State or other jurisdiction of incorporation or organization | I.R.S. employer identification no. | |||
Address of principal executive offices | Zip code |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
PART I - | PAGE | |
Item 1 - | ||
Item 2 - | ||
Item 3 - | ||
Item 4 - | ||
PART II - | ||
Item 1 - | ||
Item 1A - | ||
Item 2 - | ||
Item 6 - | ||
Three Months Ended | |||||||
(Dollars in millions, except per-share amounts) | June 28, 2020 | June 30, 2019 | |||||
Revenue: | |||||||
Products | $ | $ | |||||
Services | |||||||
Operating costs and expenses: | |||||||
Products | ( | ) | ( | ) | |||
Services | ( | ) | ( | ) | |||
General and administrative (G&A) | ( | ) | ( | ) | |||
( | ) | ( | ) | ||||
Operating earnings | |||||||
Interest, net | ( | ) | ( | ) | |||
Other, net | |||||||
Earnings before income tax | |||||||
Provision for income tax, net | ( | ) | ( | ) | |||
Net earnings | $ | $ | |||||
Earnings per share | |||||||
Basic | $ | $ | |||||
Diluted | $ | $ |
Six Months Ended | |||||||
(Dollars in millions, except per-share amounts) | June 28, 2020 | June 30, 2019 | |||||
Revenue: | |||||||
Products | $ | $ | |||||
Services | |||||||
Operating costs and expenses: | |||||||
Products | ( | ) | ( | ) | |||
Services | ( | ) | ( | ) | |||
G&A | ( | ) | ( | ) | |||
( | ) | ( | ) | ||||
Operating earnings | |||||||
Interest, net | ( | ) | ( | ) | |||
Other, net | |||||||
Earnings before income tax | |||||||
Provision for income tax, net | ( | ) | ( | ) | |||
Net earnings | $ | $ | |||||
Earnings per share | |||||||
Basic | $ | $ | |||||
Diluted | $ | $ |
Three Months Ended | Six Months Ended | |||||||||||||
(Dollars in millions) | June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | ||||||||||
Net earnings | $ | $ | $ | $ | ||||||||||
Gains on cash flow hedges | ||||||||||||||
Foreign currency translation adjustments | ( | ) | ||||||||||||
Change in retirement plans’ funded status | ||||||||||||||
Other comprehensive income, pretax | ||||||||||||||
Provision for income tax, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||
Other comprehensive income, net of tax | ||||||||||||||
Comprehensive income | $ | $ | $ | $ |
(Unaudited) | |||||||
(Dollars in millions) | June 28, 2020 | December 31, 2019 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and equivalents | $ | $ | |||||
Accounts receivable | |||||||
Unbilled receivables | |||||||
Inventories | |||||||
Other current assets | |||||||
Total current assets | |||||||
Noncurrent assets: | |||||||
Property, plant and equipment, net | |||||||
Intangible assets, net | |||||||
Goodwill | |||||||
Other assets | |||||||
Total noncurrent assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt and current portion of long-term debt | $ | $ | |||||
Accounts payable | |||||||
Customer advances and deposits | |||||||
Other current liabilities | |||||||
Total current liabilities | |||||||
Noncurrent liabilities: | |||||||
Long-term debt | |||||||
Other liabilities | |||||||
Commitments and contingencies (see Note M) | |||||||
Total noncurrent liabilities | |||||||
Shareholders’ equity: | |||||||
Common stock | |||||||
Surplus | |||||||
Retained earnings | |||||||
Treasury stock | ( | ) | ( | ) | |||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Total shareholders’ equity | |||||||
Total liabilities and shareholders’ equity | $ | $ |
Six Months Ended | |||||||
(Dollars in millions) | June 28, 2020 | June 30, 2019 | |||||
Cash flows from operating activities - continuing operations: | |||||||
Net earnings | $ | $ | |||||
Adjustments to reconcile net earnings to net cash from operating activities: | |||||||
Depreciation of property, plant and equipment | |||||||
Amortization of intangible and finance lease right-of-use assets | |||||||
Equity-based compensation expense | |||||||
Deferred income tax benefit | ( | ) | ( | ) | |||
(Increase) decrease in assets, net of effects of business acquisitions: | |||||||
Accounts receivable | ( | ) | |||||
Unbilled receivables | ( | ) | |||||
Inventories | ( | ) | ( | ) | |||
Increase (decrease) in liabilities, net of effects of business acquisitions: | |||||||
Accounts payable | ( | ) | ( | ) | |||
Customer advances and deposits | ( | ) | ( | ) | |||
Other, net | ( | ) | |||||
Net cash provided (used) by operating activities | ( | ) | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Other, net | ( | ) | |||||
Net cash used by investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from fixed-rate notes | |||||||
Repayment of fixed-rate notes | ( | ) | |||||
Proceeds from commercial paper, net | |||||||
Dividends paid | ( | ) | ( | ) | |||
Purchases of common stock | ( | ) | ( | ) | |||
Repayment of floating-rate notes | ( | ) | |||||
Proceeds from commercial paper, gross (maturities greater than 3 months) | |||||||
Other, net | ( | ) | |||||
Net cash provided by financing activities | |||||||
Net cash used by discontinued operations | ( | ) | ( | ) | |||
Net increase (decrease) in cash and equivalents | ( | ) | |||||
Cash and equivalents at beginning of period | |||||||
Cash and equivalents at end of period | $ | $ | |||||
Supplemental cash flow information: | |||||||
Income tax payments, net | $ | ( | ) | $ | ( | ) | |
Interest payments | $ | ( | ) | $ | ( | ) |
Three Months Ended | |||||||||||||||||||||||
Common Stock | Retained | Treasury | Accumulated Other Comprehensive | Total Shareholders’ | |||||||||||||||||||
(Dollars in millions) | Par | Surplus | Earnings | Stock | Loss | Equity | |||||||||||||||||
March 29, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Net earnings | — | — | — | — | |||||||||||||||||||
Cash dividends declared | — | — | ( | ) | — | — | ( | ) | |||||||||||||||
Equity-based awards | — | — | — | ||||||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||
June 28, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
March 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Net earnings | — | — | — | — | |||||||||||||||||||
Cash dividends declared | — | — | ( | ) | — | — | ( | ) | |||||||||||||||
Equity-based awards | — | — | — | ||||||||||||||||||||
Shares purchased | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||
June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
Six Months Ended | |||||||||||||||||||||||
Common Stock | Retained | Treasury | Accumulated Other Comprehensive | Total Shareholders’ | |||||||||||||||||||
(Dollars in millions) | Par | Surplus | Earnings | Stock | Loss | Equity | |||||||||||||||||
December 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Cumulative-effect adjustment* | — | — | ( | ) | — | — | ( | ) | |||||||||||||||
Net earnings | — | — | — | — | |||||||||||||||||||
Cash dividends declared | — | — | ( | ) | — | — | ( | ) | |||||||||||||||
Equity-based awards | — | — | — | ||||||||||||||||||||
Shares purchased | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||
June 28, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Net earnings | — | — | — | — | |||||||||||||||||||
Cash dividends declared | — | — | ( | ) | — | — | ( | ) | |||||||||||||||
Equity-based awards | — | — | — | ||||||||||||||||||||
Shares purchased | — | — | — | ( | ) | — | ( | ) | |||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||
June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
June 28, 2020 | December 31, 2019 | ||||||
PP&E | $ | $ | |||||
Accumulated depreciation | ( | ) | ( | ) | |||
PP&E, net | $ | $ |
Aerospace | Combat Systems | Information Technology | Mission Systems | Marine Systems | Total Goodwill | ||||||||||||||||||
December 31, 2019 (a) | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Acquisitions (b) | |||||||||||||||||||||||
Other (c) | ( | ) | |||||||||||||||||||||
June 28, 2020 (a) | $ | $ | $ | $ | $ | $ |
Gross Carrying Amount (a) | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount (a) | Accumulated Amortization | Net Carrying Amount | ||||||||||||||
June 28, 2020 | December 31, 2019 | ||||||||||||||||||
Contract and program intangible assets (b) | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||
Trade names and trademarks | ( | ) | ( | ) | |||||||||||||||
Technology and software | ( | ) | ( | ) | |||||||||||||||
Other intangible assets | ( | ) | ( | ) | |||||||||||||||
Total intangible assets | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
(a) | Changes in gross carrying amounts consist primarily of adjustments for acquired and divested intangible assets and foreign currency translation. |
(b) |
Three Months Ended | Six Months Ended | |||||||||||||
June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | |||||||||||
Revenue | $ | $ | $ | $ | ||||||||||
Operating earnings | ( | ) | ||||||||||||
Diluted earnings per share | $ | ( | ) | $ | $ | $ |
Three Months Ended | Six Months Ended | |||||||||||||
June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | |||||||||||
Aircraft manufacturing and completions | $ | $ | $ | $ | ||||||||||
Aircraft services | ||||||||||||||
Total Aerospace | ||||||||||||||
Military vehicles | ||||||||||||||
Weapons systems, armament and munitions | ||||||||||||||
Engineering and other services | ||||||||||||||
Total Combat Systems | ||||||||||||||
IT services | ||||||||||||||
Total Information Technology | ||||||||||||||
C4ISR solutions | ||||||||||||||
Total Mission Systems | ||||||||||||||
Nuclear-powered submarines | ||||||||||||||
Surface ships | ||||||||||||||
Repair and other services | ||||||||||||||
Total Marine Systems | ||||||||||||||
Total revenue | $ | $ | $ | $ |
Three Months Ended June 28, 2020 | Aerospace | Combat Systems | Information Technology | Mission Systems | Marine Systems | Total Revenue | |||||||||||||||||
Fixed-price | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Cost-reimbursement | |||||||||||||||||||||||
Time-and-materials | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Three Months Ended June 30, 2019 | |||||||||||||||||||||||
Fixed-price | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Cost-reimbursement | |||||||||||||||||||||||
Time-and-materials | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ |
Six Months Ended June 28, 2020 | Aerospace | Combat Systems | Information Technology | Mission Systems | Marine Systems | Total Revenue | |||||||||||||||||
Fixed-price | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Cost-reimbursement | |||||||||||||||||||||||
Time-and-materials | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Six Months Ended June 30, 2019 | |||||||||||||||||||||||
Fixed-price | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Cost-reimbursement | |||||||||||||||||||||||
Time-and-materials | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ |
Three Months Ended June 28, 2020 | Aerospace | Combat Systems | Information Technology | Mission Systems | Marine Systems | Total Revenue | |||||||||||||||||
U.S. government: | |||||||||||||||||||||||
DoD | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Non-DoD | |||||||||||||||||||||||
Foreign Military Sales (FMS) | |||||||||||||||||||||||
Total U.S. government | |||||||||||||||||||||||
U.S. commercial | |||||||||||||||||||||||
Non-U.S. government | ( | ) | |||||||||||||||||||||
Non-U.S. commercial | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Three Months Ended June 30, 2019 | |||||||||||||||||||||||
U.S. government: | |||||||||||||||||||||||
DoD | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Non-DoD | |||||||||||||||||||||||
FMS | |||||||||||||||||||||||
Total U.S. government | |||||||||||||||||||||||
U.S. commercial | |||||||||||||||||||||||
Non-U.S. government | |||||||||||||||||||||||
Non-U.S. commercial | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ |
Six Months Ended June 28, 2020 | Aerospace | Combat Systems | Information Technology | Mission Systems | Marine Systems | Total Revenue | |||||||||||||||||
U.S. government: | |||||||||||||||||||||||
DoD | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Non-DoD | |||||||||||||||||||||||
FMS | |||||||||||||||||||||||
Total U.S. government | |||||||||||||||||||||||
U.S. commercial | |||||||||||||||||||||||
Non-U.S. government | ( | ) | |||||||||||||||||||||
Non-U.S. commercial | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Six Months Ended June 30, 2019 | |||||||||||||||||||||||
U.S. government: | |||||||||||||||||||||||
DoD | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Non-DoD | |||||||||||||||||||||||
FMS | |||||||||||||||||||||||
Total U.S. government | |||||||||||||||||||||||
U.S. commercial | |||||||||||||||||||||||
Non-U.S. government | |||||||||||||||||||||||
Non-U.S. commercial | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | $ | $ |
Three Months Ended | Six Months Ended | |||||||||
June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | |||||||
Basic weighted average shares outstanding | ||||||||||
Dilutive effect of stock options and restricted stock/RSUs* | ||||||||||
Diluted weighted average shares outstanding |
• | Level 1 - quoted prices in active markets for identical assets or liabilities; |
• | Level 2 - inputs, other than quoted prices, observable by a marketplace participant either directly or indirectly; and |
• | Level 3 - unobservable inputs significant to the fair value measurement. |
Carrying Value | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||
Financial Assets (Liabilities) | June 28, 2020 | ||||||||||||||||||
Measured at fair value: | |||||||||||||||||||
Marketable securities held in trust: | |||||||||||||||||||
Cash and equivalents | $ | $ | $ | $ | $ | ||||||||||||||
Available-for-sale debt securities | |||||||||||||||||||
Equity securities | |||||||||||||||||||
Other investments | |||||||||||||||||||
Cash flow hedges | |||||||||||||||||||
Measured at amortized cost: | |||||||||||||||||||
Short- and long-term debt principal | ( | ) | ( | ) | ( | ) |
December 31, 2019 | |||||||||||||||||||
Measured at fair value: | |||||||||||||||||||
Marketable securities held in trust: | |||||||||||||||||||
Cash and equivalents | $ | $ | $ | $ | $ | ||||||||||||||
Available-for-sale debt securities | |||||||||||||||||||
Equity securities | |||||||||||||||||||
Other investments | |||||||||||||||||||
Cash flow hedges | |||||||||||||||||||
Measured at amortized cost: | |||||||||||||||||||
Short- and long-term debt principal | ( | ) | ( | ) | ( | ) |
June 28, 2020 | December 31, 2019 | ||||||
Deferred tax asset | $ | $ | |||||
Deferred tax liability | ( | ) | ( | ) | |||
Net deferred tax liability | $ | ( | ) | $ | ( | ) |
June 28, 2020 | December 31, 2019 | ||||||
Unbilled revenue | $ | $ | |||||
Advances and progress billings | ( | ) | ( | ) | |||
Net unbilled receivables | $ | $ |
June 28, 2020 | December 31, 2019 | ||||||
Work in process | $ | $ | |||||
Raw materials | |||||||
Finished goods | |||||||
Pre-owned aircraft | |||||||
Total inventories | $ | $ |
June 28, 2020 | December 31, 2019 | |||||||
Fixed-rate notes due: | Interest rate: | |||||||
May 2020 | $ | $ | ||||||
May 2021 | ||||||||
July 2021 | ||||||||
November 2022 | ||||||||
May 2023 | ||||||||
August 2023 | ||||||||
November 2024 | ||||||||
April 2025 | ||||||||
May 2025 | ||||||||
August 2026 | ||||||||
