CHANGES IN ESTIMATES

3 Months Ended

Mar. 28, 2025

Change in Accounting Estimate [Abstract]

NOTE L: CHANGES IN ESTIMATES

Many of our contracts utilize the POC cost-to-cost method of revenue recognition. A single estimated profit margin is used to recognize profit for each performance obligation over its period of performance. At the outset of each contract, we gauge its complexity and perceived risks and establish an estimated total cost at completion in line with those expectations. Due to the long-term nature of many of these contracts, developing the estimated total cost at completion and total transaction price often requires judgment. After establishing the estimated total cost at completion, we follow a standard estimate at completion (“EAC”) process in which we review the progress and performance on our ongoing contracts. As the contracts progress, we may successfully retire risks or complexities and may add additional risks, and we adjust our estimated total cost at completion accordingly. For additional discussion of our revenue recognition policies and our EAC process, see “Critical Accounting Estimates” in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Fiscal 2024 Form 10-K.

Net EAC adjustments had the following impact to earnings:


	First Quarter
(In millions, except per share amounts)	2025		2024

Net EAC adjustments, before income taxes	$	(21)	$	19
Net EAC adjustments, net of income taxes	(16)		15
Net EAC adjustments, net of income taxes, per diluted share	(0.08)		0.08

Revenue recognized from performance obligations satisfied (or partially satisfied) in prior periods was $37 million and $53 million for first quarter 2025 and 2024, respectively.