Goodwill and Intangible Assets

Note 8—Goodwill and Intangible Assets

During fiscal 2024, the Company completed a business realignment, which resulted in identification of new reportable segments. The Company commenced operating and reporting under the new organizational structure effective the first day of fiscal 2024 (see "Note 20—Business Segments").

Goodwill was allocated to the new reporting units within our reportable segments based on a relative fair value approach.

The following table presents changes in the carrying amount of goodwill by reportable segment:


(in millions)	National Security & Digital		Health & Civil		Commercial & International		Defense Systems		Total
Goodwill at December 30, 2022	$	2,755	$	1,366	$	1,389	$	1,186	$	6,696
Goodwill impairment	—		—		(596)		—		(596)
Acquisitions of businesses(1)	—		—		(4)		—		(4)
Foreign currency translation adjustments	3		—		11		2		16
Goodwill at December 29, 2023(2)	2,758		1,366		800		1,188		6,112
Foreign currency translation adjustments	—		—		(28)		—		(28)
Goodwill at January 3, 2025(2)	$	2,758	$	1,366	$	772	$	1,188	$	6,084

(1)Adjustment to goodwill resulting from a measurement period purchase accounting adjustment.

(2)Carrying amount includes accumulated impairment loss of $596 million within the Commercial & International segment.

Operations of the Security Enterprise Solutions (“SES”) reporting unit rely heavily on the sales and servicing of security and detection products, which prior to fiscal 2024, have been negatively impacted due to delays in airline travel infrastructure projects as customer budgets recover from the pandemic. During fiscal 2023, the SES reporting unit refined its portfolio and made strategic business decisions to exit certain product offerings, and cease operations in certain countries in order to align the operations of the reporting unit with its strategic business plan. These decisions, along with the delays in airline travel infrastructure projects and higher than anticipated servicing costs, contributed to a significant reduction in the reporting unit’s forecasted revenue and cash flows. As a result, in fiscal 2023, we conducted a quantitative goodwill impairment analysis and our estimates led us to determine that the carrying value of the SES reporting unit exceeded its estimated fair value (see “Note 11—Fair Value Measurements”). Accordingly, we recognized a non-cash goodwill impairment charge of $596 million at the SES reporting unit as of December 29, 2023. The impairment was recorded within the Commercial & International reportable segment in the consolidated statements of operations. In the fourth quarter of fiscal 2023, we performed a second quantitative analysis for the SES reporting unit and concluded that no incremental impairment was necessary as the fair value of the reporting unit exceeded the carrying value.

In the fourth quarter of fiscal 2024, we performed a quantitative analysis for the SES reporting unit and concluded that no further impairment was necessary as the fair value of the reporting unit exceeded the carrying value.

In the fourth quarter of fiscal 2024, 2023 and 2022, we performed a qualitative analysis for certain reporting units which determined that it was more likely than not that the fair values of these reporting units were in excess of the individual reporting units’ carrying values. In the event that there are significant unfavorable changes to the forecasted cash flows, forecasted revenue, terminal growth rates or the cost of capital used in the fair value estimates, we may be required to record an additional impairment of goodwill at a future date.

Intangible assets, net consisted of the following:


	January 3, 2025						December 29, 2023
(in millions)	Gross carrying value		Accumulated amortization		Net carrying value		Gross carrying value		Accumulated amortization		Net carrying value
Finite-lived intangible assets:
Programs	$	1,686	$	(1,293)	$	393	$	1,689	$	(1,175)	$	514
Software and technology	261		(165)		96		263		(144)		119
Customer relationships	52		(28)		24		52		(22)		30

Total finite-lived intangible assets	1,999		(1,486)		513		2,004		(1,341)		663
Indefinite-lived intangible assets:

Trade names	4		—		4		4		—		4

Total intangible assets	$	2,003	$	(1,486)	$	517	$	2,008	$	(1,341)	$	667

Our strategic decisions regarding SES’ product offerings and operating regions (see the goodwill discussion above) caused certain technology, customer relationships and in-process research and development ("IPR&D") intangible assets to be abandoned and the carrying values of certain program intangible assets to become unrecoverable. As a result, we recognized intangible asset impairment charges of $79 million for fiscal 2023, which included $33 million for IPR&D intangible assets. The impairment was recorded to “Asset impairment charges” in the consolidated statements of operations within the Commercial & International reportable segment. In the event that we are required to make an additional impairment of goodwill at a future date or if other events occur that negatively impact these intangible assets, we may also be required to record an additional impairment of intangible assets at that time.

Amortization expense related to intangible assets was $147 million, $202 million and $230 million for fiscal 2024, 2023 and 2022, respectively.

The estimated annual amortization expense related to finite-lived intangible assets as of January 3, 2025, is as follows:


Fiscal year ending (in millions)
2025	$	119
2026	98
2027	72
2028	62
2029	53
2030 and thereafter	109
	$	513

Actual amortization expense in future periods could differ from these estimates as a result of future acquisitions, divestitures, impairments and other factors.