L3HARRIS TECHNOLOGIES, INC. /DE/

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.

In the opinion of management, these interim financial statements reflect all adjustments (including normal recurring adjustments) considered necessary for a fair presentation of our financial condition, results of operations, cash flows and equity for the periods presented. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended January 2, 2026 (our “Fiscal 2025 Form 10-K”). The accompanying Condensed Consolidated Balance Sheet as of January 2, 2026 has been derived from our audited financial statements in our Fiscal 2025 Form 10-K.

Our fiscal year is based on a 52- or 53-week period ending on the Friday nearest December 31. The fiscal quarters ended October 2, 2026 (“third quarter 2026”) and October 3, 2025 (“third quarter 2025”) include thirteen and fourteen weeks, respectively. The year-to-date periods ended October 2, 2026 (“year to date 2026”) and October 3, 2025 (“year to date 2025”) both include thirty-nine weeks.

Segment Reorganization

Effective in fiscal 2026, we streamlined our operating segments, which are also our reportable segments or business segments, from four segments tothree 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 (“CODM”) 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;

Communications & 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.

Information on the reallocation of goodwill in connection with the segment reorganization can be found under the “Reallocation of Goodwill in Segment Reorganization” heading in Note E: Goodwill and Intangible Assets in our Form 10-Q for first quarter 2026, which information is incorporated herein by reference.

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 has been adjusted in our Condensed Consolidated Financial Statements and these Notes to conform to current year classifications.

Recently Issued Accounting Pronouncements

In May 2026, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2026-02, Environmental Credits and Environmental Credit Obligations, which provides guidance on how companies should recognize, measure, and present environmental credits and environmental credit obligations in their financial statements. ASU 2026-02 is effective for annual and interim reporting periods beginning after December 15, 2027, and should be applied retrospectively. We are currently evaluating the potential impact of adopting ASU 2026-02 on our operating results, financial position and cash flows.

For information on accounting pronouncements issued prior to fiscal 2026, see Note 1: Significant Accounting Policies in our Fiscal 2025 Form 10-K.

NOTE B: STRATEGIC INVESTMENT IN SUBSIDIARY

Overview

On April 17, 2026, with respect to our wholly owned subsidiary, Aerojet Rocketdyne Holdings, Inc. (“AR”), which operates as our Missile Solutions segment, we entered into a definitive agreement (the “DoW Investment Agreement”) with the United States Department of War (“DoW” or the “Investor”). The DoW Investment Agreement provided for the issuance and sale of 10,000 shares of Redeemable AR Series A Convertible Preferred Stock (the “Subsidiary Series A Preferred Stock”) par value of $0.0001 per share and stated value of $100,000 per share, and pre-initial public offering (“IPO”) and, upon a Qualified IPO (as defined in the DoW Investment Agreement), post-IPO warrants (collectively the “Subsidiary Warrants”), for an aggregate purchase price of $1 billion, which is the initial face value of the Subsidiary Series A Preferred Stock.

The Subsidiary Series A Preferred Stock payout options include one of the following: (i) a liquidation preference equal to face value of the preferred shares plus 7% cumulative annual dividends, compounded quarterly (the “Liquidation Preference”); (ii) an automatic conversion into common stock of our wholly owned subsidiary AXYV Inc. (“AXYV”), at a 20% discount to the IPO stock price upon a Qualified IPO on or before December 31, 2027; or (iii) either Investor conversion on demand or redemption on or after April 17, 2031, at fair value, if a Qualified IPO does not occur by December 31, 2027. Under the DoW Investment Agreement, we are expected to use commercially reasonable efforts to consummate a Qualified IPO. The options are mutually exclusive and are dependent on achieving specified milestones.

The purpose of the investment is to strengthen the U.S. defense industrial base by providing funding for the Missile Solutions segment to expand and modernize its facilities, accelerate research and development, and increase production capacity for critical technologies. The fair value of the investment exceeds the proceeds as it simultaneously provides financing, the opportunity to substantially expand an existing commercial relationship, and the benefit of an anchor investor whose participation tangibly demonstrates the Missile Solutions segment’s strong long-term business prospects.

