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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 30, 2023
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: (321727-9100
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $1.00 per shareLHXNew 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 21, 2023 was 189,132,693.



L3HARRIS TECHNOLOGIES, INC.
FORM 10-Q
For the Quarter Ended June 30, 2023
TABLE OF CONTENTS
 Page No.
Part I. Financial Information:
Condensed Consolidated Statement of Operations for the Quarter and Two Quarters Ended June 30, 2023 and July 1, 2022
Condensed Consolidated Statement of Comprehensive Income for the Quarter and Two Quarters Ended June 30, 2023 and July 1, 2022
Condensed Consolidated Balance Sheet at June 30, 2023 and December 30, 2022
Condensed Consolidated Statement of Cash Flows for the Two Quarters Ended June 30, 2023 and July 1, 2022
Condensed Consolidated Statement of Equity for the Quarter and Two Quarters Ended June 30, 2023 and July 1, 2022
Notes to Condensed Consolidated Financial Statements
Part II. Other Information:
ITEM 6.      Exhibits
This Quarterly Report on Form 10-Q (this “Report”) contains trademarks, service marks and registered marks of L3Harris Technologies, Inc. and its subsidiaries. All other trademarks are the property of their respective owners.
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1



PART I. FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS.
L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
 Quarter EndedTwo Quarters Ended
(In millions, except per share amounts)June 30, 2023July 1, 2022June 30, 2023July 1, 2022
 
Revenue from product sales and services$4,693 $4,135 $9,164 $8,238 
Cost of product sales and services(3,476)(2,907)(6,763)(5,767)
Engineering, selling and administrative expenses(783)(744)(1,556)(1,489)
Business divestiture-related gains, net26  26  
Impairment of other assets(60) (78) 
Non-operating income, net83 108 165 214 
Interest expense, net(111)(67)(213)(135)
Income before income taxes372 525 745 1,061 
Income taxes(21)(55)(55)(116)
Net income351 470 690 945 
Noncontrolling interests, net of income taxes(2)1 (4)1 
Net income attributable to L3Harris Technologies, Inc.$349 $471 $686 $946 
Net income per common share attributable to L3Harris Technologies, Inc. common shareholders
Basic$1.84 $2.45 $3.61 $4.91 
Diluted$1.83 $2.42 $3.60 $4.86 
Basic weighted-average common shares outstanding189.2 192.1 189.7 192.6 
Diluted weighted-average common shares outstanding190.1 194.0 190.7 194.5 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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2


L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
 Quarter EndedTwo Quarters Ended
(In millions)June 30, 2023July 1, 2022June 30, 2023July 1, 2022
 
Net income$351 $470 $690 $945 
Other comprehensive income (loss):
Foreign currency translation income (loss), net of income taxes28 (73)35 (76)
Net unrealized income (loss) on hedging derivatives, net of income taxes4 (7)9 (2)
Other comprehensive income (loss), recognized during the period32 (80)44 (78)
Reclassification adjustments for gains included in net income(7)(2)(19)(8)
Other comprehensive income (loss), net of income taxes25 (82)25 (86)
Total comprehensive income376 388 715 859 
Comprehensive (income) loss attributable to noncontrolling interest(2)1 (4)1 
Total comprehensive income attributable to L3Harris Technologies, Inc.$374 $389 $711 $860 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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3


L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(In millions, except shares)June 30, 2023December 30, 2022
Assets
Current Assets
Cash and cash equivalents$366 $880 
Receivables, net of allowances for collection losses of $35 and $40, respectively
1,383 1,251 
Contract assets3,164 2,987 
Inventories1,555 1,291 
Income taxes receivable48 40 
Other current assets334 258 
Assets of business held for sale 47 
Total current assets6,850 6,754 
Non-current Assets
Property, plant and equipment, net2,186 2,104 
Operating lease right-of-use assets725 756 
Goodwill18,417 17,283 
Other intangible assets, net6,401 6,001 
Deferred income taxes84 73 
Other non-current assets699 553 
Total assets$35,362 $33,524 
Liabilities and Equity
Current Liabilities
Short-term debt$582 $2 
Accounts payable2,029 1,945 
Contract liabilities1,648 1,400 
Compensation and benefits389 398 
Other accrued items935 818 
Income taxes payable365 376 
Current portion of long-term debt, net361 818 
Liabilities of business held for sale  19 
Total current liabilities6,309 5,776 
Non-current Liabilities
Defined benefit plans184 262 
Operating lease liabilities714 741 
Long-term debt, net7,867 6,225 
Deferred income taxes452 719 
Other long-term liabilities1,305 1,177 
Total liabilities16,831 14,900 
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 189,085,602 and 190,611,458 shares at June 30, 2023 and December 30, 2022, respectively
189 191 
Other capital15,391 15,677 
Retained earnings3,111 2,943 
Accumulated other comprehensive loss(263)(288)
Total shareholders’ equity18,428 18,523 
Noncontrolling interests103 101 
Total equity18,531 18,624 
Total liabilities and equity$35,362 $33,524 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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4


