in G&A

expenses and interest expense, net.

Business Segment Results of Operations

~~SAS.~~See ~~Our~~“Item ~~SAS~~1. ~~segment~~Business” ~~includes~~of ~~space~~this ~~payloads,~~Report ~~sensors~~for ~~and~~a ~~full-mission~~description ~~solutions;~~of ~~classified~~the ~~intelligence~~sectors ~~and~~in each segment.

CS. Our CS segment includes software defined communication products and waveforms for domestic and international customers; broadband communications; integrated vision solutions; and public safety radios, system applications and equipment.

cyber; airborne combat systems, and mission networks for air traffic management operations. See “Item 1. Business”


	Fiscal Year
(Dollars in millions)	2025			2024			% Inc/(Dec)

Revenue	$	5,673		$	5,459		4	%
Operating income	1,432			1,324			8	%
Operating margin	25.2		%	24.3		%

Ending contractual backlog	$	6,935		$	7,340

CS revenue increased in fiscal 2025 compared with fiscal 2024 primarily due to higher revenue of ~~this~~$179 ~~Report~~million in Tactical Communications associated with increased international deliveries for aour ~~description~~software-defined resilient communications equipment, partially offset by lower DoW demand, and higher revenue of $82 million in Broadband Communications from program ramps, including the ~~sectors~~Next Generation Jammer Electronic Warfare program. Such increases were partially offset by lower revenue of $40 million in ~~SAS~~PSPC from lower volume on civil communication products.

	Fiscal Year Ended
(Dollars in millions)	January 3, 2025	December 29, 2023	% Inc/(Dec)
Revenue	$6,869	$6,856	—%
Operating income	812	756	7%
Operating margin	11.8%	11.0%

CS segment operating income increased in fiscal 2025 compared with fiscal 2024 primarily due to LHX NeXt driven cost savings realized during fiscal 2025 and the absence of a $24 million non-cash charge for impairment of other assets at Broadband Communications that occurred in fiscal 2024 related to the TDL acquisition, partially offset by unfavorable mix associated with a higher proportion of domestic development volume.

~~SAS~~IMS. Our IMS segment ~~revenue~~includes ~~remained~~multi-mission ~~flat~~ISR insystems; ~~fiscal~~passive ~~2024~~sensing ~~compared~~and ~~with~~targeting; ~~fiscal~~electronic ~~2023~~attack ~~due~~platforms; toautonomy; ~~higher~~power ~~revenues~~and ofcommunications; ~~$138~~networks; and the CAS disposal group, which includes aviation products and pilot training operations and was divested on March 28, 2025.

million in Intel & Cyber, primarily from program growth and $82 million in Mission Networks from higher volumes,


	Fiscal Year
(Dollars in millions)	2025			2024			% Inc/(Dec)

Revenue	$	6,630		$	6,618		—	%
Operating income	812			826			(2	%)
Operating margin	12.2		%	12.5		%

Ending contractual backlog	$	12,215		$	9,913

~~offset~~IMS byrevenue remained flat in fiscal 2025 compared with fiscal 2024 primarily due to lower ~~revenues~~revenue of $~~217~~459 million from the CAS disposal group divestiture in ~~Airborne~~first ~~Combat~~quarter ~~Systems,~~2025. ~~from~~Excluding ~~lower~~the divestiture impact, IMS revenue increased $471 million, primarily due to higher revenues of $~~115~~359 million in ISR from ramp on multiple classified programs and Airborne Early Warning and Control aircrafts for the Republic of Korea Air Force, $61 million in Maritime from new program ramp and $41 million in Targeting and Sensor Systems.

~~associated with the divestiture of the Antenna disposal group and the remaining decrease primarily from lower F-35~~ _____________________________________________________________________25

IMS operating income decreased in fiscal 2025 compared with fiscal 2024 primarily due to a $104 million decrease from the CAS disposal group divestiture in first quarter 2025 and unfavorable program performance, including negative estimate at completion (“EAC”) adjustments of $38 million on a classified Maritime program and $25 million from the resolution of a contract matter related ~~volume~~to lower utilization on the Canadian Maritime Helicopter Program as TRit nears completion. Such decreases were largely offset by a $75 million gain recognized in the second quarter of fiscal 2025 in connection with monetization of legacy end-3of-life ~~development~~assets, ~~transitions~~aligned with our transformation and value creation priorities, higher volume, favorable mix impact from ~~development~~higher toairborne aelectro-optical ~~more~~sensors ~~gradual~~volume ~~production~~and ~~ramp.~~LHX AtNeXt driven cost savings.

SAS. Our SAS segment includes satellites and space payloads, sensors and full-mission solutions; classified intelligence and cyber; airborne combat systems, and mission networks for air traffic management operations.

January 3, 2025 and December 29, 2023, SAS segment ending backlog was $9.4 billion and $9.5 billion,


	Fiscal Year
(Dollars in millions)	2025			2024			% Inc/(Dec)

Revenue	$	6,946		$	6,869		1	%
Operating income	852			812			5	%
Operating margin	12.3		%	11.8		%

Ending contractual backlog	$	11,384		$	9,427

~~respectively~~SAS revenue increased in fiscal 2025 compared with fiscal 2024 due to higher revenue of $375 million in Mission Networks from higher FAA volume, offset by lower revenues of $166 million in Space Systems from lower volume associated with program timing, $129 million in Intel & Cyber from lower classified program volume and $76 million in Airborne Combat Systems from the May 2024 Antenna disposal group divestiture.

SAS ~~segment~~ operating income increased in fiscal ~~2024~~2025 compared with fiscal ~~2023,~~2024 primarily due to stabilized program performance, an increase in gains of $23 million recognized in connection with the monetization of legacy end-of-life assets aligned with our transformation and value creation priorities and LHX NeXt driven cost savings, partially offset by unfavorable mix.

AR. Our AR segment includes missile solutions with propulsion technologies for strategic defense, missile defense, hypersonic, tactical and fuzing systems; and space propulsion and power systems for national security space and exploration missions.

driven cost savings realized during fiscal 2024, higher volume in Mission Networks and $46 million from the


	Fiscal Year
(Dollars in millions)	2025			2024			% Inc/(Dec)

Revenue	$	2,845		$	2,580		10	%
Operating income	270			307			(12	%)
Operating margin	9.5		%	11.9		%

Ending contractual backlog	$	8,171		$	7,564

~~monetization~~AR ofrevenue ~~legacy~~increased ~~end~~in fiscal 2025 compared with fiscal 2024 primarily due to higher revenues of ~~life~~$235 ~~assets,~~million ~~aligned~~in ~~with~~Missile ~~our~~Solutions ~~transformation~~from increased production volume on key missile and ~~value~~munitions ~~creation~~programs ~~priorities,~~and new program ramp and $56 million in ~~addition~~Space toPropulsion & Power Solutions from higher volume on a NASA program.

~~the~~AR ~~impact~~operating ofincome decreased primarily due to a $2785 million non-cash charge for impairment of ~~other~~goodwill ~~assets~~in ~~which~~connection ~~occurred~~with ~~during~~the ~~fiscal~~Space ~~2023.~~Technology ~~Such~~disposal group, partially offset by higher volume and LHX NeXt driven cost savings.

~~increase was partially offset by unfavorable EAC adjustments from program execution on classified fixed-price~~ _____________________________________________________________________26

~~development~~Unallocated ~~programs~~Corporate inItems. ~~Space~~Unallocated ~~Systems~~corporate ~~that~~items ~~are~~include inincome ~~the~~and ~~later~~expenses ~~stages~~not included in management’s evaluation of ~~completion~~segment operating performance.

_____________________________________________________________________


	Fiscal Year
(In millions)	2025		2024

Amortization of acquisition-related intangibles(1)	$	(769)	$	(853)
LHX NeXt implementation costs(2)	(167)		(267)
Business divestiture-related (losses) gains and impairment of goodwill(3)	(82)		(33)
Change in fair value of deferred compensation plan liabilities	(57)		(40)
Merger, acquisition, and divestiture-related expenses	(57)		(102)
Other(4)	(124)		(56)
Total unallocated corporate items	$	(1,256)	$	(1,351)

26______________

~~IMS~~(1)Includes amortization of intangible assets acquired in connection with business combinations. ~~Our~~Because ~~IMS~~our ~~segment~~acquisitions ~~includes~~benefit ~~ISR;~~the ~~passive~~entire ~~sensing~~Company, ~~and~~the ~~targeting;~~amortization ~~electronic~~was ~~attack;~~not ~~autonomy;~~allocated ~~power~~to ~~and~~any segment.

~~communications;~~(2)Includes ~~networks;~~costs ~~sensors;~~associated ~~aviation~~with ~~products;~~transforming multiple functions, systems and ~~pilot~~processes ~~training~~to ~~operations.~~increase ~~See~~agility ~~“Item~~and 1competitiveness, including third-party consulting, workforce optimization and incremental IT expenses for implementation of new systems. For further information on our LHX NeXt initiative and implementation costs see Note 14: Business Segments in the Notes and the “General and Administrative Expenses” ofdiscussion above in this MD&A.

Report for a description of the sectors in IMS.

	Fiscal Year Ended
(Dollars in millions)	January 3, 2025	December 29, 2023	% Inc/(Dec)
Revenue	$6,842	$6,630	3%
Operating income	838	459	83%
Operating margin	12.2%	6.9%

IMS segment revenue increased in fiscal 2024 compared with fiscal 2023 primarily due to higher revenues of

$73 million in Defense Electronics from higher demand for advanced electronics, $56 million in ISR from higher

aircraft missionization volume, $49 million in Commercial Aviation Solutions from higher volume, $31 million in

Global Optical Systems from higher commercial revenue for airborne electro-optical sensors and $27 million in

Maritime from volume on classified programs. At January 3, 2025 and December 29, 2023, IMS segment ending

backlog was $10.5 billion and $9.7 billion, respectively.

IMS segment operating income increased in fiscal 2024 compared with fiscal 2023 primarily due to a

$296 million non-cash charge for impairment of goodwill associated with the CAS disposal group in fiscal 2023, in

addition to improved program performance of $69 million, higher overall revenue volumes and LHX NeXt driven cost

savings realized in fiscal 2024.

CS. Our CS segment includes tactical communications with global communications solutions; broadband

communications; integrated vision solutions; and public safety radios, system applications and equipment. See

“Item 1. Business” of this Report for a description of the sectors in CS.

	Fiscal Year Ended
(Dollars in millions)	January 3, 2025	December 29, 2023	% Inc/(Dec)
Revenue	$5,459	$5,070	8%
Operating income	1,324	1,229	8%
Operating margin	24.3%	24.2%

CS segment revenue increased in fiscal 2024 compared with fiscal 2023 primarily due to higher revenues of

$208 million in Tactical Communications and $95 million in Integrated Vision Solutions associated with increased

domestic and international demand for our resilient communication equipment, related waveforms, and night vision

devices and $86 million in Broadband Communications from higher volumes. At January 3, 2025 and December 29,

2023, CS segment ending backlog was $7.3 billion and $6.3 billion, respectively.

CS segment operating income increased in fiscal 2024 compared with fiscal 2023 primarily due to LHX NeXt

driven cost savings realized during fiscal 2024, partially offset by a higher mix of domestic radios related to

competitive IDIQ contracts and a $24 million non-cash charge for impairment of other assets at Broadband

Communications related to the TDL acquisition.

AR. Our AR segment includes 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. See “Item 1. Business” of this Report for a description of the sectors in AR.

	Fiscal Year Ended
(Dollars in millions)	January 3, 2025	December 29, 2023	% Inc/(Dec)
Revenue	$2,347	$1,052	123%
Operating income	294	122	141%
Operating margin	12.5%	11.6%

AR segment revenue and operating income increased in fiscal 2024 compared with fiscal 2023 primarily due to

the AR Partial Year. At January 3, 2025, AR segment ending backlog was $7.0 billion and $7.2 billion, respectively.

_____________________________________________________________________

Unallocated Corporate Expenses. Unallocated corporate expenses include the portion of corporate costs not

included in management’s evaluation of segment operating performance.

	Fiscal Year Ended
(Dollars in millions)	January 3, 2025	December 29, 2023
Unallocated corporate department expense(1)	(123)	(62)
Amortization of acquisition-related intangibles(2)	(853)	(779)
Additional cost of revenue related to the fair value step-up in inventory sold	—	(30)
Merger, acquisition, and divestiture-related expenses	(102)	(174)
Business divestiture-related losses, net(3)	(19)	(51)
Impairment of goodwill and other assets(4)	(14)	(39)
LHX NeXt implementation costs(5)	(267)	(115)
FAS/CAS operating adjustment(6)	28	110
Total unallocated corporate expense	$(1,350)	$(1,140)

_______________

(1)The increase in unallocated corporate department expense is primarily from increases related to corporate-led initiatives and a $15 million

legal reserve.

(2)Includes amortization of intangible assets acquired in connection with business combinations. Because our acquisitions benefit the entire

Company, the amortization was not allocated to any segment.

(3)See Note 13: Acquisitions and Divestitures in the Notes for further information.

(4)~~For~~Includes ~~fiscal~~a ~~2024,~~portion ~~includes~~of amanagement ~~non-cash~~and ~~charge~~administration, ~~for~~legal, ~~impairment~~environmental, ofcompensation, ~~goodwill~~retiree ~~related~~benefits, tothe ~~our~~FAS/CAS ~~Antenna~~operating ~~disposal~~adjustment ~~group~~(as ~~divestiture.~~defined ~~For~~in ~~fiscal~~Note ~~2023~~1: Significant Accounting Policies), eliminations and other.

includes a $21 million non-cash charge for impairment of in-process R&D associated with a facility closure and an $18 million non-cash

charge for impairment of a customer contract. See Note 13: Acquisitions and Divestitures and Note 6: Goodwill and Intangible Assets in the

Notes for further information.

(5)Includes costs associated with transforming multiple functions, systems and processes to increase agility and competitiveness, including

third-party consulting, workforce optimization and incremental IT expenses for implementation of new systems. For further information on

our LHX NeXt initiative and implementation costs see Note 14: Business Segments in the Notes and the “General and Administrative

Expenses” discussion above in this MD&A.

(6)Represents the difference between U.S. Government Cost Accounting Standards (“CAS”) pension cost and the service cost component of net

periodic benefit income under our defined benefit plans. See Note 1: Significant Accounting Policies in the Notes for additional information

regarding the FAS/CAS operating adjustment.

LIQUIDITY AND CAPITAL RESOURCES

We prioritize cash flow generation through our commitment to operational excellence, efficient balance sheet management and continuous cost reduction efforts. We consistently assess various capital deployment options, considering both our long-term outlook and the evolving market conditions, recognizing the importance of adaptability as market dynamics change over time.

~~management~~Our ~~and~~primary ~~continuous~~capital ~~cost~~deployment ~~reduction~~priorities ~~efforts.~~involve Wea ~~consistently~~focus ~~assess~~on ~~various~~funding the business through capital ~~deployment~~expenditures, ~~options~~including investing in training, facilities and digital infrastructure, debt repayment and returning cash to our shareholders through dividends and share repurchases.

considering both our long-term outlook and the evolving market conditions, recognizing the importance of

adaptability as market dynamics change over time.

Our primary capital deployment priorities involve a focus on funding the business, including investing in training,

facilities and digital infrastructure, debt repayment to be achieved through the prioritization of capital allocation and

returning cash to our shareholders through dividends and share repurchases.

Capital Resources

As of January 32, ~~2025~~2026, we had cash and cash equivalents of $~~615~~1,069 million, of which $~~300~~356 million was held by our foreign subsidiaries, a significant portion of which we believe can be repatriated to the U.S. with minimal tax impact.

~~foreign~~CP ~~subsidiaries~~Program. As of January 2, a2026, ~~significant~~we ~~portion~~had no outstanding notes under our CP Program. Our CP Program serves as a source of short-term financing under which we ~~believe~~may ~~can~~issue beunsecured ~~repatriated~~commercial paper notes up to ~~the~~a Umaximum aggregate amount of $3.S0 billion, supported by amounts available under our credit facilities, discussed below. ~~with~~From ~~minimal~~time ~~tax~~to ~~cost~~time, we use borrowings under the CP Program for general corporate purposes and working capital management, including the funding of acquisitions, debt repayment, dividend payments and repurchases of our common stock. See the “Financing Activities” discussion below in this MD&A for further information about our CP Program.

~~Additionally~~Credit Facilities. As of January 2, 2026, we ~~have~~had ~~two~~no outstanding borrowings under our credit facilities, ~~and~~had aavailable borrowing capacity of $3.0 billion, net of outstanding borrowings under our CP Program, ~~supported~~and bywere ~~amounts~~in ~~available~~compliance with all covenants under ~~the~~both ~~credit~~of the following:

~~facilities~~ 2025 Five-Year Credit Facility. On February 18, 2025, we established a new $2.5 billion, five-year senior unsecured revolving credit facility (the “2025 Five-Year Credit Facility”) by entering into a Revolving Credit Agreement (“2025 Five-Year Credit Agreement”). The 2025 Five-Year Credit Agreement replaces the prior $2.0 billion Revolving Credit Agreement, dated July 29, 2022 (“2022 Credit Agreement”).

2025 364-Day Credit ~~Facilities~~Facility. AtOn ~~January~~February 318, 2025, we ~~had~~established noa ~~outstanding~~new ~~borrowings~~$500 ~~under~~million ~~our~~364-day senior unsecured revolving credit ~~facilities~~facility (“2025 364-Day Credit Facility”) by entering into a 364-day Credit Agreement (“2025 364-Day Credit Agreement”). The 2025 364-Day Credit Agreement replaces the prior $1.5 billion 364-day credit agreement (“2024 Credit Agreement”), ~~had~~which ~~available~~matured on January 24, 2025.

~~borrowing~~See ~~capacity~~Note of8: ~~$2,985~~Debt ~~million,~~and ~~net~~Credit ofArrangements ~~outstanding~~in ~~borrowings~~the ~~under~~Notes ~~our~~for CPfurther ~~Program,~~information ~~and~~regarding ~~were~~our incredit ~~compliance~~ facilities.

~~with all covenants under both of the following:~~_____________________________________________________________________27

2024 Credit Facility. 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 with a syndicate of

lenders which matured on January 24, 2025 (“2024 Credit Agreement”). The 2024 Credit Agreement replaced the

prior $2.4 billion 364-Day Credit Agreement (“2023 Credit Agreement”).

