4. SEGMENT INFORMATION

The company is aligned in three operating sectors, which also comprise our reportable segments: Aerospace Systems, Mission Systems and Technology Services.

The following table presents sales and operating income by segment:



	Year Ended December 31
$ in millions	2017			2016			2015
Sales
Aerospace Systems	$	11,955		$	10,828		$	9,940
Mission Systems	11,382			10,928			10,674
Technology Services	4,750			4,825			4,819
Intersegment eliminations	(2,284		)	(2,073		)	(1,907		)
Total sales	25,803			24,508			23,526
Operating income
Aerospace Systems	1,259			1,236			1,205
Mission Systems	1,453			1,445			1,410
Technology Services	524			512			514
Intersegment eliminations	(277		)	(258		)	(209		)
Total segment operating income	2,959			2,935			2,920
Net FAS/CAS pension adjustment	594			316			348
Unallocated corporate expenses	(250		)	(53		)	(190		)
Other	(4		)	(5		)	(2		)
Total operating income	$	3,299		$	3,193		$	3,076

Net FAS/CAS Pension Adjustment

For financial statement purposes, we account for our employee pension plans in accordance with FAS. However, the cost of these plans is charged to our contracts in accordance with the FAR and the related CAS. The net FAS/CAS pension adjustment reflects the difference between CAS pension expense included as cost in segment operating income and FAS expense included in total operating income.

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, retiree benefits and other corporate unallowable costs.

Intersegment Sales and Operating Income

Sales between segments are recorded at values that include intercompany operating income for the performing segment based on that segment’s estimated average operating margin rate for external sales. Such intercompany operating income is eliminated in consolidation, so that the company’s total sales and total operating income reflect only those transactions with external customers. See Note 1 for additional information.

The following table presents intersegment sales and operating income before eliminations:



	Year Ended December 31
$ in millions	2017					2016					2015
	Sales		Operating Income			Sales		Operating Income			Sales		Operating Income
Intersegment sales and operating income
Aerospace Systems	$	295		$	33	$	239		$	28	$	221		$	27
Mission Systems	954			141		875			136		781			97
Technology Services	1,035			103		959			94		905			85
Total	$	2,284		$	277	$	2,073		$	258	$	1,907		$	209

Assets

Substantially all of the company’s operating assets are located in the U.S. The following table presents assets by segment:



	December 31
$ in millions	2017		2016
Assets
Aerospace Systems	$	8,449	$	7,523
Mission Systems	10,204		9,991
Technology Services	3,010		3,082
Segment assets	21,663		20,596
Corporate assets⁽¹⁾	13,254		5,018
Total assets	$	34,917	$	25,614


⁽¹⁾	Corporate assets principally consist of cash and cash equivalents and deferred tax assets.

Capital Expenditures and Depreciation and Amortization

The following table presents capital expenditures and depreciation and amortization by segment:



	Capital Expenditures						Depreciation and Amortization⁽¹⁾
$ in millions	2017		2016		2015		2017		2016		2015
Aerospace Systems	$	665	$	451	$	237	$	234	$	216	$	215
Mission Systems	164		372		141		131		140		153
Technology Services	15		6		3		40		37		36
Corporate	84		91		90		70		63		63
Total	$	928	$	920	$	471	$	475	$	456	$	467


⁽¹⁾	Depreciation and amortization expense includes amortization of purchased intangible assets, as well as amortization of deferred and other outsourcing costs.