Business Combination (Tables)

3 Months Ended

Apr. 03, 2020

Schedule of Preliminary Calculation of Estimated Consideration Transferred

Our preliminary calculation of estimated consideration transferred is summarized below:



(In millions, except exchange ratio and per share amounts)	June 29, 2019
Outstanding shares of L3 common stock as of June 28, 2019	79.63
L3 restricted stock unit awards settled in shares of L3Harris common stock	0.41
L3 performance unit awards settled in shares of L3Harris common stock	0.04
	80.08
Exchange Ratio	1.30
Shares of L3Harris common stock issued for L3 outstanding common stock	104.10
Price per share of L3Harris common stock as of June 28, 2019	$	189.13
Fair value of L3Harris common stock issued for L3 outstanding common stock	$	19,689
Fair value of replacement RSUs attributable to merger consideration	10
Fair value of L3Harris stock options issued for L3 outstanding stock options	101
Withholding tax liability incurred for converted L3 share-based awards	45
Fair value of replacement award consideration	156
Fair value of total consideration	19,845
Less cash acquired	(1,195		)
Total net consideration transferred	$	18,650

Schedule of Measurement of Assets Acquired, Liabilities Assumed and Noncontrolling Interest

Our preliminary measurement of assets acquired, liabilities assumed and noncontrolling interests as of the Closing Date and measurement period adjustments recorded since the Closing Date through April 3, 2020, are as follows:



	Preliminary Fair Value			Measurement Period Adjustments			Adjusted Fair Value
	(In millions)
Receivables	$	849		$	(20	)	$	829
Contract assets	1,708			(56		)	1,652
Inventories	1,056			(74		)	982
Other current assets	517			(26		)	491
Property, plant and equipment	1,176			42			1,218
Operating lease right-of-use assets	704			—			704
Goodwill	15,423			(585		)	14,838
Other intangible assets	6,768			1,206			7,974
Other non-current assets	327			(9		)	318
Total assets acquired	$	28,528		$	478		$	29,006

Accounts payable	$	898		$	(17	)	$	881
Contract liabilities	722			2			724
Other current liabilities	772			199			971
Operating lease liabilities	715			—			715
Defined benefit plans	1,411			—			1,411
Long-term debt, net	3,548			—			3,548
Other long-term liabilities	1,661			290			1,951
Total liabilities assumed	9,727			474			10,201
Net assets acquired	18,801			4			18,805
Noncontrolling interests	(151		)	(4		)	(155		)
Total net consideration transferred	$	18,650		$	—		$	18,650

Schedule of Identifiable Intangible Assets Acquired

The following table provides further detail of the fair value and weighted-average amortization period of identified intangible assets acquired by major intangible asset class:



	Weighted Average Amortization Period	Total

	(In years)	(In millions)
Identifiable intangible assets acquired:
Customer relationships (Government)	15	$	4,769
Customer relationships (Commercial)	15	648
Trade names — Divisions	9	123
Developed technology	7	562
Total identifiable intangible assets subject to amortization	14	6,102
Trade names — Corporate	indefinite	1,803
In-process research and development	n/a	69
Total identifiable intangible assets		$	7,974

Schedule of Pro Forma Results

The following summary, prepared on a pro forma basis, presents our unaudited consolidated results of operations for the quarter ended March 29, 2019 as if the L3Harris Merger had been completed as of June 30, 2018, the first day of Harris’ fiscal 2019, after including any post-acquisition adjustments directly attributable to the acquisition, such as the sale of Harris’ Night Vision business, and after including the impact of pro forma adjustments such as amortization of intangible assets as well as the related income tax effects. This pro forma presentation does not include any impact of transaction synergies. The pro forma results are not necessarily indicative of our results of operations that actually would have been obtained had the combination of Harris and L3 been completed on the assumed date or for the period presented, or which may be realized in the future.



	March 29, 2019

	(In millions)
Revenue from product sales and services — as reported	$	1,728
Revenue from product sales and services — pro forma	$	4,386
Income from continuing operations — as reported	$	243
Income from continuing operations — pro forma	$	400