The DoW Investment Agreement contains customary representations, warranties, and covenants by us and the Investor. Under the terms of the DoW Investment Agreement, AR may redeem, or the Investor may require the redemption of, the Subsidiary Series A Preferred Stock and Subsidiary Warrants held by the Investor under certain conditions.

Use of Proceeds

Under terms of the DoW Investment Agreement, net proceeds of $973 million are to be used to fund development and construction activities for expanding our missile manufacturing capacity and capabilities within our Missile Solutions segment. We intend to use the remaining net proceeds, if any, for general corporate purposes. The net proceeds are included in the “Proceeds from issuance of subsidiary Series A preferred stock, net” line item in our Condensed Consolidated Statement of Cash Flows as Net cash used in financing activities.

Preferred Stock

Because redemption of the Subsidiary Series A Preferred Stock is not solely within our control due to the redemption features described above, the Subsidiary Series A Preferred Stock is classified as mezzanine equity and included in the “Redeemable subsidiary Series A convertible preferred stock” line item in our Condensed Consolidated Balance Sheet.

Conversion Upon Qualified IPO On or Before December 31, 2027. Upon completion of a Qualified IPO, the Subsidiary Series A Preferred Stock will convert into common stock of AXYV (“AXYV Common Stock”) at a 20% discount to the public offering price in the Qualified IPO. The conversion terms are designed to provide the holder with a fixed return settled in a variable number of shares of AXYV Common Stock. The Investor’s ownership percentage would be determined based on the valuation of AXYV at the time of a Qualified IPO.

Fair Value Conversion or Redemption After December 31, 2027. If a Qualified IPO does not occur on or before December 31, 2027, the redemption price calculation methodology varies depending on whether specified milestones have been achieved by such date. If such milestones are not achieved by December 31, 2027, the redemption price would be calculated by applying a contractual premium of 110% to the Liquidation Preference.

If the milestones are achieved by December 31, 2027, the Investor can convert the Subsidiary Series A Preferred Stock at any time (including in the case of an IPO after December 31, 2027), or a redemption on or after April 17, 2031 could occur. The Investor’s conversion rate will be determined based on the face value of the Subsidiary Series A Preferred Stock ($1 billion) divided by 15 times 2026 AXYV earnings before interest, taxes, depreciation, and amortization (“EBITDA”). The redemption price would be calculated on or after April 17, 2031, and would equal the greater of (i) the Liquidation Preference or (ii) the fair market value, calculated in the same manner as noted above.

Redemption Upon Sale of AXYV. If there is a sale of AXYV before a Qualified IPO, or after December 31, 2027 but prior to a Qualified IPO and specified milestones have not been achieved, the redemption price would be calculated by applying a contractual premium of 110% to the Liquidation Preference. If specified milestones have been achieved, the Investor is entitled to receive cash equal to the greater of the Liquidation Preference or a pro forma ownership percentage which is calculated as the face value of the Subsidiary Series A Preferred Stock divided by 15 times 2026 AXYV EBITDA.

Conversion and Redemption Feature Embedded Derivatives. Certain of the conversion and redemption features represent embedded derivatives. These features of the Subsidiary Series A Preferred Stock were bifurcated from the host instrument and recorded as a derivative liability, which is included in the “Subsidiary Series A preferred stock conversion feature” line item in the Condensed Consolidated Balance Sheet at its fair value. The derivative liability is measured at fair value each reporting period, with changes recognized in earnings as a component of the “Other non-operating (expense) income, net” line item in our Condensed Consolidated Statement of Operations.

Warrants

The Subsidiary Warrants entitle the Investor to purchase shares representing 3% of the AXYV Common Stock, on a fully diluted basis, and consist of pre-IPO warrants exercisable at 100%,110%, and 120% of the non-IPO common stock price, and post-IPO warrants exercisable at 100%,110%, and 120% of the Qualified IPO price, which take effect upon a Qualified IPO. The pre-IPO warrants become exercisable only upon (i) the occurrence of certain events outlined in the DoW Investment Agreement and (ii) the passage of time (i.e., on or after December 31, 2027), but only if certain operational conditions are met that are outside the control of the Company and the Investor.

