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BUSINESS SEGMENT INFORMATION | 6 Months Ended
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Jul. 01, 2022
Segment Reporting [Abstract] |
BUSINESS SEGMENT INFORMATION | NOTE R— BUSINESS SEGMENT INFORMATION Effective for fiscal 2022, which began January 1, 2022, we report our financial results in the following three reportable segments: •Integrated Mission Systems, including multi-mission intelligence, surveillance and reconnaissance (“ISR”) systems; integrated electrical and electronic systems for maritime platforms; advanced electro-optical and infrared (“EO/IR”) solutions; fuzing and ordnance systems; commercial aviation products; and commercial pilot training operations; •Space & Airborne Systems, including space payloads, sensors and full-mission solutions; classified intelligence and cyber; avionics; electronic warfare; and mission networks for air traffic management operations; and •Communication Systems, including tactical communications with global communications solutions; broadband communications; integrated vision solutions; and public safety radios, system applications and equipment. We structure our operations primarily around the products, systems and services we sell and the markets we serve. Effective January 1, 2022, we have streamlined our business segments from four business segments to three business segments. As a result of the segment reorganization, the Aviation Systems segment was eliminated as a business segment. As part of our new business segment structure, the ongoing operations that had been part of our former Aviation Systems segment were integrated into the remaining segments. Fuzing and ordnance systems, commercial aviation products and commercial pilot training operations were moved into our Integrated Mission Systems segment; and mission networks for air traffic management operations was moved into our Space & Airborne Systems segment. See Note B — Business Divestitures and Asset Sales in these Notes for information relating to businesses divested and asset sales during the quarter and two quarters ended July 1, 2022 and July 2, 2021. 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 2021 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 CAS pension cost 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 items in the table below represent the portion of corporate expenses not allocated to our business segments and elimination of intersegment profits. In accordance with CAS, we allocate a portion of pension and other postretirement benefit plan costs to our U.S. Government contracts. However, our consolidated financial statements require pension and other postretirement benefit plan income or expense be calculated in accordance with FAS requirements under GAAP. The “FAS/CAS operating adjustment” line item in the table below represents the difference between the service cost component of FAS pension and OPEB expense and total CAS pension and OPEB cost. The net non-service cost components of FAS pension and OPEB income are included as an income component in the “Non-operating income” line item in our Condensed Consolidated Statement of Income (Unaudited). See Note K — Postretirement Benefit Plans for more information on the composition of non-service components of FAS pension and OPEB income and expense. Segment revenue, segment operating income 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 1, 2022 |  | July 2, 2021 |  | July 1, 2022 |  | July 2, 2021
Revenue |  |  |  |  |  |  |
Integrated Mission Systems | $ | 1,673 |  |  | $ | 1,792 |  |  | $ | 3,394 |  |  | $ | 3,543 |
Space & Airborne Systems | 1,498 |  |  | 1,510 |  |  | 2,948 |  |  | 2,970 |
Communication Systems | 993 |  |  | 1,127 |  |  | 1,956 |  |  | 2,239 |
Other non-reportable businesses | — |  |  | 282 |  |  | — |  |  | 566 |
Corporate eliminations | (29) |  |  | (43) |  |  | (60) |  |  | (83) |
Total revenue | $ | 4,135 |  |  | $ | 4,668 |  |  | 8,238 |  |  | $ | 9,235 |
