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Goodwill and Intangible Assets | 6 Months Ended
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Jun. 28, 2024
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | Note 3–Goodwill and Intangible Assets Goodwill During the quarter ended March 29, 2024, the Company completed a business realignment, which resulted in identification of new reportable segments. The Company commenced operating and reporting under the new organizational structure effective the first day of fiscal 2024 (see "Note 10–Business Segments). Goodwill was allocated to the new reportable segments based on a relative fair value approach. The following table presents changes in the carrying amount of goodwill by reportable segment:
|  | National Security and Digital |  | Health & Civil |  | Commercial & International |  | Defense Systems |  | Total
|  | (in millions)
Goodwill at December 30, 2022 |  | $ | 2,755 |  |  | $ | 1,366 |  |  | $ | 1,389 |  |  | $ | 1,186 |  |  | $ | 6,696 |
Goodwill Impairment |  | — |  |  | — |  |  | (596) |  |  | — |  |  | (596) |
Acquisitions of a business(1) |  | — |  |  | — |  |  | (4) |  |  | — |  |  | (4) |
Foreign currency translation adjustments |  | 3 |  |  | — |  |  | 11 |  |  | 2 |  |  | 16 |
Goodwill at December 29, 2023(2) |  | $ | 2,758 |  |  | $ | 1,366 |  |  | $ | 800 |  |  | $ | 1,188 |  |  | $ | 6,112 |
Foreign currency translation adjustments |  | — |  |  | — |  |  | (10) |  |  | — |  |  | (10) |
Goodwill at June 28, 2024(2) |  | $ | 2,758 |  |  | $ | 1,366 |  |  | $ | 790 |  |  | $ | 1,188 |  |  | $ | 6,102 |
(1) Adjustment to goodwill resulting from a measurement period purchase accounting adjustment. (2) Carrying amount includes accumulated impairment loss of $596 million within the Commercial & International segment. We evaluate qualitative factors that could cause us to believe the estimated fair value of each of our reporting units may be lower than the carrying value and trigger a quantitative assessment, including, but not limited to (i) macroeconomic conditions, (ii) industry and market considerations, (iii) our overall financial performance, including an analysis of our current and projected cash flows, revenues and earnings, (iv) a sustained decrease in share price and (v) other relevant entity-specific events including changes in management, strategy, partners or litigation. Operations of the Security Enterprise Solutions (“SES”) reporting unit rely heavily on the sales and servicing of security and detection products, which prior to fiscal 2024, have been negatively impacted due to delays in airline travel infrastructure projects as customer budgets recover from the pandemic. During fiscal 2023, the SES reporting unit refined its portfolio and made strategic business decisions to exit certain product offerings, and cease operations in certain countries in order to align the operations of the reporting unit with its strategic business plan. These decisions, along with the delays in airline travel infrastructure projects and higher than anticipated servicing costs, contributed to a significant reduction in the reporting unit’s forecasted revenue and cash flows. Accordingly, we recognized a non-cash goodwill impairment charge of $596 million at the SES reporting unit during the fiscal year ended December 29, 2023. The impairment was recorded within the Commercial & International reportable segment in the condensed consolidated statements of operations. In the event that there are significant unfavorable changes to the forecasted cash flows, forecasted revenue, terminal growth rates or the cost of capital used in the fair value estimates, we may be required to record an additional impairment of goodwill at a future date. In conjunction with the change in reportable segments in fiscal 2024, the Company evaluated goodwill for impairment both before and after the segment change and determined that goodwill was not impaired. Intangible Assets Intangible assets, net consisted of the following:
|  | June 28, 2024 |  | December 29, 2023
|  | Gross carrying value |  | Accumulated amortization |  | Net carrying value |  | Gross carrying value |  | Accumulated amortization |  | Net carrying value
|  | (in millions)
Finite-lived intangible assets: |  |  |  |  |  |  |  |  |  |  |  |
Programs |  | $ | 1,687 |  |  | $ | (1,233) |  |  | $ | 454 |  |  | $ | 1,689 |  |  | $ | (1,175) |  |  | $ | 514 |
Software and technology |  | 262 |  |  | (155) |  |  | 107 |  |  | 263 |  |  | (144) |  |  | 119 |
Customer relationships |  | 52 |  |  | (25) |  |  | 27 |  |  | 52 |  |  | (22) |  |  | 30 |
Total finite-lived intangible assets |  | 2,001 |  |  | (1,413) |  |  | 588 |  |  | 2,004 |  |  | (1,341) |  |  | 663 |
Indefinite-lived intangible assets: |  |  |  |  |  |  |  |  |  |  |  |
Trade names |  | 4 |  |  | — |  |  | 4 |  |  | 4 |  |  | — |  |  | 4 |
Total intangible assets |  | $ | 2,005 |  |  | $ | (1,413) |  |  | $ | 592 |  |  | $ | 2,008 |  |  | $ | (1,341) |  |  | $ | 667 |
Amortization expense was $36 million and $73 million for the three and six months ended June 28, 2024, respectively and $51 million and $103 million for the three and six months ended June 30, 2023, respectively. Program intangible assets are amortized over their respective estimated useful lives in proportion to the pattern of economic benefit based on expected future discounted cash flows. Customer relationships and software and technology intangible assets are amortized either on a straight-line basis over their estimated useful lives or over their respective estimated useful lives in proportion to the pattern of economic benefit based on expected future discounted cash flows, as deemed appropriate. The estimated annual amortization expense as of June 28, 2024, was as follows:
Fiscal year ending |  |
|  | (in millions)
2024 (remainder of year) |  | $ | 74 |
2025 |  | 120 |
2026 |  | 98 |
2027 |  | 72 |
2028 |  | 62 |
2029 and thereafter |  | 162 |
|  | $ | 588 |

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- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 350 -SubTopic 30 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/350-30/tableOfContent Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 350 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/350-20/tableOfContent + Details
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