2022 Credit Facility. On July 29, 2022, we established a $2.0 billion, 5-year senior unsecured revolving credit

facility (the “2022 Credit Facility”) under a Revolving Credit Agreement (the “2022 Credit Agreement”) entered into

with a syndicate of lenders.

_____________________________________________________________________

In fiscal 2025, we expect to refinance the 2022 Credit Agreement to increase the capacity and extend the

maturity of the existing facility. Additionally, in fiscal 2025, we expect to establish a new 364-day senior unsecured

revolving credit facility by entering into a 364-day credit agreement with a syndicate of lenders.

CP Program. At January 3, 2025, we had $515 million in outstanding notes under our CP Program. Under the CP

Program, we may issue unsecured commercial paper notes up to a maximum aggregate amount of $3.0 billion. From

time to time, we use borrowings under the CP Program for general corporate purposes, including the funding of

acquisitions, debt repayment, dividend payments and repurchases of our common stock. See the “Financing

Activities” discussion below in this MD&A for further information about our CP Program.

Cash Flow

The following table provides a summary of our cash flow information:


	Fiscal Year
(In millions)	2025		2024

Cash and cash equivalents, beginning of period	$	615	$	560
Operating Activities:
Net income	1,606		1,512
Non-cash adjustments	1,551		1,576
Changes in working capital	(7)		66
Other, net	(44)		(595)
Net cash provided by operating activities	3,106		2,559
Net cash provided by (used in) investing activities	407		(263)
Net cash used in financing activities	(3,082)		(2,224)
Effect of exchange rate changes on cash and cash equivalents	23		(17)
Net increase (decrease) in cash and cash equivalents	454		55
Cash and cash equivalents, end of period	$	1,069	$	615

	Fiscal Year Ended
(In millions)	January 3, 2025	December 29, 2023
Cash and cash equivalents, beginning of period	$560	$880
Operating Activities:
Net income	1,512	1,198
Non-cash adjustments	1,576	1,162
Changes in working capital	66	286
Other, net	(595)	(550)
Net cash provided by operating activities	$2,559	$2,096
Net cash used in investing activities	(263)	(7,021)
Net cash (used in) provided by financing activities	(2,224)	4,594
Effect of exchange rate changes on cash and cash equivalents	(17)	11
Net increase (decrease) in cash and cash equivalents	$55	$(320)
Cash and cash equivalents, end of period	$615	$560

Operating Activities. The $547 million increase in net cash provided by operating activities in fiscal 2025 compared with fiscal 2024 was primarily due to favorable impacts of tax planning strategies and tax reform and less cash used for merger, acquisition and severance related payments and CP program interest as a result of lower average outstanding CP notes in fiscal 2025. Such amounts were partially offset by $73 million more cash used to fund working capital (i.e., receivables, contract assets, inventories, accounts payable and contract liabilities), largely due to timing of billing and collection activity and cash used for settlement of a longstanding legal matter.

~~Operating~~Cash ~~Activities.~~flow ~~The~~from ~~$463~~operations ~~million~~was ~~increase~~positive in ~~net~~all ~~cash~~of ~~provided~~our bybusiness ~~operating~~segments ~~activities~~ in fiscal ~~2024~~ 2025.

~~compared~~Investing ~~with~~Activities. ~~fiscal~~Our ~~2023~~primary ~~was~~investing ~~primarily~~activities ~~due~~include tocapital anexpenditures ~~increase~~and incash ~~net~~proceeds ~~income,~~from ~~excluding~~sales ~~the impact~~ of ~~non-cash~~ businesses.

~~adjustments,~~The ~~and~~$670 ~~tax~~million ~~planning~~change ~~strategies,~~in ~~partially~~net ~~offset~~cash provided by investing activities in fiscal 2025 compared with net cash used in investing activities in fiscal 2024 was primarily due to a $~~220~~547 million ~~less~~increase ~~cash~~in ~~provided~~proceeds byfrom ~~working~~the ~~capital~~sale of businesses in fiscal 2025 (~~i.e.~~see “Divestitures” section below), net of cash divested, and the absence of a $100 million contribution to our rabbi trust assets made in fiscal 2024.

~~receivables,~~Divestitures. ~~contract~~During ~~assets~~fiscal 2025, ~~inventories~~we completed the divestiture of our CAS disposal group for net cash proceeds of $820 million. During fiscal 2024, ~~accounts~~we ~~payable~~completed the divestitures of our Antenna disposal group and ~~contract~~Aerojet ~~liabilities~~Ordnance Tennessee, Inc. (“AOT disposal group”) for net cash proceeds of $170 million and $103 million, ~~primarily~~respectively. ~~due~~See toNote ~~timing~~13: Acquisitions and Divestitures in the Notes for further information.

~~Cash~~Financing ~~flow~~Activities. ~~from~~Our ~~operations~~primary ~~was~~financing ~~positive~~activities ininclude ~~all~~issuing ofand ~~our~~repaying ~~business~~long-term ~~segments~~debt inand ~~fiscal~~commercial ~~2024~~paper, exercising employee stock options, paying dividends and repurchasing common stock.

~~Investing~~The ~~Activities.~~$858 ~~Our~~million ~~primary~~increase ~~investing~~in net cash used in financing activities ~~include~~in fiscal 2025 compared with fiscal 2024 was primarily due to increases in repayments of long-term debt, net ~~cash~~of ~~paid~~issuances ~~for~~of ~~acquired~~$825 ~~businesses~~million, ~~capital~~cash used to repurchase common stock of $600 million and a decrease in net repayments of commercial paper of $569 million in fiscal 2025. Our primary financing activities are further discussed below.

~~expenditures~~Common ~~and~~stock ~~cash~~repurchases. ~~proceeds~~During ~~from~~fiscal ~~sales~~2025, we repurchased 5.1 million shares of ~~businesses~~our common stock under our share repurchase program for $1.2 billion. During fiscal 2024, we repurchased 2.5 million shares of our common stock under our share repurchase program for $554 million.

The $6level and timing of our repurchases depends on a number of factors,~~758~~ ~~million~~including ~~decrease~~our infinancial ~~net~~condition, capital requirements, cash ~~used~~flows, inresults ~~investing~~of ~~activities~~operations, infuture ~~fiscal~~business ~~2024~~prospects ~~compared~~and ~~with~~other ~~fiscal~~factors ~~2023~~our Board and management may deem relevant. The timing, volume and nature of repurchases are also subject to market conditions, applicable securities laws and other factors and are at our discretion and may be suspended or discontinued at any time. Additional information regarding our repurchase program is set forth above under “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Report.

~~was primarily due to the $6,688 million cash used for the acquisitions of TDL and AJRD in fiscal 2023 and an~~ _____________________________________________________________________28

~~increase~~Long-term ofdebt. During fiscal 2025, we repaid the entire outstanding $~~202~~600 million inaggregate ~~net~~principal ~~cash~~amount of our 3.832% notes, due April 27, 2025 with proceeds from the issuance and sale of ~~businesses~~the in$600 ~~fiscal~~million ~~2024~~5.50% ~~(see~~notes, due August 15, 2054 (“~~Divestitures~~5.50% 2054 Notes”) ~~section~~issued in fiscal 2024.

~~below)~~During fiscal 2024, ~~partially~~we ~~offset~~closed bythe issuance and sale of $~~100~~2.25 ~~million~~billion aggregate principal amount of ~~contributions~~long-term fixed-rate debt consisting of 5.05% notes, due June 2029, 5.25% notes, due June 2031 and 5.35% notes, due June 2034 and used the proceeds to ~~our~~repay ~~rabbi~~the ~~trust~~entire ~~assets~~outstanding in$2.25 billion, variable rate-term loan facility utilized to finance the fiscal 2023 acquisition of TDL. Additionally, we closed the issuance and sale of the $600 million 5.50% 2054 Notes and repaid the $350 million of our 3.950% notes, due May 28, 2024.

~~Divestitures.~~As ~~During~~of ~~fiscal~~January 2, ~~2024~~2026, we ~~completed~~had ~~the~~$10.4 ~~divestitures~~billion of ~~our~~outstanding ~~Antenna~~long-term ~~disposal~~debt, ~~group~~net ~~and~~of ~~Aerojet~~current portion of $673 million.

~~Ordnance~~CP ~~Tennessee~~Program. During fiscal 2025, ~~Inc.~~our ~~(“AOT~~CP ~~disposal~~Program ~~group”)~~had ~~for~~a ~~net~~maximum ~~cash~~outstanding ~~proceeds~~balance of $~~170~~1.8 ~~million~~billion and a daily average outstanding balance of $~~103~~1.2 ~~million~~billion. During fiscal 2024, our CP Program had a maximum outstanding balance of $2.8 billion and daily average outstanding balance of $2.1 billion.

~~respectively~~Dividends. During fiscal ~~2023,~~2025 and fiscal 2024 we ~~completed~~paid ~~the~~in ~~divestiture~~$903 ofmillion ~~Visual~~and $886 million dividends, respectively. Information ~~Solutions~~concerning our dividends is set forth above under “Item 5. Market for ~~net~~Registrant’s ~~cash~~Common ~~proceeds~~Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Report.

of $71 million. See Note 13: Acquisitions and Divestitures in the Notes for further information.

Financing Activities. Our primary financing activities include issuances of long-term debt and commercial paper,

exercises of employee stock options, repayments of long-term debt and commercial paper, dividend payments and

repurchases of common stock.

The $6,818 million change in net cash used in financing activities in fiscal 2024 compared with net cash

provided by financing activities in fiscal 2023 was primarily due to a decrease in net proceeds from long-term debt

and an increase in net repayments of commercial paper of $4,741 million and $2,683 million, respectively, partially

offset by a decrease in repayments of long-term debt of $550 million and an increase in proceeds from exercises of

employee stock options of $109 million.

Long-term debt. During fiscal 2024, we closed the issuance and sale of $2.25 billion aggregate principal amount

of the 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 “March Issued 2024 Notes”) and closed the issuance and sale of $600 million

aggregate principal amount of the of the 5.50% Notes due 2054 (“5.50% 2054 Notes”).

We used the proceeds from the March Issued 2024 Notes to repay the entire $2.25 billion outstanding balance

of Term Loan 2025 and net proceeds from the 5.50% 2054 Notes to repay borrowings under our CP Program and

intend to use such proceeds to repay the $600 million in aggregate principal amount of 3.832% notes due April

2025 (“3.832% 2025 Notes”) upon maturity. Additionally, in fiscal 2024, we repaid the $350 million aggregate

principal amount of our 3.95% notes, due May 2024 (“3.95% 2024 Notes”).

During fiscal 2023, we drew $2.25 billion in long-term debt on Term Loan 2025 and utilized the proceeds to

fund the TDL acquisition, including a portion of associated transaction and integration costs, and to repay the entire

outstanding $250 million aggregate principal amount of our Floating Rate Notes due March 2023. Additionally, we

closed the issuance and sale of $3.25 billion aggregate principal amount of 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”). The AJRD Notes were

used to fund a portion of the purchase price for the AJRD acquisition, and to pay related fees and expenses.

We repaid the entire outstanding $800 million aggregate principal amount of our 3.85% notes, due June 2023

(“3.85% 2023 Notes”) through cash.

CP program. During fiscal 2024, we had a maximum outstanding balance of $2,799 million and a daily average

outstanding balance of $2,100 million under our CP Program. We expect balances under the CP Program to remain

elevated as compared to historical norms through fiscal 2025.

Dividends. Information concerning our dividends is set forth above under “Item 5. Market for Registrant’s

Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Report.

Common stock repurchases. During fiscal 2024, we repurchased 2.5 million shares of our common stock under

our share repurchase program for $554 million. At January 3, 2025, we had a remaining unused authorization under

our repurchase program of $3,381 million.

During fiscal 2023, we repurchased 2.5 million shares of our common stock under our share repurchase

program for $518 million.

The level and timing of our repurchases depends on a number of factors, including our financial condition,

capital requirements, cash flows, results of operations, future business prospects and other factors our Board and

management may deem relevant. The timing, volume and nature of repurchases are also subject to market

conditions, applicable securities laws and other factors and are at our discretion and may be suspended or

discontinued at any time. Additional information regarding our repurchase program is set forth above under “Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of

this Report.

Cash Requirements

Total Fixed-Rate Debt. AtAs of January 32, ~~2025~~2026, we had fixed-rate debt, ~~which~~of ~~reflects~~$10.9 billion, reflecting our total long-term debt, including current portion but excluding finance leases, of which $650 million is due within the next 12 months. In addition, cash interest on fixed-rate debt of $520 million is due within the next 12 months. The majority of our fixed-rate debt has been incurred in connection with merger and acquisition activity. See Note 8: Debt and Credit Arrangements in the Notes for further information regarding our fixed-rate debt.

~~including~~Purchase ~~current~~Obligations. ~~portion~~As ~~but~~of ~~excluding~~January 2, ~~finance leases~~2026, we had purchase obligations of approximately $1110.52 billion, of which ~~$610~~approximately ~~million~~60% isare due within the next 12 months. Our purchase obligations mainly consist of outstanding commitments on open purchase orders made to suppliers, subcontractors and other outsourcing partners under U.S. Government contracts and managed service agreements. Our risk associated with these purchase obligations is generally limited to the termination liability provisions within such contracts. As such, we do not believe there to be a material liquidity risk associated with outstanding purchase obligations.

12Operating ~~months~~and finance lease commitments. ~~The~~As ~~majority~~of January 2, 2026, we had operating and finance lease commitments of ~~our~~$1.3 ~~fixed-rate~~billion, ~~debt~~of ~~has~~which ~~been~~$193 ~~incurred~~million inis ~~connection~~due ~~with~~within ~~merger~~the ~~and~~next ~~acquisition~~12 ~~activity~~months. See Note 11: Leases in the Notes for further information regarding our lease commitments.

~~Additionally~~Defined Benefit Pension Contributions. With respect to our U.S. qualified defined benefit pension plans, we ~~have~~intend ~~outstanding~~to ~~interest~~contribute onannually ~~fixed-rate~~no ~~debt~~less ofthan $4the required minimum funding thresholds.9 ~~billion~~In fiscal 2025, we made approximately $23 million of ~~which~~contributions to our U.S. qualified defined benefit pension plans. We expect to make approximately $~~534~~18 million isof ~~due~~contributions ~~within~~to ~~the~~these plans in fiscal 2026 and may consider voluntary contributions thereafter.

~~next~~Future 12required ~~months.~~contributions ~~See~~primarily ~~Note~~will 8:depend ~~Debt~~on the actual annual return on plan assets and ~~Credit~~the ~~Arrangements~~discount inrate used to measure the ~~Notes~~benefit ~~for~~obligation ~~further~~at ~~information~~the ~~regarding~~end of each year. Depending on these factors, and the resulting funded status of our ~~fixed-~~pension plans, the level of future statutory required minimum contributions could be material. We had net defined benefit plan assets of $1.2 billion as of January 2, 2026 compared with $789 million as of January 3, 2025. The improvement in funded status as of January 2, 2026 is primarily due to more favorable than expected return on plan assets.

~~rate~~We ~~debt~~strategically manage our pension obligations by pursuing opportunities, to reduce exposure to pension volatility while maintaining financial flexibility. During fiscal 2025, we executed transactions to purchase nonparticipating single premium group annuity contracts and transfer $1.4 billion of our benefit obligation associated with certain U.S. or Canadian pension plans to insurance providers. The contracts were funded with $1.4 billion of associated plan assets and did not require any additional cash contributions. We expect to continue evaluating opportunities to strategically manage our pension obligations, including the potential for additional pension de-risking transactions in the future, subject to market conditions and plan funding levels. These actions align with our long-term strategy to reduce exposure to pension volatility while maintaining financial flexibility.

~~Purchase~~See ~~Obligations.~~Note At9: ~~January 3,~~Retirement ~~2025,~~Benefits wein ~~had~~the ~~purchase~~Notes ~~obligations~~for offurther ~~approximately~~information ~~$9.2~~regarding ~~billion,~~our ofpension ~~which~~ plans.

~~approximately 60% are due within the next 12 months. Our purchase obligations mainly consist of outstanding~~ _____________________________________________________________________29

commitments on open purchase orders made to suppliers, subcontractors and other outsourcing partners under

U.S. Government contracts and managed service agreements. Our risk associated with these purchase obligations is

generally limited to the termination liability provisions within such contracts. As such, we do not believe there to be

a material liquidity risk associated with outstanding purchase obligations.

Operating and finance lease commitments. At January 3, 2025, we had operating and finance lease

commitments of $1.2 billion, of which $199 million is due within the next 12 months. See Note 11: Leases in the

Notes for further information regarding our lease commitments.

Defined Benefit Pension Contributions. With respect to our U.S. qualified defined benefit pension plans, we

intend to contribute annually no less than the required minimum funding thresholds. In fiscal 2024, we made

approximately $30 million of contributions to our U.S. qualified defined benefit pension plans. We expect to make

_____________________________________________________________________

approximately $23 million of contributions to these plans in fiscal 2025 and may consider voluntary contributions

thereafter.

Future required contributions primarily will depend on the actual annual return on plan assets and the discount

rate used to measure the benefit obligation at the end of each year. Depending on these factors, and the resulting

funded status of our pension plans, the level of future statutory required minimum contributions could be material.

We had net defined benefit plan assets of $789 million as of January 3, 2025 compared with $66 million as of

December 29, 2023. The improvement in funded status as of January 3, 2025 is primarily due to more favorable

than expected return on plan assets and decreased pension obligations resulting from higher discount rates. See

Note 9: Retirement Benefits in the Notes for further information regarding our pension plans.

Commercial Commitments

We have entered into commercial commitments in the normal course of business including surety bonds, standby letter of credit agreements and other arrangements with financial institutions and customers primarily relating to the guarantee of future performance on certain contracts to provide products and services to customers or to obtain insurance policies with our insurance carriers. See Note 15: Legal Proceedings, Commitments and Contingencies in the Notes for additional information.

standby letter of credit agreements and other arrangements with financial institutions and customers primarily

relating to the guarantee of future performance on certain contracts to provide products and services to customers

or to obtain insurance policies with our insurance carriers. See Note 15: Legal Proceedings, Commitments and

Contingencies in the Notes for additional information.

Liquidity Assessment

Given our current cash position, outlook for funds generated from operations, credit ratings, available credit facilities, cash needs and debt structure, we have not experienced to date, and do not expect to experience, any material issues with liquidity for the next 12 months and in the longer term. Although we can give no assurances concerning our future liquidity, particularly in light of our overall level of debt, U.S. Government budget uncertainties and the state of global commerce and general political and global financial uncertainty.

