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BUSINESS SEGMENTS
 12 Months Ended
Jun. 28, 2019
Segment Reporting [Abstract]  
BUSINESS SEGMENTS
NOTE 24: BUSINESS SEGMENTS
As of June 28, 2019, we structured our operations primarily around the products, systems and services we sold and the markets we served, and we reported the financial results of our continuing operations in the following three reportable segments, which were also referred to as our business segments:
•
Communication Systems, serving markets in tactical communications and defense products, including tactical ground and airborne radio communications solutions and night vision technology, and in public safety networks;
•
Electronic Systems, providing electronic warfare, avionics, and command, control, communications, computers, intelligence, surveillance and reconnaissance solutions for defense and classified customers and mission-critical communication systems for civil and military aviation and other customers; and
•
Space and Intelligence Systems, providing intelligence, space protection, geospatial, complete Earth observation, universe exploration, positioning, navigation and timing, and environmental solutions for national security, defense, civil and commercial customers, using advanced sensors, antennas and payloads, as well as ground processing and information analytics.
 
2019
 
2018
 
2017
 
 
 
 
 
 
 
(In millions)
Revenue
 
 
 
 
 
Communication Systems
$
2,177

 
$
1,904

 
$
1,754

Electronic Systems
2,583

 
2,365

 
2,245

Space and Intelligence Systems
2,057

 
1,913

 
1,904

Corporate eliminations
(16
)
 
(14
)
 
(6
)
 
$
6,801

 
$
6,168

 
$
5,897

Income from Continuing Operations before Income Taxes
 
 
 
 
 
Segment Operating Income:
 
 
 
 
 
Communication Systems
$
654

 
$
566

 
$
514

Electronic Systems
499

 
432

 
457

Space and Intelligence Systems
359

 
331

 
314

Unallocated corporate expense and corporate eliminations(1)
(234
)
 
(225
)
 
(228
)
Pension adjustment
(186
)
 
(184
)
 
(164
)
Non-operating income(2)
188

 
156

 
166

Net interest expense
(167
)
 
(168
)
 
(170
)
Total
$
1,113

 
$
908

 
$
889

_______________
(1)
Unallocated corporate expense and corporate eliminations includes: (i) $65 million of L3Harris Merger-related transaction and integration costs in fiscal 2019, (ii) $47 million of charges related to our decision to transition and exit a commercial air-to-ground LTE radio communications line of business and other items in fiscal 2018, (iii) a $12 million non-cash adjustment for deferred compensation in fiscal 2018, (iii) $5 million and $58 million of Exelis acquisition-related and other charges in fiscal 2018 and 2017, respectively,  and (iv) $101 million in each of fiscal 2019 and 2018 and $109 million in fiscal 2017, for amortization of identifiable intangible assets acquired as a result of our acquisition of Exelis. Because the acquisition of Exelis benefited the entire Company as opposed to any individual segment, the amortization of identifiable intangible assets acquired in the Exelis acquisition was recorded as unallocated corporate expense. Corporate eliminations of intersegment profits were not material in fiscal 2019, 2018 or 2017.
(2)
Non-operating income in fiscal 2018 includes $27 million of losses and other costs related to debt refinancing. Additional information regarding non-operating income is set forth in Note 20: Non-Operating Income.

Disaggregation of Revenue
Communication Systems: Communication Systems operated principally on a “commercial” market-driven business model
through which the business segment provided ready-to-ship commercial off-the-shelf products to customers in the U.S. and
internationally. Communication Systems revenue was primarily derived from fixed-price contracts and was generally recognized at the point in time when the product is received and accepted by the customer. We disaggregated Communication Systems revenue by geographical region, as we believe this category best depicts how the nature, amount, timing and uncertainty of Communication Systems revenue and cash flows were affected by economic factors:
 
2019
 
2018
 
2017
 
 
 
 
 
 
 
(In millions)
Revenue By Geographical Region
 
 
 
 
 
United States
$
1,213

 
$
983

 
$
811

International
964

 
921

 
943

 
$
2,177

 
$
1,904

 
$
1,754



Electronic Systems: Electronic Systems revenue was primarily derived from U.S. Government development and production contracts and was generally recognized over time using the POC cost-to-cost method. We disaggregated Electronic Systems revenue by customer relationship, contract type and geographical region. We believe these categories best depict how the nature, amount, timing and uncertainty of Electronic Systems revenue and cash flows were affected by economic factors:
 
2019
 
2018
 
2017
 
 
 
 
 
 
 
(In millions)
Revenue By Customer Relationship
 
 
 
 
 
Prime contractor
$
1,671

 
$
1,670

 
$
1,653

Subcontractor
912

 
695

 
592

 
$
2,583

 
$
2,365

 
$
2,245

Revenue By Contract Type
 
 
 
 
 
Fixed-price(1)
$
2,092

 
$
1,900

 
$
1,833

Cost-reimbursable
491

 
465

 
412

 
$
2,583

 
$
2,365

 
$
2,245

Revenue By Geographical Region
 
 
 
 
 