L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 Two Quarters Ended
(In millions)June 30, 2023July 1, 2022
Operating Activities
Net income$690 $945 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of acquisition-related intangibles338 303 
Depreciation and other amortization168 162 
Share-based compensation45 69 
Share-based matching contributions under defined contribution plans121 113 
Pension and other postretirement benefit plan income(141)(198)
Impairment of other assets78  
Business divestiture-related gain, net(26) 
Gain on sale of asset group (8)
Deferred income taxes(243)(326)
(Increase) decrease in:
Receivables, net(105)(146)
Contract assets(159)(25)
Inventories(99)(259)
Other current assets(67)31 
Increase (decrease) in:
Accounts payable23 (44)
Contract liabilities220 (21)
Compensation and benefits(10)(63)
Other accrued items(3)(103)
Income taxes10 376 
Other operating activities(76)(18)
Net cash provided by operating activities764 788 
Investing Activities
Net cash paid for acquired business(1,973) 
Additions to property, plant and equipment(164)(117)
Proceeds from sale of property, plant and equipment, net 4 
Proceeds from sales of businesses, net71 2 
Proceeds from sale of asset group, net 18 
Cash used for equity investments(9)(30)
Other investing activities1 2 
Net cash used in investing activities(2,074)(121)
Financing Activities
Proceeds from borrowings, net of issuance cost2,249 7 
Repayments of borrowings(1,060)(10)
Change in commercial paper, net579  
Proceeds from exercises of employee stock options13 34 
Repurchases of common stock(518)(729)
Cash dividends(436)(435)
Tax withholding payments associated with vested share-based awards(28)(38)
Other financing activities(5)(3)
Net cash provided by (used in) financing activities794 (1,174)
Effect of exchange rate changes on cash and cash equivalents2 (14)
Net decrease in cash and cash equivalents(514)(521)
Cash and cash equivalents, beginning of period880 941 
Cash and cash equivalents, end of period$366 $420 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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5


L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(Unaudited)
(In millions, except per share amounts)Common StockOther CapitalRetained EarningsAccumulated Other Comprehensive LossNon-controlling InterestsTotal Equity
Balance at March 31, 2023$189 $15,407 $2,998 $(288)$102 $18,408 
Net income— — 349 — 2 351 
Other comprehensive income, net of income taxes— — — 25 — 25 
Shares issued under stock incentive plans— 2 — — — 2 
Shares issued under defined contribution plans1 63 — — — 64 
Share-based compensation expense— 22 — — — 22 
Tax withholding payments on share-based awards— (2)— — — (2)
Repurchases and retirement of common stock(1)(101)(20)— — (122)
Cash dividends ($1.14 per share)
— — (216)— — (216)
Other— — — — (1)(1)
Balance at June 30, 2023$189 $15,391 $3,111 $(263)$103 $18,531 
Balance as of April 1, 2022$193 $16,089 $3,128 $(150)$106 $19,366 
Net income (loss)— — 471 — (1)470 
Other comprehensive loss, net of income taxes— — — (82)— (82)
Shares issued under stock incentive plans— 4 — — — 4 
Shares issued under defined contribution plans1 57 — — — 58 
Share-based compensation expense— 41 — — — 41 
Tax withholding payments on share-based awards— (26)— — — (26)
Repurchases and retirement of common stock(2)(351)(68)— — (421)
Cash dividends ($1.12 per share)
— — (217)— — (217)
Other— — (2)— (1)(3)
Balance as of July 1, 2022$192 $15,814 $3,312 $(232)$104 $19,190 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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6


L3HARRIS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (continued)
(Unaudited)
(In millions, except per share amounts)Common StockOther CapitalRetained EarningsAccumulated Other Comprehensive LossNon-controlling InterestsTotal Equity
Balance at December 30, 2022$191 $15,677 $2,943 $(288)$101 $18,624 
Net income— — 686 — 4 690 
Other comprehensive income, net of income taxes— — — 25 — 25 
Shares issued under stock incentive plans— 13 — — — 13 
Shares issued under defined contribution plans1 120 — — — 121 
Share-based compensation expense— 45 — — — 45 
Tax withholding payments on share-based awards— (28)— — — (28)
Repurchases and retirement of common stock(3)(433)(82)— — (518)
Cash dividends ($2.28 per share)
— — (436)— — (436)
Other— (3)— — (2)(5)
Balance at June 30, 2023$189 $15,391 $3,111 $(263)$103 $18,531 
 