~~facilities~~Based on our current business plan and revenue prospects, we believe that our existing cash, ~~needs~~funds generated from operations, availability under our senior unsecured credit facilities and our CP Program and access to the public and private debt ~~structure,~~and weequity ~~have~~markets ~~not~~will ~~experienced~~be sufficient to ~~date~~provide for our anticipated working capital requirements, capital expenditures, dividend payments, repurchases under our share repurchase program, and dorepayments ~~not~~of ~~expect~~our debt securities at maturity for the next 12 months and the reasonably foreseeable future thereafter. Our capital expenditures for fiscal 2026 are expected to ~~experience,~~be ~~any~~approximately $600 million.

material issues with liquidity for the next 12 months and in the longer term, although we can give no assurances

concerning our future liquidity, particularly in light of our overall level of debt, U.S. Government budget uncertainties

and the state of global commerce and general political and global financial uncertainty.

Based on our current business plan and revenue prospects, we believe that our existing cash, funds generated

from operations, availability under our senior unsecured credit facilities and our CP Program and access to the public

and private debt and equity markets will be sufficient to provide for our anticipated working capital requirements,

capital expenditures, dividend payments, repurchases under our share repurchase program and repayments of our

debt securities at maturity for the next 12 months and the reasonably foreseeable future thereafter. Our capital

expenditures for fiscal 2025 are expected to be approximately 2% of revenue.

CRITICAL ACCOUNTING ESTIMATES

Preparation of this Report in accordance with GAAP requires us to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue, expenses and contractual backlog as well as disclosure of contingent assets and liabilities. While the following is not intended to be a comprehensive list of our accounting estimates, we consider the estimates discussed below as critical to an understanding of our financial statements because their application places the most significant demands on our judgment, with financial reporting results dependent on estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Specific risks for these critical accounting estimates are described in the following paragraphs. The impact and any associated risks described in the following paragraphs related to these estimates on our business operations are discussed throughout this MD&A where such estimates affect our reported and expected financial results. Senior management has discussed the development and selection of the critical accounting estimates and the related disclosure included herein with the Audit Committee of our Board. Actual results may differ from those estimates.

the reported amount of assets, liabilities, revenue, expenses and backlog as well as disclosure of contingent assets

and liabilities. While the following is not intended to be a comprehensive list of our accounting estimates, we

consider the estimates discussed below as critical to an understanding of our financial statements because their

application places the most significant demands on our judgment, with financial reporting results dependent on

estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Specific

risks for these critical accounting estimates are described in the following paragraphs. The impact and any

associated risks described in the following paragraphs related to these estimates on our business operations are

discussed throughout this MD&A where such estimates affect our reported and expected financial results. Senior

management has discussed the development and selection of the critical accounting estimates and the related

disclosure included herein with the Audit Committee of our Board. Actual results may differ from those estimates.

Revenue Recognition

A significant portion of our business is derived from long-term development and production contracts. Revenue and profit related to development and production contracts are generally recognized over time, typically using the percentage of completion (“POC”) cost-to-cost method of revenue recognition, whereby we measure our progress towards completion of the performance obligation based on the ratio of costs incurred to date to estimated costs at completion under the contract. Because costs incurred represent work performed, we believe this method best depicts the transfer of control of the asset to the customer. Under 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.

~~related~~Recognition toof ~~development~~profit on a contract requires estimates of the total cost at completion and ~~production~~transaction price and the measurement of progress towards completion. Due to the long-term nature of many of our contracts, ~~are~~developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include: the nature and complexity of the work to be performed, subcontractor performance, the cost and availability of purchased materials and services, labor cost and availability and the risk and impact of delayed performance. Factors that must be considered in estimating the total transaction price include contractual cost or performance incentives (such as incentive fees, award fees and penalties) and other forms of variable consideration as well as our historical experience and our expectation for performance on the contract. These variable amounts generally ~~recognized~~are ~~over-time~~awarded upon achievement of certain negotiated performance metrics, ~~typically~~program ~~using~~milestones or cost targets and can be based upon customer discretion. We include such estimated amounts in the ~~percentage~~transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

At the outset of ~~completion~~each ~~(“POC”)~~contract, we gauge its complexity and perceived risks and establish an estimated total cost~~-to-cost~~ ~~method~~at ofcompletion ~~revenue~~in ~~recognition,~~line ~~whereby~~with these expectations. We follow a standard EAC process in which we ~~measure~~review ~~our~~the progress ~~towards~~

~~completion of the performance obligation based on the ratio of costs incurred to date to estimated costs at~~ _____________________________________________________________________30

~~completion~~and ~~under~~performance on our ongoing contracts. If we successfully retire risks associated with the technical, schedule and cost aspects of a contract, we may lower our estimated total cost at completion commensurate with the retirement of these risks. ~~Because~~Conversely, there are many reasons estimated contract costs ~~incurred~~can ~~represent~~increase, ~~work~~including: ~~performed~~(i) supply chain disruptions, inflation and labor issues; (ii) design or other development challenges; and (iii) program execution challenges (including from technical or quality issues and other performance concerns). Additionally, as the contract progresses, our estimates of total transaction price may increase or decrease if, for example, we ~~believe~~receive ~~this~~incentive ~~method~~or ~~best~~award fees that are higher or lower than expected.

~~depicts~~When changes in estimated total costs at completion or in estimated total transaction price are determined, the ~~transfer~~related ofimpact ~~control~~on operating income is recognized on a cumulative basis. Cumulative EAC adjustments represent the cumulative effect of the ~~asset~~changes toon current and prior periods; revenue and operating margins in future periods are recognized as if the ~~customer~~revised estimates had been used since contract inception. ~~Under~~Any anticipated losses on these contracts are fully recognized in the ~~POC~~period ~~cost-to-cost~~in ~~method~~which the losses become evident. In fiscal 2025 and fiscal 2024, earnings were impacted by recognition of ~~revenue~~net favorable EAC adjustments of $47 million and $39 million, respectively.

~~recognition~~For the impacts of changes in estimates on our Consolidated Financial Statements, asee ~~single~~“Business ~~estimated~~Segment ~~profit~~Results ~~margin~~of isOperations” ~~used~~in tothis ~~recognize~~MD&A ~~profit~~and ~~for~~Note ~~each~~1: ~~performance~~Significant ~~obligation~~Accounting ~~over~~Policies ~~its~~in the Notes.

~~period~~We recognize revenue from numerous contracts with multiple performance obligations. For these contracts, we allocate the transaction price to each performance obligation based on the relative standalone selling price of the product or service underlying each performance obligation. The standalone selling price represents the amount for which we would sell the product or service to a customer on a standalone basis (i.e., not sold as a bundled sale with any other products or services). The allocation of transaction price among separate performance obligations may impact the timing of revenue recognition but will not change the total revenue recognized on the contract.

~~Recognition~~A substantial majority of ~~profit~~our revenue is derived from contracts with the U.S. Government, including foreign military sales contracts. These contracts are subject to the FAR and the prices of our contract deliverables are typically based on our estimated or actual costs plus margin. As a ~~contract~~result, ~~requires~~the ~~estimates~~standalone selling prices of the ~~total~~products ~~cost~~and atservices ~~completion~~in ~~and~~these contracts are typically equal to the selling prices stated in the contract, thereby eliminating the need to allocate (or reallocate) the transaction price to the multiple performance obligations. In our non-U.S. Government contracts, when standalone selling prices are not directly observable, we also generally use the expected cost plus margin approach to determine standalone selling price. In determining the appropriate margin under the cost plus margin approach, we consider historical margins on similar products sold to similar customers or within similar geographies where objective evidence is available. We may also consider our cost structure and profit objectives, the nature of the proposal, the effects of customization of pricing, our practices used to establish pricing of bundled products, the expected technological life of the product, margins earned on similar contracts with different customers and other factors to determine the appropriate margin.

the measurement of progress towards completion. Due to the long-term nature of many of our contracts, developing

the estimated total cost at completion and total transaction price often requires judgment. Factors that must be

considered in estimating the cost of the work to be completed include: the nature and complexity of the work to be

performed, subcontractor performance, the cost and availability of purchased materials and services, labor cost and

availability and the risk and impact of delayed performance. Factors that must be considered in estimating the total

_____________________________________________________________________

transaction price include contractual cost or performance incentives (such as incentive fees, award fees and

penalties) and other forms of variable consideration as well as our historical experience and our expectation for

performance on the contract. These variable amounts generally are awarded upon achievement of certain

negotiated performance metrics, program milestones or cost targets and can be based upon customer discretion.

We include such estimated amounts in the transaction price to the extent it is probable that a significant reversal of

cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is

resolved.

At the outset of each contract, we gauge its complexity and perceived risks and establish an estimated total cost

at completion in line with these expectations. We follow a standard EAC process in which we review the progress

and performance on our ongoing contracts. If we successfully retire risks associated with the technical, schedule

and cost aspects of a contract, we may lower our estimated total cost at completion commensurate with the

retirement of these risks. Conversely, there are many reasons estimated contract costs can increase, including: (i)

supply chain disruptions, inflation and labor issues; (ii) design or other development challenges; and (iii) program

execution challenges (including from technical or quality issues and other performance concerns). Additionally, as

the contract progresses, our estimates of total transaction price may increase or decrease if, for example, we

receive incentive or award fees that are higher or lower than expected.

When changes in estimated total costs at completion or in estimated total transaction price are determined, the

related impact on operating income is recognized on a cumulative basis. Cumulative EAC adjustments represent the

cumulative effect of the changes on current and prior periods; revenue and operating margins in future periods are

recognized as if the revised estimates had been used since contract inception. Any anticipated losses on these

contracts are fully recognized in the period in which the losses become evident. In fiscal 2024 and fiscal 2023,

earnings were impacted by recognition of net favorable EAC adjustments of $39 million and net unfavorable EAC

adjustments of $85 million, respectively.

During fiscal 2024, we recognized approximately $100 million in unfavorable EAC adjustments related to three

classified fixed-price development programs in Space Systems, however, there were no individual EAC adjustments

that were material to our results of operations on a consolidated or segment basis in fiscal 2024 or 2023.

We recognize revenue from numerous contracts with multiple performance obligations. For these contracts, we

allocate the transaction price to each performance obligation based on the relative standalone selling price of the

product or service underlying each performance obligation. The standalone selling price represents the amount for

which we would sell the product or service to a customer on a standalone basis (i.e., not sold as a bundled sale with

any other products or services). The allocation of transaction price among separate performance obligations may

impact the timing of revenue recognition but will not change the total revenue recognized on the contract.

A substantial majority of our revenue is derived from contracts with the U.S. Government, including foreign

military sales contracts. These contracts are subject to the Federal Acquisition Regulation (“FAR”) and the prices of

our contract deliverables are typically based on our estimated or actual costs plus margin. As a result, the

standalone selling prices of the products and services in these contracts are typically equal to the selling prices

stated in the contract, thereby eliminating the need to allocate (or reallocate) the transaction price to the multiple

performance obligations. In our non-U.S. Government contracts, when standalone selling prices are not directly

observable, we also generally use the expected cost plus margin approach to determine standalone selling price. In

determining the appropriate margin under the cost plus margin approach, we consider historical margins on similar

products sold to similar customers or within similar geographies where objective evidence is available. We may also

consider our cost structure and profit objectives, the nature of the proposal, the effects of customization of pricing,

our practices used to establish pricing of bundled products, the expected technological life of the product, margins

earned on similar contracts with different customers and other factors to determine the appropriate margin.

Defined Benefit Plans

Certain of our current and former employees participate in defined benefit plans in the U.S., Canada and United Kingdom, which are sponsored by L3Harris. See Note 9: Retirement Benefits in the Notes for additional information related to our defined benefit plans.

Kingdom, which are sponsored by L3Harris. See Note 9: Retirement Benefits in the Notes for additional information

related to our defined benefit plans.

Significant Assumptions

The determination of the projected benefit obligation (“PBO”) and recognition of net periodic benefit income related to defined benefit plans depend on various assumptions, including discount rates, expected return on plan assets, rate of future compensation increases, mortality, termination and other factors.

We develop assumptions using relevant experience, in conjunction with market-related todata ~~defined~~for ~~benefit~~each ~~plans~~plan. ~~depend~~Assumptions onare ~~various~~reviewed annually with third-party experts and adjusted as appropriate. Actual results that differ from our assumptions, ~~including~~are ~~discount~~accumulated ~~rates~~and generally amortized for each plan to the extent required over the estimated future life expectancy or, ~~expected~~if ~~return~~applicable, onthe average remaining service period of the plan’s active participants.

The following table presents the significant assumptions used to determine the PBO:

assets, rate of future compensation increases, mortality, termination and other factors.


	January 2, 2026				January 3, 2025
	Pension		Other Benefits		Pension		Other Benefits
Discount rate	5.29	%	5.13	%	5.46	%	5.38	%

~~We develop assumptions using relevant experience, in conjunction with market-related data for each plan.~~ _____________________________________________________________________31

The following table presents the significant assumptions used to determine net periodic benefit income:

Assumptions are reviewed annually with third-party experts and adjusted as appropriate. Actual results that differ


	Fiscal Year
	2025				2024
	Pension		Other Benefits		Pension		Other Benefits
Discount rate to determine service cost	5.30	%	5.43	%	4.92	%	5.00	%
Discount rate to determine interest cost	4.96	%	5.08	%	4.80	%	4.78	%
Expected return on plan assets	7.46	%	7.50	%	7.45	%	7.50	%

~~_____________________________________________________________________~~Discount Rate. The discount rate is used to calculate the present value of expected future benefit payments at the measurement date. An increase in the discount rate decreases the PBO and generally decreases our net periodic benefit income. A decrease in the discount rate increases the PBO and generally increases our net periodic benefit income. The discount rate assumption is based on current investment yields of high-quality fixed income investments during the retirement benefits maturity period. The pension discount rate is determined by considering an interest rate yield curve comprising AAA/AA bonds, with maturities between zero and thirty years, developed by the plan’s actuaries. Annual benefit payments are then discounted to present value using this yield curve to develop a single discount rate matching the plan’s characteristics.

Sensitivity Analysis. The sensitivity of the PBO to changes in the discount rate varies depending on the magnitude and direction of the change in the discount rate. We estimate that a 25 basis point change in the discount rate of our combined U.S. defined benefit pension plans would have the following impact on our PBO as of January 2, 2026 and net periodic benefit income for the next twelve months:



(In millions)	25 Basis Point Increase		25 Basis Point Decrease

PBO	$	(128)	$	133
Net periodic benefit income	6		(7)

~~from~~Expected Return on Plan Assets. Substantially all of our ~~assumptions~~plan assets are ~~accumulated~~managed on a commingled basis in a master investment trust. We determine our expected return on plan assets by evaluating both historical returns and ~~generally~~estimates ~~amortized~~of ~~for~~future ~~each~~returns. Specifically, we consider the plan’s toactual historical annual return on assets over the ~~extent~~past ~~required~~15, 20 and 25 years and historical broad market returns over long-term timeframes based on our strategic allocation, which is detailed in Note 9: Retirement Benefits in the Notes. Future returns are based on independent estimates of long-term asset class returns. Based on this approach, the weighted average long-term annual rate of return on assets was estimated to be 7.46% for both fiscal 2025 and 2026.

Sensitivity Analysis. We estimate that a 25 basis point change in the expected return on plan assets of our combined U.S. defined benefit pension plans would have the following impact on net periodic benefit income for the next twelve months:

estimated future life expectancy or, if applicable, the average remaining service period of the plan’s active



(In millions)	25 Basis Point Increase		25 Basis Point Decrease

Net periodic benefit income	$	(17)	$	17

participants.

The following table presents the significant assumptions used to determine the PBO:

	January 3, 2025		December 29, 2023
	Pension	OtherBenefits	Pension	OtherBenefits
Discount rate	5.46%	5.38%	4.91%	4.87%

The following table presents the significant assumptions used to determine net periodic benefit income:

	Fiscal Year Ended
	January 3, 2025		December 29, 2023
	Pension	OtherBenefits	Pension	OtherBenefits
Discount rate to determine service cost	4.92%	5.00%	5.18%	5.26%
Discount rate to determine interest cost	4.80%	4.78%	5.08%	5.06%
Expected return on plan assets	7.45%	7.50%	7.46%	7.50%

Discount Rate. The discount rate is used to calculate the present value of expected future benefit payments at

the measurement date. An increase in the discount rate decreases the PBO and generally decreases our net periodic

benefit income. A decrease in the discount rate increases the PBO and generally increases our net periodic benefit

income. The discount rate assumption is based on current investment yields of high-quality fixed income

investments during the retirement benefits maturity period. The pension discount rate is determined by considering

an interest rate yield curve comprising AAA/AA bonds, with maturities between zero and thirty years, developed by

the plan’s actuaries. Annual benefit payments are then discounted to present value using this yield curve to develop

a single discount rate matching the plan’s characteristics.

Sensitivity Analysis. The sensitivity of the PBO to changes in the discount rate varies depending on the

magnitude and direction of the change in the discount rate. We estimate that a 25 basis point change in the discount

rate of our combined U.S. defined benefit pension plans would have the following impact on our PBO at January 3,

2025 and net periodic benefit income for the next twelve months:

(In millions)	25 BasisPoint Increase	25 BasisPoint Decrease
PBO	$(155)	$161
Net periodic benefit income	$7	$(8)

Expected Return on Plan Assets. Substantially all of our plan assets are managed on a commingled basis in a

master investment trust. We determine our expected return on plan assets by evaluating both historical returns and

estimates of future returns. Specifically, we consider the plan’s actual historical annual return on assets over the

past 15, 20 and 25 years and historical broad market returns over long-term timeframes based on our strategic

allocation, which is detailed in Note 9: Retirement Benefits in the Notes. Future returns are based on independent

estimates of long-term asset class returns. Based on this approach, the weighted average long-term annual rate of

return on assets was estimated to be 7.45% for both fiscal 2024 and 2025.

