18. RECAST 2017 AND 2016 FINANCIAL INFORMATION

Our prior period consolidated financial statements were recast for the retrospective adoption of ASC Topic 606 and ASU 2017-07 and the Accounting change described in Note 1. The following tables summarize the effects of these changes on our consolidated statements of earnings and comprehensive income, statements of cash flows and statements of changes in shareholders’ equity for the years ended December 31, 2017 and 2016 and consolidated statement of financial position as of December 31, 2017.

CONSOLIDATED STATEMENT OF EARNINGS AND COMPREHENSIVE INCOME



	Year Ended December 31, 2017
	As Previously Reported			Impact of:										As Adjusted
$ in millions, except per share amounts	As Previously Reported				ASC Topic 606			ASU 2017-07			Accounting Change			As Adjusted
Sales
Product	$	16,038			$	326		$	—		$	—		$	16,364
Service	9,765				(125		)	—			—			9,640
Total sales	25,803				201			—			—			26,004
Operating costs and expenses
Product	12,271				239			(18		)	35			12,527
Service	7,578				(42		)	(12		)	23			7,547
General and administrative expenses	2,655				57			—			—			2,712
Operating income	3,299				(53		)	30			(58		)	3,218
Other (expense) income
Interest expense	(360		)		—			—			—			(360		)
Net FAS (non-service) pension (expense) income	—				—			(44		)	743			699
Mark-to-market pension and OPB benefit	—				—			—			536			536
Other, net	110				—			14			12			136
Earnings before income taxes	3,049				(53		)	—			1,233			4,229
Federal and foreign income tax expense (benefit)	1,034				(33		)	—			359			1,360
Net earnings	$	2,015			$	(20	)	$	—		$	874		$	2,869

Basic earnings per share	$	11.55			$	(0.11	)	$	—		$	5.01		$	16.45
Weighted-average common shares outstanding, in millions	174.4				—			—			—			174.4
Diluted earnings per share	$	11.47			$	(0.11	)	$	—		$	4.98		$	16.34
Weighted-average diluted shares outstanding, in millions	175.6				—			—			—			175.6

Net earnings (from above)	$	2,015			$	(20	)	$	—		$	874		$	2,869
Other comprehensive income (loss)
Change in unamortized benefit plan costs, net of tax expense of $35	830				—			—			(874		)	(44		)
Change in cumulative translation adjustment	(4		)		—			—			—			(4		)
Other, net	2				—			—			—			2
Other comprehensive income (loss), net of tax	828				—			—			(874		)	(46		)
Comprehensive income	$	2,843			$	(20	)	$	—		$	—		$	2,823



	Year Ended December 31, 2016
	As Previously Reported			Impact of:										As Adjusted
$ in millions, except per share amounts	As Previously Reported				ASC Topic 606			ASU 2017-07			Accounting Change			As Adjusted
Sales
Product	$	14,738			$	342		$	—		$	—		$	15,080
Service	9,770				(144		)	—			—			9,626
Total sales	24,508				198			—			—			24,706
Operating costs and expenses
Product	11,002				286			(86		)	(5		)	11,197
Service	7,729				(68		)	(58		)	(3		)	7,600
General and administrative expenses	2,584				48			—			—			2,632
Operating income	3,193				(68		)	144			8			3,277
Other (expense) income
Interest expense	(301		)		—			—			—			(301		)
Net FAS (non-service) pension (expense) income	—				—			(141		)	752			611
Mark-to-market pension and OPB expense	—				—			—			(950		)	(950		)
Other, net	31				—			(3		)	16			44
Earnings before income taxes	2,923				(68		)	—			(174		)	2,681
Federal and foreign income tax expense (benefit)	723				(24		)	—			(61		)	638
Net earnings	$	2,200			$	(44	)	$	—		$	(113	)	$	2,043

Basic earnings per share	$	12.30			$	(0.25	)	$	—		$	(0.63	)	$	11.42
Weighted-average common shares outstanding, in millions	178.9				—			—			—			178.9
Diluted earnings per share	$	12.19			$	(0.24	)	$	—		$	(0.63	)	$	11.32
Weighted-average diluted shares outstanding, in millions	180.5				—			—			—			180.5

Net earnings (from above)	$	2,200			$	(44	)	$	—		$	(113	)	$	2,043
Other comprehensive loss
Change in unamortized benefit plan costs, net of tax expense of $20	(175		)		—			—			113			(62		)
Change in cumulative translation adjustment	(50		)		—			—			—			(50		)
Other, net	(1		)		—			—			—			(1		)
Other comprehensive loss, net of tax	(226		)		—			—			113			(113		)
Comprehensive income	$	1,974			$	(44	)	$	—		$	—		$	1,930

CONSOLIDATED STATEMENT OF FINANCIAL POSITION



	December 31, 2017
	As Previously Reported			Impact of:							As Adjusted
$ in millions					ASC Topic 606			Accounting Change
Assets
Cash and cash equivalents	$	11,225			$	—		$	—		$	11,225
Accounts receivable, net	829				225			—			1,054
Unbilled receivables, net	3,147				318			—			3,465
Inventoried costs, net	780				(382		)	—			398
Prepaid expenses and other current assets	368				77			—			445
Total current assets	16,349				238			—			16,587
Property, plant and equipment, net of accumulated depreciation of $5,066 for 2017	4,225				—			—			4,225
Goodwill	12,455				—			—			12,455
Intangible assets, net	52				—			—			52
Deferred tax assets	475				(28		)	—			447
Other non-current assets	1,361				1			—			1,362
Total assets	$	34,917			$	211		$	—		$	35,128

