01—Abstract
Summary
Summary of the 8-K/A filed January 18, 2022. Cited figures are marked; the original filing is the authoritative source.
L3Harris Technologies, Inc. (LHX) filed an 8-K/A on January 18, 2022, primarily to announce and provide details on a significant reorganization of its business segments, effective January 1, 2022.
The company has streamlined its operations from four business segments to three: Integrated Mission Solutions, Space & Airborne Systems, and Communication Systems. This reorganization involves the integration of the former Aviation Systems segment's operations into the remaining three segments. The filing also introduces a new accounting policy for pension and other postretirement income or expense, which will better align with industry peers by reporting U.S. Government Cost Accounting Standards (CAS) pension and OPEB costs within segment results, while FAS pension and OPEB adjustments will be presented outside of segment operating income.
Investors should note that this 8-K/A, along with the furnished Exhibit 99.1, provides reclassified historical segment financial information to reflect these changes, allowing for more consistent period-over-period analysis. While the segment structure and accounting policy changes impact how results are presented, the company states these changes have no impact on previously reported consolidated financial statements. The company also emphasizes the use of non-GAAP financial measures alongside GAAP figures for a comprehensive understanding of business trends and performance.
02—Key points
Key Highlights
- L3Harris has reorganized its business structure from four to three reporting segments, effective January 1, 2022.
- The Aviation Systems segment has been eliminated, with its operations integrated into Integrated Mission Solutions, Space & Airborne Systems, and Communication Systems.
- A new accounting policy for pension and other postretirement income/expense will now include U.S. Government Cost Accounting Standards (CAS) costs within segment results.
- Financial Accounting Standards (FAS) pension and OPEB adjustments will be reported separately outside of segment operating income.
- The company is providing reclassified historical segment financial data to ensure comparability under the new structure.
- These changes do not impact previously reported consolidated financial statements.
- Exhibit 99.1 contains supplemental, unaudited historical segment information and reconciliations of non-GAAP financial measures.
03—Questions
Frequently Asked Questions
What is the main purpose of this 8-K filing?
The main purpose of this filing is to announce and detail L3Harris Technologies' reorganization of its business segments from four to three, effective January 1, 2022, and to introduce a new accounting policy for pension and other postretirement income/expense. It also provides reclassified historical segment financial information for comparative analysis.
How does the segment reorganization affect L3Harris's financial reporting?
L3Harris will now report under three segments: Integrated Mission Solutions, Space & Airborne Systems, and Communication Systems. The former Aviation Systems segment's operations have been absorbed into these three. This change allows for a more streamlined view of the company's operations and better alignment with industry peers, with historical data reclassified for comparability.
What is the change in accounting policy for pension and OPEB costs?
The company is changing its policy to include U.S. Government Cost Accounting Standards (CAS) pension and OPEB costs within the operating results of its business segments. Financial Accounting Standards (FAS) pension and OPEB income/expense will be presented separately outside of segment operating income, with an 'FAS/CAS operating adjustment' line item to reconcile the differences.
Will this segment reorganization and accounting change impact previously reported financial results?
No, the company explicitly states that the segment reorganization and the change to pension and OPEB accounting policies have no impact on L3Harris's previously reported consolidated statements of income, balance sheets, statements of cash flows, statements of comprehensive income, or statements of shareholders' equity.
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