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BUSINESS SEGMENTS (Tables) | 6 Months Ended
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Jan. 03, 2020
Segment Reporting [Abstract] |
Schedule of Selected Financial Information by Business Segments | Other selected financial information by business segment and geographical area is summarized below:
| Two Quarters Ended |  | Fiscal Years Ended
| January 3, 2020 |  | June 28, 2019 |  | June 29, 2018 |  | June 30, 2017
| (In millions)
Capital Expenditures |  |  |  |  |  |  |
Integrated Mission Systems | $ | 29 |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | — |
Space and Airborne Systems | 36 |  |  | 48 |  |  | 49 |  |  | 49 |
Communication Systems | 22 |  |  | 29 |  |  | 25 |  |  | 16 |
Aviation Systems | 64 |  |  | 54 |  |  | 37 |  |  | 22 |
Other non-reportable business segments(1) | — |  |  | 6 |  |  | 4 |  |  | 1 |
Corporate | 22 |  |  | 23 |  |  | 20 |  |  | 27 |
Discontinued operations | — |  |  | — |  |  | — |  |  | 4 |
| $ | 173 |  |  | $ | 161 |  |  | $ | 136 |  |  | $ | 119 |
Depreciation and Amortization |  |  |  |  |  |  |
Integrated Mission Systems | $ | 37 |  |  | $ | 2 |  |  | $ | 2 |  |  | $ | 2 |
Space and Airborne Systems | 31 |  |  | 50 |  |  | 54 |  |  | 55 |
Communication Systems | 32 |  |  | 49 |  |  | 54 |  |  | 60 |
Aviation Systems | 53 |  |  | 29 |  |  | 22 |  |  | 5 |
Other non-reportable business segments(1) | — |  |  | 3 |  |  | 5 |  |  | 8 |
Corporate | 289 |  |  | 125 |  |  | 122 |  |  | 142 |
Discontinued operations | — |  |  | — |  |  | — |  |  | 39 |
| $ | 442 |  |  | $ | 258 |  |  | $ | 259 |  |  | $ | 311 |
Geographical Information for Continuing Operations |  |  |  |  |  |  |
U.S. operations: |  |  |  |  |  |  |
Revenue | $ | 8,485 |  |  | $ | 6,530 |  |  | $ | 5,854 |  |  | $ | 5,637 |
Long-lived assets | $ | 1865 |  |  | $ | 866 |  |  | $ | 892 |  |  | $ | 896 |
International operations: |  |  |  |  |  |  |
Revenue | $ | 778 |  |  | $ | 271 |  |  | $ | 314 |  |  | $ | 260 |
Long-lived assets | $ | 252 |  |  | $ | 28 |  |  | $ | 8 |  |  | $ | 8 |
_______________ (1) Includes capital expenditures and depreciation and amortization of the Harris Night Vision business prior to the date of divestiture on September 13, 2019. See Note 3: Divestitures, Asset Sales and Discontinued Operations in these Notes for more information. Segment revenue, segment operating income and a reconciliation of segment operating income to total income from continuing operations before income taxes are as follows:
| Two Quarters Ended |  | Fiscal Years Ended
| January 3, 2020 |  | June 28, 2019 |  | June 29, 2018 |  | June 30, 2017
| (In millions)
Revenue |  |  |  |  |  |  |
Integrated Mission Systems | $ | 2,774 |  |  | $ | 48 |  |  | $ | 45 |  |  | $ | 38 |
Space and Airborne Systems | 2,360 |  |  | 3,715 |  |  | 3,304 |  |  | 3,156 |
Communication Systems | 2,151 |  |  | 2,208 |  |  | 2,015 |  |  | 1,891 |
Aviation Systems | 2,038 |  |  | 672 |  |  | 668 |  |  | 697 |
Other non-reportable business segments(1) | 23 |  |  | 165 |  |  | 148 |  |  | 121 |
Corporate eliminations | (83 | ) |  | (7 | ) |  | (12 | ) |  | (6 | )
| $ | 9,263 |  |  | $ | 6,801 |  |  | $ | 6,168 |  |  | $ | 5,897 |
Income from Continuing Operations before Income Taxes
Segment Operating Income: |  |  |  |  |  |  |
Integrated Mission Systems | $ | 377 |  |  | $ | 9 |  |  | $ | 7 |  |  | $ | 7 |
Space and Airborne Systems | 442 |  |  | 697 |  |  | 628 |  |  | 559 |
Communication Systems | 493 |  |  | 637 |  |  | 561 |  |  | 522 |
Aviation Systems | 289 |  |  | 76 |  |  | 54 |  |  | 131 |
Other business activities and non-reportable business segments(1) | — |  |  | 27 |  |  | 20 |  |  | 9 |