Balance as of December 31, 2021$194 $16,248 $2,917 $(146)$106 $19,319 
Net income (loss)— — 946 — (1)945 
Other comprehensive loss, net of income taxes— — — (86)— (86)
Shares issued under stock incentive plans— 34 — — — 34 
Shares issued under defined contribution plans1 112 — — — 113 
Share-based compensation expense— 69 — — — 69 
Tax withholding payments on share-based awards— (38)— — — (38)
Repurchases and retirement of common stock(3)(611)(115)— — (729)
Cash dividends ($2.24 per share)
— — (435)— — (435)
Other— — (1)— (1)(2)
Balance as of July 1, 2022$192 $15,814 $3,312 $(232)$104 $19,190 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 Condensed Consolidated Financial Statements (these "Notes"), the terms “L3Harris,” “Company,” “we,” “our” and “us” refer to L3Harris Technologies, Inc. and its consolidated subsidiaries. Intracompany transactions and accounts have been eliminated.
The accompanying Condensed Consolidated Financial Statements have been prepared by L3Harris 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, such 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 therein. The balance sheet at December 30, 2022 has been derived from our audited financial statements, but does not include all of the information and footnotes required by GAAP for annual financial statements. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with Part II: Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 30, 2022 (our "Fiscal 2022 Form 10-K").
Business Realignment. Effective for fiscal 2023, which began December 31, 2022, we adjusted our reporting to better align our businesses and transferred our Agile Development Group (“ADG”) business from our Integrated Mission Systems ("IMS") segment to our Space & Airborne Systems (“SAS”) segment.
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.
See Note G: Goodwill and Other Intangible Assets and Note O: Business Segment Information in these Notes for further information.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the accompanying Condensed Consolidated Financial Statements and these Notes and related disclosures. These estimates and assumptions are based on experience and other information available prior to issuance of the accompanying Condensed Consolidated Financial Statements and these Notes. Materially different results can occur as circumstances change and additional information becomes known.
Reclassifications
The classification of certain prior year amounts have been adjusted in our Condensed Consolidated Financial Statements and these Notes to conform to current year classifications.
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8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Accounting Standards Updates
In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification ("ASC") 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. We adopted the new standard effective December 31, 2022. On January 3, 2023, we completed the acquisition of Viasat, Inc.’s (“Viasat”) Tactical Data Links product line (“TDL”) and applied the provisions of ASU 2021-08 in our purchase accounting for TDL. The adoption of the new standard did not have a material impact on our operating results, financial position, or cash flows. For more information regarding the TDL acquisition see Note B: Acquisitions, Divestitures and Asset Sales in these Notes for further information.
NOTE B: ACQUISITIONS, DIVESTITURES AND ASSET SALES
Acquisition of Viasat’s TDL
On January 3, 2023, we completed the acquisition of TDL for a purchase price of $1.958 billion. The acquisition, which qualified as a business acquisition, enhances our networking capability and provides access to the ubiquitous Link 16 waveform, better positioning us to enable the U.S. Department of Defense (“DoD”) integrated architecture goal in joint all-domain command and control (“JADC2”).
On November 22, 2022, we established a $2.25 billion, three-year senior unsecured term loan facility by entering into a Loan Agreement (“Term Loan 2025”) with a syndicate of lenders, in part, to finance the acquisition. See Note H: Debt and Credit Arrangements in these Notes for further information regarding Term Loan 2025.
Net assets and results of operations of TDL are reflected in our financial results commencing on January 3, 2023, the acquisition date, and are reported within our Communication Systems (“CS”) segment.
We accounted for the acquisition of TDL using the acquisition method of accounting, which required us to measure identifiable assets acquired and liabilities assumed in the acquiree at their fair values as of the acquisition date, with the excess of the consideration transferred over those fair values recorded as goodwill. Our preliminary fair value estimates and assumptions are subject to change as we obtain additional information over the measurement period.
As of the acquisition date, the fair value of consideration transferred consisted of the following:
(In millions)January 3, 2023
Purchase price$1,958 
Estimated net working capital and other adjustments15 
Cash consideration paid1,973 
Settlement of preexisting relationship(1)
1
Fair value of consideration transferred$1,974 
_______________
(1)Prior to the acquisition, we had a preexisting relationship with Viasat’s TDL business in the normal course of business. As of the acquisition date, our CS segment had a receivable from Viasat’s TDL business with a fair value of $1 million that was settled in connection with the acquisition.

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9

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table summarizes the preliminary allocation of the fair value of consideration transferred to assets acquired and liabilities assumed as of the acquisition date and the measurement period adjustments recorded since the acquisition date through June 30, 2023:
January 3, 2023
(In millions)Preliminary
Measurement Period Adjustments, Net1
Preliminary
Adjusted
Receivables$28 $— $28 
Contract assets18 — 18 
Inventories164 1 165 
Other current assets9 — 9 
Property, plant and equipment50 — 50 
Operating lease right-of-use assets12 — 12 
Goodwill1,014 103 1,117 
Other intangible assets850 (98)752 
Deferred income taxes33 2 35 
Other non-current assets6 (1)5 
Total assets acquired$2,184 $7 $2,191 
Accounts payable$20 $— $20 
Contract liabilities28 — 28 
Compensation and benefits2 — 2 
Other accrued items119 1 120 
Operating lease liabilities10 — 10 
Other long-term liabilities31 6 37 
Total liabilities assumed$210 $7 $217 
Net assets acquired$1,974 $ $1,974 
_______________
(1)Fair value adjustments during the quarter ended June 30, 2023 primarily related to refined assumptions in the valuation of customer relationship intangible assets.
Our preliminary estimates and assumptions are subject to change as we obtain additional information during the measurement period (up to one year from the acquisition date); therefore, these provisional measurements of the assets acquired and liabilities assumed are subject to change.
All intangible assets acquired in the TDL acquisition are subject to amortization. The preliminary fair value of identifiable intangible assets acquired as of the acquisition date is as follows:
TotalUseful Lives
(In millions)(In Years)
Developed technology$346 17
Customer relationships:(1)
Backlog83 2
Government programs323 16
Total customer relationships406 
Total identifiable intangible assets acquired$752 
_______________
(1)TDL had backlog and government programs intangible assets that we classified as customer relationships.
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10

