UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
| For the transition period from _______________ to ______________ | |||||
Commission File Number 1-3863
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
| (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 | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| þ | Accelerated filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ¨ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes þ No
The number of shares outstanding of the registrant’s common stock as of April 24, 2026 was 186,294,951 .
L3HARRIS TECHNOLOGIES, INC.
FORM 10-Q
For First Quarter 2026
TABLE OF CONTENTS
| Page No. | |||||
| Part I. Financial Information: | |||||
ITEM 1. Financial Statements (Unaudited): | |||||
Condensed Consolidated Statement of Comprehensive Income for First Quarter 2026 and 2025 | |||||
Notes to Condensed Consolidated Financial Statements | |||||
| Part II. Other Information: | |||||
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds | |||||
ITEM 6. Exhibits | |||||
This Quarterly Report on Form 10-Q (this “Report”) contains trademarks, service marks and registered marks of L3Harris Technologies, Inc. and its subsidiaries. All other trademarks are the property of their respective owners.
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1
Cautionary Statement Regarding Forward-Looking Statements
This Report contains forward-looking statements within the meaning of federal securities laws that involve risks, uncertainties and assumptions that could cause our results to differ materially from such forward-looking statements. Examples include, but are 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, including expectations regarding trade policies; future political or budget conditions; the outcome of contingencies or litigation; expected contractual backlog recognition; effective tax rate forecast; the potential level of share repurchases, dividends or pension contributions; capital expenditures and capital structure; other financial items; and assumptions underlying any of the foregoing. Terminology, such as “believes,” “expects,” “may,” “could,” “should,” “would,” “will,” “intends,” “plans,” “estimates,” “anticipates,” “projects” and similar words or expressions may also identify forward-looking statements.
You should not place undue reliance on forward-looking statements, which reflect our management’s current expectations, estimates, projections and assumptions and information currently available to our management as of the date of filing of this Report and are not guarantees of future performance or actual results. Important risks that could cause our results to differ materially from those expressed in or implied by these forward-looking statements or from our historical results include, but are not limited to, risks arising from: competitive markets; U.S. Government spending priorities; changes in contract mix; unilateral contract action by the U.S. Government or unexpected issues related to the Department of War (“DoW”) investment in our subsidiary; uncertain economic conditions; future geo-political events; supply chain disruptions; indebtedness; interest rates and other market factors; and changes in effective tax rate or additional tax exposures. These important risks and other disclosures are described more fully in Part I. Item 1A. Risk Factors in our Fiscal 2025 Form 10-K and in Part II. Item 1A. Risk Factors of this Report.
Forward-looking statements are made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section, and we have no duty and 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.
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2
PART I. FINANCIAL INFORMATION
ITEM 1. | FINANCIAL STATEMENTS. | ||||
L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
| First Quarter | |||||||||||
| (In millions, except per share amounts) | 2026 | 2025 | |||||||||
| Revenue | $ | $ | |||||||||
| Cost of revenue | ( | ( | |||||||||
| General and administrative expenses | ( | ( | |||||||||
| Operating income | |||||||||||
Non-service FAS pension income and other, net(1) | |||||||||||
| Interest expense, net | ( | ( | |||||||||
| Income before income taxes | |||||||||||
| Income taxes | ( | ( | |||||||||
| Net income | $ | $ | |||||||||
| Earnings per share attributable to common shareholders | |||||||||||
| Basic | $ | $ | |||||||||
| Diluted | $ | $ | |||||||||
_______________
(1)“FAS” is defined as Financial Accounting Standards.
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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3
L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
| First Quarter | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Net income | $ | $ | |||||||||
| Other comprehensive loss, net of tax: | |||||||||||
| Foreign currency translation and other, net | ( | ||||||||||
| Pension and other postretirement benefits | ( | ( | |||||||||
| Other comprehensive loss | ( | ( | |||||||||
| Comprehensive income | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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4
L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(In millions) | April 3, 2026 | January 2, 2026 | |||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Receivables, net | |||||||||||
| Contract assets | |||||||||||
| Inventories, net | |||||||||||
| Other current assets | |||||||||||
| Assets of business held for sale | |||||||||||
| Total current assets | |||||||||||
| Non-current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Deferred income taxes | |||||||||||
| Other non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and equity | |||||||||||
| Current liabilities | |||||||||||
| Short-term debt | $ | $ | |||||||||
| Current portion of long-term debt | |||||||||||
| Accounts payable | |||||||||||
| Contract liabilities | |||||||||||
| Compensation and benefits | |||||||||||
| Other current liabilities | |||||||||||
| Liabilities of business held for sale | |||||||||||
| Total current liabilities | |||||||||||
| Non-current liabilities | |||||||||||
Long-term debt, net | |||||||||||
| Deferred income taxes | |||||||||||
| Other non-current liabilities | |||||||||||
| Total liabilities | |||||||||||
| Equity | |||||||||||
| Common stock | |||||||||||
| Paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive income | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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5
L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
| First Quarter | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Operating Activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile to net cash used in operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Share-based compensation | |||||||||||
| Net periodic benefit income | ( | ( | |||||||||
| Share-based matching contributions under defined contribution plans | |||||||||||
| Deferred income taxes | ( | ||||||||||
| (Increase) decrease in: | |||||||||||
| Receivables, net | ( | ( | |||||||||
| Contract assets | ( | ||||||||||
| Inventories, net | ( | ||||||||||
| Other current assets | ( | ( | |||||||||
| Increase (decrease) in: | |||||||||||
| Accounts payable | ( | ||||||||||
| Contract liabilities | ( | ||||||||||
| Compensation and benefits | ( | ( | |||||||||
| Other current liabilities | ( | ||||||||||
| Income taxes | ( | ||||||||||
| Other operating activities | ( | ( | |||||||||
| Net cash used in operating activities | ( | ( | |||||||||
| Investing Activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Proceeds from disposal of property, plant and equipment, net | |||||||||||
| Proceeds from sales of businesses, net of cash divested | |||||||||||
| Other investing activities | ( | ( | |||||||||
| Net cash (used in) provided by investing activities | ( | ||||||||||
| Financing Activities | |||||||||||
| Repayments of long-term debt | ( | ( | |||||||||
| Change in commercial paper, net | |||||||||||
| Repurchases of common stock | ( | ( | |||||||||
| Dividends paid | ( | ( | |||||||||
| Other financing activities | ( | ||||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
| Net decrease in cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents, beginning of period | |||||||||||
| Cash and cash equivalents, end of period | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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6
L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(Unaudited)
| First Quarter | |||||||||||
| (In millions, except per share amounts) | 2026 | 2025 | |||||||||
| Common Stock | |||||||||||
| Beginning balance | $ | $ | |||||||||
| Share-based compensation | — | ||||||||||
| Repurchases and retirement of common stock | ( | ( | |||||||||
| Ending balance | |||||||||||
| Paid-in Capital | |||||||||||
| Beginning balance | |||||||||||
| Share-based compensation and other, net | |||||||||||
| Repurchases and retirement of common stock | ( | ( | |||||||||
| Ending balance | |||||||||||
| Retained Earnings | |||||||||||
| Beginning balance | |||||||||||
| Net income and other | |||||||||||
| Repurchases and retirement of common stock | ( | ( | |||||||||
| Cash dividends | ( | ( | |||||||||
| Ending balance | |||||||||||
| Accumulated Other Comprehensive Income (Loss) | |||||||||||
| Beginning balance | |||||||||||
| Other comprehensive loss, net of tax | ( | ( | |||||||||
| Ending balance | ( | ||||||||||
| Noncontrolling Interests | |||||||||||
| Beginning balance | — | ||||||||||
| Derecognized with divestiture | — | ( | |||||||||
| Other | — | ( | |||||||||
| Ending balance | — | ( | |||||||||
| Total Equity | $ | $ | |||||||||
| Cash dividends per share | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: BASIS OF PRESENTATION
Principles of Consolidation
The accompanying Condensed Consolidated Financial Statements include the accounts of L3Harris Technologies, Inc. and its consolidated subsidiaries. As used in these notes to the Condensed Consolidated Financial Statements (these “Notes”), the terms “L3Harris,” “Company,” “we,” “our” and “us” refer to L3Harris Technologies, Inc. and its consolidated subsidiaries. Intercompany transactions and accounts have been eliminated.
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, such interim financial statements do not include all information and footnotes necessary for a complete presentation of financial condition, results of operations, cash flows and equity in conformity with GAAP for annual financial statements and are not necessarily indicative of the results that may be expected for the full fiscal year or any subsequent period.
Segment Reorganization
Effective in fiscal 2026, we streamlined our operating segments, which are also our reportable segments or business segments, from four segments to three segments, more closely aligning common capabilities and business models. We report our financial results in the following three reportable segments, consistent with the manner in which our chief operating decision maker manages the business, evaluates performance, and allocates resources:
Space & Mission Systems (“SMS”): Integrates satellite and payload capabilities, including missile warning and defense, with maritime, air special missions, and other global defense and civil government programs;
Communication & Spectrum Dominance (“CSD”): Combines all of our capabilities in resilient communications and electronic warfare; and
Missile Solutions (“MSL”): Unites propulsion, sensing, guidance, and other advanced missile and munition technologies for delivery of end-to-end missile solutions.