Sensitivity Analysis. We estimate that a 25 basis point change in the expected return on plan assets of our

combined U.S. defined benefit pension plans would have the following impact on net periodic benefit income for the

next twelve months:

(In millions)	25 BasisPoint Increase		25 BasisPoint Decrease
Net periodic benefit income	$(20)		$20

Goodwill

We test our goodwill for impairment annually as of the first business day of our fourth fiscal quarter, which was October 6 in fiscal 2025, or under certain circumstances more frequently, such as when events or circumstances indicate there may be impairment or when we reorganize our reporting structure such that the composition of one or more of our reporting units is affected. We test goodwill for impairment at a level within the Company referred to as the reporting unit, which is our business segment level or one level below the business segment. Some of our segments are comprised of multiple reporting units. Allocation of goodwill to multiple reporting units could make it more likely that we will have an impairment charge in the future. An impairment charge to any one of our reporting units could have a material impact on our financial condition and results of operations.

~~September~~The 30process inof ~~fiscal~~evaluating ~~2024~~the potential impairment of goodwill is highly subjective and requires significant judgment. To test goodwill for impairment, orwe ~~under~~may perform both qualitative and quantitative assessments. If we elect to perform a qualitative assessment for a certain reporting unit, we evaluate events and circumstances impacting the reporting unit to determine the probability that goodwill is impaired. If we determine it is more-likely-than-not ~~frequently~~that the fair value of the reporting unit is less than its carrying amount, ~~such~~we asperform ~~when~~a ~~events~~quantitative orassessment.

~~circumstances indicate there may be impairment or when we reorganize our reporting structure such that the~~ _____________________________________________________________________32

~~composition~~Our qualitative assessment of ~~one~~the recoverability of goodwill, whether performed annually or ~~more~~based ofon ~~our~~specific ~~reporting~~events ~~units~~or iscircumstances, ~~affected~~considers various macroeconomic, industry-specific and company-specific factors. WeThese ~~test~~factors ~~goodwill~~include: ~~for~~(i) ~~impairment~~deterioration atin the general economy; (ii) deterioration in the environment in which we operate; (iii) increase in materials, labor or other costs; (iv) negative or declining cash flows; (v) changes in management, changes in strategy or significant litigation; (vi) changes in the composition or carrying amount of net assets or an expectation of disposing all or a ~~level~~portion ~~within~~of the reporting unit; or (vii) a sustained decrease in share price.

~~Company~~If ~~referred~~we toperform asa ~~the~~quantitative assessment for a certain reporting unit, ~~which~~we iscalculate the fair value of that reporting unit and compare the fair value to the reporting unit’s net book value. We estimate fair values of our ~~business~~reporting ~~segment~~units ~~level~~based on projected cash flows and review of revenue and/or ~~one~~earnings ~~level~~multiples ~~below~~applied to the latest twelve months’ revenue and earnings of our reporting units. Projected cash flows are based on our best estimate of future revenues, operating costs and balance sheet metrics reflecting our view of the financial and market conditions of the underlying business; and the resulting cash flows are discounted using an appropriate discount rate that reflects the risk in the forecasted cash flows. The revenues and earnings multiples applied to the revenues and earnings of our reporting units are based on current multiples of revenues and earnings for similar businesses, and based on revenues and earnings multiples paid for recent acquisitions of similar businesses made in the marketplace. We then assess whether any implied control premium, based on a comparison of fair value based purely on our stock price and outstanding shares with fair value determined by using all of the above-described models, is reasonable. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

~~_____________________________________________________________________~~Fiscal 2025 Impairment Tests. We completed our annual goodwill impairment assessment for all reporting units as of October 6, 2025 and concluded that no impairment existed for any of the reporting units.

33Business realignment. Effective for fiscal 2025, to better align our businesses, we transferred our fuzing and ordnance (“FOS”) business from our IMS segment (within the TSS and DE reporting unit) to our AR segment (also a reporting unit) and adjusted our reporting accordingly. Immediately before and after the realignment, we performed quantitative impairment assessments under our former and new reporting unit structure. These assessments indicated no impairment existed either before or after the realignment.

~~segment~~Space Technology disposal group. ~~Some~~For ofinformation ~~our~~related ~~segments~~to ~~are~~the ~~comprised~~Space ofTechnology ~~several~~disposal ~~reporting~~group ~~units.~~pending ~~Allocation~~divestiture, ofincluding goodwill toallocation, ~~several~~impairment ~~reporting~~testing and resulting impairment see Note 6: Goodwill and Intangible Assets in the Notes.

~~units~~See ~~could~~Note ~~make~~6: itGoodwill ~~more~~and ~~likely~~Intangible ~~that~~Assets ~~we will have an impairment charge~~ in ~~the~~these ~~future.~~Notes Anfor ~~impairment~~further ~~charge to any~~ information.

~~one~~Fiscal of2024 Impairment Tests. We completed our annual goodwill impairment assessment for all reporting units ~~could~~as ~~have~~of aSeptember ~~material~~30, ~~impact~~2024 onand ~~our~~concluded ~~financial~~that ~~condition~~no ~~and~~impairment ~~results~~existed for any of ~~operations~~the reporting units.

~~The~~Business ~~process~~realignment. ofEffective ~~evaluating~~for fiscal 2024, to better align our businesses, we adjusted our IMS segment by realigning our Electro Optical and Maritime sectors, which are also reporting units, splitting Electro Optical into two sectors, Global Optical Systems and Defense Electronics, and moving one Electro Optical business to the ~~potential~~Maritime ~~impairment~~sector. ofGlobal ~~goodwill~~Optical isSystems ~~highly~~and ~~subjective~~Defense Electronics represent one reporting unit. Immediately before and ~~requires~~after ~~significant~~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.

~~judgment~~Antenna disposal group divestiture. ToFor ~~test~~information related to the Antenna disposal group divestiture, including goodwill ~~for~~allocation, impairment, wetesting ~~may~~and ~~perform~~resulting ~~both~~impairment ~~qualitative~~see Note 6: Goodwill and ~~quantitative~~Intangible ~~assessments.~~Assets Ifin wethe Notes.

~~elect~~At-risk toGoodwill. ~~perform~~Based aon ~~qualitative~~the ~~assessment~~fiscal ~~for~~2025 aannual ~~certain~~impairment testing, all of our reporting ~~unit~~units had clearances above 30%. Based on the fiscal 2024 annual impairment testing, weall ~~evaluate~~of ~~events~~our ~~and~~reporting ~~circumstances~~units had clearances above 25%.

~~impacting~~An impairment of goodwill could result from a number of circumstances, including different assumptions used in determining the fair value of the reporting ~~unit~~units; changes to ~~determine~~U.S. Government spending priorities or ability to win competitively awarded contracts; an inability to meet our forecast; the ~~probability~~rescission ~~that~~of ~~goodwill~~significant iscontract ~~impaired.~~awards Ifas wea ~~determine~~result itof iscompetitors ~~more-likely-~~protesting or challenging contracts awarded to us; or an increase in interest rates without a corresponding increase in future revenue.

~~than~~Goodwill-~~not~~Related ~~that~~Fair ~~the~~Value ~~fair~~Estimates. Fair value ofdeterminations described above under the ~~reporting~~heading ~~unit~~“Goodwill” isin ~~less~~this ~~than~~Critical ~~its~~Accounting ~~carrying~~Estimates ~~amount,~~section weof ~~perform~~this MD&A were determined based on a ~~quantitative~~combination of market-based valuation techniques, utilizing quoted market prices and projected discounted cash flows. The

~~assessment.~~ _____________________________________________________________________33

~~Our qualitative assessment~~process of evaluating the ~~recoverability~~potential impairment of goodwill, ~~whether~~is ~~performed~~highly ~~annually~~subjective orand ~~based~~requires onsignificant ~~specific~~judgment. Material changes in these estimates could occur and result in additional impairments in future periods.

events or circumstances, considers various macroeconomic, industry-specific and company-specific factors. These

factors include: (i) deterioration in the general economy; (ii) deterioration in the environment in which we operate;

(iii) increase in materials, labor or other costs; (iv) negative or declining cash flows; (v) changes in management,

changes in strategy or significant litigation; (vi) changes in the composition or carrying amount of net assets or an

expectation of disposing all or a portion of the reporting unit; or (vii) a sustained decrease in share price.

If we perform a quantitative assessment for a certain reporting unit, we calculate the fair value of that reporting

unit and compare the fair value to the reporting unit’s net book value. We estimate fair values of our reporting units

based on projected cash flows. Values derived from projected cash flows are corroborated through review of

revenue and/or earnings multiples applied to the latest twelve months’ revenue and earnings of our reporting units.

Projected cash flows are based on our best estimate of future revenues, operating costs and balance sheet metrics

reflecting our view of the financial and market conditions of the underlying business; and the resulting cash flows are

discounted using an appropriate discount rate that reflects the risk in the forecasted cash flows. The revenues and

earnings multiples applied to the revenues and earnings of our reporting units are based on current multiples of

revenues and earnings for similar businesses, and based on revenues and earnings multiples paid for recent

acquisitions of similar businesses made in the marketplace. We then assess whether any implied control premium,

based on a comparison of fair value based purely on our stock price and outstanding shares with fair value

determined by using all of the above-described models, is reasonable. If the fair value of a reporting unit exceeds its

carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting unit

exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

Fiscal 2024 Impairment Tests. We performed our annual impairment test of all of our reporting units’ goodwill

as of September 30, 2024 and concluded that for each of our reporting units no impairment existed.

Business realignment. Effective for fiscal 2024, to better align our businesses, we adjusted our IMS segment by

realigning our Electro Optical and Maritime sectors, which are also reporting units, splitting Electro Optical into two

sectors, Global Optical Systems and Defense Electronics, and moving one Electro Optical business to the Maritime

sector. Global Optical Systems and Defense Electronics 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.

Antenna disposal group divestiture. For information related to the Antenna disposal group divestiture, including

goodwill allocation, impairment testing and resulting impairment see Note 6: Goodwill and Intangible Assets in the

Notes.

Fiscal 2023 Impairment Tests. For information related to fiscal 2023 impairment tests and resulting

impairments see Note 6: Goodwill and Intangible Assets in the Notes.

At-risk goodwill. Based on the fiscal 2024 annual impairment testing, all of our reporting units had clearances

above 25%. Based on the fiscal 2023 annual impairment testing, our Broadband reporting unit had clearance of

approximately 20% and goodwill of $2,656 million and our ISR and Electro Optical reporting units had clearances of

approximately 6% and goodwill of $3,186 million and $2,193 million, respectively.

An impairment of goodwill could result from a number of circumstances, including different assumptions used in

determining the fair value of the reporting units; changes to U.S. Government spending priorities or ability to win

competitively awarded contracts; an inability to meet our forecast; the rescission of significant contract awards as a

result of competitors protesting or challenging contracts awarded to us; or an increase in interest rates without a

corresponding increase in future revenue.

Goodwill-Related Fair Value Estimates. Fair value determinations described above under the heading

“Goodwill” in this Critical Accounting Estimates section of this MD&A were determined based on a combination of

market-based valuation techniques, utilizing quoted market prices, comparable publicly reported transactions, and

_____________________________________________________________________

projected discounted cash flows. The process of evaluating the potential impairment of goodwill is highly subjective

and requires significant judgment. Material changes in these estimates could occur and result in additional

impairments in future periods.

Business Combinations

We account for business combinations using the acquisition method of accounting, whereby identifiable assets acquired and liabilities assumed are measured at their estimated fair value as of the date of acquisition and any excess of the fair value of consideration transferred over the fair values of identifiable assets and liabilities is recorded as goodwill. See Note 13: Acquisitions and Divestitures in the Notes for additional information.

acquired and liabilities assumed are measured at their estimated fair value as of the date of acquisition and any

excess of the fair value of consideration transferred over the fair values of identifiable assets and liabilities is

recorded as goodwill. See Note 13: Acquisitions and Divestitures in the Notes for additional information.

Income Taxes

We record deferred tax assets and liabilities for differences between the tax basis of assets and liabilities and amounts reported in our Consolidated Balance Sheet, as well as operating loss and tax credit carryforwards. We follow very specific and detailed guidelines in each tax jurisdiction regarding the recoverability of any tax assets recorded on the Consolidated Balance Sheet and provide necessary valuation allowances as required. Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback or carryforward periods available under the tax law. We regularly review our deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. We have not made any material changes in the methodologies used to determine our tax valuation allowances during fiscal 2025.

~~amounts~~Our ~~reported~~Consolidated Balance Sheet as of January 2, 2026 included deferred tax assets of $76 million and deferred tax liabilities of $1,114 million. For all jurisdictions in which we have net deferred tax assets, we expect that our existing levels of pre-tax earnings are sufficient to generate the amount of future taxable income needed to realize these tax assets. Our valuation allowance related to our deferred tax assets, which is reflected in our Consolidated Balance Sheet, aswas ~~well~~$260 million as ~~operating~~of January 2, 2026. Although we make reasonable efforts to ensure the accuracy of our deferred tax assets, if we continue to operate at a loss ~~and~~in certain jurisdictions, or are unable to generate sufficient future taxable income, or if there is a material change in the actual effective tax ~~credit~~rates ~~carryforwards.~~or Wetime period within which the underlying temporary differences become taxable or deductible, or if the potential impact of tax planning strategies changes, we could be required to increase the valuation allowance against all or a significant portion of our deferred tax assets resulting in a substantial increase in our effective tax rate and a material adverse impact on our operating results.

~~follow~~The ~~very~~evaluation ~~specific~~of ~~and~~tax ~~detailed~~positions ~~guidelines~~taken in ~~each~~a filed tax ~~jurisdiction~~return, ~~regarding~~or planned to be taken in a future tax return or claim, involves inherent uncertainty and requires the ~~recoverability~~use of ~~any~~judgment. We evaluate our income tax ~~assets~~positions and record tax benefits for all years subject to examination based on our assessment of the facts and circumstances as of the reporting date. For tax positions where it is more likely than not that a tax benefit will be realized, we record the largest amount of tax benefit with a greater than 50% probability of being realized upon ultimate settlement with the applicable taxing authority, assuming the taxing authority has full knowledge of all relevant information. For income tax positions where it is not more likely than not that a tax benefit will be realized, we do not recognize a tax benefit in our Consolidated Balance Sheet.

~~recorded~~As onof ~~the~~January 2, ~~Consolidated~~2026, ~~Balance~~we ~~Sheet~~had ~~and~~$754 ~~provide~~million ~~necessary~~of ~~valuation~~unrecognized ~~allowances~~tax asbenefits, ~~required~~of which $635 million would favorably impact our future tax rates in the event that the tax benefits are eventually recognized. See ~~Future~~Note 7: Income Taxes in the Notes for additional information.

realization of deferred tax assets ultimately depends on the existence of sufficient taxable income of the appropriate

character (for example, ordinary income or capital gain) within the carryback or carryforward periods available under

the tax law. We regularly review our deferred tax assets for recoverability based on historical taxable income,

projected future taxable income, the expected timing of the reversals of existing temporary differences and tax

planning strategies. We have not made any material changes in the methodologies used to determine our tax

valuation allowances during fiscal 2024.

Our Consolidated Balance Sheet as of January 3, 2025 included deferred tax assets of $120 million and

deferred tax liabilities of $942 million. For all jurisdictions in which we have net deferred tax assets, we expect that

our existing levels of pre-tax earnings are sufficient to generate the amount of future taxable income needed to

realize these tax assets. Our valuation allowance related to our deferred tax assets, which is reflected in our

Consolidated Balance Sheet, was $238 million as of January 3, 2025. Although we make reasonable efforts to

ensure the accuracy of our deferred tax assets, if we continue to operate at a loss in certain jurisdictions, or are

unable to generate sufficient future taxable income, or if there is a material change in the actual effective tax rates or

time period within which the underlying temporary differences become taxable or deductible, or if the potential

impact of tax planning strategies changes, we could be required to increase the valuation allowance against all or a

significant portion of our deferred tax assets resulting in a substantial increase in our effective tax rate and a

material adverse impact on our operating results.

The evaluation of tax positions taken in a filed tax return, or planned to be taken in a future tax return or claim,

involves inherent uncertainty and requires the use of judgment. We evaluate our income tax positions and record tax

benefits for all years subject to examination based on our assessment of the facts and circumstances as of the

reporting date. For tax positions where it is more likely than not that a tax benefit will be realized, we record the

largest amount of tax benefit with a greater than 50% probability of being realized upon ultimate settlement with the

applicable taxing authority, assuming the taxing authority has full knowledge of all relevant information. For income

tax positions where it is not more likely than not that a tax benefit will be realized, we do not recognize a tax benefit

in our Consolidated Balance Sheet.

As of January 3, 2025, we had $758 million of unrecognized tax benefits, of which $666 million would favorably

impact our future tax rates in the event that the tax benefits are eventually recognized.

It is reasonably possible that there could be a significant change to our unrecognized tax benefits during the

course of the next twelve months as ongoing tax examinations continue, other tax examinations commence or

various statutes of limitations expire. However, an estimate of the range of possible changes is not practicable for

the remaining unrecognized tax benefits because of the significant number of jurisdictions in which we do business

and the number of open tax periods under various states of examination. See Note 7: Income Taxes in the Notes for

additional information.

Impact of Recently Adopted and Issued Accounting Pronouncements

See Note 1: Significant Accounting Policies in the Notes for information relating to the impact of recently adopted and issued accounting pronouncements.

~~and issued accounting pronouncements.~~_____________________________________________________________________34

_____________________________________________________________________


ITEM 7A.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Foreign Currency Risk

We are exposed to foreign currency risks that arise in normal course of our business operations. These risks include the translation of local currency balances of foreign subsidiaries into U.S. dollars and transactions denominated in currencies other than a subsidiary’s functional currency. Assets and liabilities of international subsidiaries that use local currency as the functional currency, are translated at current rates of exchange and income and expense items are translated at the weighted average exchange rate for the year. In fiscal 2025, approximately 10% of our business was transacted in local currency environments. As of January 2, 2026, the cumulative impact of translating the assets and liabilities of these operations to U.S. Dollars was a $185 million loss, which is included as a component of shareholders’ equity.

~~include~~Our U.S. and foreign businesses enter into contracts with customers, subcontractors or vendors that are denominated in currencies other than the ~~translation~~functional currencies of ~~local~~such businesses. To manage our exposure to currency ~~balances~~risk and market fluctuation risk associated with anticipated cash flows that are probable of occurring in the future, we implement foreign ~~subsidiaries~~currency ~~into~~forward contracts to hedge both balance sheet and off-balance sheet future foreign currency commitments. As of January 2, 2026, we had open foreign currency forward contracts with an aggregate notional amount of $203 million, hedging certain forecasted transactions denominated in U.S. ~~dollars~~Dollars, Canadian Dollars and ~~transactions~~Australian Dollars. Notional amounts are used to measure the volume of foreign currency forward contracts and do not represent exposure to foreign currency losses. Factors that could impact the effectiveness of our hedging programs for foreign currency include accuracy of sales estimates, volatility of currency markets and the cost and availability of hedging instruments.