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We determined the fair value of assets acquired and liabilities assumed by using available market information and various valuation methods that require judgment related to estimations. The use of different estimates could produce different results. The fair value of intangible assets is estimated using the relief from royalty method for the acquired developed technology and the multi-period excess earnings method for the acquired customer relationships. Both of these level 3 fair value methods are income-based valuation approaches, which require judgment to estimate appropriate discount rates, royalty rates related to the developed technology intangible assets, revenue growth attributable to the intangible assets and remaining useful lives. The fair value of inventory was estimated using the replacement cost approach and comparative sales method, which require estimates of replacement cost for raw materials and estimates of expected sales price less costs to complete and dispose of the inventory, plus a profit margin for efforts incurred for the work in progress and finished goods.
We have recorded a preliminary forward loss provision of $86 million in connection with certain acquired contracts which was included in the “Other accrued items” line item in our Condensed Consolidated Balance Sheet. The forward loss provisions will be recognized as a reduction to cost of sales as we incur costs to satisfy the associated performance obligations. There will be no net impact on our Condensed Consolidated Statement of Operations. We recognized $6 million and $14 million for amortization of the forward loss provision during the quarter and two quarters ended June 30, 2023, respectively.
We have identified certain contractual obligations with customers with economic returns that are higher or lower than could be realized in market transactions as of the acquisition date and have recorded liabilities for the preliminary acquisition date fair value of the off-market components. The preliminary acquisition date fair value of the off-market components is a net liability of $61 million, consisting of $33 million and $28 million included in the “Other accrued items” and “Other long-term liabilities” line items in our Condensed Consolidated Balance Sheet, respectively, and excludes any amounts already recognized in forward loss provisions (see discussion in the preceding paragraph). We measured the fair value of these components as the amount by which the terms of the contract with the customer deviates from the terms that a market participant could have achieved at the acquisition date. The off-market components of these contracts will be recognized as an increase to revenue as we incur costs to satisfy the associated performance obligations. We recognized $6 million and $15 million for amortization of off-market contract liabilities during the quarter and two quarters ended June 30, 2023, respectively. Future estimated revenue from the amortization of off-market contract liabilities (based on the estimated pattern of cash flows to be incurred to satisfy associated performance obligations) is $18 million in the remainder of 2023, $21 million in 2024 and immaterial amounts thereafter.
Goodwill. The $1.117 billion of goodwill recognized is attributable to the assembled workforce, in addition to synergies expected to be realized through integration with existing CS segment businesses and growth opportunities in the space domain. The acquired goodwill is tax deductible. See Note G: Goodwill and Other Intangible Assets in these Notes for further information.
Financial Results. Revenue of TDL included in our Condensed Consolidated Statement of Operations for the quarter ended June 30, 2023 and for the acquisition date through June 30, 2023 was $83 million and $164 million. During the same periods of calendar year 2022, revenue for Viasat’s TDL was approximately $90 million and $185 million.
Income before income taxes of TDL included in our Condensed Consolidated Statement of Operations for the quarter ended June 30, 2023 and for the acquisition date through June 30, 2023 was $22 million and $48 million. During the same periods of calendar year 2022, income before income taxes of Viasat’s TDL was approximately $20 million and $25 million.
Acquisition-Related Costs. Acquisition-related costs have been expensed as incurred. In connection with the TDL acquisition, we recorded transaction and integration costs of $23 million and $54 million for the quarter and two quarters ended June 30, 2023, respectively, which were included in the Engineering, selling and administrative expenses line item in our Condensed Consolidated Statement of Operations.
Pending Acquisition of Aerojet Rocketdyne Holdings, Inc. (“AJRD”)
On December 17, 2022, we entered into a definitive agreement to acquire AJRD in an all-cash transaction for a purchase price of approximately $4.7 billion. We were advised on July 26, 2023 that the Federal Trade Commission (“FTC”) will not block the acquisition of AJRD. We expect the acquisition to close on or about July 28, 2023. In connection with the pending acquisition, during the two quarters ended June 30, 2023, we entered into a revolving credit facility and a commercial paper program. See Note H: Debt and Credit Arrangements in these Notes and Note 3: Acquisitions in our Fiscal 2022 Form 10-K for further information regarding the pending AJRD acquisition and related funding.
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11