Income from Continuing Operations before Income Taxes
Segment Operating Income: |  |  |  |  |  |  |
Integrated Mission Systems | $ | 217 |  |  | $ | 142 |  |  | $ | 472 |  |  | $ | 376 |
Space & Airborne Systems | 195 |  |  | 204 |  |  | 367 |  |  | 396 |
Communication Systems | 238 |  |  | 276 |  |  | 467 |  |  | 546 |
Other non-reportable businesses | — |  |  | 41 |  |  | — |  |  | 93 |
| 650 |  |  | 663 |  |  | 1,306 |  |  | 1,411 |
Unallocated Items: |  |  |  |  |  |  |
Unallocated corporate department income (expense), net(1) | 17 |  |  | (23) |  |  | 14 |  |  | (54) |
L3Harris Merger-related transaction, integration and other expenses and losses | (26) |  |  | (21) |  |  | (49) |  |  | (44) |
Amortization of acquisition-related intangibles(2) | (151) |  |  | (156) |  |  | (303) |  |  | (320) |
Business divestiture-related gains, net | — |  |  | 180 |  |  | — |  |  | 165 |
Impairment of goodwill and other assets | — |  |  | (63) |  |  | — |  |  | (125) |
Gain on sale of asset group | 8 |  |  | — |  |  | 8 |  |  | — |
Other divestiture-related expenses | (35) |  |  | (49) |  |  | (37) |  |  | (56) |
FAS/CAS operating adjustment(3) | 21 |  |  | 30 |  |  | 43 |  |  | 60 |
| (166) |  |  | (102) |  |  | (324) |  |  | (374) |
Non-operating income | 108 |  |  | 86 |  |  | 214 |  |  | 203 |
Net interest expense | (67) |  |  | (65) |  |  | (135) |  |  | (131) |
Income from continuing operations before income taxes | $ | 525 |  |  | $ | 582 |  |  | $ | 1,061 |  |  | $ | 1,109 |
_______________ (1)For the quarter and two quarters ended July 1, 2022, includes $10 million of income from our deferred compensation plans and $7 million of income from sale of intellectual property. For the quarter ended July 2, 2021 includes $8 million of loss related to our deferred compensation plans. For the two quarters ended July 2, 2021, includes a $15 million accrual for a value added tax obligation and $8 million of loss related to our deferred compensation plans. (2)Includes amortization of identifiable intangible assets acquired as a result of the all-stock merger between Harris Corporation and L3 Technologies, Inc. (the “L3Harris Merger”) and the acquisition of Exelis Inc. (“Exelis”). 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. (3)Represents the difference between the service cost component of FAS pension and OPEB income and total CAS pension and OPEB cost and replaces the “Pension adjustment” line item previously presented, which included the non-service components of FAS pension and OPEB income. See Net FAS/CAS operating adjustment table below. The table below is a reconciliation of the FAS/CAS operating adjustment:
| Quarter Ended |  | Two Quarters Ended
(In millions) | July 1, 2022 |  | July 2, 2021 |  | July 1, 2022 |  | July 2, 2021
FAS pension service cost | $ | (12) |  |  | $ | (18) |  |  | $ | (23) |  |  | $ | (37) |
Less: CAS pension cost | (33) |  |  | (48) |  |  | (66) |  |  | (97) |
FAS/CAS operating adjustment | 21 |  |  | 30 |  |  | 43 |  |  | 60 |
Non-service FAS pension income | 111 |  |  | 111 |  |  | 221 |  |  | 222 |
FAS/CAS pension adjustment, net(1) | $ | 132 |  |  | $ | 141 |  |  | $ | 264 |  |  | $ | 282 |
_______________ (1)FAS/CAS pension adjustment, net excludes net settlement and curtailment losses recognized in fiscal 2021. Disaggregation of Revenue We disaggregate revenue for all three 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.
| Quarter Ended |  |
(In millions) | July 1, 2022 |  | July 2, 2021 |  |  |  |
| Integrated Mission Systems |  | Space & Airborne Systems |  | Communication Systems |  | Integrated Mission Systems |  | Space & Airborne Systems |  | Communication Systems |  |  |  |
Revenue By Customer Relationship |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Prime contractor | $ | 1,082 |  |  | $ | 942 |  |  | $ | 690 |  |  | $ | 1,185 |  |  | $ | 921 |  |  | $ | 783 |  |  |  |  |
Subcontractor | 577 |  |  | 550 |  |  | 294 |  |  | 594 |  |  | 587 |  |  | 330 |  |  |  |  |