~~denominated~~As of January 2, 2026, a hypothetical 10% change in ~~currencies~~currency ~~other~~exchange ~~than~~rates afor ~~subsidiary’s~~our ~~functional~~foreign currency derivatives held would not have had a material impact on the fair value of such instruments or our results of operations or cash flows. ~~Assets~~This ~~and~~quantification ~~liabilities~~of exposure to the market risk associated with foreign currency financial instruments does not take into account the offsetting impact of ~~international~~changes in the fair value of our foreign denominated assets, liabilities and firm commitments.

subsidiaries that use local currency as the functional currency, are translated at current rates of exchange and

income and expense items are translated at the weighted average exchange rate for the year. In fiscal 2024,

approximately 10% of our business was transacted in local currency environments. At January 3, 2025, the

cumulative impact of translating the assets and liabilities of these operations to U.S. Dollars was a $265 million loss,

which is included as a component of shareholders’ equity.

Our U.S. and foreign businesses enter into contracts with customers, subcontractors or vendors that are

denominated in currencies other than the functional currencies of such businesses. To manage our exposure to

currency risk and market fluctuation risk associated with anticipated cash flows that are probable of occurring in the

future, we implement foreign currency forward contracts to hedge both balance sheet and off-balance sheet future

foreign currency commitments. At January 3, 2025, we had open foreign currency forward contracts with an

aggregate notional amount of $201 million, hedging certain forecasted transactions denominated in U.S. Dollars,

Canadian Dollars and Australian Dollars. Notional amounts are used to measure the volume of foreign currency

forward contracts and do not represent exposure to foreign currency losses. Factors that could impact the

effectiveness of our hedging programs for foreign currency include accuracy of sales estimates, volatility of currency

markets and the cost and availability of hedging instruments.

At January 3, 2025, a hypothetical 10% change in currency exchange rates for our foreign currency derivatives

held would not have had a material impact on the fair value of such instruments or our results of operations or cash

flows. This quantification of exposure to the market risk associated with foreign currency financial instruments does

not take into account the offsetting impact of changes in the fair value of our foreign denominated assets, liabilities

and firm commitments.

Interest Rate Risk

We have exposure to interest rate risk associated with our financing activities, primarily our long-term debt borrowings. As of January 2, 2026, our long-term debt consisted predominately of fixed-rate debt with a carrying value and estimated fair value of $10,876 million and $10,913 million, respectively. The terms of our fixed-rate debt obligations are not puttable to us (i.e., not required to be redeemed by us prior to maturity) and we currently have no plans to refinance or repurchase outstanding fixed-rate debt prior to maturity. As such, fluctuation in market interest rates impact the fair value of our long-term debt but do not impact our statement of operations or cash flow. As of January 2, 2026, a hypothetical 10% change in interest rates on our long-term fixed-rate debt obligations would not have had a material impact on the fair value of these obligations.

~~short-term~~We ~~debt~~can ~~borrowings.~~give Atno ~~January 3~~assurances, ~~2025~~however, ~~our~~that ~~long-term~~interest rates will not change significantly or have a material effect on the fair value of our debt ~~consisted~~obligations ~~exclusively~~or our results of operations or cash flows over the next twelve months. See Note 8: Debt and Credit Arrangements in the Notes for information regarding the maturities of our fixed-rate debt ~~with a~~ obligations.

~~carrying value and estimated fair value of $11,530 million and $11,179 million, respectively. The terms of our fixed-~~_____________________________________________________________________35

rate debt obligations are not puttable to us (i.e., not required to be redeemed by us prior to maturity) and we

currently have no plans to refinance or repurchase outstanding fixed-rate debt prior to maturity. As such, fluctuation

in market interest rates impact the fair value of our long-term debt but do not impact our statement of operations or

cash flow. At January 3, 2025, a hypothetical 10% change in interest rates on our long-term fixed-rate debt

obligations would not have had a material impact on the fair value of these obligations.

Additionally, at January 3, 2025, we had short-term variable-rate debt outstanding under our CP Program of

$515 million. Due to its short-term nature, the fair value of our short-term debt approximates the carrying value.

Outstanding notes under our CP Program bear interest that is variable based on certain short-term indices, thus

exposing us to interest-rate risk. At January 3, 2025, a hypothetical 10% change in interest rates on our short-term

debt obligations would not have had a material impact on our results of operations or cash flows.

We can give no assurances, however, that interest rates will not change significantly or have a material effect on

the fair value of our debt obligations or our results of operations or cash flows over the next twelve months. See Note

8: Debt and Credit Arrangements in the Notes for information regarding the maturities of our fixed-rate debt

obligations and our CP program.

_____________________________________________________________________


ITEM 8.			FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of L3Harris Technologies, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of L3Harris Technologies, Inc. (the Company) as of January 2, 2026 and January 3, 2025, the related consolidated statements of operations, comprehensive income, cash flows and equity for each of the three years in the period ended January 2, 2026, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 2, 2026 and January 3, 2025, and the results of its operations and its cash flows for each of the three years in the period ended January 2, 2026, in conformity with U.S. generally accepted accounting principles.

~~January 3~~We also have audited, ~~2025~~in ~~and~~accordance ~~December~~with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 292, ~~2023~~2026, based on criteria established in Internal Control-Integrated Framework issued by the ~~related~~Committee ~~consolidated~~of ~~statements~~Sponsoring Organizations of ~~operations~~the Treadway Commission (2013 framework), ~~comprehensive~~and our report dated February 12, 2026 expressed an unqualified opinion thereon.

income, cash flows and equity for each of the three years in the period ended January 3, 2025, and the related notes

(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial

statements present fairly, in all material respects, the financial position of the Company at January 3, 2025 and

December 29, 2023, and the results of its operations and its cash flows for each of the three years in the period

ended January 3, 2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United

States) (PCAOB), the Company's internal control over financial reporting as of January 3, 2025, based on criteria

established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the

Treadway Commission (2013 framework), and our report dated February 14, 2025 expressed an unqualified opinion

thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

~~opinion~~We onconducted our audits in accordance with the ~~Company’s~~standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements ~~based~~are onfree ~~our~~of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. WeSuch ~~are~~procedures included examining, on a ~~public~~test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting ~~firm~~principles ~~registered~~used ~~with~~and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~the~~Critical ~~PCAOB~~Audit ~~and are required to be independent with respect to the Company in accordance with the U.S. federal~~ Matter

~~securities~~The ~~laws~~critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the ~~applicable~~financial ~~rules~~statements and ~~regulations~~(2) involved our especially challenging, subjective or complex judgments. The communication of the ~~Securities~~critical ~~and~~audit ~~Exchange~~matter ~~Commission~~does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the ~~PCAOB~~critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

~~We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and~~ _____________________________________________________________________36

perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of

material misstatement of the financial statements, whether due to error or fraud, and performing procedures that

respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and

disclosures in the financial statements. Our audits also included evaluating the accounting principles used and

significant estimates made by management, as well as evaluating the overall presentation of the financial

statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial

statements that were communicated or required to be communicated to the audit committee and that: (1) relate to

accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion

on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which

they relate.

_____________________________________________________________________


			Cost estimation for revenue recognition on development and production contracts
Description of the Matter			As described in the consolidated financial statements, the Company recognized revenue for certain of its development and production contracts over time, typically using a percentage of completion cost-to-cost method, which required estimates of costs at completion for each contract. At the outset of each contract, the Company gauges its complexity and perceived risks and establishes an estimated total cost at completion with these expectations. After establishing the estimated total cost at completion, the Company reviews the progress and performance on its ongoing contracts at least quarterly and updates the estimated total cost at completion. Such estimates are subject to change during the performance of the contract and significant changes in estimates could have a material effect on the Company’s results of operations. Auditing the cost estimation for revenue recognition on development and production contracts where revenue is recognized over time using the percentage of completion cost-to-cost method involved subjective auditor judgment because the Company’s development of the estimated total cost at completion requires estimates of the cost of the work to be completed based on the Company’s underlying assumptions around achieving the technical, schedule and cost aspects of its contracts. In determining the estimates of the cost of the work to be completed, the Company considered the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. Estimates of total cost at completion are also affected by management’s assessment of the current status of the contract and expectation for performance on the contract, as well as historical experience.
How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s accounting for cost estimation for development and production contracts. For example, we tested certain controls over management’s review of the estimate at completion analyses and the significant assumptions underlying the estimated total costs at completion. We also tested certain of management’s controls to validate that the data used in the estimate at completion analyses was complete and accurate. To test the cost estimation for development and production contracts, our audit procedures included, among others, obtaining an understanding of the contract, meeting with program management to confirm our understanding of the risks associated with the arrangement and the current contract performance, review of customer correspondence and contractual milestones and comparing cost estimates to historical cost experience with similar contracts, when applicable. Additionally, we obtained an understanding of the Company’s past performance of estimating total costs at completion by reviewing changes in the cost estimates from previous periods and reviewing the overall accuracy of management’s cost to completion estimations through lookback analyses.

_____________________________________________________________________

	Valuation of Goodwill
Description of the Matter	At January 3, 2025, the Company’s goodwill was $20.3 billion. As more fully described in the consolidated financial statements, the Company tests goodwill for impairment annually (or under certain circumstances, more frequently) at the reporting unit level using either a qualitative or quantitative assessment. Under the quantitative assessment to test for goodwill impairment, the Company compares the fair value of a reporting unit to its carrying amount, including goodwill. The Company estimates the fair value of its reporting units using a combination of a discounted cash flows analysis and market-based valuation methodologies. Auditing the Company’s quantitative goodwill impairment tests involved subjective auditor judgment due to the significant estimation required in management’s determination of the fair value of the reporting units. The significant estimation is primarily due to the sensitivity of the respective fair values to underlying assumptions, particularly at the Aerojet Rocketdyne (AR) reporting unit, including changes in the weighted average cost of capital and projected EBITDA margins. These assumptions relate to the expected future operating performance of the Company’s AR reporting unit, are forward-looking, and are sensitive to and affected by economic, industry and company-specific qualitative factors.
How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design and tested the operating effectiveness of relevant internal controls over the Company’s goodwill impairment review process, including controls over management’s review of the significant assumptions used in the valuation models. We also tested management’s controls to validate that the data used in the valuation models was complete and accurate. To test the estimated fair value of the Company’s AR reporting unit, we performed audit procedures that included, among others, assessing the valuation methodologies used by the Company, involving our valuation specialists to assist in testing the significant assumptions discussed above, and testing the completeness and accuracy of the underlying data the Company used in its valuation analyses. For example, we compared the significant assumptions used by management to current industry, market and economic trends, the historical results of the AR reporting unit and other relevant factors. We also assessed the historical accuracy of management’s valuation estimates and performed sensitivity analyses of significant assumptions used in the impairment tests to evaluate the change in the fair value of the AR reporting unit resulting from changes in the significant assumptions.In addition, we reviewed the reconciliation of the fair value of the reporting units based on the annual impairment test to the market capitalization of the Company.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since at least 1932, but we are unable to determine the specific year.

Orlando, Florida

February 1412, ~~2025~~2026

~~_____________________________________________________________________~~_____________________________________________________________________37

CONSOLIDATED STATEMENT OF OPERATIONS


	Fiscal Year
(In millions, except per share amounts)	2025		2024		2023

Revenue
Products	$	15,487	$	15,134	$	13,694
Services	6,378		6,191		5,725
Total revenue	21,865		21,325		19,419
Cost of revenue
Products	(11,252)		(11,019)		(9,711)
Services	(4,988)		(4,782)		(4,595)
Total cost of revenue	(16,240)		(15,801)		(14,306)
General and administrative expenses	(3,430)		(3,568)		(3,313)
Impairment of goodwill and other assets	(85)		(38)		(374)
Operating income	2,110		1,918		1,426
Non-service FAS pension income and other, net	419		354		338
Interest expense, net	(597)		(675)		(543)
Income before income taxes	1,932		1,597		1,221
Income taxes	(326)		(85)		(23)


Net income	1,606		1,512		1,198
Noncontrolling interests, net of tax	—		(10)		29
Net income attributable to L3Harris	$	1,606	$	1,502	$	1,227






Earnings per share attributable to common shareholders
Basic	$	8.57	$	7.91	$	6.47
Diluted	$	8.53	$	7.87	$	6.44

CONSOLIDATED STATEMENT OF OPERATIONS

	Fiscal Year Ended
(In millions, except per share amounts)	January 3, 2025	December 29, 2023	December 30, 2022
Revenue
Products	$15,134	$13,694	$12,097
Services	6,191	5,725	4,965
Total revenue	21,325	19,419	17,062
Cost of revenue
Products	(11,019)	(9,711)	(8,355)
Services	(4,782)	(4,595)	(3,780)
Total cost of revenue	(15,801)	(14,306)	(12,135)
General and administrative expenses	(3,568)	(3,313)	(2,998)
Impairment of goodwill and other assets	(38)	(374)	(802)
Operating income	1,918	1,426	1,127
Non-service FAS pension income and other, net	354	338	425
Interest expense, net	(675)	(543)	(279)
Income before income taxes	1,597	1,221	1,273
Income taxes	(85)	(23)	(212)
Net income	1,512	1,198	1,061
Noncontrolling interests, net of income taxes	(10)	29	1
Net income attributable to L3Harris Technologies, Inc.	$1,502	$1,227	$1,062
Net income per common share attributable to L3Harris Technologies, Inc. common shareholders
Basic	$7.91	$6.47	$5.54
Diluted	$7.87	$6.44	$5.49

See accompanying Notes to Consolidated Financial Statements.

~~_____________________________________________________________________~~_____________________________________________________________________38

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


	Fiscal Year
(In millions)	2025		2024		2023

Net income	$	1,606	$	1,512	$	1,198
Other comprehensive income, net of tax:
Foreign currency translation and other, net	97		(65)		50
Pension and other postretirement benefits	(5)		290		40
Other comprehensive income	92		225		90
Comprehensive income	1,698		1,737		1,288
Noncontrolling interests, net of tax	—		(10)		29
Comprehensive income attributable to L3Harris	$	1,698	$	1,727	$	1,317

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Fiscal Year Ended
(In millions)	January 3, 2025	December 29, 2023	December 30, 2022
Net income	$1,512	$1,198	$1,061
Other comprehensive income (loss):
Foreign currency translation, net of income taxes	(60)	36	(119)
Hedging derivatives, net of income taxes	(12)	10	(8)
Pension and other postretirement benefits, net of income taxes	323	71	(26)
Other comprehensive income (loss) recognized during the period	251	117	(153)
Reclassification adjustments for (gains) losses included in net income	(26)	(27)	11
Other comprehensive income (loss), net of income taxes	225	90	(142)
Total comprehensive income	1,737	1,288	919
Comprehensive (income) loss attributable to noncontrolling interest	(10)	29	1
Total comprehensive income attributable to L3Harris Technologies, Inc.	$1,727	$1,317	$920

See accompanying Notes to Consolidated Financial Statements.

~~_____________________________________________________________________~~_____________________________________________________________________39

CONSOLIDATED BALANCE SHEET


(In millions, except shares)	January 2, 2026		January 3, 2025

Assets
Current assets
Cash and cash equivalents	$	1,069	$	615
Receivables, net	1,371		1,072
Contract assets	3,566		3,230
Inventories, net	1,219		1,330
Income taxes receivable	53		379
Other current assets	431		461
Assets of business held for sale	884		1,131
Total current assets	8,593		8,218
Non-current assets
Property, plant and equipment, net	2,665		2,806
Goodwill	20,010		20,325
Intangible assets, net	6,509		7,639
Deferred income taxes	76		120
Other non-current assets	3,342		2,893

Total assets	$	41,195	$	42,001

Liabilities and equity
Current liabilities
Short-term debt	$	—	$	515

Accounts payable	2,461		2,005
Contract liabilities	2,262		2,142
Compensation and benefits	482		419
Other current liabilities	1,908		2,317

Liabilities of business held for sale	113		235
Total current liabilities	7,226		7,633
Non-current liabilities
Long-term debt, net of current portion	10,443		11,081
Deferred income taxes	1,114		942
Other non-current liabilities	2,777		2,766
Total liabilities	21,560		22,422
Equity
Shareholders’ Equity:

Common stock	187		190
Paid-in capital	15,117		15,558
Retained earnings	4,212		3,739
Accumulated other comprehensive income	119		27
Total shareholders’ equity	19,635		19,514
Noncontrolling interests	—		65
Total equity	19,635		19,579
Total liabilities and equity	$	41,195	$	42,001

CONSOLIDATED BALANCE SHEET

(In millions, except shares)	January 3, 2025	December 29, 2023
Assets
Current assets
Cash and cash equivalents	$615	$560
Receivables, net	1,072	1,230
Contract assets	3,230	3,196
Inventories, net	1,330	1,472
Income taxes receivable	379	61
Other current assets	461	430
Assets of business held for sale	1,131	1,106
Total current assets	8,218	8,055
Non-current assets
Property, plant and equipment, net	2,806	2,862
Goodwill	20,325	19,979
Intangible assets, net	7,639	8,540
Deferred income taxes	120	91
Other non-current assets	2,893	2,160
Total assets	$42,001	$41,687
Liabilities and equity
Current liabilities
Short-term debt	$515	$1,602
Current portion of long-term debt, net	640	363
Accounts payable	2,005	2,106
Contract liabilities	2,142	1,900
Compensation and benefits	419	544
Other current liabilities	1,648	1,129
Income taxes payable	29	88
Liabilities of business held for sale	235	272
Total current liabilities	7,633	8,004
Non-current liabilities
Long-term debt, net	11,081	11,160
Deferred income taxes	942	815
Other long-term liabilities	2,766	2,879
Total liabilities	22,422	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 189,794,911 and 189,808,581 shares at January 3, 2025 and December 29, 2023, respectively	190	190
Paid-in capital	15,558	15,553
Retained earnings	3,739	3,220
Accumulated other comprehensive income (loss)	27	(198)
Total shareholders’ equity	19,514	18,765
Noncontrolling interests	65	64
Total equity	19,579	18,829
Total liabilities and equity	$42,001	$41,687

See accompanying Notes to Consolidated Financial Statements.

