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Business Segment Information | 6 Months Ended
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Jul. 02, 2021
Segment Reporting [Abstract] |
Business Segment Information | Note S — Business Segment Information We structure our operations primarily around the products, systems and services we sell and the markets we serve, and we report the financial results of our continuing operations in the following four operating segments, which are also our reportable segments and are referred to as our business segments: •Integrated Mission Systems, including multi-mission intelligence, surveillance and reconnaissance (“ISR”) and communication systems; integrated electrical and electronic systems for maritime platforms; and advanced electro-optical and infrared solutions; •Space and Airborne Systems, including space payloads, sensors and full-mission solutions; classified intelligence and cyber defense; avionics; and electronic warfare; •Communication Systems, including tactical communications; broadband communications; integrated vision solutions; public safety and global communications solutions; and •Aviation Systems, including defense aviation; commercial aviation products; commercial pilot training; and mission networks for air traffic management. See Note B — Business Divestitures in these Notes for information relating to the following businesses divested or classified as held for sale in fiscal 2020 and 2021: •Airport security and automation business, divested on May 4, 2020, the results of which were reported as part of our Aviation Systems segment through the date of divestiture; •Applied Kilovolts and Analytical Instrumentation business, divested on May 15, 2020, the results of which were reported as part of our Space and Airborne Systems segment through the date of divestiture; •EOTech business, divested on July 31, 2020, the results of which were reported as part of our Communication Systems segment through the date of divestiture; •Military training business, divested on July 2, 2021, the results of which were reported as part of our Aviation Systems segment through the date of divestiture; •CPS business, divested on July 2, 2021, the results of which were reported as part of our Aviation Systems segment through the date of divestiture; •VSE disposal group, definitive agreement entered into on February 23, 2021 and divestiture partially completed during the quarter ended July 2, 2021, with the remainder classified as held for sale and expected to be completed in the second half of fiscal 2021, the results of which are reported as part of our Aviation Systems segment; •Electron Devices business, definitive agreement entered into on July 2, 2021 and classified as held for sale, expected to be completed during the second half of fiscal 2021, the results of which are reported as part of our Aviation Systems segment; and •AP disposal groups, classified as held for sale during the quarter ended July 2, 2021, expected to be completed during the next twelve months, the results of which are reported as part of our Aviation Systems segment. The accounting policies of our business segments are the same as those described in Note 1: “Significant Accounting Policies” in the Notes to Consolidated Financial Statements in our Fiscal 2020 Form 10-K. We evaluate each business segment’s performance based on its operating income or loss, which we define as profit or loss from operations before income taxes, including pension income and excluding interest income and expense, royalties and related intellectual property expenses, equity method investment income or loss and gains or losses from securities and other investments. Intersegment sales are generally transferred at cost to the buying segment, and the sourcing segment recognizes a profit that is eliminated. The “Corporate eliminations” line item in the table below represents the elimination of intersegment sales. Corporate expenses are primarily allocated to our business segments using an allocation methodology prescribed by U.S. Government regulations for government contractors. The “Unallocated corporate expenses” line item in the table below represents the portion of corporate expenses not allocated to our business segments and elimination of intersegment profits. The “Pension adjustment” line item in the table below represents the reconciliation of the non-service components of net periodic pension and postretirement benefit costs, which are a component of segment operating income but are included in the “Non-operating income” line item in our Condensed Consolidated Statement of Income (Unaudited). The non-service components of net periodic pension and postretirement benefit costs include interest cost, expected return on plan assets, amortization of net actuarial gain or loss, and effect of curtailments or settlements. Segment revenue, segment operating income (loss) and a reconciliation of segment operating income to total income from continuing operations before income taxes are as follows:
| Quarter Ended |  | Two Quarters Ended
(In millions) | July 2, 2021 |  | July 3, 2020 |  | July 2, 2021 |  | July 3, 2020
Revenue |  |  |  |  |  |  |
