LHX 10-Q report for 2025-06-27

L3Harris Technologies, Inc. filed its quarterly report (Form 10‑Q) for the period ended June 27, 2025. The filing includes condensed consolidated financial statements, MD&A, segment results, backlog and notes on divestitures and the expected impact of recent U.S. federal tax reform.

LHX 10-Q report for 2025-06-27 hrs-20250627 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM  10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 27, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to ______________ Commission File Number 1-3863 L3HARRIS TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) Delaware 34-0276860 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1025 West NASA Boulevard Melbourne, Florida 32919 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: ( 321 )  727-9100 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $1.00 per share LHX New York Stock Exchange Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.           þ Yes o   No   Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).           þ Yes o   No   Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer þ Accelerated filer ☐ Non-accelerated filer ¨ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes þ  No   The number of shares outstanding of the registrant’s common stock as of July 18, 2025 was 187,094,798 . L3HARRIS TECHNOLOGIES, INC. FORM 10-Q For Second Quarter 2025 TABLE OF CONTENTS Page No. Part I. Financial Information: ITEM 1.     Financial Statements ( Unaudited): Condensed Consolidated Statement of Operations for Second Quarter and Year to Date 2025 and 2024 3 Condensed Consolidated Statement of Comprehensive Income for Second Quarter and Year to Date 2025 and 2024 4 Condensed Consolidated Balance Sheet as of June 27, 2025 and January 3, 2025 5 Condensed Consolidated Statement of Cash Flows for Year to Date 2025 and 2024 6 Condensed Consolidated Statement of Equity  f or Second Quarter and Year to Date 2025 and 2024 7 Notes to Condensed Consolidated Financial Statements 8 Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 22 ITEM 2.      M anagement’s Discussion and Analysis of Financial Condition and Results of Operations 23 ITEM 3.     Quantitative and Qualitative Disclosures About Market Risk 33 ITEM 4.     Controls and Procedures 33 Part II. Other Information: ITEM 1.      Legal Proceedings 34 ITEM 1A.   Risk Factors 34 ITEM 2.      Unregistered Sales of Equity Securities and Use of Proceeds 34 ITEM 3.      Defaults Upon Senior Securities 35 ITEM 4.      Mine Safety Disclosures 35 ITEM 5.     Other Information 36 ITEM 6.       Exhibits 37 Signatures 38 This Quarterly Report on Form 10-Q (this “Report”) contains trademarks, service marks and registered marks of L3Harris Technologies, Inc. and its subsidiaries. All other trademarks are the property of their respective owners. _____________________________________________________________________ 1 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 backlog recognition; effective tax rate forecast; 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 2024 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 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 76% for year to date 2025. U.S. and International Budget Environment The U.S. and international budget environments are evolving rapidly within a dynamic geopolitical context, influenced by the new Administration and Congress, heightened geopolitical tensions, global security concerns, inflationary pressures, and overall macroeconomic conditions. On March 15, 2025, the President signed into law a full-year Continuing Resolution (“CR”) for GFY 2025, funding the government through September 30, 2025, with $893 billion for defense funding, including $851 billion for the U.S. Department of Defense (“DoD”). This is in line with the 1% increase permitted by the Fiscal Responsibility Act of 2023 caps for GFY 2025. Notably, the CR provides funding at the account level, not the program level, allowing federal agencies more discretion with how they can prioritize funding for programs. On May 2, 2025, the White House released a preliminary GFY 2026 budget that included a flat national defense topline of $893 billion (including $849 billion for DoD) and assumed an additional $119 billion from reconciliation funding in 2026 for a total of $1 trillion. The Administration requested $557 billion for non-defense funding, down from $721 billion in GFY 2025, resulting in material funding declines for some agencies, including a $6 billion cut to NASA. On July 4, 2025, the President signed Congress’ reconciliation package which included $155 billion for national defense spending to fund DoD priorities, including priorities closely aligned with L3Harris interests and opportunities, such as Golden Dome, munitions, and shipbuilding, $165 billion for Department of Homeland Security priorities, $12.5 billion for the Federal Aviation Administration (“FAA”) for air