April 2027 | ||||||||
November 2027 | ||||||||
May 2028 | ||||||||
April 2030 | ||||||||
April 2040 | ||||||||
November 2042 | ||||||||
April 2050 | ||||||||
Floating-rate notes due: | ||||||||
May 2020 | 3-month LIBOR + 0.29% | |||||||
May 2021 | 3-month LIBOR + 0.38% | |||||||
Commercial paper | ||||||||
Other | ||||||||
Total debt principal | ||||||||
Less unamortized debt issuance costs and discounts | ||||||||
Total debt | ||||||||
Less current portion | ||||||||
Long-term debt | $ | $ |
June 28, 2020 | December 31, 2019 | ||||||
Salaries and wages | $ | $ | |||||
Workers’ compensation | |||||||
Retirement benefits | |||||||
Operating lease liabilities | |||||||
Fair value of cash flow hedges | |||||||
Other (a) | |||||||
Total other current liabilities | $ | $ | |||||
Retirement benefits | $ | $ | |||||
Operating lease liabilities | |||||||
Customer deposits on commercial contracts | |||||||
Deferred income taxes | |||||||
Other (b) | |||||||
Total other liabilities | $ | $ |
Gains /(Losses) on Cash Flow Hedges | Foreign Currency Translation Adjustments | Changes in Retirement Plans’ Funded Status | AOCL | |||||||||
December 31, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | ||||
Other comprehensive income, pretax | ( | ) | ||||||||||
Provision for income tax, net | ( | ) | ( | ) | ( | ) | ||||||
Other comprehensive income, net of tax | ( | ) | ||||||||||
June 28, 2020 | $ | $ | $ | ( | ) | $ | ( | ) |
December 31, 2018 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||
Other comprehensive income, pretax | ||||||||||||
Provision for income tax, net | ( | ) | ( | ) | ( | ) | ||||||
Other comprehensive income, net of tax | ||||||||||||
June 30, 2019 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) |
Six Months Ended | June 28, 2020 | June 30, 2019 | |||||
Beginning balance | $ | $ | |||||
Warranty expense | |||||||
Payments | ( | ) | ( | ) | |||
Adjustments | ( | ) | ( | ) | |||
Ending balance | $ | $ |
Pension Benefits | Other Post-retirement Benefits | |||||||||||||
Three Months Ended | June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | ||||||||||
Service cost | $ | $ | $ | $ | ||||||||||
Interest cost | ||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | ||||||
Recognized net actuarial loss (gain) | ( | ) | ( | ) | ||||||||||
Amortization of prior service credit | ( | ) | ( | ) | ( | ) | ||||||||
Net periodic benefit (credit) cost | $ | ( | ) | $ | $ | $ | ( | ) | ||||||
Six Months Ended | June 28, 2020 | |||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||
Interest cost | ||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | ||||||
Recognized net actuarial loss (gain) | ( | ) | ( | ) | ||||||||||
Amortization of prior service credit | ( | ) | ( | ) | ( | ) | ||||||||
Net periodic benefit (credit) cost | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) |
Revenue | Operating Earnings | |||||||||||
Three Months Ended | June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | ||||||||
Aerospace | $ | $ | $ | $ | ||||||||
Combat Systems | ||||||||||||
Information Technology | ||||||||||||
Mission Systems | ||||||||||||
Marine Systems | ||||||||||||
Corporate | ( | ) | ||||||||||
Total | $ | $ | $ | $ | ||||||||
Six Months Ended | ||||||||||||
Aerospace | $ | $ | $ | $ | ||||||||
Combat Systems | ||||||||||||
Information Technology | ||||||||||||
Mission Systems | ||||||||||||
Marine Systems | ||||||||||||
Corporate | ( | ) | ||||||||||
Total | $ | $ | $ | $ |
• | implementing measures to protect the health and safety of our employees; |
• | modifying employee work locations and schedules where possible and permitted under our contracts; |
• | coordinating closely with our suppliers and customers; |
• | instituting various aspects of our business continuity programs; |
• | planning for and working aggressively to mitigate disruptions that may occur; and |
• | supporting our communities and the U.S. government in addressing the challenges of the pandemic, such as the production of medical supplies and donation of personal protective equipment. |
Three Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 9,264 | $ | 9,555 | $ | (291 | ) | (3.0 | )% | |||||
Operating costs and expenses | (8,423 | ) | (8,465 | ) | 42 | (0.5 | )% | |||||||
Operating earnings | 841 | 1,090 | (249 | ) | (22.8 | )% | ||||||||
Operating margin | 9.1 | % | 11.4 | % | ||||||||||
Six Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 18,013 | $ | 18,816 | $ | (803 | ) | (4.3 | )% | |||||
Operating costs and expenses | (16,231 | ) | (16,712 | ) | 481 | (2.9 | )% | |||||||
Operating earnings | 1,782 | 2,104 | (322 | ) | (15.3 | )% | ||||||||
Operating margin | 9.9 | % | 11.2 | % |
Three Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 1,974 | $ | 2,136 | $ | (162 | ) | (7.6 | )% | |||||
Operating earnings | 159 | 331 | (172 | ) | (52.0 | )% | ||||||||
Operating margin | 8.1 | % | 15.5 | % | ||||||||||
Gulfstream aircraft deliveries (in units) | 32 | 31 | 1 | 3.2 | % | |||||||||
Six Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 3,665 | $ | 4,376 | $ | (711 | ) | (16.2 | )% | |||||
Operating earnings | 399 | 659 | (260 | ) | (39.5 | )% | ||||||||
Operating margin | 10.9 | % | 15.1 | % | ||||||||||
Gulfstream aircraft deliveries (in units) | 55 | 65 | (10 | ) | (15.4 | )% |
Second Quarter | Six Months | ||||||
Aircraft manufacturing | $ | (36 | ) | $ | (588 | ) | |
Aircraft services and completions | (126 | ) | (123 | ) | |||
Total decrease | $ | (162 | ) | $ | (711 | ) |
Second Quarter | Six Months | ||||||
Aircraft manufacturing | $ | (142 | ) | $ | (281 | ) | |
Aircraft services and completions | (29 | ) | (30 | ) | |||
Restructuring charge | (42 | ) | (42 | ) | |||
G&A/other expenses | 41 | 93 | |||||
Total decrease | $ | (172 | ) | $ | (260 | ) |
Three Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 1,754 | $ | 1,659 | $ | 95 | 5.7 | % | ||||||
Operating earnings | 239 | 242 | (3 | ) | (1.2 | )% | ||||||||
Operating margin | 13.6 | % | 14.6 | % | ||||||||||
Six Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 3,462 | $ | 3,295 | $ | 167 | 5.1 | % | ||||||
Operating earnings | 462 | 448 | 14 | 3.1 | % | |||||||||
Operating margin | 13.3 | % | 13.6 | % |
Second Quarter | Six Months | ||||||
Weapons systems and munitions | $ | 62 | $ | 111 | |||
U.S. military vehicles | (6 | ) | 59 | ||||
International military vehicles | 39 | (3 | ) | ||||
Total increase | $ | 95 | $ | 167 |
Three Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 1,884 | $ | 2,158 | $ | (274 | ) | (12.7 | )% | |||||
Operating earnings | 83 | 154 | (71 | ) | (46.1 | )% | ||||||||
Operating margin | 4.4 | % | 7.1 | % | ||||||||||
Six Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 3,872 | $ | 4,327 | $ | (455 | ) | (10.5 | )% | |||||
Operating earnings | 233 | 310 | (77 | ) | (24.8 | )% | ||||||||
Operating margin | 6.0 | % | 7.2 | % |
Second Quarter | Six Months | ||||||
Intelligence and homeland security | $ | (97 | ) | $ | (232 | ) | |
Defense | (108 | ) | (140 | ) | |||
Federal civilian | (69 | ) | (83 | ) | |||
Total decrease | $ | (274 | ) | $ | (455 | ) |
Three Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 1,181 | $ | 1,277 | $ | (96 | ) | (7.5 | )% | |||||
Operating earnings | 164 | 162 | 2 | 1.2 | % | |||||||||
Operating margin | 13.9 | % | 12.7 | % | ||||||||||
Six Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 2,297 | $ | 2,435 | $ | (138 | ) | (5.7 | )% | |||||
Operating earnings | 312 | 310 | 2 | 0.6 | % | |||||||||
Operating margin | 13.6 | % | 12.7 | % |
Second Quarter | Six Months | ||||||
Ground systems and products | $ | (90 | ) | $ | (108 | ) | |
Space, intelligence and cyber systems | 9 | (24 | ) | ||||
Naval, air and electronic systems | (15 | ) | (6 | ) | |||
Total decrease | $ | (96 | ) | $ | (138 | ) |
Three Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 2,471 | $ | 2,325 | $ | 146 | 6.3 | % | ||||||
Operating earnings | 200 | 197 | 3 | 1.5 | % | |||||||||
Operating margin | 8.1 | % | 8.5 | % | ||||||||||
Six Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 4,717 | $ | 4,383 | $ | 334 | 7.6 | % | ||||||
Operating earnings | 384 | 377 | 7 | 1.9 | % | |||||||||
Operating margin | 8.1 | % | 8.6 | % |
Second Quarter | Six Months | ||||||
U.S. Navy ship construction | $ | 141 | $ | 293 | |||
U.S. Navy ship engineering, repair and other services | 14 | 52 | |||||
Commercial ship construction | (9 | ) | (11 | ) | |||
Total increase | $ | 146 | $ | 334 |
Three Months Ended | Six Months Ended | |||||||||||||
June 28, 2020 | June 30, 2019 | June 28, 2020 | June 30, 2019 | |||||||||||
Operating (expense) income | $ | (4 | ) | $ | 4 | $ | (8 | ) | $ | — |
Three Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 5,505 | $ | 5,401 | $ | 104 | 1.9 | % | ||||||
Operating costs | (4,603 | ) | (4,342 | ) | (261 | ) | 6.0 | % | ||||||
Six Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 10,395 | $ | 10,652 | $ | (257 | ) | (2.4 | )% | |||||
Operating costs | (8,586 | ) | (8,577 | ) | (9 | ) | 0.1 | % |
Second Quarter | Six Months | ||||||
Ship construction | $ | 134 | $ | 282 | |||
Aircraft manufacturing | (36 | ) | (588 | ) | |||
Other, net | 6 | 49 | |||||
Total increase (decrease) | $ | 104 | $ | (257 | ) |
Three Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 3,759 | $ | 4,154 | $ | (395 | ) | (9.5 | )% | |||||
Operating costs | (3,246 | ) | (3,527 | ) | 281 | (8.0 | )% | |||||||
Six Months Ended | June 28, 2020 | June 30, 2019 | Variance | |||||||||||
Revenue | $ | 7,618 | $ | 8,164 | $ | (546 | ) | (6.7 | )% | |||||
Operating costs | (6,547 | ) | (6,925 | ) | 378 | (5.5 | )% |
Second Quarter | Six Months | ||||||
IT services | $ | (274 | ) | $ | (455 | ) | |
Aircraft services and completions | (126 | ) | (123 | ) | |||
Other, net | 5 | 32 | |||||
Total decrease | $ | (395 | ) | $ | (546 | ) |
Funded | Unfunded | Total Backlog | Estimated Potential Contract Value | Total Estimated Contract Value | |||||||||||||||
June 28, 2020 | |||||||||||||||||||
Aerospace | $ | 11,874 | $ | 239 | $ | 12,113 | $ | 2,834 | $ | 14,947 | |||||||||
Combat Systems | 13,863 | 242 | 14,105 | 6,399 | 20,504 | ||||||||||||||
Information Technology | 5,464 | 3,463 | 8,927 | 18,392 | 27,319 | ||||||||||||||
Mission Systems | 4,856 | 185 | 5,041 | 7,510 | 12,551 | ||||||||||||||
Marine Systems | 25,118 | 17,365 | 42,483 | 14,441 | 56,924 | ||||||||||||||
Total | $ | 61,175 | $ | 21,494 | $ | 82,669 | $ | 49,576 | $ | 132,245 | |||||||||
March 29, 2020 | |||||||||||||||||||
Aerospace | $ | 12,998 | $ | 274 | $ | 13,272 | $ | 2,837 | $ | 16,109 | |||||||||
Combat Systems | 14,373 | 244 | 14,617 | 4,253 | 18,870 | ||||||||||||||
Information Technology | 5,375 | 4,127 | 9,502 | 18,638 | 28,140 | ||||||||||||||
Mission Systems | 4,947 | 229 | 5,176 | 7,957 | 13,133 | ||||||||||||||
Marine Systems | 26,112 | 17,053 | 43,165 | 4,460 | 47,625 | ||||||||||||||
Total | $ | 63,805 | $ | 21,927 | $ | 85,732 | $ | 38,145 | $ | 123,877 |
• | $320 from the U.S. Army to upgrade Stryker vehicles to the double-V-hull A1 configuration. The contract has a maximum potential value of $2.5 billion. |
• | $215 from the Army for the production of Hydra-70 rockets. The contract has a maximum potential value of $3.4 billion. |
• | $110 from the U.S. Navy to provide missile components for the Aegis Ballistic Missile Defense program. |
• | $100 for various munitions and ordnance. |
• | $50 from the Navy to produce gun systems for the F-35 Joint Strike Fighter. |
• | $120 from the U.S. Air Force for the Battlefield Information Collection and Exploitation System (BICES) program to provide intelligence information sharing capabilities for the Department of Defense (DoD). The contract has a maximum potential value of $620. |
• | $130 from the Centers for Medicare and Medicaid Services (CMS) for several contracts, including support of the agency’s Healthcare Integrated General Ledger Accounting System (HIGLAS) application. |
• | $125 for several key contracts to provide intelligence services to classified customers. |
• | $50 from the Navy to provide training and training-related program support. |
• | $40 to provide IT, cloud support and network management services for a commercial customer. |
• | $175 from the Army for computing and communications equipment under the Common Hardware Systems-5 (CHS-5) program. |
• | $105 from the Navy to support the design and development of fire-control systems for ballistic-missile submarines for the Navy and the U.K. Royal Navy. |
• | $60 to provide sustainment services for the Navy’s next-generation Mobile User Objective System (MUOS) satellite communications system. |
• | $35 from the U.S. Coast Guard to provide system sustainment support for the Rescue 21 program. |
• | $35 from the Army to provide continued software support and engineering for the Warfighter Information Network-Tactical (WIN-T) Increment 2 program. |
• | A contract from the Navy to construct the first two Columbia-class submarines, which will be worth $11.5 billion when funding is received from Congress. |
• | $130 from the Navy for capital expenditures and industrial base development in support of the Arleigh Burke-class (DDG-51) guided-missile destroyer program. |
• | $80 from the Navy for Advanced Nuclear Plant Studies (ANPS) in support of the Columbia-class submarine program. |
• | $55 from the Navy to support the Common Missile Compartment work under joint development for the Navy and the U.K. Royal Navy. |
• | $45 from the Navy to provide ongoing lead yard services for the DDG-51 program. |
Six Months Ended | June 28, 2020 | June 30, 2019 | |||||
Net cash provided (used) by operating activities | $ | 177 | $ | (504 | ) | ||
Capital expenditures | (406 | ) | (362 | ) | |||
Free cash flow from operations | $ | (229 | ) | $ | (866 | ) | |
Cash flows as a percentage of net earnings: | |||||||
Net cash provided (used) by operating activities | 13 | % | (32 | )% | |||
Free cash flow from operations | (17 | )% | (56 | )% |
Six Months Ended | June 28, 2020 | ||
Revenue | $ | 6,241 | |
Operating costs and expenses, excluding G&A | (5,372 | ) | |
Net Earnings | 285 |
June 28, 2020 | December 31, 2019 | ||||||
Cash and equivalents | $ | 1,727 | $ | 606 | |||
Other current assets | 2,443 | 2,367 | |||||
Noncurrent assets | 2,751 | 2,549 | |||||
Total assets | $ | 6,921 | $ | 5,522 | |||
Short-term debt and current portion of long-term debt | $ | 3,734 | $ | 2,497 | |||
Other current liabilities | 2,707 | 2,642 | |||||
Long-term debt | 10,414 | 8,965 | |||||
Other noncurrent liabilities | 5,409 | 5,665 | |||||
Total liabilities | $ | 22,264 | $ | 19,769 |
• | general U.S. and international political and economic conditions; |
• | the negative impact of the COVID-19 outbreak, or other similar outbreaks; |
• | decreases in U.S. government defense spending or changing priorities within the defense budget; |
• | termination or restructuring of government contracts due to unilateral government action; |
• | differences in anticipated and actual program performance, including the ability to perform under long-term, fixed-price contracts within estimated costs, and performance issues with key suppliers and subcontractors; |