Unallocated corporate expenses and corporate eliminations(2) | (140 | ) |  | (2 | ) |  | (65 | ) |  | (62 | )
L3Harris Merger-related transaction and integration expenses and losses | (390 | ) |  | (65 | ) |  | — |  |  | — |
Amortization of acquisition-related intangibles(3) | (289 | ) |  | (101 | ) |  | (101 | ) |  | (109 | )
Gain on sale of business | 229 |  |  | — |  |  | — |  |  | — |
Pension adjustment | (172 | ) |  | (186 | ) |  | (184 | ) |  | (164 | )
Non-operating income | 192 |  |  | 188 |  |  | 156 |  |  | 166 |
Net interest expense | (123 | ) |  | (167 | ) |  | (168 | ) |  | (170 | )
Total | $ | 908 |  |  | $ | 1,113 |  |  | $ | 908 |  |  | $ | 889 |
_______________
(1) | Includes the operating results of the Harris Night Vision business prior to the date of divestiture on September 13, 2019. See Note 3: Divestitures, Asset Sales and Discontinued Operations in these Notes for more information.
(2) | Includes: (i) $142 million of additional cost of sales related to the fair value step-up in inventory sold (see Note 5: Business Combination in these Notes for more information), a $12 million gain on the sale of an asset group and a $10 million non-cash cumulative adjustment to lease expense for the two quarters ended January 3, 2020; (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, a $12 million non-cash adjustment for deferred compensation and $5 million of Exelis acquisition-related and other charges in fiscal 2018; and (iii) $58 million of Exelis acquisition-related and other charges in fiscal 2017.
(3) | Includes $239 million of amortization of identifiable intangible assets acquired as a result of the L3Harris Merger for the two quarters ended January 3, 2020 and $50 million, $101 million, $101 million and $109 million of amortization of identifiable intangible assets acquired as a result of our acquisition of Exelis for the two quarters ended January 3, 2020 and fiscal 2019, 2018 and 2017, respectively. Because the L3Harris Merger and the acquisition of Exelis benefited the entire Company as opposed to any individual segment, the amortization of identifiable intangible assets acquired was not allocated to any segment.
Schedule of Disaggregation of Revenue by Segment | Integrated Mission Systems: Integrated Mission Systems revenue is primarily derived from U.S. Government development and production contracts and is generally recognized over time using the POC cost-to-cost revenue recognition method. We disaggregate Integrated Mission Systems revenue by customer relationship, contract type and geographical region. We believe these categories best depict how the nature, amount, timing and uncertainty of Integrated Mission Systems revenue and cash flows are affected by economic factors:
| Two Quarters Ended |  | Fiscal Years Ended
| January 3, 2020 |  | June 28, 2019 |  | June 29, 2018 |  | June 30, 2017
| (In millions)
Revenue By Customer Relationship |  |  |  |  |  |  |
Prime contractor | $ | 1,904 |  |  | $ | 25 |  |  | $ | 20 |  |  | $ | 24 |
Subcontractor | 870 |  |  | 23 |  |  | 25 |  |  | 14 |
| $ | 2,774 |  |  | $ | 48 |  |  | $ | 45 |  |  | $ | 38 |
Revenue By Contract Type |  |  |  |  |  |  |
Fixed-price(1) | $ | 2,138 |  |  | $ | 48 |  |  | $ | 45 |  |  | $ | 37 |
Cost-reimbursable | 636 |  |  | — |  |  | — |  |  | 1 |
| $ | 2,774 |  |  | $ | 48 |  |  | $ | 45 |  |  | $ | 38 |
Revenue By Geographical Region |  |  |  |  |  |  |
United States | $ | 2,300 |  |  | $ | 30 |  |  | $ | 39 |  |  | $ | 27 |
International | 474 |  |  | 18 |  |  | 6 |  |  | 11 |
| $ | 2,774 |  |  | $ | 48 |  |  | $ | 45 |  |  | $ | 38 |
_______________
(1) | Includes revenue derived from time-and-materials contracts.