traffic control modernization efforts and $10 billion for NASA. The Administration expects departments and agencies will be able to access significant amounts of this additional funding in GFY 2026, specifically noting they expect DoD will access $113 billion in GFY 2026. The reconciliation package also raises the debt ceiling by $5 trillion and enacts key changes to the federal tax code, further discussed under the “U.S. Federal Tax Reform” heading below. With reconciliation complete, Congress continues its work on the GFY 2026 appropriations and authorization bills. Internationally, NATO allies have committed to spend 5% of GDP annually over the next decade, with 3.5% on core defense articles and another 1.5% on critical infrastructure, cyber and other key areas. There are indications both the Administration and Congress are interested in defense acquisition reform efforts, including a recent Executive Order pushing DoD to use rapid acquisition measures and draft language from both the House and Senate Armed Services Committees that we are monitoring closely. 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 2024 Form 10-K. _____________________________________________________________________ 23 U.S. Federal Tax Reform Congress’ reconciliation package includes significant amendments to the U.S. federal income tax code. Key provisions include the permanent reinstatement of immediate expensing for domestic research expenditures, the restoration of full expensing for qualified machinery, equipment and other short-lived assets, and several modifications to existing international tax provisions. These provisions were enacted subsequent to the end of second quarter 2025 and are not reflected in the accompanying Condensed Consolidated Financial Statements. We expect favorable cash tax benefits of $150 million and an increase to our ETR between 200 and 300 basis points for fiscal 2025. We expect to recognize its effects in our provision for income taxes beginning in third quarter 2025. We are still evaluating the provisions of the legislation and the impact on our future financial position, results of operations, and cash flows. Economic Environment The ongoing uncertainty related to the impacts of inflation, as well as the interest rate environment and ongoing federal deficits, which raises the cost of borrowing for the federal government, 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 2024 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 2025 results, but will continue to monitor developments and assess potential implications as trade policies evolve. For a discussion of trade policy and macroeconomic related risks, see Part II. Item 1A. Risk Factors in our Form 10-Q for first quarter 2025 , which is incorporated herein by reference, and Part I. Item 1A. Risk Factors in our Fiscal 2024 Form 10-K. _____________________________________________________________________ 24 RESULTS OF OPERATIONS The second quarter 2025 and 2024 both include 13 weeks, while year to date 2025 and 2024 include 25 weeks and 26 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 Second Quarter Year to Date (Dollars in millions, except per share amounts) 2025 2024 2025 2024 Revenue Products $ 3,708  $ 3,684  $ 7,274  $ 7,283  Services 1,718  1,615  3,284  3,227  Total revenue 5,426  5,299  10,558  10,510  Cost of revenue Products (2,716) (2,660) (5,312) (5,254) Services (1,375) (1,279) (2,561) (2,548) Total cost of revenue (4,091) (3,939) (7,873) (7,802) Gross margin 1,335  1,360  2,685  2,708  General and administrative expenses (764) (884) (1,589) (1,854) Operating Income 571  476  1,096  854  Non-service FAS pension income and other, net 105  86  189  174  Interest expense, net (152) (172) (302) (348) Income before income taxes 524  390  983  680  Income taxes (66) (23) (139) (28) Effective Tax Rate 12.6  % 5.9  % 14.1  % 4.1  % Net income 458  367  844  652  Noncontrolling interests, net of income taxes —  (1) —  (3) Net income attributable to L3Harris $ 458  $ 366  $ 844  $ 649  Diluted EPS $ 2.44  $ 1.92  $ 4.48  $ 3.40  Revenue The following table presents revenue from products and services by segment, net of intersegment eliminations: Second Quarter Year to Date (In millions) 2025 2024 2025 2024 CS $ 1,167  $ 1,062  $ 2,313  $ 2,069  IMS 938  1,009  1,887  1,997  SAS 1,101  1,189  2,122  2,399  AR 502  424  952  818  Products revenue $ 3,708  $ 3,684  $ 7,274  $ 7,283  CS $ 192  $ 262  $ 386  $ 535  IMS 662  649  1,292  1,277  SAS 673  505  1,246  1,031  AR 191  199  360  384  Services revenue $ 1,718  $ 1,615  $ 3,284  $ 3,227  Second Quarter Comparison. Products revenue increased $24 million, or 1%, due to higher products revenues of $105 million and $78 million in our CS and AR segments, respectively, partially offset by lower products revenues of $88 million and $71 million in our SAS and IMS segments, respectively. _____________________________________________________________________ 25 