See Note E: Goodwill and Intangible Assets and Note O: Business Segment Information in these Notes for further information.
The historical results, discussion and presentation of our business segments as set forth in the accompanying Condensed Consolidated Financial Statements and these Notes reflect the impact of these changes for all periods presented in order to present segment information on a comparable basis. There is no impact on our previously reported consolidated statements of operations, balance sheets, statements of cash flows or statements of equity resulting from these changes.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the accompanying Condensed Consolidated Financial Statements and these Notes and related disclosures. These estimates and assumptions are based on experience and other information available prior to issuance of the accompanying Condensed Consolidated Financial Statements and these Notes. Materially different results can occur as circumstances change and additional information becomes known.
Reclassifications
The classification of certain prior year amounts have been adjusted in our Condensed Consolidated Financial Statements and these Notes to conform to current year classifications.
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8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Recently Issued Accounting Pronouncements
See Note 1: Significant Accounting Policies in our Fiscal 2025 Form 10-K for information on recently issued accounting pronouncements.
NOTE B: EARNINGS PER SHARE (“EPS”)
EPS is calculated as net income attributable to common shareholders divided by our weighted-average number of basic or diluted common shares outstanding. Potential dilutive common shares primarily consist of employee stock options, restricted stock units (“RSUs”) and performance share units (“PSUs”).
The weighted-average number of shares outstanding used to compute basic and diluted EPS are as follows:
| First Quarter | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Basic weighted-average common shares outstanding | |||||||||||
| Impact of dilutive share-based awards | |||||||||||
| Diluted weighted-average common shares outstanding | |||||||||||
NOTE C: CONTRACT ASSETS AND CONTRACT LIABILITIES
Contract assets represent unbilled receivables for revenue recognized in advance of billings, primarily under the percentage-of-completion (“POC”) cost-to-cost method. Contract liabilities consist of advance payments and billings in excess of revenue recognized. Contract assets and liabilities are reported net on a contract-by-contract basis.
Contract assets and contract liabilities are summarized below:
| (In millions) | April 3, 2026 | January 2, 2026 | |||||||||
Contract assets | $ | $ | |||||||||
Contract liabilities | ( | ( | |||||||||
Contract liabilities, non-current(1) | ( | ( | |||||||||
| Net contract assets | $ | $ | |||||||||
_______________
(1)Included as a component of the “Other non-current liabilities” line item in our Condensed Consolidated Balance Sheet.
During first quarter 2026 and 2025, we recognized revenue of $861 million and $698 million, respectively, related to contract liabilities that were outstanding at the end of the respective prior fiscal year.
NOTE D: INVENTORIES, NET
Inventories, net are summarized below:
| (In millions) | April 3, 2026 | January 2, 2026 | |||||||||
| Materials and supplies | $ | $ | |||||||||
| Work in process | |||||||||||
Finished products | |||||||||||
Inventories, net | $ | $ | |||||||||
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9
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE E: GOODWILL AND INTANGIBLE ASSETS
Goodwill
Changes in the carrying amount of goodwill, by business segment, were as follows:
| (In millions) | SMS | CSD | MSL | Total | |||||||||||||||||||
Balance as of January 2, 2026(1) | $ | $ | $ | $ | |||||||||||||||||||
| Currency translation adjustments | ( | ( | ( | ||||||||||||||||||||
Balance as of April 3, 2026 | $ | $ | $ | $ | |||||||||||||||||||
(1)Balances reflect impact of segment reorganization, as discussed in Note A: Basis of Presentation in these Notes.
As of both April 3, 2026 and January 2, 2026, accumulated goodwill impairment losses were $120 431 337
Reallocation of Goodwill in Segment Reorganization. As discussed in Note A: Basis of Presentation in these Notes, effective in fiscal 2026, we streamlined our business segments from four segments to three segments, more closely aligning common capabilities and business models. As a result of the segment reorganization, we realigned our goodwill reporting units from seven to five reporting units, which are our operating segments or one level below the operating segment. Following the realignment, our reporting units are organized as follows: SMS in our SMS segment, Non-Spectrum and Spectrum in our CSD segment, Advanced Effects (“AE”) and Propulsion Systems (“PS”) in our MSL segment.
The revised reporting unit structure was established through the creation of the new AE reporting unit and reassignment of the three former Integrated Mission Systems (“IMS”) segment reporting units, Targeting & Sensor Systems and Defense Electronics (“TSS+DE”), Intelligence, Surveillance and Reconnaissance (“ISR”) and Maritime. The AE reporting unit was formed by combining two businesses from the former Space & Airborne Systems (“SAS”) reporting unit and two businesses from the former TSS+DE reporting unit. The remaining businesses from the former TSS+DE reporting unit were aggregated into the former Non-Broadband reporting unit, which was renamed the Non-Spectrum reporting unit; and two businesses from the former SAS reporting unit were aggregated with the former Broadband reporting unit, which was renamed the Spectrum reporting unit. The businesses from the ISR and Maritime reporting units were aggregated with the other businesses in the SMS reporting unit, formerly the SAS reporting unit.
In connection with the realignments, goodwill was allocated to the businesses that moved between reporting units on a relative fair value basis utilizing a combination of income and market approaches. We performed quantitative impairment assessments under our former and new reporting unit structure to assess the impact before and after realignments. These assessments indicated no impairments existed either before or after the realignments.
Intangible Assets
Intangible assets, net are summarized below:
| April 3, 2026 | January 2, 2026 | ||||||||||||||||||||||||||||||||||
| (In millions) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||
Customer relationships(1) | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Developed technologies(1) | ( | ( | |||||||||||||||||||||||||||||||||
Trade names(1) | ( | ( | |||||||||||||||||||||||||||||||||
| Other | ( | ( | |||||||||||||||||||||||||||||||||
| Total finite-lived intangible assets | ( | ( | |||||||||||||||||||||||||||||||||
Trade name(1) | — | — | |||||||||||||||||||||||||||||||||
| Intangible assets, net | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
_______________
(1)Includes acquisition-related intangibles that benefit the entire Company. As such, these assets and associated amortization are reported at Corporate.
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10
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Amortization expense for intangible assets was $174 million and $194 million for first quarter 2026 and 2025, respectively. Future estimated amortization expense for intangible assets is as follows:
| (In millions) | Remaining Fiscal 2026 | Fiscal 2027 | Fiscal 2028 | Fiscal 2029 | Fiscal 2030 | Thereafter | Total | ||||||||||||||||||||||||||||||||||
| Amortization expense | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
NOTE F: INCOME TAXES
Tax Legislation Update
The Organisation for Economic Cooperation and Development (“OECD”) established a 15% global minimum tax applicable to multinational companies, which has been adopted by a majority of countries in which we operate and may subject us to this tax. In January 2026, the OECD issued additional guidance that is expected to reduce the global minimum tax burden on U.S. based multinationals. We are actively monitoring the legislative adoption of this guidance in relevant jurisdictions and will continue to evaluate its applicability to our operations and refine our estimates of the effective tax rate and cash tax impacts as new legislation is enacted. There was no impact on our effective tax rate in first quarter 2026.
Effective Tax Rate (“ETR”)
ETR was as follows:
| First Quarter | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Income tax expense | $ | ( | $ | ( | |||||||
| ETR | % | % | |||||||||
ETR for both periods benefited from favorable impacts of research and development (“R&D”) credits and tax deductions for foreign derived intangible income (“FDII”). First quarter 2026 ETR decreased compared to first quarter 2025, primarily due to higher deductions associated with FDII benefits from exporting products and services, the favorable resolution of audit matters and favorable impact of excess tax benefits from share based-compensation, partially offset by unfavorable return-to-provision adjustments, while first quarter 2025 ETR included an unfavorable impact from the Commercial Aviations Solutions (“CAS disposal group”) divestiture.
NOTE G: DEBT AND CREDIT ARRANGEMENTS
Long-Term Debt
Long-term debt is summarized below:
| (In millions) | April 3, 2026 | January 2, 2026 | |||||||||
Fixed-rate debt(1) | $ | $ | |||||||||
| Finance lease obligations and other | |||||||||||
| Unamortized discounts and issuance costs, net of bond premium | ( | ( | |||||||||
| Total long-term debt | |||||||||||
Less: Current portion of long term debt(2) | |||||||||||
| Long-term debt, net | $ | $ | |||||||||
_______________
(1)See Note 8: Debt and Credit Arrangements in our Fiscal 2025 Form 10-K for information on our fixed-rate debt.
(2)As of April 3, 2026, includes the $550 million 3.85 % notes, due December 2026 (“3.85 % 2026 Notes”) and $1,250 million 5.40 % notes, due January 2027 (“5.40 % 2027 Notes”). As of January 2, 2026, includes the $100 million 7.00 % debentures, due January 2026 (“7.00 % 2026 Debentures”) and $550 million 3.85 % 2026 Notes.
Repayments. On January 14, 2026, we repaid the entire outstanding $100 million 7.00 % 2026 Debentures with cash on hand.
