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Segment Financial Data

9 Months Ended

Sep. 30, 2021

Segment Reporting Disclosure [Text Block]

Segment Financial Data

Our operations, for the periods presented herein, 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.

As previously announced, effective January 1, 2021, we reorganized certain product areas of our RIS and RMD businesses to more efficiently leverage our capabilities. The amounts and presentation of our business segments, including intersegment activity, set forth in this Form 10-Q reflect this reorganization. The reorganization does not impact our previously reported Collins Aerospace Systems and Pratt & Whitney segment results, or our consolidated balance sheets, statements of operations or statements of cash flows.

Revised financial results for the fiscal quarters and year ended 2020 were as follows:


	2020
(dollars in millions)	Q1		Q2		Q3		Q4		FY
Net Sales
Collins Aerospace Systems	$	6,438	$	4,202	$	4,274	$	4,374	$	19,288
Pratt & Whitney	5,353		3,487		3,494		4,465		16,799
Raytheon Intelligence & Space	—		3,387		3,749		3,933		11,069
Raytheon Missiles & Defense	—		3,506		3,706		4,184		11,396
Total segments	11,791		14,582		15,223		16,956		58,552
Eliminations and other	(431)		(521)		(476)		(537)		(1,965)
Consolidated	$	11,360	$	14,061	$	14,747	$	16,419	$	56,587


Operating Profit (Loss)
Collins Aerospace Systems	$	1,246		$	(317)		$	526		$	11		$	1,466
Pratt & Whitney	475			(457)			(615)			33			(564)
Raytheon Intelligence & Space	—			309			350			361			1,020
Raytheon Missiles & Defense	—			398			449			33			880
Total segments	1,721			(67)			710			438			2,802
Eliminations and other	(25)			(27)			(49)			(6)			(107)
Corporate expenses and other unallocated items	(130)			(277)			(84)			(99)			(590)
FAS/CAS operating adjustment	—			356			380			370			1,106
Acquisition accounting adjustments	(271)			(3,745)			(523)			(561)			(5,100)
Consolidated	$	1,295		$	(3,760)		$	434		$	142		$	(1,889)

Segment Operating Profit (Loss) Margin
Collins Aerospace Systems	19.4		%	(7.5)		%	12.3		%	0.3		%	7.6		%
Pratt & Whitney	8.9		%	(13.1)		%	(17.6)		%	0.7		%	(3.4)		%
Raytheon Intelligence & Space	NM			9.1		%	9.3		%	9.2		%	9.2		%
Raytheon Missiles & Defense	NM			11.4		%	12.1		%	0.8		%	7.7		%
Total segment	14.6		%	(0.5)		%	4.7		%	2.6		%	4.8		%

As a result of the Raytheon Merger, we now present a FAS/CAS operating adjustment outside of segment results, which represents the difference between the service cost component of our pension and PRB expense under the Financial Accounting Standards (FAS) requirements of U.S. Generally Accepted Accounting Principles (GAAP) and our pension and PRB expense under U.S. government Cost Accounting Standards (CAS) primarily related to our RIS and RMD segments. While the ultimate liability for pension and PRB costs under FAS and CAS is similar, the pattern of cost recognition is different. We generally expect to recover the related RIS and RMD pension and PRB liabilities over time through the pricing of our products and services to the U.S. government. 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, 2021 and 2020 are as follows:


	Net Sales				Operating Profit (Loss)				Operating Profit (Loss) Margins
(dollars in millions)	2021		2020		2021		2020		2021		2020
Collins Aerospace Systems	$	4,592	$	4,274	$	478	$	526	10.4	%	12.3	%
Pratt & Whitney	4,725		3,494		187		(615)		4.0	%	(17.6)	%
Raytheon Intelligence & Space	3,740		3,749		391		350		10.5	%	9.3	%
Raytheon Missiles & Defense	3,902		3,706		490		449		12.6	%	12.1	%
Total segment	16,959		15,223		1,546		710		9.1	%	4.7	%
Eliminations and other(1)	(746)		(476)		(27)		(49)
Corporate expenses and other unallocated items (2)	—		—		(89)		(84)
FAS/CAS operating adjustment	—		—		499		380
Acquisition accounting adjustments	—		—		(586)		(523)
Consolidated	$	16,213	$	14,747	$	1,343	$	434	8.3	%	2.9	%

(1) Includes the operating results of certain smaller non-reportable business segments. 2020 amounts include Forcepoint, which was acquired as part of the Raytheon Merger and subsequently disposed of on January 8, 2021.