~~_____________________________________________________________________~~_____________________________________________________________________40

CONSOLIDATED STATEMENT OF CASH FLOWS


	Fiscal Year
(In millions)	2025		2024		2023

Operating Activities
Net income	$	1,606	$	1,512	$	1,198
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization	1,224		1,289		1,166
Share-based compensation	113		97		89
Net periodic benefit income	(330)		(286)		(275)
Share-based matching contributions under defined contribution plans	253		264		231
Impairment of goodwill and other assets	85		38		374
Deferred income taxes	206		174		(423)
(Increase) decrease in:
Receivables, net	(343)		128		124
Contract assets	(437)		(194)		62
Inventories, net	117		96		(182)
Other current assets	17		(29)		(55)
Increase (decrease) in:
Accounts payable	475		(90)		87
Contract liabilities	181		126		195
Compensation and benefits	70		(128)		38
Other current liabilities	(423)		155		(88)
Income taxes	365		(383)		(333)
Other operating activities	(73)		(210)		(112)
Net cash provided by operating activities	3,106		2,559		2,096
Investing Activities
Net cash paid for acquired businesses	—		—		(6,688)
Capital expenditures	(424)		(408)		(449)

Proceeds from sales of businesses, net of cash divested	820		273		71
Other investing activities	11		(128)		45
Net cash provided by (used in) investing activities	407		(263)		(7,021)
Financing Activities
Proceeds from issuances of long-term debt, net	—		2,827		7,568
Repayments of long-term debt	(618)		(2,620)		(3,170)
Change in commercial paper, maturities under 90 days, net	(515)		(567)		623
Proceeds from commercial paper, maturities over 90 days	—		688		1,181
Repayments of commercial paper, maturities over 90 days	—		(1,205)		(205)

Repurchases of common stock	(1,154)		(554)		(518)
Dividends paid	(903)		(886)		(868)
Other financing activities	108		93		(17)
Net cash (used in) provided by financing activities	(3,082)		(2,224)		4,594
Effect of exchange rate changes on cash and cash equivalents	23		(17)		11
Net increase (decrease) in cash and cash equivalents	454		55		(320)
Cash and cash equivalents, beginning of period	615		560		880
Cash and cash equivalents, end of period	$	1,069	$	615	$	560

CONSOLIDATED STATEMENT OF CASH FLOWS

	Fiscal Year Ended
(In millions)	January 3, 2025	December 29, 2023	December 30, 2022
Operating Activities
Net income	$1,512	$1,198	$1,061
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,289	1,166	938
Share-based compensation	97	89	109
Net periodic benefit income	(286)	(275)	(395)
Share-based matching contributions under defined contribution plans	264	231	216
Impairment of goodwill and other assets	38	374	802
Deferred income taxes	174	(423)	(596)
(Increase) decrease in:
Receivables, net	128	124	(210)
Contract assets	(194)	62	23
Inventories, net	96	(182)	(310)
Other current assets	(29)	(55)	13
Increase (decrease) in:
Accounts payable	(90)	87	180
Contract liabilities	126	195	121
Compensation and benefits	(128)	38	(45)
Other current liabilities	155	(88)	(181)
Income taxes	(383)	(333)	499
Other operating activities	(210)	(112)	(67)
Net cash provided by operating activities	2,559	2,096	2,158
Investing Activities
Net cash paid for acquired businesses	—	(6,688)	—
Capital expenditures	(408)	(449)	(252)
Proceeds from sale of property, plant and equipment, net	1	56	14
Proceeds from sales of businesses	273	71	23
Other investing activities	(129)	(11)	(35)
Net cash used in investing activities	(263)	(7,021)	(250)
Financing Activities
Proceeds from issuances of long-term debt, net	2,827	7,568	4
Repayments of long-term debt	(2,620)	(3,170)	(14)
Change in commercial paper, maturities under 90 days, net	(567)	623	—
Proceeds from commercial paper, maturities over 90 days	688	1,181	—
Repayments of commercial paper, maturities over 90 days	(1,205)	(205)	—
Proceeds from exercises of employee stock options	133	24	57
Repurchases of common stock	(554)	(518)	(1,083)
Dividends paid	(886)	(868)	(864)
Other financing activities	(40)	(41)	(51)
Net cash (used in) provided by financing activities	(2,224)	4,594	(1,951)
Effect of exchange rate changes on cash and cash equivalents	(17)	11	(18)
Net increase (decrease) in cash and cash equivalents	55	(320)	(61)
Cash and cash equivalents, beginning of period	560	880	941
Cash and cash equivalents, end of period	$615	$560	$880

See accompanying Notes to Consolidated Financial Statements.

~~_____________________________________________________________________~~_____________________________________________________________________41

CONSOLIDATED STATEMENT OF EQUITY


	Fiscal Year
(In millions, except per share amounts)	2025		2024		2023

Common Stock
Beginning balance	$	190	$	190	$	191
Share-based compensation	2		3		2
Repurchases and retirement of common stock	(5)		(3)		(3)
Ending balance	187		190		190
Paid-in Capital
Beginning balance	15,558		15,553		15,677
Share-based compensation and other, net	478		460		309
Repurchases and retirement of common stock	(919)		(455)		(433)
Ending balance	15,117		15,558		15,553
Retained Earnings
Beginning balance	3,739		3,220		2,943
Net income and other	1,606		1,501		1,227
Repurchases and retirement of common stock	(230)		(96)		(82)
Cash dividends	(903)		(886)		(868)
Ending balance	4,212		3,739		3,220
Accumulated Other Comprehensive Income (Loss)
Beginning balance	27		(198)		(288)
Other comprehensive income, net of tax	92		225		90
Ending balance	119		27		(198)
Noncontrolling Interests
Beginning balance	65		64		101
Derecognized with divestiture	(63)		—		—
Net income and other	(2)		1		(37)
Ending balance	—		65		64
Total Equity	$	19,635	$	19,579	$	18,829
Cash dividends per share	$	4.80	$	4.64	$	4.56

CONSOLIDATED STATEMENT OF EQUITY

	Fiscal Year Ended
(In millions, except per share amounts)	January 3, 2025	December 29, 2023	December 30, 2022
Common Stock
Beginning balance	$190	$191	$194
Shares issued under stock incentive plans	2	1	1
Shares issued under defined contribution plans	1	1	1
Repurchases and retirement of common stock	(3)	(3)	(5)
Ending balance	190	190	191
Paid-in Capital
Beginning balance	15,553	15,677	16,248
Shares issued under stock incentive plans	131	23	56
Shares issued under defined contribution plans	263	230	215
Share-based compensation expense	97	89	109
Tax withholding payments on share-based awards	(30)	(30)	(45)
Repurchases and retirement of common stock	(455)	(433)	(907)
Other	(1)	(3)	1
Ending balance	15,558	15,553	15,677
Retained Earnings
Beginning balance	3,220	2,943	2,917
Net income attributable to L3Harris Technologies, Inc.	1,502	1,227	1,062
Repurchases and retirement of common stock	(96)	(82)	(171)
Cash dividends	(886)	(868)	(864)
Other	(1)	—	(1)
Ending balance	3,739	3,220	2,943
Accumulated Other Comprehensive Income (Loss)
Beginning balance	(198)	(288)	(146)
Other comprehensive income (loss), net of income taxes	225	90	(142)
Ending balance	27	(198)	(288)
Noncontrolling Interests
Beginning balance	64	101	106
Net income (loss) attributable to noncontrolling interests	10	(29)	(1)
Other	(9)	(8)	(4)
Ending balance	65	64	101
Total Equity	$19,579	$18,829	$18,624
Cash dividends per share	$4.64	$4.56	$4.48

See accompanying Notes to Consolidated Financial Statements.

~~_____________________________________________________________________~~_____________________________________________________________________42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: SIGNIFICANT ACCOUNTING POLICIES

Organization — L3Harris Technologies, Inc., together with its subsidiaries, is the Trusted Disruptor in the defense industry. With customers’ mission-critical needs in mind, we deliver end-to-end technology solutions connecting the space, air, land, sea and cyber domains in the interest of national security. We support customers in more than 100 countries, with our largest customers being various departments and agencies of the U.S. Government, their prime contractors and international allies. Our capabilities have defense and civil government applications, as well as commercial applications. As of January 2, 2026, we had approximately 45,000 employees.

~~defense~~Principles ~~industry~~of Consolidation — Our Consolidated Financial Statements include the accounts of L3Harris Technologies, Inc. ~~With~~and ~~customers’~~its ~~mission-critical~~consolidated ~~needs~~subsidiaries. As used in ~~mind~~these Notes to the Consolidated Financial Statements, the terms “L3Harris,” “Company,” “we,” ~~deliver~~“our” ~~end-~~and “us” refer to~~-end~~ ~~technology~~L3Harris ~~solutions~~Technologies, Inc. and its consolidated subsidiaries. Intercompany transactions and accounts have been eliminated.

~~connecting~~Fiscal Year — Our fiscal year ends on the ~~space~~Friday nearest December 31. The fiscal years ended January 2, ~~air~~2026 (“fiscal 2025”), ~~land~~January 3, ~~sea~~2025 (“fiscal 2024”) and ~~cyber~~December 29, ~~domains~~2023 in(“fiscal ~~the~~2023”) ~~interest~~included of52 ~~global~~weeks, ~~security.~~53 Weweeks, ~~support~~and ~~government~~52 weeks, respectively.

~~customers~~Use inof ~~more~~Estimates — ~~than~~The ~~100~~preparation ~~countries,~~of financial statements in accordance with ~~our~~GAAP ~~largest~~requires ~~customers~~us ~~being~~to ~~various~~make ~~departments~~estimates and ~~agencies~~assumptions that affect the amounts reported in the accompanying 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 Consolidated Financial Statements and these Notes. Materially different results can occur as circumstances change and additional information becomes known.

~~U.S.~~Reclassifications ~~Government,~~— ~~their~~The ~~prime~~classification ~~contractors~~of ~~and~~certain ~~international~~prior ~~allies.~~year ~~Our~~amounts ~~products~~have ~~and~~been ~~services~~adjusted ~~have~~in ~~defense~~our Consolidated Financial Statements and ~~civil~~these Notes to conform to current year classifications.

~~government~~Business ~~applications~~Realignment — Effective in first quarter 2025, asto ~~well~~better align our businesses, we transferred our FOS business from our IMS segment to our AR segment and adjusted our reporting accordingly. The historical results, discussion and presentation of our business segments as ~~commercial~~set ~~applications~~forth in the accompanying Consolidated Financial Statements and these Notes reflect the impact of these changes for all periods presented in order to present segment information on a comparable basis. AsThere is no impact on our previously reported consolidated statements of ~~January 3~~operations, ~~2025~~balance wesheets, ~~had~~statements ~~approximately~~of ~~47,000~~cash flows or statements of equity resulting from these changes.

~~employees~~Cash and Cash Equivalents — Cash and cash equivalents include cash at banks and temporary cash investments with a maturity of three or fewer months when purchased. These investments include accrued interest and are carried at the lower of cost or market.

~~Principles~~Fair ofValue ~~Consolidation~~ Measurements — ~~Our~~We ~~Consolidated~~measure ~~Financial~~certain ~~Statements~~assets ~~include~~and ~~the~~liabilities ~~accounts~~at offair ~~L3Harris~~value on a recurring basis utilizing a three-level fair value hierarchy that prioritizes inputs based on market observability:

Technologies, Inc. and its consolidated subsidiaries. As used in these Notes to the Consolidated Financial

Statements, the terms “L3Harris,” “Company,” “we,” “our” and “us” refer to L3Harris Technologies, Inc. and its

consolidated subsidiaries. Intercompany transactions and accounts have been eliminated.

Fiscal Year — Our fiscal year ends on the Friday nearest December 31. Fiscal 2024 included 53 weeks. Fiscal

2023 and fiscal 2022 each included 52 weeks.

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 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 Consolidated Financial Statements and these

Notes. Materially different results can occur as circumstances change and additional information becomes known.

Reclassifications — The classification of certain prior year amounts have been adjusted in our Consolidated

Financial Statements and these Notes to conform to current year classifications.

Cash and Cash Equivalents — Cash and cash equivalents include cash at banks and temporary cash

investments with a maturity of three or fewer months when purchased. These investments include accrued interest

and are carried at the lower of cost or market.

Fair Value Measurements — Fair value is defined as the price that would be received to sell 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 or inactive markets; quoted prices for identical assets or liabilities in inactive markets; and inputs derived from or corroborated by observable market data.

~~similar~~•Level 3 — ~~assets~~Unobservable inputs with little or ~~liabilities~~no inmarket ~~active~~activity ~~markets;~~that ~~quoted~~are ~~prices~~significant ~~for~~to ~~identical~~the orfair ~~similar~~value of the assets or liabilities inand reflect our assumptions about market participants’ pricing, using the best available information.

~~markets~~We ~~that~~utilize ~~are~~observable ~~not~~inputs ~~active;~~whenever ~~and~~available. ~~inputs~~In ~~other~~certain ~~than~~instances, fair value is estimated using quoted market prices ~~that~~from ~~are~~external ~~observable~~pricing orservices. ~~are~~We ~~derived~~assess the methodologies of these services to ensure valuations reflect fair value, including net asset value (“NAV”). The NAV reported by an asset manager may be adjusted when sufficient evidence indicates NAV is not representative of fair value.

~~principally from, or corroborated by, observable market data by correlation or other means.~~_____________________________________________________________________43

~~•Level 3 —~~Fair ~~Unobservable~~Value ~~inputs~~of Businesses. For purposes of allocating goodwill to the disposal groups that ~~are~~represent ~~supported~~a byportion ~~little~~of ora noreporting unit, 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 ~~activity~~and income-based valuation techniques, utilizing quoted market prices and projected discounted cash flows. These fair value determinations are ~~significant~~categorized toas Level 3 in the fair value hierarchy due to their use of internal projections and unobservable measurement inputs. See Note 6: Goodwill and Intangible Assets in these Notes for additional information regarding the impairment of goodwill related to our business divestitures.

Accounts Receivable — We record receivables derived from contracts with customers at net realizable value and they generally do not bear interest. This value includes an allowance for estimated uncollectible accounts to reflect any losses anticipated on the accounts receivable balances which is charged to the provision for doubtful accounts. We calculate this allowance at inception based on expected loss over the life of the ~~assets~~receivable. orWe ~~liabilities~~consider historical write-offs by customer, level of past due accounts and ~~reflect~~economic ~~our~~status ~~own~~of ~~assumptions~~the ~~about~~customer. A receivable is considered delinquent if it is unpaid after the ~~assumptions~~term ~~market~~of ~~participants~~the related invoice has expired. Write-offs are recorded at the time a customer receivable is deemed uncollectible. Our allowances for collection losses were $21 million as of both January 2, 2026 and January 3, 2025.

~~would~~Contract ~~use~~Assets and Liabilities — The timing of revenue recognition, customer billings and cash collections results in ~~pricing~~contract assets and contract liabilities at the ~~asset~~end of each reporting period. Contract assets mainly represent unbilled amounts typically resulting from revenue recognized exceeding amounts billed to customers for contracts utilizing the POC cost-to-cost revenue recognition method. Contract assets become receivables as we bill customers as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, upon achievement of contractual milestones or ~~liability~~upon ~~developed~~deliveries ~~using~~and, in certain arrangements, the ~~best~~customer ~~information~~may ~~available~~defer payment of a portion of the contract price until contract completion. Contract assets are classified as current on our Consolidated Balance Sheet based on our contract operating cycle. Contract liabilities include advance payments and billings in excess of revenue recognized, including deferred revenue. Contract assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period.

~~circumstances~~Contract assets related to amounts withheld by customers until contract completion are not considered a significant financing component of our contracts because the intent is to protect the customers from our failure to satisfactorily complete our performance obligations. Payments received from customers in advance of revenue recognition are not considered a significant financing component of our contracts because they are utilized to pay for contract costs within a one-year period or are requested by us to ensure the customers meet their payment obligations.

InInventories — ~~certain~~Inventories ~~instances~~are valued at the lower of cost (determined by average and first-in, ~~fair~~first-out methods) or net realizable value. isWe regularly review inventory quantities on hand and record a provision for excess and obsolete inventory primarily based on our estimated ~~using~~forecast ~~quoted~~of ~~market~~product ~~prices~~demand, ~~obtained~~anticipated ~~from~~end ~~external~~of ~~pricing~~product ~~services~~life and production requirements.

InProperty, ~~obtaining~~Plant ~~such~~and ~~data~~Equipment — ~~from~~Property, plant and equipment, including software capitalized for internal use, is recorded at cost and depreciated on a reasonable and systematic basis, typically the ~~pricing~~straight-line ~~service~~method, weover ~~have~~the ~~evaluated~~estimated useful life of the ~~methodologies~~asset. ~~used~~Estimated touseful ~~develop~~lives generally range as follows: buildings, including leasehold improvements, between 2 and 45 years; machinery and equipment between 2 and 10 years; and software capitalized for internal-use between 2 and 10 years. We review property, plant and equipment for impairment whenever events or changes in circumstances indicate the ~~estimate~~carrying amount may not be recoverable.

Goodwill — We follow the acquisition method of accounting to record the assets and liabilities of acquired businesses at their estimated fair value inat ~~order~~the todate ~~assess~~of ~~whether~~acquisition. ~~such~~We ~~valuations~~initially ~~are~~record ~~representative~~goodwill for the amount of consideration transferred that exceeds the acquisition-date fair value, ~~including~~of net ~~asset~~identifiable ~~value~~assets acquired.

~~(“NAV”)~~We test goodwill for impairment at a level within the Company referred to as the reporting unit, which is our business segment level or one level below the business segment. ~~Additionally~~Goodwill is tested for impairment annually as of the first business day of our fourth fiscal quarter, inor under certain circumstances more frequently, ~~the~~such ~~NAV~~as ~~reported~~when byevents anor ~~asset~~circumstances ~~manager~~indicate there may be ~~adjusted~~impairment. ~~when~~Such events or circumstances may include a significant deterioration in overall economic conditions, changes in the business climate of our industry, a decline in our market capitalization, operating performance indicators, competition, reorganizations of our business or the disposal of all or a portion of a reporting unit.

