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ACQUISITIONS, DIVESTITURES AND ASSET SALES (Tables) | 9 Months Ended
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Sep. 29, 2023
Business Combination and Asset Acquisition [Abstract] |
Schedule of Business Acquisitions Consideration Transferred | 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 adjustments | 15 |
Cash consideration paid | 1,973 |
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. As of the acquisition date, the fair value of consideration transferred consisted of the following:
(In millions) | July 28, 2023
Cash consideration paid for AJRD outstanding common stock & equity awards | $ | 4,748 |
AJRD debt settled by L3Harris | 257 |
Cash consideration paid | 5,005 |
Less cash acquired | (290) |
Fair value of consideration transferred | $ | 4,715 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | 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 September 29, 2023:
| January 3, 2023
(In millions) | Preliminary |  | Measurement Period Adjustments, Net 1,2 |  | Preliminary Adjusted
Receivables | $ | 28 |  |  | $ | — |  |  | $ | 28 |
Contract assets | 18 |  |  | 11 |  |  | 29 |
Inventories | 164 |  |  | (10) |  |  | 154 |
Other current assets | 9 |  |  | — |  |  | 9 |
Property, plant and equipment | 50 |  |  | — |  |  | 50 |
Operating lease right-of-use assets | 12 |  |  | — |  |  | 12 |
Goodwill | 1,014 |  |  | 103 |  |  | 1,117 |
Other intangible assets | 850 |  |  | (95) |  |  | 755 |
Deferred income taxes | 33 |  |  | 3 |  |  | 36 |
Other non-current assets | 6 |  |  | (1) |  |  | 5 |
Total assets acquired | $ | 2,184 |  |  | $ | 11 |  |  | $ | 2,195 |
Accounts payable | $ | 20 |  |  | $ | — |  |  | $ | 20 |
Contract liabilities | 28 |  |  | — |  |  | 28 |
Compensation and benefits | 2 |  |  | — |  |  | 2 |
Other accrued items | 119 |  |  | 1 |  |  | 120 |
Operating lease liabilities | 10 |  |  | — |  |  | 10 |
Other long-term liabilities | 31 |  |  | 10 |  |  | 41 |
Total liabilities assumed | $ | 210 |  |  | $ | 11 |  |  | $ | 221 |
Net assets acquired | $ | 1,974 |  |  | $ | — |  |  | $ | 1,974 |
_______________ (1)Fair value adjustments primarily related to refined assumptions in the valuation of customer relationship intangible assets. (2) Assets acquired include $11 million of Contract assets that were reclassified from Inventories to Contract assets to conform TDL’s accounting policies with those of L3Harris, as required under ASC 805. As such, reclassified amounts will not be recognized as revenue in future periods. 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:
(In millions) | July 28, 2023
Receivables | $ | 156 |  |  |  |  |
Contract assets | 338 |  |  |  |  |
Inventories | 14 |  |  |  |  |
Income taxes receivable | 3 |  |  |  |  |
Other current assets | 114 |  |  |  |  |
Property, plant and equipment | 574 |  |  |  |  |
Operating lease right-of-use assets | 51 |  |  |  |  |
Goodwill | 2,348 |  |  |  |  |
Other intangible assets | 2,860 |  |  |  |  |
Recoverable environmental remediation costs | 383 |  |  |  |  |
Other non-current assets | 175 |  |  |  |  |
Total assets acquired | $ | 7,016 |  |  |  |  |
Accounts payable | 145 |  |  |  |  |
Contract liabilities | 310 |  |  |  |  |
Compensation and benefits | 116 |  |  |  |  |
Income taxes payable | 6 |  |  |  |  |
Current portion of long-term debt, net | 1 |  |  |  |  |
Other accrued items | 278 |  |  |  |  |
Defined benefit plans | 223 |  |  |  |  |
Operating lease liabilities | 40 |  |  |  |  |
Long-term debt, net | 41 |  |  |  |  |
Deferred income taxes | 398 |  |  |  |  |
Reserves for environmental remediation costs | 417 |  |  |  |  |
Other long-term liabilities | 326 |  |  |  |  |
Total liabilities assumed | $ | 2,301 |  |  |  |  |
Fair value of consideration transferred | $ | 4,715 |  |  |  |  |
Schedule of Identifiable Intangible Assets Acquired | The preliminary fair value of identifiable intangible assets acquired as of the acquisition date is as follows:
| Total |  | Useful Lives
| (In millions) |  | (In Years)
Developed technology | $ | 349 |  |  | 17
Customer relationships:(1) |  |  |
Backlog | 83 |  |  | 2
Government programs | 323 |  |  | 16
Total customer relationships | 406 |  |  |
Total identifiable intangible assets acquired | $ | 755 |  |  |
_______________ (1)TDL had backlog and government programs intangible assets that we classified as customer relationships. The preliminary fair value of identifiable intangible assets acquired as of the acquisition date is as follows:
| Total |  | Useful Lives
| (In millions) |  | (In Years)
Trade names | $ | 120 |  |  | 10 - 20
Customer relationships:(1) |  |  |
Backlog | 360 |  |  | 3 - 4
Government programs | 2,380 |  |  | 15 - 25
Total customer relationships | 2,740 |  |  |
Total identifiable intangible assets acquired | $ | 2,860 |  |  |
_______________ (1)AJRD had backlog and government programs intangible assets that we classified as customer relationships.
Schedule of Pro Forma Results | The following table includes revenue and income before income taxes of TDL included in our Condensed Consolidated Statement of Operations for the quarter ended September 29, 2023 and for the acquisition date through September 29, 2023 and the comparable periods of calendar year 2022. The comparable period results do not include any integration synergies or accounting conformity adjustments and are not necessarily indicative of our results of operations that actually would have been obtained had the acquisition of TDL been completed for the period presented, or which may be realized in the future.
| Quarter Ended |  | Three Quarters Ended
(In millions) | September 29, 2023 |  | September 30, 2022 |  | September 29, 2023 |  | September 30, 2022
Revenue | $ | 97 |  |  | $ | 105 |  |  | $ | 261 |  |  | $ | 290 |
Income before income taxes | 38 |  |  | 30 |  |  | 86 |  |  | 55 |
The pro forma results do not include any integration synergies and are not necessarily indicative of our results of operations that actually would have been obtained had the acquisition of AJRD been completed for the period presented, or which may be realized in the future.
|  |  | Three Quarters Ended
(In millions) |  |  |  |  | September 29, 2023 |  | September 30, 2022
Revenue |  |  |  |  | $ | 1,740 |  |  | $ | 1,589 |
Income before income taxes |  |  |  |  | 156 |  |  | 180 |

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