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Divestiture of Visual Information Solutions (“VIS”)
On April 6, 2023, we completed the sale of VIS for a sale price of $70 million and recognized a pre-tax gain of $26 million included in the “Business divestiture-related gains, net” line item in our Condensed Consolidated Statement of Operations for the quarter and two quarters ended June 30, 2023. After selling costs and purchase price adjustments, the net cash proceeds for the sale of VIS were $71 million. The operating results of VIS were reported in the SAS segment through the date of divestiture.
The carrying amounts of the assets and liabilities of VIS were classified as held for sale in our Condensed Consolidated Balance Sheet as of December 30, 2022.
Completed Divestiture and Asset Sale for the Two Quarters Ended July 1, 2022
During the two quarters ended July 1, 2022, we completed one business divestiture and one asset sale from our IMS segment for combined net cash proceeds of $20 million and recognized a pre-tax gain of $8 million associated with the asset sale included in the “Engineering, selling and administrative expenses” line item in our Condensed Consolidated Statement of Operations for the quarter and two quarters ended July 1, 2022.
Fair Value of Businesses and Goodwill Allocation
For purposes of allocating goodwill to the disposal groups that represent a portion of a reporting unit, we determine the fair value of each disposal group based on the respective negotiated selling price (or estimated net cash proceeds, in the case of no negotiated selling price), and the fair value of the retained businesses of the respective reporting unit based on a combination of market-based valuation techniques, utilizing quoted market prices, comparable publicly reported transactions and projected discounted cash flows. These fair value determinations are categorized as Level 3 in the fair value hierarchy due to their use of internal projections and unobservable measurement inputs. See Note G: Goodwill and Other Intangible Assets and Note L: Fair Value Measurements in these Notes for additional information.
NOTE C: STOCK OPTIONS AND OTHER SHARE-BASED COMPENSATION
At June 30, 2023, we had stock options or other share-based compensation awards outstanding under several employee stock incentive plans (“L3Harris SIPs”). The compensation cost related to our share-based awards that was charged against income for the quarter and two quarters ended June 30, 2023 was $22 million and $45 million, respectively, and $41 million and $69 million for the quarter and two quarters ended July 1, 2022, respectively.
Awards granted to participants under L3Harris SIPs and the weighted-average grant-date fair value per share during the two quarters ended June 30, 2023 and July 1, 2022 are as follows:
Two Quarters Ended June 30, 2023Two Quarters Ended July 1, 2022
(In millions, except per share amounts)SharesWeighted-Average Grant-Date Fair Value
Per Share
SharesWeighted-Average Grant-Date Fair Value
Per Share
Stock options granted(1)
0.4 $210.37 0.4 $231.71 
Restricted stock and restricted stock units granted(2)
0.2 $209.13 0.2 $223.35 
Performance share units grants(3)
0.2 $223.09 0.2 $258.83 
_______________
(1)Other than certain stock options granted in connection with new hires, our stock options generally ratably vest in equal amounts over a three-year period.
(2)Other than certain restricted stock units granted in connection with new hires, our restricted stock and restricted stock units generally vest on a three-year cliff.
(3)Our performance share units are subject to performance criteria and generally vest after the three-year performance period.
There were no significant stock options, restricted stock and restricted stock units or performance share units granted to participants under the L3Harris SIPs during the quarters ended June 30, 2023 and July 1, 2022.
The aggregate number of shares of our common stock issued under L3Harris SIPs, net of shares withheld for tax purposes, was 0.1 million and 0.4 million for the quarter and two quarters ended June 30, 2023, respectively, and 0.2 million and 0.6 million for the quarter and two quarters ended July 1, 2022, respectively.
See Note 15: Stock Options and Other Share-Based Compensation in our Fiscal 2022 Form 10-K for additional information regarding the L3Harris SIPs.
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12

