BACKLOG

9 Months Ended

Sep. 27, 2024

Revenue from Contract with Customer [Abstract]

BACKLOG

NOTE C: CONTRACT ASSETS AND CONTRACT LIABILITIES

Contract assets mainly represent unbilled amounts typically resulting from revenue recognized exceeding amounts billed to customers for contracts utilizing the percentage of completion (“POC”) cost-to-cost revenue recognition method. Contract assets become receivables as we bill customers as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, upon achievement of contractual milestones or upon deliveries and, in certain arrangements, the customer may withhold payment of a small portion of the contract price until contract completion. Contract liabilities include advance payments and billings in excess of revenue recognized, including deferred revenue associated with extended product warranties. Contract assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period.

Contract assets and contract liabilities are summarized below:

(In millions)	September 27, 2024		December 29, 2023
Contract assets	$	3,401	$	3,196
Contract liabilities, current	(1,878)		(1,900)
Contract liabilities, non-current(1)	(93)		(94)
Net contract assets	$	1,430	$	1,202

_______________

(1)The non-current portion of contract liabilities is included as a component of the “Other long-term liabilities” line item in our Condensed Consolidated Balance Sheet.

There were no significant credit or impairment losses related to our contract assets during the quarter and three quarters ended September 27, 2024 or the quarter and three quarters ended September 29, 2023. Revenue recognized related to contract liabilities that were outstanding at the end of the respective prior fiscal year were $193 million and $1,241 million for the quarter and three quarters ended September 27, 2024, respectively, and $223 million and $1,121 million for the quarter and three quarters ended September 29, 2023, respectively.

NOTE M: BACKLOG

Backlog, which is the equivalent of our remaining performance obligations, represents the future revenue we expect to recognize as we perform on our current contracts. Backlog comprises both funded backlog (i.e., firm orders for which funding is authorized and appropriated) and unfunded backlog. Backlog excludes unexercised contract options and potential orders under ordering-type contracts, such as indefinite-delivery, indefinite-quantity contracts.

At September 27, 2024, our ending backlog was $33.8 billion. We expect to recognize approximately 45% of the revenue associated with this backlog over the next twelve months and an additional 25% over the following twelve months, with the remainder to be recognized thereafter.