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BUSINESS SEGMENT INFORMATION | 6 Months Ended
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Jun. 30, 2023
Segment Reporting [Abstract] |
BUSINESS SEGMENT INFORMATION | NOTE O: BUSINESS SEGMENT INFORMATION We structure our operations primarily around the products, systems and services we sell and the markets we serve and report our financial results in the following three reportable segments: •IMS: including multi-mission intelligence, surveillance and reconnaissance (“ISR”) systems; integrated electrical and electronic systems for maritime platforms; advanced electro-optical and infrared solutions; fuzing and ordnance systems; commercial aviation products; and commercial pilot training operations; •SAS: including space payloads, sensors and full-mission solutions; classified intelligence and cyber; avionics; electronic warfare; and mission networks for air traffic management operations; and •CS: including tactical communications with global communications solutions; broadband communications; tactical data links; integrated vision solutions; and public safety radios, and system applications and equipment. Business Realignment. Effective December 31, 2022, we adjusted our reporting to better align our businesses and transferred our ADG business from our IMS segment to our SAS segment. Acquisition of Viasat’s TDL. On January 3, 2023, we completed the acquisition of TDL, which is reported within our CS segment. See Note B: Acquisitions, Divestitures and Asset Sales in these Notes for additional information regarding our acquisition of TDL. Business Segment Financial Information Segment revenue, segment operating income and a reconciliation of segment operating income to total income before income taxes are as follows:
| Quarter Ended |  | Two Quarters Ended
(In millions) | June 30, 2023 |  | July 1, 2022 |  | June 30, 2023 |  | July 1, 2022
Revenue from Product Sales and Services |  |  |  |  |  |  |
IMS | $ | 1,735 |  |  | $ | 1,608 |  |  | $ | 3,435 |  |  | $ | 3,267 |
SAS | 1,715 |  |  | 1,572 |  |  | 3,370 |  |  | 3,089 |
CS | 1,289 |  |  | 993 |  |  | 2,452 |  |  | 1,956 |
Corporate eliminations | (46) |  |  | (38) |  |  | (93) |  |  | (74) |
Total revenue from product sales and services | $ | 4,693 |  |  | $ | 4,135 |  |  | 9,164 |  |  | $ | 8,238 |
Income before Income Taxes |  |  |  |  |  |  |
Segment operating income: |  |  |  |  |  |  |
IMS(1) | $ | 162 |  |  | $ | 207 |  |  | $ | 347 |  |  | $ | 458 |
SAS(1) | 168 |  |  | 203 |  |  | 355 |  |  | 380 |
CS | 325 |  |  | 238 |  |  | 591 |  |  | 467 |
Total segment operating income | 655 |  |  | 648 |  |  | 1,293 |  |  | 1,305 |
Unallocated Items: |  |  |  |  |  |  |
Unallocated corporate department (expense) income, net(2) | (35) |  |  | 19 |  |  | (41) |  |  | 15 |
Amortization of acquisition-related intangibles(3) | (173) |  |  | (151) |  |  | (338) |  |  | (303) |
Additional cost of sales related to the fair value step-up in inventory sold | (15) |  |  | — |  |  | (30) |  |  | — |
L3Harris merger-related integration expenses | — |  |  | (26) |  |  | — |  |  | (50) |
Acquisition-related transaction and integration expenses | (36) |  |  | — |  |  | (76) |  |  | — |
Pre-acquisition and other divestiture-related expenses | (2) |  |  | (35) |  |  | (12) |  |  | (36) |
Business divestiture-related gains, net | 26 |  |  | — |  |  | 26 |  |  | — |
Gain on sale of asset group | — |  |  | 8 |  |  | — |  |  | 8 |
Impairment of other assets(4) | (21) |  |  | — |  |  | (39) |  |  | — |
LHX NeXt(5) | (22) |  |  | — |  |  | (35) |  |  | — |
FAS/CAS operating adjustment(6) | 23 |  |  | 21 |  |  | 45 |  |  | 43 |
Total unallocated items | (255) |  |  | (164) |  |  | (500) |  |  | (323) |
Non-operating income, net | 83 |  |  | 108 |  |  | 165 |  |  | 214 |
Interest expense, net | (111) |  |  | (67) |  |  | (213) |  |  | (135) |
Income before income taxes | $ | 372 |  |  | $ | 525 |  |  | $ | 745 |  |  | $ | 1,061 |