United States
$
2,095

 
$
1,890

 
$
1,769

International
488

 
475

 
476

 
$
2,583

 
$
2,365

 
$
2,245

_______________
(1)
Includes revenue derived from time-and-materials contracts.
Space and Intelligence Systems: Space and Intelligence Systems revenue was primarily derived from U.S. Government development and production contracts and was generally recognized over time using the POC cost-to-cost method. We disaggregated Space and Intelligence Systems revenue by customer relationship, contract type and geographical region. We believe these categories best depict how the nature, amount, timing and uncertainty of Space and Intelligence Systems revenue and cash flows were affected by economic factors:
 
2019
 
2018
 
2017
 
 
 
 
 
 
 
(In millions)
Revenue By Customer Relationship
 
 
 
 
 
Prime contractor
$
1,409

 
$
1,384

 
$
1,369

Subcontractor
648

 
529

 
535

 
$
2,057

 
$
1,913

 
$
1,904

Revenue By Contract Type
 
 
 
 
 
Fixed-price(1)
$
748

 
$
544

 
$
448

Cost-reimbursable
1,309

 
1,369

 
1,456

 
$
2,057

 
$
1,913

 
$
1,904

Revenue By Geographical Region
 
 
 
 
 
United States
$
2,003

 
$
1,861

 
$
1,821

International
54

 
52

 
83

 
$
2,057

 
$
1,913

 
$
1,904

_______________
(1)
Includes revenue derived from time-and-materials contracts.
Total assets by business segment is as follows:
 
2019
 
2018
 
 
 
 
 
(In millions)
Total Assets
 
 
 
Communication Systems
$
1,565

 
$
1,567

Electronic Systems
4,188

 
4,174

Space and Intelligence Systems
2,208

 
2,193

Corporate(1)
2,156

 
1,917

 
$
10,117

 
$
9,851

_______________
(1)
Identifiable intangible assets acquired in connection with our acquisition of Exelis in the fourth quarter of fiscal 2015 were recorded as Corporate assets because they benefited the entire Company as opposed to any individual segment. Exelis identifiable intangible asset balances of continuing operations recorded as Corporate assets were approximately $869 million and $974 million as of June 28, 2019 and June 29, 2018, respectively. Corporate assets also consisted of cash, income taxes receivable, deferred income taxes, deferred compensation plan investments, buildings and equipment and identifiable intangibles, and also included any assets and liabilities from discontinued operations and divestitures. See Note 3: Discontinued Operations and Divestitures for additional information.

Other selected financial information by business segment and geographical area is summarized below:
 
2019
 
2018
 
2017
 
 
 
 
 
 
 
(In millions)
Capital Expenditures
 
 
 
 
 
Communication Systems
$
33

 
$
26

 
$
14

Electronic Systems
74

 
57

 
40

Space and Intelligence Systems
31

 
33

 
34

Corporate
23

 
20

 
27

Discontinued operations
—

 
—

 
4

 
$
161

 
$
136

 
$
119

Depreciation and Amortization
 
 
 
 
 
Communication Systems
$
50

 
$
57

 
$
64

Electronic Systems
50

 
44

 
29

Space and Intelligence Systems
33

 
36

 
37

Corporate
125

 
122

 
142

Discontinued operations
—

 
—

 
39

 
$
258

 
$
259

 
$
311

Geographical Information for Continuing Operations
 
 
 
 
 
U.S. operations:
 
 
 
 
 
Revenue
$
6,530

 
$
5,854

 
$
5,637

Long-lived assets
$
866

 
$
892

 
$
896

International operations:
 
 
 
 
 
Revenue
$
271

 
$
314

 
$
260

Long-lived assets
$
28

 
$
8

 
$
8


In addition to depreciation and amortization expense related to property, plant and equipment, “Depreciation and Amortization” in the table above also includes $120 million, $116 million and $125 million of amortization related to intangible assets, debt premium, debt discount and debt issuance costs in fiscal 2019, 2018 and 2017, respectively.
Our products and systems are produced principally in the U.S. with international revenue derived primarily from exports. No revenue earned from any individual foreign country exceeded 5 percent of our total revenue during fiscal 2019, 2018 or 2017.
Sales made to U.S. Government customers, including foreign military sales funded through the U.S. Government, whether directly or through prime contractors, by all segments as a percentage of total revenue were 77 percent, 75 percent and 74 percent in fiscal 2019, 2018 and 2017, respectively. Revenue from services in fiscal 2019 was approximately 8 percent, 28 percent and 13 percent of total revenue in our Communication Systems, Electronic Systems and Space and Intelligence Systems segments, respectively.
Revenue from products and services where the end consumer is located outside the U.S., including foreign military sales through the U.S. Government, was $1.5 billion (22 percent of our revenue), $1.4 billion (23 percent of our revenue) and $1.5 billion (25 percent of our revenue) in fiscal 2019, 2018 and 2017, respectively. Fiscal 2019 export revenue and revenue from international operations was principally from Europe, the Middle East, Asia, Australia, Canada and Africa.