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BUSINESS SEGMENT INFORMATION
 3 Months Ended
Mar. 28, 2025
Segment Reporting [Abstract]  
BUSINESS SEGMENT INFORMATION
NOTE O: BUSINESS SEGMENT INFORMATION
We structure our operations primarily around the products, systems and services we sell and the markets we serve and report our financial results in four reportable segments: CS, IMS, SAS and AR.
Business Realignment. Effective in first quarter 2025, to better align our businesses, we transferred our FOS business from our IMS segment to our AR segment and adjusted our reporting accordingly. See Note A: Basis of Presentation and Note E: Goodwill and Intangible Assets in these Notes for further information.
Business Segment Financial Information
Segment revenue, segment operating income and a reconciliation of segment operating income to total income before income taxes were as follows:
 First Quarter
(Dollars in millions)20252024
 
Revenue
CS$1,352 $1,294 
IMS1,592 1,627 
SAS1,611 1,751 
AR629 584 
Other (1)
(52)(45)
Total revenue5,132 5,211 
Cost of revenue
CS$(856)$(837)
IMS(1,204)(1,248)
SAS(1,281)(1,366)
AR(489)(443)
Other (1)
48 31 
Total cost of revenue(3,782)(3,863)
Other segment costs (2)
CS$(151)$(147)
IMS(185)(194)
SAS(154)(169)
AR(64)(64)
Other (1)
4 14 
Total other segment costs (2)
(550)(560)
Operating income
CS$345 $310 
IMS203 185 
SAS176 216 
AR76 77 
Unallocated corporate expenses(275)(410)
Total operating income525 378 
Non-service FAS pension income and other, net84 88 
Interest expense, net(150)(176)
Income before income taxes$459 $290 
_____________
(1)     Includes corporate headquarters and intersegment eliminations.
(2)    Other segment costs consist of company-funded R&D costs, selling and marketing costs and other General and Administrative (“G&A”) expenses, which include a portion of depreciation and amortization expenses that are disclosed by segment under the “Disaggregation of Revenue” heading below in this Note.
Unallocated Corporate Expenses. Total unallocated corporate expenses include corporate items such as a portion of management and administration, legal, environmental, compensation, retiree benefits, other corporate expenses and eliminations and the FAS/Cost Accounting Standards (“CAS”) operating adjustment. Total unallocated corporate expenses also include the portion of corporate costs not included in management’s evaluation of segment operating performance, such as amortization of acquisition-related intangibles; additional cost of revenue related to the fair value step-up in inventory sold; merger, acquisition, and divestiture-related expenses; business divestiture-losses and any related impairment of goodwill; impairment of other assets; LHX NeXt implementation costs; and other items.
LHX NeXt Initiative. LHX NeXt is our initiative to transform multiple functions, systems and processes to increase agility and competitiveness. The LHX NeXt effort is expected to continue through 2026 with non-recurring costs for workforce optimization, incremental information technology (“IT”) expenses for implementation of new systems, third party consulting and other costs.
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.
First Quarter
20252024
(In millions)CSIMSSASARCSIMSSASAR
Revenue By Customer Relationship
Prime contractor$995 $1,049 $1,008 $139 $913 $1,056 $1,108 $163 
Subcontractor(1)
345 530 586 480 367 560 628 416 
Intersegment12 13 17 10 14 11 15 5 
Total segment$1,352 $1,592 $1,611 $629 $1,294 $1,627 $1,751 $584 
Revenue By Contract Type
Fixed-price(2)
$1,161 $1,255 $994 $392 $1,065 $1,245 $1,108 $335 
Cost-reimbursable179 324 600 227 215 371 628 244 
Intersegment12 13 17 10 14 11 15 5 
Total segment$1,352 $1,592 $1,611 $629 $1,294 $1,627 $1,751 $584 
Revenue By Geographical Region
United States$844 $1,147 $1,376 $609 $925 $1,166 $1,507 $564 
International496 432 218 10 355 450 229 15 
Intersegment12 13 17 10 14 11 15 5 
Total segment$1,352 $1,592 $1,611 $629 $1,294 $1,627 $1,751 $584 
_______________
(1)     Includes products and services to contractors whose customers are the end user.
(2)     Includes revenue derived from time-and-materials contracts.
Other selected financial information by business segment is summarized below:
First Quarter
(In millions)20252024
Capital Expenditures
CS$7 $6 
IMS20 40 
SAS19 53 
AR11 5 
Corporate2 11 
Total capital expenditures$59 $115 
Depreciation and Amortization
CS$13 $14 
IMS15 16 
SAS33 30 
AR12 9 
Corporate228 251 
Total depreciation and amortization$301 $320 
Assets by Business Segment
Total assets by business segment were as follows:
(In millions)March 28, 2025January 3, 2025
CS$7,124 $7,060 
IMS9,615 10,389 
SAS9,145 8,705 
AR4,773 4,826 
Corporate(1)
10,591 11,021 
Total Assets$41,248 $42,001 
_______________
(1)Includes intangible assets acquired in connection with business combinations that benefit the entire Company of $7,448 million and $7,639 million as of March 28, 2025 and January 3, 2025, respectively. Corporate assets also include cash, income taxes receivable, deferred income taxes, deferred compensation plan assets, buildings and equipment and real estate held for development and leasing.