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BUSINESS SEGMENTS
 12 Months Ended
Dec. 31, 2021
Segment Reporting [Abstract]  
BUSINESS SEGMENTS
NOTE 24: BUSINESS SEGMENTS
We structure our operations primarily around the products, systems and services we sell and the markets we serve, and in fiscal 2021 we reported the financial results of our continuing operations in the following four operating segments, which were also our reportable segments and are referred to as our business segments:
•Integrated Mission Systems, including multi-mission ISR and communication systems; integrated electrical and electronic systems for maritime platforms; and advanced electro-optical and infrared (“EO/IR”) solutions;
•Space & Airborne Systems, including space payloads, sensors and full-mission solutions; classified intelligence and cyber defense; avionics; and electronic warfare;
•Communication Systems, including tactical communications; broadband communications; integrated vision solutions; and public safety radios; global communications solutions and
•Aviation Systems, including defense aviation; commercial aviation products; commercial pilot training; and mission networks for air traffic management.
During the first quarter of fiscal 2020, we adjusted our segment reporting to better align our businesses and transferred two businesses between our Integrated Mission Systems and Space & Airborne Systems segments. The historical results, discussion and presentation of our business segments as set forth in our Consolidated Financial Statements and these Notes reflect the impact of these adjustments to our segment reporting for all periods presented in order to present the segment information on a comparable basis. There is no impact on our previously reported consolidated statements of income, balance sheets, statements of cash flows or statements of equity resulting from these adjustments.
Effective January 1, 2022, we have streamlined our business segments from four business segments to three business segments. As a result of the segment reorganization, the Aviation Systems segment was eliminated as a business segment effective for the beginning of fiscal 2022. See Note 27: Subsequent Events for further information relating to our fiscal 2022 segment reorganization.
See Note 3: Business Divestitures and Asset Sales and elsewhere in these Notes for information relating to businesses divested in fiscal 2021, fiscal 2020 and the two quarters ended January 3, 2020.
Segment revenue, segment operating income (loss) and a reconciliation of segment operating income to total income from continuing operations before income taxes are as follows:
Fiscal Years EndedTwo Quarters EndedFiscal Year Ended
(In millions)December 31, 2021January 1, 2021January 3, 2020June 28, 2019
Revenue
Integrated Mission Systems$5,839 $5,538 $2,758 $52 
Space & Airborne Systems5,093 4,946 2,377 3,711 
Communication Systems4,287 4,443 2,151 2,208 
Aviation Systems2,783 3,448 2,038 672 
Other non-reportable businesses(1)
— — 23 165 
Corporate eliminations(188)(181)(84)(7)
Total Revenue$17,814 $18,194 $9,263 $6,801 
Income from Continuing Operations before Income Taxes
Segment Operating Income (Loss):
Integrated Mission Systems$950 $847 $371 $10 
Space & Airborne Systems970 932 447 696 
Communication Systems1,092 1,084 493 637 
Aviation Systems330 (177)289 76 
Other non-reportable businesses(1)
— — — 27 
3,342 2,686 1,600 1,446 
Unallocated Items:
Unallocated corporate department expense, net(57)(69)3 (2)
L3Harris Merger-related transaction, integration and other expenses and losses
(128)(140)(390)(65)
Amortization of acquisition-related intangibles(2)
(627)(709)(289)(101)
Additional cost of sales related to fair value step-up in inventory sold— (31)(142)— 
Business divestiture-related gains (losses)220 (51)229 — 
Impairment of goodwill and other assets(3)
(125)(132)— — 
Other items (71)10 — — 
(788)(1,122)(589)(168)
Pension adjustment(445)(389)(172)(186)
Non-operating income439 401 192 188 
Net interest expense(265)(254)(123)(167)
Total income from continuing operations before income taxes$2,283 $1,322 $908 $1,113 
_______________
(1)Includes the operating results of the Harris Night Vision business prior to the date of divestiture on September 13, 2019. See Note 3: Business Divestitures and Asset Sales in these Notes for more information.
(2)Includes amortization of identifiable intangible assets acquired as a result of the L3Harris Merger and the acquisition of Exelis. Because the L3Harris Merger and the acquisition of Exelis benefited the entire Company as opposed to any individual segment, the amortization of identifiable intangible assets acquired was not allocated to any segment.