Fair Value. As of April 3, 2026 and January 2, 2026, the estimated fair value of long-term debt was $11.0 billion and $11.2 billion, respectively. These values were estimated using a market approach based on quoted market prices for our debt in the secondary market and would be classified as Level 2 in the fair value hierarchy. See Note K: Fair Value Measurements in these Notes for further information on fair value.
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11
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Credit Agreements
Five-Year Credit Facility. On February 18, 2025, we established a $2.5 billion, five-year senior unsecured revolving credit facility (the “2025 Five-Year Credit Facility”) under a Revolving Credit Agreement (“2025 Five-Year Credit Agreement”) maturing on February 18, 2030 with a syndicate of lenders. For a description of the 2025 Five-Year Credit Agreement and related covenants, see Note 8: Debt and Credit Arrangements in our Fiscal 2025 Form 10-K.
As of April 3, 2026, we had no 2.2 billion, net of outstanding borrowings under our commercial paper program, as discussed below, and were in compliance with all covenants under the 2025 Five-Year Credit Agreement.
364-Day Credit Facility. On February 18, 2025, we established a $500 million 364 -day senior unsecured revolving credit facility (“2025 364-Day Credit Facility”) by entering into a 364 -day Credit Agreement (“2025 364-Day Credit Agreement”) with a syndicate of lenders. The 2025 364-Day Credit Facility matured on February 17, 2026.
Commercial Paper Program (“CP Program”)
Under our CP Program, we may issue unsecured commercial paper notes up to a maximum aggregate amount, supported by the availability under our credit agreements. As of April 3, 2026, our CP Program had maximum aggregate capacity of $2.5 billion, supported by our 2025 Five-Year Credit Facility. As of January 2, 2026, our CP Program had maximum aggregate capacity of $3.0 billion, supported by our 2025 Five-Year Credit Facility and 2025 364-Day Credit Facility, which matured on February 17, 2026.
The commercial paper notes are sold at par less a discount representing an interest factor or, if interest bearing, at par, and the maturities vary but may not exceed 397 days from the date of issue. The commercial paper notes rank at least pari passu with all other unsecured and unsubordinated indebtedness.
NOTE H: RETIREMENT BENEFITS
The components of net periodic benefit income for our defined benefit pension plans and other postretirement benefit plans (“other benefits”) (collectively, “defined benefit plans”) were as follows:
| First Quarter | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
(In millions) | Pension | Other Benefits | Total | Pension | Other Benefits | Total | |||||||||||||||||||||||||||||
| Operating | |||||||||||||||||||||||||||||||||||
Service cost(1) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Non-operating | |||||||||||||||||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Amortization of net actuarial gains | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Amortization of prior service credits | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Effect of settlements | ( | ( | |||||||||||||||||||||||||||||||||
Non-service cost net periodic benefit income(2) | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Net periodic benefit income | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
(1)Included in the “Cost of revenue” and “General and administrative expenses” line items in our Condensed Consolidated Statement of Operations.
(2)Included in the “Non-service FAS pension income and other, net” line item in our Condensed Consolidated Statement of Operations.
_____________________________________________________________________
12
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE I: SHARE-BASED COMPENSATION
As of April 3, 2026, we had stock options and other share-based compensation awards outstanding under our 2024 Equity Incentive Plan and predecessor plans (collectively, the “L3Harris SIPs”).
Awards granted to participants under the L3Harris SIPs and the weighted-average grant-date fair value per share or unit were as follows:
| First Quarter | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (In thousands, except per share/unit amounts) | Shares or Units | Weighted-Average Grant-Date Fair Value Per Share or Unit | Shares or Units | Weighted-Average Grant-Date Fair Value Per Share or Unit | |||||||||||||||||||
Stock options(1) | $ | $ | |||||||||||||||||||||
RSUs (2) | $ | $ | |||||||||||||||||||||
PSUs (3) | $ | $ | |||||||||||||||||||||
_______________
(1)Other than certain stock options granted in connection with new hires, our stock options generally vest ratably in equal amounts over a three-year period.
(2)The majority of our RSUs, including those granted annually to executives under our long-term incentive plan, cliff vest after three years .
(3)Our PSUs are subject to performance criteria and generally vest after the three-year performance period.
The aggregate number of shares of our common stock issued under the L3Harris SIPs, net of shares withheld for tax purposes, was 0.4 million and 0.2 million for first quarter 2026 and 2025, respectively.
Share-based compensation expense was $21 million and $19 million for first quarter 2026 and 2025, respectively.
NOTE J: SHAREHOLDERS' EQUITY
Common Stock
Authorized common stock consists of 500,000,000 1 186,601,408 186,844,093
Share Repurchase Program. On January 28, 2021 and October 21, 2022, we announced that our Board of Directors (“Board”) approved share repurchase authorizations under our repurchase program of $6.0 billion and $3.0 billion, respectively. The $6.0 billion program was fully utilized during the 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.
During first quarter 2026, we repurchased 0.8 million shares of our common stock under our share repurchase program for $296 million and had remaining unused authorizations of $1.9 billion as of April 3, 2026. During first quarter 2025, we repurchased 2.7 million shares of our common stock under our share repurchase program for $569 million and had remaining unused authorizations of $2.8 billion as of March 28, 2025.
Preferred Stock
Authorized preferred stock consists of 1,000,000 no
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13
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Accumulated Other Comprehensive Income (Loss) (“AOCI”)
Changes in the components of AOCI, net of tax were as follows:
| (In millions) | Foreign currency translation and other, net(1) | Pension and other postretirement benefits(2) | Total AOCI | ||||||||||||||
Balance as of January 2, 2026 | $ | ( | $ | $ | |||||||||||||
| Other comprehensive loss before reclassifications | ( | ( | |||||||||||||||
Losses (gains) reclassified to earnings | ( | ( | |||||||||||||||
| Other comprehensive loss | ( | ( | ( | ||||||||||||||
| Balance as of April 3, 2026 | $ | ( | $ | $ | |||||||||||||
| Balance as of January 3, 2025 | $ | ( | $ | $ | |||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||
Losses (gains) reclassified to earnings | ( | ( | |||||||||||||||
| Other comprehensive income (loss) | ( | ( | |||||||||||||||
Balance as of March 28, 2025 | $ | ( | $ | $ | ( | ||||||||||||
_______________
(1)Other, net consists of hedging derivatives.
NOTE K: FAIR VALUE MEASUREMENTS
We measure certain assets and liabilities at fair value on a recurring basis utilizing a three-level fair value hierarchy that prioritizes inputs based on market observability:
•Level 1 — Quoted prices in active markets for identical assets or liabilities.
•Level 2 — Observable inputs other than quoted prices included within Level 1, including: quoted prices for similar assets or liabilities in active or inactive markets; quoted prices for identical assets or liabilities in inactive markets; and inputs derived from or corroborated by observable market data.
•Level 3 — Unobservable inputs with little or no market activity that are significant to the fair value of the assets or liabilities and reflect our assumptions about market participants’ pricing, using the best available information.
We utilize observable inputs whenever available. In certain instances, fair value is estimated using quoted market prices from external pricing services. We assess the methodologies of these services to ensure valuations reflect fair value, including net asset value (“NAV”). The NAV reported by an asset manager may be adjusted when sufficient evidence indicates NAV is not representative of fair value.
Deferred Compensation Plans
We sponsor certain non-qualified deferred compensation plans which are measured at fair value on a recurring basis in our Condensed Consolidated Balance Sheet. Deferred compensation plan assets represent diversified assets held in rabbi trusts, which include marketable equity and fixed income securities (Level 1) and corporate-owned life insurance (”COLI”) contracts measured at NAV. Liabilities represent participant balances in marketable equity securities (Level 1) and common/collective trusts (“CCTs”) and guaranteed investment contracts (“GICs”) measured at NAV based on participant designed investment options.
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14
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table summarizes our deferred compensation plan assets and liabilities:
| April 3, 2026 | January 2, 2026 | ||||||||||||||||||||||
| (In millions) | Total | Level 1 | Total | Level 1 | |||||||||||||||||||
Assets | |||||||||||||||||||||||
| Equity and fixed income securities | $ | $ | $ | $ | |||||||||||||||||||
| COLI, measured at NAV | |||||||||||||||||||||||
Deferred compensation plan assets(1) | $ | $ | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||
| Equity securities | $ | $ | $ | $ | |||||||||||||||||||
CCTs and GICs, measured at NAV | |||||||||||||||||||||||
Deferred compensation plan liabilities(2) | $ | $ | |||||||||||||||||||||
_______________
(1)Included in the “Other current assets” and “Other non-current assets” line items in our Condensed Consolidated Balance Sheet.
(2)Included in the “Compensation and benefits” and “Other non-current liabilities” line items in our Condensed Consolidated Balance Sheet.
NOTE L: CHANGES IN ESTIMATES
Many of our contracts utilize the POC cost-to-cost method of revenue recognition. A single estimated profit margin is used to recognize profit for each performance obligation over its period of performance. At the outset of each contract, we gauge its complexity and perceived risks and establish an estimated total cost at completion in line with those expectations. Due to the long-term nature of many of these contracts, developing the estimated total cost at completion and total transaction price often requires judgment. After establishing the estimated total cost at completion, we follow a standard estimate at completion (“EAC”) process in which we review the progress and performance on our ongoing contracts. If we successfully retire risks associated with the technical, schedule and cost aspects of a contract, we may lower our estimated total cost at completion commensurate with the retirement of these risks. Conversely, there are many reasons estimated contract costs can increase, including: (i) supply chain disruptions, inflation and labor issues; (ii) design or other development challenges; and (iii) program execution challenges (including technical schedule or quality issues and other performance concerns). Additionally, as the contract progresses, our estimates of total transaction price may increase or decrease if, for example, we receive incentive or award fees that are higher or lower than expected.