The pre-IPO warrants are accounted for as derivative liabilities, included in the “Subsidiary warrants” line item in the Condensed Consolidated Balance Sheet, initially measured at fair value with subsequent changes recognized in earnings as a component of the “Other non-operating (expense) income, net” line item in our Condensed Consolidated Statement of Operations.

Immediately prior to the Qualified IPO, the pre-IPO warrants will automatically convert into post-IPO warrants of AXYV. The number of shares underlying the post-IPO warrants will be calculated as a specified percentage of the fully diluted AXYV Common Stock immediately prior to the Qualified IPO, after giving effect to the conversion of the Subsidiary Series A Preferred Stock.

Fair Value Measurements

The conversion and redemption feature embedded derivatives and warrants are measured at fair value with probabilities associated with expected Qualified IPO timing and probability, projected valuation of AXYV, equity volatility, and probability-weighted scenario outcomes. The significant unobservable quantitative inputs used for the fair value measurement of the warrants are the projected valuation of AXYV and the equity volatility, which is 30% as of October 2, 2026. These liabilities are classified within Level 3 of the fair value hierarchy. See Note H: Fair Value Measurements for further information on fair value methodology.

Measurement and Recognition

The fair value of the Subsidiary Series A Preferred Stock was initially assigned first to the conversion feature embedded derivative based on the fair value at issuance and the residual amount was recorded as the initial fair value of the Subsidiary Series A Preferred Stock. The Subsidiary Warrants were separately recognized at their fair value. Our fair value estimates as of October 2, 2026 are substantially weighted to reflect a Qualified IPO prior to December 31, 2027, in line with our expectation to use commercially reasonable efforts to consummate a Qualified IPO by such date.

Fair values recognized upon initial issuance, fair value adjustments related to updates in assumptions recognized during third quarter and the fair values of the instruments as of October 2, 2026 recognized in our Condensed Consolidated Balance Sheet are summarized below:

(1)Included as a component of the “Other non-operating (expense) income, net” line item in our Condensed Consolidated Statement of Operations.

Program Investment Asset. We also recognized a program investment intangible asset of $386 million, representing the fair value in excess of cash proceeds from our issuance of preferred stock, embedded derivative instruments, and warrants related to the DoW strategic investment. Amortization of the program investment asset commenced in third quarter 2026 and is being recognized as a reduction to revenue on a straight-line basis over its estimated useful life of 20 years. The asset is included in the “Intangible assets, net” line item in the Condensed Consolidated Balance Sheet and the initial recognition of this asset is a non-cash financing activity, excluded from our Condensed Consolidated Statement of Cash Flows.

Upon recognition of the program investment asset, we recorded a deferred tax liability of $89 million, which is netted against the Subsidiary Series A Preferred Stock, and is included in the “Deferred income taxes” line item in the Condensed Consolidated Balance Sheet.

Transaction Costs. We incurred transaction costs of $27 million in connection with the issuance of the Subsidiary Series A Preferred Stock and related derivative instruments. These costs were recognized as a reduction to the initial carrying value of the Subsidiary Series A Preferred Stock, reflected in the “Redeemable subsidiary Series A convertible preferred stock” line item in the Condensed Consolidated Balance Sheet.

Subsidiary Preferred Stock Deemed Dividends. The Subsidiary Series A Preferred Stock has multiple redemption and conversion factors, as described above. As of October 2, 2026, we evaluated if the Subsidiary Series A Preferred Stock was currently redeemable or probable of becoming redeemable. While the Subsidiary Series A Preferred Stock is not currently redeemable, it is probable of becoming redeemable based on passage of time and certain milestones that are not currently achieved. The highest redemption value should not consider the Subsidiary Series A preferred stock conversion feature as it represents value incremental to Liquidation Preference. Therefore, we will recognize accretion to the highest redemption value of $1,422 million, representing the expected Liquidation Preference amount at April 17, 2031, through a subsidiary preferred stock deemed dividend which will be recognized ratably over time through April 17, 2031.

