v3.25.3
BUSINESS SEGMENT INFORMATION
 9 Months Ended
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 QuarterYear to Date
(In millions)2025202420252024
 
Revenue
CS$1,462 $1,382 $4,190 $4,022 
IMS1,700 1,608 4,914 4,906 
SAS1,809 1,683 5,207 5,141 
AR755 669 2,082 1,886 
Other(1)
(67)(50)(176)(153)
Total revenue5,659 5,292 16,217 15,802 
Cost of revenue
CS$(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 
IMS204 204 621 589 
SAS218 195 614 626 
AR96 76 265 234 
Unallocated corporate items(279)(339)(846)(1,098)
Total operating income621 495 1,717 1,349 
Non-service FAS pension income and other, net98 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 QuarterYear to Date
(In millions)2025202420252024
Capital Expenditures
CS$19 $9 $40 $27 
IMS16 25 51 93 
SAS31 23 74 107 
AR33 11 62 26 
Corporate20 10 39 37 
Total capital expenditures$119 $78 $266 $290 
Depreciation and Amortization
CS$13 $14 $39 $42 
IMS20 15 52 46 
SAS40 35 106 92 
AR12 14 37 37 
Corporate224 246 679 746 
Total depreciation and amortization$309 $324 $913 $963 
Assets
Total assets by business segment were as follows:
(In millions)October 3, 2025January 3, 2025
CS$7,186 $7,060 
IMS9,741 10,389 
SAS9,117 8,705 
AR4,811 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
20252024
(In millions)CSIMSSASARCSIMSSASAR
Revenue By Customer Relationship
Prime contractor$1,127 $1,220 $1,114 $173 $977 $1,036 $1,008 $164 
Subcontractor317 459 675 574 388 557 663 499 
Intersegment18 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-type213 487 586 257 219 397 659 240 
Intersegment18 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 
International496 389 217 128 390 443 187 12 
Intersegment18 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
20252024
(In millions)CSIMSSASARCSIMSSASAR
Revenue By Customer Relationship
Prime contractor$3,154 $3,440 $3,230 $473 $2,805 $3,176 $3,192 $495 
Subcontractor989 1,418 1,927 1,586 1,164 1,691 1,909 1,370 
Intersegment47 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-type593 1,163 1,765 727 640 1,122 1,909 727 
Intersegment47 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 
International1,448 1,187 642 234 1,183 1,330 622 37 
Intersegment47 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