Segment Information (Unaudited)

9 Months Ended

Sep. 30, 2019

The company is aligned in four operating sectors, which also comprise our reportable segments: Aerospace Systems, Innovation Systems, Mission Systems and Technology Services.

The following table presents sales and operating income by segment:



	Three Months Ended September 30						Nine Months Ended September 30
$ in millions	2019			2018			2019			2018
Sales
Aerospace Systems	$	3,458		$	3,282		$	10,344		$	9,899
Innovation Systems	1,584			1,415			4,520			1,815
Mission Systems	3,029			2,911			9,043			8,668
Technology Services	1,067			1,040			3,088			3,232
Intersegment eliminations	(663		)	(563		)	(1,875		)	(1,675		)
Total sales	8,475			8,085			25,120			21,939
Operating income
Aerospace Systems	324			376			1,067			1,074
Innovation Systems	164			161			500			200
Mission Systems	398			399			1,189			1,122
Technology Services	136			111			351			328
Intersegment eliminations	(82		)	(68		)	(222		)	(204		)
Total segment operating income	940			979			2,885			2,520
Net FAS (service)/CAS pension adjustment	131			176			346			440
Unallocated corporate (expense) income	(120		)	17			(398		)	(123		)
Total operating income	$	951		$	1,172		$	2,833		$	2,837

Net FAS (Service)/CAS Pension Adjustment

For financial statement purposes, we account for our employee pension plans in accordance with FAS. However, the cost of these plans is charged to our contracts in accordance with the Federal Acquisition Regulation (FAR) and the related U.S. Government Cost Accounting Standards (CAS). The net FAS (service)/CAS pension adjustment reflects the difference between CAS pension expense included as cost in segment operating income and the service cost component of FAS expense included in total operating income.

Unallocated Corporate (Expense) Income

Unallocated corporate expense includes the portion of corporate costs not considered allowable or allocable under applicable CAS or FAR, and therefore not allocated to the segments, such as a portion of management and administration, legal, environmental, compensation, retiree benefits and other corporate unallowable costs. Unallocated corporate expense also includes costs not considered part of management’s evaluation of segment operating performance, such as amortization of purchased intangible assets and the additional depreciation expense related to the step-up in fair value of property, plant and equipment acquired through business combinations.

Disaggregation of Revenue



Sales by Customer Type	Three Months Ended September 30								Nine Months Ended September 30
	2019				2018				2019				2018
$ in millions	$		%⁽³⁾		$		%⁽³⁾		$		%⁽³⁾		$		%⁽³⁾
Aerospace Systems
U.S. government ⁽¹⁾	$	3,014	87	%	$	2,926	89	%	$	8,954	87	%	$	8,633	87	%
International ⁽²⁾	353		10	%	270		8	%	1,137		11	%	990		10	%
Other customers	36		1	%	44		2	%	100		1	%	124		1	%
Intersegment sales	55		2	%	42		1	%	153		1	%	152		2	%
Aerospace Systems sales	3,458		100	%	3,282		100	%	10,344		100	%	9,899		100	%
Innovation Systems
U.S. government ⁽¹⁾	1,163		74	%	972		69	%	3,239		72	%	1,237		68	%
International ⁽²⁾	228		14	%	272		19	%	702		16	%	364		20	%
Other customers	99		6	%	134		9	%	331		7	%	164		9	%
Intersegment sales	94		6	%	37		3	%	248		5	%	50		3	%
Innovation Systems sales	1,584		100	%	1,415		100	%	4,520		100	%	1,815		100	%
Mission Systems
U.S. government ⁽¹⁾	2,260		75	%	2,232		77	%	6,775		75	%	6,577		76	%
International ⁽²⁾	416		14	%	374		12	%	1,242		14	%	1,144		13	%
Other customers	32		1	%	25		1	%	105		1	%	89		1	%
Intersegment sales	321		10	%	280		10	%	921		10	%	858		10	%
Mission Systems sales	3,029		100	%	2,911		100	%	9,043		100	%	8,668		100	%
Technology Services
U.S. government ⁽¹⁾	629		59	%	581		56	%	1,799		58	%	1,780		55	%
International ⁽²⁾	208		19	%	183		17	%	642		21	%	596		18	%
Other customers	37		4	%	72		7	%	94		3	%	241		8	%
Intersegment sales	193		18	%	204		20	%	553		18	%	615		19	%
Technology Services sales	1,067		100	%	1,040		100	%	3,088		100	%	3,232		100	%
Total
U.S. government ⁽¹⁾	7,066		83	%	6,711		83	%	20,767		83	%	18,227		83	%
International ⁽²⁾	1,205		14	%	1,099		14	%	3,723		15	%	3,094		14	%
Other customers	204		3	%	275		3	%	630		2	%	618		3	%
Total Sales	$	8,475	100	%	$	8,085	100	%	$	25,120	100	%	$	21,939	100	%


⁽¹⁾	Sales to the U.S. government include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is the U.S. government. Each of the company’s segments derives substantial revenue from the U.S. government.

