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BUSINESS SEGMENT INFORMATION | 9 Months Ended
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Oct. 03, 2025
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 four reportable segments: CS, IMS, SAS and AR. Business Segment Financial Results The following table presents operating results by business segment and a reconciliation to total income before income taxes:
| Third Quarter |  | Year to Date
(In millions) | 2025 |  | 2024 |  | 2025 |  | 2024
Revenue |  |  |  |  |  |  |
CS | $ | 1,462 |  |  | $ | 1,382 |  |  | $ | 4,190 |  |  | $ | 4,022 |
IMS | 1,700 |  |  | 1,608 |  |  | 4,914 |  |  | 4,906 |
SAS | 1,809 |  |  | 1,683 |  |  | 5,207 |  |  | 5,141 |
AR | 755 |  |  | 669 |  |  | 2,082 |  |  | 1,886 |
Other(1) | (67) |  |  | (50) |  |  | (176) |  |  | (153) |
Total revenue | 5,659 |  |  | 5,292 |  |  | 16,217 |  |  | 15,802 |
Cost of revenue |  |  |  |  |  |  |
CS | $ | (911) |  |  | $ | (858) |  |  | $ | (2,637) |  |  | $ | (2,571) |
IMS | (1,308) |  |  | (1,203) |  |  | (3,808) |  |  | (3,743) |
SAS | (1,425) |  |  | (1,325) |  |  | (4,112) |  |  | (4,020) |
AR | (589) |  |  | (535) |  |  | (1,627) |  |  | (1,466) |
Other(1) | 68 |  |  | 48 |  |  | 146 |  |  | 125 |
Total cost of revenue | (4,165) |  |  | (3,873) |  |  | (12,038) |  |  | (11,675) |
Other segment costs(2) |  |  |  |  |  |  |
CS | $ | (169) |  |  | $ | (165) |  |  | $ | (490) |  |  | $ | (453) |
IMS | (188) |  |  | (201) |  |  | (485) |  |  | (574) |
SAS | (166) |  |  | (163) |  |  | (481) |  |  | (495) |
AR | (70) |  |  | (58) |  |  | (190) |  |  | (186) |
Other(1) | (1) |  |  | 2 |  |  | 30 |  |  | 28 |
Total other segment costs(3) | (594) |  |  | (585) |  |  | (1,616) |  |  | (1,680) |
Operating income |  |  |  |  |  |  |
CS | $ | 382 |  |  | $ | 359 |  |  | $ | 1,063 |  |  | $ | 998 |
IMS | 204 |  |  | 204 |  |  | 621 |  |  | 589 |
SAS | 218 |  |  | 195 |  |  | 614 |  |  | 626 |
AR | 96 |  |  | 76 |  |  | 265 |  |  | 234 |
Unallocated corporate items | (279) |  |  | (339) |  |  | (846) |  |  | (1,098) |
Total operating income | 621 |  |  | 495 |  |  | 1,717 |  |  | 1,349 |
Non-service FAS pension income and other, net | 98 |  |  | 101 |  |  | 287 |  |  | 275 |
Interest expense, net | (152) |  |  | (166) |  |  | (454) |  |  | (514) |
Income before income taxes | $ | 567 |  |  | $ | 430 |  |  | $ | 1,550 |  |  | $ | 1,110 |
_____________ (1) Includes corporate headquarters and intersegment eliminations. (2) Other segment costs consist of company-funded R&D costs, selling and marketing costs and other General and Administrative (“G&A”) expenses, which include a portion of depreciation and amortization expenses that are disclosed by segment under the “Other Financial Information” heading below in this Note. (3) Includes gains recognized in connection with the monetization of certain legacy end-of-life assets. Unallocated Corporate Items. Total unallocated corporate items include expenses not included in management’s evaluation of segment