L3harris Technologies, Inc 10-Q for FY2022 Q1

L3harris Technologies, Inc. (LHX)

10-Q 2022-04-29 For: 2022-04-01

Added on April 10, 2026

About this 10-Q

L3harris Technologies, Inc filed this 10-Q on April 29, 2022, covering the quarter ended April 1, 2022 (FY2022 Q1).

Headline figures

Quarter ended April 1, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $4.1B; down 10.2% from $4.57B a year earlier
Net income: $475M; up 1.5% from net income of $468M a year earlier
Diluted EPS: $2.44; up 8.4% from $2.25 a year earlier

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Delaware									34-0276860
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)


		Page No.

Part I. Financial Information:
	ITEM 1 . Financial Statements (Unaudited):
	C ondensed C on soli dated Statement of Income for the Quarter Ended April 1, 2022 and April 2, 2021	1
	C onde nsed C onsolidated Statement of Comprehensive Income for the Quarter Ended April 1, 2022 and April 2, 2021	2
	Condensed Consolidated Balance Sheet at April 1, 2022 and December 31, 2021	3
	C ondensed C onsolidated Statement of Cash Flow s for the Quarter Ended April 1, 2022 and April 2, 2021	4
	C ondensed C onsolidated Statement of Equity for the Quarter Ended April 1, 2022 and April 2, 2021	5
	Notes to Condensed Consolidated Financial Statements	6
	Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)	18
	ITEM 2 . Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	ITEM 3 . Quantitative and Qualitative Disclosures About Market Risk	28
	ITEM 4 . Controls and Procedures	28

Part II. Other Information:
	ITEM 1 . Legal Proceedings	30
	ITEM 1A. Risk Factors	30
	ITEM 2 . Unregistered Sales of Equity Securities and Use of Proceeds	30
	ITEM 3 . Defaults Upon Senior Securities	31
	ITEM 4. Mine Safety Disclosures	31
	ITEM 5 . O ther Information	31
	ITEM 6. Exhibits	31

Signatures		32


	Quarter Ended
(In millions, except per share amounts)	April 1, 2022		April 2, 2021

Revenue from product sales and services	$	4,103	$	4,567
Cost of product sales and services	(2,892)		(3,213)
Engineering, selling and administrative expenses	(713)		(801)
Business divestiture-related losses	—		(15)
Impairment of goodwill and other assets	—		(62)
Non-operating income	106		117


Interest expense, net	(68)		(66)
Income from continuing operations before income taxes	536		527
Income taxes	(61)		(60)
Income from continuing operations	475		467
Discontinued operations, net of income taxes	—		(1)
Net income	475		466
Noncontrolling interests, net of income taxes	—		2
Net income attributable to L3Harris Technologies, Inc.	$	475	$	468

Amount attributable to L3Harris Technologies, Inc. common shareholders
Income from continuing operations	$	475	$	469
Discontinued operations, net of income taxes	—		(1)
Net income	$	475	$	468

Net income per common share attributable to L3Harris Technologies, Inc. common shareholders
Basic
Continuing operations	$	2.46	$	2.27
Discontinued operations	—		(0.01)
	$	2.46	$	2.26
Diluted
Continuing operations	$	2.44	$	2.25
Discontinued operations	—		—
	$	2.44	$	2.25

Basic weighted average common shares outstanding	193.2		206.7
Diluted weighted average common shares outstanding	195.1		208.5


	Quarter Ended
(In millions)	April 1, 2022		April 2, 2021

Net income	$	475	$	466
Other comprehensive income (loss):
Foreign currency translation loss, net of income taxes	(3)		(18)
Net unrealized gain on hedging derivatives, net of income taxes	5		5

Other comprehensive income (loss), recognized during the period	2		(13)
Reclassification adjustments for gains included in net income	(6)		(2)
Other comprehensive loss, net of income taxes	(4)		(15)
Total comprehensive income	471		451
Comprehensive loss attributable to noncontrolling interests	—		2
Total comprehensive income attributable to L3Harris Technologies, Inc.	$	471	$	453


(In millions, except shares)	April 1, 2022		December 31, 2021

Assets
Current Assets
Cash and cash equivalents	$	402	$	941
Receivables, net	1,283		1,045
Contract assets	3,113		3,021
Inventories	1,090		982
Inventory prepayments	58		48
Income taxes receivable	54		98
Other current assets	249		224

Total current assets	6,249		6,359
Non-current Assets
Property, plant and equipment, net	2,078		2,101
Operating lease right-of-use assets	775		769
Goodwill	18,194		18,189
Other intangible assets, net	6,486		6,640
Deferred income taxes	91		85
Other non-current assets	571		566

Total non-current assets	28,195		28,350
	$	34,444	$	34,709
Liabilities and Equity
Current Liabilities
Short-term debt	$	3	$	2
Accounts payable	1,723		1,767
Contract liabilities	1,275		1,297
Compensation and benefits	290		444
Other accrued items	997		1,002
Income taxes payable	187		28
Current portion of long-term debt, net	262		11