~~sufficient~~To ~~evidence~~test ~~indicates~~goodwill ~~NAV~~for isimpairment, ~~not~~we ~~representative~~may ofperform ~~fair~~both ~~value~~qualitative and quantitative assessments. If we elect to perform a qualitative assessment for a certain reporting unit, we evaluate events and circumstances impacting the reporting unit to determine the probability that goodwill is impaired. If we perform a quantitative assessment for a

~~Financial instruments. The carrying amounts of certain of our financial instruments reflected in our Consolidated~~ _____________________________________________________________________44

~~Balance~~certain ~~Sheet~~reporting unit, ~~including~~we ~~cash~~calculate the fair value of that reporting unit and compare the fair value to the reporting unit’s net book value. We estimate fair values of our reporting units based on projected cash ~~equivalents~~flows, ~~accounts~~and ~~receivable~~sales and/or earnings multiples applied to the latest twelve months’ sales and earnings of our reporting units. Projected cash flows are based on our best estimate of future revenues, ~~non-~~operating costs and balance sheet metrics reflecting our view of the financial and market conditions of the underlying business; and the resulting cash flows are discounted using an appropriate discount rate that reflects the risk in the forecasted cash flows. Revenue and earnings multiples are based on current ~~receivables~~multiples of revenues and earnings for similar businesses, ~~notes~~and ~~receivable~~based on revenue and earnings multiples paid for recent acquisitions of similar businesses made in the marketplace. We then assess whether any implied control premium, based on a comparison of fair value based purely on our stock price and outstanding shares with fair value determined by using all of the above-described models, is reasonable.

~~accounts~~If ~~payable~~we ~~and~~determine ~~short~~it is more-~~term~~likely-than-not ~~debt~~that the fair value of a reporting unit is less than its carrying amount, ~~approximate~~we ~~their~~measure any impairment loss by comparing the fair ~~values~~value of that reporting unit to its carrying amount, including goodwill. ~~Fair~~If ~~values~~the ~~for~~carrying ~~long-term~~amount ~~fixed-rate~~of ~~debt~~a ~~are~~reporting unit exceeds its fair value, goodwill is considered impaired, and an impairment loss is recognized in an amount equal to that excess.

~~primarily~~Intangible ~~based~~Assets — Our finite-lived intangible assets are amortized to expense over their applicable useful lives, either according to the underlying economic benefit as reflected by future net cash inflows or on ~~quoted~~a ~~market~~straight-line ~~prices~~basis depending on the nature of the asset, generally ranging between 3 to 20 years. We review finite-lived intangible assets for ~~those~~impairment whenever events or ~~similar~~changes ~~instruments~~in circumstances indicate the carrying amount of the asset may not be recoverable. ~~See~~We ~~Note~~evaluate 8:the ~~Debt~~recoverability of such assets based on the expectations of undiscounted cash flows from such assets. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and ~~Credit~~the ~~Arrangements~~carrying amount.

inOur ~~these~~most ~~Notes~~significant ~~for~~finite-lived ~~additional~~intangible ~~information~~asset ~~regarding~~is customer relationships that are established through written customer contracts (i.e., revenue arrangements). The fair ~~values~~value for ~~our~~customer ~~long~~relationships is determined, as of the date of acquisition, based on estimates and judgments regarding expectations for the estimated future after-~~term~~tax ~~fixed~~earnings and cash flows arising from the follow-~~rate~~on ~~debt.~~revenues Aexpected ~~discussion~~from the customer relationships over the estimated lives, including the probability of ~~fair~~expected future contract renewals and revenues, less a contributory assets charge, all of which is discounted to present value.

~~values~~Indefinite-lived ~~for~~intangible ~~our~~assets ~~derivative~~are ~~financial~~tested ~~instruments~~annually isfor ~~included~~impairment, or under certain circumstances, more frequently, such as when events or circumstances indicate there may be an impairment. This testing compares the ~~caption~~fair ~~“Financial~~value ~~Instruments~~of the asset to its carrying amount, and, ~~Risk~~when appropriate, the carrying amount of these assets is reduced to its fair value.

~~Management~~Leases — At contract inception, we evaluate whether an arrangement is or contains a lease. Leases with terms of twelve months or less are accounted for under the short-term lease practical expedient and are expensed as incurred in the “Cost of revenue” and “General and administrative expenses” line items in ~~this~~our ~~Note~~Consolidated Statement of Operations. For leases with terms greater than twelve months, we determine the lease classification (operating or finance) at the lease commencement date and recognize the related right-of-use (“ROU”) asset and lease liability on our Consolidated Balance Sheet. ROU assets for operating and finance leases are included as a component of the “Other non-current assets” and “Property, plant and equipment, net” line items, respectively. The current portion of the related lease liability is included as a component of the “Other current liabilities” line item, and the non-current portion is included as a component of the “Other non-current liabilities” and “Long-term debt, net of current portion” line items, for operating and finance leases, respectively.

~~_____________________________________________________________________~~ROU assets and lease liabilities are initially measured at the present value of future lease payments, which primarily consist of base rent. The majority of our leases do not provide an implicit rate that is readily available, therefore the present value of future lease payments is determined using our incremental borrowing rate at the lease commencement date. The expected lease term includes periods covered by options to extend or terminate the lease when it is reasonably certain that such options will be exercised.

45Certain lease payments vary based on changes in market indices. These variable lease costs are expensed as incurred and included in the “Cost of revenue” and “General and administrative expenses” line items in our Consolidated Statement of Operations. As a practical expedient, we account for lease and non-lease components as a single lease component. Variable non-lease components are excluded from the measurement of lease payments used to determine the ROU asset and lease liability.

~~Accounts~~Operating ~~Receivable —~~lease Wecost ~~record~~and ~~receivables~~finance ~~derived~~lease ~~from~~amortization ~~contracts~~are ~~with~~recognized ~~customers~~on ata ~~net~~straight-line ~~realizable~~basis ~~value~~over the expected lease term and included in the “Cost of revenue” and “General and administrative expenses” line items in our

~~and they generally do not bear interest. This value includes an allowance for estimated uncollectible accounts to~~ _____________________________________________________________________45

~~reflect~~Consolidated ~~any~~Statement ~~losses~~of ~~anticipated~~Operations. onInterest ~~the~~expense ~~accounts~~related ~~receivable~~to ~~balances~~finance ~~which~~lease liabilities is ~~charged~~recognized toin the ~~provision~~“Interest ~~for~~expense, ~~doubtful~~net” line item in our Consolidated Statement of Operations.

~~accounts.~~Investments — We ~~calculate~~hold ~~this~~certain ~~allowance~~investments atin ~~inception~~companies ~~based~~that onalign ~~expected~~with ~~loss~~our ~~over~~strategic ~~the~~business ~~life~~objectives, including advancing capabilities, market access, and technology development. These investments, consisting of equity method investments and equity interest investments, are included as a component of the ~~receivable~~“Other non-current assets” line item in our Consolidated Balance Sheet. WeAny impairment charges recognized on our investments are included in the “Non-service FAS pension income and other, net” line item in our Consolidated Statement of Operations.

~~consider~~Equity ~~historical~~Method ~~write-offs~~Investments. byAs ~~customer~~of January 2, ~~level~~2026 ofand ~~past~~January 3, ~~due~~2025, ~~accounts~~our equity method investments were $88 million and ~~economic~~$62 ~~status~~million, respectively. Investments where we have significant influence, but not control (typically 20% to 50% ownership), are recorded at cost and adjusted for our share of the ~~customer~~investee’s earnings or losses, with dividends received reducing the carrying value of our investment. AAdjustments are recognized in the “Non-service FAS pension income and other, net” line item in our Consolidated Statement of Operations. We evaluate these investments for other-than-temporary impairment when events or circumstances indicate the carrying amount may not be recoverable.

~~receivable~~Equity isInterest ~~considered~~Investments. ~~delinquent~~As ifof itJanuary 2, 2026 and January 3, 2025, our equity interest investments were $82 million and $55 million, respectively. These investments are accounted for under ASC 321 and measured at fair value or, when fair value is ~~unpaid~~not ~~after~~readily determinable, under the ~~term~~measurement ofalternative ~~the~~at ~~related~~cost ~~invoice~~adjusted ~~has~~for ~~expired~~observable price changes or impairment. ~~Write-offs~~Changes in fair value and measurement alternative adjustments are recognized in the “Non-service FAS pension income and other, net” line item in our Consolidated Statement of Operations. We evaluate these investments for impairment when indicators of a decline in value arise.

~~recorded~~Income atTaxes — We follow the ~~time~~asset aand ~~customer~~liability ~~receivable~~method isof ~~deemed~~accounting ~~uncollectible~~for income taxes. AtWe ~~January 3~~record deferred tax assets and liabilities for differences between the tax basis of assets and liabilities and amounts reported in our Consolidated Balance Sheet, ~~2025~~as well as operating loss and ~~December 29~~tax credit carryforwards. We follow specific and detailed guidelines in each tax jurisdiction regarding the recoverability of any tax assets recorded on the balance sheet and provide necessary valuation allowances as required. We regularly review our deferred tax assets for recoverability based on historical taxable income, ~~2023~~projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies.

~~our~~We ~~allowances~~have elected to account for ~~collection~~tax ~~losses~~on ~~were~~Global ~~$21~~Intangible ~~million~~Low-Taxed ~~and~~Income ~~$15~~as ~~million,~~a ~~respectively~~current-period expense when incurred.

~~Contract~~Foreign Currency Translation — Assets and ~~Liabilities~~liabilities —of ~~The~~international ~~timing~~subsidiaries ofthat ~~revenue~~use ~~recognition~~local currency as the functional currency, ~~customer~~are ~~billings~~translated at current rates of exchange and ~~cash~~income ~~collections~~and expense items are translated at the weighted average exchange rate for the year. The resulting translation adjustments are recorded as a component of the “Accumulated other comprehensive income” line item in our Consolidated Balance Sheet.

~~results~~Share-Based inCompensation — ~~accounts~~We ~~receivable,~~measure ~~contract~~compensation ~~assets~~cost ~~and~~for ~~contract~~all ~~liabilities~~share-based awards (including employee stock options) at ~~the~~fair ~~end~~value ofand ~~each~~recognize ~~reporting~~cost over the vesting period, with forfeitures recognized as they occur. ~~Contract~~It is our practice to issue shares when options are exercised. Share-based compensation expense is recognized in the “Cost of revenue” and “General and administrative expenses” line items in our Consolidated Statement of Operations.

~~assets~~Share ~~mainly~~Repurchases ~~represent~~— ~~unbilled~~Repurchased ~~amounts~~common ~~typically~~shares ~~resulting~~are ~~from~~permanently ~~revenue~~retired. ~~recognized~~As ~~exceeding~~we ~~amounts~~repurchase ~~billed~~our common shares, we reduce common stock for the par value and allocate any excess purchase price over par value to paid-in capital and retained earnings.

~~customers~~Revenue Recognition — We account for ~~contracts~~a ~~utilizing~~contract when it has approval and commitment from all parties, the ~~POC~~rights ~~cost-~~and payment terms of the parties can be identified, the contract has commercial substance and the collectability of the consideration, or transaction price, is probable. Our contracts are often subsequently modified to~~-cost~~ ~~revenue~~include ~~recognition~~changes ~~method~~in specifications, requirements or price that may create new or change existing enforceable rights and obligations. ~~Contract~~We ~~assets~~do ~~become~~not account for contract modifications (including unexercised options) or follow-on contracts until they meet the requirements noted above to account for a contract.

~~receivables~~We categorize revenue and costs for performance obligations to provide tangible goods as we“product” ~~bill~~and ~~customers~~revenue and costs for performance obligations to provide services for which the principal result is not to produce anything tangible as ~~work~~“service.” ~~progresses~~In instances where a single performance obligation requires us to deliver products and perform services, we derive the product and service categories presented in ~~accordance~~our ~~with~~financial ~~agreed-~~statements based upon ~~contractual~~the ~~terms~~predominant nature of the performance obligation. In these cases, ~~either~~we atclassify the revenue and costs from the entire performance obligation based on the nature of the overall promise made to the customer.

~~periodic intervals, upon achievement of contractual milestones or upon deliveries and, in certain arrangements, the~~ _____________________________________________________________________46

At the inception of each contract, we evaluate the promised products and services to determine whether the contract should be accounted for as having one or more performance obligations. A performance obligation is a promise to transfer a distinct product or service to a customer ~~may~~and ~~withhold~~represents ~~payment~~the unit of aaccounting ~~portion~~for revenue recognition. A substantial majority of our revenue is derived from long-term development and production contracts involving the ~~contract~~design, ~~price~~development, ~~until~~manufacture or modification of defense products and related services according to the customers’ specifications. Due to the highly interdependent and interrelated nature of the underlying products and services and the significant service of integration that we provide, which often results in the delivery of multiple units, we account for these contracts as one performance obligation. For contracts that include both development/production and follow-on support services (for example, operations and maintenance), we generally consider the follow-on services distinct in the context of the contract ~~completion~~and account for them as separate performance obligations. ~~Contract~~Additionally, ~~liabilities~~we recognize revenue from contracts to provide multiple distinct products to a customer for which the products can readily be sold to other customers based on their commercial nature and, accordingly, these products are accounted for as separate performance obligations.

~~include~~Shipping ~~advance~~and ~~payments~~handling ~~and~~costs ~~billings~~incurred inafter ~~excess~~control of ~~revenue~~a ~~recognized~~product has transferred to the customer (for example, ~~including~~in ~~deferred~~free ~~revenue~~on board shipping arrangements) are treated as fulfillment costs and, therefore, are not accounted for as separate performance obligations. ~~Contract~~Also, ~~assets~~we record taxes collected from customers and remitted to governmental authorities on a net basis such that they are excluded from revenue.

~~and~~As ~~liabilities~~noted above, our contracts are ~~reported~~often subsequently modified to include changes in specifications, requirements or price. Depending on the nature of the modification, we consider whether to account for the modification as an adjustment to the existing contract or as a separate contract~~-by-~~. Often, the deliverables in our contract ~~basis~~modifications are not distinct from the existing contract due to the significant integration and interrelated tasks provided in the context of the contract. Therefore, such modifications are accounted for as if they are part of the existing contract, and we may be required to recognize a cumulative catch-up adjustment to revenue at the ~~end~~date of ~~each~~the ~~reporting~~contract ~~period~~modification.

~~Contract~~We ~~assets~~determine ~~related~~the transaction price for each contract based on our best estimate of the consideration we expect to ~~amounts~~receive, ~~withheld~~which byincludes ~~customers~~assumptions ~~until~~regarding ~~contract~~variable ~~completion~~consideration such as award and incentive fees. These variable amounts are ~~not~~generally ~~considered~~awarded upon achievement of certain negotiated performance metrics, program milestones or cost targets and can be based upon customer discretion. We include such estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. We estimate variable consideration primarily using the most likely amount method.

~~significant~~For ~~financing~~contracts ~~component~~with multiple performance obligations, we allocate the transaction price to each performance obligation based on the relative standalone selling price of the product or service underlying each performance obligation. The standalone selling price represents the amount for which we would sell the product or service to a customer on a standalone basis (i.e., not sold as a bundle with any other products or services). Our contracts with the U.S. Government, including foreign military sales contracts, are subject to the FAR and the prices of our contract deliverables are typically based on our estimated or actual costs plus appropriate margin. As a result, the standalone selling prices of the products and services in these contracts ~~because~~are typically equal to the ~~intent~~selling isprices stated in the contract, thereby eliminating the need to ~~protect~~allocate (or reallocate) the ~~customers~~transaction ~~from~~price to the multiple performance obligations. In our ~~failure~~non-U.S. Government contracts, we also generally use the expected cost plus margin approach to determine standalone selling price. In addition, we determine standalone selling price for certain contracts that are commercial in nature based on observable selling prices.

~~satisfactorily~~We ~~complete~~recognize revenue for each performance obligation when (or as) the performance obligation is satisfied by transferring control of the promised products or services underlying the performance obligation to the customer. The transfer of control can occur over time or at a point in time. A significant portion of our business is derived from development and production contracts. Revenue and profit related to development and production contracts are generally recognized over time, typically using the POC cost-to-cost method of revenue recognition, whereby we measure our progress towards completion of the performance ~~obligations~~obligation based on the ratio of costs incurred to date to estimated costs at completion under the contract. ~~Payments~~Because ~~received~~costs incurred represent work performed, we believe this method best depicts the transfer of control of the asset to the customer. Under 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. To a lesser extent, we also recognize revenue from ~~customers~~contracts to provide multiple distinct products to a customer that are commercial in ~~advance~~nature ofand can readily be sold to other customers. These performance obligations do not meet the criteria listed below to recognize revenue over time; therefore, we recognize revenue at a point in time, generally when the products are received and accepted by the customer.

~~recognition are not considered a significant financing component of our contracts because they are utilized to pay for~~ _____________________________________________________________________47

~~contract~~Point-in-Time ~~costs~~Revenue ~~within~~Recognition. Our performance obligations are satisfied at a ~~one-year~~point ~~period~~in ortime ~~are~~unless ~~requested~~they bymeet usat toleast ~~ensure~~one of the ~~customers~~following ~~meet~~criteria, ~~their~~in ~~payment~~which case they are satisfied over time:

~~obligations.~~•The customer simultaneously receives and consumes the benefits provided by our performance as we perform;

~~Inventories —~~•Our ~~Inventories~~performance ~~are~~creates ~~valued~~or atenhances ~~the~~an ~~lower~~asset of(for ~~cost~~example, ~~(determined~~work byin ~~average~~process) ~~and~~that ~~first-in,~~the ~~first-out~~customer ~~methods)~~controls as the asset is created or enhanced; or

or•Our ~~net~~performance ~~realizable~~does ~~value.~~not Wecreate ~~regularly~~an ~~review~~asset ~~inventory~~with ~~quantities~~an onalternative ~~hand~~use to us and ~~record~~we ahave ~~provision~~an enforceable right to payment for ~~excess~~performance ~~and~~completed to date.

~~obsolete~~Over ~~inventory~~Time ~~primarily~~Revenue Recognition. For U.S. Government development and production contracts, there is generally a continuous transfer of control of the asset to the customer as it is being produced based on ~~our~~FAR ~~estimated~~clauses ~~forecast~~in ofthe ~~product~~contract ~~demand~~that provide the customer with lien rights to work in process and allow the customer to unilaterally terminate the contract for convenience, ~~anticipated~~pay ~~end~~us for costs incurred plus a reasonable profit and take control of ~~product~~any ~~life~~work in process. This also typically applies to our contracts with prime contractors for U.S. Government development and production contracts, when the above-described FAR clauses are flowed down to us by the prime contractors.