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE D: ACCUMULATED OTHER COMPREHENSIVE LOSS ("AOCI")
The components of AOCI are summarized below:
(In millions)Foreign currency translationNet unrealized losses on hedging derivativesUnrecognized postretirement obligationsTotal AOCI
Balance at December 30, 2022$(237)$(79)$28 $(288)
Other comprehensive income, before reclassifications to earnings and income taxes35 12  47 
Income taxes (3) (3)
Other comprehensive income before reclassifications to earnings, net of income taxes35 9  44 
Losses (gains) reclassified to earnings, before income taxes 2 (27)(25)
Income taxes (1)7 6 
Losses (gains) reclassified to earnings, net of income taxes(1)
 1 (20)(19)
Other comprehensive income (loss), net of income taxes35 10 (20)25 
Balance at June 30, 2023$(202)$(69)$8 $(263)
Balance at December 31, 2021$(118)$(89)$61 $(146)
Other comprehensive loss, before reclassifications to earnings and income taxes(76)(3) (79)
Income taxes 1  1 
Other comprehensive loss before reclassifications to earnings, net of income taxes(76)(2) (78)
Losses (gains) reclassified to earnings, before income taxes 3 (12)(9)
Income taxes (1)2 1 
Losses (gains) reclassified to earnings, net of income taxes(1)
 2 (10)(8)
Other comprehensive loss, net of income taxes(76) (10)(86)
Balance at July 1, 2022$(194)$(89)$51 $(232)
_______________
(1)Losses (gains) reclassified to earnings are included in the “Revenue from product sales and services,” “Interest expense, net” and “Non-operating income, net line items in our Condensed Consolidated Statement of Operations.
NOTE E: CONTRACT ASSETS AND CONTRACT LIABILITIES
Contract assets include unbilled amounts typically resulting from revenue recognized exceeding amounts billed to customers for contracts utilizing the percentage of completion (“POC”) cost-to-cost revenue recognition method. We bill customers as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, upon achievement of contractual milestones or upon deliveries and, in certain arrangements, the customer may withhold payment of a small portion of the contract price until contract completion. Contract liabilities include advance payments and billings in excess of revenue recognized, including deferred revenue associated with extended product warranties. Contract assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period.
Contract assets and contract liabilities are summarized below:
(In millions)June 30, 2023December 30, 2022
Contract assets$3,164 $2,987 
Contract liabilities, current(1,648)(1,400)
Contract liabilities, non-current(1)
(111)(117)
Net contract assets$1,405 $1,470 
_______________
(1)The non-current portion of contract liabilities is included as a component of the “Other long-term liabilities” line item in our Condensed Consolidated Balance Sheet.
The components of contract assets are summarized below:
(In millions)June 30, 2023December 30, 2022
Unbilled contract receivables, gross$5,034 $4,629 
Unliquidated progress payments and advances(1,870)(1,642)
Contract assets$3,164 $2,987 
Contract assets and liabilities as of June 30, 2023 and December 30, 2022 were impacted primarily by the timing of contractual billing milestones. Revenue recognized related to contract liabilities that were outstanding at the end of the respective prior fiscal year were $295 million and $898 million for the quarter and two quarters ended June 30, 2023, respectively, and $254 million and $771 million for the quarter and two quarters ended July 1, 2022, respectively.
NOTE F: INVENTORIES
Inventories are summarized below:
(In millions)June 30, 2023December 30, 2022
Finished products(1)
$285 $181 
Work in process486 396 
Materials and supplies784 714 
Inventories(1)
$1,555 $1,291 
_______________
(1)Includes approximately $104 million of TDL inventory of which $68 million is included in finished products at June 30, 2023.
NOTE G: GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The assignment of goodwill and changes in the carrying amount of goodwill, by business segment, are as follows:
(In millions)IMSSASCSTotal
Balance at December 30, 2022$7,709 $5,778 $3,796 $17,283 
Reallocation of goodwill in business realignment(327)327   
Goodwill from TDL acquisition  1,117 1,117 
Goodwill decrease from divestitures(1)
 (9) (9)
Currency translation adjustments14 11 1 26 
Balance at June 30, 2023$7,396 $6,107 $4,914 $18,417 
_______________
(1)During the two quarters ended June 30, 2023, we assigned an additional $9 million of goodwill to our VIS business and completed the divestiture. We derecognized $39 million of intangible assets as part of determining the gain on sale. The assets (including goodwill) of VIS were included in the “Assets of business held for sale” line item in our Condensed Consolidated Balance Sheet at December 30, 2022. See Note B: Acquisitions, Divestitures and Asset Sales in these Notes for further information.
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13

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Reallocation of Goodwill in Business Realignment. Effective December 31, 2022, we adjusted our reporting to better align our businesses and transferred our ADG business (a reporting unit) from our IMS segment to our SAS segment (also a reporting unit). In connection with the realignment, we reduced our reporting units from nine to eight as the ADG reporting unit and all $327 million of associated goodwill was absorbed by our existing SAS reporting unit given the economic similarities of the two reporting units. Immediately before the realignment, we performed a qualitative impairment assessment over our SAS reporting unit and a quantitative impairment assessment over our ADG reporting unit. Immediately after the realignment, we performed a quantitative impairment assessment over the SAS reporting unit. We prepared estimates of the fair value of our pre-realignment ADG reporting unit and post-realignment SAS reporting unit based on a combination of market-based valuation techniques, utilizing quoted market prices, comparable publicly reported transactions and an income-based valuation technique using projected discounted cash flows. These assessments indicated no impairment existed either before or after the realignment.
Goodwill from TDL Acquisition. In connection with the January 3, 2023 acquisition of TDL, we recorded $1.117 billion of goodwill in our Broadband reporting unit within our CS segment. See Note B: Acquisitions, Divestitures and Asset Sales in these Notes for further information.
Intangible Assets
Identifiable intangible assets, net are summarized below:
June 30, 2023December 30, 2022
(In millions)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated Amortization
Net Carrying Amount(1)
Customer relationships(2)
$6,539 $2,480 $4,059 $6,124 $2,189 $3,935 
Developed technologies(3)
914 413 501 566 366 200 
Contract backlog
2 2  1 1  
Trade names — divisions95 57 38 95 53 42 
Other
2 2  2 2  
Total finite-lived identifiable intangible assets7,552 2,954 4,598 6,788 2,611 4,177 
In-process research and development —  21 — 21 
Trade names — corporate1,803 — 1,803 1,803 — 1,803 
Total identifiable intangible assets, net$9,355 $2,954 $6,401 $8,612 $2,611 $6,001 
_______________
(1)During the two quarters ended June 30, 2023, we completed the divestiture of our VIS business. We derecognized $10 million of intangible assets as part of determining the gain on sale which was assigned during fiscal 2022. See Note B: Acquisitions, Divestitures and Asset Sales in these Notes for further information.
(2)Includes $406 million of customer relationship intangible assets acquired from the TDL acquisition and $31 million of accumulated amortization recognized during the two quarters ended June 30, 2023. See Note B: Acquisitions, Divestitures and Asset Sales in these Notes for additional information.
(3)Includes $346 million of developed technology intangible assets acquired in the TDL acquisition and $10 million of accumulated amortization recognized during the two quarters ended June 30, 2023. See Note B: Acquisitions, Divestitures and Asset Sales in these Notes for additional information.
The most significant identifiable intangible asset that is separately recognized for our business combinations is customer relationships. For further description of our accounting policies related to intangible assets acquired in the TDL acquisition, see Note B: Acquisitions, Divestitures and Asset Sales in these Notes, and for our accounting policies related to all other intangible assets, see Note 10: Intangible Assets, Net in our Fiscal 2022 Form 10-K.
Amortization expense for identifiable finite-lived intangible assets was $173 million and $338 million for the quarter and two quarters ended June 30, 2023, respectively, and was $151 million and $303 million, for the quarter and two quarters ended July 1, 2022, respectively, which primarily related to assets acquired in connection with business combinations.
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14