Integrated Mission Systems | $ | 1,494 |  |  | $ | 1,331 |  |  | $ | 2,945 |  |  | $ | 2,701 |
Space and Airborne Systems | 1,287 |  |  | 1,249 |  |  | 2,523 |  |  | 2,441 |
Communication Systems | 1,127 |  |  | 1,112 |  |  | 2,239 |  |  | 2,206 |
Aviation Systems | 809 |  |  | 800 |  |  | 1,623 |  |  | 1,811 |
Corporate eliminations | (49) |  |  | (47) |  |  | (95) |  |  | (88) |
Total revenue | $ | 4,668 |  |  | $ | 4,445 |  |  | $ | 9,235 |  |  | $ | 9,071 |
Income From Continuing Operations Before Income Taxes |  |  |  |  |  |
Segment Operating Income (Loss): |  |  |  |  |  |  |
Integrated Mission Systems | $ | 229 |  |  | $ | 224 |  |  | $ | 469 |  |  | $ | 425 |
Space and Airborne Systems | 253 |  |  | 235 |  |  | 493 |  |  | 456 |
Communication Systems | 287 |  |  | 265 |  |  | 568 |  |  | 515 |
Aviation Systems | 35 |  |  | 31 |  |  | 163 |  |  | (146) |
Other unallocated corporate expenses(1) | (70) |  |  | (53) |  |  | (110) |  |  | (78) |
L3Harris Merger-related integration expenses | (20) |  |  | (37) |  |  | (41) |  |  | (68) |
Amortization of acquisition-related intangibles(2) | (156) |  |  | (208) |  |  | (320) |  |  | (353) |
Business divestiture-related gains (losses) | 180 |  |  | (49) |  |  | 165 |  |  | (52) |
Impairment of goodwill and other assets | (63) |  |  | (14) |  |  | (125) |  |  | (19) |
Pension adjustment | (114) |  |  | (98) |  |  | (225) |  |  | (195) |
Non-operating income | 86 |  |  | 105 |  |  | 203 |  |  | 200 |
Interest expense, net | (65) |  |  | (65) |  |  | (131) |  |  | (128) |
Total income from continuing operations before income taxes | $ | 582 |  |  | $ | 336 |  |  | $ | 1,109 |  |  | $ | 557 |
_______________ (1)For the quarter and two quarters ended July 2, 2021, includes $46 million and $53 million, respectively, of divestiture-related expenses. For the quarter and two quarters ended July 3, 2020, includes (i) $16 million and $31 million, respectively, of additional cost of sales related to fair value step-up in inventory sold; (ii) $9 million of other divestiture-related expenses; and (iii) $7 million of restructuring charges. (2)Includes amortization of identifiable intangible assets acquired as a result of the L3Harris Merger of $131 million and $271 million for the quarter and two quarters ended July 2, 2021, respectively, and $183 million and $303 million for the quarter and two quarters ended July 3, 2020, respectively. Also includes amortization of identifiable intangible assets acquired as a result of our acquisition of Exelis Inc. of $25 million and $49 million for the quarter and two quarters ended July 2, 2021, respectively, and $25 million and $50 million for the quarter and two quarters ended July 3, 2020, respectively. Because the L3Harris Merger and the acquisition of Exelis Inc. benefited the entire Company as opposed to any individual segment, the amortization of identifiable intangible assets acquired was not allocated to any segment. Disaggregation of Revenue We disaggregate revenue for all four business segments by customer relationship, contract type and geographical region. We believe these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. 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.
| Quarter Ended |  | Two Quarters Ended
(In millions) | July 2, 2021 |  | July 3, 2020 |  | July 2, 2021 |  | July 3, 2020
Revenue By Customer Relationship |  |  |  |  |  |  |
Prime contractor | $ | 1,020 |  |  | $ | 856 |  |  | $ | 2,027 |  |  | $ | 1,807 |
Subcontractor | 460 |  |  | 462 |  |  | 889 |  |  | 869 |
Intersegment | 14 |  |  | 13 |  |  | 29 |  |  | 25 |
| $ | 1,494 |  |  | $ | 1,331 |  |  | $ | 2,945 |  |  | $ | 2,701 |
Revenue By Contract Type |  |  |  |  |  |  |
Fixed-price(1) | $ | 1,147 |  |  | $ | 997 |  |  | $ | 2,239 |  |  | $ | 2,021 |
Cost-reimbursable | 333 |  |  | 321 |  |  | 677 |  |  | 655 |
Intersegment | 14 |  |  | 13 |  |  | 29 |  |  | 25 |
| $ | 1,494 |  |  | $ | 1,331 |  |  | $ | 2,945 |  |  | $ | 2,701 |
Revenue By Geographical Region |  |  |  |  |  |  |
United States | $ | 1,034 |  |  | $ | 1,026 |  |  | $ | 2,054 |  |  | $ | 2,119 |
International | 446 |  |  | 292 |  |  | 862 |  |  | 557 |
Intersegment | 14 |  |  | 13 |  |  | 29 |  |  | 25 |
| $ | 1,494 |  |  | $ | 1,331 |  |  | $ | 2,945 |  |  | $ | 2,701 |
_______________ (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.
| Quarter Ended |  | Two Quarters Ended
(In millions) | July 2, 2021 |  | July 3, 2020 |  | July 2, 2021 |  | July 3, 2020
Revenue By Customer Relationship |  |  |  |  |  |  |
Prime contractor | $ | 733 |  |  | $ | 674 |  |  | $ | 1,416 |  |  | $ | 1,333 |
Subcontractor | 552 |  |  | 572 |  |  | 1,103 |  |  | 1,102 |
Intersegment | 2 |  |  | 3 |  |  | 4 |  |  | 6 |
| $ | 1,287 |  |  | $ | 1,249 |  |  | $ | 2,523 |  |  | $ | 2,441 |
Revenue By Contract Type |  |  |  |  |  |  |
Fixed-price(1) | $ | 740 |  |  | $ | 701 |  |  | $ | 1,455 |  |  | $ | 1,370 |
Cost-reimbursable | 545 |  |  | 545 |  |  | 1,064 |  |  | 1,065 |
Intersegment | 2 |  |  | 3 |  |  | 4 |  |  | 6 |
| $ | 1,287 |  |  | $ | 1,249 |  |  | $ | 2,523 |  |  | $ | 2,441 |
Revenue By Geographical Region |  |  |  |  |  |  |
United States | $ | 1,102 |  |  | $ | 1,049 |  |  | $ | 2,162 |  |  | $ | 2,050 |