operating performance, such as amortization of intangibles; merger, acquisition, and divestiture-related expenses; business divestiture-related losses and any related impairment of goodwill; and LHX NeXt implementation costs. Additionally, unallocated corporate items include a portion of management and administration, legal, environmental, compensation and retiree benefits, the FAS/Cost Accounting Standards (“CAS”) operating adjustment, eliminations and other. LHX NeXt Initiative. LHX NeXt is our initiative to transform multiple functions, systems and processes to increase agility and competitiveness. The LHX NeXt effort is expected to continue into 2026 with non-recurring costs for workforce optimization, incremental information technology (“IT”) expenses for implementation of new systems, third party consulting and other costs. Other Financial Information The following table presents capital expenditures and depreciation and amortization by business segment:
| Third Quarter |  | Year to Date
(In millions) | 2025 |  | 2024 |  | 2025 |  | 2024
Capital Expenditures |  |  |  |  |  |  |
CS | $ | 19 |  |  | $ | 9 |  |  | $ | 40 |  |  | $ | 27 |
IMS | 16 |  |  | 25 |  |  | 51 |  |  | 93 |
SAS | 31 |  |  | 23 |  |  | 74 |  |  | 107 |
AR | 33 |  |  | 11 |  |  | 62 |  |  | 26 |
Corporate | 20 |  |  | 10 |  |  | 39 |  |  | 37 |
Total capital expenditures | $ | 119 |  |  | $ | 78 |  |  | $ | 266 |  |  | $ | 290 |
Depreciation and Amortization |  |  |  |  |  |  |
CS | $ | 13 |  |  | $ | 14 |  |  | $ | 39 |  |  | $ | 42 |
IMS | 20 |  |  | 15 |  |  | 52 |  |  | 46 |
SAS | 40 |  |  | 35 |  |  | 106 |  |  | 92 |
AR | 12 |  |  | 14 |  |  | 37 |  |  | 37 |
Corporate | 224 |  |  | 246 |  |  | 679 |  |  | 746 |
Total depreciation and amortization | $ | 309 |  |  | $ | 324 |  |  | $ | 913 |  |  | $ | 963 |
Assets Total assets by business segment were as follows:
(In millions) | October 3, 2025 |  | January 3, 2025
CS | $ | 7,186 |  |  | $ | 7,060 |
IMS | 9,741 |  |  | 10,389 |
SAS | 9,117 |  |  | 8,705 |
AR | 4,811 |  |  | 4,826 |
Corporate(1) | 10,159 |  |  | 11,021 |
Total assets | $ | 41,014 |  |  | $ | 42,001 |
_______________ (1)Includes intangible assets acquired in connection with business combinations that benefit the entire Company of $7,072 million and $7,639 million as of October 3, 2025 and January 3, 2025, respectively. 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.
| Third Quarter
| 2025 |  | 2024
(In millions) | CS |  | IMS |  | SAS |  | AR |  | CS |  | IMS |  | SAS |  | AR
Revenue By Customer Relationship
Prime contractor | $ | 1,127 |  |  | $ | 1,220 |  |  | $ | 1,114 |  |  | $ | 173 |  |  | $ | 977 |  |  | $ | 1,036 |  |  | $ | 1,008 |  |  | $ | 164 |
Subcontractor | 317 |  |  | 459 |  |  | 675 |  |  | 574 |  |  | 388 |  |  | 557 |  |  | 663 |  |  | 499 |
Intersegment | 18 |  |  | 21 |  |  | 20 |  |  | 8 |  |  | 17 |  |  | 15 |  |  | 12 |  |  | 6 |
Total segment | $ | 1,462 |  |  | $ | 1,700 |  |  | $ | 1,809 |  |  | $ | 755 |  |  | $ | 1,382 |  |  | $ | 1,608 |  |  | $ | 1,683 |  |  | $ | 669 |
