v3.26.3
Segment Information
 9 Months Ended
Sep. 30, 2026
Segment Reporting [Abstract]  
Segment Information Segment Information
Operating segments represent components of an enterprise for which separate financial information is available that is regularly reviewed by the CODM in determining how to allocate resources and assess performance. The Company’s operating and reportable segments consist of ASC and IMS. All other operations, which consist primarily of DRS corporate headquarters and certain non-operating subsidiaries of the Company, are grouped in Corporate & Eliminations.
The CODM primarily uses operating earnings to manage the Company and allocate resources. Operating earnings is used to facilitate a comparison of the ordinary, ongoing and customary course of our operations on a consistent basis from period to period and provide an additional understanding of factors and trends affecting our business segments.
Certain information related to our segments for the periods ended September 30, 2026 and 2025 is presented in the following tables. Consistent accounting policies have been applied by all segments within the Company, within all reporting periods. Intersegment sales are generally transferred at cost to the buying segment, and the sourcing segment does not recognize a profit. Such intercompany operating earnings is eliminated in consolidation, so that the Company’s total revenues and operating earnings reflect only those transactions with external customers.
Revenues, expenses, and operating earnings by segment and the reconciliation to earnings before taxes for the periods ended September 30, 2026 and 2025 consist of the following:
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)2026202520262025
Revenues
ASC$659 $580 $1,805 $1,633 
IMS428 383 1,056 964 
Corporate & Eliminations(21)(3)(36)(9)
Total revenues$1,066 $960 $2,825 $2,588 
Cost of revenues
ASC$500 $437 $1,357 $1,237 
IMS324 304 792 760 
Corporate & Eliminations(21)(3)(36)(9)
Total cost of revenues$803 $738 $2,113 $1,988 
General and administrative
ASC$70 $63 $206 $196 
IMS30 24 86 71 
Corporate & Eliminations5 — 5 — 
Total general and administrative$105 $87 $297 $267 
Company-funded independent research and development
ASC$27 $29 $80 $76 
IMS10 7 24 18 
Corporate & Eliminations— — — — 
Total company-funded independent research and development$37 $36 $104 $94 
Amortization of acquired intangible assets
ASC$5 $5 $16 $16 
IMS— — — — 
Corporate & Eliminations— — — — 
Total amortization of acquired intangible assets$5 $5 $16 $16 
Other segment items
ASC$— $1 $— $1 
IMS— — — — 
Corporate & Eliminations— — — — 
Total other segment items(1)
$— $1 $— $1 
Operating earnings
ASC$57 $45 $146 $107 
IMS64 48 154 115 
Corporate & Eliminations(5)— (5)— 
Total operating earnings$116 $93 $295 $222 
Interest income (expense), net1 (4)3 (7)
Other, net(1)(2)(5)(3)
Earnings before taxes$116 $87 $293 $212 
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(1)Includes ASC restructuring costs for the periods presented.
Total intersegment revenues by segment for the periods ended September 30, 2026 and 2025 consist of the following:
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)2026202520262025
ASC$20 $3 $33 $9 
IMS1 — 3 — 
Total intersegment revenues $21 $3 $36 $9 
Depreciation by segment for the periods ended September 30, 2026 and 2025 consists of the following:
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)2026202520262025
ASC$15 $12 $42 $36 
IMS7 6 19 17 
Total depreciation $22 $18 $61 $53 
Total assets by segment as of September 30, 2026 and December 31, 2025, consist of the following:
(Dollars in millions)September 30, 2026December 31, 2025
ASC$2,643 $2,451 
IMS1,295 1,300 
Corporate & Eliminations436 735 
Total assets $4,374 $4,486