International | 183 |  |  | 197 |  |  | 357 |  |  | 385 |
Intersegment | 2 |  |  | 3 |  |  | 4 |  |  | 6 |
| $ | 1,287 |  |  | $ | 1,249 |  |  | $ | 2,523 |  |  | $ | 2,441 |
_______________ (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.
| Quarter Ended |  | Two Quarters Ended
(In millions) | July 2, 2021 |  | July 3, 2020 |  | July 2, 2021 |  | July 3, 2020
Revenue By Customer Relationship |  |  |  |  |  |  |
Prime contractor | $ | 783 |  |  | $ | 748 |  |  | $ | 1,512 |  |  | $ | 1,488 |
Subcontractor | 330 |  |  | 353 |  |  | 702 |  |  | 699 |
Intersegment | 14 |  |  | 11 |  |  | 25 |  |  | 19 |
| $ | 1,127 |  |  | $ | 1,112 |  |  | $ | 2,239 |  |  | $ | 2,206 |
Revenue By Contract Type |  |  |  |  |  |  |
Fixed-price(1) | $ | 954 |  |  | $ | 945 |  |  | $ | 1,894 |  |  | $ | 1,858 |
Cost-reimbursable | 159 |  |  | 156 |  |  | 320 |  |  | 329 |
Intersegment | 14 |  |  | 11 |  |  | 25 |  |  | 19 |
| $ | 1,127 |  |  | $ | 1,112 |  |  | $ | 2,239 |  |  | $ | 2,206 |
Revenue By Geographical Region |  |  |  |  |  |  |
United States | $ | 786 |  |  | $ | 835 |  |  | $ | 1,618 |  |  | $ | 1,664 |
International | 327 |  |  | 266 |  |  | 596 |  |  | 523 |
Intersegment | 14 |  |  | 11 |  |  | 25 |  |  | 19 |
| $ | 1,127 |  |  | $ | 1,112 |  |  | $ | 2,239 |  |  | $ | 2,206 |
_______________ (1)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.
| Quarter Ended |  | Two Quarters Ended
(In millions) | July 2, 2021 |  | July 3, 2020 |  | July 2, 2021 |  | July 3, 2020
Revenue By Customer Relationship |  |  |  |  |  |  |
Prime contractor | $ | 520 |  |  | $ | 515 |  |  | $ | 1,056 |  |  | $ | 1,179 |
Subcontractor | 270 |  |  | 265 |  |  | 530 |  |  | 594 |
Intersegment | 19 |  |  | 20 |  |  | 37 |  |  | 38 |
| $ | 809 |  |  | $ | 800 |  |  | $ | 1,623 |  |  | $ | 1,811 |
Revenue By Contract Type |  |  |  |  |  |  |
Fixed-price(1) | $ | 641 |  |  | $ | 610 |  |  | $ | 1,280 |  |  | $ | 1,439 |
Cost-reimbursable | 149 |  |  | 170 |  |  | 306 |  |  | 334 |
Intersegment | 19 |  |  | 20 |  |  | 37 |  |  | 38 |
| $ | 809 |  |  | $ | 800 |  |  | $ | 1,623 |  |  | $ | 1,811 |
Revenue By Geographical Region |  |  |  |  |  |  |
United States | $ | 679 |  |  | $ | 676 |  |  | $ | 1,361 |  |  | $ | 1,408 |
International | 111 |  |  | 104 |  |  | 225 |  |  | 365 |
Intersegment | 19 |  |  | 20 |  |  | 37 |  |  | 38 |
| $ | 809 |  |  | $ | 800 |  |  | $ | 1,623 |  |  | $ | 1,811 |
_______________ (1)Includes revenue derived from time-and-materials contracts. Total assets by business segment are summarized below:
(In millions) | July 2, 2021 |  | January 1, 2021
Total Assets |  |  |
Integrated Mission Systems | $ | 9,152 |  |  | $ | 8,906 |
Space and Airborne Systems | 7,058 |  |  | 6,943 |
Communication Systems | 5,871 |  |  | 5,746 |
Aviation Systems | 4,042 |  |  | 5,026 |
Corporate(1) | 9,941 |  |  | 10,339 |
Total Assets | $ | 36,064 |  |  | $ | 36,960 |
_______________ (1)Identifiable intangible assets acquired in connection with the L3Harris Merger on June 29, 2019 and our acquisition of Exelis Inc. 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 $7.0 billion and $7.9 billion at July 2, 2021 and January 1, 2021, 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 and liabilities from discontinued operations and divestitures. See Note B — Business Divestitures in these Notes for additional information.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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