Segment Financial Data

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Segment Financial DataOur operations, effective as of the date of the Raytheon Merger, are classified into four principal segments: Collins Aerospace, Pratt & Whitney, RIS and RMD. The segments are generally based on the management structure of the businesses and the grouping of similar operating companies, where each management organization has general operating autonomy over

diversified products and services. The results of RIS and RMD reflect the period subsequent to the completion of the Raytheon Merger on April 3, 2020. See “Note 21: Segment Financial Data” within the Notes to the Consolidated Financial Statements in our 2019 Annual Report for a description of the Collins Aerospace and Pratt & Whitney segments.

Raytheon Intelligence & Space is a leading developer and provider of integrated sensor and communication systems for advanced missions, including space-enabled information and multi-domain intelligence solutions, as well as electronic warfare solutions, advanced training and logistic services, and cyber and software solutions to intelligence, defense, federal and commercial customers worldwide.

Raytheon Missiles & Defense is a leading designer, developer, integrator and producer of missile and combat systems for the armed forces of the U.S. and allied nations and a leader in integrated air and missile defense, large land- and sea-based radar solutions, command, control, communications, computers, cyber and intelligence solutions, naval combat and ship electronic and sensing systems, and undersea sensing and effects solutions.

In conjunction with the Raytheon Merger, we revised our measurement of segment performance to reflect how management now reviews and evaluates operating performance. Under the new segment performance measurement, certain acquisition accounting adjustments are now excluded from segments’ results in order to better represent the ongoing operational performance of those segments. In addition, the majority of Corporate expenses are now allocated to the segments, excluding certain items that remain at Corporate because they are not included in management’s review of the segments’ results. Historical results, discussion and presentation of our business segments reflect the impact of these adjustments for all periods presented.

Also as a result of the Raytheon Merger, we now present a FAS/CAS operating adjustment outside of segment results, which represents the difference between our service cost component of our pension and PRB expense under the Financial Accounting Standards (FAS) requirements of U.S. GAAP and our pension and PRB expense under U.S. government Cost Accounting Standards (CAS) primarily related to our RIS and RMD segments. Because the Collins Aerospace and Pratt & Whitney segments generally record pension and PRB expense on a FAS basis, historical results were not impacted by this change in segment reporting.

Total sales and operating profit by segment include inter-segment sales which are generally recorded at prices approximating those that the selling entity is able to obtain on external sales for our Collins Aerospace and Pratt & Whitney segments, and at cost-plus a specified fee, which may differ from what the selling entity would be able to obtain on sales to external customers, for our RIS and RMD segments. Results for the quarters ended September 30, 2020 and 2019 are as follows:

	Net Sales				Operating Profits				Operating Profit Margins
(dollars in millions)	2020		2019		2020		2019		2020		2019
Collins Aerospace Systems	$	4,274	$	6,495	$	526	$	1,259	12.3	%	19.4	%
Pratt & Whitney	3,494		5,285		(615)		520		(17.6)	%	9.8	%
Raytheon Intelligence & Space	3,674		—		348		—		9.5	%	—	%
Raytheon Missiles & Defense	3,794		—		453		—		11.9	%	—	%
Total segment	15,236		11,780		712		1,779		4.7	%	15.1	%
Eliminations and other(1)	(489)		(407)		(51)		(46)
Corporate expenses and other unallocated items (2)	—		—		(84)		(83)
FAS/CAS operating adjustment	—		—		380		—
Acquisition accounting adjustments	—		—		(523)		(220)
Consolidated	$	14,747	$	11,373	$	434	$	1,430	2.9	%	12.6	%

(1)    Includes the operating results of certain smaller non-reportable business segments, including Forcepoint, LLC, which was acquired as part of the Raytheon Merger.

(2)    The net expenses related to the U.S. Army’s Lower Tier Air and Missile Defense Sensor (LTAMDS) project of $45 million in the quarter ended September 30, 2020 are included in Corporate operating profit as they are not included in management’s evaluation of business segment results. No amounts were recorded in the quarter ended September 30, 2019.