• | expected recovery on contract claims and requests for equitable adjustment; |
• | changing customer demand or preferences for business aircraft, including the effects of economic conditions on the business-aircraft market; |
• | potential for changing prices for energy and raw materials; |
• | the status or outcome of legal and/or regulatory proceedings; |
• | potential effects of audits and reviews by government agencies of our government contract performance, compliance and internal control systems and policies; |
• | risks and uncertainties relating to our acquisitions and joint ventures; and |
• | potential for cybersecurity events and other disruptions. |
Period | Total Number of Shares | Average Price per Share | |||||
Shares Delivered or Withheld Pursuant to Restricted Stock Vesting* | |||||||
3/30/20-4/26/20 | 36 | $ | 132.31 | ||||
4/27/20-5/24/20 | 295 | 116.51 | |||||
5/25/20-6/28/20 | 447 | 159.76 | |||||
778 | $ | 142.09 |
22 |
31.1 |
31.2 |
32.1 |
32.2 |
101.INS | Inline eXtensible Business Reporting Language (XBRL) Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH | Inline XBRL Taxonomy Extension Schema Document* |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document* |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document* |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document* |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document* |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101) |
GENERAL DYNAMICS CORPORATION | ||
by | ||
William A. Moss | ||
Vice President and Controller | ||
(Authorized Officer and Chief Accounting Officer) | ||
Dated: July 29, 2020 |
1. | I have reviewed this quarterly report on Form 10-Q of General Dynamics Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Phebe N. Novakovic | |
Phebe N. Novakovic | |
Chairman and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of General Dynamics Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Jason W. Aiken | |
Jason W. Aiken | |
Senior Vice President and Chief Financial Officer |
1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Phebe N. Novakovic | |
Phebe N. Novakovic | |
Chairman and Chief Executive Officer |
1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Jason W. Aiken | |
Jason W. Aiken | |
Senior Vice President and Chief Financial Officer |
H.KZ.=.W+\"9,;^S[ &5U.$Z1><>2*+24 MX6A^3)?BE2#@E$E+GG8F'/_Q_27W>@JLE[%*PZK'T^."]<8^ K^!Z<=0+,#A M=G2=$UV!O/4S@:J#/\!1?'_BIR1#J,%/%J8PKP?2"\-@_AB@ )8Q(6&;V1'H M9?0XY584W)(E"[H,Z_;5 M6W'."@O7A,T@/1ES;8J@+&EU$F'5-1_X9>PV$QR6%HSQ (R8"+(35G-5>W>Q M5IC2>[$R'V0A)%@G32+()=,'#TOX#!90 O6:HOPA65T,+0S88GPA7/A<%52 M+NU29?"F#RI4>S+W",E&BQ/1BX^@1?9 -3!290R6;G&U*QRA=)H3"3=2-!?W MB;X8C1EQ?QY!BM'2%?/!9+IPA-+8C=[XC> 8CN(XCN18CN9XCNB8CNJXCNS8 GCN[XCO 8C_(XC\)0A_1XC_B8C_JXC_S8C_[XCP '&9 "N8^! [ end
Consolidated Statement of Earnings (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
Revenue: | ||||
Revenue | $ 9,264 | $ 9,555 | $ 18,013 | $ 18,816 |
Operating costs and expenses: | ||||
General and administrative (G&A) | (574) | (596) | (1,098) | (1,210) |
Operating costs and expenses, total | (8,423) | (8,465) | (16,231) | (16,712) |
Operating earnings | 841 | 1,090 | 1,782 | 2,104 |
Interest, net | (132) | (119) | (239) | (236) |
Other, net | 18 | 12 | 32 | 30 |
Earnings before income tax | 727 | 983 | 1,575 | 1,898 |
Provision for income tax, net | (102) | (177) | (244) | (347) |
Net earnings | $ 625 | $ 806 | $ 1,331 | $ 1,551 |
Earnings per share | ||||
Basic (in dollars per share) | $ 2.18 | $ 2.80 | $ 4.63 | $ 5.39 |
Diluted (in dollars per share) | $ 2.18 | $ 2.77 | $ 4.61 | $ 5.33 |
Products | ||||
Revenue: | ||||
Revenue | $ 5,505 | $ 5,401 | $ 10,395 | $ 10,652 |
Operating costs and expenses: | ||||
Cost of sales | (4,603) | (4,342) | (8,586) | (8,577) |
Services | ||||
Revenue: | ||||
Revenue | 3,759 | 4,154 | 7,618 | 8,164 |
Operating costs and expenses: | ||||
Cost of sales | $ (3,246) | $ (3,527) | $ (6,547) | $ (6,925) |
Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 625 | $ 806 | $ 1,331 | $ 1,551 |
Gains on cash flow hedges | 170 | 51 | 71 | 68 |
Foreign currency translation adjustments | 159 | 125 | (79) | 156 |
Change in retirement plans’ funded status | 75 | 59 | 152 | 122 |
Other comprehensive income, pretax | 404 | 235 | 144 | 346 |
Provision for income tax, net | (60) | (28) | (52) | (44) |
Other comprehensive income, net of tax | 344 | 207 | 92 | 302 |
Comprehensive income | $ 969 | $ 1,013 | $ 1,423 | $ 1,853 |
Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
|
Cash flows from operating activities - continuing operations: | ||
Net earnings | $ 1,331 | $ 1,551 |
Adjustments to reconcile net earnings to net cash from operating activities: | ||
Depreciation of property, plant and equipment | 254 | 232 |
Amortization of intangible and finance lease right-of-use assets | 177 | 183 |
Equity-based compensation expense | 61 | 72 |
Deferred income tax benefit | (83) | (17) |
(Increase) decrease in assets, net of effects of business acquisitions: | ||
Accounts receivable | (1) | 64 |
Unbilled receivables | 160 | (1,074) |
Inventories | (433) | (556) |
Increase (decrease) in liabilities, net of effects of business acquisitions: | ||
Accounts payable | (782) | (301) |
Customer advances and deposits | (863) | (607) |
Other, net | 356 | (51) |
Net cash provided (used) by operating activities | 177 | (504) |
Cash flows from investing activities: | ||
Capital expenditures | (406) | (362) |
Other, net | 184 | (1) |
Net cash used by investing activities | (222) | (363) |
Cash flows from financing activities: | ||
Proceeds from fixed-rate notes | 3,960 | 0 |
Repayment of notes | (2,000) | 0 |
Proceeds from commercial paper, net | 816 | 1,394 |
Dividends paid | (610) | (563) |
Purchases of common stock | (501) | (231) |
Proceeds from commercial paper, gross (maturities greater than 3 months) | 420 | 0 |
Other, net | (118) | 30 |
Net cash provided by financing activities | 1,467 | 630 |
Net cash used by discontinued operations | (24) | (24) |
Net increase (decrease) in cash and equivalents | 1,398 | (261) |
Cash and equivalents at beginning of period | 902 | 963 |
Cash and equivalents at end of period | 2,300 | 702 |
Supplemental cash flow information: | ||
Income tax payments, net | (56) | (397) |
Interest payments | (221) | (216) |
Floating-rate notes | ||
Cash flows from financing activities: | ||
Repayment of notes | $ (500) | $ 0 |
Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($) $ in Millions |
Total |
Common Stock, Par |
Common Stock, Surplus |
Retained Earnings |
Treasury Stock |
AOCL |
---|---|---|---|---|---|---|
Beginning balance at Dec. 31, 2018 | $ 11,732 | $ 482 | $ 2,946 | $ 29,326 | $ (17,244) | $ (3,778) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | 1,551 | 1,551 | ||||
Cash dividends declared | (586) | (586) | ||||
Equity-based awards | 62 | 13 | 49 | |||
Shares purchased | (184) | (184) | ||||
Other comprehensive income (loss) | 302 | 302 | ||||
Ending balance at Jun. 30, 2019 | 12,877 | 482 | 2,959 | 30,291 | (17,379) | (3,476) |
Beginning balance at Mar. 31, 2019 | 12,234 | 482 | 2,937 | 29,781 | (17,283) | (3,683) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | 806 | 806 | ||||
Cash dividends declared | (296) | (296) | ||||
Equity-based awards | 24 | 22 | 2 | |||
Shares purchased | (98) | (98) | ||||
Other comprehensive income (loss) | 207 | 207 | ||||
Ending balance at Jun. 30, 2019 | 12,877 | 482 | 2,959 | 30,291 | (17,379) | (3,476) |
Beginning balance at Dec. 31, 2019 | 13,577 | 482 | 3,039 | 31,633 | (17,358) | (4,219) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | 1,331 | 1,331 | ||||
Cash dividends declared | (633) | (633) | ||||
Equity-based awards | 61 | 11 | 50 | |||
Shares purchased | (501) | (501) | ||||
Other comprehensive income (loss) | 92 | 92 | ||||
Ending balance at Jun. 28, 2020 | 13,890 | 482 | 3,050 | 32,294 | (17,809) | (4,127) |
Beginning balance at Mar. 29, 2020 | 13,200 | 482 | 3,015 | 31,983 | (17,809) | (4,471) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | 625 | 625 | ||||
Cash dividends declared | (314) | (314) | ||||
Equity-based awards | 35 | 35 | 0 | |||
Other comprehensive income (loss) | 344 | 344 | ||||
Ending balance at Jun. 28, 2020 | $ 13,890 | $ 482 | $ 3,050 | $ 32,294 | $ (17,809) | $ (4,127) |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization. General Dynamics is a global aerospace and defense company that offers a broad portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; information technology (IT) services; command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) solutions; and shipbuilding and ship repair. Basis of Consolidation and Classification. The unaudited Consolidated Financial Statements include the accounts of General Dynamics Corporation and our wholly owned and majority-owned subsidiaries. We eliminate all inter-company balances and transactions in the unaudited Consolidated Financial Statements. Some prior-year amounts have been reclassified among financial statement accounts or disclosures to conform to the current-year presentation. Consistent with industry practice, we classify assets and liabilities related to long-term contracts as current, even though some of these amounts may not be realized within one year. Further discussion of our significant accounting policies is contained in the other notes to these financial statements. Interim Financial Statements. The unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. These rules and regulations permit some of the information and footnote disclosures included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) to be condensed or omitted. Our fiscal quarters are typically 13 weeks in length. Because our fiscal year ends on December 31, the number of days in our first and fourth quarters varies slightly from year to year. Operating results for the three- and six-month periods ended June 28, 2020, are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. The unaudited Consolidated Financial Statements contain all adjustments that are of a normal recurring nature necessary for a fair presentation of our results of operations and financial condition for the three- and six-month periods ended June 28, 2020, and June 30, 2019. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019. Use of Estimates and Other Uncertainties. The Coronavirus (COVID-19) outbreak has caused significant disruptions to national and global economies and government activities. Our businesses have been designated as critical infrastructure by the U.S. government and many non-U.S. governments and, as such, are required to stay open. Within our Aerospace segment, quarantine and travel restrictions in connection with the outbreak have delayed aircraft deliveries, and the economic consequences of COVID-19 have impacted demand. Our defense business has also experienced disruptions, such as customer site closures, travel restrictions and social distancing requirements, which have impacted contract execution. We have instituted various initiatives throughout the company as part of our business continuity programs, and we continue to work to mitigate risk when disruptions occur. While we expect this situation to be temporary, any longer-term impact to our business is currently unknown due to the uncertainty around the outbreak’s duration and its broader impact. The nature of our business requires that we make estimates and assumptions in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. The COVID-19 outbreak has impacted these estimates and assumptions and will continue to do so. The accounting for long-term contracts requires the use of estimates (see Note C). Our estimates at the end of the second quarter included impacts from the disruptions caused by COVID-19. Given the uncertainties around the pandemic, including its duration and potential future disruptions to our supply chain or workforce, it is reasonably possible that the actual impact of the pandemic on contract costs could be materially different than our current estimates. The United States and some other governments have taken steps to provide relief. Where our customer has agreed to reimburse certain costs, such as provided for by the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), we have included those recoveries in our estimates of revenue. To the extent the U.S. government provides for reimbursement of additional costs through legislation and the U.S. Department of Defense (DoD) has available funds, we will seek reimbursement as appropriate. The company is also monitoring for other long-term impacts of the pandemic, such as the impairment of goodwill, intangibles or other long-lived assets. As of the end of the quarter, we have not identified a triggering event requiring an impairment test. Property, Plant and Equipment, Net. Property, plant and equipment (PP&E) is carried at historical cost, net of accumulated depreciation. Net PP&E consisted of the following:
Accounting Standards Updates. Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 significantly changes how entities account for credit losses for financial assets and certain other instruments, including trade receivables and contract assets, that are not measured at fair value through net income. The ASU requires a number of changes to the assessment of credit losses, including the utilization of an expected credit loss model, which requires consideration of a broader range of information to estimate expected credit losses over the entire lifetime of the asset, including losses where probability is considered remote. Additionally, the standard requires the estimation of lifetime expected losses for trade receivables and contract assets that are classified as current. We adopted the standard on a modified retrospective basis and recognized the cumulative effect as a $37 decrease to retained earnings on the date of adoption. There are other accounting standards that have been issued by the Financial Accounting Standards Board but are not yet effective. These standards are not expected to have a material impact on our results of operations, financial condition or cash flows.
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Goodwill. The changes in the carrying amount of goodwill by reporting unit were as follows:
(a)Goodwill in the Information Technology and Mission Systems reporting units is net of $536 and $1.3 billion of accumulated impairment losses, respectively. (b)Includes a business acquired in our Aerospace segment and adjustments during the purchase price allocation period. (c)Consists primarily of adjustments for foreign currency translation. Intangible Assets. Intangible assets consisted of the following:
Amortization expense is included in operating costs and expenses in the Consolidated Statement of Earnings. Amortization expense for intangible assets was $65 and $131 for the three- and six-month periods ended June 28, 2020, and $70 and $140 for the three- and six-month periods ended June 30, 2019, respectively.
