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CONTRACT ASSETS AND CONTRACT LIABILITIES
 6 Months Ended
Jun. 27, 2025
Revenue from Contract with Customer [Abstract]  
CONTRACT ASSETS AND CONTRACT LIABILITIES
NOTE C: CONTRACT ASSETS AND CONTRACT LIABILITIES
Contract assets mainly represent unbilled amounts typically resulting from revenue recognized exceeding amounts billed to customers for contracts utilizing the percentage of completion (“POC”) cost-to-cost revenue recognition method. Contract assets become receivables as we bill customers as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, upon achievement of contractual milestones or upon deliveries and, in certain arrangements, the customer may defer payment of a portion of the contract price until contract completion. Contract liabilities include advance payments and billings in excess of revenue recognized, including deferred revenue. Contract assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period.
Contract assets and contract liabilities are summarized below:
(In millions)June 27, 2025January 3, 2025
Contract assets
$3,857 $3,230 
Contract liabilities, current
(2,317)(2,142)
Contract liabilities, non-current(1)
(103)(91)
Net contract assets$1,437 $997 
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(1)Included as a component of the “Other non-current liabilities” line item in our Condensed Consolidated Balance Sheet.
Revenue recognized related to contract liabilities that were outstanding at the end of the respective prior fiscal year were $517 million and $1,215 million for second quarter and year to date 2025, respectively, and $353 million and $1,048 million for second quarter and year to date 2024, respectively.
NOTE M: BACKLOG
Backlog, which is the equivalent of our remaining performance obligations, represents the future revenue we expect to recognize as we perform on our current contracts. Backlog comprises both funded backlog (i.e., firm orders for which funding is authorized and appropriated) and unfunded backlog (i.e., orders for which funds have not been appropriated and/or incrementally funded). Backlog excludes unexercised contract options and potential orders under ordering-type contracts, such as indefinite-delivery, indefinite-quantity contracts.
As of June 27, 2025, our ending backlog was $35.4 billion. We expect to recognize approximately 45% of our backlog as revenue over the next twelve months and 70% as revenue over the next twenty-four months, with the remainder to be recognized thereafter.