(2) Corporate expenses and other unallocated items include the net expenses related to the U.S. Army’s Lower Tier Air and Missile Defense Sensor (LTAMDS) project.

Results for the nine months ended September 30, 2021 and 2020 are as follows:


	Net Sales				Operating Profit (Loss)				Operating Profit (Loss) Margins
(dollars in millions)	2021		2020		2021		2020		2021		2020
Collins Aerospace Systems	$	13,507	$	14,914	$	1,298	$	1,455	9.6	%	9.8	%
Pratt & Whitney	13,035		12,334		319		(597)		2.4	%	(4.8)	%
Raytheon Intelligence & Space	11,310		7,136		1,194		659		10.6	%	9.2	%
Raytheon Missiles & Defense	11,680		7,212		1,518		847		13.0	%	11.7	%
Total segment	49,532		41,596		4,329		2,364		8.7	%	5.7	%
Eliminations and other (1)	(2,188)		(1,428)		(98)		(101)
Corporate expenses and other unallocated items (2)	—		—		(319)		(491)
FAS/CAS operating adjustment	—		—		1,347		736
Acquisition accounting adjustments	—		—		(1,621)		(4,539)
Consolidated	$	47,344	$	40,168	$	3,638	$	(2,031)	7.7	%	(5.1)	%

(2) Corporate expenses and other unallocated items include the net expenses related to the U.S. Army’s LTAMDS project.

We disaggregate our contracts from customers by geographic location based on customer location, by customer and by sales type. Our geographic location based on customer location uses end user customer location where known or practical to determine, or in instances where the end user customer is not known or not practical to determine, 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, 2021 and 2020 are as follows:


	2021												2020
(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	$	2,334	$	2,367	$	2,977	$	2,414	$	4	$	10,096	$	2,378	$	1,856	$	2,999	$	2,224	$	109	$	9,566
Asia Pacific	465		1,007		199		335		—		2,006		358		772		205		355		13		1,703
Middle East and North Africa	136		127		105		772		—		1,140		97		112		133		703		10		1,055
Europe	1,066		943		107		297		(5)		2,408		965		572		100		337		38		2,012
Canada and All Other	226		281		39		17		—		563		165		179		29		29		9		411
Consolidated net sales	4,227		4,725		3,427		3,835		(1)		16,213		3,963		3,491		3,466		3,648		179		14,747
Inter-segment sales	365		—		313		67		(745)		—		311		3		283		58		(655)		—
Business segment sales	$	4,592	$	4,725	$	3,740	$	3,902	$	(746)	$	16,213	$	4,274	$	3,494	$	3,749	$	3,706	$	(476)	$	14,747

Segment sales disaggregated by geographic region for the nine months ended September 30, 2021 and 2020 are as follows:


	2021												2020
(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	$	6,899	$	6,665	$	8,962	$	7,156	$	15	$	29,697	$	8,027	$	6,103	$	5,627	$	4,311	$	156	$	24,224
Asia Pacific	1,340		2,771		608		1,061		—		5,780		1,350		2,980		405		701		26		5,462
Middle East and North Africa	346		316		370		2,267		—		3,299		339		406		270		1,408		18		2,441
Europe	3,207		2,376		339		949		—		6,871		3,497		2,101		202		628		104		6,532
Canada and All Other	646		907		94		50		—		1,697		651		738		53		43		24		1,509
Consolidated net sales	12,438		13,035		10,373		11,483		15		47,344		13,864		12,328		6,557		7,091		328		40,168
Inter-segment sales	1,069		—		937		197		(2,203)		—		1,050		6		579		121		(1,756)		—
Business segment sales	$	13,507	$	13,035	$	11,310	$	11,680	$	(2,188)	$	47,344	$	14,914	$	12,334	$	7,136	$	7,212	$	(1,428)	$	40,168

Segment sales disaggregated by customer for the quarters ended September 30, 2021 and 2020 are as follows:


	2021												2020
(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)	$	1,101	$	1,295	$	2,923	$	2,414	$	4	$	7,737	$	1,238	$	1,270	$	2,944	$	2,223	$	72	$	7,747
Foreign military sales through the U.S. government	54		322		210		778		—		1,364		34		325		201		812		—		1,372
Foreign government direct commercial sales	258		126		216		642		—		1,242		230		120		245		589		2		1,186
Commercial aerospace and other commercial	2,814		2,982		78		1		(5)		5,870		2,461		1,776		76		24		105		4,442
Consolidated net sales	4,227		4,725		3,427		3,835		(1)		16,213		3,963		3,491		3,466		3,648		179		14,747
Inter-segment sales	365		—		313		67		(745)		—		311		3		283		58		(655)		—
Business segment sales	$	4,592	$	4,725	$	3,740	$	3,902	$	(746)	$	16,213	$	4,274	$	3,494	$	3,749	$	3,706	$	(476)	$	14,747

