XML 29 R14.htm IDEA: XBRL DOCUMENT v3.22.4
Information on Business Segments
 12 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
Information on Business Segments Information on Business Segments
Overview
We operate in four business segments: Aeronautics, MFC, RMS and Space. We organize our business segments based on the nature of products and services offered. Following is a brief description of the activities of our business segments:

•Aeronautics – Engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of advanced military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies.
•Missiles and Fire Control – Provides air and missile defense systems; tactical missiles and air-to-ground precision strike weapon systems; logistics; fire control systems; mission operations support, readiness, engineering support and integration services; manned and unmanned ground vehicles; and energy management solutions.
•Rotary and Mission Systems – Designs, manufactures, services and supports various military and commercial helicopters, surface ships, sea and land-based missile defense systems, radar systems, sea and air-based mission and combat systems, command and control mission solutions, cyber solutions, and simulation and training solutions.
•Space – Engaged in the research and design, development, engineering and production of satellites, space transportation systems, and strategic, advanced strike, and defensive systems. Space provides network-enabled situational awareness and integrates complex space and ground global systems to help our customers gather, analyze and securely distribute critical intelligence data. Space is also responsible for various classified systems and services in support of vital national security systems. Operating profit for our Space business segment also includes our share of earnings for our 50% ownership interest in ULA, which provides expendable launch services to the U.S. Government and commercial customers. Our investment in ULA totaled $571 million and $585 million at December 31, 2022 and 2021.
Selected Financial Data by Business Segment
Net sales of our business segments in the following tables exclude intersegment sales as these activities are eliminated in consolidation and thus are not included in management’s evaluation of performance of each segment. Business segment operating profit includes our share of earnings or losses from equity method investees as the operating activities of the equity method investees are closely aligned with the operations of our business segments.
Summary Operating Results
Sales and operating profit for each of our business segments were as follows (in millions):
202220212020
Net sales
Aeronautics$26,987 $26,748 $26,266 
Missiles and Fire Control11,317 11,693 11,257 
Rotary and Mission Systems16,148 16,789 15,995 
Space11,532 11,814 11,880 
Total net sales$65,984 $67,044 $65,398 
Operating profit
Aeronautics$2,866 $2,799 $2,843 
Missiles and Fire Control1,635 1,648 1,545 
Rotary and Mission Systems1,673 1,798 1,615 
Space1,045 1,134 1,149 
Total business segment operating profit7,219 7,379 7,152 
Unallocated items
     FAS/CAS pension operating adjustment 1,709 1,960 1,876 
     Severance and other charges (a)
(100)(36)(27)
Other, net (b)
(480)(180)(357)
Total unallocated, net1,129 1,744 1,492 
Total consolidated operating profit$8,348 $9,123 $8,644 
(a)Severance and other charges in 2022 include $100 million ($79 million, or $0.31 per share, after-tax) charge related to actions at our RMS business segment, which include severance costs for reduction of positions and asset impairment charges; $36 million ($28 million, or $0.10 per share, after-tax) charge during 2021 associated with plans to close and consolidate certain facilities and reduce total workforce within our RMS business segment; and $27 million ($21 million, or $0.08 per share, after-tax) charge during 2020 related to the planned elimination of certain positions primarily at our corporate functions.
(b)Other, net in 2020 includes a noncash impairment charge of $128 million ($96 million, or $0.34 per share, after-tax) for our investment in the international equity method investee, AMMROC. (See “Note 1 – Organization and Significant Accounting Policies”).

Unallocated Items

Business segment operating profit excludes the FAS/CAS pension operating adjustment described below, a portion of corporate costs not considered allowable or allocable to contracts with the U.S. Government under the applicable U.S. Government cost accounting standards (CAS) or federal acquisition regulations (FAR), and other items not considered part of management’s evaluation of segment operating performance such as a portion of management and administration costs, legal fees and settlements, environmental costs, stock-based compensation expense, changes in the fair value of investments held in a
trust for deferred compensation plans, retiree benefits, significant severance actions, significant asset impairments, gains or losses from divestitures, and other miscellaneous corporate activities. Excluded items are included in the reconciling item “Unallocated items” between operating profit from our business segments and our consolidated operating profit. See “Note 1 – Organization and Significant Accounting Policies” (under the caption “Use of Estimates”) for a discussion related to certain factors that may impact the comparability of net sales and operating profit of our business segments.