The following table presents the effect of aggregate net EAC adjustments:
| First Quarter | |||||||||||
| (In millions, except per share amounts) | 2026 | 2025 | |||||||||
| Revenue | $ | $ | |||||||||
| Operating income | ( | ||||||||||
Net income(1) | ( | ||||||||||
| Diluted EPS | ( | ||||||||||
_______________
(1)Based on a 25
NOTE M: CONTRACTUAL BACKLOG
Contractual backlog, which is the equivalent of our remaining performance obligations, represents the future revenue we expect to recognize as we perform on our current contracts. Contractual backlog comprises both funded backlog (i.e., firm orders for which funding is authorized and appropriated) and unfunded backlog (i.e., orders for which funds have not been appropriated and/or incrementally funded). Contractual backlog excludes unexercised contract options and potential orders under ordering-type contracts, such as indefinite-delivery, indefinite-quantity contracts.
As of April 3, 2026, our contractual backlog was $40.7 billion. We expect to recognize approximately 40 % of our contractual backlog as revenue over the next twelve months and 65 % as revenue over the next twenty-four months , with the remainder to be recognized thereafter.
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15
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE N: DIVESTITURES
Space Technology Disposal Group
During fourth quarter 2025, we entered into an agreement with AE Industrial Partners (“AE Industrial”) to establish a new space technology company (“Space Technology disposal group”). Under the agreement we will contribute certain assets and liabilities of the Space Propulsion and Power Systems sector (“SPPS business”) and the Space Avionics & Communications division (“SA&C business”), both reported in our MSL segment, to a new entity in which we will retain approximately 40 % noncontrolling interest. The Space Technology disposal group, which excludes our RS-25 rocket engine business, provides premier propulsion, power, space flight avionics and communications systems. AE Industrial will acquire a controlling interest of approximately 60 % in the new space technology company, at a net enterprise value of $825 million, subject to regulatory approvals and other customary closing conditions. The transaction is expected to close in the second half of 2026.
Upon closing, we will derecognize the assets and liabilities of the Space Technology disposal group and record an equity method investment at the fair value of our retained noncontrolling interest in the newly formed entity. Our share of earnings or losses from the equity method investment will be recognized in the “Non-service FAS pension income and other, net” line item in our Condensed Consolidated Statement of Operations, with a corresponding adjustment to the carrying value of the investment included in the “Other non-current assets” line in our Condensed Consolidated Balance Sheet.
The carrying amounts of the assets and liabilities of the Space Technology disposal group classified as held for sale in our Condensed Consolidated Balance Sheet were as follows:
| (In millions) | April 3, 2026 | January 2, 2026 | |||||||||
| Receivables, net | $ | $ | |||||||||
| Contract assets | |||||||||||
| Inventories, net | |||||||||||
| Other current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other non-current assets | |||||||||||
| Valuation allowance | ( | ( | |||||||||
| Total assets held for sale | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Contract liabilities | |||||||||||
| Compensation and benefits | |||||||||||
| Other current liabilities | |||||||||||
| Other non-current liabilities | |||||||||||
| Total liabilities held for sale | $ | $ | |||||||||
Income before income taxes attributable to the Space Technology disposal group was $31 million and $14 million for first quarter 2026 and 2025, respectively.
In first quarter 2026, we recorded an additional valuation allowance due to an increase in the carrying value of the disposal group and recognized a pre-tax loss of $10 million, which is incremental to the previously recorded Space Technology disposal group loss recognized in fiscal 2025. The pre-tax loss is included in the “General and administrative expenses” line item in our Condensed Consolidated Statement of Operations.
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16
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
CAS Disposal Group
NOTE O: BUSINESS SEGMENT INFORMATION
Description of Business Segments
We structure our operations primarily around the capabilities we provide and report our financial results in the following three operating segments, which are also our reportable segments or business segments, consistent with the manner in which our chief operating decision maker manages the business, evaluates performance, and allocates resources:
SMS: Supplies full mission solutions as a prime and subsystem integrator in the space, airborne, maritime, 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:
Intelligence, Surveillance and Reconnaissance (“ISR”): Airborne passive sensing and targeting, mission systems development, integration and life-cycle management for strategic reconnaissance and air superiority platforms, national command and control, tactical surveillance, electronic attack, agile strike, mobility, and classified platforms.
Space Systems: End-to-end mission solutions to support intelligence, surveillance and reconnaissance; missile defense; positioning, navigation and timing; weather and climate monitoring; and ground-based space surveillance networks.
Maritime: Power, electrical, imaging, communication and sensor systems for naval platforms; autonomous solutions for surface and undersea operations; high-assurance encryption; in-service support; missionization prototyping; and naval integration.
Mission Networks: Integrator of large-scale, highly secure, and resilient mission critical infrastructure and enterprise systems for communications, air traffic surveillance, and enterprise information management.
Airborne Solutions: Integrated and multi-function processors, memory, communication, displays, and other hardened electronics, for airborne and ground platforms.
Intel & Cyber: Situational awareness, optical networks and advanced wireless solutions for classified intelligence and defense customers.
CSD: 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 DoW and international, federal, and state agency customers in the following business sectors:
Mission Critical Communications: Design, manufacture and sustainment of resilient and interoperable secure communication solutions that includes software defined radios, waveforms, satellite terminals and end-to-end battlefield systems for the warfighter and government agencies.
Spectrum Superiority: Design, manufacture and sustainment of resilient and secure communication solutions that include ISR and tactical data links, software and integrated broadband networks and electronic warfare.
Targeting & Sensor Systems (“TSS”): Multi-domain, multi-spectral electro-optical and infrared sensor systems supporting ISR and target acquisition missions; manufacturing of specialty laser transmitters and filter glass materials; and manufacturing of counter unmanned aircraft integrated systems, and specialized mission management software solutions.
Integrated Vision Solutions: Design, manufacture and sustainment of a full suite of helmet-mounted integrated night vision goggles with leading-edge image intensifier tubes, as well as weapon-mounted sights, aiming lasers, and range finders.
MSL: Provides a comprehensive portfolio of missile technologies spanning the full mission lifecycle, as well as critical space propulsion capabilities to the U.S. Government and its allies, including the DoW, NASA and major aerospace and defense prime contractors in the following business sectors:
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17
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Missile Solutions: Provides propulsion, maneuvering, and control technologies as well as fuzing systems that support missile defense interceptors, strategic deterrence systems, and precision strike weapons.
Advanced Effects: Provides advanced systems that improve missile performance, accuracy, and mission effectiveness across four capability areas including advanced sensing and targeting systems, guidance systems, weapons release systems, and complete weapons systems.
Space Propulsion and Power Systems (“SPPS”): Premier propulsion and power systems for national security, space and exploration missions.
Business Segment Financial Results
The following table presents operating results by business segment and a reconciliation to total income before income taxes:
| First Quarter | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Revenue | |||||||||||
| SMS | $ | $ | |||||||||
| CSD | |||||||||||
| MSL | |||||||||||
| Intersegment | ( | ( | |||||||||
| Segment revenue | |||||||||||
Other(1) | |||||||||||
| Total revenue | |||||||||||
| Cost of revenue | |||||||||||
| SMS | ( | ( | |||||||||
| CSD | ( | ( | |||||||||
| MSL | ( | ( | |||||||||
| Intersegment | |||||||||||
| Segment cost of revenue | ( | ( | |||||||||
Other(2) | ( | ( | |||||||||
| Total cost of revenue | ( | ( | |||||||||
| Operating income | |||||||||||
| SMS | |||||||||||
| CSD | |||||||||||
| MSL | |||||||||||
| Segment operating income | |||||||||||
| Unallocated corporate items and other, net | ( | ( | |||||||||
| Total operating income | |||||||||||
| Non-service FAS pension income and other, net | |||||||||||
| Interest expense, net | ( | ( | |||||||||
| Income before income taxes | $ | $ | |||||||||
_______________
(1)Includes other non-reportable businesses, which consists of the CAS disposal group, corporate headquarters, and eliminations.
(2)Includes corporate headquarters. Additionally, first quarter 2025 includes other non-reportable businesses, which consists of the CAS disposal group.
Unallocated Corporate Items and Other, Net. Unallocated corporate items and other, net include expenses not included in management’s evaluation of segment operating performance, such as amortization of acquisition-related intangibles; acquisition, divestiture and transaction-related expenses; business divestiture-related losses; LHX NeXt implementation costs, and a portion of management and administration, legal, environmental, compensation and retiree benefits, and the FAS/Cost Accounting Standards (“CAS”) operating adjustment. Additionally, includes the operating results of other non-reportable businesses, which consists of the CAS disposal group, eliminations and other.