_______________ (1)For the quarter ended June 30, 2023, includes non-cash charges for impairment of other assets of $12 million and $27 million for IMS and SAS, respectively, related to facility closures and restructuring of a customer contract impacting both segments. (2)Includes certain corporate-level expenses that are not included in management’s evaluation of any segment’s operating performance. (3)Includes amortization of identifiable intangible assets acquired in connection with business combinations. Because our acquisitions benefited the entire Company, the amortization of identifiable intangible assets acquired was not allocated to any segment. (4)Includes a $21 million non-cash charge for impairment of intangible assets related to the closure of a facility during the quarter and two quarters ended June 30, 2023. See Note G: Goodwill and Other Intangible Assets in these Notes for additional information. Additionally, includes $18 million charge related to an impairment of a customer contract during the two quarters ended June 30, 2023. (5)Costs associated with transforming multiple functions, systems and processes to increase agility and competitiveness, including third-party consulting, workforce optimization and incremental IT expenses for implementation of new systems. (6)Represents the difference between the service cost component of Financial Accounting Standards ("FAS") pension and other postretirement benefits (“OPEB”) cost and total U.S. Government Cost Accounting Standards (“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 FAS/CAS operating adjustment table below. FAS/CAS Pension Operating Adjustment In accordance with CAS, we allocate a portion of pension and OPEB plan costs to our U.S. Government contracts. However, our Condensed Consolidated Financial Statements require pension and OPEB plan income or expense to 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 cost and total CAS pension and OPEB cost. The non-service cost components of FAS pension and OPEB income or expense are included as component of the “Non-operating income, net” line item in our Condensed Consolidated Statement of Operations. See Note I: Pension and Other Postretirement Benefit Plans in these Notes for more information on the composition of non-service cost components of FAS pension and OPEB income and expense. The table below is a reconciliation of the FAS/CAS operating adjustment:
| Quarter Ended |  | Two Quarters Ended
(In millions) | June 30, 2023 |  | July 1, 2022 |  | June 30, 2023 |  | July 1, 2022
FAS pension service cost | $ | (7) |  |  | $ | (12) |  |  | $ | (13) |  |  | $ | (23) |
Less: CAS pension cost | (30) |  |  | (33) |  |  | (58) |  |  | (66) |
FAS/CAS operating adjustment | 23 |  |  | 21 |  |  | 45 |  |  | 43 |
Non-service FAS pension income | 77 |  |  | 111 |  |  | 154 |  |  | 221 |
FAS/CAS pension adjustment, net | $ | 100 |  |  | $ | 132 |  |  | $ | 199 |  |  | $ | 264 |
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
| June 30, 2023 |  | July 1, 2022
(In millions) | IMS |  | SAS |  | CS |  | IMS |  | SAS |  | CS
Revenue By Customer Relationship |  |  |  |  |  |  |  |  |  |  |
Prime contractor | $ | 1,127 |  |  | $ | 1,084 |  |  | $ | 798 |  |  | $ | 1,035 |  |  | $ | 987 |  |  | $ | 691 |
Subcontractor | 584 |  |  | 621 |  |  | 479 |  |  | 554 |  |  | 574 |  |  | 294 |
Intersegment | 24 |  |  | 10 |  |  | 12 |  |  | 19 |  |  | 11 |  |  | 8 |
Total revenue | $ | 1,735 |  |  | $ | 1,715 |  |  | $ | 1,289 |  |  | $ | 1,608 |  |  | $ | 1,572 |  |  | $ | 993 |
Revenue By Contract Type |  |  |  |  |  |  |  |  |  |  |
Fixed-price(1) | $ | 1,317 |  |  | $ | 1,099 |  |  | $ | 1,102 |  |  | $ | 1,209 |  |  | $ | 918 |  |  | $ | 834 |
Cost-reimbursable | 394 |  |  | 606 |  |  | 175 |  |  | 380 |  |  | 643 |  |  | 151 |
Intersegment | 24 |  |  | 10 |  |  | 12 |  |  | 19 |  |  | 11 |  |  | 8 |
Total revenue | $ | 1,735 |  |  | $ | 1,715 |  |  | $ | 1,289 |  |  | $ | 1,608 |  |  | $ | 1,572 |  |  | $ | 993 |
