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BUSINESS SEGMENTS INFORMATION | 9 Months Ended
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Sep. 25, 2016
BUSINESS SEGMENTS INFORMATION | NOTE 5 – BUSINESS SEGMENTS INFORMATION We operate in four business segments: Aeronautics, Missiles and Fire Control (MFC), RMS and Space Systems. We organize our business segments based on the nature of the products and services offered. Net sales of our business segments exclude intersegment sales as these activities are eliminated in consolidation. Operating profit of our business segments includes our share of earnings or losses from equity method investees as the operating activities of the equity method investees are closely aligned with the operations of our business segments. United Launch Alliance (ULA), which is part of our Space Systems business segment, is our primary equity method investee. Operating profit of our business segments excludes the FAS/CAS pension adjustment described below; expense for stock-based compensation; the effects of items not considered part of management’s evaluation of segment operating performance, such as charges related to goodwill impairments and significant severance actions; gains or losses from divestitures not reflected in discontinued operations; the effects of certain legal settlements; corporate costs not allocated to our business segments; and other miscellaneous corporate activities. These items are included in the reconciling item “Unallocated items” between operating profit from our business segments and our consolidated operating profit. See Note 10 (under the caption “Changes in Estimates”) for a discussion related to certain factors that may impact the comparability of net sales and operating profit of our business segments. Our business segments’ results of operations include pension expense only as calculated under U.S. Government Cost Accounting Standards (CAS), which we refer to as CAS pension cost. We recover CAS pension cost through the pricing of our products and services on U.S. Government contracts and, therefore, the CAS pension cost is recognized in each of our business segments’ net sales and cost of sales. Since our consolidated financial statements must present pension expense calculated in accordance with the financial accounting standards (FAS) requirements under GAAP, which we refer to as FAS pension expense, the FAS/CAS pension adjustment increases or decreases the CAS pension cost recorded in our business segments’ results of operations to equal the FAS pension expense. Summary operating results for each of our business segments were as follows (in millions):
|  | Quarters Ended |  |  | Nine Months Ended |
|  | September 25, 2016 |  |  | September 27, 2015 |  |  | September 25, 2016 |  |  | September 27, 2015 |
Net sales |  |  |  |  |  |  |  |  |  |  |  |
Aeronautics |  | $ | 4,188 |  |  | $ | 3,921 |  |  | $ | 12,362 |  |  | $ | 11,186 |
Missiles and Fire Control |  |  | 1,737 |  |  |  | 1,769 |  |  |  | 4,851 |  |  |  | 4,801 |
Rotary and Mission Systems |  |  | 3,346 |  |  |  | 2,162 |  |  |  | 9,653 |  |  |  | 6,306 |
Space Systems |  |  | 2,280 |  |  |  | 2,208 |  |  |  | 6,630 |  |  |  | 6,723 |
Total net sales |  | $ | 11,551 |  |  | $ | 10,060 |  |  | $ | 33,496 |  |  | $ | 29,016 |
Operating profit |  |  |  |  |  |  |  |  |  |  |  |
Aeronautics |  | $ | 437 |  |  | $ | 418 |  |  | $ | 1,335 |  |  | $ | 1,233 |
Missiles and Fire Control |  |  | 289 |  |  |  | 316 |  |  |  | 763 |  |  |  | 895 |
Rotary and Mission Systems |  |  | 247 |  |  |  | 245 |  |  |  | 678 |  |  |  | 687 |
Space Systems |  |  | 450 |  |  |  | 265 |  |  |  | 1,034 |  |  |  | 883 |
Total business segment operating profit |  |  | 1,423 |  |  |  | 1,244 |  |  |  | 3,810 |  |  |  | 3,698 |
Unallocated items |  |  |  |  |  |  |  |  |  |  |  |
FAS pension expense (a) |  |  | (256) |  |  |  | (280) |  |  |  | (758) |  |  |  | (841) |
Less: CAS pension cost (a) |  |  | 482 |  |  |  | 382 |  |  |  | 1,430 |  |  |  | 1,146 |
FAS/CAS pension adjustment (a) |  |  | 226 |  |  |  | 102 |  |  |  | 672 |  |  |  | 305 |
Stock-based compensation |  |  | (28) |  |  |  | (27) |  |  |  | (124) |  |  |  | (112) |
Severance charges |  |  | — |  |  |  | (15) |  |  |  | (80) |  |  |  | (15) |
Other, net |  |  | (33) |  |  |  | (112) |  |  |  | (157) |  |  |  | (264) |
Total unallocated items |  |  | 165 |  |  |  | (52) |  |  |  | 311 |  |  |  | (86) |
Total consolidated operating profit |  | $ | 1,588 |  |  | $ | 1,192 |  |  | $ | 4,121 |  |  | $ | 3,612 |
Intersegment sales |  |  |  |  |  |  |  |  |  |  |  |
Aeronautics |  | $ | 30 |  |  | $ | 22 |  |  | $ | 105 |  |  | $ | 68 |
Missiles and Fire Control |  |  | 81 |  |  |  | 86 |  |  |  | 225 |  |  |  | 241 |
Rotary and Mission Systems |  |  | 469 |  |  |  | 364 |  |  |  | 1,382 |  |  |  | 1,066 |
Space Systems |  |  | 21 |  |  |  | 39 |  |  |  | 90 |  |  |  | 108 |
Total intersegment sales |  | $ | 601 |  |  | $ | 511 |  |  | $ | 1,802 |  |  | $ | 1,483 |
(a) | FAS pension expense and CAS pension costs reflect the reclassification for discontinued operations presentation of benefits related to former IS&GS salaried employees (See Note 7).
Total assets for each of our business segments were as follows (in millions):
|  | September 25, 2016 |  |  | December 31, 2015 |
Assets |  |  |  |  |  |  |  |
Aeronautics |  | $ | 8,012 |  |  | $ | 6,618 |
Missiles and Fire Control |  |  | 3,950 |  |  |  | 4,027 |
Rotary and Mission Systems |  |  | 18,978 |  |  |  | 19,187 |
Space Systems |  |  | 5,396 |  |  |  | 4,861 |
Total business segment assets |  |  | 36,336 |  |  |  | 34,693 |
Assets of discontinued operations |  |  | — |  |  |  | 4,130 |
Corporate assets (a) |  |  | 12,403 |  |  |  | 10,481 |
Total assets |  | $ | 48,739 |  |  | $ | 49,304 |
(a) | Corporate assets primarily include cash and cash equivalents, deferred income taxes, environmental receivables and investments held in a separate trust to fund certain of our non-qualified deferred compensation plans.
Our Aeronautics business segment includes our largest program, the F-35 Lightning II Joint Strike Fighter, an international multi-role, multi-variant, stealth fighter aircraft. Net sales for the F-35 program represented approximately 23% of our total consolidated net sales from continuing operations for both the quarter and nine months ended September 25, 2016 and 23% of our total consolidated net sales from continuing operations for both the quarter and nine months ended September 27, 2015.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599 + Details
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