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Revenue |
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Revenue Recognition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | REVENUE Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account for revenue. A contract’s transaction price is allocated to each distinct performance obligation within that contract and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. Some of our contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the product lifecycle (development, production, maintenance and support). For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service. Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct and, therefore, are accounted for as part of the existing contract. Our performance obligations are satisfied over time as work progresses or at a point in time. Revenue from products and services transferred to customers over time accounted for 76% and 78% of our revenue for the three- and six-month periods ended June 28, 2020, and 75% of our revenue for the three- and six-month periods ended June 30, 2019, respectively. Substantially all of our revenue in the defense segments is recognized over time, because control is transferred continuously to our customers. Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material, overhead and, when appropriate, G&A expenses. Revenue from goods and services transferred to customers at a point in time accounted for 24% and 22% of our revenue for the three- and six-month periods ended June 28, 2020, and 25% of our revenue for the three- and six-month periods ended June 30, 2019, respectively. The majority of our revenue recognized at a point in time is for the manufacture of business-jet aircraft in our Aerospace segment. Revenue on these contracts is recognized when the customer obtains control of the asset, which is generally upon delivery and acceptance by the customer of the fully outfitted aircraft. On June 28, 2020, we had $82.7 billion of remaining performance obligations, which we also refer to as total backlog. We expect to recognize approximately 50% of our remaining performance obligations as revenue by year-end 2021, an additional 30% by year-end 2023 and the balance thereafter. Contract Estimates. The majority of our revenue is derived from long-term contracts and programs that can span several years. Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events that often span several years. These assumptions include labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; the performance of subcontractors; and the availability and timing of funding from the customer. The nature of our contracts gives rise to several types of variable consideration, including claims and award and incentive fees. We include in our contract estimates additional revenue for submitted contract modifications or claims against the customer when we believe we have an enforceable right to the modification or claim, the amount can be estimated reliably and its realization is probable. In evaluating these criteria, we consider the contractual/legal basis for the claim, the cause of any additional costs incurred, the reasonableness of those costs and the objective evidence available to support the claim. We include award or incentive fees in the estimated transaction price when there is a basis to reasonably estimate the amount of the fee. These estimates are based on historical award experience, anticipated performance and our best judgment at the time. Because of our certainty in estimating these amounts, they are included in the transaction price of our contracts and the associated remaining performance obligations. As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the period it is identified. The impact of adjustments in contract estimates on our operating earnings can be reflected in either operating costs and expenses or revenue. The aggregate impact of adjustments in contract estimates on our revenue, operating earnings and diluted earnings per share were as follows:
No adjustment on any one contract was material to the unaudited Consolidated Financial Statements for the three- and six-month periods ended June 28, 2020, or June 30, 2019. The 2020 results reflect an approximate $40 loss in our Information Technology segment on a contract with a non-U.S. customer from schedule delays caused by COVID-related travel restrictions. Revenue by Category. Our portfolio of products and services consists of approximately 11,000 active contracts. The following series of tables presents our revenue disaggregated by several categories. Revenue by major products and services was as follows:
Revenue by contract type was as follows:
Our segments operate under fixed-price, cost-reimbursement and time-and-materials contracts. Our production contracts are primarily fixed-price. Under these contracts, we agree to perform a specific scope of work for a fixed amount. Contracts for research, engineering, repair and maintenance, and other services are typically cost-reimbursement or time-and-materials. Under cost-reimbursement contracts, the customer reimburses contract costs incurred and pays a fixed, incentive or award-based fee. These fees are determined by our ability to achieve targets set in the contract, such as cost, quality, schedule and performance. Under time-and-materials contracts, the customer pays a fixed hourly rate for direct labor and generally reimburses us for the cost of materials. Each of these contract types presents advantages and disadvantages. Typically, we assume more risk with fixed-price contracts. However, these types of contracts offer additional profits when we complete the work for less than originally estimated. Cost-reimbursement contracts generally subject us to lower risk. Accordingly, the associated base fees are usually lower than fees earned on fixed-price contracts. Under time-and-materials contracts, our profit may vary if actual labor-hour rates vary significantly from the negotiated rates. Also, because these contracts can provide little or no fee for managing material costs, the content mix can impact profitability. Revenue by customer was as follows:
Contract Balances. The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. In our defense segments, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers, particularly on our international contracts, before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the Consolidated Balance Sheet on a contract-by-contract basis at the end of each reporting period. In our Aerospace segment, we generally receive deposits from customers upon contract execution and upon achievement of contractual milestones. These deposits are liquidated when revenue is recognized. Changes in the contract asset and liability balances during the six-month period ended June 28, 2020, were not materially impacted by any other factors. Revenue recognized for the three- and six-month periods ended June 28, 2020, and June 30, 2019, that was included in the contract liability balance at the beginning of each year was $1.2 billion and $2.4 billion, and $1.2 billion and $2.9 billion, respectively. This revenue represented primarily the sale of business-jet aircraft.
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Earnings Per Share |
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Earnings Per Share | EARNINGS PER SHARE We compute basic earnings per share (EPS) using net earnings for the period and the weighted average number of common shares outstanding during the period. Diluted EPS incorporates the additional shares issuable upon the assumed exercise of stock options and the release of restricted stock and restricted stock units (RSUs). Basic and diluted weighted average shares outstanding were as follows (in thousands):
* Excludes outstanding options to purchase shares of common stock that had exercise prices in excess of the average market price of our common stock during the period and, therefore, the effect of including these options would be antidilutive. These options totaled 7,723 and 6,811 for the three- and six-month periods ended June 28, 2020, and 5,396 and 4,685 for the three- and six-month periods ended June 30, 2019, respectively.
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | FAIR VALUE Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants. Various valuation approaches can be used to determine fair value, each requiring different valuation inputs. The following hierarchy classifies the inputs used to determine fair value into three levels:
We did not have any significant non-financial assets or liabilities measured at fair value on June 28, 2020, or December 31, 2019. Our financial instruments include cash and equivalents, accounts receivable and payable, marketable securities held in trust and other investments, short- and long-term debt, and derivative financial instruments. The carrying values of cash and equivalents and accounts receivable and payable on the unaudited Consolidated Balance Sheet approximate their fair value. The following tables present the fair values of our other financial assets and liabilities on June 28, 2020, and December 31, 2019, and the basis for determining their fair values:
Our Level 1 assets include investments in publicly traded equity securities valued using quoted prices from the market exchanges. The fair value of our Level 2 assets and liabilities, which consist primarily of fixed-income securities, cash flow hedge assets and our fixed-rate notes, is determined under a market approach using valuation models that incorporate observable inputs such as interest rates, bond yields and quoted prices for similar assets. Our Level 3 assets include direct private equity investments that are measured using inputs unobservable to a marketplace participant.
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Income Taxes |
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Income Taxes | INCOME TAXES Net Deferred Tax Liability. Our deferred tax assets and liabilities are included in other noncurrent assets and liabilities on the Consolidated Balance Sheet. Our net deferred tax liability consisted of the following:
Tax Uncertainties. We participate in the Internal Revenue Service (IRS) Compliance Assurance Process (CAP), a real-time audit of our consolidated federal corporate income tax return. The IRS has examined our consolidated federal income tax returns through 2018. For all periods open to examination by tax authorities, we periodically assess our liabilities and contingencies based on the latest available information. Where we believe there is more than a 50% chance that our tax position will not be sustained, we record our best estimate of the resulting tax liability, including interest, in the Consolidated Financial Statements. We include any interest or penalties incurred in connection with income taxes as part of income tax expense. Based on all known facts and circumstances and current tax law, we believe the total amount of any unrecognized tax benefits on June 28, 2020, was not material to our results of operations, financial condition or cash flows. In addition, there are no tax positions for which it is reasonably possible that the unrecognized tax benefits will vary significantly over the next 12 months, producing, individually or in the aggregate, a material effect on our results of operations, financial condition or cash flows.
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Unbilled Receivables |
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Contractors [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Unbilled Receivables | UNBILLED RECEIVABLES Unbilled receivables represent revenue recognized on long-term contracts (contract costs and estimated profits) less associated advances and progress billings. These amounts will be billed in accordance with the agreed-upon contractual terms. Unbilled receivables consisted of the following:
On June 28, 2020, and December 31, 2019, net unbilled receivables included $2.3 billion and $2.9 billion, respectively, associated with a large international wheeled armored vehicle contract in our Combat Systems segment. We had experienced delays in payment under the contract in 2018 and 2019, which resulted in the large unbilled receivables balance. In March 2020, we finalized a new agreement with the customer that included a revised payment schedule. Under the new agreement, we received two $500 progress payments, one in each of the first and second quarters of 2020. Further progress payments will be due annually that will liquidate the net unbilled receivables balance over the next few years.
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Inventories |
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Inventories | INVENTORIES The majority of our inventories are for business-jet aircraft. Our inventories are stated at the lower of cost or net realizable value. Work in process represents largely labor, material and overhead costs associated with aircraft in the manufacturing process and is based primarily on the estimated average unit cost in a production lot. Raw materials are valued primarily on the first-in, first-out method. We record pre-owned aircraft acquired in connection with the sale of new aircraft at the lower of the trade-in value or the estimated net realizable value. Inventories consisted of the following:
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Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | DEBT Debt consisted of the following:
In March 2020, we issued $4 billion of fixed-rate notes. The proceeds were used to repay $2.5 billion of fixed- and floating-rate notes that matured in May 2020 and for general corporate purposes, including the repayment of a portion of our borrowings under our commercial paper program as they mature. We also amended two of our credit facilities to, among other things, extend their expiration dates. On June 28, 2020, we had $1.2 billion of commercial paper outstanding with a dollar-weighted average interest rate of 2.104%. Separately, we have $5 billion in committed bank credit facilities for general corporate purposes and working capital needs and to support our commercial paper issuances. These credit facilities include a $2 billion 364-day facility expiring in March 2021, a $2 billion multi-year facility expiring in March 2023 and a $1 billion multi-year facility expiring in March 2025. We may renew or replace these credit facilities in whole or in part at or prior to their expiration dates. We also have an effective shelf registration on file with the Securities and Exchange Commission that allows us to access the debt markets. Our financing arrangements contain a number of customary covenants and restrictions. We were in compliance with all covenants and restrictions on June 28, 2020.
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Other Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities | OTHER LIABILITIES A summary of significant other liabilities by balance sheet caption follows:
(a)Consists primarily of dividends payable, taxes payable, environmental remediation reserves, warranty reserves, deferred revenue and supplier contributions in the Aerospace segment, liabilities of discontinued operations, finance lease liabilities and insurance-related costs. (b)Consists primarily of warranty reserves, workers’ compensation liabilities, finance lease liabilities and liabilities of discontinued operations.
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Shareholders' Equity |
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Shareholders' Equity | SHAREHOLDERS’ EQUITY Share Repurchases. Our board of directors from time to time authorizes management’s repurchase of outstanding shares of our common stock on the open market. On March 4, 2020, the board of directors authorized management to repurchase up to 10 million additional shares of the company’s outstanding stock. In the six-month period ended June 28, 2020, we repurchased 3.4 million of our outstanding shares for $501. We did not repurchase any shares in the second quarter of 2020. On June 28, 2020, 13 million shares remained authorized by our board of directors for repurchase, representing 4.5% of our total shares outstanding. We repurchased 1.1 million shares for $184 in the six-month period ended June 30, 2019. Dividends per Share. Our board of directors declared dividends of $1.10 and $2.20 per share for the three- and six-month periods ended June 28, 2020, and $1.02 and $2.04 per share for the three- and six-month periods ended June 30, 2019, respectively. We paid cash dividends of $315 and $610 for the three- and six-month periods ended June 28, 2020, and $295 and $563 for the three- and six-month periods ended June 30, 2019, respectively. Accumulated Other Comprehensive Loss. The changes, pretax and net of tax, in each component of accumulated other comprehensive loss (AOCL) consisted of the following:
Amounts reclassified out of AOCL related primarily to changes in our retirement plans’ funded status and included pretax recognized net actuarial losses and amortization of prior service credit. See Note N for these amounts, which are included in our net periodic pension and other post-retirement benefit cost.
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Derivative Financial Instruments and Hedging Activities |
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Jun. 28, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments and Hedging Activities | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES We are exposed to market risk, primarily from foreign currency exchange rates, interest rates, commodity prices and investments. We may use derivative financial instruments to hedge some of these risks as described below. We do not use derivative financial instruments for trading or speculative purposes. Foreign Currency Risk. Our foreign currency exchange rate risk relates to receipts from customers, payments to suppliers and inter-company transactions denominated in foreign currencies. To the extent possible, we include terms in our contracts that are designed to protect us from this risk. Otherwise, we enter into derivative financial instruments, principally foreign currency forward purchase and sale contracts, designed to offset and minimize our risk. The dollar-weighted two-year average maturity of these instruments generally matches the duration of the activities that are at risk. Interest Rate Risk. Our financial instruments subject to interest rate risk include variable-rate commercial paper and fixed- and floating-rate long-term debt obligations. We entered into derivative financial instruments, specifically interest rate swap contracts, to eliminate our floating-rate interest risk. The interest rate risk associated with our financial instruments is not material. Commodity Price Risk. We are subject to rising labor and commodity price risk, primarily on long-term, fixed-price contracts. To the extent possible, we include terms in our contracts that are designed to protect us from these risks. Some of the protective terms included in our contracts are considered derivative financial instruments but are not accounted for separately, because they are clearly and closely related to the host contract. We have not entered into any material commodity hedging contracts but may do so as circumstances warrant. We do not believe that changes in labor or commodity prices will have a material impact on our results of operations or cash flows. Investment Risk. Our investment policy allows for purchases of fixed-income securities with an investment-grade rating and a maximum maturity of up to five years. On June 28, 2020, and December 31, 2019, we held $2.3 billion and $902 in cash and equivalents, respectively, but held no marketable securities other than those held in trust to meet some of our obligations under workers’ compensation and non-qualified supplemental executive retirement plans. On June 28, 2020, and December 31, 2019, we held marketable securities in trust of $199 and $207, respectively. These marketable securities are reflected at fair value on the Consolidated Balance Sheet in other current and noncurrent assets. See Note E for additional details. Hedging Activities. We had notional forward exchange and interest rate swap contracts outstanding of $10 billion and $5 billion on June 28, 2020, and December 31, 2019, respectively. These derivative financial instruments are cash flow hedges, and are reflected at fair value on the Consolidated Balance Sheet in other current assets and liabilities. See Note E for additional details. Changes in fair value (gains and losses) related to derivative financial instruments that qualify as cash flow hedges are deferred in AOCL until the underlying transaction is reflected in earnings. Alternatively, gains and losses on derivative financial instruments that do not qualify for hedge accounting are recorded each period in earnings. All gains and losses from derivative financial instruments recognized in the Consolidated Statement of Earnings are presented in the same line item as the underlying transaction, either operating costs and expenses or interest expense. Net gains and losses recognized in earnings on derivative financial instruments that do not qualify for hedge accounting were not material to our results of operations for the three- and six-month periods ended June 28, 2020, and June 30, 2019. Net gains and losses reclassified to earnings from AOCL related to qualified hedges were also not material to our results of operations for the three- and six-month periods ended June 28, 2020, and June 30, 2019, and we do not expect the amount of these gains and losses that will be reclassified to earnings during the next 12 months to be material. We had no material derivative financial instruments designated as fair value or net investment hedges on June 28, 2020, or December 31, 2019. Foreign Currency Financial Statement Translation. We translate foreign currency balance sheets from our international businesses’ functional currency (generally the respective local currency) to U.S. dollars at the end-of-period exchange rates, and statements of earnings at the average exchange rates for each period. The resulting foreign currency translation adjustments are a component of AOCL. We do not hedge the fluctuation in reported revenue and earnings resulting from the translation of these international operations’ results into U.S. dollars. The impact of translating our non-U.S. operations’ revenue into U.S. dollars was not material to our results of operations for the three- and six-month periods ended June 28, 2020, or June 30, 2019. In addition, the effect of changes in foreign exchange rates on non-U.S. cash balances was not material for the six-month periods ended June 28, 2020, and June 30, 2019.