FAS/CAS Pension Operating Adjustment

Our business segments’ results of operations include pension expense only as calculated under U.S. Government Cost Accounting Standards (CAS), which we refer to as CAS pension cost. We recover CAS pension and other postretirement benefit plan cost through the pricing of our products and services on U.S. Government contracts and, therefore, recognize CAS pension cost in each of our business segment’s net sales and cost of sales. Our consolidated financial statements must present pension and other postretirement benefit plan (expense) income calculated in accordance with Financial Accounting Standards (FAS) requirements under U.S. GAAP. The operating portion of the total FAS/CAS pension adjustment represents the difference between the service cost component of FAS pension (expense) income and total CAS pension cost. The non-service FAS pension (expense) income components are included in non-service FAS pension (expense) income in our consolidated statements of earnings. As a result, to the extent that CAS pension cost exceeds the service cost component of FAS pension (expense) income, we have a favorable FAS/CAS pension operating adjustment.

The total FAS/CAS pension adjustments, including the service and non-service cost components of FAS pension (expense) income for our qualified defined benefit pension plans, were as follows (in millions):
202220212020
Total FAS (expense) income and CAS cost
FAS pension (expense) income$(1,058)$(1,398)$118 
Less: CAS pension cost1,796 2,066 1,977 
Total FAS/CAS pension adjustment$738 $668 $2,095 
Service and non-service cost reconciliation
FAS pension service cost$(87)$(106)$(101)
Less: CAS pension cost1,796 2,066 1,977 
Total FAS/CAS pension operating adjustment1,709 1,960 1,876 
Non-service FAS pension (expense) income(971)(1,292)219 
Total FAS/CAS pension adjustment$738 $668 $2,095 
The total FAS/CAS pension adjustment in 2022 reflects a noncash, non-operating pension settlement charge of $1.5 billion ($1.2 billion, or $4.33 per share, after-tax) recognized in connection with the transfer of $4.3 billion of our gross defined benefit pension obligations and related plan assets to an insurance company in the second quarter of 2022. The total FAS/CAS pension adjustment in 2021 reflects a noncash, non-operating pension settlement charge of $1.7 billion ($1.3 billion, or $4.72 per share, after-tax) in connection with the transfer of $4.9 billion of our gross defined benefit pension obligations and related plan assets to an insurance company in the third quarter of 2021. See “Note 11 – Postretirement Benefit Plans” included in our Notes to Consolidated Financial Statements.
Intersegment Sales
Sales between our business segments are excluded from our consolidated and segment operating results as these activities are eliminated in consolidation. Intersegment sales for each of our business segments were as follows (in millions):
202220212020
Intersegment sales
Aeronautics$249 $219 $243 
Missiles and Fire Control627 618 562 
Rotary and Mission Systems1,930 1,895 1,903 
Space 381 360 377 
Total intersegment sales$3,187 $3,092 $3,085 
Disaggregation of Net Sales
Net sales by products and services, contract type, customer category and geographic region for each of our business segments were as follows (in millions):
2022
AeronauticsMFCRMSSpace Total
Net sales
Products$22,870 $10,048 $12,811 $9,737 $55,466 
Services4,117 1,269 3,337 1,795 10,518 
Total net sales$26,987 $11,317 $16,148 $11,532 $65,984 
Net sales by contract type
Fixed-price$19,431 $8,014 $10,460 $3,064 $40,969 
Cost-reimbursable7,556 3,303 5,688 8,468 25,015 
Total net sales$26,987 $11,317 $16,148 $11,532 $65,984 
Net sales by customer
U.S. Government$18,026 $7,814 $11,331 $11,344 $48,515 
International (a)
8,811 3,496 4,470 154 16,931 
U.S. commercial and other150 7 347 34 538 
Total net sales$26,987 $11,317 $16,148 $11,532 $65,984 
Net sales by geographic region
United States$18,176 $7,821 $11,678 $11,378 $49,053 
Europe4,303 1,020 857 87 6,267 
