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INFORMATION ON BUSINESS SEGMENTS
 9 Months Ended
Sep. 27, 2020
Segment Reporting [Abstract]  
INFORMATION ON BUSINESS SEGMENTS INFORMATION ON BUSINESS SEGMENTS
We operate in four business segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. We organize our business segments based on the nature of products and services offered.
Net sales and operating profit of our business segments exclude intersegment sales, cost of sales, and profit as these activities are eliminated in consolidation. 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.
Business segment operating profit also excludes the FAS/CAS 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, retiree benefits, significant severance actions, significant asset impairments, gains or losses from significant 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 10 – Other” for a discussion related to certain factors that may impact the comparability of net sales and operating profit of our business segments.
Summary operating results for each of our business segments were as follows (in millions):
 Quarters EndedNine Months Ended
September 27,
2020		September 29,
2019		September 27,
2020		September 29,
2019
Net sales
Aeronautics$6,680 $6,178 $19,552 $17,312 
Missiles and Fire Control2,971 2,601 8,391 7,362 
Rotary and Mission Systems3,998 3,709 11,783 11,239 
Space 2,846 2,683 8,640 8,021 
Total net sales$16,495 $15,171 $48,366 $43,934 
Operating profit
Aeronautics$705 $665 $2,116 $1,842 
Missiles and Fire Control405 349 1,171 1,093 
Rotary and Mission Systems 404 342 1,209 1,068 
Space 248 309 781 931 
Total business segment operating profit1,762 1,665 5,277 4,934 
Unallocated items
FAS/CAS operating adjustment (a)
469 513 1,407 1,537 
Stock-based compensation(67)(54)(182)(158)
Other, net (b)
(17)(19)(147)83 
Total unallocated items385 440 1,078 1,462 
Total consolidated operating profit$2,147 $2,105 $6,355 $6,396 
Intersegment sales
Aeronautics$59 $58 $179 $147 
Missiles and Fire Control129 107 405 372 
Rotary and Mission Systems438 473 1,438 1,433 
Space 83 91 296 244 
Total intersegment sales$709 $729 $2,318 $2,196 
 
(a)The FAS/CAS operating adjustment represents the difference between the service cost component of financial accounting standards (FAS) pension income (expense) and total pension costs recoverable on U.S. Government contracts as determined in accordance with CAS.
(b)Other, net for nine months ended September 27, 2020 includes a non-cash impairment charge of $128 million recognized in the second quarter of 2020 on our investment in the international equity method investee, Advanced Military Maintenance, Repair and Overhaul Center (AMMROC), which decreased net earnings from continuing operations by $96 million ($0.34 per share).
Our total net FAS/CAS pension adjustment for the quarters and nine months ended September 27, 2020 and September 29, 2019, including the service and non-service cost components of FAS pension income (expense) for our qualified defined benefit pension plans, were as follows (in millions):
Quarters EndedNine Months Ended
September 27,
2020		September 29,
2019		September 27,
2020		September 29,
2019
Total FAS income (expense) and CAS costs
FAS pension income (expense)$29 $(274)$88 $(820)
Less: CAS pension cost494 642 1,483 1,924 
Net FAS/CAS pension adjustment$523 $368 $1,571 $1,104 
Service and non-service cost reconciliation
FAS pension service cost$(25)$(129)$(76)$(387)
Less: CAS pension cost494 642 1,483 1,924 
FAS/CAS operating adjustment469 513 1,407 1,537 
Non-operating FAS pension income (expense)54 (145)164 (433)
Net FAS/CAS pension adjustment$523 $368 $1,571 $1,104 

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 cost in each of our business segment’s net sales and cost of sales. Our consolidated financial statements must present FAS pension and other postretirement benefit plan expense calculated in accordance with FAS requirements under U.S. GAAP. The operating portion of the net FAS/CAS pension adjustment represents the difference between the service cost component of FAS pension income (expense) and total CAS pension cost. The non-service FAS pension income (expense) component is included in other non-operating income (expense), net in our consolidated statements of earnings. As a result, to the extent that CAS pension cost exceeds the service cost component of FAS pension income (expense), we have a favorable FAS/CAS operating adjustment.
We expect to have FAS pension income in 2020, compared to FAS pension expense in prior periods. We no longer have service cost for certain of our plans as a result of completing the planned freeze of our salaried pension plans effective January 1, 2020 that was previously announced on July 1, 2014. See “Note 6 – Postretirement Benefit Plans” for additional information regarding the corporation’s FAS pension expense or income and CAS pension cost.
Net sales by products and services, contract type, customer, and geographic region were as follows (in millions):
Quarter Ended September 27, 2020
AeronauticsMFCRMSSpace Total
Net sales
Products$5,742 $2,614 $3,120 $2,393 $13,869 
Services938 357 878 453 2,626 
Total net sales$6,680 $2,971 $3,998 $2,846 $16,495 
Net sales by contract type
Fixed-price$4,718 $2,034 $2,666 $516 $9,934 
Cost-reimbursable1,962 937 1,332 2,330 6,561 
Total net sales$6,680 $2,971 $3,998 $2,846 $16,495 
Net sales by customer
U.S. Government$3,930 $2,206 $2,971 $2,463 $11,570 
International (a)
2,729 764 914 381 4,788 
U.S. commercial and other21 1 113 2 137 
Total net sales$6,680 $2,971 $3,998 $2,846 $16,495 
Net sales by geographic region
United States$3,951 $2,207 $3,084 $2,465 $11,707 
Asia Pacific1,099 70 383 21 1,573 
Europe1,141 208 191 360 1,900 
Middle East440 475 206 — 1,121 
Other49 11 134 — 194 
Total net sales$6,680 $2,971 $3,998 $2,846 $16,495 