_____________________________________________________________________
18
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Assets
Total assets by business segment were as follows:
| (In millions) | April 3, 2026 | January 2, 2026 | |||||||||
| SMS | $ | $ | |||||||||
| CSD | |||||||||||
| MSL | |||||||||||
Corporate(1) | |||||||||||
| Total assets | $ | $ | |||||||||
_______________
(1)Includes intangible assets acquired in connection with business combinations that benefit the entire Company. See the “Intangible Assets” section in Note E: Goodwill and Intangible Assets in these Notes for further information.
Other Financial Information
Other financial information by business segment is summarized below:
| First Quarter | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Capital expenditures | |||||||||||
| SMS | $ | $ | |||||||||
| CSD | |||||||||||
| MSL | |||||||||||
| Corporate | |||||||||||
| Total capital expenditures | $ | $ | |||||||||
| Depreciation and amortization | |||||||||||
| SMS | $ | $ | |||||||||
| CSD | |||||||||||
| MSL | |||||||||||
| Corporate | |||||||||||
| Total depreciation and amortization | $ | $ | |||||||||
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19
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Disaggregation of Revenue
We disaggregate revenue by customer relationship, contract type and geographical region. We believe these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
| First Quarter | |||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||
| (In millions) | SMS | CSD | MSL | SMS | CSD | MSL | Other(1) | ||||||||||||||||||||||||||||||||||
| Revenue by customer relationship | |||||||||||||||||||||||||||||||||||||||||
| Prime contractor | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Subcontractor | |||||||||||||||||||||||||||||||||||||||||
| Intersegment | |||||||||||||||||||||||||||||||||||||||||
| Total segment | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Revenue by contract type | |||||||||||||||||||||||||||||||||||||||||
Fixed-price | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Cost-type | |||||||||||||||||||||||||||||||||||||||||
| Intersegment | |||||||||||||||||||||||||||||||||||||||||
| Total segment | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Revenue by geographical region | |||||||||||||||||||||||||||||||||||||||||
| United States | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| International | |||||||||||||||||||||||||||||||||||||||||
| Intersegment | |||||||||||||||||||||||||||||||||||||||||
| Total segment | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
_______________
(1)Includes revenue associated with other non-reportable businesses, which consists of the CAS disposal group. These amounts are included to reconcile total revenue.
NOTE P: LEGAL PROCEEDINGS AND CONTINGENCIES
In the ordinary course of business, we are routinely defendants in, parties to or otherwise subject to many pending and threatened legal actions, claims, disputes, arbitrations and other legal proceedings incident to our business, arising from or related to matters, including but not limited to: product liability; personal injury; patents, trademarks, trade secrets or other intellectual property; labor and employment disputes; commercial or contractual disputes; strategic acquisitions or divestitures; the prior sale or use of former products allegedly containing asbestos or other restricted materials; breach of warranty; or environmental matters. Claimed amounts against us may be substantial, but may not bear any reasonable relationship to the merits of the claim or the extent of any real risk of court or arbitral awards. We record accruals for losses related to those matters against us that we consider to be probable and that can be reasonably estimated. Gain contingencies, if any, are recognized when they are realized and legal costs generally are expensed when incurred. As of April 3, 2026, our accrual for the potential resolution of lawsuits, claims or proceedings that we consider probable of being decided unfavorably to us was not material. We cannot at this time estimate the reasonably possible loss or range of loss in excess of our accrual due to the inherent uncertainties and speculative nature of contested proceedings. Although it is not feasible to predict the outcome of these matters with certainty, based on available information, in the opinion of management, settlements, arbitration awards and final judgments, if any, that are considered probable of being rendered against us in litigation or arbitration in existence as of April 3, 2026 were reserved against or would not have a material adverse effect on our financial condition, results of operations, cash flows or equity.
_____________________________________________________________________
20
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Environmental Matters
We are subject to numerous U.S. federal, state, local and international environmental laws and regulatory requirements and are involved from time to time in investigations or litigation of various potential environmental issues. We or companies we have acquired are responsible, or alleged to be responsible, for environmental investigation and/or remediation of multiple sites, including sites owned by us and third-party sites. These sites are in various stages of investigation and/or remediation, and in some cases our liability is considered de minimis. Notices from the U.S. Environmental Protection Agency or equivalent state or international environmental agencies allege that several sites formerly or currently owned and/or operated by us or companies we have acquired, and other properties or water supplies that may be or have been impacted from those operations, contain disposed or recycled materials or wastes and require environmental investigation and/or remediation. These sites include instances of being identified as a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as the “Superfund Act”), the Resource Conservation Recovery Act and/or equivalent state and international laws, and in some instances, our liability and proportionate share of costs that may be shared among other PRPs have not been determined largely due to uncertainties as to the nature and extent of site conditions and our involvement.
Based on an assessment of relevant factors, we estimated that our liability under applicable environmental statutes and regulations for identified sites was $657 million and $659 million as of April 3, 2026 and January 2, 2026, respectively. The current and non-current portions of our estimated environmental liability are included in the “Other current liabilities” and “Other non-current liabilities” line items, respectively, in our Condensed Consolidated Balance Sheet.
Certain environmental costs are eligible for future recovery in the pricing of our products and services to the U.S. Government and based on U.S. Government contracting regulations, we consider the recovery probable. We had recoverable assets of $482 million and $483 million, as of April 3, 2026 and January 2, 2026, respectively. The current and non-current portions of the recoverable costs are included in the “Other current assets” and “Other non-current assets” line items, respectively, in our Condensed Consolidated Balance Sheet.
NOTE Q: SUBSEQUENT EVENTS
On April 17, 2026, the Company, through our wholly owned subsidiary, Aerojet Rocketdyne Holdings, Inc. (“AJRD”), entered into definitive agreements with the United States Department of War (the “Investor”). The agreements provide for the issuance and sale of shares of Series A Convertible Preferred Stock of AJRD (the “Series A Preferred Stock”) and warrants (the “Warrants”) to purchase common stock of AJRD (the “Common Stock”) for an aggregate purchase price of $1.0 billion.
The purpose of the investment is to strengthen the U.S. defense industrial base by providing funding for AJRD to expand and modernize its facilities, accelerate research and development, and increase production capacity for critical technologies.
The Series A Preferred Stock will be convertible into shares of AJRD’s Common Stock at the Investor’s option. In the event of an initial public offering (“IPO”) of AJRD’s Common Stock, the Series A Preferred Stock will automatically convert into Common Stock of the IPO Company at a conversion price equal to 80 % of the price to the public in the IPO (the “IPO Price”) reflecting a mutually agreed-upon valuation that aligns with the strategic objectives of the investment, and the Warrants will be automatically exchanged for new warrants, which are exercisable from time to time to purchase 3 % of the common stock of the IPO Company, on a fully diluted basis, with an average exercise price of 110 % of the IPO Price. Upon completion of the IPO, the Investor is expected to own less than 10 % of the IPO Company’s common stock on an as-exercised basis.
The agreements contain customary representations, warranties, and covenants by the Company and the Investor. The Agreement also provides for certain registration rights for the shares of Common Stock issuable upon conversion of the Series A Preferred Stock. Under the terms of the agreements, AJRD may redeem the Series A Preferred Stock and Warrants held by the Investor under certain conditions.
As of April 3, 2026, the agreements had not closed, and accordingly, their impacts are not reflected in our first quarter 2026 Condensed Consolidated Financial Statements. The impacts will be recognized in second quarter 2026.
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21
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of L3Harris Technologies, Inc.
Results of Review of Interim Financial Statements
We have reviewed the accompanying condensed consolidated balance sheet of L3Harris Technologies, Inc. and subsidiaries (the Company) as of April 3, 2026, the related condensed consolidated statements of operations, comprehensive income, cash flows, and equity for the quarters ended April 3, 2026 and March 28, 2025, and the related notes (collectively referred to as the “condensed consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company as of January 2, 2026, the related consolidated statements of operations, comprehensive income, cash flows and equity for the year then ended, and the related notes (not presented herein); and in our report dated February 12, 2026, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of January 2, 2026, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
These financial statements are the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ Ernst & Young LLP
Orlando, Florida
April 30, 2026
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22
ITEM 2. | 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. 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 Condensed Consolidated Financial Statements and accompanying Notes in this Report (the “Notes”). In addition, reference should be made to our audited Consolidated Financial Statements and accompanying Notes to our Consolidated Financial Statements and Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Fiscal 2025 Form 10-K. The discussions in this MD&A contain forward-looking statements.
OVERVIEW
We are the Trusted Disruptor in the defense industry. With customers’ mission-critical needs always 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 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, systems and services have defense and civil government applications, as well as commercial applications. The percentage of our revenue that was derived from sales to U.S. Government customers, including foreign military sales funded through the U.S. Government, whether directly or through prime contractors, was 75% for first quarter 2026.
U.S. and International Budget Environment
The U.S. and international budget environments are evolving rapidly within a dynamic geopolitical context, influenced by the Administration and Congress, heightened geopolitical tensions, global security concerns, inflationary pressures, and overall macroeconomic conditions.
