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BUSINESS SEGMENT INFORMATION | 9 Months Ended
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Sep. 27, 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 satellite space payloads, sensors and full-mission solutions; classified intelligence and cyber; avionics; electronic warfare systems; and mission networks for FAA mission-critical safety of flight; •IMS: including multi-mission intelligence, surveillance and reconnaissance (“ISR”) systems; passive sensing and targeting; electronic attack platforms; 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 |  | Three Quarters Ended
(In millions) | September 27, 2024 |  | September 29, 2023 |  | September 27, 2024 |  | September 29, 2023
Revenue |  |  |  |  |  |  |
SAS | $ | 1,683 |  |  | $ | 1,686 |  |  | $ | 5,141 |  |  | $ | 5,056 |
IMS | 1,671 |  |  | 1,568 |  |  | 5,069 |  |  | 5,003 |
CS | 1,382 |  |  | 1,255 |  |  | 4,022 |  |  | 3,707 |
AR | 596 |  |  | 455 |  |  | 1,719 |  |  | 455 |
Corporate eliminations | (40) |  |  | (49) |  |  | (149) |  |  | (142) |
Total revenue | $ | 5,292 |  |  | $ | 4,915 |  |  | $ | 15,802 |  |  | $ | 14,079 |
Income before Income Taxes |  |  |  |  |  |  |
Operating income: |  |  |  |  |  |  |
SAS | $ | 195 |  |  | $ | 210 |  |  | $ | 626 |  |  | $ | 565 |
IMS | 204 |  |  | 187 |  |  | 600 |  |  | 534 |
CS | 359 |  |  | 282 |  |  | 998 |  |  | 873 |
AR | 75 |  |  | 56 |  |  | 222 |  |  | 56 |
Total segment | 833 |  |  | 735 |  |  | 2,446 |  |  | 2,028 |
Total unallocated corporate expenses | (338) |  |  | (256) |  |  | (1,097) |  |  | (756) |
Total operating income | 495 |  |  | 479 |  |  | 1,349 |  |  | 1,272 |
Non-service FAS pension income and other, net | 101 |  |  | 80 |  |  | 275 |  |  | 245 |
Interest expense, net | (166) |  |  | (159) |  |  | (514) |  |  | (372) |
Income before income taxes | $ | 430 |  |  | $ | 400 |  |  | $ | 1,110 |  |  | $ | 1,145 |
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 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 table below is a reconciliation of the FAS/CAS operating adjustment:
| Quarter Ended |  | Three Quarters Ended
(In millions) | September 27, 2024 |  | September 29, 2023 |  | September 27, 2024 |  | September 29, 2023
FAS pension service cost | $ | (8) |  |  | $ | (10) |  |  | $ | (26) |  |  | $ | (23) |
Less: CAS pension cost | (15) |  |  | (37) |  |  | (46) |  |  | (95) |
FAS/CAS operating adjustment | $ | 7 |  |  | $ | 27 |  |  | $ | 20 |  |  | $ | 72 |
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
| September 27, 2024 |  | September 29, 2023
(In millions) | SAS |  | IMS |  | CS |  | AR |  | SAS |  | IMS |  | CS |  | AR
Revenue By Customer Relationship
Prime contractor | $ | 1,008 |  |  | $ | 1,051 |  |  | $ | 977 |  |  | $ | 149 |  |  | $ | 1,081 |  |  | $ | 962 |  |  | $ | 866 |  |  | $ | 113 |
Subcontractor(1) | 663 |  |  | 609 |  |  | 388 |  |  | 447 |  |  | 592 |  |  | 585 |  |  | 374 |  |  | 342 |
Intersegment | 12 |  |  | 11 |  |  | 17 |  |  | — |  |  | 13 |  |  | 21 |  |  | 15 |  |  | — |
Total segment | $ | 1,683 |  |  | $ | 1,671 |  |  | $ | 1,382 |  |  | $ | 596 |  |  | $ | 1,686 |  |  | $ | 1,568 |  |  | $ | 1,255 |  |  | $ | 455 |
Revenue By Contract Type
Fixed-price(2) | $ | 1,012 |  |  | $ | 1,258 |  |  | $ | 1,146 |  |  | $ | 361 |  |  | $ | 1,039 |  |  | $ | 1,164 |  |  | $ | 1,047 |  |  | $ | 272 |