Total current liabilities	4,737		4,551
Non-current Liabilities
Defined benefit plans	524		614
Operating lease liabilities	777		768
Long-term debt, net	6,795		7,048
Deferred income taxes	1,189		1,344
Other long-term liabilities	1,056		1,065

Total non-current liabilities	10,341		10,839
Equity
Shareholders’ Equity:
Preferred stock, without par value; 1,000,000 shares authorized; none issued	—		—
Common stock, $1.00 par value; 500,000,000 shares authorized; issued and outstanding 192,805,539 and 193,511,401 shares at April 1, 2022 and December 31, 2021, respectively	193		194
Other capital	16,089		16,248
Retained earnings	3,128		2,917
Accumulated other comprehensive loss	(150)		(146)
Total shareholders’ equity	19,260		19,213
Noncontrolling interests	106		106
Total equity	19,366		19,319
	$	34,444	$	34,709


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


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from _______________ to ______________


(In millions, except per share amounts)	Common Stock		Other Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Non-controlling Interests		Total Equity

Balance at December 31, 2021	$	194	$	16,248	$	2,917	$	(146)	$	106	$	19,319
Net income	—		—		475		—		—		475
Other comprehensive loss, net of income taxes	—		—		—		(4)		—		(4)
Shares issued under stock incentive plans	—		30		—		—		—		30
Shares issued under defined contribution plans	—		55		—		—		—		55
Share-based compensation expense	—		28		—		—		—		28
Tax withholding payments on share-based awards	—		(12)		—		—		—		(12)
Repurchases and retirement of common stock	(1)		(260)		(47)		—		—		(308)
Cash dividends ($1.12 per share)	—		—		(218)		—		—		(218)
Distributions to noncontrolling interests	—		—		—		—		(1)		(1)
Other	—		—		1		—		1		2
Balance at April 1, 2022	$	193	$	16,089	$	3,128	$	(150)	$	106	$	19,366

Balance at January 1, 2021	$	208	$	19,008	$	2,347	$	(839)	$	117	$	20,841
Net income	—		—		468		—		(2)		466
Other comprehensive loss, net of income taxes	—		—		—		(15)		—		(15)
Shares issued under stock incentive plans	—		10		—		—		—		10
Shares issued under defined contribution plans	—		57		—		—		—		57
Share-based compensation expense	—		33		—		—		—		33

Repurchases and retirement of common stock	(3)		(620)		(77)		—		—		(700)
Cash dividends ($1.02 per share)	—		—		(209)		—		—		(209)

Other	—		(1)		—		—		—		(1)
Balance at April 2, 2021	$	205	$	18,487	$	2,529	$	(854)	$	115	$	20,482


(In millions)	Foreign currency translation		Net unrealized losses on hedging derivatives		Unrecognized postretirement obligations		Total AOCI

Balance at December 31, 2021	$	(118)	$	(89)	$	61	$	(146)


Other comprehensive (loss) income before reclassifications to earnings, net of income taxes	(3)		5		—		2


Gains reclassified to earnings, net of income taxes	—		(1)		(5)		(6)
Other comprehensive (loss) income, net of income taxes	(3)		4		(5)		(4)
Balance at April 1, 2022	$	(121)	$	(85)	$	56	$	(150)

Balance at January 1, 2021	$	(58)	$	(80)	$	(701)	$	(839)


Other comprehensive (loss) income before reclassifications to earnings, net of income taxes	(18)		5		—		(13)


(Gains) losses reclassified to earnings, net of income taxes	—		(3)		1		(2)
Other comprehensive (loss) income, net of income taxes	(18)		2		1		(15)
Balance at April 2, 2021	$	(76)	$	(78)	$	(700)	$	(854)


(In millions)	Integrated Mission Systems		Space & Airborne Systems		Communication Systems		Aviation Systems(1)		Total

Balance at December 31, 2021 - As Reported	$	6,485	$	5,202	$	4,153	$	2,349	$	18,189
Transfer of goodwill in segment reorganization(1)	1,702		647		—		(2,349)		—
Balance at December 31, 2021 - After Reallocation	8,187		5,849		4,153		—		18,189

Currency translation adjustments	6		(2)		1		—		5

Balance at April 1, 2022	$	8,193	$	5,847	$	4,154	$	—	$	18,194


	(In millions)

Balance at December 31, 2021	$	117



Accruals for product warranties issued during the period	17
Settlements made during the period	(30)
Other, including foreign currency translation adjustments	(2)
Balance at April 1, 2022	$	102


	Quarter Ended April 1, 2022				Quarter Ended April 2, 2021
(In millions)	Pension		Other Benefits		Pension		Other Benefits

Net periodic benefit income
Operating
Service cost	$	10	$	1	$	18	$	1
Non-operating
Interest cost	55		2		46		1
Expected return on plan assets	(156)		(5)		(155)		(5)
Amortization of net actuarial loss (gain)	2		(2)		9		—
Amortization of prior service credit	(6)		—		(7)		—


Non-service cost periodic benefit income	(105)		(5)		(107)		(4)
Net periodic benefit income	$	(95)	$	(4)	$	(89)	$	(3)


ITEM 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.


