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DIVESTITURES
 3 Months Ended
Apr. 03, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
DIVESTITURES
NOTE N: DIVESTITURES
Space Technology Disposal Group
During fourth quarter 2025, we entered into an agreement with AE Industrial Partners (“AE Industrial”) to establish a new space technology company (“Space Technology disposal group”). Under the agreement we will contribute certain assets and liabilities of the Space Propulsion and Power Systems sector (“SPPS business”) and the Space Avionics & Communications division (“SA&C business”), both reported in our MSL segment, to a new entity in which we will retain approximately 40% noncontrolling interest. The Space Technology disposal group, which excludes our RS-25 rocket engine business, provides premier propulsion, power, space flight avionics and communications systems. AE Industrial will acquire a controlling interest of approximately 60% in the new space technology company, at a net enterprise value of $825 million, subject to regulatory approvals and other customary closing conditions. The transaction is expected to close in the second half of 2026.
Upon closing, we will derecognize the assets and liabilities of the Space Technology disposal group and record an equity method investment at the fair value of our retained noncontrolling interest in the newly formed entity. Our share of earnings or losses from the equity method investment will be recognized in the “Non-service FAS pension income and other, net” line item in our Condensed Consolidated Statement of Operations, with a corresponding adjustment to the carrying value of the investment included in the “Other non-current assets” line in our Condensed Consolidated Balance Sheet.
The carrying amounts of the assets and liabilities of the Space Technology disposal group classified as held for sale in our Condensed Consolidated Balance Sheet were as follows:
(In millions)April 3, 2026January 2, 2026
Receivables, net$108 $26 
Contract assets58 94 
Inventories, net10 8 
Other current assets10 11 
Property, plant and equipment, net120 115 
Goodwill285 285 
Intangible assets, net372 373 
Other non-current assets26 26 
Valuation allowance(63)(54)
Total assets held for sale$926 $884 
Accounts payable13 9 
Contract liabilities46 59 
Compensation and benefits11 7 
Other current liabilities21 19 
Other non-current liabilities20 19 
Total liabilities held for sale$111 $113 
Income before income taxes attributable to the Space Technology disposal group was $31 million and $14 million for first quarter 2026 and 2025, respectively.
In first quarter 2026, we recorded an additional valuation allowance due to an increase in the carrying value of the disposal group and recognized a pre-tax loss of $10 million, which is incremental to the previously recorded Space Technology disposal group loss recognized in fiscal 2025. The pre-tax loss is included in the “General and administrative expenses” line item in our Condensed Consolidated Statement of Operations.
CAS Disposal Group
On March 28, 2025, we completed the sale of our CAS disposal group, which provided integrated aircraft avionics, pilot training and data analytics services for the commercial aviation industry, for cash proceeds, net of cash divested, of $831 million as of first quarter 2025. The operating results of the CAS disposal group are reported in other non-reportable businesses, within Unallocated corporate items and other, net in Note O: Business Segment Information, through the date of sale. For additional information on the CAS disposal group, see Note 13: Acquisitions and Divestitures in our Fiscal 2025 Form 10-K.