Services revenue increased $103 million, or 6%, primarily due to higher services revenues of $168 million in our SAS segment, partially offset by lower services revenue of $70 million in our CS segment. Year to Date Comparison. Products revenue was flat, due to higher products revenues of $244 million and $134 million in our CS and AR segments, respectively, offset by lower products revenues of $277 million and $110 million in our SAS and IMS segments, respectively. Services revenue increased $57 million, or 2%, primarily due to higher services revenue of $215 million in our SAS segment, partially offset by lower services revenue of $149 million in our CS segment. See the “Business Segment Results of Operations” discussion below in this MD&A for further information. Cost of Revenue The following table presents cost of revenue from products and services by segment, net of intersegment eliminations: Second Quarter Year to Date (In millions) 2025 2024 2025 2024 CS $ (705) $ (612) $ (1,395) $ (1,214) IMS (746) (800) (1,458) (1,556) SAS (854) (909) (1,680) (1,837) AR (399) (325) (744) (619) Corporate (12) (14) (35) (28) Cost of products revenue $ (2,716) $ (2,660) $ (5,312) $ (5,254) CS $ (148) $ (242) $ (302) $ (463) IMS (528) (479) (1,007) (960) SAS (539) (407) (977) (830) AR (145) (153) (279) (297) Corporate (15) 2 4 2 Cost of services revenue $ (1,375) $ (1,279) $ (2,561) $ (2,548) Second Quarter Comparison. Cost of products revenue increased $56 million, or 2%, primarily due to higher cost of products revenues of $93 million and $74 million in our CS and AR segments, respectively, partially offset by lower cost of products revenues of $55 million and $54 million in our SAS and IMS segments, respectively. Cost of services revenue increased $96 million, or 8%, primarily due to higher cost of services revenues of $132 million and $49 million in our SAS and IMS segments, respectively, partially offset by lower cost of services revenue of $94 million in our CS segment. Year to Date Comparison. Cost of products revenue increased $58 million, or 1%, primarily due to higher cost of products revenues of $181 million and $125 million in our CS and AR segments, respectively, partially offset by lower cost of products revenues of $157 million and $98 million in our SAS and IMS segments, respectively. Cost of services revenue increased $13 million, or 1%, primarily due to higher cost of services revenues of $147 million and $47 million in our SAS and IMS segments, respectively, partially offset by lower cost of services revenues of $161 million and $18 million in our CS and AR segments, respectively. Gross Margin Second Quarter Comparison. Gross margin decreased $25 million primarily due to a $62 million decrease from the March 2025 CAS disposal group divestiture and $20 million unfavorable change in net EAC adjustments, partially offset by favorable mix from higher margin revenue, primarily in our CS segment. Year to Date Comparison. Gross margin decreased $23 million primarily due to a $67 million decrease from the March 2025 CAS disposal group divestiture and $60 million unfavorable change in net EAC adjustments, impacted by program execution on certain classified development programs in SAS, partially offset by favorable higher margin revenue mix, primarily in our CS segment. _____________________________________________________________________ 26 G&A Expenses The following table presents the components of G&A expenses: Second Quarter Year to Date (In millions) 2025 2024 2025 2024 Amortization of intangibles $ (177) $ (194) $ (354) $ (391) Company-funded R&D costs (132) (124) (244) (238) Selling and marketing (120) (112) (225) (225) LHX NeXt implementation costs (1) (39) (48) (74) (175) Merger, acquisition, and divestiture-related expenses (13) (21) (30) (61) Business divestiture-related losses —  (24) (17) (24) Other G&A expenses (2) (283) (361) (645) (740) G&A expenses $ (764) $ (884) $ (1,589) $ (1,854) _______________ (1) Includes costs associated with transforming multiple functions, systems and processes to increase agility and competitiveness, including third-party consulting, workforce optimization and incremental IT expenses for implementation of new systems. See Note O: Business Segment Information in the Notes and the “Operating Environment, Strategic Priorities and Key Performance Measures” section in the MD&A in our Fiscal 2024 Form 10-K for more detail on our LHX NeXt initiative and implementation costs. (2) Includes other segment G&A expenses, primarily payroll and benefits, outside services, facilities, insurance, gains recognized from asset sales, and unallocated corporate department expenses. Second Quarter Comparison. G&A expenses decreased $120 million, or 14%, primarily due to a decrease of ITEM 1A.   Risk Factors 34 ITEM 2.      Unregistered Sales of Equity Securities and Use of Proceeds 34 ITEM 3.      Defaults Upon Senior Securities 35 ITEM 4.      Mine Safety Disclosures 35 ITEM 5.     