Liabilities
Trade accounts payable	$	1,661			$	—		—			$	1,661
Accrued employee compensation	1,382				—			—			1,382
Advance payments and amounts in excess of costs incurred	1,617				144			—			1,761
Other current liabilities	2,305				(17		)	—			2,288
Total current liabilities	6,965				127			—			7,092
Long-term debt, net of current portion of $867 for 2017	14,399				—			—			14,399
Pension and OPB plan liabilities	5,511				—			—			5,511
Other non-current liabilities	994				—			—			994
Total liabilities	27,869				127			—			27,996

Commitments and contingencies (Note 12)

Shareholders’ equity
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued and outstanding	—				—			—			—
Common stock, $1 par value; 800,000,000 shares authorized; issued and outstanding: 2017—174,085,619	174				—			—			174
Paid-in capital	44				—			—			44
Retained earnings	11,548				84			(4,719		)	6,913
Accumulated other comprehensive (loss) income	(4,718		)		—			4,719			1
Total shareholders’ equity	7,048				84			—			7,132
Total liabilities and shareholders’ equity	$	34,917			$	211		$	—		$	35,128

CONSOLIDATED STATEMENT OF CASH FLOWS

The adoption of ASC Topic 606 and ASU 2017-07 and our Accounting change did not have an impact on our investing or financing cash flows for the years ended December 31, 2017 and 2016.



	Year Ended December 31, 2017
	As Previously Reported			Impact of:						As Adjusted
$ in millions	As Previously Reported			ASC Topic 606			Accounting Change			As Adjusted
Operating activities
Net earnings	$	2,015		$	(20	)	$	874		$	2,869
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization	475			—			—			475
Mark-to-market pension and OPB benefit	—			—			(536		)	(536		)
Stock-based compensation	94			—			—			94
Deferred income taxes	603			(35		)	417			985
Changes in assets and liabilities:
Accounts receivable, net	(187		)	(22		)	—			(209		)
Unbilled receivables, net	(490		)	68			—			(422		)
Inventoried costs, net	36			(11		)	—			25
Prepaid expenses and other assets	(81		)	(11		)	—			(92		)
Accounts payable and other liabilities	539			31			—			570
Income taxes payable, net	(157		)	—			—			(157		)
Retiree benefits⁽¹⁾	(191		)	—			(755		)	(946		)
Other, net	(43		)	—			—			(43		)
Net cash provided by operating activities	$	2,613		$	—		$	—		$	2,613



	Year Ended December 31, 2016
	As Previously Reported			Impact of:						As Adjusted
$ in millions	As Previously Reported			ASC Topic 606			Accounting Change			As Adjusted
Operating activities
Net earnings	$	2,200		$	(44	)	$	(113	)	$	2,043
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization	456			—			—			456
Mark-to-market pension and OPB expense	—			—			950			950
Stock-based compensation	93			—			—			93
Deferred income taxes	36			(27		)	(69		)	(60		)
Changes in assets and liabilities:
Accounts receivable, net	55			(9		)	—			46
Unbilled receivables, net	(516		)	305			—			(211		)
Inventoried costs, net	(15		)	(38		)	—			(53		)
Prepaid expenses and other assets	(110		)	(7		)	—			(117		)
Accounts payable and other liabilities	198			(180		)	—			18
Income taxes payable, net	148			—			—			148
Retiree benefits⁽¹⁾	393			—			(768		)	(375		)
Other, net	(125		)	—			—			(125		)
Net cash provided by operating activities	$	2,813		$	—		$	—		$	2,813


⁽¹⁾	Includes company contributions to our pension and OPB plans as well as net periodic benefit costs, excluding MTM pension and OPB expense, which is presented as a separate non-cash item above.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

The adoption of ASC Topic 606 and ASU 2017-07 and our Accounting change did not have an impact on the changes in common stock and paid-in capital for the years ended December 31, 2017 and 2016.



	Year Ended December 31, 2017
	As Previously Reported			Impact of:							As Adjusted
$ in millions, except per share amounts	As Previously Reported				ASC Topic 606			Accounting Change			As Adjusted
Retained earnings
Beginning of year	$	10,630			$	104		$	(5,593	)	$	5,141
Common stock repurchased	(371		)		—			—			(371		)
Net earnings	2,015				(20		)	874			2,869
Dividends declared	(687		)		—			—			(687		)
Stock compensation	(39		)		—			—			(39		)
End of year	11,548				84			(4,719		)	6,913

Accumulated other comprehensive (loss) income
Beginning of year	(5,546		)		—			5,593			47
Other comprehensive income (loss), net of tax	828				—			(874		)	(46		)
End of year	(4,718		)		—			4,719			1
Total shareholders’ equity	$	7,048			$	84		$	—		$	7,132



	Year Ended December 31, 2016
	As Previously Reported			Impact of:							As Adjusted
$ in millions, except per share amounts	As Previously Reported				ASC Topic 606			Accounting Change			As Adjusted
Retained earnings
Beginning of year	$	10,661			$	148		$	(5,480	)	$	5,329
Common stock repurchased	(1,548		)		—			—			(1,548		)
Net earnings	2,200				(44		)	(113		)	2,043
Dividends declared	(633		)		—			—			(633		)
Stock compensation	(50		)		—			—			(50		)
End of year	10,630				104			(5,593		)	5,141

Accumulated other comprehensive (loss) income
Beginning of year	(5,320		)		—			5,480			160
Other comprehensive income (loss), net of tax	(226		)		—			113			(113		)
End of year	(5,546		)		—			5,593			47
Total shareholders’ equity	$	5,259			$	104		$	—		$	5,363