The Redeemable subsidiary Series A convertible preferred stock recognized in Mezzanine equity in our Condensed Consolidated Balance Sheet is summarized below:

NOTE C: EARNINGS PER SHARE AVAILABLE TO COMMON SHAREHOLDERS (“EPS”)

EPS is calculated as net income available to common shareholders divided by our weighted-average number of basic or diluted common shares outstanding. Net income available to common shareholders is calculated by reducing net income by the amount of the subsidiary preferred stock deemed dividends associated with the Subsidiary Series A Preferred Stock, as it is not a participating security.

Potential dilutive common shares primarily consist of employee stock options, restricted stock units (“RSUs”), performance share units (“PSUs”), Subsidiary Series A Preferred Stock and Subsidiary Warrants. As of October 2, 2026, the Subsidiary Series A Preferred Stock is anti-dilutive and the Subsidiary Warrants are not currently exercisable, therefore, both instruments are excluded from the diluted EPS calculation.

See Note B: Strategic Investment in Subsidiaryfor further information on the subsidiary preferred stock deemed dividends, Subsidiary Series A Preferred Stock and Subsidiary Warrants.

Basic and diluted EPS are calculated as follows:

Anti-dilutive share-based awards excluded from diluted EPS were 0.4 million and 0.9 million for third quarter and year to date 2026, respectively, and 2.0 million for year to date 2025. There wereno anti-dilutive share-based awards excluded from diluted EPS for third quarter 2025.

NOTE D: 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:

(1)Included as a component of the “Other non-current liabilities” line item in our Condensed Consolidated Balance Sheet.

During third quarter and year to date 2026, we recognized revenue of $274 million and $1,616 million, respectively, related to contract liabilities that were outstanding as of January 2, 2026. During third quarter and year to date 2025, we recognized revenue of $270 million and $1,485 million, respectively, related to contract liabilities that were outstanding as of January 3, 2025.

NOTE E: INVENTORIES, NET

Inventories, net are summarized below:

NOTE F: GOODWILL AND INTANGIBLE ASSETS

Goodwill

Changes in the carrying amount of goodwill, by business segment, were as follows:

(1)Balances reflect impact of segment reorganization, as discussed in Note A: Basis of Presentation. Information on the reallocation of goodwill in connection with the reorganization can be found under the “Reallocation of Goodwill in Segment Reorganization” heading in Note E: Goodwill and Intangible Assets in our Form 10-Q for first quarter 2026, which information is incorporated herein by reference.

As of both October 2, 2026 and January 2, 2026, accumulated goodwill impairment losses were $120 million and $431 million in our Space and Mission Systems and Communications and Spectrum Dominance segments, respectively. As of October 2, 2026 and January 2, 2026, accumulated impairment losses in our Missile Solutions segment, were $238 million and $337 million, respectively. The decrease reflects the removal upon sale of $99 million of accumulated impairment losses in connection with the August 3, 2026 divestiture of certain businesses previously reported in our Missile Solutions segment (“Space Technology disposal group”). See Note O: Divestitures for further information.

Intangible Assets

Intangible assets, net are summarized below:

(1)Acquisition-related intangibles recorded at Corporate, as they benefit the entire Company. Amortization is included in “Unallocated corporate items and other, net” in Note Q: Business Segment Information.

(2)Asset is recorded at Corporate, as it benefits the entire Company. Amortization is included in the “Revenue” line item of our Condensed Consolidated Statement of Operations. See Note B: Strategic Investment in Subsidiary for further information.

Amortization for intangible assets was $152 million and $503 million for third quarter and year to date 2026, respectively, and $192 million and $579 million for third quarter and year to date 2025, respectively. Future estimated amortization for intangible assets is as follows:

NOTE G: 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 third quarter 2026.

