v3.25.2
BUSINESS SEGMENT INFORMATION
 6 Months Ended
Jun. 27, 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:
 Second QuarterYear to Date
(In millions)2025202420252024
 
Revenue
CS$1,376 $1,346 $2,728 $2,640 
IMS1,622 1,671 3,214 3,298 
SAS1,787 1,707 3,398 3,458 
AR698 633 1,327 1,217 
Other(1)
(57)(58)(109)(103)
Total revenue5,426 5,299 10,558 10,510 
Cost of revenue
CS$(870)$(876)$(1,726)$(1,713)
IMS(1,296)(1,292)(2,500)(2,540)
SAS(1,406)(1,329)(2,687)(2,695)
AR(549)(488)(1,038)(931)
Other (1)
30 46 78 77 
Total cost of revenue(4,091)(3,939)(7,873)(7,802)
Other segment costs(2)
CS$(170)$(141)$(321)$(288)
IMS(3)
(112)(179)(297)(373)
SAS(161)(163)(315)(332)
AR(56)(64)(120)(128)
Other(1)
27 12 31 26 
Total other segment costs(472)(535)(1,022)(1,095)
Operating income
CS$336 $329 $681 $639 
IMS214 200 417 385 
SAS220 215 396 431 
AR93 81 169 158 
Unallocated corporate expenses(292)(349)(567)(759)
Total operating income571 476 1,096 854 
Non-service FAS pension income and other, net105 86 189 174 
Interest expense, net(152)(172)(302)(348)
Income before income taxes$524 $390 $983 $680 
_____________
(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)     Second quarter and year to date 2025 reflect a $75 million gain recognized in connection with the monetization of certain legacy end-of-life assets.
Unallocated Corporate Expenses. Total unallocated corporate expenses includes the portion of corporate costs 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; impairment of other assets; LHX NeXt implementation costs; a portion of management and administration, legal, environmental, compensation, 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:
Second QuarterYear to Date
(In millions)2025202420252024
Capital Expenditures
CS$14 $12 $21 $18 
IMS15 28 35 68 
SAS24 31 43 84 
AR18 10 29 15 
Corporate17 16 19 27 
Total capital expenditures$88 $97 $147 $212 
Depreciation and Amortization
CS$13 $14 $26 $28 
IMS17 15 32 31 
SAS33 27 66 57 
AR13 14 25 23 
Corporate227 249 455 500 
Total depreciation and amortization$303 $319 $604 $639 
Assets
Total assets by business segment were as follows:
(In millions)June 27, 2025January 3, 2025
CS$7,106 $7,060 
IMS9,667 10,389 
SAS9,317 8,705 
AR4,823 4,826 
Corporate(1)
10,327 11,021 
Total assets$41,240 $42,001 
_______________
(1)Includes intangible assets acquired in connection with business combinations that benefit the entire Company of $7,261 million and $7,639 million as of June 27, 2025 and January 3, 2025, respectively. Corporate assets also include cash, income taxes receivable, deferred income taxes, deferred compensation plan assets, buildings and equipment and real estate held for development and leasing.
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.
Second Quarter
20252024
(In millions)CSIMSSASARCSIMSSASAR
Revenue By Customer Relationship
Prime contractor$1,032 $1,171 $1,108 $161 $915 $1,084 $1,076 $168 
Subcontractor(1)
327 429 666 532 409 574 618 455 
Intersegment17 22 13 5 22 13 13 10 
Total segment$1,376 $1,622 $1,787 $698 $1,346 $1,671 $1,707 $633 
Revenue By Contract Type
Fixed-price(2)
$1,158 $1,248 $1,195 $450 $1,118 $1,304 $1,072 $380 
Cost-type201 352 579 243 206 354 622 243 
Intersegment17 22 13 5 22 13 13 10 
Total segment$1,376 $1,622 $1,787 $698 $1,346 $1,671 $1,707 $633 
Revenue By Geographical Region
United States$903 $1,234 $1,567 $597 $886 $1,221 $1,488 $613 
International456 366 207 96 438 437 206 10 
Intersegment17 22 13 5 22 13 13 10 
Total segment$1,376 $1,622 $1,787 $698 $1,346 $1,671 $1,707 $633 
Year to Date
20252024
(In millions)CSIMSSASARCSIMSSASAR
Revenue By Customer Relationship
Prime contractor$2,027 $2,220 $2,116 $300 $1,828 $2,140 $2,184 $331 
Subcontractor(1)
672 959 1,252 1,012 776 1,134 1,246 871 
Intersegment29 35 30 15 36 24 28 15 
Total segment$2,728 $3,214 $3,398 $1,327 $2,640 $3,298 $3,458 $1,217 
Revenue By Contract Type
Fixed-price(2)
$2,319 $2,503 $2,189 $842 $2,183 $2,549 $2,180 $715 
Cost-type380 676 1,179 470 421 725 1,250 487 
Intersegment29 35 30 15 36 24 28 15 
Total segment$2,728 $3,214 $3,398 $1,327 $2,640 $3,298 $3,458 $1,217 
Revenue By Geographical Region
United States$1,747 $2,381 $2,943 $1,206 $1,811 $2,387 $2,995 $1,177 
International952 798 425 106 793 887 435 25 
Intersegment29 35 30 15 36 24 28 15 
Total segment$2,728 $3,214 $3,398 $1,327 $2,640 $3,298 $3,458 $1,217 
_______________
(1)     Includes products and services to contractors whose customers are the end user.
(2)     Includes revenue derived from time-and-materials contracts.