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Information on Business Segments
 12 Months Ended
Dec. 31, 2021
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 development, design, 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. Our investment in ULA totaled $585 million and $691 million at December 31, 2021 and 2020.
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.
Summary Operating Results
Sales and operating profit for each of our business segments were as follows (in millions):
202120202019
Net sales
Aeronautics$26,748 $26,266 $23,693 
Missiles and Fire Control11,693 11,257 10,131 
Rotary and Mission Systems16,789 15,995 15,128 
Space11,814 11,880 10,860 
Total net sales$67,044 $65,398 $59,812 
Operating profit
Aeronautics$2,799 $2,843 $2,521 
Missiles and Fire Control1,648 1,545 1,441 
Rotary and Mission Systems1,798 1,615 1,421 
Space1,134 1,149 1,191 
Total business segment operating profit7,379 7,152 6,574 
Unallocated items
     FAS/CAS operating adjustment 1,960 1,876 2,049 
Stock-based compensation(227)(221)(189)
     Severance and restructuring charges (a)
(36)(27)— 
Other, net (b)
47 (136)111 
Total unallocated, net1,744 1,492 1,971 
Total consolidated operating profit$9,123 $8,644 $8,545 
(a)Severance and restructuring includes a $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 a $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 recognized in the second quarter of 2020 on our investment in the international equity method investee, AMMROC, which decreased net earnings from continuing operations by $96 million. Other, net in 2019 includes a previously deferred non-cash gain of $51 million related to properties sold in 2015 as a result of completing our remaining obligations and a gain of $34 million for the sale of our Distributed Energy Solutions business. (See “Note 1 – Organization and Significant Accounting Policies”).

Unallocated Items

Business segment operating profit also excludes the FAS/CAS operating adjustment, 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 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. However, 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. 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 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 FAS pension and other postretirement benefit plan income 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 (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 operating adjustment.

Our total net 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):
202120202019
Total FAS (expense) income and CAS costs
FAS pension (expense) income $(1,398)$118 $(1,093)
Less: CAS pension cost2,066 1,977 2,565 
Net FAS/CAS pension adjustment$668 $2,095 $1,472 
Service and non-service cost reconciliation
FAS pension service cost$(106)$(101)$(516)
Less: CAS pension cost2,066 1,977 2,565 
FAS/CAS operating adjustment1,960 1,876 2,049 
Non-service FAS pension (expense) income (1,292)219 (577)
Net FAS/CAS pension adjustment$668 $2,095 $1,472 
The decrease in the net FAS/CAS pension adjustment in 2021 was principally driven by 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 on August 3, 2021. See “Note 12 – 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):
202120202019
Intersegment sales
Aeronautics$219 $243 $217 
Missiles and Fire Control618 562 515 
Rotary and Mission Systems1,895 1,903 1,872 
Space 360 377 352 
Total intersegment sales$3,092 $3,085 $2,956 
Dissaggregation of Net Sales
Net sales by total products and services, contract type, customer category and geographic region for each of our business segments were as follows (in millions):
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.
2019
AeronauticsMFCRMSSpace Total
Net sales
Products$20,319 $8,424 $12,206 $9,104 $50,053 
Services3,374 1,707 2,922 1,756 9,759 
Total net sales$23,693 $10,131 $15,128 $10,860 $59,812 
Net sales by contract type
Fixed-price$17,239 $6,449 $10,382 $2,135 $36,205 
Cost-reimbursable6,454 3,682 4,746 8,725 23,607 
Total net sales$23,693 $10,131 $15,128 $10,860 $59,812 
Net sales by customer
U.S. Government$14,776 $7,524 $10,803 $9,322 $42,425 
International (a)
8,733 2,465 3,822 1,511 16,531 
U.S. commercial and other184 142 503 27 856 
Total net sales$23,693 $10,131 $15,128 $10,860 $59,812 
Net sales by geographic region
United States$14,960 $7,666 $11,306 $9,349 $43,281 
Europe3,224 516 769 1,419 5,928 
Asia Pacific3,882 420 1,451 73 5,826 
Middle East1,465 1,481 979 19 3,944 
Other162 48 623 — 833 
Total net sales$23,693 $10,131 $15,128 $10,860 $59,812 
(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 2021, 28% during 2020 and 27% during 2019.
Capital Expenditures, PP&E Depreciation and Software Amortization, and Amortization of Purchased Intangibles
202120202019
Capital expenditures
Aeronautics$477 $534 $526 
Missiles and Fire Control304 391 300 
Rotary and Mission Systems279 311 272 
Space305 403 258 
Total business segment capital expenditures1,365 1,639 1,356 
Corporate activities157 127 128 
Total capital expenditures$1,522 $1,766 $1,484 
PP&E depreciation and software amortization (a)
Aeronautics$348 $348 $318 
Missiles and Fire Control153 136 122 
Rotary and Mission Systems250 244 232 
Space 205 182 164 
Total business segment depreciation and amortization956 910 836 
Corporate activities123 109 70 
Total depreciation and amortization $1,079 $1,019 $906 
Amortization of purchased intangibles
Aeronautics$1 $— $— 
Missiles and Fire Control2 2 2 
Rotary and Mission Systems232 232 232 
Space50 37 50 
Total amortization of purchased intangibles$285 $271 $284 
(a)Excludes amortization of purchased intangibles.
Assets

Total assets for each of our business segments were as follows (in millions):
20212020
Assets
Aeronautics$10,756 $9,903 
Missiles and Fire Control5,243 4,966 
Rotary and Mission Systems17,664 18,035 
Space 6,199 6,451 
Total business segment assets39,862 39,355 
Corporate assets (a)
11,011 11,355 
Total assets$50,873 $50,710 
(a)Corporate assets primarily include cash and cash equivalents, deferred income taxes, assets for the portion of certain environmental costs that are probable of future recovery, and investments. Substantially all of our operating assets are located in the U.S.