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Commitments And Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments And Contingencies | COMMITMENTS AND CONTINGENCIES Litigation In 2015, Electric Boat Corporation, a subsidiary of General Dynamics Corporation, received a Civil Investigative Demand from the U.S. Department of Justice regarding an investigation of potential False Claims Act violations relating to alleged failures of Electric Boat’s quality system with respect to allegedly non-conforming parts purchased from a supplier. In 2016, Electric Boat was made aware that it is a defendant in a lawsuit related to this matter which had been filed under seal in U.S. district court. Also in 2016, the Suspending and Debarring Official for the U.S. Department of the Navy issued a Show Cause Letter to Electric Boat requesting that Electric Boat respond to the official’s concerns regarding Electric Boat’s oversight and management with respect to its quality assurance systems for subcontractors and suppliers. Electric Boat responded to the Show Cause Letter and engaged in discussions with the U.S. government. In the third quarter of 2019, the Department of Justice declined to intervene in the qui tam action, noting that its investigation continues, and the court unsealed the relator’s complaint. In the first quarter of 2020, the relator filed an amended complaint. Given the current status of these matters, we are unable to express a view regarding the ultimate outcome or, if the outcome is adverse, to estimate an amount or range of reasonably possible loss. Depending on the outcome of these matters, there could be a material impact on our results of operations, financial condition and cash flows. Additionally, various other claims and legal proceedings incidental to the normal course of business are pending or threatened against us. These other matters relate to such issues as government investigations and claims, the protection of the environment, asbestos-related claims and employee-related matters. The nature of litigation is such that we cannot predict the outcome of these other matters. However, based on information currently available, we believe any potential liabilities in these other proceedings, individually or in the aggregate, will not have a material impact on our results of operations, financial condition or cash flows. Environmental We are subject to and affected by a variety of federal, state, local and foreign environmental laws and regulations. We are directly or indirectly involved in environmental investigations or remediation at some of our current and former facilities and third-party sites that we do not own but where we have been designated a Potentially Responsible Party (PRP) by the U.S. Environmental Protection Agency or a state environmental agency. Based on historical experience, we expect that a significant percentage of the total remediation and compliance costs associated with these facilities will continue to be allowable contract costs and, therefore, recoverable under U.S. government contracts. As required, we provide financial assurance for certain sites undergoing or subject to investigation or remediation. We accrue environmental costs when it is probable that a liability has been incurred and the amount can be reasonably estimated. Where applicable, we seek insurance recovery for costs related to environmental liabilities. We do not record insurance recoveries before collection is considered probable. Based on all known facts and analyses, we do not believe that our liability at any individual site, or in the aggregate, arising from such environmental conditions will be material to our results of operations, financial condition or cash flows. We also do not believe that the range of reasonably possible additional loss beyond what has been recorded would be material to our results of operations, financial condition or cash flows. Other Government Contracts. As a government contractor, we are subject to U.S. government audits and investigations relating to our operations, including claims for fines, penalties, and compensatory and treble damages. We believe the outcome of such ongoing government audits and investigations will not have a material impact on our results of operations, financial condition or cash flows. In the performance of our contracts, we routinely request contract modifications that require additional funding from the customer. Most often, these requests are due to customer-directed changes in the scope of work. While we are entitled to recovery of these costs under our contracts, the administrative process with our customer may be protracted. Based on the circumstances, we periodically file requests for equitable adjustment (REAs) that are sometimes converted into claims. In some cases, these requests are disputed by our customer. We believe our outstanding modifications, REAs and other claims will be resolved without material impact to our results of operations, financial condition or cash flows. Letters of Credit and Guarantees. In the ordinary course of business, we have entered into letters of credit, bank guarantees, surety bonds and other similar arrangements with financial institutions and insurance carriers totaling approximately $1.2 billion on June 28, 2020. In addition, from time to time and in the ordinary course of business, we contractually guarantee the payment or performance of our subsidiaries arising under certain contracts. Aircraft Trade-ins. In connection with orders for new aircraft in contract backlog, our Aerospace segment has outstanding options with some customers to trade in aircraft as partial consideration in their new-aircraft transaction. These trade-in commitments are generally structured to establish the fair market value of the trade-in aircraft at a date generally 45 or fewer days preceding delivery of the new aircraft to the customer. At that time, the customer is required to either exercise the option or allow its expiration. Other trade-in commitments are structured to guarantee a pre-determined trade-in value. These commitments present more risk in the event of an adverse change in market conditions. In either case, any excess of the pre-established trade-in price above the fair market value at the time the new aircraft is delivered is treated as a reduction of revenue in the new-aircraft sales transaction. As of June 28, 2020, the estimated change in fair market values from the date of the commitments was not material. Product Warranties. We provide warranties to our customers associated with certain product sales. We record estimated warranty costs in the period in which the related products are delivered. The warranty liability recorded at each balance sheet date is based generally on the number of months of warranty coverage remaining for the products delivered and the average historical monthly warranty payments. Warranty obligations incurred in connection with long-term production contracts are accounted for within the contract estimates at completion. Our other warranty obligations, primarily for business-jet aircraft, are included in other current and noncurrent liabilities on the Consolidated Balance Sheet. The changes in the carrying amount of warranty liabilities for the six-month periods ended June 28, 2020, and June 30, 2019, were as follows:
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Retirement Plans |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans | RETIREMENT PLANS We provide defined-contribution benefits to eligible employees, as well as some remaining defined-benefit pension and other post-retirement benefits. Net periodic defined-benefit pension and other post-retirement benefit (credit) cost for the three- and six-month periods ended June 28, 2020, and June 30, 2019, consisted of the following:
Our contractual arrangements with the U.S. government provide for the recovery of contributions to our pension and other post-retirement benefit plans covering employees working in our defense segments. For non-funded plans, our government contracts allow us to recover claims paid. Following payment, these recoverable amounts are allocated to contracts and billed to the customer in accordance with the Cost Accounting Standards (CAS) and specific contractual terms. For some of these plans, the cumulative pension and other post-retirement benefit cost exceeds the amount currently allocable to contracts. To the extent we consider recovery of the cost to be probable based on our backlog and probable follow-on contracts, we defer the excess in other contract costs in other current assets on the Consolidated Balance Sheet until the cost is allocable to contracts. For other plans, the amount allocated to contracts and included in revenue has exceeded the plans’ cumulative benefit cost. We have similarly deferred recognition of these excess earnings on the Consolidated Balance Sheet.
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Segment Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | SEGMENT INFORMATION We have five operating segments: Aerospace, Combat Systems, Information Technology, Mission Systems and Marine Systems. We organize our segments in accordance with the nature of products and services offered. We measure each segment’s profitability based on operating earnings. As a result, we do not allocate net interest, other income and expense items, and income taxes to our segments. Summary financial information for each of our segments follows:
Corporate operating results have two primary components: pension and other post-retirement benefit income, and equity-based compensation expense. We are required to report the non-service cost components of pension and other post-retirement benefit cost (e.g., interest cost) in other income (expense) in the Consolidated Statement of Earnings. As described in Note N, in our defense segments, pension and other post-retirement benefit costs are recoverable contract costs. Therefore, the non-service cost components are included in the operating results of these segments, but an offset is reported in Corporate.
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Summary of Significant Accounting Policies (Policies) |
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Basis of Consolidation and Classification | Basis of Consolidation and Classification. The unaudited Consolidated Financial Statements include the accounts of General Dynamics Corporation and our wholly owned and majority-owned subsidiaries. We eliminate all inter-company balances and transactions in the unaudited Consolidated Financial Statements. Some prior-year amounts have been reclassified among financial statement accounts or disclosures to conform to the current-year presentation. Consistent with industry practice, we classify assets and liabilities related to long-term contracts as current, even though some of these amounts may not be realized within one year.
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Interim Financial Statements | Interim Financial Statements. The unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. These rules and regulations permit some of the information and footnote disclosures included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) to be condensed or omitted. Our fiscal quarters are typically 13 weeks in length. Because our fiscal year ends on December 31, the number of days in our first and fourth quarters varies slightly from year to year. Operating results for the three- and six-month periods ended June 28, 2020, are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. The unaudited Consolidated Financial Statements contain all adjustments that are of a normal recurring nature necessary for a fair presentation of our results of operations and financial condition for the three- and six-month periods ended June 28, 2020, and June 30, 2019. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.
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Use of Estimates and Other Uncertainties | Use of Estimates and Other Uncertainties. The Coronavirus (COVID-19) outbreak has caused significant disruptions to national and global economies and government activities. Our businesses have been designated as critical infrastructure by the U.S. government and many non-U.S. governments and, as such, are required to stay open. Within our Aerospace segment, quarantine and travel restrictions in connection with the outbreak have delayed aircraft deliveries, and the economic consequences of COVID-19 have impacted demand. Our defense business has also experienced disruptions, such as customer site closures, travel restrictions and social distancing requirements, which have impacted contract execution. We have instituted various initiatives throughout the company as part of our business continuity programs, and we continue to work to mitigate risk when disruptions occur. While we expect this situation to be temporary, any longer-term impact to our business is currently unknown due to the uncertainty around the outbreak’s duration and its broader impact. The nature of our business requires that we make estimates and assumptions in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. The COVID-19 outbreak has impacted these estimates and assumptions and will continue to do so. The accounting for long-term contracts requires the use of estimates (see Note C). Our estimates at the end of the second quarter included impacts from the disruptions caused by COVID-19. Given the uncertainties around the pandemic, including its duration and potential future disruptions to our supply chain or workforce, it is reasonably possible that the actual impact of the pandemic on contract costs could be materially different than our current estimates. The United States and some other governments have taken steps to provide relief. Where our customer has agreed to reimburse certain costs, such as provided for by the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), we have included those recoveries in our estimates of revenue. To the extent the U.S. government provides for reimbursement of additional costs through legislation and the U.S. Department of Defense (DoD) has available funds, we will seek reimbursement as appropriate. The company is also monitoring for other long-term impacts of the pandemic, such as the impairment of goodwill, intangibles or other long-lived assets. As of the end of the quarter, we have not identified a triggering event requiring an impairment test.
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Accounting Standards Updates | Accounting Standards Updates. Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 significantly changes how entities account for credit losses for financial assets and certain other instruments, including trade receivables and contract assets, that are not measured at fair value through net income. The ASU requires a number of changes to the assessment of credit losses, including the utilization of an expected credit loss model, which requires consideration of a broader range of information to estimate expected credit losses over the entire lifetime of the asset, including losses where probability is considered remote. Additionally, the standard requires the estimation of lifetime expected losses for trade receivables and contract assets that are classified as current. We adopted the standard on a modified retrospective basis and recognized the cumulative effect as a $37 decrease to retained earnings on the date of adoption. There are other accounting standards that have been issued by the Financial Accounting Standards Board but are not yet effective. These standards are not expected to have a material impact on our results of operations, financial condition or cash flows.
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Revenue Recognition | Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account for revenue. A contract’s transaction price is allocated to each distinct performance obligation within that contract and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct. Some of our contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the product lifecycle (development, production, maintenance and support). For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service. Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct and, therefore, are accounted for as part of the existing contract. Our performance obligations are satisfied over time as work progresses or at a point in time. Revenue from products and services transferred to customers over time accounted for 76% and 78% of our revenue for the three- and six-month periods ended June 28, 2020, and 75% of our revenue for the three- and six-month periods ended June 30, 2019, respectively. Substantially all of our revenue in the defense segments is recognized over time, because control is transferred continuously to our customers. Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material, overhead and, when appropriate, G&A expenses. Revenue from goods and services transferred to customers at a point in time accounted for 24% and 22% of our revenue for the three- and six-month periods ended June 28, 2020, and 25% of our revenue for the three- and six-month periods ended June 30, 2019, respectively. The majority of our revenue recognized at a point in time is for the manufacture of business-jet aircraft in our Aerospace segment. Revenue on these contracts is recognized when the customer obtains control of the asset, which is generally upon delivery and acceptance by the customer of the fully outfitted aircraft. On June 28, 2020, we had $82.7 billion of remaining performance obligations, which we also refer to as total backlog. We expect to recognize approximately 50% of our remaining performance obligations as revenue by year-end 2021, an additional 30% by year-end 2023 and the balance thereafter. Contract Estimates. The majority of our revenue is derived from long-term contracts and programs that can span several years. Accounting for long-term contracts and programs involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events that often span several years. These assumptions include labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; the performance of subcontractors; and the availability and timing of funding from the customer. The nature of our contracts gives rise to several types of variable consideration, including claims and award and incentive fees. We include in our contract estimates additional revenue for submitted contract modifications or claims against the customer when we believe we have an enforceable right to the modification or claim, the amount can be estimated reliably and its realization is probable. In evaluating these criteria, we consider the contractual/legal basis for the claim, the cause of any additional costs incurred, the reasonableness of those costs and the objective evidence available to support the claim. We include award or incentive fees in the estimated transaction price when there is a basis to reasonably estimate the amount of the fee. These estimates are based on historical award experience, anticipated performance and our best judgment at the time. Because of our certainty in estimating these amounts, they are included in the transaction price of our contracts and the associated remaining performance obligations. As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the period it is identified. The impact of adjustments in contract estimates on our operating earnings can be reflected in either operating costs and expenses or revenue.Contract Balances. The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. In our defense segments, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., biweekly or monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers, particularly on our international contracts, before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the Consolidated Balance Sheet on a contract-by-contract basis at the end of each reporting period. In our Aerospace segment, we generally receive deposits from customers upon contract execution and upon achievement of contractual milestones. These deposits are liquidated when revenue is recognized.Our segments operate under fixed-price, cost-reimbursement and time-and-materials contracts. Our production contracts are primarily fixed-price. Under these contracts, we agree to perform a specific scope of work for a fixed amount. Contracts for research, engineering, repair and maintenance, and other services are typically cost-reimbursement or time-and-materials. Under cost-reimbursement contracts, the customer reimburses contract costs incurred and pays a fixed, incentive or award-based fee. These fees are determined by our ability to achieve targets set in the contract, such as cost, quality, schedule and performance. Under time-and-materials contracts, the customer pays a fixed hourly rate for direct labor and generally reimburses us for the cost of materials. Each of these contract types presents advantages and disadvantages. Typically, we assume more risk with fixed-price contracts. However, these types of contracts offer additional profits when we complete the work for less than originally estimated. Cost-reimbursement contracts generally subject us to lower risk. Accordingly, the associated base fees are usually lower than fees earned on fixed-price contracts. Under time-and-materials contracts, our profit may vary if actual labor-hour rates vary significantly from the negotiated rates. Also, because these contracts can provide little or no fee for managing material costs, the content mix can impact profitability.
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Earnings Per Share | We compute basic earnings per share (EPS) using net earnings for the period and the weighted average number of common shares outstanding during the period. Diluted EPS incorporates the additional shares issuable upon the assumed exercise of stock options and the release of restricted stock and restricted stock units (RSUs).