Asia Pacific2,970 461 1,994 54 5,479 
Middle East1,103 1,858 823 12 3,796 
Other435 157 796 1 1,389 
Total net sales$26,987 $11,317 $16,148 $11,532 $65,984 
2021
AeronauticsMFCRMSSpace Total
Net sales
Products$22,631 $10,269 $13,483 $10,052 $56,435 
Services4,117 1,424 3,306 1,762 10,609 
Total net sales$26,748 $11,693 $16,789 $11,814 $67,044 
Net sales by contract type
Fixed-price$19,734 $8,079 $11,125 $2,671 $41,609 
Cost-reimbursable7,014 3,614 5,664 9,143 25,435 
Total net sales$26,748 $11,693 $16,789 $11,814 $67,044 
Net sales by customer
U.S. Government$17,262 $8,341 $11,736 $10,811 $48,150 
International (a)
9,403 3,346 4,719 971 18,439 
U.S. commercial and other83 6 334 32 455 
Total net sales$26,748 $11,693 $16,789 $11,814 $67,044 
Net sales by geographic region
United States$17,345 $8,347 $12,070 $10,843 $48,605 
Europe3,973 910 909 968 6,760 
Asia Pacific3,644 292 2,178 (6)6,108 
Middle East1,351 2,066 827 9 4,253 
Other435 78 805 — 1,318 
Total net sales$26,748 $11,693 $16,789 $11,814 $67,044 
2020
AeronauticsMFCRMSSpace Total
Net sales
Products$22,327 $9,804 $12,748 $10,049 $54,928 
Services3,939 1,453 3,247 1,831 10,470 
Total net sales$26,266 $11,257 $15,995 $11,880 $65,398 
Net sales by contract type
Fixed-price$18,477 $7,587 $10,795 $2,247 $39,106 
Cost-reimbursable7,789 3,670 5,200 9,633 26,292 
Total net sales$26,266 $11,257 $15,995 $11,880 $65,398 
Net sales by customer
U.S. Government$18,175 $8,404 $11,596 $10,293 $48,468 
International (a)
8,012 2,842 3,986 1,546 16,386 
U.S. commercial and other79 11 413 41 544 
Total net sales$26,266 $11,257 $15,995 $11,880 $65,398 
Net sales by geographic region
United States$18,254 $8,415 $12,009 $10,334 $49,012 
Europe3,283 767 806 1,478 6,334 
Asia Pacific3,162 280 1,666 68 5,176 
Middle East1,344 1,749 847 — 3,940 
Other223 46 667 — 936 
Total net sales$26,266 $11,257 $15,995 $11,880 $65,398 
(a)International sales include FMS contracted through the U.S. Government, direct commercial sales with international governments and commercial and other sales to international customers.
Our Aeronautics business segment includes our largest program, the F-35 Lightning II Joint Strike Fighter, an international multi-role, multi-variant, stealth fighter aircraft. Net sales for the F-35 program represented approximately 27% of our consolidated net sales during both 2022 and 2021 and 28% during 2020.
Capital Expenditures, PP&E Depreciation and Software Amortization, and Amortization of Purchased Intangibles
202220212020
Capital expenditures
Aeronautics$461 $477 $534 
Missiles and Fire Control253 304 391 
Rotary and Mission Systems266 279 311 
Space391 305 403 
Total business segment capital expenditures1,371 1,365 1,639 
Corporate activities299 157 127 
Total capital expenditures$1,670 $1,522 $1,766 
PP&E depreciation and software amortization (a)
Aeronautics$383 $348 $348 
Missiles and Fire Control160 153 136 
Rotary and Mission Systems245 250 244 
Space 201 205 182 
Total business segment depreciation and amortization989 956 910 
Corporate activities167 123 109 
Total depreciation and amortization $1,156 $1,079 $1,019 
Amortization of purchased intangibles
Aeronautics$1 $1 $— 
Missiles and Fire Control2 2 2 
Rotary and Mission Systems233 232 232 
Space12 50 37 
Total amortization of purchased intangibles$248 $285 $271 
(a)Excludes amortization of purchased intangibles.
Assets

Total assets for each of our business segments were as follows (in millions):
20222021
Assets
Aeronautics$12,055 $10,756 
Missiles and Fire Control5,788 5,243 
Rotary and Mission Systems17,988 17,664 
Space 6,351 6,199 
Total business segment assets42,182 39,862 
Corporate assets (a)
10,698 11,011 
Total assets$52,880 $50,873 
(a)Corporate assets primarily include cash and cash equivalents, deferred income taxes, assets for the portion of environmental costs that are probable of future recovery, property, plant and equipment, investments held in a separate trust for deferred compensation plans and other marketable investments.