On July 4, 2025, the President signed Congress’ reconciliation package which included $155 billion for national defense spending to fund DoW priorities. This includes priorities closely aligned with L3Harris interests and opportunities, such as Golden Dome, munitions, and shipbuilding. The reconciliation package also includes approximately $190 billion for Department of Homeland Security, $12.5 billion for the Federal Aviation Administration (“FAA”) for air traffic control modernization efforts and $10 billion for NASA. The reconciliation package also raises the debt ceiling by $5 trillion and enacts key changes to the federal tax code.
The U.S. Government fiscal year (“GFY”) 2026 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 proposed termination of the Space Launch System (“SLS”) and Orion following the 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.
The final GFY 2026 National Defense Authorization Act (“NDAA”) was signed into law in December 2025. The NDAA provides authorization of appropriations for the DoW, nuclear weapons programs of the Department of Energy, and 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.
Congress passed the GFY 2026 Defense Appropriations bill on February 3, 2026, providing $859 billion for DoW programs, an increase of 1% or ~$9 billion over the President’s Budget Request (“PBR”). In addition, Congress provided just over $22 billion for the FAA via the Transportation-Housing and Urban Development bill, more than $1 billion above the GFY 2025 enacted level. This includes $4 billion in resources for facilities and equipment, nearly $1 billion more than the prior year.
On April 3, 2026, the GFY 2027 PBR was introduced and called for a ~$1.5 trillion topline for national defense programs, comprised of $1.1 billion for the DoW base budget and $350 billion in another reconciliation bill. This total request represents a $441 million increase, or 44%, over the GFY 2026 enacted value. Further, the PBR requested $18.8 billion for NASA, a $5.6 billion or 23% decrease from the 2026 enacted level; $4.5 billion for NOAA, a decrease from $6.1 billion in GFY 2026 enacted; and $22.4 billion for FAA, a moderate increase above the $22.1 billion enacted in GFY 2026.
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Internationally, almost all NATO allies have committed to spend 5% of GDP annually over the next decade on defense and security-related expenditures, with 3.5% on core defense articles and another 1.5% on critical infrastructure, cyber and other key areas.
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.
See our U.S. Government funding risks and the discussion of our international business risks within Part I. Item 1A. Risk Factors in our Fiscal 2025 Form 10-K.
Economic Environment
The ongoing uncertainty related to the impacts of inflation, as well as the interest rate environment and ongoing federal deficits could in the future impact U.S. Government spending priorities for our products and services. For a discussion of inflation-related risks, see Part I. Item 1A. Risk Factors in our Fiscal 2025 Form 10-K.
We continue to monitor and evaluate the potential impact of current and proposed changes in trade policies and in particular, tariffs. In response to enacted tariffs, we are seeking exemptions, evaluating alternative sources of materials and subcontracted components, as well as engaging in supplier negotiations to help manage cost impacts and are considering price adjustments and other strategies to support profitability. Based on current conditions, we do not expect a material impact on our 2026 results, but will continue to monitor developments and assess potential implications as trade policies evolve.
RESULTS OF OPERATIONS
First quarter 2026 and 2025 include thirteen and twelve weeks, respectively. Outcomes for specific periods, or year-over-year comparisons of results of operations and segment performance should be considered in this context.
Consolidated Results of Operations
| First Quarter | |||||||||||
| (Dollars in millions, except per share amounts) | 2026 | 2025 | |||||||||
| Revenue | $ | 5,744 | $ | 5,132 | |||||||
| Cost of revenue | (4,342) | (3,782) | |||||||||
| Gross margin | 1,402 | 1,350 | |||||||||
| General and administrative expenses | (750) | (825) | |||||||||
| Operating Income | 652 | 525 | |||||||||
| Non-service FAS pension income and other, net | 73 | 84 | |||||||||
| Interest expense, net | (136) | (150) | |||||||||
| Income before income taxes | 589 | 459 | |||||||||
| Income taxes | (77) | (73) | |||||||||
| Effective Tax Rate | 13.1 | % | 15.9 | % | |||||||
| Net income | $ | 512 | $ | 386 | |||||||
| Diluted EPS | $ | 2.72 | $ | 2.04 | |||||||
Revenue
Revenue increased $612 million, or 12% reflecting higher revenues across all segments, primarily from higher volumes, driven by new program ramps, including a milestone related to material procurement in support of classified contracts, and increased international deliveries.
See the “Business Segment Results of Operations” discussion below in this MD&A for further information.
Gross Margin
Gross margin increased $52 million, primarily due to higher volumes across all segments and a $39 million favorable change in net EAC adjustments, partially offset by the absence of the CAS disposal group as a result of the March 2025 divestiture.
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G&A Expenses
The following table presents the components of G&A expenses:
| First Quarter | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Corporate: | |||||||||||
| Amortization of acquisition-related intangibles | $ | (159) | $ | (177) | |||||||
LHX NeXt implementation costs(1) | — | (35) | |||||||||
Acquisition, divestiture and transaction-related expenses(2) | (30) | (17) | |||||||||
Business divestiture-related losses(3) | (10) | (17) | |||||||||
Other non-reportable businesses(4) | — | (30) | |||||||||
Other unallocated corporate items(5) | (27) | (27) | |||||||||
| Segment: | |||||||||||
| Company-funded R&D costs | (146) | (111) | |||||||||
| Selling and marketing | (136) | (120) | |||||||||
| Monetization of certain legacy assets | 50 | 5 | |||||||||
Other(6) | (292) | (296) | |||||||||
G&A expenses | $ | (750) | $ | (825) | |||||||
_______________
(1)Includes costs associated with transforming multiple functions, systems and processes to increase agility and competitiveness. See the “Operating Environment, Strategic Priorities and Key Performance Measures” section in the MD&A in our Fiscal 2025 Form 10-K for more detail on our LHX NeXt initiative and implementation costs.
(2)Includes costs related to pursuing acquisition and divestiture portfolio optimization; non-transaction costs related to divestitures; costs related to the carve-out and planned MSL public offering; salaries of employees in roles dedicated to planned strategic transaction activity; and resolution of a procurement contract matter.
(3)Includes losses associated with the Space Technology disposal group and the CAS disposal group in first quarter 2026 and 2025, respectively. See Note N: Divestitures in the Notes for further information.
(4)Includes the CAS disposal group. See Note N: Divestitures in the Notes for further information.
(5)Includes a portion of management and administration, legal, environmental, compensation, retiree benefits, the FAS/CAS operating adjustment, eliminations and other.
(6)Includes other segment G&A expenses, primarily payroll and benefits, outside services, facilities and insurance. First quarter 2026 includes a $20 million favorable settlement of a legal matter in CSD.
G&A expenses decreased $75 million, or 9%, primarily due to an increase in gains recognized in connection with the monetization of certain legacy assets, including recognition of a $39 million gain in our MSL segment in 2026, the absence of LHX NeXt implementation costs, as the LHX NeXt implementation phase was completed in fiscal 2025, and the absence of the CAS disposal group expenses. Such impacts were partially offset by an increase in company-funded R&D costs.
Non-service FAS Pension Income and Other, Net
The following table presents the components of non-service FAS pension income and other, net:
| First Quarter | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
Non-service FAS pension income(1) | $ | 75 | $ | 90 | |||||||
Other, net(2) | (2) | (6) | |||||||||
| Non-service FAS pension income and other, net | $ | 73 | $ | 84 | |||||||
_______________
(1)Includes the non-service cost components of net periodic benefit income under our defined benefit plans. See Note H: Retirement Benefits in the Notes for further information.
(2)Primarily includes changes in the market value of our rabbi trust assets, gains and losses on our equity investments in nonconsolidated affiliates and royalty income.
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Interest Expense, Net
Interest expense, net decreased $14 million primarily due to lower total outstanding debt, which reflects reductions in both long-term debt and average outstanding notes under our CP Program during 2026. See Note G: Debt and Credit Arrangements in the Notes and the “Liquidity and Capital Resources” section below in this MD&A for further information.
Income Taxes
During interim periods, we estimate our global annual ETR and apply that rate to ordinary income in order to compute the income tax provision. Although most items will be considered part of the annual ETR, there are a number of items that are instead required to be recorded in the interim period in which they occur; such as certain changes in uncertain tax positions, the accrual of interest and penalties, changes in tax laws or rates, and other items as prescribed by GAAP. As a result, there may be quarterly fluctuations in our ETR and the results for the interim periods are not necessarily indicative of the results to be expected for the full year or future periods.
Our ETR was 13.1% and 15.9% for first quarter 2026 and 2025, respectively. First quarter 2026 ETR decreased compared to first quarter 2025, primarily due to higher deductions associated with FDII from exporting products and services, the favorable resolution of audit matters and favorable impact of excess tax benefits from share based-compensation, partially offset by unfavorable return-to-provision adjustments, while first quarter 2025 ETR included an unfavorable impact from the CAS disposal group divestiture.
Diluted EPS
Diluted EPS increased 33% primarily due to higher net income from the combined effects of reasons noted in the sections above.
Business Segment Results of Operations
See Note O: Business Segment Information in the Notes for a description of the sectors in each segment.