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

Segment sales disaggregated by customer for the nine months ended September 30, 2021 and 2020 are as follows:


	2021												2020
(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)	$	3,470	$	3,748	$	8,767	$	7,155	$	15	$	23,155	$	3,880	$	3,792	$	5,504	$	4,301	$	126	$	17,603
Foreign military sales through the U.S. government	119		961		627		2,449		—		4,156		166		877		419		1,578		—		3,040
Foreign government direct commercial sales	804		392		662		1,877		—		3,735		659		380		458		1,154		2		2,653
Commercial aerospace and other commercial	8,045		7,934		317		2		—		16,298		9,159		7,279		176		58		200		16,872
Consolidated net sales	12,438		13,035		10,373		11,483		15		47,344		13,864		12,328		6,557		7,091		328		40,168
Inter-segment sales	1,069		—		937		197		(2,203)		—		1,050		6		579		121		(1,756)		—
Business segment sales	$	13,507	$	13,035	$	11,310	$	11,680	$	(2,188)	$	47,344	$	14,914	$	12,334	$	7,136	$	7,212	$	(1,428)	$	40,168

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

Segment sales disaggregated by sales type for the quarters ended September 30, 2021 and 2020 are as follows:


	2021												2020
(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
Products	$	3,336	$	2,877	$	2,613	$	3,506	$	(1)	$	12,331	$	3,231	$	2,142	$	2,615	$	3,324	$	157	$	11,469
Services	891		1,848		814		329		—		3,882		732		1,349		851		324		22		3,278
Consolidated net sales	4,227		4,725		3,427		3,835		(1)		16,213		3,963		3,491		3,466		3,648		179		14,747
Inter-segment sales	365		—		313		67		(745)		—		311		3		283		58		(655)		—
Business segment sales	$	4,592	$	4,725	$	3,740	$	3,902	$	(746)	$	16,213	$	4,274	$	3,494	$	3,749	$	3,706	$	(476)	$	14,747

Segment sales disaggregated by sales type for the nine months ended September 30, 2021 and 2020 are as follows:


	2021												2020
(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
Products	$	9,867	$	7,882	$	7,964	$	10,446	$	15	$	36,174	$	11,325	$	7,285	$	5,024	$	6,480	$	288	$	30,402
Services	2,571		5,153		2,409		1,037		—		11,170		2,539		5,043		1,533		611		40		9,766
Consolidated net sales	12,438		13,035		10,373		11,483		15		47,344		13,864		12,328		6,557		7,091		328		40,168
Inter-segment sales	1,069		—		937		197		(2,203)		—		1,050		6		579		121		(1,756)		—
Business segment sales	$	13,507	$	13,035	$	11,310	$	11,680	$	(2,188)	$	47,344	$	14,914	$	12,334	$	7,136	$	7,212	$	(1,428)	$	40,168

RIS and RMD segment sales disaggregated by contract type for the quarters ended September 30, 2021 and 2020 are as follows:


	2021				2020
(dollars in millions)	Raytheon Intelligence & Space		Raytheon Missiles & Defense		Raytheon Intelligence & Space		Raytheon Missiles & Defense
Fixed-price	$	1,506	$	2,401	$	1,510	$	2,337
Cost-type	1,921		1,434		1,956		1,311
Consolidated net sales	3,427		3,835		3,466		3,648
Inter-segments sales	313		67		283		58
Business segment sales	$	3,740	$	3,902	$	3,749	$	3,706

RIS and RMD segment sales disaggregated by contract type for the nine months ended September 30, 2021 and 2020 are as follows:


	2021				2020
(dollars in millions)	Raytheon Intelligence & Space		Raytheon Missiles & Defense		Raytheon Intelligence & Space		Raytheon Missiles & Defense
Fixed-price	$	4,533	$	7,054	$	2,781	$	4,447
Cost-type	5,840		4,429		3,776		2,644
Consolidated net sales	10,373		11,483		6,557		7,091
Inter-segments sales	937		197		579		121
Business segment sales	$	11,310	$	11,680	$	7,136	$	7,212

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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