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Future estimated amortization expense for identifiable intangible assets is as follows:
(In millions)
Year 1$662 
Year 2598 
Year 3529 
Year 4467 
Year 5437 
Thereafter1,905 
Total$4,598 
In-process R&D Impairment. During the quarter ended June 30, 2023, we closed a facility which resulted in a triggering event to evaluate the in-process research and development (“R&D”) related to the operations of the closed facility. As a result we recorded a $21 million non-cash charge for the impairment of in-process R&D intangible assets which is included in the “Impairment of other assets” line item in our Condensed Consolidated Statement of Operations.
NOTE H: DEBT AND CREDIT ARRANGEMENTS
Long-Term Debt
Long-term debt, net is summarized below:
(In millions)June 30, 2023December 30, 2022
Variable-rate debt:
Floating rate notes, due March 10, 2023 (“Floating 2023 Notes”)
$ $250 
Term loan, due November 21, 2025 (“Term Loan 2025”)
2,250  
Fixed-rate debt:
3.85% notes, due June 15, 2023 (“3.85% 2023 Notes”)
 800 
3.95% notes, due May 28, 2024
350 350 
3.832% notes, due April 27, 2025
600 600 
7.00% debentures, due January 15, 2026
100 100 
3.85% notes, due December 15, 2026
550 550 
6.35% debentures, due February 1, 2028
26 26 
4.40% notes, due June 15, 2028
1,850 1,850 
2.90% notes, due December 15, 2029
400 400 
1.80% notes, due January 15, 2031
650 650 
4.854% notes, due April 27, 2035
400 400 
6.15% notes, due December 15, 2040
300 300 
5.054% notes, due April 27, 2045
500 500 
Total variable and fixed-rate debt7,976 6,776 
Financing lease obligations and other debt219 222 
Total debt8,195 6,998 
Plus: unamortized bond premium58 70 
Less: unamortized discounts and issuance costs(25)(25)
Total debt, net8,228 7,043 
Less: current portion of long-term debt, net(361)(818)
Total long-term debt, net$7,867 $6,225 
Long-Term Debt Issued
On November 22, 2022, we established a $2.25 billion, three-year senior unsecured term loan facility by entering into Term Loan 2025 with a syndicate of lenders that matures on November 21, 2025.
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15

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On January 3, 2023, we drew $2.0 billion on Term Loan 2025 and utilized the proceeds to fund the cash consideration paid and a portion of the associated transaction and integration costs related to the TDL acquisition. See Note B: Acquisitions, Divestitures and Asset Sales in these Notes for further information on the TDL acquisition.
On March 14, 2023, we drew an additional $250 million on Term Loan 2025 and utilized the proceeds to repay our Floating 2023 Notes.
At June 30, 2023, we had $2.25 billion outstanding under Term Loan 2025. There were no borrowings outstanding under Term Loan 2025 at December 30, 2022.
Borrowings under Term Loan 2025 bear interest at: (i) the sum of the term secured overnight financing rate (“SOFR”) for any tenor comparable to the applicable interest period, plus 0.10%, plus an applicable margin between 1.125% and 1.875% that varies based on ratings of our senior unsecured long-term debt securities (“Senior Debt Ratings”). At June 30, 2023, the interest rate on Term Loan 2025 was 6.5% (6.1% net of the impact of our interest rate cap derivative). See Note 19: Derivative Instruments and Hedging Activities in our Fiscal 2022 Form 10-K for further information on our interest rate cap derivative.
There were no issuances of variable and fixed-rate long-term debt during the two quarters ended July 1, 2022.
Long-Term Debt Repayments
On March 14, 2023, we repaid the entire outstanding $250 million aggregate principal amount of our Floating 2023 Notes through a $250 million draw on Term Loan 2025 as described above under “Long-Term Debt Issued.” The Floating 2023 Notes were classified as “Long-term debt, net” in our Condensed Consolidated Balance Sheet as of December 30, 2022.
On June 15, 2023, we repaid the entire outstanding $800 million aggregate principal amount of our 3.85% 2023 Notes through cash on hand and the issuance of commercial paper during the quarter ended June 30, 2023.
There were no repayments of variable and fixed-rate long-term debt during the two quarters ended July 1, 2022.
2023 Credit Agreement
On March 10, 2023, we established a $2.4 billion, 364-day senior unsecured revolving credit facility ("2023 Credit Facility") by entering into a 364-Day Credit Agreement (“2023 Credit Agreement”) with a syndicate of lenders.
Proceeds of the initial funding of loans under the 2023 Credit Agreement are required to be used to finance a portion of the purchase price for the acquisition of AJRD and for the fees, taxes, costs and related expenses related to it, and thereafter may be used for working capital purposes.
At our election, borrowings under the 2023 Credit Agreement, which will be designated in U.S. Dollars, will bear interest at the sum of the term SOFR rate or the Base Rate (as defined in the 2023 Credit Agreement), plus an applicable margin. In addition to interest payable on the principal amount of indebtedness outstanding, beginning June 6, 2023, we are required to pay a quarterly unused commitment fee that varies based on our Senior Debt Ratings.
The 2023 Credit Agreement also contains representations, warranties, covenants and events of default that are substantially similar to the existing Revolving Credit Agreement, dated as of July 29, 2022 (“2022 Credit Agreement”). The 2023 Credit Agreement generally matures on the earlier of 364 days from the initial funding or December 8, 2023, provided that we may extend the maturity of any loans outstanding under the 2023 Credit Agreement by one year, subject to the satisfaction of certain conditions.
At June 30, 2023, we had no outstanding borrowings and were in compliance with all covenants under our 2023 Credit Agreement. For additional information regarding our 2023 Credit Agreement, see our Current Report on Form 8-K filed on March 16, 2023.
2022 Credit Agreement
On July 29, 2022, we established a $2.0 billion, five-year senior unsecured revolving credit facility (“2022 Credit Facility”) under the 2022 Credit Agreement, with a syndicate of lenders. At June 30, 2023, we had no outstanding borrowings and were in compliance with all covenants under our 2022 Credit Agreement.
For a description of the 2022 Credit Agreement and related covenants, see Note 12: Credit Arrangements in our Fiscal 2022 Form 10-K.
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16

