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BUSINESS SEGMENT INFORMATION | 6 Months Ended
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Jun. 28, 2024
Segment Reporting [Abstract] |
BUSINESS SEGMENT INFORMATION | NOTE P: 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 four reportable segments: •SAS: including space payloads, sensors and full-mission solutions; classified intelligence and cyber; avionics; electronic warfare; and mission networks for air traffic management operations; •IMS: including multi-mission intelligence, surveillance and reconnaissance (“ISR”) systems; passive sensing and targeting; electronic attack; autonomy; power and communications; networks; sensors; and the CAS Disposal Group, which includes aviation products and pilot training operations, see Note O: Acquisitions and Divestitures; •CS: including tactical communications with global communications solutions; broadband communications; integrated vision solutions; and public safety radios, system applications and equipment; and •AR: including missile solutions with propulsion technologies for strategic defense, missile defense, and hypersonic and tactical systems; and space propulsion and power systems for national security space and exploration missions. Business Segment Financial Information Segment revenue, segment operating income and a reconciliation of segment operating income to total income before income taxes were as follows:
| Quarter Ended |  | Two Quarters Ended
(In millions) | June 28, 2024 |  | June 30, 2023 |  | June 28, 2024 |  | June 30, 2023
Revenue |  |  |  |  |  |  |
SAS | $ | 1,707 |  |  | $ | 1,715 |  |  | $ | 3,458 |  |  | $ | 3,370 |
IMS | 1,729 |  |  | 1,735 |  |  | 3,398 |  |  | 3,435 |
CS | 1,346 |  |  | 1,289 |  |  | 2,640 |  |  | 2,452 |
AR | 581 |  |  | ** |  | 1,123 |  |  | **
Corporate eliminations | (64) |  |  | (46) |  |  | (109) |  |  | (93) |
Total revenue | $ | 5,299 |  |  | $ | 4,693 |  |  | $ | 10,510 |  |  | $ | 9,164 |
Income before Income Taxes |  |  |  |  |  |  |
Operating income: |  |  |  |  |  |  |
SAS | $ | 215 |  |  | $ | 168 |  |  | $ | 431 |  |  | $ | 355 |
IMS | 206 |  |  | 162 |  |  | 396 |  |  | 347 |
CS | 329 |  |  | 325 |  |  | 639 |  |  | 591 |
AR | 75 |  |  | ** |  | 147 |  |  | **
Total segment | 825 |  |  | 655 |  |  | 1,613 |  |  | 1,293 |
Total unallocated corporate expenses | (349) |  |  | (255) |  |  | (759) |  |  | (500) |
Total operating income | 476 |  |  | 400 |  |  | 854 |  |  | 793 |
Non-service FAS pension income and other, net | 86 |  |  | 83 |  |  | 174 |  |  | 165 |
Interest expense, net | (172) |  |  | (111) |  |  | (348) |  |  | (213) |
Income before income taxes | $ | 390 |  |  | $ | 372 |  |  | $ | 680 |  |  | $ | 745 |
_______________ ** AR is a reportable segment established during the quarter ended September 29, 2023, which consists of operations of AJRD. As such, there is no comparable prior year information. Unallocated Corporate Expenses. Total unallocated corporate expenses include corporate items such as a portion of management and administration, legal, environmental, compensation, retiree benefits, other corporate expenses and eliminations and the FAS/Cost Accounting Standards (“CAS”) operating adjustment. Total unallocated corporate expenses also include the portion of corporate costs not included in management’s evaluation of segment operating performance, such as amortization of acquisition-related intangibles; additional cost of revenue related to the fair value step-up in inventory sold; merger, acquisition, and divestiture-related expenses; asset group and business divestiture-related (losses) gains, net and any related impairment of goodwill; impairment of other assets; LHX NeXt implementation costs; and other items. 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 net periodic benefit income under our pension and OPEB plans and total CAS pension and OPEB cost. The non-service cost components of net periodic benefit income under our pension and OPEB plans are included as components of the “Non-service FAS pension income and other, net” line item in our Condensed Consolidated Statement of Operations. See Note H: Retirement Benefits in these Notes for more information on the composition of non-service FAS pension income. The table below is a reconciliation of the FAS/CAS operating adjustment:
| Quarter Ended |  | Two Quarters Ended
(In millions) | June 28, 2024 |  | June 30, 2023 |  | June 28, 2024 |  | June 30, 2023
FAS pension service cost | $ | (10) |  |  | $ | (7) |  |  | $ | (18) |  |  | $ | (13) |
Less: CAS pension cost | (16) |  |  | (30) |  |  | (31) |  |  | (58) |
FAS/CAS operating adjustment | 6 |  |  | 23 |  |  | 13 |  |  | 45 |
Non-service FAS pension income | 81 |  |  | 77 |  |  | 161 |  |  | 154 |
FAS/CAS pension adjustment, net | $ | 87 |  |  | $ | 100 |  |  | $ | 174 |  |  | $ | 199 |
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.