Nine Months Ended September 27, 2020
AeronauticsMFCRMSSpace Total
Net sales
Products$16,671 $7,311 $9,365 $7,260 $40,607 
Services2,881 1,080 2,418 1,380 7,759 
Total net sales$19,552 $8,391 $11,783 $8,640 $48,366 
Net sales by contract type
Fixed-price$13,769 $5,629 $7,787 $1,518 $28,703 
Cost-reimbursable5,783 2,762 3,996 7,122 19,663 
Total net sales$19,552 $8,391 $11,783 $8,640 $48,366 
Net sales by customer
U.S. Government$13,315 $6,259 $8,685 $7,479 $35,738 
International (a)
6,182 2,123 2,780 1,131 12,216 
U.S. commercial and other55 9 318 30 412 
Total net sales$19,552 $8,391 $11,783 $8,640 $48,366 
Net sales by geographic region
United States$13,370 $6,268 $9,003 $7,509 $36,150 
Asia Pacific2,447 217 1,165 65 3,894 
Europe2,595 546 528 1,072 4,741 
Middle East981 1,324 626 (6)2,925 
Other159 36 461 — 656 
Total net sales$19,552 $8,391 $11,783 $8,640 $48,366 
(a)International sales include foreign military sales (FMS) contracted through the U.S. Government and direct commercial sales to international governments and other international customers.
Quarter Ended September 29, 2019
AeronauticsMFCRMSSpace Total
Net sales
Products$5,340 $2,172 $2,982 $2,234 $12,728 
Services838 429 727 449 2,443 
Total net sales$6,178 $2,601 $3,709 $2,683 $15,171 
Net sales by contract type
Fixed-price$4,567 $1,681 $2,536 $527 $9,311 
Cost-reimbursable1,611 920 1,173 2,156 5,860 
Total net sales$6,178 $2,601 $3,709 $2,683 $15,171 
Net sales by customer
U.S. Government$3,509 $1,995 $2,763 $2,332 $10,599 
International (a)
2,631 572 804 343 4,350 
U.S. commercial and other38 34 142 8 222 
Total net sales$6,178 $2,601 $3,709 $2,683 $15,171 
Net sales by geographic region
United States$3,547 $2,029 $2,905 $2,340 $10,821 
Asia Pacific1,046 107 317 17 1,487 
Europe1,106 138 168 326 1,738 
Middle East455 318 206 — 979 
Other24 9 113 — 146 
Total net sales$6,178 $2,601 $3,709 $2,683 $15,171 
Nine Months Ended September 29, 2019
AeronauticsMFCRMSSpace Total
Net sales
Products$14,876 $6,051 $9,064 $6,710 $36,701 
Services2,436 1,311 2,175 1,311 7,233 
Total net sales$17,312 $7,362 $11,239 $8,021 $43,934 
Net sales by contract type
Fixed-price$12,777 $4,660 $7,681 $1,585 $26,703 
Cost-reimbursable4,535 2,702 3,558 6,436 17,231 
Total net sales$17,312 $7,362 $11,239 $8,021 $43,934 
Net sales by customer
U.S. Government$10,420 $5,528 $8,113 $6,900 $30,961 
International (a)
6,736 1,717 2,773 1,098 12,324 
U.S. commercial and other156 117 353 23 649 
Total net sales$17,312 $7,362 $11,239 $8,021 $43,934 
Net sales by geographic region
United States$10,576 $5,645 $8,466 $6,923 $31,610 
Asia Pacific2,736 315 1,065 48 4,164 
Europe2,751 363 509 1,035 4,658 
Middle East1,127 1,003 738 15 2,883 
Other122 36 461 — 619 
Total net sales$17,312 $7,362 $11,239 $8,021 $43,934 
(a)International sales include FMS contracted through the U.S. Government and direct commercial sales to international governments and other 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 28% of our total consolidated net sales for both the quarter and nine months ended September 27, 2020 and 28% and 27% of our total consolidated net sales for the quarter and nine months ended September 29, 2019.
Total assets for each of our business segments were as follows (in millions):
September 27,
2020		December 31,
2019
Assets
Aeronautics$10,434 $9,109 
Missiles and Fire Control5,112 5,030 
Rotary and Mission Systems18,244 18,751 
Space 6,145 5,844 
Total business segment assets39,935 38,734 
Corporate assets (a)
10,838 8,794 
Total assets$50,773 $47,528 
(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 and investments held in a separate trust.