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Fair Value of Financial Instruments | Our financial instruments include cash and equivalents, accounts receivable and payable, marketable securities held in trust and other investments, short- and long-term debt, and derivative financial instruments. The carrying values of cash and equivalents and accounts receivable and payable on the unaudited Consolidated Balance Sheet approximate their fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants. Various valuation approaches can be used to determine fair value, each requiring different valuation inputs. The following hierarchy classifies the inputs used to determine fair value into three levels:
• Level 3 - unobservable inputs significant to the fair value measurement. Our Level 1 assets include investments in publicly traded equity securities valued using quoted prices from the market exchanges. The fair value of our Level 2 assets and liabilities, which consist primarily of fixed-income securities, cash flow hedge assets and our fixed-rate notes, is determined under a market approach using valuation models that incorporate observable inputs such as interest rates, bond yields and quoted prices for similar assets. Our Level 3 assets include direct private equity investments that are measured using inputs unobservable to a marketplace participant.
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Tax Uncertainties | Tax Uncertainties. We participate in the Internal Revenue Service (IRS) Compliance Assurance Process (CAP), a real-time audit of our consolidated federal corporate income tax return. The IRS has examined our consolidated federal income tax returns through 2018. For all periods open to examination by tax authorities, we periodically assess our liabilities and contingencies based on the latest available information. Where we believe there is more than a 50% chance that our tax position will not be sustained, we record our best estimate of the resulting tax liability, including interest, in the Consolidated Financial Statements. We include any interest or penalties incurred in connection with income taxes as part of income tax expense. Based on all known facts and circumstances and current tax law, we believe the total amount of any unrecognized tax benefits on June 28, 2020, was not material to our results of operations, financial condition or cash flows. In addition, there are no tax positions for which it is reasonably possible that the unrecognized tax benefits will vary significantly over the next 12 months, producing, individually or in the aggregate, a material effect on our results of operations, financial condition or cash flows.
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Unbilled Receivables | Unbilled receivables represent revenue recognized on long-term contracts (contract costs and estimated profits) less associated advances and progress billings. These amounts will be billed in accordance with the agreed-upon contractual terms. | ||||||||
Inventories | The majority of our inventories are for business-jet aircraft. Our inventories are stated at the lower of cost or net realizable value. Work in process represents largely labor, material and overhead costs associated with aircraft in the manufacturing process and is based primarily on the estimated average unit cost in a production lot. Raw materials are valued primarily on the first-in, first-out method. We record pre-owned aircraft acquired in connection with the sale of new aircraft at the lower of the trade-in value or the estimated net realizable value.
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Derivative Financial Instruments and Hedging Activities | We are exposed to market risk, primarily from foreign currency exchange rates, interest rates, commodity prices and investments. We may use derivative financial instruments to hedge some of these risks as described below. We do not use derivative financial instruments for trading or speculative purposes. Interest Rate Risk. Our financial instruments subject to interest rate risk include variable-rate commercial paper and fixed- and floating-rate long-term debt obligations. We entered into derivative financial instruments, specifically interest rate swap contracts, to eliminate our floating-rate interest risk. The interest rate risk associated with our financial instruments is not material. Commodity Price Risk. We are subject to rising labor and commodity price risk, primarily on long-term, fixed-price contracts. To the extent possible, we include terms in our contracts that are designed to protect us from these risks. Some of the protective terms included in our contracts are considered derivative financial instruments but are not accounted for separately, because they are clearly and closely related to the host contract. We have not entered into any material commodity hedging contracts but may do so as circumstances warrant. We do not believe that changes in labor or commodity prices will have a material impact on our results of operations or cash flows. Investment Risk. Our investment policy allows for purchases of fixed-income securities with an investment-grade rating and a maximum maturity of up to five years.Foreign Currency Risk. Our foreign currency exchange rate risk relates to receipts from customers, payments to suppliers and inter-company transactions denominated in foreign currencies. To the extent possible, we include terms in our contracts that are designed to protect us from this risk. Otherwise, we enter into derivative financial instruments, principally foreign currency forward purchase and sale contracts, designed to offset and minimize our risk. The dollar-weighted two-year average maturity of these instruments generally matches the duration of the activities that are at risk.Hedging Activities. We had notional forward exchange and interest rate swap contracts outstanding of $10 billion and $5 billion on June 28, 2020, and December 31, 2019, respectively. These derivative financial instruments are cash flow hedges, and are reflected at fair value on the Consolidated Balance Sheet in other current assets and liabilities. See Note E for additional details. Changes in fair value (gains and losses) related to derivative financial instruments that qualify as cash flow hedges are deferred in AOCL until the underlying transaction is reflected in earnings. Alternatively, gains and losses on derivative financial instruments that do not qualify for hedge accounting are recorded each period in earnings. All gains and losses from derivative financial instruments recognized in the Consolidated Statement of Earnings are presented in the same line item as the underlying transaction, either operating costs and expenses or interest expense.
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Foreign Currency and Financial Statement Translation | Foreign Currency Financial Statement Translation. We translate foreign currency balance sheets from our international businesses’ functional currency (generally the respective local currency) to U.S. dollars at the end-of-period exchange rates, and statements of earnings at the average exchange rates for each period. The resulting foreign currency translation adjustments are a component of AOCL. We do not hedge the fluctuation in reported revenue and earnings resulting from the translation of these international operations’ results into U.S. dollars.
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Commitments and Contingencies | Environmental We are subject to and affected by a variety of federal, state, local and foreign environmental laws and regulations. We are directly or indirectly involved in environmental investigations or remediation at some of our current and former facilities and third-party sites that we do not own but where we have been designated a Potentially Responsible Party (PRP) by the U.S. Environmental Protection Agency or a state environmental agency. Based on historical experience, we expect that a significant percentage of the total remediation and compliance costs associated with these facilities will continue to be allowable contract costs and, therefore, recoverable under U.S. government contracts. As required, we provide financial assurance for certain sites undergoing or subject to investigation or remediation. We accrue environmental costs when it is probable that a liability has been incurred and the amount can be reasonably estimated. Where applicable, we seek insurance recovery for costs related to environmental liabilities. We do not record insurance recoveries before collection is considered probable. Based on all known facts and analyses, we do not believe that our liability at any individual site, or in the aggregate, arising from such environmental conditions will be material to our results of operations, financial condition or cash flows. We also do not believe that the range of reasonably possible additional loss beyond what has been recorded would be material to our results of operations, financial condition or cash flows. Other Government Contracts. As a government contractor, we are subject to U.S. government audits and investigations relating to our operations, including claims for fines, penalties, and compensatory and treble damages. We believe the outcome of such ongoing government audits and investigations will not have a material impact on our results of operations, financial condition or cash flows. In the performance of our contracts, we routinely request contract modifications that require additional funding from the customer. Most often, these requests are due to customer-directed changes in the scope of work. While we are entitled to recovery of these costs under our contracts, the administrative process with our customer may be protracted. Based on the circumstances, we periodically file requests for equitable adjustment (REAs) that are sometimes converted into claims. In some cases, these requests are disputed by our customer. We believe our outstanding modifications, REAs and other claims will be resolved without material impact to our results of operations, financial condition or cash flows.
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Product Warranties | Product Warranties. We provide warranties to our customers associated with certain product sales. We record estimated warranty costs in the period in which the related products are delivered. The warranty liability recorded at each balance sheet date is based generally on the number of months of warranty coverage remaining for the products delivered and the average historical monthly warranty payments. Warranty obligations incurred in connection with long-term production contracts are accounted for within the contract estimates at completion. Our other warranty obligations, primarily for business-jet aircraft, are included in other current and noncurrent liabilities on the Consolidated Balance Sheet.
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Retirement Plans | We provide defined-contribution benefits to eligible employees, as well as some remaining defined-benefit pension and other post-retirement benefits. Our contractual arrangements with the U.S. government provide for the recovery of contributions to our pension and other post-retirement benefit plans covering employees working in our defense segments. For non-funded plans, our government contracts allow us to recover claims paid. Following payment, these recoverable amounts are allocated to contracts and billed to the customer in accordance with the Cost Accounting Standards (CAS) and specific contractual terms. For some of these plans, the cumulative pension and other post-retirement benefit cost exceeds the amount currently allocable to contracts. To the extent we consider recovery of the cost to be probable based on our backlog and probable follow-on contracts, we defer the excess in other contract costs in other current assets on the Consolidated Balance Sheet until the cost is allocable to contracts. For other plans, the amount allocated to contracts and included in revenue has exceeded the plans’ cumulative benefit cost. We have similarly deferred recognition of these excess earnings on the Consolidated Balance Sheet.
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Segment Information | We have five operating segments: Aerospace, Combat Systems, Information Technology, Mission Systems and Marine Systems. We organize our segments in accordance with the nature of products and services offered. We measure each segment’s profitability based on operating earnings. As a result, we do not allocate net interest, other income and expense items, and income taxes to our segments. Corporate operating results have two primary components: pension and other post-retirement benefit income, and equity-based compensation expense. We are required to report the non-service cost components of pension and other post-retirement benefit cost (e.g., interest cost) in other income (expense) in the Consolidated Statement of Earnings. As described in Note N, in our defense segments, pension and other post-retirement benefit costs are recoverable contract costs. Therefore, the non-service cost components are included in the operating results of these segments, but an offset is reported in Corporate.
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Summary of Significant Accounting Policies (Tables) |
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Schedule of Property, Plant and Equipment, Net | Property, plant and equipment (PP&E) is carried at historical cost, net of accumulated depreciation. Net PP&E consisted of the following:
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Goodwill and Intangible Assets (Tables) |
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Changes in Carrying Amount of Goodwill By Reporting Unit | The changes in the carrying amount of goodwill by reporting unit were as follows:
(a)Goodwill in the Information Technology and Mission Systems reporting units is net of $536 and $1.3 billion of accumulated impairment losses, respectively. (b)Includes a business acquired in our Aerospace segment and adjustments during the purchase price allocation period. (c)Consists primarily of adjustments for foreign currency translation.
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Intangible Assets | Intangible assets consisted of the following:
(b) Consists of acquired backlog and probable follow-on work and associated customer relationships.
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Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Impact of Adjustments in Contract Estimates | The aggregate impact of adjustments in contract estimates on our revenue, operating earnings and diluted earnings per share were as follows:
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Revenue by Major Product Line | Revenue by major products and services was as follows:
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Revenue by Contract Type | Revenue by contract type was as follows:
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Revenue by Customer | Revenue by customer was as follows:
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Earnings Per Share (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and diluted weighted average shares outstanding | Basic and diluted weighted average shares outstanding were as follows (in thousands):
* Excludes outstanding options to purchase shares of common stock that had exercise prices in excess of the average market price of our common stock during the period and, therefore, the effect of including these options would be antidilutive. These options totaled 7,723 and 6,811 for the three- and six-month periods ended June 28, 2020, and 5,396 and 4,685 for the three- and six-month periods ended June 30, 2019, respectively.
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Fair Value (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Values of Other Financial Assets and Liabilities | The following tables present the fair values of our other financial assets and liabilities on June 28, 2020, and December 31, 2019, and the basis for determining their fair values:
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Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Net Deferred Tax Assets and Liabilities | Our net deferred tax liability consisted of the following:
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Unbilled Receivables (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
Contractors [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Unbilled Receivables | Unbilled receivables consisted of the following:
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Inventories (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Inventories | Inventories consisted of the following:
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Debt (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Debt | Debt consisted of the following:
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Other Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Significant Other Liabilities By Balance Sheet Caption | A summary of significant other liabilities by balance sheet caption follows:
(a)Consists primarily of dividends payable, taxes payable, environmental remediation reserves, warranty reserves, deferred revenue and supplier contributions in the Aerospace segment, liabilities of discontinued operations, finance lease liabilities and insurance-related costs. (b)Consists primarily of warranty reserves, workers’ compensation liabilities, finance lease liabilities and liabilities of discontinued operations.