| Quarter Ended
| June 28, 2024 |  | June 30, 2023
(In millions) | SAS |  | IMS |  | CS |  | AR |  | SAS |  | IMS |  | CS |  | AR
Revenue By Customer Relationship
Prime contractor | $ | 1,076 |  |  | $ | 1,097 |  |  | $ | 915 |  |  | $ | 155 |  |  | $ | 1,084 |  |  | $ | 1,127 |  |  | $ | 798 |  |  | **
Subcontractor | 618 |  |  | 603 |  |  | 409 |  |  | 426 |  |  | 621 |  |  | 584 |  |  | 479 |  |  | **
Intersegment | 13 |  |  | 29 |  |  | 22 |  |  | — |  |  | 10 |  |  | 24 |  |  | 12 |  |  | **
Total segment | $ | 1,707 |  |  | $ | 1,729 |  |  | $ | 1,346 |  |  | $ | 581 |  |  | $ | 1,715 |  |  | $ | 1,735 |  |  | $ | 1,289 |  |  | **
Revenue By Contract Type
Fixed-price(1) | $ | 1,072 |  |  | $ | 1,340 |  |  | $ | 1,118 |  |  | $ | 344 |  |  | $ | 1,099 |  |  | $ | 1,317 |  |  | $ | 1,102 |  |  | **
Cost-reimbursable | 622 |  |  | 360 |  |  | 206 |  |  | 237 |  |  | 606 |  |  | 394 |  |  | 175 |  |  | **
Intersegment | 13 |  |  | 29 |  |  | 22 |  |  | — |  |  | 10 |  |  | 24 |  |  | 12 |  |  | **
Total segment | $ | 1,707 |  |  | $ | 1,729 |  |  | $ | 1,346 |  |  | $ | 581 |  |  | $ | 1,715 |  |  | $ | 1,735 |  |  | $ | 1,289 |  |  | **
Revenue By Geographical Region
United States | $ | 1,488 |  |  | $ | 1,263 |  |  | $ | 886 |  |  | $ | 571 |  |  | $ | 1,475 |  |  | $ | 1,281 |  |  | $ | 834 |  |  | **
International | 206 |  |  | 437 |  |  | 438 |  |  | 10 |  |  | 230 |  |  | 430 |  |  | 443 |  |  | **
Intersegment | 13 |  |  | 29 |  |  | 22 |  |  | — |  |  | 10 |  |  | 24 |  |  | 12 |  |  | **
Total segment | $ | 1,707 |  |  | $ | 1,729 |  |  | $ | 1,346 |  |  | $ | 581 |  |  | $ | 1,715 |  |  | $ | 1,735 |  |  | $ | 1,289 |  |  | **
| Two Quarters Ended
| June 28, 2024 |  | June 30, 2023
(In millions) | SAS |  | IMS |  | CS |  | AR |  | SAS |  | IMS |  | CS |  | AR
Revenue By Customer Relationship
Prime contractor | $ | 2,184 |  |  | $ | 2,163 |  |  | $ | 1,828 |  |  | $ | 308 |  |  | $ | 2,094 |  |  | $ | 2,281 |  |  | $ | 1,605 |  |  | **
Subcontractor | 1,246 |  |  | 1,190 |  |  | 776 |  |  | 815 |  |  | 1,253 |  |  | 1,109 |  |  | 822 |  |  | **
Intersegment | 28 |  |  | 45 |  |  | 36 |  |  | — |  |  | 23 |  |  | 45 |  |  | 25 |  |  | **
Total segment | $ | 3,458 |  |  | $ | 3,398 |  |  | $ | 2,640 |  |  | $ | 1,123 |  |  | $ | 3,370 |  |  | $ | 3,435 |  |  | $ | 2,452 |  |  | **
Revenue By Contract Type
Fixed-price(1) | $ | 2,180 |  |  | $ | 2,618 |  |  | $ | 2,183 |  |  | $ | 646 |  |  | $ | 2,121 |  |  | $ | 2,603 |  |  | $ | 2,080 |  |  | **
Cost-reimbursable | 1,250 |  |  | 735 |  |  | 421 |  |  | 477 |  |  | 1,226 |  |  | 787 |  |  | 347 |  |  | **
Intersegment | 28 |  |  | 45 |  |  | 36 |  |  | — |  |  | 23 |  |  | 45 |  |  | 25 |  |  | **
Total segment | $ | 3,458 |  |  | $ | 3,398 |  |  | $ | 2,640 |  |  | $ | 1,123 |  |  | $ | 3,370 |  |  | $ | 3,435 |  |  | $ | 2,452 |  |  | **
Revenue By Geographical Region
United States | $ | 2,995 |  |  | $ | 2,466 |  |  | $ | 1,811 |  |  | $ | 1,098 |  |  | $ | 2,929 |  |  | $ | 2,538 |  |  | $ | 1,625 |  |  | **
International | 435 |  |  | 887 |  |  | 793 |  |  | 25 |  |  | 418 |  |  | 852 |  |  | 802 |  |  | **
Intersegment | 28 |  |  | 45 |  |  | 36 |  |  | — |  |  | 23 |  |  | 45 |  |  | 25 |  |  | **
Total segment | $ | 3,458 |  |  | $ | 3,398 |  |  | $ | 2,640 |  |  | $ | 1,123 |  |  | $ | 3,370 |  |  | $ | 3,435 |  |  | $ | 2,452 |  |  | **
_______________ ** AR is a reportable segment established during the quarter ended September 29, 2023, which consists of operations of AJRD. As such, there is no comparable prior year information. (1)Includes revenue derived from time-and-materials contracts. Assets by Business Segment Total assets by business segment were as follows:
(In millions) | June 28, 2024 |  | December 29, 2023
SAS | $ | 8,814 |  |  | $ | 9,085 |
IMS | 10,912 |  |  | 10,631 |
CS | 7,026 |  |  | 7,084 |
AR | 4,462 |  |  | 4,208 |
Corporate(1) | 10,443 |  |  | 10,679 |
Total Assets | $ | 41,657 |  |  | $ | 41,687 |
_______________ (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 $8.1 billion and $8.5 billion at June 28, 2024 and December 29, 2023, respectively. Corporate assets also consisted of cash, income taxes receivable, deferred income taxes, deferred compensation plan investments, buildings and equipment, real estate held for development and leasing, as well as any assets of businesses held for sale.

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