Cost-reimbursable | 659 |  |  | 402 |  |  | 219 |  |  | 235 |  |  | 634 |  |  | 383 |  |  | 193 |  |  | 183 |
Intersegment | 12 |  |  | 11 |  |  | 17 |  |  | — |  |  | 13 |  |  | 21 |  |  | 15 |  |  | — |
Total segment | $ | 1,683 |  |  | $ | 1,671 |  |  | $ | 1,382 |  |  | $ | 596 |  |  | $ | 1,686 |  |  | $ | 1,568 |  |  | $ | 1,255 |  |  | $ | 455 |
Revenue By Geographical Region
United States | $ | 1,484 |  |  | $ | 1,217 |  |  | $ | 975 |  |  | $ | 584 |  |  | $ | 1,478 |  |  | $ | 1,141 |  |  | $ | 874 |  |  | $ | 443 |
International | 187 |  |  | 443 |  |  | 390 |  |  | 12 |  |  | 195 |  |  | 406 |  |  | 366 |  |  | 12 |
Intersegment | 12 |  |  | 11 |  |  | 17 |  |  | — |  |  | 13 |  |  | 21 |  |  | 15 |  |  | — |
Total segment | $ | 1,683 |  |  | $ | 1,671 |  |  | $ | 1,382 |  |  | $ | 596 |  |  | $ | 1,686 |  |  | $ | 1,568 |  |  | $ | 1,255 |  |  | $ | 455 |
| Three Quarters Ended
| September 27, 2024 |  | September 29, 2023
(In millions) | SAS |  | IMS |  | CS |  | AR |  | SAS |  | IMS |  | CS |  | AR
Revenue By Customer Relationship
Prime contractor | $ | 3,192 |  |  | $ | 3,214 |  |  | $ | 2,805 |  |  | $ | 457 |  |  | $ | 3,175 |  |  | $ | 3,243 |  |  | $ | 2,471 |  |  | $ | 113 |
Subcontractor(1) | 1,909 |  |  | 1,799 |  |  | 1,164 |  |  | 1,262 |  |  | 1,845 |  |  | 1,694 |  |  | 1,196 |  |  | 342 |
Intersegment | 40 |  |  | 56 |  |  | 53 |  |  | — |  |  | 36 |  |  | 66 |  |  | 40 |  |  | — |
Total segment | $ | 5,141 |  |  | $ | 5,069 |  |  | $ | 4,022 |  |  | $ | 1,719 |  |  | $ | 5,056 |  |  | $ | 5,003 |  |  | $ | 3,707 |  |  | $ | 455 |
Revenue By Contract Type
Fixed-price(2) | $ | 3,192 |  |  | $ | 3,876 |  |  | $ | 3,329 |  |  | $ | 1,007 |  |  | $ | 3,160 |  |  | $ | 3,767 |  |  | $ | 3,127 |  |  | $ | 272 |
Cost-reimbursable | 1,909 |  |  | 1,137 |  |  | 640 |  |  | 712 |  |  | 1,860 |  |  | 1,170 |  |  | 540 |  |  | 183 |
Intersegment | 40 |  |  | 56 |  |  | 53 |  |  | — |  |  | 36 |  |  | 66 |  |  | 40 |  |  | — |
Total segment | $ | 5,141 |  |  | $ | 5,069 |  |  | $ | 4,022 |  |  | $ | 1,719 |  |  | $ | 5,056 |  |  | $ | 5,003 |  |  | $ | 3,707 |  |  | $ | 455 |
Revenue By Geographical Region
United States | $ | 4,479 |  |  | $ | 3,683 |  |  | $ | 2,786 |  |  | $ | 1,682 |  |  | $ | 4,407 |  |  | $ | 3,679 |  |  | $ | 2,499 |  |  | $ | 443 |
International | 622 |  |  | 1,330 |  |  | 1,183 |  |  | 37 |  |  | 613 |  |  | 1,258 |  |  | 1,168 |  |  | 12 |
Intersegment | 40 |  |  | 56 |  |  | 53 |  |  | — |  |  | 36 |  |  | 66 |  |  | 40 |  |  | — |
Total segment | $ | 5,141 |  |  | $ | 5,069 |  |  | $ | 4,022 |  |  | $ | 1,719 |  |  | $ | 5,056 |  |  | $ | 5,003 |  |  | $ | 3,707 |  |  | $ | 455 |
_______________ (1) Our subcontractor revenues includes products and services to contractors whose customers are the end user. (2) Includes revenue derived from time-and-materials contracts. Assets by Business Segment Total assets by business segment were as follows:
(In millions) | September 27, 2024 |  | December 29, 2023
SAS | $ | 8,836 |  |  | $ | 9,085 |
IMS | 10,932 |  |  | 10,631 |
CS | 6,952 |  |  | 7,084 |
AR | 4,540 |  |  | 4,208 |
Corporate(1) | 10,629 |  |  | 10,679 |
Total Assets | $ | 41,889 |  |  | $ | 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 $7.9 billion and $8.5 billion at September 27, 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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