Revenue By Contract Type
Fixed-price | $ | 1,231 |  |  | $ | 1,192 |  |  | $ | 1,203 |  |  | $ | 490 |  |  | $ | 1,146 |  |  | $ | 1,196 |  |  | $ | 1,012 |  |  | $ | 423 |
Cost-type | 213 |  |  | 487 |  |  | 586 |  |  | 257 |  |  | 219 |  |  | 397 |  |  | 659 |  |  | 240 |
Intersegment | 18 |  |  | 21 |  |  | 20 |  |  | 8 |  |  | 17 |  |  | 15 |  |  | 12 |  |  | 6 |
Total segment | $ | 1,462 |  |  | $ | 1,700 |  |  | $ | 1,809 |  |  | $ | 755 |  |  | $ | 1,382 |  |  | $ | 1,608 |  |  | $ | 1,683 |  |  | $ | 669 |
Revenue By Geographical Region
United States | $ | 948 |  |  | $ | 1,290 |  |  | $ | 1,572 |  |  | $ | 619 |  |  | $ | 975 |  |  | $ | 1,150 |  |  | $ | 1,484 |  |  | $ | 651 |
International | 496 |  |  | 389 |  |  | 217 |  |  | 128 |  |  | 390 |  |  | 443 |  |  | 187 |  |  | 12 |
Intersegment | 18 |  |  | 21 |  |  | 20 |  |  | 8 |  |  | 17 |  |  | 15 |  |  | 12 |  |  | 6 |
Total segment | $ | 1,462 |  |  | $ | 1,700 |  |  | $ | 1,809 |  |  | $ | 755 |  |  | $ | 1,382 |  |  | $ | 1,608 |  |  | $ | 1,683 |  |  | $ | 669 |
| Year to Date
| 2025 |  | 2024
(In millions) | CS |  | IMS |  | SAS |  | AR |  | CS |  | IMS |  | SAS |  | AR
Revenue By Customer Relationship
Prime contractor | $ | 3,154 |  |  | $ | 3,440 |  |  | $ | 3,230 |  |  | $ | 473 |  |  | $ | 2,805 |  |  | $ | 3,176 |  |  | $ | 3,192 |  |  | $ | 495 |
Subcontractor | 989 |  |  | 1,418 |  |  | 1,927 |  |  | 1,586 |  |  | 1,164 |  |  | 1,691 |  |  | 1,909 |  |  | 1,370 |
Intersegment | 47 |  |  | 56 |  |  | 50 |  |  | 23 |  |  | 53 |  |  | 39 |  |  | 40 |  |  | 21 |
Total segment | $ | 4,190 |  |  | $ | 4,914 |  |  | $ | 5,207 |  |  | $ | 2,082 |  |  | $ | 4,022 |  |  | $ | 4,906 |  |  | $ | 5,141 |  |  | $ | 1,886 |
Revenue By Contract Type
Fixed-price | $ | 3,550 |  |  | $ | 3,695 |  |  | $ | 3,392 |  |  | $ | 1,332 |  |  | $ | 3,329 |  |  | $ | 3,745 |  |  | $ | 3,192 |  |  | $ | 1,138 |
Cost-type | 593 |  |  | 1,163 |  |  | 1,765 |  |  | 727 |  |  | 640 |  |  | 1,122 |  |  | 1,909 |  |  | 727 |
Intersegment | 47 |  |  | 56 |  |  | 50 |  |  | 23 |  |  | 53 |  |  | 39 |  |  | 40 |  |  | 21 |
Total segment | $ | 4,190 |  |  | $ | 4,914 |  |  | $ | 5,207 |  |  | $ | 2,082 |  |  | $ | 4,022 |  |  | $ | 4,906 |  |  | $ | 5,141 |  |  | $ | 1,886 |
Revenue By Geographical Region
United States | $ | 2,695 |  |  | $ | 3,671 |  |  | $ | 4,515 |  |  | $ | 1,825 |  |  | $ | 2,786 |  |  | $ | 3,537 |  |  | $ | 4,479 |  |  | $ | 1,828 |
International | 1,448 |  |  | 1,187 |  |  | 642 |  |  | 234 |  |  | 1,183 |  |  | 1,330 |  |  | 622 |  |  | 37 |
Intersegment | 47 |  |  | 56 |  |  | 50 |  |  | 23 |  |  | 53 |  |  | 39 |  |  | 40 |  |  | 21 |
Total segment | $ | 4,190 |  |  | $ | 4,914 |  |  | $ | 5,207 |  |  | $ | 2,082 |  |  | $ | 4,022 |  |  | $ | 4,906 |  |  | $ | 5,141 |  |  | $ | 1,886 |

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- Definition The entire disclosure for reporting segments including data and tables. 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