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BUSINESS SEGMENTS | 12 Months Ended
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Jun. 28, 2019
Segment Reporting [Abstract] |
BUSINESS SEGMENTS | NOTE 24: BUSINESS SEGMENTS As of June 28, 2019, we structured our operations primarily around the products, systems and services we sold and the markets we served, and we reported the financial results of our continuing operations in the following three reportable segments, which were also referred to as our business segments:
• | Communication Systems, serving markets in tactical communications and defense products, including tactical ground and airborne radio communications solutions and night vision technology, and in public safety networks;
• | Electronic Systems, providing electronic warfare, avionics, and command, control, communications, computers, intelligence, surveillance and reconnaissance solutions for defense and classified customers and mission-critical communication systems for civil and military aviation and other customers; and
• | Space and Intelligence Systems, providing intelligence, space protection, geospatial, complete Earth observation, universe exploration, positioning, navigation and timing, and environmental solutions for national security, defense, civil and commercial customers, using advanced sensors, antennas and payloads, as well as ground processing and information analytics.
| 2019 |  | 2018 |  | 2017
| (In millions)
Revenue |  |  |  |  |
Communication Systems | $ | 2,177 |  |  | $ | 1,904 |  |  | $ | 1,754 |
Electronic Systems | 2,583 |  |  | 2,365 |  |  | 2,245 |
Space and Intelligence Systems | 2,057 |  |  | 1,913 |  |  | 1,904 |
Corporate eliminations | (16 | ) |  | (14 | ) |  | (6 | )
| $ | 6,801 |  |  | $ | 6,168 |  |  | $ | 5,897 |
Income from Continuing Operations before Income Taxes |  |  |  |  |
Segment Operating Income: |  |  |  |  |
Communication Systems | $ | 654 |  |  | $ | 566 |  |  | $ | 514 |
Electronic Systems | 499 |  |  | 432 |  |  | 457 |
Space and Intelligence Systems | 359 |  |  | 331 |  |  | 314 |
Unallocated corporate expense and corporate eliminations(1) | (234 | ) |  | (225 | ) |  | (228 | )
Pension adjustment | (186 | ) |  | (184 | ) |  | (164 | )
Non-operating income(2) | 188 |  |  | 156 |  |  | 166 |
Net interest expense | (167 | ) |  | (168 | ) |  | (170 | )
Total | $ | 1,113 |  |  | $ | 908 |  |  | $ | 889 |
_______________
(1) | Unallocated corporate expense and corporate eliminations includes: (i) $65 million of L3Harris Merger-related transaction and integration costs in fiscal 2019, (ii) $47 million of charges related to our decision to transition and exit a commercial air-to-ground LTE radio communications line of business and other items in fiscal 2018, (iii) a $12 million non-cash adjustment for deferred compensation in fiscal 2018, (iii) $5 million and $58 million of Exelis acquisition-related and other charges in fiscal 2018 and 2017, respectively, and (iv) $101 million in each of fiscal 2019 and 2018 and $109 million in fiscal 2017, for amortization of identifiable intangible assets acquired as a result of our acquisition of Exelis. Because the acquisition of Exelis benefited the entire Company as opposed to any individual segment, the amortization of identifiable intangible assets acquired in the Exelis acquisition was recorded as unallocated corporate expense. Corporate eliminations of intersegment profits were not material in fiscal 2019, 2018 or 2017.
(2) | Non-operating income in fiscal 2018 includes $27 million of losses and other costs related to debt refinancing. Additional information regarding non-operating income is set forth in Note 20: Non-Operating Income.
Disaggregation of Revenue Communication Systems: Communication Systems operated principally on a “commercial” market-driven business model through which the business segment provided ready-to-ship commercial off-the-shelf products to customers in the U.S. and internationally. Communication Systems revenue was primarily derived from fixed-price contracts and was generally recognized at the point in time when the product is received and accepted by the customer. We disaggregated Communication Systems revenue by geographical region, as we believe this category best depicts how the nature, amount, timing and uncertainty of Communication Systems revenue and cash flows were affected by economic factors:
| 2019 |  | 2018 |  | 2017
| (In millions)
Revenue By Geographical Region |  |  |  |  |
United States | $ | 1,213 |  |  | $ | 983 |  |  | $ | 811 |
International | 964 |  |  | 921 |  |  | 943 |
| $ | 2,177 |  |  | $ | 1,904 |  |  | $ | 1,754 |
Electronic Systems: Electronic Systems revenue was primarily derived from U.S. Government development and production contracts and was generally recognized over time using the POC cost-to-cost method. We disaggregated Electronic Systems revenue by customer relationship, contract type and geographical region. We believe these categories best depict how the nature, amount, timing and uncertainty of Electronic Systems revenue and cash flows were affected by economic factors:
| 2019 |  | 2018 |  | 2017
| (In millions)
Revenue By Customer Relationship |  |  |  |  |
Prime contractor | $ | 1,671 |  |  | $ | 1,670 |  |  | $ | 1,653 |
Subcontractor | 912 |  |  | 695 |  |  | 592 |
| $ | 2,583 |  |  | $ | 2,365 |  |  | $ | 2,245 |
Revenue By Contract Type |  |  |  |  |
Fixed-price(1) | $ | 2,092 |  |  | $ | 1,900 |  |  | $ | 1,833 |
Cost-reimbursable | 491 |  |  | 465 |  |  | 412 |
| $ | 2,583 |  |  | $ | 2,365 |  |  | $ | 2,245 |
Revenue By Geographical Region |  |  |  |  |
United States | $ | 2,095 |  |  | $ | 1,890 |  |  | $ | 1,769 |
International | 488 |  |  | 475 |  |  | 476 |
| $ | 2,583 |  |  | $ | 2,365 |  |  | $ | 2,245 |
_______________
(1) | Includes revenue derived from time-and-materials contracts.