Other Information 36 ITEM 6.       Exhibits 37 Signatures 38 This Quarterly Report on Form 10-Q (this “Report”) contains trademarks, service marks and registered marks of L3Harris Technologies, Inc. and its subsidiaries. All other trademarks are the property of their respective owners. _____________________________________________________________________ 1 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 backlog recognition; 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: our dependence on competitive markets from U.S. Government customers; changes in contract mix; inflation; unilateral contract action by the U.S. Government; uncertain economic conditions; future geopolitical events; supply chain disruptions; impact of LHX NeXt costs and savings; indebtedness; commercial paper balances; defined benefit plan liability and returns; interest rates; changes in trade policy, including tariffs; and other market factors. These important risks and other disclosures are described more fully in Part I. Item 1A. Risk Factors in our Fiscal 2024 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. _____________________________________________________________________ 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) Second Quarter Year to Date (In millions, except per share amounts) 2025 2024 2025 2024 Revenue $ 5,426 $ 5,299 $ 10,558 $ 10,510 Cost of revenue ( 4,091 ) ( 3,939 ) ( 7,873 ) ( 7,802 ) General and administrative expenses ( 764 ) ( 884 ) ( 1,589 ) ( 1,854 ) Operating income 571 476 1,096 854 Non-service FAS pension income and other, net (1) 105 86 189 174 Interest expense, net ( 152 ) ( 172 ) ( 302 ) ( 348 ) Income before income taxes 524 390 983 680 Income taxes ( 66 ) ( 23 ) ( 139 ) ( 28 ) Net income 458 367 844 652 Noncontrolling interests, net of income taxes — ( 1 ) — ( 3 ) Net income attributable to L3Harris $ 458 $ 366 $ 844 $ 649 Earnings per share attributable to common shareholders Basic $ 2.45 $ 1.93 $ 4.50 $ 3.42 Diluted $ 2.44 $ 1.92 $ 4.48 $ 3.40 _______________ (1) “FAS” is defined as Financial Accounting Standards. See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). _____________________________________________________________________ 3 L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited) Second Quarter Year to Date (In millions) 2025 2024 2025 2024 Net income $ 458 $ 367 $ 844 $ 652 Other comprehensive income (loss), net of income taxes: Foreign currency translation and other, net 49 5 68 ( 24 ) Pension and other postretirement benefits — 3 ( 43 ) 3 Other comprehensive income (loss) recognized during the period 49 8 25 ( 21 ) Reclassification adjustments for gains included in net income ( 4 ) ( 8 ) ( 21 ) ( 15 ) Other comprehensive income (loss) 45 — 4 ( 36 ) Total comprehensive income 503 367 848 616 Comprehensive income attributable to noncontrolling interest — ( 1 ) — ( 3 ) Total comprehensive income attributable to L3Harris $ 503 $ 366 $ 848 $ 613 See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). _____________________________________________________________________ 4 L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In millions, except shares) June 27, 2025 January 3, 2025 Assets Current assets Cash and cash equivalents $ 482 $ 615 Receivables, net of allowances of $ 24 and $ 21 , respectively 1,437 1,072 Contract assets 3,857 3,230 Inventories, net 1,258 1,330 Income taxes receivable 93 379 Other current assets 481 461 Assets of business held for sale — 1,131 Total current assets 7,608 8,218 Non-current assets Property, plant and equipment, net 2,742 2,806 Goodwill 20,372 20,325 Intangible assets, net 7,261 7,639 Deferred income taxes 89 120 Other non-current assets 3,168 2,893 Total assets $ 41,240 $ 42,001 Liabilities and equity Current liabilities Short-term debt $ 985 $ 515 Current portion of long-term debt, net 141 640 Accounts payable 2,033 2,005 Contract liabilities 2,317 2,142 Compensation and benefits 444 419 Other current liabilities 1,402 1,677 Liabilities of business held for sale — 235 Total current liabilities 7,322 7,633 Non-current liabilities Long-term debt, net 10,976 11,081 Deferred income taxes 800 942 Other non-current liabilities 2,864 2,766 Total liabilities 21,962 22,422 Equity Shareholders’ Equity: Common stock, $ 1.00 par value; 500,000,000 shares authorized; issued and outstanding 186,912,403 and 189,794,911 shares at June 27, 2025 and January 3, 2025, respectively 187 190 Paid-in capital 15,090 15,558 Retained earnings 3,970 3,739 Accumulated other comprehensive income 31 27 Total shareholders’ equity 19,278 19,514 Noncontrolling interests — 65 Total equity 19,278 19,579 Total liabilities and equity $ 41,240 $ 42,001 See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). _____________________________________________________________________ 5 L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Year to Date (In millions) 2025 2024 Operating Activities Net income $ 844 $ 652 