Revenue By Geographical Region |  |  |  |  |  |  |  |  |  |  |
United States | $ | 1,281 |  |  | $ | 1,475 |  |  | $ | 834 |  |  | $ | 1,154 |  |  | $ | 1,380 |  |  | $ | 631 |
International | 430 |  |  | 230 |  |  | 443 |  |  | 435 |  |  | 181 |  |  | 354 |
Intersegment | 24 |  |  | 10 |  |  | 12 |  |  | 19 |  |  | 11 |  |  | 8 |
Total revenue | $ | 1,735 |  |  | $ | 1,715 |  |  | $ | 1,289 |  |  | $ | 1,608 |  |  | $ | 1,572 |  |  | $ | 993 |
| Two Quarters Ended
| June 30, 2023 |  | July 1, 2022
(In millions) | IMS |  | SAS |  | CS |  | IMS |  | SAS |  | CS
Revenue By Customer Relationship |  |  |  |  |  |  |  |  |  |  |
Prime contractor | $ | 2,281 |  |  | $ | 2,094 |  |  | $ | 1,605 |  |  | $ | 2,121 |  |  | $ | 1,964 |  |  | $ | 1,347 |
Subcontractor | 1,109 |  |  | 1,253 |  |  | 822 |  |  | 1,111 |  |  | 1,104 |  |  | 590 |
Intersegment | 45 |  |  | 23 |  |  | 25 |  |  | 35 |  |  | 21 |  |  | 19 |
Total revenue | $ | 3,435 |  |  | $ | 3,370 |  |  | $ | 2,452 |  |  | $ | 3,267 |  |  | $ | 3,089 |  |  | $ | 1,956 |
Revenue By Contract Type |  |  |  |  |  |  |  |  |  |  |
Fixed-price(1) | $ | 2,603 |  |  | $ | 2,121 |  |  | $ | 2,080 |  |  | $ | 2,470 |  |  | $ | 1,798 |  |  | $ | 1,631 |
Cost-reimbursable | 787 |  |  | 1,226 |  |  | 347 |  |  | 762 |  |  | 1,270 |  |  | 306 |
Intersegment | 45 |  |  | 23 |  |  | 25 |  |  | 35 |  |  | 21 |  |  | 19 |
Total revenue | $ | 3,435 |  |  | $ | 3,370 |  |  | $ | 2,452 |  |  | $ | 3,267 |  |  | $ | 3,089 |  |  | $ | 1,956 |
Revenue By Geographical Region |  |  |  |  |  |  |  |  |  |  |
United States | $ | 2,538 |  |  | $ | 2,929 |  |  | $ | 1,625 |  |  | $ | 2,336 |  |  | $ | 2,722 |  |  | $ | 1,256 |
International | 852 |  |  | 418 |  |  | 802 |  |  | 896 |  |  | 346 |  |  | 681 |
Intersegment | 45 |  |  | 23 |  |  | 25 |  |  | 35 |  |  | 21 |  |  | 19 |
Total revenue | $ | 3,435 |  |  | $ | 3,370 |  |  | $ | 2,452 |  |  | $ | 3,267 |  |  | $ | 3,089 |  |  | $ | 1,956 |
_______________ (1)Includes revenue derived from time-and-materials contracts. Assets by Business Segment Total assets by business segment are as follows:
(In millions) | June 30, 2023 |  | December 30, 2022
Total Assets |  |  |
IMS | $ | 11,030 |  |  | $ | 10,925 |
SAS | 9,181 |  |  | 8,838 |
CS | 7,129 |  |  | 5,800 |
Corporate(1) | 8,022 |  |  | 7,961 |
Total Assets | $ | 35,362 |  |  | $ | 33,524 |
_______________ (1)Identifiable intangible assets acquired in connection with business combinations were recorded as corporate assets because they benefited the entire Company. Identifiable intangible asset balances recorded as corporate assets were $6.4 billion and $6.0 billion at June 30, 2023 and December 30, 2022, 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 businesses held for sale.

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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 -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 22 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-22 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-15 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 31 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-31 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 42 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-42 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 40 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-40 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//280/tableOfContent Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 26 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-26 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 34 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-34 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 41 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-41 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 + Details
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