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Contract Asset and Liabilities
3 Months Ended
Apr. 03, 2020
Revenue from Contract with Customer [Abstract]  
Contract Asset and Liabilities
Note 2–Revenues
Remaining Performance Obligations
Remaining performance obligations represent the expected value of exercised contracts, both funded and unfunded, less revenue recognized to date. Remaining performance obligations do not include unexercised option periods and future potential task orders expected to be awarded under indefinite delivery/indefinite quantity ("IDIQ"), General Services Administration Schedule or other master agreement contract vehicles, with the exception of certain IDIQ contracts where task orders are not competitively awarded and separately priced but instead are used as a funding mechanism, and where there is a basis for estimating future revenues and funding on future task orders is anticipated.
As of April 3, 2020, we had $13.8 billion of remaining performance obligations, which are expected to be recognized as revenues in the amounts of $6.5 billion, $2.5 billion and $4.8 billion for the remainder of fiscal 2020, fiscal 2021 and fiscal 2022 and thereafter, respectively.
Disaggregation of Revenues
We disaggregate revenues by customer-type, contract-type and geographic location for each of our reportable segments. These categories represent how the nature, timing and uncertainty of revenues and cash flows are affected.
Prior year segment results have been recast for the contracts that were reassigned from the Civil reportable segment to the Defense Solutions reportable segment.
Disaggregated revenues by customer-type were as follows:
Three Months Ended April 3, 2020
Defense SolutionsCivilHealthTotal
(in millions)
DoD and U.S. Intelligence Community
$1,285  $17  $124  $1,426  
Other government agencies(1)
208  544  375  1,127  
Commercial and non-U.S. customers212  71  28  311  
Total$1,705  $632  $527  $2,864  

Three Months Ended March 29, 2019
Defense SolutionsCivilHealthTotal
(in millions)
DoD and U.S. Intelligence Community
$1,135  $17  $124  $1,276  
Other government agencies(1)
156  511  302  969  
Commercial and non-U.S. customers199  87  28  314  
Total$1,490  $615  $454  $2,559  
(1) Includes federal government agencies other than the DoD and U.S. Intelligence Community, as well as state and local government agencies.
The majority of our revenues are generated from U.S. government contracts, either as a prime contractor or as a subcontractor. Revenues from the U.S. government can be adversely impacted by spending caps or changes in budgetary priorities of the U.S. government, as well as delays in program start dates or the award of a contract.
Disaggregated revenues by contract-type were as follows:
Three Months Ended April 3, 2020
Defense SolutionsCivilHealthTotal
(in millions)
Cost-reimbursement and fixed-price-incentive-fee$1,094  $346  $65  $1,505  
Firm-fixed-price440  173  373  986  
Time-and-materials and fixed-price-level-of-effort171  113  89  373  
Total$1,705  $632  $527  $2,864  

Three Months Ended March 29, 2019
Defense SolutionsCivilHealthTotal
(in millions)
Cost-reimbursement and fixed-price-incentive-fee$986  $367  $69  $1,422  
Firm-fixed-price364  142  269  775  
Time-and-materials and fixed-price-level-of-effort140  106  116  362  
Total$1,490  $615  $454  $2,559  
Cost-reimbursement and fixed-price-incentive-fee contracts are generally lower risk and have lower profits. Time-and-materials ("T&M") and fixed-price-level-of-effort contracts are also lower risk but profits may vary depending on actual labor costs compared to negotiated contract billing rates. Firm-fixed-price ("FFP") contracts offer the potential for higher profits while increasing the exposure to risk of cost overruns.
Disaggregated revenues by geographic location were as follows:
Three Months Ended April 3, 2020
Defense SolutionsCivilHealthTotal
(in millions)
United States
$1,513  $619  $527  $2,659  
International
192  13  —  205  
Total$1,705  $632  $527  $2,864  

Three Months Ended March 29, 2019
Defense SolutionsCivilHealthTotal
(in millions)
United States
$1,304  $599  $454  $2,357  
International
186  16  —  202  
Total$1,490  $615  $454  $2,559  
Our international business operations, primarily located in Australia and the U.K., are subject to additional and different risks than our U.S. business. Failure to comply with U.S. government laws and regulations applicable to international business, such as the Foreign Corrupt Practices Act or U.S. export control regulations, could have an adverse impact on our business with the U.S. government.
In some countries, there is an increased chance for economic, legal or political changes that may adversely affect the performance of our services, sales of products or repatriation of profits. International transactions can also involve increased financial and legal risks arising from foreign exchange variability, imposition of tariffs or additional taxes and restrictive trade policies and delays or failure to collect amounts due to differing legal systems.
Revenues by customer-type, contract-type and geographic location exclude $25 million and $18 million of lease income for the three months ended April 3, 2020 and March 29, 2019, respectively (see "Note 6–Leases").
Note 3–Contract Assets and Liabilities
Performance obligations are satisfied either over time as work progresses or at a point in time. FFP contracts are typically billed to the customer using milestone payments while cost-reimbursable and T&M contracts are typically billed to the customer on a monthly or bi-weekly basis as indicated by the negotiated billing terms and conditions of the contract. As a result, the timing of revenue recognition, customer billings and cash collections for each contract results in a net contract asset or liability at the end of each reporting period.
Contract assets consist of unbilled receivables, which is the amount of revenue recognized that exceeds the amount billed to the customer, where right to payment is not just subject to the passage of time. Contract liabilities consist of deferred revenue.
The components of contract assets and contract liabilities consisted of the following:
Balance sheet line itemApril 3,
2020
January 3,
2020
(in millions)
Contract assets - current:
Unbilled receivables(1)
Receivables, net  $718  $735  
Contract liabilities - current:
Deferred revenue
Accounts payable and accrued liabilities$420  $400  
Contract liabilities - non-current:
Deferred revenueOther long-term liabilities  $ $ 
(1) Balances exclude $572 million determined to be billable at April 3, 2020, and January 3, 2020.
The decrease in unbilled receivables was primarily due to the timing of revenue recognized on certain contracts. The increase in deferred revenue was primarily due to the timing of advance payments from customers offset by revenue recognized during the period.
Revenue recognized for the three months ended April 3, 2020 of $145 million was included as a contract liability at January 3, 2020. Revenue recognized for the three months ended March 29, 2019 of $113 million was included as a contract liability at December 28, 2018.