(3)For fiscal 2021 includes: (i) a $62 million non-cash goodwill impairment charge related to our CPS business and (ii) a $63 million non-cash intangible asset impairment charge related to our CTS reporting unit. For fiscal 2020 includes: (i) a $113 million non-cash intangible asset impairment charge related to our CAS reporting unit and (ii) a $14 million non-cash goodwill impairment charge related to the then-potential divestiture of VSE disposal group, as well as a $5 million non-cash goodwill impairment charge related to the divestiture of the Applied Kilovolts business. See Note 9: Goodwill and Note 10: Intangible Assets in these Notes for additional information.
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.
Integrated Mission Systems: Integrated Mission 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 revenue recognition method.
Fiscal Years EndedTwo Quarters EndedFiscal Year Ended
(In millions)December 31, 2021January 1, 2021January 3, 2020June 28, 2019
Revenue By Customer Relationship
Prime contractor$4,044 $3,721 $1,893 $27 
Subcontractor1,727 1,764 847 25 
Intersegment68 53 18 — 
$5,839 $5,538 $2,758 $52 
Revenue By Contract Type
Fixed-price(1)
$4,467 $4,172 $2,115 $52 
Cost-reimbursable1,304 1,313 625 — 
Intersegment68 53 18 — 
$5,839 $5,538 $2,758 $52 
Revenue By Geographical Region
United States$4,115 $4,338 $2,120 $30 
International1,656 1,147 620 22 
Intersegment68 53 18 — 
$5,839 $5,538 $2,758 $52 
_______________
(1)Includes revenue derived from time-and-materials contracts.
Space & Airborne Systems: Space & Airborne 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 revenue recognition method.
Fiscal Years EndedTwo Quarters EndedFiscal Year Ended
(In millions)December 31, 2021January 1, 2021January 3, 2020June 28, 2019
Revenue By Customer Relationship
Prime contractor$2,925 $2,684 $1,349 $2,244 
Subcontractor2,157 2,247 1,023 1,439 
Intersegment11 15 5 28 
$5,093 $4,946 $2,377 $3,711 
Revenue By Contract Type
Fixed-price(1)
$2,921 $2,834 $1,380 $2,066 
Cost-reimbursable2,161 2,097 992 1,617 
Intersegment11 15 5 28 
$5,093 $4,946 $2,377 $3,711 
Revenue By Geographical Region
United States$4,417 $4,180 $2,038 $3,252 
International665 751 334 431 
Intersegment11 15 5 28 
$5,093 $4,946 $2,377 $3,711 
_______________
(1)Includes revenue derived from time-and-materials contracts.
Communication Systems: Communication Systems revenue was primarily derived from fixed-price contracts and was generally recognized at the point in time when products were received and accepted by the customer for standard products offered to multiple customers and over time for customer-specific products, systems and services.
Fiscal Years EndedTwo Quarters EndedFiscal Year Ended
(In millions)December 31, 2021January 1, 2021January 3, 2020June 28, 2019
Revenue By Customer Relationship(1)
Prime contractor$2,886 $3,102 $1,406 
Subcontractor1,347 1,304 729 
Intersegment54 37 16 
$4,287 $4,443 $2,151 
Revenue By Contract Type(1)
Fixed-price(2)
$3,631 $3,784 $1,840 
Cost-reimbursable602 622 295 
Intersegment54 37 16 
$4,287 $4,443 $2,151 
Revenue By Geographical Region
United States$3,001 $3,181 $1,507 $1,280 
International1,232 1,225 628 927 
Intersegment54 37 16 1 
$4,287 $4,443 $2,151 $2,208 
_______________
(1)Prior to the L3Harris Merger, Communication Systems did not recognize significant revenue for customer-specific products and systems, and currently, such customer arrangements primarily exist at operating businesses acquired in connection with the L3Harris Merger. The “Revenue by Customer Relationship” and “Revenue by Contract Type” disaggregation categories were added beginning in the Fiscal Transition Period to best depict how the nature, amount, timing and uncertainty of revenue and cash flows from these types of customer arrangements are affected by economic factors.
(2)Includes revenue derived from time-and-materials contracts.
Aviation Systems: Aviation Systems revenue was primarily derived from fixed-price contracts and was generally recognized at the point in time when products were received and accepted by the customer for standard products offered to multiple customers and over time for customer-specific products, systems and services.
