We assess and identify material risks from cybersecurity threats primarily through the work of our Information
We assess and identify material risks from cybersecurity threats primarily through the work of our Information
Security organization, which is fully integrated in our enterprise risk management (“ERM”) process in close
Security organization, which is fully integrated in our enterprise risk management (“ ERM ”) process in close
partnership with other functions such as Engineering, Industrial Security, Internal Audit, and Legal. The ERM
partnership with other functions such as Engineering, Industrial Security, Internal Audit
process, administered by management with input from each business segment and function, continuously monitors
material risks facing L3Harris, including cybersecurity threats. Our Information Security organization, is led by our
material risks facing L3Harris, including cybersecurity threats. Our Information Security organization, is led by our
Chief Information Officer (“CIO”), who has extensive experience leading information technology for global
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_____________________________________________________________________ equity. Strategic mergers, acquisitions and divestitures we have made in the past and may make in the future
present significant risks and uncertainties that could adversely affect our business, financial condition, results of
operations, cash flows and equity, which include:
- Difficulty in identifying and evaluating potential mergers and acquisitions, including the risk that our due
diligence does not identify or fully assess valuation issues, potential liabilities or other merger or acquisition
risks;
- Difficulty, delays and expense in integrating newly merged or acquired businesses and operations, including
combining product and service offerings, and in entering into new markets in which we are not experienced,
in an efficient and cost-effective manner while maintaining adequate standards, controls and procedures,
and the risk that we encounter significant unanticipated costs or other problems associated with integration;
- Differences in business backgrounds, corporate cultures and management philosophies that may delay
successful integration;
- Difficulty, delays and expense in consolidating and rationalizing IT infrastructure, which may include
multiple legacy systems from various mergers and acquisitions and integrating software code;
- Challenges in achieving strategic objectives, cost savings and other expected benefits;
- Risk that our markets do not evolve as anticipated and that the strategic mergers, acquisitions and
divestitures do not prove to be those needed to be successful in those markets;
- Risk that we assume or retain, or that companies we have merged with or acquired have assumed or
retained or otherwise become subject to, significant liabilities that exceed the limitations of any applicable
indemnification provisions or the financial resources of any indemnifying parties;
- Risk that indemnification related to businesses divested or spun off that we may be required to provide or
otherwise bear may be significant and could negatively impact our business;
- Risk that mergers, acquisitions, divestitures, spin offs and other strategic transactions fail to qualify for the
intended tax treatment for U.S. federal income tax purposes and the possibility that the full tax benefits
anticipated to result from such transactions may not be realized;
- Risk that we are not able to complete strategic divestitures on satisfactory terms and conditions, including
non-competition arrangements applicable to certain of our business lines, or within expected timeframes;
- Potential loss of key employees or customers of the businesses acquired or to be divested; and
- Risk of diverting the attention of senior management from our existing operations.
Changes in future business or other market conditions could cause business investments and/or recorded
goodwill or other intangible assets to become impaired, resulting in substantial losses and write-downs that would
materially adversely affect our results of operations and financial condition. A significant portion of our assets
consist of goodwill and other intangible assets, primarily recorded as the result of acquisitions. Assumptions and
judgments in determining initial acquisition price may subsequently prove to have been inaccurate and unforeseen
issues could arise, which could adversely affect the anticipated returns or which are otherwise not recoverable as an
adjustment to the purchase price. We evaluate the recoverability of recorded goodwill annually, as well as when we
change reporting units (either as a result of a reorganization or as the result of divestiture activity) and when events
or circumstances indicate there may be an impairment. If an impairment exists, we record the charge in the period
of determination. Because of the significance of our goodwill and other intangible assets, any future impairment of
these assets could have a material adverse effect on our results of operations and financial condition. For additional
information on our accounting policies related to impairment of goodwill, see our discussion under “Critical
Accounting Estimates” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of this Report and Note 1: Significant Accounting Policies and Note 6: Goodwill and Intangible Assets in
the Notes.
Not applicable.
Risk Management and Strategy
We assess and identify material risks from cybersecurity threats primarily through the work of our Information
Security organization, which is fully integrated in our enterprise risk management (“ERM”) process in close
partnership with other functions such as Engineering, Industrial Security, Internal Audit, and Legal. The ERM
process, administered by management with input from each business segment and function, continuously monitors
material risks facing L3Harris, including cybersecurity threats. Our Information Security organization, is led by our
Chief Information Officer (“CIO”), who has extensive experience leading information technology for global
equity. Strategic mergers, acquisitions and divestitures we have made in the past and may make in the future
present significant risks and uncertainties that could adversely affect our business, financial condition, results of
operations, cash flows and equity, which include:
- Difficulty in identifying and evaluating potential mergers and acquisitions, including the risk that our due
diligence does not identify or fully assess valuation issues, potential liabilities or other merger or acquisition
risks;
- Difficulty, delays and expense in integrating newly merged or acquired businesses and operations, including
combining product and service offerings, and in entering into new markets in which we are not experienced,
in an efficient and cost-effective manner while maintaining adequate standards, controls and procedures,
and the risk that we encounter significant unanticipated costs or other problems associated with integration;
- Differences in business backgrounds, corporate cultures and management philosophies that may delay
successful integration;
- Difficulty, delays and expense in consolidating and rationalizing IT infrastructure, which may include
multiple legacy systems from various mergers and acquisitions and integrating software code;
- Challenges in achieving strategic objectives, cost savings and other expected benefits;
- Risk that our markets do not evolve as anticipated and that the strategic mergers, acquisitions and
divestitures do not prove to be those needed to be successful in those markets;
- Risk that we assume or retain, or that companies we have merged with or acquired have assumed or
retained or otherwise become subject to, significant liabilities that exceed the limitations of any applicable
indemnification provisions or the financial resources of any indemnifying parties;
- Risk that indemnification related to businesses divested or spun off that we may be required to provide or
otherwise bear may be significant and could negatively impact our business;
- Risk that mergers, acquisitions, divestitures, spin offs and other strategic transactions fail to qualify for the
intended tax treatment for U.S. federal income tax purposes and the possibility that the full tax benefits
anticipated to result from such transactions may not be realized;
- Risk that we are not able to complete strategic divestitures on satisfactory terms and conditions, including
non-competition arrangements applicable to certain of our business lines, or within expected timeframes;
- Potential loss of key employees or customers of the businesses acquired or to be divested; and
- Risk of diverting the attention of senior management from our existing operations.
Changes in future business or other market conditions could cause business investments and/or recorded
goodwill or other intangible assets to become impaired, resulting in substantial losses and write-downs that would
materially adversely affect our results of operations and financial condition. A significant portion of our assets
consist of goodwill and other intangible assets, primarily recorded as the result of acquisitions. Assumptions and
judgments in determining initial acquisition price may subsequently prove to have been inaccurate and unforeseen
issues could arise, which could adversely affect the anticipated returns or which are otherwise not recoverable as an
adjustment to the purchase price. We evaluate the recoverability of recorded goodwill annually, as well as when we
change reporting units (either as a result of a reorganization or as the result of divestiture activity) and when events
or circumstances indicate there may be an impairment. If an impairment exists, we record the charge in the period
of determination. Because of the significance of our goodwill and other intangible assets, any future impairment of
these assets could have a material adverse effect on our results of operations and financial condition. For additional
information on our accounting policies related to impairment of goodwill, see our discussion under “Critical
Accounting Estimates” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of this Report and Note 1: Significant Accounting Policies and Note 6: Goodwill and Intangible Assets in
the Notes.
Not applicable.
Risk Management and Strategy