Segment Information (Unaudited)

3 Months Ended

Mar. 31, 2020

Effective January 1, 2020, the company reorganized its operating sectors to better align the company’s broad portfolio to serve its customers’ needs. The four new sectors, which also comprise our reportable segments, are Aeronautics Systems, Defense Systems, Mission Systems and Space Systems.

The following table presents sales and operating income by segment:



	Three Months Ended March 31
$ in millions	2020			2019
Sales
Aeronautics Systems	$	2,843		$	2,818
Defense Systems	1,881			1,768
Mission Systems	2,347			2,210
Space Systems	1,948			1,801
Intersegment eliminations	(399		)	(408		)
Total sales	8,620			8,189
Operating income
Aeronautics Systems	259			308
Defense Systems	196			202
Mission Systems	348			319
Space Systems	199			188
Intersegment eliminations	(49		)	(50		)
Total segment operating income	953			967
Net FAS (service)/CAS pension adjustment	105			108
Unallocated corporate expense	(124		)	(139		)
Total operating income	$	934		$	936

Net FAS (Service)/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 Federal Acquisition Regulation (FAR) and the related U.S. Government Cost Accounting Standards (CAS). The net FAS (service)/CAS pension adjustment reflects the difference between CAS pension expense included as cost in segment operating income and the service cost component of FAS expense included in total operating income.

Unallocated Corporate Expense

Unallocated corporate expense includes the portion of corporate costs not considered allowable or allocable under applicable CAS or FAR, and therefore not allocated to the segments, such as a portion of management and administration, legal, environmental, compensation, retiree benefits and other corporate unallowable costs. Unallocated corporate expense also includes costs not considered part of management’s evaluation of segment

operating performance, such as amortization of purchased intangible assets and the additional depreciation expense related to the step-up in fair value of property, plant and equipment acquired through business combinations.

Disaggregation of Revenue



Sales by Customer Type	Three Months Ended March 31
	2020				2019
$ in millions	$		%⁽³⁾		$		%⁽³⁾
Aeronautics Systems
U.S. government⁽¹⁾	$	2,361	83	%	$	2,334	83	%
International⁽²⁾	444		16	%	435		15	%
Other customers	12		—	%	25		1	%
Intersegment sales	26		1	%	24		1	%
Aeronautics Systems sales	2,843		100	%	2,818		100	%
Defense Systems
U.S. government⁽¹⁾	1,259		67	%	1,141		65	%
International⁽²⁾	340		18	%	363		21	%
Other customers	111		6	%	97		5	%
Intersegment sales	171		9	%	167		9	%
Defense Systems sales	1,881		100	%	1,768		100	%
Mission Systems
U.S. government⁽¹⁾	1,671		71	%	1,613		73	%
International⁽²⁾	483		21	%	376		17	%
Other customers	17		1	%	24		1	%
Intersegment sales	176		7	%	197		9	%
Mission Systems sales	2,347		100	%	2,210		100	%
Space Systems
U.S. government⁽¹⁾	1,803		93	%	1,669		93	%
International⁽²⁾	68		3	%	43		2	%
Other customers	51		3	%	69		4	%
Intersegment sales	26		1	%	20		1	%
Space Systems sales	1,948		100	%	1,801		100	%
Total
U.S. government⁽¹⁾	7,094		83	%	6,757		83	%
International⁽²⁾	1,335		15	%	1,217		15	%
Other customers	191		2	%	215		2	%
Total Sales	$	8,620	100	%	$	8,189	100	%


⁽¹⁾	Sales to the U.S. government include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is the U.S. government. Each of the company’s segments derives substantial revenue from the U.S. government.

⁽²⁾ International sales include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is an international customer. These sales include foreign military sales contracted through the U.S. government.

⁽³⁾ Percentages calculated based on total segment sales.



Sales by Contract Type	Three Months Ended March 31
	2020				2019
$ in millions	$		%⁽¹⁾		$		%⁽¹⁾
Aeronautics Systems
Cost-type	$	1,343	48	%	$	1,312	47	%
Fixed-price	1,474		52	%	1,482		53	%
Intersegment sales	26				24
Aeronautics Systems sales	2,843				2,818
Defense Systems
Cost-type	628		37	%	623		39	%
Fixed-price	1,082		63	%	978		61	%
Intersegment sales	171				167
Defense Systems sales	1,881				1,768
Mission Systems
Cost-type	846		39	%	835		41	%
Fixed-price	1,325		61	%	1,178		59	%
Intersegment sales	176				197
Mission Systems sales	2,347				2,210
Space Systems
Cost-type	1,398		73	%	1,306		73	%
Fixed-price	524		27	%	475		27	%
Intersegment sales	26				20
Space Systems sales	1,948				1,801
Total
Cost-type	4,215		49	%	4,076		50	%
Fixed-price	4,405		51	%	4,113		50	%
Total Sales	$	8,620			$	8,189


⁽¹⁾	Percentages calculated based on external customer sales.



Sales by Geographic Region	Three Months Ended March 31
	2020				2019
$ in millions	$		%⁽²⁾		$		%⁽²⁾
Aeronautics Systems
United States	$	2,373	84	%	$	2,359	85	%
Asia/Pacific	207		8	%	233		8	%
All other⁽¹⁾	237		8	%	202		7	%
Intersegment sales	26				24
Aeronautics Systems sales	2,843				2,818
Defense Systems
United States	1,370		80	%	1,238		77	%
Asia/Pacific	82		5	%	88		6	%
All other⁽¹⁾	258		15	%	275		17	%
Intersegment sales	171				167
Defense Systems sales	1,881				1,768
Mission Systems
United States	1,688		78	%	1,637		81	%
Asia/Pacific	176		8	%	135		7	%
All other⁽¹⁾	307		14	%	241		12	%
Intersegment sales	176				197
Mission Systems sales	2,347				2,210
Space Systems
United States	1,854		97	%	1,738		98	%
Asia/Pacific	5		—	%	12		—	%
All other⁽¹⁾	63		3	%	31		2	%
Intersegment sales	26				20
Space Systems sales	1,948				1,801
Total
United States	7,285		85	%	6,972		85	%
Asia/Pacific	470		5	%	468		6	%
All other⁽¹⁾	865		10	%	749		9	%
Total Sales	$	8,620			$	8,189


⁽¹⁾	All other is principally comprised of Europe and the Middle East.

⁽²⁾

Percentages calculated based on external customer sales.