Results for the nine months ended September 30, 2020 and 2019 are as follows:

	Net Sales				Operating Profits				Operating Profit Margins
(dollars in millions)	2020		2019		2020		2019		2020		2019
Collins Aerospace Systems	$	14,914	$	19,584	$	1,455	$	3,499	9.8	%	17.9	%
Pratt & Whitney	12,334		15,257		(597)		1,447		(4.8)	%	9.5	%
Raytheon Intelligence & Space	6,988		—		659		—		9.4	%	—	%
Raytheon Missiles & Defense	7,384		—		850		—		11.5	%	—	%
Total segment	41,620		34,841		2,367		4,946		5.7	%	14.2	%
Eliminations and other (1)	(1,452)		(1,186)		(104)		(115)
Corporate expenses and other unallocated items (2)	—		—		(491)		(216)
FAS/CAS operating adjustment	—		—		736		—
Acquisition accounting adjustments	—		—		(4,539)		(657)
Consolidated	$	40,168	$	33,655	$	(2,031)	$	3,958	(5.1)	%	11.8	%

(1)    Includes the operating results of certain smaller non-reportable business segments, including Forcepoint, LLC, which was acquired as part of the Raytheon Merger.

(2)    The net expenses related to the U.S. Army’s LTAMDS project of $80 million in the nine months ended September 30, 2020 are included in Corporate operating profit as they are not included in management’s evaluation of business segment results. No amounts were recorded in the nine months ended September 30, 2019.

Total assets by segment are as follows:

	Total Assets
(dollars in millions)	September 30, 2020		December 31, 2019
Collins Aerospace Systems(1)	$	68,870	$	74,049
Pratt & Whitney(1)	32,240		31,170
Raytheon Intelligence & Space(1)	20,509		—
Raytheon Missiles & Defense(1)	29,720		—
Total segment	151,339		105,219
Corporate and other	11,004		2,573
Assets related to discontinued operations	56		31,823
Consolidated	$	162,399	$	139,615

(1)    Total assets include acquired intangible assets and property, plant and equipment fair value adjustment. Related amortization expense is included in Acquisition accounting adjustments.

We disaggregate our contracts from customers by geographic location, by customer and by sales type. Our geographic location is based on customer location, utilizing end user customer location where known or practical. In instances in which determining the end user customer is not known or practical, we utilize ship to location as the customer location. In addition, for our RIS and RMD segments, we disaggregate our contracts from customers by contract type. We believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Historical results have been recast to reflect the presentation of this disaggregation.

Segment sales disaggregated by geographic region for the quarters ended September 30, 2020 and 2019 are as follows:

	2020												2019
(dollars in millions)	Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total		Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total
United States	$	2,378	$	1,856	$	2,933	$	2,290	$	109	$	9,566	$	3,269	$	2,260	$	—	$	—	$	3	$	5,532
Asia Pacific	358		772		195		365		13		1,703		644		1,452		—		—		—		2,096
Middle East and North Africa	97		112		122		714		10		1,055		168		212		—		—		—		380
Europe	965		572		100		337		38		2,012		1,661		953		—		—		—		2,614
Canada and All Other	165		179		29		29		9		411		342		409		—		—		—		751
Consolidated net sales	3,963		3,491		3,379		3,735		179		14,747		6,084		5,286		—		—		3		11,373
Inter-segment sales	311		3		295		59		(668)		—		411		(1)		—		—		(410)		—
Business segment sales	$	4,274	$	3,494	$	3,674	$	3,794	$	(489)	$	14,747	$	6,495	$	5,285	$	—	$	—	$	(407)	$	11,373

Segment sales disaggregated by geographic region for the nine months ended September 30, 2020 and 2019 are as follows:

	2020												2019
(dollars in millions)	Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total		Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total
United States	$	8,027	$	6,103	$	5,498	$	4,440	$	156	$	24,224	$	9,590	$	6,353	$	—	$	—	$	9	$	15,952
Asia Pacific	1,350		2,980		390		716		26		5,462		1,822		3,930		—		—		—		5,752
Middle East and North Africa	339		406		244		1,434		18		2,441		536		608		—		—		—		1,144
Europe	3,497		2,101		202		628		104		6,532		5,341		3,126		—		—		—		8,467
Canada and All Other	651		738		53		43		24		1,509		1,097		1,243		—		—		—		2,340
Consolidated net sales	13,864		12,328		6,387		7,261		328		40,168		18,386		15,260		—		—		9		33,655
Inter-segment sales	1,050		6		601		123		(1,780)		—		1,198		(3)		—		—		(1,195)		—
Business segment sales	$	14,914	$	12,334	$	6,988	$	7,384	$	(1,452)	$	40,168	$	19,584	$	15,257	$	—	$	—	$	(1,186)	$	33,655

Segment sales disaggregated by customer for the quarters ended September 30, 2020 and 2019 are as follows:

