Segment Information

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

Segment Information

16. SEGMENT INFORMATION

The company is aligned in four operating sectors, which also comprise our reportable segments: Aeronautics Systems, Defense Systems, Mission Systems and Space Systems.

The following table presents sales and operating income by segment:

	Year Ended December 31
$ in millions	2023		2022		2021
Sales
Aeronautics Systems	$	10,786	$	10,531	$	11,259
Defense Systems	5,862		5,579		5,776
Mission Systems	10,895		10,396		10,134
Space Systems	13,946		12,275		10,608
Intersegment eliminations	(2,199)		(2,179)		(2,110)
Total sales	39,290		36,602		35,667
Operating income
Aeronautics Systems	(473)		1,116		1,093
Defense Systems	710		664		696
Mission Systems	1,609		1,618		1,579
Space Systems	1,212		1,158		1,121
Intersegment eliminations	(298)		(303)		(272)
Total segment operating income	2,760		4,253		4,217
FAS/CAS operating adjustment	(82)		(200)		130
Unallocated corporate (expense) income	(141)		(452)		1,304
Total operating income	$	2,537	$	3,601	$	5,651
Other (expense) income
Interest expense	(545)		(506)		(556)
Non-operating FAS pension benefit	530		1,505		1,469
Mark-to-market pension and OPB (expense) benefit	(422)		1,232		2,355
Other, net	246		4		19
Earnings before income taxes	$	2,346	$	5,836	$	8,938

FAS/CAS Operating 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 applicable FAR and CAS requirements. The FAS/CAS operating 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) Income

Unallocated corporate (expense) income includes the portion of corporate costs not considered allowable or allocable under applicable FAR and CAS requirements, and therefore not allocated to the segments, such as changes in deferred state income taxes and a portion of management and administration, legal, environmental, compensation, retiree benefits, advertising and other corporate unallowable costs. Unallocated corporate (expense) income 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 PP&E acquired through business combinations, as well as certain compensation and other costs.

During the first quarter of 2021, the $2.0 billion pre-tax gain on the sale of our IT services business and $192 million of unallowable state taxes and transaction costs associated with the divestiture were recorded in Unallocated corporate (expense) income.

Disaggregation of Revenue

Sales by Customer Type	Year Ended December 31
	2023				2022				2021
$ in millions	$		%(3)		$		%(3)		$		%(3)
Aeronautics Systems
U.S. government(1)	$	9,132	85	%	$	8,930	85	%	$	9,631	85	%
International(2)	1,379		13	%	1,344		13	%	1,421		13	%
Other customers	35		—	%	18		—	%	18		—	%
Intersegment sales	240		2	%	239		2	%	189		2	%
Aeronautics Systems sales	10,786		100	%	10,531		100	%	11,259		100	%
Defense Systems
U.S. government(1)	3,497		60	%	3,344		61	%	3,595		62	%
International(2)	1,491		25	%	1,358		24	%	1,317		23	%
Other customers	76		1	%	71		1	%	75		1	%
Intersegment sales	798		14	%	806		14	%	789		14	%
Defense Systems sales	5,862		100	%	5,579		100	%	5,776		100	%
Mission Systems
U.S. government(1)	7,999		73	%	7,471		72	%	7,223		71	%
International(2)	1,757		16	%	1,809		17	%	1,846		18	%
Other customers	85		1	%	101		1	%	72		1	%
Intersegment sales	1,054		10	%	1,015		10	%	993		10	%
Mission Systems sales	10,895		100	%	10,396		100	%	10,134		100	%
Space Systems
U.S. government(1)	13,254		95	%	11,578		94	%	9,885		93	%
International(2)	278		2	%	337		3	%	398		4	%
Other customers	307		2	%	241		2	%	186		2	%
Intersegment sales	107		1	%	119		1	%	139		1	%
Space Systems sales	13,946		100	%	12,275		100	%	10,608		100	%
Total
U.S. government(1)	33,882		86	%	31,323		86	%	30,334		85	%
International(2)	4,905		13	%	4,848		13	%	4,982		14	%
Other customers	503		1	%	431		1	%	351		1	%
Total Sales	$	39,290	100	%	$	36,602	100	%	$	35,667	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	Year Ended December 31
	2023				2022				2021
$ in millions	$		%(1)		$		%(1)		$		%(1)
Aeronautics Systems
Cost-type	$	5,235	50	%	$	5,013	49	%	$	5,419	49	%
Fixed-price	5,311		50	%	5,279		51	%	5,651		51	%
Intersegment sales	240				239				189
Aeronautics Systems sales	10,786				10,531				11,259
Defense Systems
Cost-type	1,591		31	%	1,497		31	%	1,739		35	%
Fixed-price	3,473		69	%	3,276		69	%	3,248		65	%
Intersegment sales	798				806				789
Defense Systems sales	5,862				5,579				5,776
Mission Systems
Cost-type	4,116		42	%	3,622		39	%	3,139		34	%
Fixed-price	5,725		58	%	5,759		61	%	6,002		66	%
Intersegment sales	1,054				1,015				993
Mission Systems sales	10,895				10,396				10,134
Space Systems
Cost-type	10,037		73	%	8,579		71	%	7,731		74	%
Fixed-price	3,802		27	%	3,577		29	%	2,738		26	%
Intersegment sales	107				119				139
Space Systems sales	13,946				12,275				10,608
Total
Cost-type	20,979		53	%	18,711		51	%	18,028		51	%
Fixed-price	18,311		47	%	17,891		49	%	17,639		49	%
Total Sales	$	39,290			$	36,602			$	35,667