⁽²⁾ International sales include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is an international customer. These sales include foreign military sales contracted through the U.S. government.

⁽³⁾ Percentages calculated based on total segment sales.



Sales by Contract Type	Three Months Ended September 30								Nine Months Ended September 30
	2019				2018				2019				2018
$ in millions	$		%⁽¹⁾		$		%⁽¹⁾		$		%⁽¹⁾		$		%⁽¹⁾
Aerospace Systems
Cost-type	$	1,995	59	%	$	1,953	60	%	$	5,976	59	%	$	5,789	59	%
Fixed-price	1,408		41	%	1,287		40	%	4,215		41	%	3,958		41	%
Intersegment sales	55				42				153				152
Aerospace Systems sales	3,458				3,282				10,344				9,899
Innovation Systems
Cost-type	419		28	%	373		27	%	1,232		29	%	472		27	%
Fixed-price	1,071		72	%	1,005		73	%	3,040		71	%	1,293		73	%
Intersegment sales	94				37				248				50
Innovation Systems sales	1,584				1,415				4,520				1,815
Mission Systems
Cost-type	1,264		47	%	1,259		48	%	3,854		47	%	3,745		48	%
Fixed-price	1,444		53	%	1,372		52	%	4,268		53	%	4,065		52	%
Intersegment sales	321				280				921				858
Mission Systems sales	3,029				2,911				9,043				8,668
Technology Services
Cost-type	398		46	%	373		45	%	1,202		47	%	1,195		46	%
Fixed-price	476		54	%	463		55	%	1,333		53	%	1,422		54	%
Intersegment sales	193				204				553				615
Technology Services sales	1,067				1,040				3,088				3,232
Total
Cost-type	4,076		48	%	3,958		49	%	12,264		49	%	11,201		51	%
Fixed-price	4,399		52	%	4,127		51	%	12,856		51	%	10,738		49	%
Total Sales	$	8,475			$	8,085			$	25,120			$	21,939


⁽¹⁾	Percentages calculated based on external customer sales.



Sales by Geographic Region	Three Months Ended September 30								Nine Months Ended September 30
	2019				2018				2019				2018
$ in millions	$		%⁽²⁾		$		%⁽²⁾		$		%⁽²⁾		$		%⁽²⁾
Aerospace Systems
United States	$	3,050	90	%	$	2,970	92	%	$	9,054	89	%	$	8,757	90	%
Asia/Pacific	173		5	%	121		4	%	632		6	%	499		5	%
All other ⁽¹⁾	180		5	%	149		4	%	505		5	%	491		5	%
Intersegment sales	55				42				153				152
Aerospace Systems sales	3,458				3,282				10,344				9,899
Innovation Systems
United States	1,262		85	%	1,105		80	%	3,570		84	%	1,401		79	%
Asia/Pacific	30		2	%	72		5	%	123		3	%	96		6	%
All other ⁽¹⁾	198		13	%	201		15	%	579		13	%	268		15	%
Intersegment sales	94				37				248				50
Innovation Systems sales	1,584				1,415				4,520				1,815
Mission Systems
United States	2,292		85	%	2,253		86	%	6,880		85	%	6,666		85	%
Asia/Pacific	143		5	%	208		8	%	443		5	%	521		7	%
All other ⁽¹⁾	273		10	%	170		6	%	799		10	%	623		8	%
Intersegment sales	321				280				921				858
Mission Systems sales	3,029				2,911				9,043				8,668
Technology Services
United States	666		76	%	653		78	%	1,893		75	%	2,021		77	%
Asia/Pacific	44		5	%	45		5	%	144		6	%	113		4	%
All other ⁽¹⁾	164		19	%	138		17	%	498		19	%	483		19	%
Intersegment sales	193				204				553				615
Technology Services sales	1,067				1,040				3,088				3,232
Total
United States	7,270		86	%	6,981		86	%	21,397		85	%	18,845		86	%
Asia/Pacific	390		5	%	446		6	%	1,342		5	%	1,229		6	%
All other ⁽¹⁾	815		9	%	658		8	%	2,381		10	%	1,865		8	%
Total Sales	$	8,475			$	8,085			$	25,120			$	21,939


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

⁽²⁾

Percentages calculated based on external customer sales.