	2020												2019
(dollars in millions)	Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total		Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total
U.S. government(1)	$	1,238	$	1,270	$	2,879	$	2,288	$	72	$	7,747	$	1,222	$	1,091	$	—	$	—	$	—	$	2,313
Foreign military sales through the U.S. government	34		325		185		828		—		1,372		64		335		—		—		—		399
Foreign government direct commercial sales	230		120		240		594		2		1,186		217		98		—		—		—		315
Commercial aerospace and other commercial	2,461		1,776		75		25		105		4,442		4,581		3,762		—		—		3		8,346
Consolidated net sales	3,963		3,491		3,379		3,735		179		14,747		6,084		5,286		—		—		3		11,373
Inter-segment sales	311		3		295		59		(668)		—		411		(1)		—		—		(410)		—
Business segment sales	$	4,274	$	3,494	$	3,674	$	3,794	$	(489)	$	14,747	$	6,495	$	5,285	$	—	$	—	$	(407)	$	11,373

(1)    Excludes foreign military sales through the U.S. government.

Segment sales disaggregated by customer for the nine months ended September 30, 2020 and 2019 are as follows:

	2020												2019
(dollars in millions)	Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total		Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total
U.S. government(1)	$	3,880	$	3,792	$	5,376	$	4,429	$	126	$	17,603	$	3,534	$	3,243	$	—	$	—	$	—	$	6,777
Foreign military sales through the U.S. government	166		877		387		1,610		—		3,040		190		901		—		—		—		1,091
Foreign government direct commercial sales	659		380		449		1,163		2		2,653		700		382		—		—		—		1,082
Commercial aerospace and other commercial	9,159		7,279		175		59		200		16,872		13,962		10,734		—		—		9		24,705
Consolidated net sales	13,864		12,328		6,387		7,261		328		40,168		18,386		15,260		—		—		9		33,655
Inter-segment sales	1,050		6		601		123		(1,780)		—		1,198		(3)		—		—		(1,195)		—
Business segment sales	$	14,914	$	12,334	$	6,988	$	7,384	$	(1,452)	$	40,168	$	19,584	$	15,257	$	—	$	—	$	(1,186)	$	33,655

(1)    Excludes foreign military sales through the U.S. government.

Segment sales disaggregated by sales type for the quarters ended September 30, 2020 and 2019 are as follows:

	2020												2019
(dollars in millions)	Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total		Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total
Product	$	3,231	$	2,142	$	2,534	$	3,405	$	157	$	11,469	$	4,973	$	3,235	$	—	$	—	$	3	$	8,211
Service	732		1,349		845		330		22		3,278		1,111		2,051		—		—		—		3,162
Consolidated net sales	$	3,963	$	3,491	$	3,379	$	3,735	$	179	$	14,747	$	6,084	$	5,286	$	—	$	—	$	3	$	11,373
Inter-segment sales	311		3		295		59		(668)		—		411		(1)		—		—		(410)		—
Business segment sales	$	4,274	$	3,494	$	3,674	$	3,794	$	(489)	$	14,747	$	6,495	$	5,285	$	—	$	—	$	(407)	$	11,373

Segment sales disaggregated by sales type for the nine months ended September 30, 2020 and 2019 are as follows:

	2020												2019
(dollars in millions)	Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total		Collins Aerospace Systems		Pratt & Whitney		Raytheon Intelligence & Space		Raytheon Missiles & Defense		Other		Total
Product	$	11,325	$	7,285	$	4,867	$	6,637	$	288	$	30,402	$	15,105	$	9,521	$	—	$	—	$	9	$	24,635
Service	2,539		5,043		1,520		624		40		9,766		3,281		5,739		—		—		—		9,020
Consolidated net sales	$	13,864	$	12,328	$	6,387	$	7,261	$	328	$	40,168	$	18,386	$	15,260	$	—	$	—	$	9	$	33,655
Inter-segment sales	1,050		6		601		123		(1,780)		—		1,198		(3)		—		—		(1,195)		—
Business segment sales	$	14,914	$	12,334	$	6,988	$	7,384	$	(1,452)	$	40,168	$	19,584	$	15,257	$	—	$	—	$	(1,186)	$	33,655

RIS and RMD segment sales disaggregated by contract type for the quarter and nine months ended September 30, 2020 are as follows:

	Quarter Ended September 30, 2020				Nine Months Ended September 30, 2020
(dollars in millions)	Raytheon Intelligence & Space		Raytheon Missiles & Defense		Raytheon Intelligence & Space		Raytheon Missiles & Defense
Fixed-price	$	1,443	$	2,404	$	2,646	$	4,582
Cost-type	1,936		1,331		3,741		2,679
Consolidated net sales	$	3,379	$	3,735	$	6,387	$	7,261