Space and Airborne Systems: Space and Airborne Systems revenue is primarily derived from U.S. Government development and production contracts and is generally recognized over time using the POC cost-to-cost revenue recognition method. We disaggregate Space and Airborne 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 Airborne Systems revenue and cash flows are affected by economic factors:
| Two Quarters Ended |  | Fiscal Years Ended
| January 3, 2020 |  | June 28, 2019 |  | June 29, 2018 |  | June 30, 2017
| (In millions)
Revenue By Customer Relationship |  |  |  |  |  |  |
Prime contractor | $ | 1,337 |  |  | $ | 2,246 |  |  | $ | 2,159 |  |  | $ | 2,067 |
Subcontractor | 1,023 |  |  | 1,469 |  |  | 1,145 |  |  | 1,089 |
| $ | 2,360 |  |  | $ | 3,715 |  |  | $ | 3,304 |  |  | $ | 3,156 |
Revenue By Contract Type |  |  |  |  |  |  |
Fixed-price(1) | $ | 1,367 |  |  | $ | 2,097 |  |  | $ | 1,634 |  |  | $ | 1,390 |
Cost-reimbursable | 993 |  |  | 1,618 |  |  | 1,670 |  |  | 1,766 |
| $ | 2,360 |  |  | $ | 3,715 |  |  | $ | 3,304 |  |  | $ | 3,156 |
Revenue By Geographical Region |  |  |  |  |  |  |
United States | $ | 2,037 |  |  | $ | 3,255 |  |  | $ | 2,937 |  |  | $ | 2,782 |
International | 323 |  |  | 460 |  |  | 367 |  |  | 374 |
| $ | 2,360 |  |  | $ | 3,715 |  |  | $ | 3,304 |  |  | $ | 3,156 |
_______________
(1) | Includes revenue derived from time-and-materials contracts.
Communication Systems: Communication Systems revenue is primarily derived from fixed-price contracts and is generally recognized at the point in time when products are received and accepted by the customer for standard products offered to multiple customers and over time for customer-specific products, systems and services. We disaggregate Communication Systems revenue by customer relationship, contract type and geographical region. We believe these categories best depict how the nature, amount, timing and uncertainty of Communication Systems revenue and cash flows are affected by economic factors:
| Two Quarters Ended |  | Fiscal Years Ended
| January 3, 2020 |  | June 28, 2019 |  | June 29, 2018 |  | June 30, 2017
| (In millions)
Revenue By Customer Relationship(1) |  |  |  |  |  |  |
Prime contractor | $ | 1,406 |  |  |  |  |  |  |
Subcontractor | 745 |  |  |  |  |  |  |
| $ | 2,151 |  |  |  |  |  |  |
Revenue By Contract Type(1) |  |  |  |  |  |  |
Fixed-price(2) | $ | 1,849 |  |  |  |  |  |  |
Cost-reimbursable | 302 |  |  |  |  |  |  |
| $ | 2,151 |  |  |  |  |  |  |
Revenue By Geographical Region |  |  |  |  |  |  |
United States | $ | 1,518 |  |  | $ | 1,281 |  |  | $ | 1,031 |  |  | $ | 880 |
International | 633 |  |  | 927 |  |  | 984 |  |  | 1,011 |
| $ | 2,151 |  |  | $ | 2,208 |  |  | $ | 2,015 |  |  | $ | 1,891 |
_______________
(1) | Prior to the L3Harris Merger, Communication Systems did not recognize significant revenue for customer-specific products and systems, and currently, such customer arrangements primarily exist at operating businesses acquired in connection with the L3Harris Merger. The “Revenue by Customer Relationship” and “Revenue by Contract Type” disaggregation categories were added beginning in the Fiscal Transition Period to best depict how the nature, amount, timing and uncertainty of revenue and cash flows from these types of customer arrangements are affected by economic factors.