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Shareholders' Equity (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The changes, pretax and net of tax, in each component of accumulated other comprehensive loss (AOCL) consisted of the following:
|
Commitments And Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Changes In Carrying Amount Of Warranty Liabilities | The changes in the carrying amount of warranty liabilities for the six-month periods ended June 28, 2020, and June 30, 2019, were as follows:
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Retirement Plans (Tables) |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Periodic Defined-Benefit Pension And Other Post-Retirement Benefit Cost | Net periodic defined-benefit pension and other post-retirement benefit (credit) cost for the three- and six-month periods ended June 28, 2020, and June 30, 2019, consisted of the following:
|
Segment Information (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Financial Information For Each Of Our Segments | Summary financial information for each of our segments follows:
|
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Millions |
6 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 28, 2020 |
Jan. 01, 2020 |
Jan. 01, 2019 |
||||
New Accounting Pronouncements | ||||||
Length of fiscal quarters, weeks | 91 days | |||||
ASU 2016-13 - Credit Losses (Topic 326) | ||||||
New Accounting Pronouncements | ||||||
Cumulative effect of adoption of new accounting pronouncement | [1] | $ 37 | ||||
ASU 2016-13 - Credit Losses (Topic 326) | Retained Earnings | ||||||
New Accounting Pronouncements | ||||||
Cumulative effect of adoption of new accounting pronouncement | $ 37 | $ 37 | [1] | |||
|
Summary of Significant Accounting Policies - Property, Plant, and Equipment, Net (Details) - USD ($) $ in Millions |
Jun. 28, 2020 |
Dec. 31, 2019 |
---|---|---|
Accounting Policies [Abstract] | ||
PP&E | $ 10,093 | $ 9,761 |
Accumulated depreciation | (5,372) | (5,286) |
PP&E, net | $ 4,721 | $ 4,475 |
Goodwill and Intangible Assets - Changes In Carrying Amount of Goodwill by Reporting Unit (Details) $ in Millions |
6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Jun. 28, 2020
USD ($)
| ||||||||
Goodwill [Roll Forward] | ||||||||
Goodwill, beginning of period | $ 19,677 | [1] | ||||||
Acquisitions/divestitures | 21 | [2] | ||||||
Other | 20 | [3] | ||||||
Goodwill, end of period | 19,718 | [1] | ||||||
Aerospace | ||||||||
Goodwill [Roll Forward] | ||||||||
Goodwill, beginning of period | 2,831 | [1] | ||||||
Acquisitions/divestitures | 21 | [2] | ||||||
Other | 47 | [3] | ||||||
Goodwill, end of period | 2,899 | [1] | ||||||
Combat Systems | ||||||||
Goodwill [Roll Forward] | ||||||||
Goodwill, beginning of period | 2,681 | [1] | ||||||
Acquisitions/divestitures | 0 | [2] | ||||||
Other | (31) | [3] | ||||||
Goodwill, end of period | 2,650 | [1] | ||||||
Information Technology | ||||||||
Goodwill [Roll Forward] | ||||||||
Goodwill, beginning of period | 9,700 | [1] | ||||||
Acquisitions/divestitures | 0 | [2] | ||||||
Other | 0 | [3] | ||||||
Goodwill, end of period | 9,700 | [1] | ||||||
Accumulated impairment losses | 536 | |||||||
Mission Systems | ||||||||
Goodwill [Roll Forward] | ||||||||
Goodwill, beginning of period | 4,168 | [1] | ||||||
Acquisitions/divestitures | 0 | [2] | ||||||
Other | 4 | [3] | ||||||
Goodwill, end of period | 4,172 | [1] | ||||||
Accumulated impairment losses | 1,300 | |||||||
Marine Systems | ||||||||
Goodwill [Roll Forward] | ||||||||
Goodwill, beginning of period | 297 | [1] | ||||||
Acquisitions/divestitures | 0 | [2] | ||||||
Other | 0 | [3] | ||||||
Goodwill, end of period | $ 297 | [1] | ||||||
|
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Millions |
Jun. 28, 2020 |
Dec. 31, 2019 |
||||
---|---|---|---|---|---|---|
Intangible Assets [Line Items] | ||||||
Gross Carrying Amount | [1] | $ 4,489 | $ 4,573 | |||
Accumulated Amortization | (2,292) | (2,258) | ||||
Net Carrying Amount | 2,197 | 2,315 | ||||
Contract and program intangible assets | ||||||
Intangible Assets [Line Items] | ||||||
Gross Carrying Amount | [1],[2] | 3,715 | 3,776 | |||
Accumulated Amortization | [2] | (1,827) | (1,779) | |||
Net Carrying Amount | [2] | 1,888 | 1,997 | |||
Trade names and trademarks | ||||||
Intangible Assets [Line Items] | ||||||
Gross Carrying Amount | [1] | 486 | 474 | |||
Accumulated Amortization | (208) | (195) | ||||
Net Carrying Amount | 278 | 279 | ||||
Technology and software | ||||||
Intangible Assets [Line Items] | ||||||
Gross Carrying Amount | [1] | 129 | 164 | |||
Accumulated Amortization | (99) | (126) | ||||
Net Carrying Amount | 30 | 38 | ||||
Other intangible assets | ||||||
Intangible Assets [Line Items] | ||||||
Gross Carrying Amount | [1] | 159 | 159 | |||
Accumulated Amortization | (158) | (158) | ||||
Net Carrying Amount | $ 1 | $ 1 | ||||
|
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense of intangibles | $ 65 | $ 70 | $ 131 | $ 140 |
Revenue - Additional Information (Details) contract in Thousands, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 28, 2020
USD ($)
contract
|
Jun. 30, 2019
USD ($)
|
Jun. 28, 2020
USD ($)
|
Jun. 30, 2019
USD ($)
|
|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Number of active contracts | contract | 11 | |||
Revenue recognized in contract liability balance | $ 1,200 | $ 1,200 | $ 2,400 | $ 2,900 |
Technology and software | Non-U.S. Government | COVID-19 Pandemic | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Loss on contract with customer from COVID-19 related schedule delays | $ 40 | |||
Transferred over Time | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue, percentage from products and services transferred to customers | 76.00% | 75.00% | 78.00% | 75.00% |
Transferred at Point in Time | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue, percentage from products and services transferred to customers | 24.00% | 25.00% | 22.00% | 25.00% |
Revenue - Remaining Performance Obligations to be Recognized as Revenue (Details) $ in Billions |
Jun. 28, 2020
USD ($)
|
---|---|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-06-29 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Revenue, remaining performance obligations | $ 82.7 |
Revenue, remaining performance obligation, percentage recognized | 50.00% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Revenue, remaining performance obligation, percentage recognized | 30.00% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 2 years |
Revenue - Impact of Adjustments in Contract Estimates (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue | $ 9,264 | $ 9,555 | $ 18,013 | $ 18,816 |
Operating Earnings | 841 | 1,090 | 1,782 | 2,104 |
Accounting Standards Update 2014-09 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue | 54 | 72 | 144 | 168 |
Operating Earnings | $ (5) | $ 71 | $ 85 | $ 139 |
Diluted earnings per share (in dollars per share) | $ (0.01) | $ 0.19 | $ 0.23 | $ 0.38 |
Revenue - Revenue by Products and Services (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
Revenue [Line Items] | ||||
Revenue | $ 9,264 | $ 9,555 | $ 18,013 | $ 18,816 |
Aerospace | ||||
Revenue [Line Items] | ||||
Revenue | 1,974 | 2,136 | 3,665 | 4,376 |
Aerospace | Aircraft manufacturing and completions | ||||
Revenue [Line Items] | ||||
Revenue | 1,563 | 1,599 | 2,757 | 3,332 |
Aerospace | Aircraft services | ||||
Revenue [Line Items] | ||||
Revenue | 411 | 537 | 908 | 1,044 |
Combat Systems | ||||
Revenue [Line Items] | ||||
Revenue | 1,754 | 1,659 | 3,462 | 3,295 |
Combat Systems | Military vehicles | ||||
Revenue [Line Items] | ||||
Revenue | 1,103 | 1,090 | 2,249 | 2,224 |
Combat Systems | Weapons systems, armament and munitions | ||||
Revenue [Line Items] | ||||
Revenue | 515 | 461 | 948 | 862 |
Combat Systems | Engineering and other services | ||||
Revenue [Line Items] | ||||
Revenue | 136 | 108 | 265 | 209 |
Information Technology | ||||
Revenue [Line Items] | ||||
Revenue | 1,884 | 2,158 | 3,872 | 4,327 |
Information Technology | IT services | ||||
Revenue [Line Items] | ||||
Revenue | 1,884 | 2,158 | 3,872 | 4,327 |
Mission Systems | ||||
Revenue [Line Items] | ||||
Revenue | 1,181 | 1,277 | 2,297 | 2,435 |
Mission Systems | C4ISR solutions | ||||
Revenue [Line Items] | ||||
Revenue | 1,181 | 1,277 | 2,297 | 2,435 |
Marine Systems | ||||
Revenue [Line Items] | ||||
Revenue | 2,471 | 2,325 | 4,717 | 4,383 |
Marine Systems | Nuclear-powered submarines | ||||
Revenue [Line Items] | ||||
Revenue | 1,708 | 1,538 | 3,268 | 2,915 |
Marine Systems | Surface ships | ||||
Revenue [Line Items] | ||||
Revenue | 510 | 528 | 972 | 974 |
Marine Systems | Repair and other services | ||||
Revenue [Line Items] | ||||
Revenue | $ 253 | $ 259 | $ 477 | $ 494 |
Revenue - Revenue by Contract Type (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
Revenue [Line Items] | ||||
Revenue | $ 9,264 | $ 9,555 | $ 18,013 | $ 18,816 |
Fixed-price | ||||
Revenue [Line Items] | ||||
Revenue | 6,476 | 6,554 | 12,377 | 12,998 |
Cost-reimbursement | ||||
Revenue [Line Items] | ||||
Revenue | 2,251 | 2,308 | 4,502 | 4,463 |
Time-and-materials | ||||
Revenue [Line Items] | ||||
Revenue | 537 | 693 | 1,134 | 1,355 |
Aerospace | ||||
Revenue [Line Items] | ||||
Revenue | 1,974 | 2,136 | 3,665 | 4,376 |
Aerospace | Fixed-price | ||||
Revenue [Line Items] | ||||
Revenue | 1,849 | 1,925 | 3,327 | 3,965 |
Aerospace | Cost-reimbursement | ||||
Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Aerospace | Time-and-materials | ||||
Revenue [Line Items] | ||||
Revenue | 125 | 211 | 338 | 411 |
Combat Systems | ||||
Revenue [Line Items] | ||||
Revenue | 1,754 | 1,659 | 3,462 | 3,295 |
Combat Systems | Fixed-price | ||||
Revenue [Line Items] | ||||
Revenue | 1,507 | 1,427 | 2,972 | 2,843 |
Combat Systems | Cost-reimbursement | ||||
Revenue [Line Items] | ||||
Revenue | 230 | 221 | 459 | 432 |
Combat Systems | Time-and-materials | ||||
Revenue [Line Items] | ||||
Revenue | 17 | 11 | 31 | 20 |
Information Technology | ||||
Revenue [Line Items] | ||||
Revenue | 1,884 | 2,158 | 3,872 | 4,327 |
Information Technology | Fixed-price | ||||
Revenue [Line Items] | ||||
Revenue | 742 | 875 | 1,511 | 1,796 |
Information Technology | Cost-reimbursement | ||||
Revenue [Line Items] | ||||
Revenue | 800 | 858 | 1,693 | 1,699 |
Information Technology | Time-and-materials | ||||
Revenue [Line Items] | ||||
Revenue | 342 | 425 | 668 | 832 |
Mission Systems | ||||
Revenue [Line Items] | ||||
Revenue | 1,181 | 1,277 | 2,297 | 2,435 |
Mission Systems | Fixed-price | ||||
Revenue [Line Items] | ||||
Revenue | 662 | 752 | 1,282 | 1,403 |
Mission Systems | Cost-reimbursement | ||||
Revenue [Line Items] | ||||
Revenue | 471 | 484 | 925 | 947 |
Mission Systems | Time-and-materials | ||||
Revenue [Line Items] | ||||
Revenue | 48 | 41 | 90 | 85 |
Marine Systems | ||||
Revenue [Line Items] | ||||
Revenue | 2,471 | 2,325 | 4,717 | 4,383 |
Marine Systems | Fixed-price | ||||
Revenue [Line Items] | ||||
Revenue | 1,716 | 1,575 | 3,285 | 2,991 |
Marine Systems | Cost-reimbursement | ||||
Revenue [Line Items] | ||||
Revenue | 750 | 745 | 1,425 | 1,385 |
Marine Systems | Time-and-materials | ||||
Revenue [Line Items] | ||||
Revenue | $ 5 | $ 5 | $ 7 | $ 7 |
Revenue - Revenue by Customer (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
Revenue [Line Items] | ||||
Revenue | $ 9,264 | $ 9,555 | $ 18,013 | $ 18,816 |
U.S. Government - Department of Defense (DoD) | ||||
Revenue [Line Items] | ||||
Revenue | 5,067 | 5,015 | 9,912 | 9,614 |
U.S. Government - Non Department of Defense (Non-DoD) | ||||
Revenue [Line Items] | ||||
Revenue | 1,151 | 1,315 | 2,339 | 2,645 |
U.S. Government - Foreign Military Sales (FMS) | ||||
Revenue [Line Items] | ||||
Revenue | 215 | 167 | 384 | 319 |
U.S. Government | ||||
Revenue [Line Items] | ||||
Revenue | 6,433 | 6,497 | 12,635 | 12,578 |
U.S. Commercial | ||||
Revenue [Line Items] | ||||
Revenue | 1,211 | 1,358 | 2,160 | 2,789 |
Non-U.S. Government | ||||
Revenue [Line Items] | ||||
Revenue | 785 | 919 | 1,624 | 1,859 |
Non-U.S. Commercial | ||||
Revenue [Line Items] | ||||
Revenue | 835 | 781 | 1,594 | 1,590 |
Aerospace | ||||
Revenue [Line Items] | ||||
Revenue | 1,974 | 2,136 | 3,665 | 4,376 |
Aerospace | U.S. Government - Department of Defense (DoD) | ||||
Revenue [Line Items] | ||||
Revenue | 52 | 52 | 213 | 175 |
Aerospace | U.S. Government - Non Department of Defense (Non-DoD) | ||||
Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Aerospace | U.S. Government - Foreign Military Sales (FMS) | ||||
Revenue [Line Items] | ||||
Revenue | 52 | 14 | 70 | 29 |
Aerospace | U.S. Government | ||||
Revenue [Line Items] | ||||
Revenue | 104 | 66 | 283 | 204 |
Aerospace | U.S. Commercial | ||||
Revenue [Line Items] | ||||
Revenue | 1,032 | 1,185 | 1,812 | 2,455 |
Aerospace | Non-U.S. Government | ||||
Revenue [Line Items] | ||||
Revenue | 53 | 144 | 74 | 207 |
Aerospace | Non-U.S. Commercial | ||||
Revenue [Line Items] | ||||
Revenue | 785 | 741 | 1,496 | 1,510 |
Combat Systems | ||||
Revenue [Line Items] | ||||
Revenue | 1,754 | 1,659 | 3,462 | 3,295 |
Combat Systems | U.S. Government - Department of Defense (DoD) | ||||
Revenue [Line Items] | ||||
Revenue | 930 | 910 | 1,818 | 1,703 |
Combat Systems | U.S. Government - Non Department of Defense (Non-DoD) | ||||
Revenue [Line Items] | ||||
Revenue | 3 | 3 | 6 | 6 |
Combat Systems | U.S. Government - Foreign Military Sales (FMS) | ||||
Revenue [Line Items] | ||||
Revenue | 99 | 90 | 188 | 169 |
Combat Systems | U.S. Government | ||||
Revenue [Line Items] | ||||
Revenue | 1,032 | 1,003 | 2,012 | 1,878 |
Combat Systems | U.S. Commercial | ||||
Revenue [Line Items] | ||||
Revenue | 86 | 59 | 141 | 109 |
Combat Systems | Non-U.S. Government | ||||
Revenue [Line Items] | ||||
Revenue | 618 | 587 | 1,281 | 1,288 |
Combat Systems | Non-U.S. Commercial | ||||
Revenue [Line Items] | ||||
Revenue | 18 | 10 | 28 | 20 |
Information Technology | ||||
Revenue [Line Items] | ||||
Revenue | 1,884 | 2,158 | 3,872 | 4,327 |
Information Technology | U.S. Government - Department of Defense (DoD) | ||||
Revenue [Line Items] | ||||
Revenue | 825 | 926 | 1,674 | 1,850 |
Information Technology | U.S. Government - Non Department of Defense (Non-DoD) | ||||
Revenue [Line Items] | ||||
Revenue | 1,030 | 1,178 | 2,108 | 2,370 |
Information Technology | U.S. Government - Foreign Military Sales (FMS) | ||||
Revenue [Line Items] | ||||
Revenue | 4 | 4 | 8 | 9 |
Information Technology | U.S. Government | ||||
Revenue [Line Items] | ||||
Revenue | 1,859 | 2,108 | 3,790 | 4,229 |
Information Technology | U.S. Commercial | ||||
Revenue [Line Items] | ||||
Revenue | 39 | 45 | 87 | 85 |
Information Technology | Non-U.S. Government | ||||
Revenue [Line Items] | ||||
Revenue | (14) | 5 | (5) | 13 |
Information Technology | Non-U.S. Commercial | ||||
Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Mission Systems | ||||
Revenue [Line Items] | ||||
Revenue | 1,181 | 1,277 | 2,297 | 2,435 |
Mission Systems | U.S. Government - Department of Defense (DoD) | ||||
Revenue [Line Items] | ||||
Revenue | 870 | 884 | 1,658 | 1,668 |
Mission Systems | U.S. Government - Non Department of Defense (Non-DoD) | ||||
Revenue [Line Items] | ||||
Revenue | 117 | 133 | 223 | 268 |
Mission Systems | U.S. Government - Foreign Military Sales (FMS) | ||||
Revenue [Line Items] | ||||
Revenue | 9 | 12 | 18 | 21 |
Mission Systems | U.S. Government | ||||
Revenue [Line Items] | ||||
Revenue | 996 | 1,029 | 1,899 | 1,957 |
Mission Systems | U.S. Commercial | ||||
Revenue [Line Items] | ||||
Revenue | 27 | 39 | 60 | 74 |