Fiscal Years EndedTwo Quarters EndedFiscal Year Ended
(In millions)December 31, 2021January 1, 2021January 3, 2020June 28, 2019
Revenue By Customer Relationship
Prime contractor$1,808 $2,258 $1,245 $654 
Subcontractor920 1,114 748 14 
Intersegment55 76 45 4 
$2,783 $3,448 $2,038 $672 
Revenue By Contract Type
Fixed-price(1)
$2,199 $2,750 $1,664 $583 
Cost-reimbursable529 622 329 85 
Intersegment55 76 45 4 
$2,783 $3,448 $2,038 $672 
Revenue By Geographical Region
United States$2,329 $2,769 $1,472 $640 
International399 603 521 28 
Intersegment55 76 45 4 
$2,783 $3,448 $2,038 $672 
______________
(1)Includes revenue derived from time-and-materials contracts.
Total assets by business segment are as follows:
(In millions)December 31, 2021January 1, 2021
Total Assets
Integrated Mission Systems$9,269 $8,906 
Space & Airborne Systems7,190 6,943 
Communication Systems6,035 5,746 
Aviation Systems3,531 5,026 
Corporate(1)
8,684 10,339 
$34,709 $36,960 
_______________
(1)Identifiable intangible assets acquired in connection with the L3Harris Merger in the two quarters ended January 3, 2020 and our acquisition of Exelis in fiscal 2015 were recorded as Corporate assets because they benefited the entire Company as opposed to any individual segment. Identifiable intangible asset balances recorded as Corporate assets were $6.6 billion and $7.9 billion at December 31, 2021 and January 1, 2021, respectively. Corporate assets also consisted of cash, income taxes receivable, deferred income taxes, deferred compensation plan investments, buildings and equipment, as well as any assets of discontinued operations and divestitures.
Other selected financial information by business segment and geographical area is summarized below:
Fiscal Years EndedTwo Quarters EndedFiscal Year Ended
(In millions)December 31, 2021January 1, 2021January 3, 2020June 28, 2019
Capital Expenditures
Integrated Mission Systems$64 $67 $29 $1 
Space & Airborne Systems101 92 36 48 
Communication Systems56 58 22 29 
Aviation Systems63 87 64 54 
Other non-reportable businesses(1)
— — — 6 
Corporate58 64 22 23 
$342 $368 $173 $161 
Depreciation and Amortization
Integrated Mission Systems$74 $70 $37 $2 
Space & Airborne Systems69 66 31 50 
Communication Systems49 61 32 49 
Aviation Systems66 103 53 29 
Other non-reportable businesses(1)
— — — 3 
Corporate709 732 289 125 
$967 $1,032 $442 $258 
Geographical Information for Continuing Operations
U.S. operations:
Revenue$16,234 $16,998 $8,485 $6,530 
Long-lived assets(2)
$1,870 $1,949 $1,865 $866 
International operations:
Revenue$1,580 $1,196 $778 $271 
Long-lived assets(2)
$231 $153 $252 $28 
_______________
(1)Includes capital expenditures and depreciation and amortization of the Harris Night Vision business prior to the date of divestiture on September 13, 2019. See Note 3: Business Divestitures and Asset Sales in these Notes for more information.
(2)Long-lived assets are net fixed assets attributed to the respective geographic regions.
In addition to depreciation and amortization expense related to property, plant and equipment, “Depreciation and Amortization” in the table above also includes $624 million, $714 million, $285 million and $120 million of amortization related to identifiable intangible assets, debt premium, debt discount, debt issuance costs and other items in fiscal 2021, fiscal 2020, the two quarters ended January 3, 2020 and fiscal 2019, 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 in fiscal 2021 or 2020, the two quarters ended January 3, 2020, or fiscal 2019.
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 75 percent, 78 percent, 73 percent and 77 percent in fiscal 2021, fiscal 2020, the two quarters ended January 3, 2020 and fiscal 2019, respectively. Revenue from services in fiscal 2021 was 36 percent, 16 percent, 16 percent and 40 percent of total revenue in our Integrated Mission Systems, Space & Airborne Systems, Communication Systems and Aviation 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 $3.9 billion (22 percent of our revenue), $3.7 billion (20 percent of our revenue), $2.0 billion (21 percent of our revenue) and $1.5 billion (22 percent of our revenue) in fiscal 2021, fiscal 2020, the two quarters ended January 3, 2020 and fiscal 2019, respectively. Export revenue and revenue from international operations in fiscal 2021 was principally from the EMEA (Europe, Middle East and Africa) and APAC (Asia-Pacific) regions and Canada.