	Quarter Ended
(Dollars in millions, except per share amounts)	April 1, 2022			April 2, 2021			% Inc/(Dec)

Revenue
Integrated Mission Systems	$	1,721		$	1,751		(2)	%
Space & Airborne Systems	1,450			1,460			(1)	%
Communication Systems	963			1,112			(13)	%
Other non-reportable businesses	—			284			*

Corporate eliminations	(31)			(40)			(23)	%
Total revenue	4,103			4,567			(10)	%
Total cost of product sales and services	(2,892)			(3,213)			(10)	%
% of total revenue	70		%	70		%
Gross margin	1,211			1,354			(11)	%
% of total revenue	30		%	30		%
Engineering, selling and administrative expenses	(713)			(801)			(11)	%
% of total revenue	17		%	18		%
Business divestiture-related losses	—			(15)			*
Impairment of goodwill and other assets	—			(62)			*
Non-operating income	106			117			(9)	%
Net interest expense	(68)			(66)			3	%
Income from continuing operations before income taxes	536			527			2	%
Income taxes	(61)			(60)			2	%
Effective tax rate	11		%	11		%
Income from continuing operations	475			467			2	%
Noncontrolling interests, net of income taxes	—			2			*
Income from continuing operations attributable to L3Harris common shareholders	$	475		$	469		1	%
% of total revenue	12		%	10		%
Income from continuing operations per diluted common share attributable to L3Harris common shareholders	$	2.44		$	2.25		8	%


	Quarter Ended
(Dollars in millions)	April 1, 2022			April 2, 2021			% Inc/(Dec)

Revenue	$	1,721		$	1,751		(2	%)
Operating income	255			234			9	%
Operating income as a percentage of revenue (“operating margin”)	14.8		%	13.4		%


ITEM 1.			FINANCIAL STATEMENTS (Unaudited).


(In millions)	April 1, 2022		December 31, 2021

Finished products	$	159	$	141
Work in process	326		335
Raw materials and supplies	605		506
Inventories	$	1,090	$	982


(In millions)	April 1, 2022		December 31, 2021

Land	$	80	$	79
Software capitalized for internal use	584		576
Buildings	1,250		1,236
Machinery and equipment	2,191		2,177
	4,105		4,068
Less: accumulated depreciation and amortization	(2,027)		(1,967)
Property, plant and equipment, net	$	2,078	$	2,101


	April 1, 2022				December 31, 2021
(In millions)	Total		Level 1		Total		Level 1

Assets
Deferred compensation plan assets(1)
Equity and fixed income securities	$	72	$	72	$	77	$	77
Investments measured at NAV:

Corporate-owned life insurance	35				35

Total fair value of deferred compensation plan assets	$	107			$	112

Liabilities
Deferred compensation plan liabilities(2)
Equity securities and mutual funds	$	7	$	7	$	6	$	6
Investments measured at NAV:
Common/collective trusts and guaranteed investment contracts	170				177
Total fair value of deferred compensation plan liabilities	$	177			$	183


ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


ITEM 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.


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 1, 2022-January 28, 2022)
Repurchase program(1)	273,155	$	218.71	273,155	$2,476
Employee transactions(2)	106,690	$	217.54	—	—
Month No. 2
(January 29, 2022-February 25, 2022)
Repurchase program(1)	506,083	$	214.76	506,083	$2,367

Employee transactions(2)	46,142	$	222.47	—	—
Month No. 3
(February 26, 2022-April 1, 2022)
Repurchase program(1)	551,348	$	252.88	551,348	$2,228
Employee transactions(2)	120,224	$	263.87	—	—
Total	1,603,642			1,330,586	$2,228


Grant Date / Type*	# Granted	Vested Prior to January 21, 2022
8-1-19 Stock Options	34,707	0
8-1-19 Performance Share Units	3,222	0
8-1-19 Restricted Units	4,638	3,092
2-28-20 Stock Options	15,222	5,074 **
2-28-20 Performance Share Units	5,311	0
2-28-20 Restricted Share Units	2,656	0
2-26-21 Stock Options	14,232	0
2-26-21 Performance Share Units	6,597	0
2-26-21 Restricted Share Units	3,299	0
* All listed equity grants include non-compete provisions which were accepted. ** Such stock options were terminated, cancelled and forfeited on the Separation Date. For avoidance of doubt, any and all other options, restricted units and performance share units are forfeited.