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Segment Information (Unaudited)
 9 Months Ended
Sep. 30, 2014
Segment Reporting [Abstract]  
SEGMENT INFORMATION
SEGMENT INFORMATION
The company is aligned into four segments: Aerospace Systems, Electronic Systems, Information Systems and Technical Services. The U.S. Government is the primary customer of our four segments. The company, from time to time, acquires or disposes of businesses and realigns contracts, programs or business areas among and within our segments. Portfolio shaping and internal realignments are designed to more fully leverage existing capabilities and enhance development and delivery of products and services.
The following table presents sales and operating income by segment:
 
Three Months Ended September 30
 
Nine Months Ended September 30
$ in millions
2014
 
2013
 
2014
 
2013
Sales
 
 
 
 
 
 
 
Aerospace Systems
$
2,543

 
$
2,484

 
$
7,465

 
$
7,582

Electronic Systems
1,733

 
1,774

 
5,121

 
5,266

Information Systems
1,511

 
1,619

 
4,650

 
4,982

Technical Services
691

 
713

 
2,120

 
2,152

Intersegment eliminations
(494
)
 
(484
)
 
(1,485
)
 
(1,478
)
Total sales
5,984

 
6,106

 
17,871

 
18,504

Operating income
 
 
 
 
 
 
 
Aerospace Systems
402

 
330

 
1,016

 
936

Electronic Systems
274

 
273

 
833

 
891

Information Systems
150

 
162

 
465

 
474

Technical Services
66

 
67

 
202

 
201

Intersegment eliminations
(52
)
 
(69
)
 
(177
)
 
(194
)
Total segment operating income
840


763

 
2,339

 
2,308

Reconciliation to total operating income:
 
 
 
 
 
 
 
Net FAS/CAS pension adjustment
(20
)
 
61

 
200

 
125

Unallocated corporate expenses
(50
)
 
(33
)
 
(103
)
 
(73
)
Other
(1
)
 
(1
)
 
(2
)
 
(5
)
Total operating income
$
769

 
$
790

 
$
2,434

 
$
2,355


Net FAS/CAS Pension Adjustment
The net FAS (GAAP Financial Accounting Standards)/CAS (U.S. Government Cost Accounting Standards) pension adjustment reflects the difference of pension expense charged to contracts and included as cost in segment operating income less pension expense determined in accordance with GAAP. In the third quarter of 2014, Congress passed the Highway and Transportation Funding Act of 2014 (HATFA), which includes provisions that reduce the amount of CAS pension expense charged to our contracts. The legislation was retroactive to January 1, 2014; in the third quarter of 2014 we recognized a $132 million cumulative reduction in 2014 CAS pension expense principally reflecting the year-to-date HATFA impact. As a result, CAS expense charged to our contracts for the three and nine months ended September 30, 2014, declined as compared to the same periods in 2013. The reduction in FAS expense for the three and nine months ended September 30, 2014, respectively, is largely due to the increase in our FAS discount rate assumption as of December 31, 2013.
Unallocated Corporate Expenses
Unallocated corporate expenses include the portion of corporate expenses not considered allowable or allocable under applicable CAS regulations and the Federal Acquisition Regulation, and are therefore not allocated to the segments. Such costs consist of a portion of management and administration, legal, environmental, compensation costs, retiree benefits, and certain unallowable costs such as lobbying activities, among others.