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 604 639 Share-based compe Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Fiscal 2024 Form 10-K. The following table presents the effect of aggregate net EAC adjustments: Second Quarter Year to Date (In millions, except per share amounts) 2025 2024 2025 2024 Operating income $ ( 20 ) $ — $ ( 41 ) $ 19 Net income (1) ( 15 ) — ( 31 ) 15 Diluted EPS ( 0.08 ) — ( 0.16 ) 0.08 _______________ (1) Based on a 25 percent federal and state statutory tax rate. Revenue recognized from performance obligations satisfied (or partially satisfied) in prior periods was $ 37 million and $ 74 million for second quarter and year to date 2025, respectively, and $ 34 million and $ 87 million for second quarter and year to date 2024, respectively. NOTE M: BACKLOG Backlog, which is the equivalent of our remaining performance obligations, represents the future revenue we expect to recognize as we perform on our current contracts. Backlog comprises both funded backlog (i.e., firm orders for which funding is authorized and appropriated) and unfunded backlog (i.e., orders for which funds have not been appropriated and/or incrementally funded). Backlog excludes unexercised contract options and potential orders under ordering-type contracts, such as indefinite-delivery, indefinite-quantity contracts. As of June 27, 2025, our ending backlog was $ 35.4 billion. We expect to recognize approximately 45 % of our backlog as revenue over the next twelve months and 70 % as revenue over the next twenty-four months , with the remainder to be recognized thereafter. _____________________________________________________________________ 16 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE N: DIVESTITURES CAS Disposal Group On March 28, 2025, we completed the sale of our CAS disposal group, for cash proceeds, net of cash divested, of $ 831 million. The CAS disposal group, which provided integrated aircraft avionics, pilot training and data analytics services for the commercial aviation industry, was reported in our IMS segment through the date of sale. Income before income taxes attributable to L3Harris was $ 21  million for year to date 2025 and $ 30  million and $ 56  million for second quarter and year to date 2024, respectively. The carrying amounts of assets and liabilities included in the CAS disposal group divestiture were as follows: (In millions) March 28, 2025 Receivables, net $ 117 Contract assets 47 Inventories, net 139 Other current assets 22 Property, plant and equipment, net 46 Goodwill (1) 535 Intangible assets, net 263 Other non-current assets 60 Total assets 1,229 Current portion of long-term debt 1 Accounts payable 95 Contract liabilities 49 Compensation and benefits 6 Other current liabilities 40 Long-term debt, net 2 Other non-current liabilities 59 Total liabilities 252 Net assets divested $ 977 _______________ (1) Includes $ 759 million of accumulated goodwill impairment losses reported in our IMS segment through the date of sale. In connection with the divestiture, we derecognized noncontrolling interest and accumulated other comprehensive income of $ 63  million and $ 6  million, respectively, and recognized a pre-tax loss, inclusive of amounts attributable to noncontrolling interest, of $ 17  million in year to date 2025. The pre-tax loss is incremental to the previously recorded CAS disposal group losses recognized in fiscal 2024 and 2023. The final cumulative loss on sale remains subject to certain purchase price adjustments, including final working capital settlement, as set forth in the agreement, and will be finalized in fiscal 2025. The pre-tax loss is included in the “General and administrative expenses” line item in our Condensed Consolidated Statement of Operations. For additional information on the CAS disposal group, including the cumulative pre-tax losses recognized and carrying amounts of assets and liabilities classified as held for sale as of January 3, 2025, see Note 13: Acquisitions and Divestitures in our Fiscal 2024 Form 10-K. Antenna Disposal Group On May 31, 2024, we completed the divestiture of our antenna and related businesses (“Antenna disposal group”) from our SAS segment. For additional information, see Note 13: Acquisitions and Divestitures in our Fiscal 2024 Form 10-K. _____________________________________________________________________ 17 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE O: BUSINESS SEGMENT INFORMATION We structure our operations primarily around the products, systems and services we sell and the markets we serve and report our financial results in four reportable segments: CS, IMS, SAS and AR. Business Segment Financial Results The following table presents operating results by business segment and a reconciliation to total income before income taxes: Second Quarter Year to Date (In millions) 2025 2024 2025 2024 Revenue CS $ 1,376 $ 1,346 $ 2,728 $ 2,640 IMS

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