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INFORMATION ON BUSINESS SEGMENTS | 9 Months Ended
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Sep. 24, 2017
Segment Reporting [Abstract] |
INFORMATION ON BUSINESS SEGMENTS | INFORMATION ON BUSINESS SEGMENTS We operate in four business segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space Systems. We organize our business segments based on the nature of the products and services offered. The financial information in the following tables excludes businesses included in discontinued operations for all periods presented and includes the results of businesses we have acquired from their respective acquisition dates (see “Note 1 – Basis of Presentation”). Net sales of our business segments exclude intersegment sales as these activities are eliminated in consolidation. Under the equity method of accounting for nonconsolidated ventures and investments, we include our share of the operating profit related to these ventures in operating profit of our business segments as the operating activities of equity method investees are closely aligned with the operations of our business segments. United Launch Alliance (ULA), results of which are included in 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 significant severance actions and certain asset impairments; gains or losses from significant divestitures; 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 – Other” (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 24, 2017 |  | September 25, 2016 |  | September 24, 2017 |  | September 25, 2016
Net sales |  |  |  |  |  |  |  |  |
Aeronautics |  | $ | 4,771 |  |  |  | $ | 4,188 |  |  |  | $ | 14,102 |  |  |  | $ | 12,362 |  |
Missiles and Fire Control |  | 1,793 |  |  |  | 1,737 |  |  |  | 4,919 |  |  |  | 4,851 |  |
Rotary and Mission Systems |  | 3,353 |  |  |  | 3,346 |  |  |  | 9,864 |  |  |  | 9,653 |  |
Space Systems |  | 2,252 |  |  |  | 2,280 |  |  |  | 7,026 |  |  |  | 6,630 |  |
Total net sales |  | $ | 12,169 |  |  |  | $ | 11,551 |  |  |  | $ | 35,911 |  |  |  | $ | 33,496 |  |
Operating profit |  |  |  |  |  |  |  |  |
Aeronautics |  | $ | 517 |  |  |  | $ | 437 |  |  |  | $ | 1,503 |  |  |  | $ | 1,335 |  |
Missiles and Fire Control |  | 270 |  |  |  | 289 |  |  |  | 757 |  |  |  | 763 |  |
Rotary and Mission Systems |  | 244 |  |  |  | 247 |  |  |  | 606 |  |  |  | 678 |  |
Space Systems (a) |  | 218 |  |  |  | 450 |  |  |  | 762 |  |  |  | 1,034 |  |
Total business segment operating profit |  | 1,249 |  |  |  | 1,423 |  |  |  | 3,628 |  |  |  | 3,810 |  |
Unallocated items |  |  |  |  |  |  |  |  |
FAS/CAS pension adjustment |  |  |  |  |  |  |  |  |
FAS pension expense |  | (342 | ) |  |  | (256 | ) |  |  | (1,030 | ) |  |  | (758 | ) |
Less: CAS pension cost |  | 562 |  |  |  | 482 |  |  |  | 1,686 |  |  |  | 1,430 |  |
FAS/CAS pension adjustment |  | 220 |  |  |  | 226 |  |  |  | 656 |  |  |  | 672 |  |
Stock-based compensation |  | (32 | ) |  |  | (28 | ) |  |  | (133 | ) |  |  | (124 | ) |
Severance charges |  | — |  |  |  | — |  |  |  | — |  |  |  | (80 | ) |
Other, net (b) (c) |  | (9 | ) |  |  | (33 | ) |  |  | (89 | ) |  |  | (157 | ) |
Total unallocated items |  | 179 |  |  |  | 165 |  |  |  | 434 |  |  |  | 311 |  |
Total consolidated operating profit |  | $ | 1,428 |  |  |  | $ | 1,588 |  |  |  | $ | 4,062 |  |  |  | $ | 4,121 |  |
Intersegment sales |  |  |  |  |  |  |  |  |
Aeronautics |  | $ | 33 |  |  |  | $ | 30 |  |  |  | $ | 98 |  |  |  | $ | 105 |  |
Missiles and Fire Control |  | 104 |  |  |  | 81 |  |  |  | 253 |  |  |  | 225 |  |
Rotary and Mission Systems |  | 452 |  |  |  | 469 |  |  |  | 1,438 |  |  |  | 1,382 |  |
Space Systems |  | 31 |  |  |  | 21 |  |  |  | 76 |  |  |  | 90 |  |
Total intersegment sales |  | $ | 620 |  |  |  | $ | 601 |  |  |  | $ | 1,865 |  |  |  | $ | 1,802 |  |
(a) | On August 24, 2016, our ownership interest in the AWE joint venture increased from 33% to 51% and we were required to change our accounting for this investment from the equity method to consolidation. As a result of the increased ownership interest, we recognized a non-cash gain of $127 million at our Space Systems business segment, which increased net earnings from continuing operations by $104 million ($0.34 per share) in the quarter and nine months ended September 25, 2016. See “Note 1 – Basis of Presentation” for more information.
(b) | During the nine months ended September 24, 2017, we recognized a $64 million charge, which represents our portion of a noncash asset impairment charge recorded by our equity method investee, Advanced Military Maintenance, Repair and Overhaul Center LLC (AMMROC). See “Note 10 – Other” (under the caption “Equity Method Investee Impairment”) for more information.
(c) | Includes $17 million and $82 million of corporate overhead costs incurred during the quarter and nine months ended September 25, 2016 that were previously allocated to our former IS&GS business. See “Note 3 – Divestiture” for more information.
Total assets for each of our business segments were as follows (in millions):
|  | September 24, 2017 |  | December 31, 2016
Assets |  |  |  |  |  |
Aeronautics |  | $ | 7,918 |  |  |  | $ | 7,896 |  |
Missiles and Fire Control |  | 4,510 |  |  |  | 4,000 |  |
Rotary and Mission Systems |  | 18,500 |  |  |  | 18,367 |  |
Space Systems |  | 5,425 |  |  |  | 5,250 |  |
Total business segment assets |  | 36,353 |  |  |  | 35,513 |  |
Corporate assets (a) |  | 12,593 |  |  |  | 12,293 |  |
Total assets |  | $ | 48,946 |  |  |  | $ | 47,806 |  |
(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 26% and 25% of our total consolidated net sales for the quarter and nine months ended September 24, 2017 and 23% of our total consolidated net sales for both the quarter and nine months ended September 25, 2016.

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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 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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