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Commercial Paper Program
On March 14, 2023, we established a new commercial paper program ("CP Program"), which replaced our prior $1.0 billion commercial paper program. Under the CP Program, we issue unsecured commercial paper notes up to a maximum aggregate amount of $3.4 billion, which was increased to $3.9 billion subsequent to June 30, 2023, supported by amounts available under the 2022 Credit Agreement and the 2023 Credit Agreement.
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 will rank at least pari passu with all other unsecured and unsubordinated indebtedness.
At June 30, 2023, we had $579 million outstanding notes under our CP Program which primarily consists of amounts used for the June 15, 2023 repayment of the $800 million aggregate principal amount of our 3.85% 2023 Notes, which is included as a component of the “Short-term debt” line item in our Condensed Consolidated Balance Sheet. The outstanding notes have a weighted-average interest rate of 5.47% and mature at various dates, primarily in July 2023.
NOTE I: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
The following tables provide the components of our net periodic benefit income for our defined benefit plans, including defined benefit pension plans and other postretirement defined benefit plans:
Quarter Ended June 30, 2023Two Quarters Ended June 30, 2023
(In millions)PensionOther BenefitsPensionOther Benefits
Net periodic benefit income
Operating
Service cost$6 $1 $12 $1 
Non-operating
Interest cost91 2 183 5 
Expected return on plan assets(152)(5)(305)(10)
Amortization of net actuarial gain(3)(5)(5)(10)
Amortization of prior service (credit) cost(6)1 (13)1 
Non-service cost periodic benefit income(70)(7)(140)(14)
Net periodic benefit income$(64)$(6)$(128)$(13)
Quarter Ended July 1, 2022Two Quarters Ended July 1, 2022
(In millions)PensionOther BenefitsPensionOther Benefits
Net periodic benefit income
Operating
Service cost$12 $ $22 $1 
Non-operating
Interest cost55 2 110 4 
Expected return on plan assets(156)(6)(312)(11)
Amortization of net actuarial loss (gain)3 (2)5 (4)
Amortization of prior service (credit) cost(8)1 (14)1 
Non-service cost periodic benefit income(106)(5)(211)(10)
Net periodic benefit income$(94)$(5)$(189)$(9)
The service cost component of net periodic benefit income is included in the “Cost of product sales and services” and “Engineering, selling and administrative expenses” line items in our Condensed Consolidated Statement of Operations. The non-service cost components of net periodic benefit income are included in the “Non-operating income, net” line item in our Condensed Consolidated Statement of Operations.
_____________________________________________________________________
17

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE J: EARNINGS PER SHARE
Net income per common share attributable to L3Harris common shareholders (“EPS”) is computed by dividing earnings to L3Harris common shareholders less earnings allocated to participating securities, if applicable, by the weighted-average number of common shares outstanding for the period. Net income per diluted common share attributable to L3Harris common shareholders ("diluted EPS") incorporates potential dilutive common shares, primarily consisting of employee stock options and restricted and performance share unit awards, into the weighted-average number of common shares outstanding.
The weighted-average number of common shares outstanding used to compute basic and diluted EPS are as follows:
Quarter EndedTwo Quarters Ended
(In millions)June 30, 2023July 1, 2022June 30, 2023July 1, 2022
Basic weighted-average common shares outstanding189.2 192.1 189.7 192.6 
Impact of dilutive share-based awards0.9 1.9 1.0 1.9 
Diluted weighted-average common shares outstanding190.1