Space and Intelligence Systems: Space and Intelligence Systems revenue was primarily derived from U.S. Government development and production contracts and was generally recognized over time using the POC cost-to-cost method. We disaggregated Space and Intelligence Systems revenue by customer relationship, contract type and geographical region. We believe these categories best depict how the nature, amount, timing and uncertainty of Space and Intelligence Systems revenue and cash flows were affected by economic factors:
| 2019 |  | 2018 |  | 2017
| (In millions)
Revenue By Customer Relationship |  |  |  |  |
Prime contractor | $ | 1,409 |  |  | $ | 1,384 |  |  | $ | 1,369 |
Subcontractor | 648 |  |  | 529 |  |  | 535 |
| $ | 2,057 |  |  | $ | 1,913 |  |  | $ | 1,904 |
Revenue By Contract Type |  |  |  |  |
Fixed-price(1) | $ | 748 |  |  | $ | 544 |  |  | $ | 448 |
Cost-reimbursable | 1,309 |  |  | 1,369 |  |  | 1,456 |
| $ | 2,057 |  |  | $ | 1,913 |  |  | $ | 1,904 |
Revenue By Geographical Region |  |  |  |  |
United States | $ | 2,003 |  |  | $ | 1,861 |  |  | $ | 1,821 |
International | 54 |  |  | 52 |  |  | 83 |
| $ | 2,057 |  |  | $ | 1,913 |  |  | $ | 1,904 |
_______________
(1) | Includes revenue derived from time-and-materials contracts.
Total assets by business segment is as follows:
| 2019 |  | 2018
| (In millions)
Total Assets |  |  |
Communication Systems | $ | 1,565 |  |  | $ | 1,567 |
Electronic Systems | 4,188 |  |  | 4,174 |
Space and Intelligence Systems | 2,208 |  |  | 2,193 |
Corporate(1) | 2,156 |  |  | 1,917 |
| $ | 10,117 |  |  | $ | 9,851 |
_______________
(1) | Identifiable intangible assets acquired in connection with our acquisition of Exelis in the fourth quarter of fiscal 2015 were recorded as Corporate assets because they benefited the entire Company as opposed to any individual segment. Exelis identifiable intangible asset balances of continuing operations recorded as Corporate assets were approximately $869 million and $974 million as of June 28, 2019 and June 29, 2018, respectively. Corporate assets also consisted of cash, income taxes receivable, deferred income taxes, deferred compensation plan investments, buildings and equipment and identifiable intangibles, and also included any assets and liabilities from discontinued operations and divestitures. See Note 3: Discontinued Operations and Divestitures for additional information.
Other selected financial information by business segment and geographical area is summarized below:
| 2019 |  | 2018 |  | 2017
| (In millions)
Capital Expenditures |  |  |  |  |
Communication Systems | $ | 33 |  |  | $ | 26 |  |  | $ | 14 |
Electronic Systems | 74 |  |  | 57 |  |  | 40 |
Space and Intelligence Systems | 31 |  |  | 33 |  |  | 34 |
Corporate | 23 |  |  | 20 |  |  | 27 |
Discontinued operations | — |  |  | — |  |  | 4 |
| $ | 161 |  |  | $ | 136 |  |  | $ | 119 |
Depreciation and Amortization |  |  |  |  |
Communication Systems | $ | 50 |  |  | $ | 57 |  |  | $ | 64 |
Electronic Systems | 50 |  |  | 44 |  |  | 29 |
Space and Intelligence Systems | 33 |  |  | 36 |  |  | 37 |
Corporate | 125 |  |  | 122 |  |  | 142 |
Discontinued operations | — |  |  | — |  |  | 39 |
| $ | 258 |  |  | $ | 259 |  |  | $ | 311 |
Geographical Information for Continuing Operations |  |  |  |  |
U.S. operations: |  |  |  |  |
Revenue | $ | 6,530 |  |  | $ | 5,854 |  |  | $ | 5,637 |
Long-lived assets | $ | 866 |  |  | $ | 892 |  |  | $ | 896 |
International operations: |  |  |  |  |
Revenue | $ | 271 |  |  | $ | 314 |  |  | $ | 260 |
Long-lived assets | $ | 28 |  |  | $ | 8 |  |  | $ | 8 |
In addition to depreciation and amortization expense related to property, plant and equipment, “Depreciation and Amortization” in the table above also includes $120 million, $116 million and $125 million of amortization related to intangible assets, debt premium, debt discount and debt issuance costs in fiscal 2019, 2018 and 2017, respectively. Our products and systems are produced principally in the U.S. with international revenue derived primarily from exports. No revenue earned from any individual foreign country exceeded 5 percent of our total revenue during fiscal 2019, 2018 or 2017. Sales made to U.S. Government customers, including foreign military sales funded through the U.S. Government, whether directly or through prime contractors, by all segments as a percentage of total revenue were 77 percent, 75 percent and 74 percent in fiscal 2019, 2018 and 2017, respectively. Revenue from services in fiscal 2019 was approximately 8 percent, 28 percent and 13 percent of total revenue in our Communication Systems, Electronic Systems and Space and Intelligence Systems segments, respectively. Revenue from products and services where the end consumer is located outside the U.S., including foreign military sales through the U.S. Government, was $1.5 billion (22 percent of our revenue), $1.4 billion (23 percent of our revenue) and $1.5 billion (25 percent of our revenue) in fiscal 2019, 2018 and 2017, respectively. Fiscal 2019 export revenue and revenue from international operations was principally from Europe, the Middle East, Asia, Australia, Canada and Africa.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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