Effective Tax Rate

Our effective tax rate was as follows:

Both third quarter 2026 and 2025 effective tax rate benefited from favorable impacts of research and development (“R&D”) credits and tax deductions for foreign derived deduction-eligible intangible income (“FDDEI”). Third quarter 2026 effective tax rate reflects an incremental benefit of 10% associated with the favorable resolution of audit uncertainties, partially offset by an unfavorable impact from pre-divestiture activities of the Space Technology disposal group. Third quarter 2025 effective tax rate was unfavorably impacted by the reduction in R&D credits from the enactment of the One Big Beautiful Bill Act (“OBBBA”) and the Commercial Aviation Solutions (“CAS disposal group”) divestiture, partially offset by a favorable return-to-provision adjustment.

Both year to date 2026 and 2025 effective tax rate benefited from the favorable resolution of audit uncertainties, favorable impacts of R&D credits and tax deductions for FDDEI. Year to date 2026 effective tax rate is lower than year to date 2025 effective tax rate primarily due to the establishment of a valuation allowance on R&D credit carryforwards in year to date 2025 resulting from a state legislative change.

NOTE H: 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.

For further information on assets and liabilities measured at fair value on a recurring basis, see Note B: Strategic Investment in Subsidiary, Note J: Retirement Benefits and Note P: Investments. For further information on fair value of long-term debt, see Note I: Debt and Credit Arrangements.

NOTE I: DEBT AND CREDIT ARRANGEMENTS

Long-Term Debt

Long-term debt is summarized below:

(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 October 2, 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 October 2, 2026 and January 2, 2026, the estimated fair value of long-term debt was $10.6 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 H: Fair Value Measurements for further information on fair value.

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 Arrangementsin our Fiscal 2025 Form 10-K.

As of October 2, 2026, we hadno outstanding borrowings under the 2025 Five-Year Credit Agreement and had available borrowing capacity of $2.5 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 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 October 2, 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.

As of both October 2, 2026 and January 2, 2026, we hadno outstanding notes under our CP Program.

NOTE J: RETIREMENT BENEFITS

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 and corporate-owned life insurance (“COLI”) contracts. Liabilities represent participant balances in marketable equity securities and common/collective trusts (“CCTs”) and guaranteed investment contracts (“GICs”) based on participant designated investment options.

The following table summarizes our deferred compensation plan assets and liabilities and classifications within the fair value hierarchy:

(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.

See Note H: Fair Value Measurementsfor further information on fair value.

Defined Benefit Plans

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:

(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” line item in our Condensed Consolidated Statement of Operations.

NOTE K: SHARE-BASED COMPENSATION

As of October 2, 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:

(1)Other than certain stock options granted in connection with new hires, our stock options generally vest ratably in equal amounts over athree-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 thethree-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 0.1 million and 0.6 million for third quarter and year to date 2026, respectively, and 0.7 million and 1.1 million for third quarter and year to date 2025, respectively.

Share-based compensation expense was $1 million of income and $48 million of expense for third quarter and year to date 2026, respectively, and $35 million and $83 million of expense for third quarter and year to date 2025, respectively. Both third quarter and year to date 2026 include $20 million of income from reversal of previously recognized share-based compensation expense resulting from the forfeiture of certain unvested equity awards, including 0.1 million shares granted year to date 2026.

NOTE L: SHAREHOLDERS' EQUITY

Common Stock

Authorized common stock consists of 500,000,000 shares, with a $1 par value per share, of which 186,144,686 shares and 186,844,093 shares were issued and outstanding as of October 2, 2026 and January 2, 2026, respectively.

Share Repurchase Program. On October 21, 2022, we announced that our Board of Directors (“Board”) approved a $3.0 billion share repurchase authorization under our repurchase program. Our previous $6.0 billion share repurchase authorization was fully utilized during first quarter 2025. Our repurchase program does not have an expiration date and authorizes us to repurchase shares of our common stock through open market purchases, private transactions, transactions structured through investment banking institutions or any combination thereof.

During year to date 2026, we repurchased 1.8 million shares of our common stock under our share repurchase program for $598 million and had remaining unused authorizations of $1.6 billion as of October 2, 2026. During year to date 2025, we repurchased 4.5 million shares of our common stock under our share repurchase program for $998 million and had remaining unused authorizations of $2.4 billion as of October 3, 2025.