Our non-U.S. Government development and production ~~requirements~~contracts, including international direct commercial contracts and U.S. contracts with state and local agencies, utilities, commercial and transportation organizations, often do not include the FAR clauses described above. However, over time revenue recognition is typically supported either through our performance creating or enhancing an asset that the customer controls as it is created or enhanced or based on other contractual provisions or relevant laws that provide us with an enforceable right to payment for our work performed to date plus a reasonable profit if our customer were permitted to and did terminate the contract for reasons other than our failure to perform as promised.

~~Property~~For performance obligations to provide services that are satisfied over time, ~~Plant~~we ~~and~~recognize ~~Equipment —~~revenue ~~Property~~either on a straight-line basis, ~~plant~~the ~~and~~POC ~~equipment~~cost-to-cost method or based on the right-to-invoice method (i.e., ~~including~~based ~~software~~on ~~capitalized~~our ~~for~~right ~~internal~~to bill the customer), depending on which method best depicts transfer of control to the customer.

~~use,~~Cost-Type isContracts. ~~recorded~~Our atU.S. Government cost-type contracts provide for the reimbursement of allowable costs plus payment of a fee and ~~depreciated~~fall oninto three basic types: (i) cost-plus fixed-fee contracts, which provide for payment of a ~~reasonable~~fixed fee irrespective of the final cost of performance; (ii) cost-plus incentive-fee contracts, which provide for payment of a fee that may increase or decrease, within specified limits, based on actual results compared with contractual targets relating to factors such as cost, performance and ~~systematic~~delivery ~~basis~~schedule; and (iii) cost-plus award-fee contracts, ~~typically~~which provide for payment of an award fee determined at the ~~straight~~customer’s discretion based on our performance against pre-~~line~~established ~~method~~performance criteria. Under our U.S. Government cost-type contracts, we are reimbursed periodically for allowable costs and are paid a portion of the fee based on contract progress. Some costs are partially or wholly unallowable for reimbursement by statute or regulation. Examples include certain merger and acquisition costs, lobbying costs, charitable contributions, interest expense, financing costs and certain litigation defense costs.

~~over~~Fixed-Price Contracts. Our U.S. Government fixed-price contracts are either firm fixed-price contracts or fixed-price incentive contracts. Under our U.S. Government firm fixed-price contracts, we agree to perform a specific scope of work or sell a specific product for a fixed price and, as a result, benefit from cost savings or carry the ~~estimated~~burden ~~useful~~of ~~life~~cost overruns. Under our U.S. Government fixed-price incentive contracts, we share with the U.S. Government both savings accrued for performance at less than target cost as well as costs incurred in excess of target cost up to a negotiated ceiling price, which is higher than the ~~asset~~target cost, but carry the entire burden of costs exceeding the negotiated ceiling price. ~~Estimated~~Under ~~useful~~such ~~lives~~incentive contracts, profit may also be adjusted up or down depending on whether specified performance objectives are met. Under our U.S. Government firm fixed-price and fixed-price incentive contracts, we generally ~~range~~receive aseither ~~follows:~~milestone ~~buildings~~payments totaling 100% of the contract price or monthly progress payments in amounts equaling 80% of costs incurred under the contract. The remaining amounts, including profits or incentive fees, are billed upon delivery and final acceptance of end items and deliverables under the contract.

~~leasehold~~Our ~~improvements,~~production ~~between~~contracts ~~two~~are ~~and~~mainly ~~45 years;~~fixed-price ~~machinery~~contracts and ~~equipment~~development ~~between~~contracts ~~two~~are ~~and~~generally ~~10 years;~~cost-type contracts, although we have some fixed-price development contracts. Time-and-material contracts are considered fixed-price contracts as they specify a fixed hourly rate for each labor hour charged.

~~software~~Contract ~~capitalized~~Estimates. ~~for~~Under ~~internal~~the POC cost-~~use~~to-cost ~~between~~method ~~two~~of ~~and~~revenue ~~10 years~~recognition, a single estimated profit margin is used to recognize profit for each performance obligation over its period of performance. WeRecognition ~~review~~of ~~property,~~profit ~~plant~~on a contract requires estimates of the total cost at completion and ~~equipment~~transaction ~~for~~price and the measurement of progress

~~impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be~~ _____________________________________________________________________48

~~recoverable~~towards completion. Due to the long-term nature of many of these contracts, developing the estimated total cost at completion and total transaction price often requires judgment. Factors that must be considered in estimating the cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor performance and the risk and impact of delayed performance. Factors that must be considered in estimating the total transaction price include contractual cost or performance incentives (such as incentive fees, award fees and penalties) and other forms of variable consideration, as well as our historical experience and our expectation for performance on the contract.

~~Goodwill —~~At the outset of each contract, we gauge its complexity and perceived risks and establish an estimated total cost at completion in line with these expectations. We follow a standard EAC process in which we review the ~~acquisition~~progress ~~method~~and performance on our ongoing contracts. If we successfully retire risks associated with the technical, schedule and cost aspects of ~~accounting~~a tocontract, ~~record~~we may lower our estimated total cost at completion commensurate with the ~~assets~~retirement of these risks. Conversely, there are many reasons estimated contract costs can increase, including: (i) supply chain disruptions, inflation and ~~liabilities~~labor issues; (ii) design or other development challenges; and (iii) program execution challenges (including from technical schedule or quality issues and other performance concerns). Additionally, as the contract progresses, our estimates of ~~acquired~~total transaction price may increase or decrease if, for example, we receive incentive or award fees that are higher or lower than expected.

~~businesses~~When atchanges ~~their~~in estimated ~~fair~~total ~~value~~costs at completion or in estimated total transaction price are determined, the ~~date~~related impact on operating income is recognized on a cumulative basis. EAC adjustments represent the cumulative effect of ~~acquisition~~the changes from current and prior periods; revenue and operating margins in future periods are recognized as if the revised estimates had been used since contract inception. WeAny ~~initially~~anticipated ~~record~~losses ~~goodwill~~on ~~for~~these contracts are fully recognized in the ~~amount~~period in which the losses become evident.

consideration transferred exceeds the acquisition-date fair value of net identifiable assets acquired.

We test goodwill for impairment at a level within the Company referred to as the reporting unit, which is our

business segment level or one level below the business segment. Goodwill is tested for impairment annually as of

the first business day of our fourth fiscal quarter, or under certain circumstances more frequently, such as when

events or circumstances indicate there may be impairment. Such events or circumstances may include a significant

deterioration in overall economic conditions, changes in the business climate of our industry, a decline in our market

capitalization, operating performance indicators, competition, reorganizations of our business or the disposal of all

or a portion of a reporting unit.

To test goodwill for impairment, we may perform both qualitative and quantitative assessments. If we elect to

perform a qualitative assessment for a certain reporting unit, we evaluate events and circumstances impacting the

reporting unit to determine the probability that goodwill is impaired. If we perform a quantitative assessment for a

certain reporting unit, we calculate the fair value of that reporting unit and compare the fair value to the reporting

unit’s net book value. We estimate fair values of our reporting units based on projected cash flows, and sales and/or

earnings multiples applied to the latest twelve months’ sales and earnings of our reporting units. Projected cash

flows are based on our best estimate of future revenues, operating costs and balance sheet metrics reflecting our

view of the financial and market conditions of the underlying business; and the resulting cash flows are discounted

using an appropriate discount rate that reflects the risk in the forecasted cash flows. Revenue and earnings

multiples are based on current multiples of revenues and earnings for similar businesses, and based on revenue and

earnings multiples paid for recent acquisitions of similar businesses made in the marketplace. We then assess

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whether any implied control premium, based on a comparison of fair value based purely on our stock price and

outstanding shares with fair value determined by using all of the above-described models, is reasonable.

If we determine it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount,

we measure any impairment loss by comparing the fair value of each reporting unit to its carrying amount, including

goodwill. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered impaired, and an

impairment loss is recognized in an amount equal to that excess.

Intangible Assets — Our finite-lived intangible assets are amortized to expense over their applicable useful

lives, either according to the underlying economic benefit as reflected by future net cash inflows or on a straight-line

basis depending on the nature of the asset, generally ranging between three to 20 years. We review finite-lived

intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of the

asset may not be recoverable. We evaluate the recoverability of such assets based on the expectations of

undiscounted cash flows from such assets. If the sum of the expected future undiscounted cash flows is less than

the carrying amount of the asset, a loss is recognized for the difference between the fair value and the carrying

amount.

Our most significant finite-lived intangible asset is customer relationships that are established through written

customer contracts (i.e., revenue arrangements). The fair value for customer relationships is determined, as of the

date of acquisition, based on estimates and judgments regarding expectations for the estimated future after-tax

earnings and cash flows arising from the follow-on revenues expected from the customer relationships over the

estimated lives, including the probability of expected future contract renewals and revenues, less a contributory

assets charge, all of which is discounted to present value.

Indefinite-lived intangible assets are tested annually for impairment, or under certain circumstances, more

frequently, such as when events or circumstances indicate there may be an impairment. This testing compares the

fair value of the asset to its carrying amount, and, when appropriate, the carrying amount of these assets is reduced

to its fair value.

Leases — We recognize right-of-use (“ROU”) assets and lease liabilities in our Consolidated Balance Sheet for

operating and finance leases under which we are the lessee. As a practical expedient, leases with a term of twelve

months or less (including reasonably certain extension periods) and leases with expected lease payments of less

than $250 thousand are expensed as incurred in the “Cost of revenue” and “General and administrative expenses”

line items in our Consolidated Statement of Operations.

ROU assets and lease liabilities are recognized based on the present value of future lease payments, which are

primarily base rent. We have some lease payments that are based on an index and changes to the index are treated

as variable lease payments and recognized in the “Cost of revenue” and “General and administrative expenses” line

items in our Consolidated Statement of Operations in the period in which the obligation for those payments is

incurred. Our lease payments also include non-lease components such as real estate taxes and common-area

maintenance costs. As a practical expedient, we account for lease and non-lease components as a single

component. For certain leases, the non-lease components are variable and are therefore excluded from lease

payments to determine the ROU asset. The present value of future lease payments is determined using our

incremental borrowing rate at lease commencement over the expected lease term. We use our incremental

borrowing rate because our leases do not provide an implicit lease rate. The expected lease term represents the

number of years we expect to lease the property, including options to extend or terminate the lease when it is

reasonably certain that we will exercise the option.

Operating lease cost and finance lease amortization are recognized on a straight-line basis over the expected

lease term in the “Cost of revenue” and “General and administrative expenses” line items in our Consolidated

Statement of Operations. Interest on finance lease liabilities is recognized in the “Interest expense, net” line item in

our Consolidated Statement of Operations.

Income Taxes — We follow the asset and liability method of accounting for income taxes. We record deferred

tax assets and liabilities for differences between the tax basis of assets and liabilities and amounts reported in our

Consolidated Balance Sheet, as well as operating loss and tax credit carryforwards. We follow specific and detailed

guidelines in each tax jurisdiction regarding the recoverability of any tax assets recorded on the balance sheet and

provide necessary valuation allowances as required. We regularly review our deferred tax assets for recoverability

based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing

temporary differences and tax planning strategies.

We have elected to account for tax on Global Intangible Low-Taxed Income as a current-period expense when

incurred.

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Foreign Currency Translation — Assets and liabilities of international subsidiaries that use local currency as the

functional currency, are translated at current rates of exchange and income and expense items are translated at the

weighted average exchange rate for the year. The resulting translation adjustments are recorded as a component of

the “Accumulated other comprehensive income (loss)” line item in our Consolidated Balance Sheet.

Share-Based Compensation — We measure compensation cost for all share-based awards (including employee

stock options) at fair value and recognize cost over the vesting period, with forfeitures recognized as they occur. It is

our practice to issue shares when options are exercised.

Share Repurchases — Repurchased common shares are permanently retired. As we repurchase our common

shares, we reduce common stock for the par value and allocate any excess purchase price over par value to paid-in

capital and retained earnings. During fiscal 2024, we repurchased 2.5 million shares of our common stock for $554

million under our repurchase program. At January 3, 2025, we had remaining unused authorization under our

repurchase program of $3,381 million.

Revenue Recognition — We account for a contract when it has approval and commitment from all parties, the

rights and payment terms of the parties can be identified, the contract has commercial substance and the

collectability of the consideration, or transaction price, is probable. Our contracts are often subsequently modified to

include changes in specifications, requirements or price that may create new or change existing enforceable rights

and obligations. We do not account for contract modifications (including unexercised options) or follow-on contracts

until they meet the requirements noted above to account for a contract.

We categorize revenue and costs for performance obligations to provide tangible goods as “product” and

revenue and costs for performance obligations to provide services for which the principal result is not to produce

anything tangible as “service.” In instances where a single performance obligation requires us to deliver products

and perform services, we derive the product and service categories presented in our financial statements based

upon the predominant nature of each performance. In these cases, we classify the revenue and costs from the entire

performance obligation based on the nature of the overall promise made to the customer.

At the inception of each contract, we evaluate the promised products and services to determine whether the

contract should be accounted for as having one or more performance obligations. A performance obligation is a

promise to transfer a distinct product or service to a customer and represents the unit of accounting for revenue

recognition. A substantial majority of our revenue is derived from long-term development and production contracts

involving the design, development, manufacture or modification of defense products and related services according

to the customers’ specifications. Due to the highly interdependent and interrelated nature of the underlying

products and services and the significant service of integration that we provide, which often results in the delivery of

multiple units, we account for these contracts as one performance obligation. For contracts that include both

development/production and follow-on support services (for example, operations and maintenance), we generally

consider the follow-on services distinct in the context of the contract and account for them as separate performance

obligations. Additionally, we recognize revenue from contracts to provide multiple distinct products to a customer

for which the products can readily be sold to other customers based on their commercial nature and, accordingly,

these products are accounted for as separate performance obligations.

Shipping and handling costs incurred after control of a product has transferred to the customer (for example, in

free on board shipping arrangements) are treated as fulfillment costs and, therefore, are not accounted for as

separate performance obligations. Also, we record taxes collected from customers and remitted to governmental

authorities on a net basis such that they are excluded from revenue.

As noted above, our contracts are often subsequently modified to include changes in specifications,

requirements or price. Depending on the nature of the modification, we consider whether to account for the

modification as an adjustment to the existing contract or as a separate contract. Often, the deliverables in our

contract modifications are not distinct from the existing contract due to the significant integration and interrelated

tasks provided in the context of the contract. Therefore, such modifications are accounted for as if they are part of

the existing contract, and we may be required to recognize a cumulative catch-up adjustment to revenue at the date

of the contract modification.

We determine the transaction price for each contract based on our best estimate of the consideration we expect

to receive, which includes assumptions regarding variable consideration such as award and incentive fees. These

variable amounts are generally awarded upon achievement of certain negotiated performance metrics, program

milestones or cost targets and can be based upon customer discretion. We include such estimated amounts in the

transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not

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occur when the uncertainty associated with the variable consideration is resolved. We estimate variable

consideration primarily using the most likely amount method.

For contracts with multiple performance obligations, we allocate the transaction price to each performance

obligation based on the relative standalone selling price of the product or service underlying each performance

obligation. The standalone selling price represents the amount for which we would sell the product or service to a

customer on a standalone basis (i.e., not sold as a bundle with any other products or services). Our contracts with

the U.S. Government, including foreign military sales contracts, are subject to the FAR and the prices of our contract

deliverables are typically based on our estimated or actual costs plus margin. As a result, the standalone selling

prices of the products and services in these contracts are typically equal to the selling prices stated in the contract,

thereby eliminating the need to allocate (or reallocate) the transaction price to the multiple performance obligations.

In our non-U.S. Government contracts, we also generally use the expected cost plus margin approach to determine

standalone selling price. In addition, we determine standalone selling price for certain contracts that are commercial

in nature based on observable selling prices.

We recognize revenue for each performance obligation when (or as) the performance obligation is satisfied by

transferring control of the promised products or services underlying the performance obligation to the customer.

The transfer of control can occur over-time or at a point in time. A significant portion of our business is derived from

development and production contracts. Revenue and profit related to development and production contracts are

generally recognized over-time, typically using the POC cost-to-cost method of revenue recognition, whereby we

measure our progress towards completion of the performance obligation based on the ratio of costs incurred to date

to estimated costs at completion under the contract. Because costs incurred represent work performed, we believe

this method best depicts the transfer of control of the asset to the customer. Under 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. To a lesser extent, we also recognize revenue from contracts to provide multiple

distinct products to a customer that are commercial in nature and can readily be sold to other customers. These

performance obligations do not meet the criteria listed below to recognize revenue over-time; therefore, we

recognize revenue at a point in time, generally when the products are received and accepted by the customer.

Point-in-Time Revenue Recognition. Our performance obligations are satisfied at a point in time unless they

meet at least one of the following criteria, in which case they are satisfied over-time:

•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.

Over-Time Revenue Recognition. For U.S. Government development and production contracts, there is generally

a continuous transfer of control of the asset to the customer as it is being produced based on FAR clauses in the

contract that provide the customer with lien rights to work in process and allow the customer to unilaterally

terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any

work in process. This also typically applies to our contracts with prime contractors for U.S. Government

development and production contracts, when the above-described FAR clauses are flowed down to us by the prime

contractors.

Our non-U.S. Government development and production contracts, including international direct commercial

contracts and U.S. contracts with state and local agencies, utilities, commercial and transportation organizations,

often do not include the FAR clauses described above. However, over-time revenue recognition is typically

supported either through our performance creating or enhancing an asset that the customer controls as it is created

or enhanced or based on other contractual provisions or relevant laws that provide us with an enforceable right to

payment for our work performed to date plus a reasonable profit if our customer were permitted to and did

terminate the contract for reasons other than our failure to perform as promised.

For performance obligations to provide services that are satisfied over-time, we recognize revenue either on a

straight-line basis, the POC cost-to-cost method or based on the right-to-invoice method (i.e., based on our right to

bill the customer), depending on which method best depicts transfer of control to the customer.

Contract Estimates. Under 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. Recognition of profit on a

contract requires estimates of the total cost at completion and transaction price and the measurement of progress

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towards completion. Due to the long-term nature of many of our contracts, developing the estimated total cost at

completion and total transaction price often requires judgment. Factors that must be considered in estimating the

cost of the work to be completed include the nature and complexity of the work to be performed, subcontractor

performance and the risk and impact of delayed performance. Factors that must be considered in estimating the

total transaction price include contractual cost or performance incentives (such as incentive fees, award fees and

penalties) and other forms of variable consideration, as well as our historical experience and our expectation for

performance on the contract.

Filing Compare · L3HARRIS TECHNOLOGIES, INC. /DE/