Business Segments (Tables)

6 Months Ended

Jan. 01, 2016

Business Segments (Tables) [Abstract]

Summary of total assets by business segment

Total assets by business segment are summarized below:

	January 1,		July 3,
	2016		2015

	(In millions)
Total Assets
Communication Systems	$	1,722	$	1,906
Space and Intelligence Systems		2,078		2,096
Electronic Systems		2,511		2,513
Critical Networks		2,999		3,492
Corporate ⁽¹⁾		2,787		3,120
	$	12,097	$	13,127
_____________

(1) Because the acquisition of Exelis in the fourth quarter of fiscal 2015 benefited the entire Company as opposed to any individual segments, the approximately $1.6 billion of identifiable intangible assets acquired in the Exelis acquisition was recorded as Corporate assets.

Revenue and income from continuing operations before income taxes by segment

Segment revenue, segment operating income (loss) and a reconciliation of segment operating income (loss) to total income (loss) from continuing operations before income taxes follow:

		Quarter Ended				Two Quarters Ended
		January 1,		January 2,		January 1,		January 2,
		2016		2015		2016		2015

		(In millions)
Revenue
Communication Systems		$	489	$	435	$	943	$	824
Space and Intelligence Systems			446		221		881		474
Electronic Systems			382		128		756		237
Critical Networks			541		423		1,107		830
Corporate eliminations			(15)		(1)		(33)		(4)
		$	1,843	$	1,206	$	3,654	$	2,361
Income (Loss) From Continuing Operations Before Income Taxes
Segment Operating Income (Loss):
	Communication Systems⁽¹⁾		121	$	126	$	259	$	242
	Space and Intelligence Systems		67		34		135		71
	Electronic Systems		63		24		132		46
	Critical Networks ⁽²⁾		(308)		50		(245)		92
Unallocated corporate income (expense) ⁽³⁾			14		(21)		(61)		(38)
Corporate eliminations			(1)		(3)		(2)		(5)
Non-operating income			―		―		1		―
Net interest expense			(45)		(21)		(92)		(43)
		$	(89)	$	189	$	127	$	365
____________

(1) Communication Systems operating income included $17 million of charges in the quarter and two quarters ended January 1, 2016, primarily related to workforce reductions, facility consolidation and other items. We recorded $14 million of these charges in the “Cost of product sales and services” line item and the remaining $3 million of these charges in the “Engineering, selling and administrative expenses” line item in the accompanying Condensed Consolidated Statement of Income (Unaudited).

(2) Critical Networks operating loss in the quarter and two quarters ended January 1, 2016 included a preliminary estimate of $367 million for a non-cash impairment charge to write down goodwill and other assets related to Harris CapRock Communications. We recorded this charge in the “Impairment of goodwill and other assets” line item in the accompanying Condensed Consolidated Statement of Income (Unaudited). Additionally, operating loss included $12 million of charges in the quarter and two quarters ended January 1, 2016, primarily related to workforce reductions and facility consolidation. We recorded these charges in the “Engineering, selling and administrative expenses” line item in the accompanying Condensed Consolidated Statement of Income (Unaudited).

(3) Unallocated corporate income (expense) included: (i) the impact of a net liability reduction of $101 million in the quarter and two quarters ended January 1, 2016 for certain post-employment benefit plans, (ii) charges of $46 million and $69 million in the quarter and two quarters ended January 1, 2016, respectively, for integration and other costs associated with our acquisition of Exelis in the fourth quarter of fiscal 2015, and (iii) $33 million and $66 million of expense in the quarter and two quarters ended January 1, 2016, respectively, for amortization of intangible assets acquired as a result of our acquisition of Exelis. Because the acquisition of Exelis benefited the entire Company as opposed to any individual segments, the amortization of identifiable intangible assets acquired in the Exelis acquisition was recorded as unallocated corporate expense.