Business Segments

12 Months Ended

Jan. 03, 2020

Note 24—Business Segments

The Company's operations and reportable segments are organized around the customers and markets it serves. The Company defines its reportable segments based on the way the chief operating decision maker ("CODM"), currently its Chairman and Chief Executive Officer, manages the operations of the Company for purposes of allocating resources and assessing performance.

The Company's business is aligned into three reportable segments (Defense Solutions, Civil and Health). Additionally, the Company separately presents the unallocable costs associated with corporate functions as Corporate. Effective the beginning of fiscal 2019, the Company changed the composition of its Defense Solutions reportable segment to better align the operations within the reportable segment to the customers it serves. This resulted in the identification of new operating segments within Defense Solutions. In addition, certain contracts were reassigned between the Civil and Defense Solutions reportable segments. While this activity did not have a material impact on the Company's reportable segments, prior year segment results have been recast to reflect this change.

Defense Solutions is focused on rapidly deploying agile, cost-effective solutions to meet the ever-changing missions of the Company's customers in the areas of intelligence surveillance and reconnaissance, enterprise IT, integrated systems, cybersecurity and global services. Defense Solutions provides a diverse portfolio of national security solutions and systems for air, land, sea, space and cyberspace for the U.S. Intelligence Community, the DoD, military services, government agencies of U.S. allies abroad and other federal and commercial customers in the national security industry. The Company's solutions deliver innovative technology, large-scale intelligence systems, command and control platforms, data analytics, logistics and cybersecurity solutions, as well as intelligence analysis and operations support to critical missions around the world.

The Civil business is focused on seamlessly integrating and protecting physical, digital and data domains. By applying leading science, effective technologies and business acumen, the Company's talented employees help customers maximize their performance and take on the connected world with data-driven insights, improved efficiencies and technological advantages.

The Health business is focused on delivering effective and affordable solutions to federal and commercial customers that are responsible for the health and well-being of people worldwide including service members and veterans. These solutions enable customers to deliver on the health mission of providing high quality, cost effective care and are accomplished through the integration of information technology, engineering, health and life sciences, clinical insights and health policy. The capabilities the Health business provides are principally encapsulated by four major areas of activity: complex systems integration, managed health services, enterprise IT transformation and life sciences.

Corporate includes the operations of various corporate activities, certain corporate expense items that are not reimbursed by the Company's U.S. government customers and certain other expense items excluded from a reportable segment's performance.

The following table summarizes business segment information for the periods presented:



	Year Ended
	January 3, 2020			December 28, 2018			December 29, 2017
	(in millions)
Revenues:
Defense Solutions	$	5,367		$	4,966		$	4,989
Civil	3,729			3,411			3,379
Health	1,998			1,817			1,802
Total revenues	$	11,094		$	10,194		$	10,170

Operating income (loss):
Defense Solutions	$	407		$	353		$	312
Civil	295			284			221
Health	242			230			228
Corporate	(32		)	(118		)	(202		)
Total operating income	$	912		$	749		$	559

Amortization of intangible assets:
Defense Solutions	$	60		$	68		$	108
Civil	67			87			132
Health	46			46			41
Total amortization of intangible assets	$	173		$	201		$	281

The financial performance measures used to evaluate segment performance are revenues and operating income. As a result, "Interest expense, net," "Other income (expense), net," and "Income tax expense," as reported in the consolidated financial statements are not allocated to the Company's segments. Under U.S. government CAS, indirect costs including depreciation expense are collected in numerous indirect cost pools, which are then collectively allocated out to the Company’s reportable segments based on a representative causal or beneficial relationship of the costs in the pool to the costs in the base. While depreciation expense is a component of the allocated costs, the allocation process precludes depreciation expense from being specifically identified by the Company’s individual reportable segments. For this reason, depreciation expense by reportable segment has not been reported above.

Asset information by segment is not a key measure of performance used by the CODM.

Less than 10% of the Company's revenues and tangible long-lived assets are generated by or owned by entities outside of the United States. As such, additional financial information by geographic location is not presented.

The Company's revenues are largely attributable to prime contracts with the U.S. government or to subcontracts with other contractors engaged in work for the U.S. government. The percentages of total revenues for the U.S. government, its agencies and other customers comprising more than 10% of total revenues in any of the periods for the periods presented were as follows:



	Year Ended
	January 3, 2020		December 28, 2018		December 29, 2017
U.S. Government	87	%	85	%	84	%
DoD and U.S. Intelligence Community	48	%	48	%	48	%
U.S. Army	11	%	13	%	13	%