SMS Segment
| First Quarter | |||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | % Inc/(Dec) | ||||||||||||||
| Revenue | $ | 2,990 | $ | 2,411 | 24 | % | |||||||||||
| Operating income | 313 | 238 | 32 | % | |||||||||||||
Operating margin | 10.5 | % | 9.9 | % | |||||||||||||
| Ending contractual backlog | $ | 21,113 | $ | 14,564 | |||||||||||||
SMS revenue increased primarily due to higher revenues of $420 million in ISR associated with a milestone related to material procurement in support of classified contracts and ramp on classified and international missionized aircraft programs, $65 million in Space Systems from higher volumes on Space Development Agency (“SDA”) Tracking Tranche 3 and classified space programs, $59 million in Mission Networks from higher FAA volume, $57 million in Maritime from higher volume on international programs associated with program timing, partially offset by lower revenue of $24 million in Intel and Cyber from lower classified program volume.
SMS operating income increased primarily due to higher volume and improved program performance, partially offset by a shift in mix reflecting higher volume in lower margin programs associated with program timing.
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CSD Segment
| First Quarter | |||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | % Inc/(Dec) | ||||||||||||||
| Revenue | $ | 1,855 | $ | 1,809 | 3 | % | |||||||||||
| Operating income | 465 | 443 | 5 | % | |||||||||||||
| Operating margin | 25.1 | % | 24.5 | % | |||||||||||||
| Ending contractual backlog | $ | 9,136 | $ | 9,419 | |||||||||||||
CSD revenue increased primarily due to higher revenues of $21 million in Integrated Vision Solutions from higher volumes, $18 million in Mission Critical Communications associated with increased international deliveries for our software-defined resilient communications equipment, and $16 million in Spectrum Superiority from program ramps, including the Next Generation Jammer Electronic Warfare program, partially offset by $13 million in Targeting and Sensor Systems from lower volumes.
CSD operating income increased primarily due to higher margin product mix and a $20 million favorable settlement of a legal matter, partially offset by a $17 million increase in R&D costs and higher selling and marketing expenses.
MSL Segment
| First Quarter | |||||||||||||||||
| (Dollars in millions) | 2026 | 2025 | % Inc/(Dec) | ||||||||||||||
| Revenue | $ | 990 | $ | 840 | 18 | % | |||||||||||
| Operating income | 124 | 96 | 29 | % | |||||||||||||
Operating margin | 12.5 | % | 11.4 | % | |||||||||||||
| Ending contractual backlog | $ | 10,453 | $ | 9,212 | |||||||||||||
MSL revenue increased primarily due to higher revenues of $84 million in Missile Propulsion from increased production volumes on key missile and munitions programs and $28 million and $21 million in Space Propulsion and Power Systems and Advanced Effects, respectively, from higher volumes and new program ramps.
MSL operating income increased primarily due to higher volumes and a gain of $39 million recognized in connection with the monetization of certain legacy assets aligned with our transformation and value creation priorities, partially offset by a $31 million unfavorable EAC adjustment on a legacy domestic naval sensor program.
Unallocated Corporate Items and Other, Net
| First Quarter | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
Amortization of acquisition-related intangibles(1) | $ | (173) | $ | (194) | |||||||
LHX NeXt implementation costs(2) | — | (35) | |||||||||
Business divestiture-related losses(3) | (10) | (17) | |||||||||
Acquisition, divestiture and transaction-related expenses(4) | (30) | (17) | |||||||||
Other unallocated corporate items(5) | (37) | (12) | |||||||||
| Unallocated corporate items | (250) | (275) | |||||||||
Other non-reportable businesses(6) | — | 23 | |||||||||
| Unallocated corporate items and other, net | $ | (250) | $ | (252) | |||||||
______________
(1)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.
(2)Includes costs associated with transforming multiple functions, systems and processes to increase agility and competitiveness. For further information on our LHX NeXt initiative and implementation costs see the “General and Administrative Expenses” discussion above in this MD&A. The implementation phase of LHX NeXt was completed in fiscal 2025.
(3)Includes losses associated with the Space Technology disposal group and the CAS disposal group in first quarter 2026 and 2025, respectively. See Note N: Divestitures in the Notes for further information.
(4)Includes costs related to pursuing acquisition and divestiture portfolio optimization; non-transaction costs related to divestitures; costs related to the carve-out and planned MSL public offering; salaries of employees in roles dedicated to planned strategic transaction activity; and resolution of a procurement contract matter.
(5)Includes a portion of management and administration, legal, environmental, compensation, retiree benefits, the FAS/CAS operating adjustment, corporate eliminations and other.
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(6)Includes the CAS disposal group. See Note N: Divestitures in the Notes for further information.
LIQUIDITY AND CAPITAL RESOURCES
Capital Resources
As of April 3, 2026, we had cash and cash equivalents of $590 million, of which $329 million was held by our foreign subsidiaries, a significant portion of which we believe can be repatriated to the U.S. with minimal tax cost.
CP Program. As of April 3, 2026, we had $350 million in outstanding notes under our CP Program. Our CP Program serves as a source of short-term financing under which we may issue unsecured commercial paper notes supported by amounts available under our $2.5 billion 2025 Five-Year Credit Agreement, discussed below. From time to time, we use borrowings under the CP Program for general corporate purposes, including funding acquisitions, repaying debt, paying dividends, and repurchasing our common stock. See the “Financing Activities” discussion below in this MD&A for further information about our CP Program.
Credit Facilities. As of April 3, 2026, we had no outstanding borrowings under our 2025 Five-Year Credit Facility, had available borrowing capacity of $2.2 billion, net of outstanding notes under our CP Program, and were in compliance with all covenants. Our previous $500 million 2025 364-Day Credit Agreement matured on February 17, 2026 and our CP Program capacity was reduced accordingly.
See Note G: Debt and Credit Arrangements in the Notes for further information regarding our credit facilities.
Cash Flows
The following table provides a summary of our cash flow information:
First Quarter | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Cash and cash equivalents, beginning of period | $ | 1,069 | $ | 615 | |||||||
| Operating Activities: | |||||||||||
| Net income | 512 | 386 | |||||||||
| Non-cash adjustments | 414 | 215 | |||||||||
| Changes in working capital | (634) | (739) | |||||||||
| Other, net | (387) | 96 | |||||||||
| Net cash used in operating activities | (95) | (42) | |||||||||
| Net cash (used in) provided by investing activities | (97) | 744 | |||||||||
| Net cash used in financing activities | (284) | (805) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (3) | 5 | |||||||||
| Net decrease in cash and cash equivalents | (479) | (98) | |||||||||
| Cash and cash equivalents, end of period | $ | 590 | $ | 517 | |||||||
Operating Activities. The $53 million increase in net cash used in operating activities for 2026 compared with 2025 was primarily due to timing of tax planning strategies and a settlement of a procurement contract matter, partially offset by an increase in net income and $105 million less cash used to fund working capital, largely driven by timing of billing and collection activity. The net cash used in operating activities in first quarter is consistent with our historical pattern, whereby operating cash flows are typically lowest in the first quarter due to timing of our business cycles and expenditure activities.
Investing Activities. The $841 million change in net cash used in investing activities for 2026 compared with net cash provided by investing activities for 2025 was primarily due to a $831 million decrease in proceeds from sale of businesses, net of cash divested, reflecting the March 2025 CAS disposal group divestiture.
Financing Activities. The $521 million decrease in net cash used in financing activities for 2026 compared with 2025 was primarily due to a $273 million decrease in cash used to repurchase common stock and a $330 million increase in net issuances of commercial paper, partially offset by an increase in repayments of long-term debt of $101 million. Our primary financing activities are further discussed below.
Common Stock Repurchases. 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 program was fully utilized during the first quarter 2025.
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During first quarter 2026, we used $296 million of cash to repurchase 0.8 million shares of our common stock under our share repurchase program. As of April 3, 2026, we had $1.9 billion of remaining unused authorizations under our repurchase program. During first quarter 2025, we used $569 million of cash to repurchase 2.7 million shares of our common stock under our share repurchase program.
See “Liquidity and Capital Resources” in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Fiscal 2025 Form 10-K and Part II. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of this Report for further information regarding common stock repurchases.
Long-term debt. On January 14, 2026, we repaid the entire outstanding $100 million 7.00% 2026 Debentures with cash on hand.
As of April 3, 2026, we had $11.0 billion of outstanding total long-term debt, which includes the current portion of long-term debt of $1,816 million. The current portion primarily consists of the $550 million 3.85% 2026 Notes and $1,250 million 5.40% 2027 Notes.
CP Program. During first quarter 2026, our CP Program had a maximum outstanding balance of $880 million and a daily average outstanding balance of $454 million. During first quarter 2025, our CP Program had a maximum outstanding balance of $1.8 billion and daily average outstanding balance of $1.3 billion.
Dividends. On January 23, 2026, we announced that our Board increased the quarterly per share cash dividend rate on our common stock to $1.25 from $1.20, the 25th consecutive annual dividend increase. During first quarter 2026 and 2025, we paid $238 million and $228 million in dividends, respectively. See Part II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities in our Fiscal 2025 Form 10-K for further information regarding our dividends.
Cash Requirements
Except for the level of indebtedness under our CP Program, there were no material changes to our cash requirements or commercial commitments as disclosed in our Fiscal 2025 Form 10-K. Further information about our credit facilities and CP Program can be found in “Capital Resources” in this MD&A and Note G: Debt and Credit Arrangements in the Notes.