(1)Percentages calculated based on external customer sales.

Sales by Geographic Region	Year Ended December 31
	2023				2022				2021
$ in millions	$		%(2)		$		%(2)		$		%(2)
Aeronautics Systems
United States	$	9,167	87	%	$	8,948	87	%	$	9,649	87	%
Asia/Pacific	607		6	%	708		7	%	896		8	%
Europe	736		7	%	585		6	%	461		4	%
All other(1)	36		—	%	51		—	%	64		1	%
Intersegment sales	240				239				189
Aeronautics Systems sales	10,786				10,531				11,259
Defense Systems
United States	3,573		71	%	3,415		71	%	3,670		74	%
Asia/Pacific	419		8	%	454		10	%	465		9	%
Europe	601		12	%	477		10	%	314		6	%
All other(1)	471		9	%	427		9	%	538		11	%
Intersegment sales	798				806				789
Defense Systems sales	5,862				5,579				5,776
Mission Systems
United States	8,084		82	%	7,572		81	%	7,295		80	%
Asia/Pacific	460		5	%	531		6	%	518		6	%
Europe	959		10	%	977		10	%	1,004		10	%
All other(1)	338		3	%	301		3	%	324		4	%
Intersegment sales	1,054				1,015				993
Mission Systems sales	10,895				10,396				10,134
Space Systems
United States	13,561		98	%	11,819		97	%	10,071		96	%
Asia/Pacific	82		1	%	109		1	%	60		1	%
Europe	159		1	%	213		2	%	328		3	%
All other(1)	37		—	%	15		—	%	10		—	%
Intersegment sales	107				119				139
Space Systems sales	13,946				12,275				10,608
Total
United States	34,385		88	%	31,754		87	%	30,685		86	%
Asia/Pacific	1,568		4	%	1,802		5	%	1,939		5	%
Europe	2,455		6	%	2,252		6	%	2,107		6	%
All other(1)	882		2	%	794		2	%	936		3	%
Total Sales	$	39,290			$	36,602			$	35,667

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

(2)Percentages calculated based on external customer sales.

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:

	Year Ended December 31
$ in millions	2023					2022					2021
	Sales		Operating Income			Sales		Operating Income			Sales		Operating Income
Intersegment sales and operating income
Aeronautics Systems	$	240		$	22	$	239		$	27	$	189		$	19
Defense Systems	798			97		806			95		789			89
Mission Systems	1,054			167		1,015			167		993			150
Space Systems	107			12		119			14		139			14
Total	$	2,199		$	298	$	2,179		$	303	$	2,110		$	272

Capital Expenditures and Depreciation and Amortization

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

	Year Ended December 31
$ in millions	2023		2022		2021		2023		2022		2021
	Capital Expenditures						Depreciation and Amortization
Aeronautics Systems	$	504	$	490	$	465	$	384	$	322	$	266
Defense Systems	111		110		133		107		101		91
Mission Systems	288		248		236		246		242		233
Space Systems	798		529		530		447		396		344
Corporate(1)	74		58		51		154		281		305
Total	$	1,775	$	1,435	$	1,415	$	1,338	$	1,342	$	1,239

(1)Corporate amounts include the amortization of purchased intangible assets and the additional depreciation expense related to the step-up in fair value of PP&E acquired through business combinations as they are not considered part of management’s evaluation of segment operating performance.

Assets
Our chief operating decision maker does not use assets by segment to evaluate segment performance or allocate resources. Therefore, we do not disclose assets by segment.