Preferred Stock

Authorized preferred stock consists of 1,000,000 shares, without par value, of whichno shares were issued and outstanding as of both October 2, 2026 and January 2, 2026.

Accumulated Other Comprehensive Income (Loss) (“AOCI”)

Changes in the components of AOCI, net of tax were as follows:

(1)Other, net consists of hedging derivatives.

(2)See Note J: Retirement Benefits for additional information.

NOTE M: 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:

(1)Based on a 25 percent federal and state statutory tax rate.

NOTE N: 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 (“IDIQ”) contracts.

As of October 2, 2026, our contractual backlog and funded contractual backlog was $53.2 billion and $31.2 billion, respectively. We expect to recognize approximately 35% of our contractual backlog as revenue over the next twelve months and 55% as revenue over the next twenty-four months, with the remainder to be recognized thereafter.

NOTE O: DIVESTITURES

Space Technology Disposal Group

On August 3, 2026, we completed the sale of a 60% controlling interest in our Space Technology disposal group for cash proceeds, net of cash divested, of $539 million, subject to final purchase price adjustments, including the final working capital settlement, as set forth in the agreement. In connection with the transaction, we recognized a $248 million equity method investment, reflecting the fair value of our retained 40% noncontrolling interest in the newly formed company, RocketForce Technologies LLC (“Rocketdyne”). See Note P: Investments for further information on our Rocketdyne equity method investment.

In connection with the transaction, we recognized pre-tax losses of $17 million and $27 million for third quarter and year to date 2026, respectively, which are included in the “General and administrative expenses” line item in our Condensed Consolidated Statement of Operations. The fiscal 2026 losses are incremental to the $54 million loss recognized in fiscal 2025.

The Space Technology disposal group consists of certain contributed assets and liabilities of the Space Propulsion and Power Systems business and the Space Avionics & Communications division, both previously reported in our Missile Solutions segment. The Space Technology disposal group excludes our RS-25 rocket engine and hypersonics businesses.

The carrying values of the Space Technology disposal group assets and liabilities divested on August 3, 2026 and carrying values of the Space Technology disposal group assets and liabilities classified as held for sale as of January 2, 2026 in our Condensed Consolidated Balance Sheet were as follows:

Income before income taxes attributable to the Space Technology disposal group was $5 million and $64 million for third quarter and year to date 2026, respectively, and $23 million and $61 million for third quarter and year to date 2025, respectively.

CAS Disposal Group

On March 28, 2025, we completed the sale of our CAS disposal group, which provided integrated aircraft avionics, pilot training and data analytics services for the commercial aviation industry, for cash proceeds, net of cash divested, of $831 million as of year to date 2025. The operating results of the CAS disposal group are reported in other non-reportable businesses, within Unallocated corporate items and other, net in Note Q: Business Segment Information, through the date of sale. For additional information on the CAS disposal group, see Note 13: Acquisitions and Divestituresin our Fiscal 2025 Form 10-K.

NOTE P: INVESTMENTS

Short-Term Investments

During third quarter 2026, we entered into time deposits with contractual maturities of more than three months but less than one year. Time deposits are held with high credit quality financial institutions and are intended to be held to maturity. As of October 2, 2026, the aggregate carrying value of our time deposits was $550 million, which is included in the “Short-term investments” line item in our Condensed Consolidated Balance Sheet.

Fair Value. The fair value of our time deposits approximates the carrying value due to its short-term nature and would be classified as Level 2 in the fair value hierarchy. See Note H: Fair Value Measurements for further information on fair value.

Non-Current Investments

We hold investments in certain companies that align with our strategic business objectives, including advancing capabilities, market access and technology development. The majority of our investments are reported at Corporate, as they benefit the entire Company, while certain investments strategically aligned with our segments, are reported within the respective segment. See “Segment aligned investment” discussion below for further information.

Rocketdyne Equity Method Investment. On August 3, 2026, in connection with the divestiture of the Space Technology disposal group, further discussed in Note O: Divestitures, we recorded an initial equity method investment of $248 million, reflecting fair value of our 40% retained noncontrolling interest in Rocketdyne. The recognition of this investment is a non-cash investing activity, excluded from our Condensed Consolidated Statement of Cash Flows.