Mission Systems | Non-U.S. Government | ||||
Revenue [Line Items] | ||||
Revenue | 126 | 181 | 269 | 347 |
Mission Systems | Non-U.S. Commercial | ||||
Revenue [Line Items] | ||||
Revenue | 32 | 28 | 69 | 57 |
Marine Systems | ||||
Revenue [Line Items] | ||||
Revenue | 2,471 | 2,325 | 4,717 | 4,383 |
Marine Systems | U.S. Government - Department of Defense (DoD) | ||||
Revenue [Line Items] | ||||
Revenue | 2,390 | 2,243 | 4,549 | 4,218 |
Marine Systems | U.S. Government - Non Department of Defense (Non-DoD) | ||||
Revenue [Line Items] | ||||
Revenue | 1 | 1 | 2 | 1 |
Marine Systems | U.S. Government - Foreign Military Sales (FMS) | ||||
Revenue [Line Items] | ||||
Revenue | 51 | 47 | 100 | 91 |
Marine Systems | U.S. Government | ||||
Revenue [Line Items] | ||||
Revenue | 2,442 | 2,291 | 4,651 | 4,310 |
Marine Systems | U.S. Commercial | ||||
Revenue [Line Items] | ||||
Revenue | 27 | 30 | 60 | 66 |
Marine Systems | Non-U.S. Government | ||||
Revenue [Line Items] | ||||
Revenue | 2 | 2 | 5 | 4 |
Marine Systems | Non-U.S. Commercial | ||||
Revenue [Line Items] | ||||
Revenue | $ 0 | $ 2 | $ 1 | $ 3 |
Earnings Per Share (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|||
Earnings Per Share [Abstract] | ||||||
Basic weighted average shares outstanding (shares) | 286,388 | 288,099 | 287,479 | 288,008 | ||
Dilutive effect of stock options and restricted stock/RSUs (shares) | [1] | 545 | 2,716 | 1,036 | 2,816 | |
Diluted weighted average shares outstanding (shares) | 286,933 | 290,815 | 288,515 | 290,824 | ||
Stock Options and Restricted Stock | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Antidilutive securities (shares) | 7,723 | 5,396 | 6,811 | 4,685 | ||
|
Fair Value (Details) - USD ($) $ in Millions |
Jun. 28, 2020 |
Dec. 31, 2019 |
---|---|---|
Carrying Value | ||
Financial assets (liabilities) | ||
Cash and equivalents | $ 7 | $ 24 |
Available-for-sale debt securities | 141 | 129 |
Equity securities | 51 | 54 |
Other investments | 9 | 4 |
Cash flow hedges | 77 | 26 |
Short- and long-term debt principal | (14,724) | (12,005) |
Fair Value | ||
Financial assets (liabilities) | ||
Cash and equivalents | 7 | 24 |
Available-for-sale debt securities | 141 | 129 |
Equity securities | 51 | 54 |
Other investments | 9 | 4 |
Cash flow hedges | 77 | 26 |
Short- and long-term debt principal | (16,104) | (12,339) |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Financial assets (liabilities) | ||
Cash and equivalents | 0 | 11 |
Available-for-sale debt securities | 0 | 0 |
Equity securities | 51 | 54 |
Other investments | 0 | 0 |
Cash flow hedges | 0 | 0 |
Short- and long-term debt principal | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Financial assets (liabilities) | ||
Cash and equivalents | 7 | 13 |
Available-for-sale debt securities | 141 | 129 |
Equity securities | 0 | 0 |
Other investments | 0 | 0 |
Cash flow hedges | 77 | 26 |
Short- and long-term debt principal | (16,104) | (12,339) |
Significant Unobservable Inputs (Level 3) | ||
Financial assets (liabilities) | ||
Cash and equivalents | 0 | 0 |
Available-for-sale debt securities | 0 | 0 |
Equity securities | 0 | 0 |
Other investments | 9 | 4 |
Cash flow hedges | 0 | 0 |
Short- and long-term debt principal | $ 0 | $ 0 |
Income Taxes - Net Deferred Tax Liability (Details) - USD ($) $ in Millions |
Jun. 28, 2020 |
Dec. 31, 2019 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Deferred tax asset | $ 35 | $ 33 |
Deferred tax liability | (446) | (481) |
Net deferred tax liability | $ (411) | $ (448) |
Income Taxes - Additional Information (Details) |
Jun. 28, 2020
USD ($)
|
---|---|
Income Tax Disclosure [Abstract] | |
Possible chance of tax position sustained, percentage | 50.00% |
Amount of unrecorded benefit | $ 0 |
Unbilled Receivables (Details) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 28, 2020
USD ($)
progress_payment
|
Mar. 29, 2020
USD ($)
progress_payment
|
Jun. 28, 2020
USD ($)
progress_payment
|
Dec. 31, 2019
USD ($)
|
|
Contracts In Process [Line Items] | ||||
Unbilled revenue | $ 33,823 | $ 33,823 | $ 33,481 | |
Advances and progress billings | (26,108) | (26,108) | (25,624) | |
Net unbilled receivables | 7,715 | 7,715 | 7,857 | |
Combat Systems | ||||
Contracts In Process [Line Items] | ||||
Net unbilled receivables | $ 2,300 | $ 2,300 | $ 2,900 | |
International Customer Through Canadian Government [Member] | Combat Systems | ||||
Contracts In Process [Line Items] | ||||
Number of progress payments received | progress_payment | 1 | 1 | 2 | |
Progress payments received | $ 500 | $ 500 |
Inventories (Details) - USD ($) $ in Millions |
Jun. 28, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Work in process | $ 4,599 | $ 4,419 |
Raw materials | 1,830 | 1,733 |
Finished goods | 154 | 30 |
Pre-owned aircraft | 83 | 124 |
Total inventories | $ 6,666 | $ 6,306 |
Debt (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 28, 2020 |
Dec. 31, 2019 |
|
Debt Instrument [Line Items] | ||
Total debt principal | $ 14,724 | $ 12,005 |
Less unamortized debt issuance costs and discounts | 133 | 75 |
Total debt | 14,591 | 11,930 |
Less current portion | 4,121 | 2,920 |
Long-term debt | 10,470 | 9,010 |
Commercial Paper | ||
Debt Instrument [Line Items] | ||
Short term debt | $ 1,243 | 0 |
Weighted average interest rate | 2.104% | |
Fixed Rate Notes Due May 2020 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 0 | 2,000 |
Interest rate | 2.875% | |
Fixed Rate Notes Due May 2021 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 2,000 | 2,000 |
Interest rate | 3.00% | |
Fixed-Rate Notes Due July 2021 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 500 | 500 |
Interest rate | 3.875% | |
Fixed Rate Notes Due November 2022 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 1,000 | 1,000 |
Interest rate | 2.25% | |
Fixed Rate Notes Due May 2023 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 750 | 750 |
Interest rate | 3.375% | |
Fixed Rate Notes Due August 2023 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 500 | 500 |
Interest rate | 1.875% | |
Fixed Rate Notes Due November 2024 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 500 | 500 |
Interest rate | 2.375% | |
Fixed Rate Notes Due April 2025 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 750 | 0 |
Interest rate | 3.25% | |
Fixed Rate Notes Due May 2025 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 750 | 750 |
Interest rate | 3.50% | |
Fixed Rate Notes Due August 2026 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 500 | 500 |
Interest rate | 2.125% | |
Fixed Rate Notes Due April 2027 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 750 | 0 |
Interest rate | 3.50% | |
Fixed Rate Notes Due November 2027 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 500 | 500 |
Interest rate | 2.625% | |
Fixed Rate Notes Due May 2028 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 1,000 | 1,000 |
Interest rate | 3.75% | |
Fixed Rate Notes Due April 2030 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 1,000 | 0 |
Interest rate | 3.625% | |
Fixed Rate Notes Due April 2040 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 750 | 0 |
Interest rate | 4.25% | |
Fixed Rate Notes Due November 2042 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 500 | 500 |
Interest rate | 3.60% | |
Fixed Rate Notes Due April 2050 | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 750 | 0 |
Interest rate | 4.25% | |
Floating Rate Notes Due May 2020 | LIBOR | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 0 | 500 |
Basis spread on variable rate | 0.29% | |
Floating Rate Notes Due May 2021 | LIBOR | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 500 | 500 |
Basis spread on variable rate | 0.38% | |
Other | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 481 | $ 505 |
Other Interest rate | Various |
Debt - Additional Information (Details) - USD ($) |
1 Months Ended | 6 Months Ended |
---|---|---|
Mar. 31, 2020 |
Jun. 28, 2020 |
|
Debt Instrument [Line Items] | ||
Repayments of fixed-rate and floating-rate notes | $ 2,500,000,000 | |
Credit facility, maximum borrowing capacity | $ 5,000,000,000 | |
Commercial Paper | ||
Debt Instrument [Line Items] | ||
Debt issued | $ 1,200,000,000 | |
Weighted average interest rate | 2.104% | |
Credit Facility | 364-day Facility Expiring March 2021 | ||
Debt Instrument [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 2,000,000,000 | |
Debt term | 364 days | |
Fixed-rate Notes | ||
Debt Instrument [Line Items] | ||
Debt issued | $ 4,000,000,000 | |
Credit Facility | Multi-year Facility Expiring March 2023 | ||
Debt Instrument [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 2,000,000,000 | |
Credit Facility | Multi-year Facility Expiring March 2025 | ||
Debt Instrument [Line Items] | ||
Credit facility, maximum borrowing capacity | $ 1,000,000,000 |
Other Liabilities (Details) - USD ($) $ in Millions |
Jun. 28, 2020 |
Dec. 31, 2019 |
||||
---|---|---|---|---|---|---|
Other Liabilities Disclosure [Abstract] | ||||||
Salaries and wages | $ 929 | $ 941 | ||||
Workers’ compensation | 329 | 306 | ||||
Retirement benefits | 291 | 296 | ||||
Operating lease liabilities | 267 | 252 | ||||
Fair value of cash flow hedges | 125 | 32 | ||||
Other | [1] | 1,949 | 1,744 | |||
Total other current liabilities | 3,890 | 3,571 | ||||
Retirement benefits | 4,944 | 5,172 | ||||
Operating lease liabilities | 1,112 | 1,251 | ||||
Customer deposits on commercial contracts | 782 | 709 | ||||
Deferred income taxes | 446 | 481 | ||||
Other | [2] | 1,972 | 1,840 | |||
Total other liabilities | $ 9,256 | $ 9,453 | ||||
|
Shareholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
Mar. 04, 2020 |
|
Equity [Abstract] | |||||
Stock repurchase program, number of shares authorized to be repurchased | 10,000,000 | ||||
Stock repurchased during the period (shares) | 0 | 3,400,000 | 1,100,000 | ||
Stock repurchased during the period, value | $ 501 | $ 184 | |||
Remaining number of shares authorized to be repurchased (shares) | 13,000,000 | 13,000,000 | |||
Shares remaining to be repurchased as a percent of total shares outstanding | 4.50% | 4.50% | |||
Dividends declared per share | $ 1.10 | $ 1.02 | $ 2.20 | $ 2.04 | |
Dividends paid in cash | $ 315 | $ 295 | $ 610 | $ 563 |
Shareholders' Equity - Changes in AOCI (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
|
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning Balance | $ (4,219) | |
Other comprehensive income, pretax | 144 | $ 346 |
Provision for income tax, net | (52) | (44) |
Other comprehensive income, net of tax | 92 | 302 |
Ending Balance | (4,127) | |
Gains /(Losses) on Cash Flow Hedges | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning Balance | 2 | (71) |
Other comprehensive income, pretax | 71 | 68 |
Provision for income tax, net | (20) | (16) |
Other comprehensive income, net of tax | 51 | 52 |
Ending Balance | 53 | (19) |
Foreign Currency Translation Adjustments | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning Balance | 288 | 102 |
Other comprehensive income, pretax | (79) | 156 |
Provision for income tax, net | 0 | 0 |
Other comprehensive income, net of tax | (79) | 156 |
Ending Balance | 209 | 258 |
Changes in Retirement Plans’ Funded Status | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning Balance | (4,509) | (3,809) |
Other comprehensive income, pretax | 152 | 122 |
Provision for income tax, net | (32) | (28) |
Other comprehensive income, net of tax | 120 | 94 |
Ending Balance | (4,389) | (3,715) |
AOCL | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning Balance | (4,219) | (3,778) |
Ending Balance | $ (4,127) | $ (3,476) |
Derivative Financial Instruments and Hedging Activities (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 28, 2020 |
Dec. 31, 2019 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Average maturity of foreign currency forward contracts, in years | 2 years | |
Cash and equivalents | $ 2,300 | $ 902 |
Marketable securities held in trust | 199 | 207 |
Notional forward foreign exchange contracts outstanding | $ 10,000 | $ 5,000 |
Maximum | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Maturity of fixed-income securities, in years | 5 years |
Commitments And Contingencies - Additional Information (Details) $ in Billions |
3 Months Ended |
---|---|
Jun. 28, 2020
USD ($)
| |
Other Commitments [Line Items] | |
Letters of credit and guarantees | $ 1.2 |
Aerospace | Maximum | |
Other Commitments [Line Items] | |
Period preceding delivery of aircraft to customer fair market value of trade-in aircraft is established, days, maximum | 45 days |
Commitments And Contingencies - Product Guarantee (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
|
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Beginning balance | $ 619 | $ 480 |
Warranty expense | 55 | 50 |
Payments | (51) | (37) |
Adjustments | (2) | (11) |
Ending balance | $ 621 | $ 482 |
Retirement Plans (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
Pension Benefits | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 30 | $ 28 | $ 59 | $ 56 |
Interest cost | 123 | 150 | 246 | 300 |
Expected return on plan assets | (235) | (228) | (469) | (456) |
Recognized net actuarial loss (gain) | 80 | 70 | 159 | 140 |
Amortization of prior service credit | (5) | (5) | (9) | (9) |
Net periodic benefit (credit) cost | (7) | 15 | (14) | 31 |
Other Post-retirement Benefits | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 3 | 2 | 5 | 4 |
Interest cost | 7 | 9 | 14 | 18 |
Expected return on plan assets | (9) | (9) | (18) | (18) |
Recognized net actuarial loss (gain) | (1) | (2) | (2) | (4) |
Amortization of prior service credit | 0 | (1) | 0 | (2) |
Net periodic benefit (credit) cost | $ 0 | $ (1) | $ (1) | $ (2) |
Segment Information - Additional Information (Details) |
6 Months Ended |
---|---|
Jun. 28, 2020
Segment
| |
Segment Reporting Information [Line Items] | |
Number of operating segments | 5 |
Segment Information - Summary of Financial Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 28, 2020 |
Jun. 30, 2019 |
Jun. 28, 2020 |
Jun. 30, 2019 |
|
Segment Reporting Information [Line Items] | ||||
Revenue | $ 9,264 | $ 9,555 | $ 18,013 | $ 18,816 |
Operating Earnings | 841 | 1,090 | 1,782 | 2,104 |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Operating Earnings | (4) | 4 | (8) | 0 |
Aerospace | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,974 | 2,136 | 3,665 | 4,376 |
Aerospace | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,974 | 2,136 | 3,665 | 4,376 |
Operating Earnings | 159 | 331 | 399 | 659 |
Combat Systems | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,754 | 1,659 | 3,462 | 3,295 |
Combat Systems | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,754 | 1,659 | 3,462 | 3,295 |
Operating Earnings | 239 | 242 | 462 | 448 |
Information Technology | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,884 | 2,158 | 3,872 | 4,327 |
Information Technology | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,884 | 2,158 | 3,872 | 4,327 |
Operating Earnings | 83 | 154 | 233 | 310 |
Mission Systems | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,181 | 1,277 | 2,297 | 2,435 |
Mission Systems | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,181 | 1,277 | 2,297 | 2,435 |
Operating Earnings | 164 | 162 | 312 | 310 |
Marine Systems | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 2,471 | 2,325 | 4,717 | 4,383 |
Marine Systems | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 2,471 | 2,325 | 4,717 | 4,383 |
Operating Earnings | $ 200 | $ 197 | $ 384 | $ 377 |
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