(2) | Includes revenue derived from time-and-materials contracts.
Aviation Systems: Aviation Systems revenue is primarily derived from fixed-price contracts and is generally recognized at the point in time when products are received and accepted by the customer for standard products offered to multiple customers and over time for customer-specific products, systems and services. We disaggregate Aviation Systems revenue by customer relationship, contract type and geographical region. We believe these categories best depict how the nature, amount, timing and uncertainty of Aviation Systems revenue and cash flows are affected by economic factors:
| Two Quarters Ended |  | Fiscal Years Ended
| January 3, 2020 |  | June 28, 2019 |  | June 29, 2018 |  | June 30, 2017
| (In millions)
Revenue By Customer Relationship |  |  |  |  |  |  |
Prime contractor | $ | 1,246 |  |  | $ | 654 |  |  | $ | 656 |  |  | $ | 697 |
Subcontractor | 792 |  |  | 18 |  |  | 12 |  |  | — |
| $ | 2,038 |  |  | $ | 672 |  |  | $ | 668 |  |  | $ | 697 |
Revenue By Contract Type |  |  |  |  |  |  |
Fixed-price(1) | $ | 1,688 |  |  | $ | 587 |  |  | $ | 582 |  |  | $ | 636 |
Cost-reimbursable | 350 |  |  | 85 |  |  | 86 |  |  | 61 |
| $ | 2,038 |  |  | $ | 672 |  |  | $ | 668 |  |  | $ | 697 |
Revenue By Geographical Region |  |  |  |  |  |  |
United States | $ | 1,514 |  |  | $ | 644 |  |  | $ | 627 |  |  | $ | 647 |
International | 524 |  |  | 28 |  |  | 41 |  |  | 50 |
| $ | 2,038 |  |  | $ | 672 |  |  | $ | 668 |  |  | $ | 697 |
______________ (1) Includes revenue derived from time-and-materials contracts.
Schedule of Total Assets by Segment | Total assets by business segment is as follows:
| January 3, 2020 |  | June 28, 2019 |  | June 29, 2018
| (In millions)
Total Assets |  |  |  |  |
Integrated Mission Systems | $ | 7,896 |  |  | $ | 87 |  |  | $ | 90 |
Space and Airborne Systems | 6,829 |  |  | 5,027 |  |  | 4,953 |
Communication Systems | 5,930 |  |  | 1,683 |  |  | 1,724 |
Aviation Systems | 7,569 |  |  | 1,036 |  |  | 1,046 |
Corporate(1) | 10,112 |  |  | 2,284 |  |  | 2,038 |
| $ | 38,336 |  |  | $ | 10,117 |  |  | $ | 9,851 |
_______________ (1) Identifiable intangible assets acquired in connection with the L3Harris Merger in the two quarters ended January 3, 2020 and our acquisition of Exelis in fiscal 2015 were recorded as Corporate assets because they benefited the entire Company as opposed to any individual segment. Identifiable intangible asset balances recorded as Corporate assets were approximately $8.5 billion, $869 million and $974 million at January 3, 2020, 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, as well as any assets of discontinued operations and divestitures. See Note 3: Divestitures, Asset Sales and Discontinued Operations for additional information.

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