Acquisitions, Goodwill and Intangible Assets

6 Months Ended

Jul. 04, 2025

Goodwill and Intangible Assets Disclosure [Abstract]

Acquisitions, Goodwill and Intangible Assets

Note 3–Acquisitions, Goodwill and Intangible Assets

KUDU DYNAMICS ACQUISITION

On May 23, 2025 (the "Purchase Date"), we completed the acquisition of Savanna Industries, Inc. ("Kudu Dynamics") for preliminary purchase consideration of approximately $291 million, net of $29 million of cash acquired. The Kudu Dynamics business provides artificial intelligence enabled cyber capabilities for defense, intelligence and homeland security customers.

The preliminary goodwill recognized of $244 million represents intellectual capital and the acquired assembled workforce, neither of which qualify for recognition as a separate intangible asset. All of the goodwill recognized is tax deductible.

The following table summarizes the preliminary fair value of intangible assets acquired at the Purchase Date and the related weighted average amortization period:


	Weighted Amortization Period	Fair Value
	(in years)	(in millions)
Programs	7	$	44
Backlog	1	13

Total		$	57

For the three and six months ended July 4, 2025, $12 million of revenues related to Kudu Dynamics were recognized within the National Security & Digital reportable segment.

GOODWILL

The following table presents changes in the carrying amount of goodwill by reportable segment:


(in millions)	National Security & Digital		Health & Civil		Commercial & International		Defense Systems		Total
Goodwill at December 29, 2023(1)	$	2,758	$	1,366	$	800	$	1,188	$	6,112
Foreign currency translation adjustments	—		—		(28)		—		(28)
Goodwill at January 3, 2025(1)	2,758		1,366		772		1,188		6,084
Acquisition of a business	244		—		—		—		244
Foreign currency translation adjustments	—		—		31		—		31
Goodwill at July 4, 2025(1)	$	3,002	$	1,366	$	803	$	1,188	$	6,359

(1) Carrying amount includes accumulated impairment loss of $596 million within the Commercial & International segment.

We evaluate qualitative factors that could cause us to consider whether 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.

During the three and six months ended July 4, 2025, and June 28, 2024, there were no impairments to goodwill.

INTANGIBLE ASSETS

Intangible assets, net consisted of the following:


	July 4, 2025						January 3, 2025
(in millions)	Gross carrying value		Accumulated amortization		Net carrying value		Gross carrying value		Accumulated amortization		Net carrying value
Finite-lived intangible assets:
Programs	$	1,732	$	(1,342)	$	390	$	1,686	$	(1,293)	$	393
Software and technology	264		(177)		87		261		(165)		96
Backlog	13		(2)		11		—		—		—
Customer relationships	54		(31)		23		52		(28)		24
Total finite-lived intangible assets	2,063		(1,552)		511		1,999		(1,486)		513
Indefinite-lived intangible assets:
Trade names	4		—		4		4		—		4
Total intangible assets	$	2,067	$	(1,552)	$	515	$	2,003	$	(1,486)	$	517

Amortization expense was $32 million and $62 million for the three and six months ended July 4, 2025, respectively, and $36 million and $73 million for the three and six months ended June 28, 2024, 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. Backlog intangible assets are amortized on a straight-line basis over their estimated useful lives. 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 July 4, 2025, was as follows:


Fiscal year ending (in millions)
2025 (remainder of year)	$	70
2026	110
2027	79
2028	68
2029	59
2030 and thereafter	125
	$	511