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Segment Information (Unaudited)
 6 Months Ended
Jun. 30, 2016
Segment Reporting [Abstract]  
SEGMENT INFORMATION
SEGMENT INFORMATION
The company is aligned in three operating sectors, which also comprise our reportable segments: Aerospace Systems, Mission Systems and Technology Services. Effective January 1, 2016, the company streamlined our sectors from four to three to better align our business with the evolving needs of our customers and enhance innovation across the company. Mission Systems and Technology Services were created by merging elements of our former Electronic Systems, Information Systems and Technical Services sectors. The new Mission Systems sector is composed of the majority of our former Electronic Systems sector and the businesses from our former Information Systems sector focused on the development of new capabilities for our military and intelligence customers. The new Technology Services sector was formed by combining the services portfolio in the former Information Systems sector with the former Technical Services sector. Among other operations that were realigned, the military and civil space hardware business in Azusa, California, previously reporting to the Electronic Systems sector, moved to the Aerospace Systems sector, and the electronic attack business, previously in the Aerospace Systems sector, moved to the Mission Systems sector.
The following table presents sales and operating income by segment:
 
Three Months Ended June 30
 
Six Months Ended June 30
$ in millions
2016
 
2015
 
2016
 
2015
Sales
 
 
 
 
 
 
 
Aerospace Systems
$
2,600

 
$
2,498

 
$
5,174

 
$
4,996

Mission Systems
2,690

 
2,628

 
5,383

 
5,339

Technology Services
1,213

 
1,238

 
2,427

 
2,505

Intersegment eliminations
(503
)
 
(468
)
 
(1,028
)
 
(987
)
Total sales
6,000

 
5,896

 
11,956

 
11,853

Operating income
 
 
 
 
 
 
 
Aerospace Systems
312

 
319

 
598

 
631

Mission Systems
351

 
348

 
704

 
692

Technology Services
131

 
128

 
257

 
261

Intersegment eliminations
(63
)
 
(53
)
 
(127
)
 
(107
)
Total segment operating income
731


742

 
1,432

 
1,477

Reconciliation to total operating income:
 
 
 
 
 
 
 
Net FAS/CAS pension adjustment
69

 
81

 
143

 
164

Unallocated corporate expenses
(3
)
 
(9
)
 
(36
)
 
(47
)
Other
—

 
(1
)
 
(3
)
 
(1
)
Total operating income
$
797

 
$
813

 
$
1,536

 
$
1,593


Net FAS/CAS Pension Adjustment
For financial statement purposes, we account for our employee pension plans in accordance with GAAP under FAS (GAAP Financial Accounting Standards). However, the cost of these plans is charged to our contracts in accordance with the Federal Acquisition Regulation (FAR) and the related U.S. Government Cost Accounting Standards (CAS) that govern such plans. The net FAS/CAS pension adjustment reflects the difference between CAS pension expense included as cost in segment operating income and FAS expense determined in accordance with GAAP.
The decrease in net FAS/CAS pension adjustment for the three and six months ended June 30, 2016, as compared to the same periods in 2015, is primarily due to lower than expected asset returns during 2015, partially offset by the increase in our FAS discount rate assumption as of December 31, 2015 and the continued phase-in of the effects of CAS harmonization.
Unallocated Corporate Expenses
Unallocated corporate expenses include the portion of corporate expenses not considered allowable or allocable under applicable CAS or the FAR, and therefore not allocated to the segments. Such costs consist of a portion of management and administration, legal, environmental, compensation costs, retiree benefits and corporate unallowable costs.
Current Quarter
Unallocated corporate expenses for the three months ended June 30, 2016 were comparable with the same period in 2015 and both periods reflect a reduction in reserves for overhead costs related to the finalization of certain prior year incurred cost claims.
Year to Date
Unallocated corporate expenses decreased for the six months ended June 30, 2016, as compared with the same period in 2015, principally due to higher deferred state taxes in 2015 resulting from a $500 million discretionary pension contribution made in the first quarter of 2015.