Segment Information (Unaudited)

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

At September 30, 2015, the company was aligned into four segments: Aerospace Systems, Electronic Systems, Information Systems and Technical Services.

The following table presents sales and operating income by segment:

	Three Months Ended September 30						Nine Months Ended September 30
$ in millions	2015			2014			2015			2014
Sales
Aerospace Systems	$	2,563		$	2,543		$	7,573		$	7,465
Electronic Systems	1,767			1,733			5,131			5,121
Information Systems	1,472			1,511			4,531			4,650
Technical Services	695			691			2,185			2,120
Intersegment eliminations	(518		)	(494		)	(1,588		)	(1,485		)
Total sales	5,979			5,984			17,832			17,871
Operating income
Aerospace Systems	303			402			940			1,016
Electronic Systems	275			274			787			833
Information Systems	146			150			462			465
Technical Services	64			66			199			202
Intersegment eliminations	(62		)	(52		)	(185		)	(177		)
Total segment operating income	726			840			2,203			2,339
Reconciliation to total operating income:
Net FAS/CAS pension adjustment	97			(20		)	261			200
Unallocated corporate expenses	(29		)	(50		)	(76		)	(103		)
Other	—			(1		)	(1		)	(2		)
Total operating income	$	794		$	769		$	2,387		$	2,434

Net FAS/CAS Pension Adjustment

The net FAS (GAAP Financial Accounting Standards)/CAS (U.S. Government Cost Accounting Standards) pension adjustment reflects the difference between pension expense included as cost in segment operating income and 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.

Current Quarter

The increase in net FAS/CAS pension adjustment for the three months ended September 30, 2015, as compared to the same period in 2014, is principally due to the absence in 2015 of the $132 million reduction in CAS pension expense related to HATFA described above, partially offset by higher FAS expense in 2015, as a result of changes in our FAS discount rate and mortality assumptions as of December 31, 2014.

Year to Date

The increase in net FAS/CAS pension adjustment for the nine months ended September 30, 2015, as compared to the same period in 2014, is principally due to higher 2015 CAS expense resulting from changes in mortality assumptions and demographic experience, partially offset by an increase in 2015 FAS expense as a result of changes in our FAS discount rate and mortality assumptions as of December 31, 2014.

Unallocated Corporate Expenses

Unallocated corporate expenses include the portion of corporate expenses not considered allowable or allocable under applicable CAS or 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. The decrease in unallocated corporate expenses for the three and nine months ended September 30, 2015, as compared to the same periods in 2014, is principally due to reductions in environmental and other corporate provisions.