Defined Benefit Plan Contributions. As of April 3, 2026, we had net defined benefit plan assets of $1.2 billion, the majority of which pertain to our U.S. qualified defined benefit pension plans. We intend to contribute annually no less than the required minimum funding thresholds to these pension plans and do not expect to make material contributions in fiscal 2026. Future required contributions will depend primarily on the actual return on plan assets and the discount rate used to measure the benefit obligation at the end of each year.
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.
See Note 9: Retirement Benefits in our Fiscal 2025 Form 10-K and Note H: Retirement Benefits in the Notes for further information regarding our defined benefit plans.
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. See the “U.S. and International Budget Environment” discussion above in this MD&A and Part I. Item 1A. Risk Factors in our Fiscal 2025 Form 10-K for more information on budget uncertainties.
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 facility 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 2026 are expected to be approximately $600 million. See “Cash Requirements” in this MD&A and “Capital Resources”, “Cash Requirements” and “Commercial Commitments” in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Fiscal 2025 Form 10-K, for further information regarding our cash requirements.
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CRITICAL ACCOUNTING ESTIMATES
There have been no material changes to the critical accounting estimates disclosed in “Critical Accounting Estimates” in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Fiscal 2025 Form 10-K, except for, as set forth below.
Goodwill
We test our goodwill for impairment annually as of the first day of our fourth fiscal quarter, 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.
Fiscal 2026 Impairment Tests. Effective in fiscal 2026, we streamlined our business segments from four segments to three segments, more closely aligning common capabilities and business models. As a result of the segment reorganization, we realigned our goodwill reporting units from seven to five reporting units, which are our operating segments or one level below the operating segment. Following the realignment, our reporting units are organized as follows: SMS in our SMS segment, Non-Spectrum and Spectrum in our CSD segment, AE and PS in our MSL segment.
The revised reporting unit structure was established through the creation of the new AE reporting unit and reassignment of the three former IMS segment reporting units, TSS+DE, ISR and Maritime. The AE reporting unit was formed by combining two businesses from the former SAS reporting unit and two businesses from the former TSS+DE reporting unit. The remaining businesses from the former TSS+DE reporting unit were aggregated into the former Non-Broadband reporting unit, which was renamed the Non-Spectrum reporting unit; and two businesses from the former SAS reporting unit were aggregated with the former Broadband reporting unit, which was renamed the Spectrum reporting unit. The businesses from the ISR and Maritime reporting units were aggregated with the other businesses in the SMS reporting unit, formerly the SAS reporting unit.
In connection with the realignments, goodwill was allocated to the businesses that moved between reporting units on a relative fair value basis utilizing a combination of income and market approaches. We performed quantitative impairment assessments under our former and new reporting unit structure to assess the impact before and after realignments. These assessments indicated no impairments existed either before or after the realignments.
See Note E: Goodwill and Intangible Assets in the Notes for further information.
At-risk Goodwill. As a result of our quantitative impairment assessments performed under our former and new reporting structure, our reporting units all had clearances above 40%.
Impact of Recently Issued Accounting Pronouncements
There have been no new accounting pronouncements that became effective during first quarter 2026 that have had a material impact on our Condensed Consolidated Financial Statements.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. | ||||
Other than the repayment of long-term debt discussed in the Liquidity and Capital Resources section of Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations above, there were no material changes during first quarter 2026, with respect to our exposure to market risk as discussed in Part II. Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Fiscal 2025 Form 10-K.
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ITEM 4. | CONTROLS AND PROCEDURES. | ||||
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15 under the Exchange Act, management, with the participation of our principal executive officer, our Chief Executive Officer (“CEO”), and our principal financial officer, our Chief Financial Officer (“CFO”), carried out an evaluation of the Company’s disclosure controls and procedures as of April 3, 2026. Based on this evaluation, the CEO and CFO concluded that as of April 3, 2026, our disclosure controls and procedures were designed at a reasonable assurance level and were effective to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.
Changes in Internal Control
As noted in Note A: Basis of Presentation in the Notes, effective in fiscal 2026, we streamlined our business segments from four segments to three segments. While representing a structural reorganization, management has determined that this event has not resulted in a significant change to our control processes, systems, or personnel, and therefore there have been no changes in our internal control over financial reporting during first quarter 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS. | ||||
See Note P: Legal Proceedings and Contingencies in the Notes for discussion regarding material legal proceedings and contingencies. Except as set forth in such discussion, there have been no material developments in legal proceedings as reported in Part I. Item 3. Legal Proceedings in our Fiscal 2025 Form 10-K.
ITEM 1A. | RISK FACTORS. | ||||
Investors should carefully review and consider the information regarding certain factors that could materially affect our business, results of operations, financial condition, cash flows and equity as set forth in Part I. Item 1A. Risk Factors in our Fiscal 2025 Form 10-K. We may disclose changes to our risk factors or disclose additional risk factors from time to time in our future filings with the SEC. Additional risks and uncertainties not presently known to us or that we currently believe not to be material also may adversely impact our business, financial condition, results of operations, cash flows and equity.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. | ||||
Issuer Purchases of Equity Securities
The following table sets forth information with respect to repurchases by us of our common stock during first quarter 2026:
| 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 | |||||||||||||||||||||||
(January 3, 2026 - January 30, 2026) | |||||||||||||||||||||||
Repurchase program(1) | 264,353 | $ | 340.42 | 264,353 | $ | 2,137 | |||||||||||||||||
Employee transactions(2) | 503 | $ | 341.66 | ||||||||||||||||||||
| Month No. 2 | |||||||||||||||||||||||
(January 31, 2026 - February 27, 2026) | |||||||||||||||||||||||
Repurchase program(1) | 173,479 | $ | 348.84 | 173,479 | $ | 2,076 | |||||||||||||||||
Employee transactions(2) | 102,802 | $ | 358.12 | ||||||||||||||||||||
| Month No. 3 | |||||||||||||||||||||||
(February 28, 2026 - April 3, 2026) | |||||||||||||||||||||||
Repurchase program(1) | 404,859 | $ | 358.90 | 404,859 | $ | 1,931 | |||||||||||||||||
Employee transactions(2) | 2,877 | $ | 367.67 | ||||||||||||||||||||
| Total | 948,873 | 842,691 | $ | 1,931 | |||||||||||||||||||
_______________
* Periods represent our fiscal months.
(1) On October 21, 2022, we announced that our Board approved share repurchase authorizations under our repurchase program of $3.0 billion. 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.
(2) Represents shares of our common stock delivered to us in satisfaction of the tax withholding obligation of holders of PSUs or RSUs that vested during the quarter. Our stock incentive plans provide that the value of shares delivered to us to cover tax withholding obligations shall be the closing price of our common stock on the date the relevant transaction occurs.
Sales of Unregistered Equity Securities
During first quarter 2026, we did not issue or sell any unregistered equity securities.
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES. | ||||
None.
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ITEM 4. | MINE SAFETY DISCLOSURES. | ||||
Not applicable.
ITEM 5. | OTHER INFORMATION. | ||||
Securities Trading Plans of Directors and Executive Officers
We require all executive officers and directors to effect purchase and sale transactions in L3Harris securities pursuant to a trading plan (each, a “10b5-1 Plan”) intended to satisfy the requirements of Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”). We limit executive officers to a single 10b5-1 Plan in effect at any time, subject to limited exceptions in accordance with Rule 10b5-1.
The following table includes the material terms (other than with respect to the price) of each 10b5-1 Plan adopted or terminated
| Name and title | Date of adoption of 10b5-1 Plan(1) | Scheduled expiration date of 10b5-1 Plan(2) | Aggregate number of shares of common stock to be purchased or sold(3) | |||||||||||||||||
Up to | ||||||||||||||||||||
Up to | ||||||||||||||||||||
(1) Transactions under each Rule 10b5-1 Plan commence no earlier than 90 days after adoption, or such later date as required by Rule 10b5-1.
(2) Each Rule 10b5-1 Plan may expire on such earlier date as all transactions are completed.
(3) Each Rule 10b5-1 Plan provides for shares to be sold on multiple predetermined dates.
ITEM 6. | EXHIBITS. | ||||
(10.1) Offer Letter, dated February 26, 2026, between L3Harris Technologies, Inc. and Kenneth Sharp.
(101) The financial information from L3Harris Technologies, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 3, 2026 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Statement of Operations, (ii) the Condensed Consolidated Statement of Comprehensive Income , (iii) the Condensed Consolidated Balance Sheet, (iv) the Condensed Consolidated Statement of Cash Flows, (v) the Condensed Consolidated Statement of Equity, and (vi) the Notes to Condensed Consolidated Financial Statements.
(104) Cover Page Interactive Data File formatted in Inline XBRL and contained in Exhibit 101.
* Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
L3HARRIS TECHNOLOGIES, INC. | ||||||||||||||
(Registrant) | ||||||||||||||
Date: April 30, 2026 | By: | /s/ KENNETH SHARP | ||||||||||||
| Kenneth Sharp | ||||||||||||||
| Senior Vice President and Chief Financial Officer | ||||||||||||||
| (Principal Financial Officer) | ||||||||||||||
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