Intersegment | 14 |  |  | 6 |  |  | 9 |  |  | 13 |  |  | 2 |  |  | 14 |  |  |  |  |
| $ | 1,673 |  |  | $ | 1,498 |  |  | $ | 993 |  |  | $ | 1,792 |  |  | $ | 1,510 |  |  | $ | 1,127 |  |  |  |  |
Revenue By Contract Type |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed-price(1) | $ | 1,230 |  |  | $ | 898 |  |  | $ | 833 |  |  | $ | 1,350 |  |  | $ | 941 |  |  | $ | 954 |  |  |  |  |
Cost-reimbursable | 429 |  |  | 594 |  |  | 151 |  |  | 429 |  |  | 567 |  |  | 159 |  |  |  |  |
Intersegment | 14 |  |  | 6 |  |  | 9 |  |  | 13 |  |  | 2 |  |  | 14 |  |  |  |  |
| $ | 1,673 |  |  | $ | 1,498 |  |  | $ | 993 |  |  | $ | 1,792 |  |  | $ | 1,510 |  |  | $ | 1,127 |  |  |  |  |
Revenue By Geographical Region |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
United States | $ | 1,223 |  |  | $ | 1,311 |  |  | $ | 631 |  |  | $ | 1,282 |  |  | $ | 1,315 |  |  | $ | 786 |  |  |  |  |
International | 436 |  |  | 181 |  |  | 353 |  |  | 497 |  |  | 193 |  |  | 327 |  |  |  |  |
Intersegment | 14 |  |  | 6 |  |  | 9 |  |  | 13 |  |  | 2 |  |  | 14 |  |  |  |  |
| $ | 1,673 |  |  | $ | 1,498 |  |  | $ | 993 |  |  | $ | 1,792 |  |  | $ | 1,510 |  |  | $ | 1,127 |  |  |  |  |
| Two Quarters Ended |  |  |  |
(In millions) | July 1, 2022 |  | July 2, 2021 |  |  |  |
| Integrated Mission Systems |  | Space & Airborne Systems |  | Communication Systems |  | Integrated Mission Systems |  | Space & Airborne Systems |  | Communication Systems |  |  |  |
Revenue By Customer Relationship |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Prime contractor | $ | 2,214 |  |  | $ | 1,872 |  |  | $ | 1,347 |  |  | $ | 2,374 |  |  | $ | 1,797 |  |  | $ | 1,512 |  |  |  |  |
Subcontractor | 1,151 |  |  | 1,064 |  |  | 590 |  |  | 1,144 |  |  | 1,168 |  |  | 702 |  |  |  |  |
Intersegment | 29 |  |  | 12 |  |  | 19 |  |  | 25 |  |  | 5 |  |  | 25 |  |  |  |  |
| $ | 3,394 |  |  | $ | 2,948 |  |  | $ | 1,956 |  |  | $ | 3,543 |  |  | $ | 2,970 |  |  | $ | 2,239 |  |  |  |  |
Revenue By Contract Type |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed-price(1) | $ | 2,507 |  |  | $ | 1,762 |  |  | $ | 1,631 |  |  | $ | 2,644 |  |  | $ | 1,855 |  |  | $ | 1,894 |  |  |  |  |
Cost-reimbursable | 858 |  |  | 1,174 |  |  | 306 |  |  | 874 |  |  | 1,110 |  |  | 320 |  |  |  |  |
Intersegment | 29 |  |  | 12 |  |  | 19 |  |  | 25 |  |  | 5 |  |  | 25 |  |  |  |  |
| $ | 3,394 |  |  | $ | 2,948 |  |  | $ | 1,956 |  |  | $ | 3,543 |  |  | $ | 2,970 |  |  | $ | 2,239 |  |  |  |  |
Revenue By Geographical Region |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
United States | $ | 2,468 |  |  | $ | 2,590 |  |  | $ | 1,256 |  |  | $ | 2,557 |  |  | $ | 2,589 |  |  | $ | 1,618 |  |  |  |  |
International | 897 |  |  | 346 |  |  | 681 |  |  | 961 |  |  | 376 |  |  | 596 |  |  |  |  |
Intersegment | 29 |  |  | 12 |  |  | 19 |  |  | 25 |  |  | 5 |  |  | 25 |  |  |  |  |
| $ | 3,394 |  |  | $ | 2,948 |  |  | $ | 1,956 |  |  | $ | 3,543 |  |  | $ | 2,970 |  |  | $ | 2,239 |  |  |  |  |
_______________ (1)Includes revenue derived from time-and-materials contracts. Total assets by business segment are as follows:
(In millions) | July 1, 2022 |  | December 31, 2021
Total Assets |  |  |
Integrated Mission Systems | $ | 11,761 |  |  | $ | 11,830 |
Space & Airborne Systems | 8,381 |  |  | 8,151 |
Communication Systems | 6,170 |  |  | 6,035 |
Other non-reportable businesses | — |  |  | 3 |
Corporate(1) | 7,826 |  |  | 8,690 |
| $ | 34,138 |  |  | $ | 34,709 |
_______________ (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 $6.3 billion and $6.6 billion at July 1, 2022 and December 31, 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 of discontinued operations and divestitures.

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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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&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 https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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