Segment Aligned Investments. Investments in companies with dual-use technologies that accelerate our capabilities, improve go-to-market efforts and are operationally aligned with our business segments are reported within segment assets. Investment gains, losses and impairments associated with segment aligned investments are included in segment operating income, the profit measure reviewed and used by the CODM for evaluating segment performance and allocating resources. See Note Q: Business Segment Information for further information.

As of October 2, 2026, segment aligned investments, consisting of both equity method and equity interest investments, were $54 million and $43 million in our Space and Mission Systems and Communications and Spectrum Dominance segments, respectively. Net investment gains included in segment operating income were $39 million for year to date 2026. There wereno investment gains or losses included in segment operating income for third quarter 2026, third quarter 2025 or year to date 2025.

Non-current investments, included as a component of the “Other non-current assets” line item in our Condensed Consolidated Balance Sheet, are summarized below:

Investment gains (losses) associated with our non-current investments, included as a component of the “Other non-operating (expense) income, net” line item in our Condensed Consolidated Statement of Operations, are summarized below:

NOTE Q: BUSINESS SEGMENT INFORMATION

Description of Business Segments

We structure our operations primarily around the capabilities we provide, with each segment consisting of similar end products and technologies, 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 CODM manages the business, evaluates performance and allocates resources. In second quarter 2026, we enhanced our business segment disclosure to clarify the manner in which our CODM evaluates segment performance and allocates resources. Investment gains and losses, net of impairments, associated with investments in companies with dual-use technologies that accelerate our capabilities, improve go-to-market efforts and are operationally aligned with our business segments are included in the respective segments’ operating income. There were no material changes to the historical results, discussion and presentation of our business segments in the accompanying Condensed Consolidated Financial Statements and these Notes. Ourthree business segments are:

Space & Mission Systems: 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.

Communications & Spectrum Dominance: 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: 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; 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.

Missile Solutions: 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:

Propulsion Systems: Provides propulsion, maneuvering, and control technologies as well as fuzing systems that support missile defense interceptors, strategic deterrence systems, and precision strike weapons; and space propulsion for national security and space exploration missions.

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.

Business Segment Financial Results

The following table presents results by business segment:

(1)Includes corporate headquarters. Additionally, year to date 2025 includes other non-reportable businesses, which consists of the CAS disposal group.

(2)Included as a component of the “General and administrative expenses” line item in our Condensed Consolidated Statement of Operations.

(3)Includes selling and marketing costs and other General and Administrative (“G&A”) expenses, which includes depreciation and amortization costs that are disaggregated by segment under the “Disaggregation of Revenue” heading below in this Note, and investment gains recognized on segment aligned investments. See Note P: Investments for further information.

The following table presents a reconciliation of segment operating income to consolidated Income before income taxes:

Unallocated Corporate Items and Other, Net. Unallocated corporate items 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; a portion of management and administration, legal, environmental, compensation and retiree benefits, and the FAS/Cost Accounting Standards (“CAS”) operating adjustment.

Other, net includes the operating results of other non-reportable businesses, which consists of the CAS disposal group, eliminations and other. Other, net also includes a segment investment offset to eliminate the effect of net investment gains on segment aligned investments included in segment operating income, when applicable. There wereno segment investment gains or losses recognized in third quarter and $39 million of segment investment gains recognized in year to date 2026. There wereno segment investment gains or losses recognized in third quarter or year to date 2025. Net investment gains or losses are included in the “Other non-operating (expense) income, net” line item in our Condensed Consolidated Statement of Operations. See Note P: Investments for further information.

Assets

Total assets by business segment were as follows:

Other Financial Information

Other financial information by business segment is summarized below:

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.

(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 R: 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 October 2, 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 October 2, 2026 were reserved against or would not have a material adverse effect on our financial condition, results of operations, cash flows or equity.

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 us or companies we acquired 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 $700 million and $659 million as of October 2, 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 $521 million and $483 million, as of October 2, 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.