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INFORMATION ON BUSINESS SEGMENTS
 3 Months Ended
Mar. 26, 2023
Segment Reporting [Abstract]  
INFORMATION ON BUSINESS SEGMENTS INFORMATION ON BUSINESS SEGMENTS
Overview
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.
Selected Financial Data by Business Segment
Net sales and operating profit of our business segments exclude intersegment sales, cost of sales, and profit as these activities are eliminated in consolidation and thus are not included in management’s evaluation of performance of each segment. 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.
Summary Operating Results
As discussed in “Note 1 - Basis of Presentation”, effective January 1, 2023, we no longer consider amortization expense related to purchased intangible assets when evaluating the operating performance of our business segments. As a result, intangible asset amortization expense, which was previously included in segment operating profit, is now reported in unallocated items within total consolidated operating profit.
This change has been applied to the amounts below, including the amounts for 2022. Sales and operating profit for each of our business segments were as follows (in millions):
 Quarters Ended
March 26,
2023		March 27,
2022
Net sales
Aeronautics$6,269 $6,401 
Missiles and Fire Control2,388 2,452 
Rotary and Mission Systems3,510 3,552 
Space 2,959 2,559 
Total net sales$15,126 $14,964 
Operating profit
Aeronautics$675 $679 
Missiles and Fire Control377 385 
Rotary and Mission Systems 350 406 
Space 280 248 
Total business segment operating profit1,682 1,718 
Unallocated items
FAS/CAS pension operating adjustment415 426 
Intangible asset amortization expense(62)(62)
Other, net 2 (149)
Total unallocated items355 215 
Total consolidated operating profit$2,037 $1,933 
Intersegment sales
Aeronautics$53 $60 
Missiles and Fire Control146 156 
Rotary and Mission Systems489 455 
Space 86 83 
Total intersegment sales$774 $754 
Unallocated Items
Business segment operating profit excludes the FAS/CAS pension 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, changes in the fair value of net assets and liabilities for deferred compensation plans, retiree benefits, significant severance charges, significant asset impairments, gains or losses from divestitures, intangible asset amortization expense, 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.
FAS/CAS Pension 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 pension and other postretirement benefit plan income calculated in accordance with Financial Accounting Standards (FAS) requirements under U.S. GAAP. The operating portion of the total FAS/CAS pension adjustment represents the difference between the service cost component of FAS pension income and total CAS pension cost. As a result, to the extent that CAS pension cost exceeds the service cost component of FAS pension income, we have a favorable FAS/CAS pension operating adjustment.
Disaggregation of Net Sales
Net sales by products and services, contract type, customer, and geographic region were as follows (in millions):
Quarter Ended March 26, 2023
AeronauticsMFCRMSSpace Total
Net sales
Products$5,156 $2,089 $2,792 $2,489 $12,526 
Services1,113 299 718 470 2,600 
Total net sales$6,269 $2,388 $3,510 $2,959 $15,126 
Net sales by contract type
Fixed-price$4,312 $1,618 $2,208 $764 $8,902 
Cost-reimbursable1,957 770 1,302 2,195 6,224 
Total net sales$6,269 $2,388 $3,510 $2,959 $15,126 
Net sales by customer
U.S. Government$4,117 $1,581 $2,423 $2,908 $11,029 
International (a)
2,114 805 1,020 45 3,984 
U.S. commercial and other38 2 67 6 113 
Total net sales$6,269 $2,388 $3,510 $2,959 $15,126 
Net sales by geographic region
United States$4,155 $1,583 $2,490 $2,914 $11,142 
Europe1,130 211 225 23 1,589 
Asia Pacific675 102 438 22 1,237 
Middle East225 455 186 — 866 
Other84 37 171 — 292 
Total net sales$6,269 $2,388 $3,510 $2,959 $15,126 
Quarter Ended March 27, 2022
AeronauticsMFCRMSSpace Total
Net sales
Products$5,417 $2,173 $2,788 $2,116 $12,494 
Services984 279 764 443 2,470 
Total net sales$6,401 $2,452 $3,552 $2,559 $14,964 
Net sales by contract type
Fixed-price$4,686 $1,713 $2,218 $637 $9,254 
Cost-reimbursable1,715 739 1,334 1,922 5,710 
Total net sales$6,401 $2,452 $3,552 $2,559 $14,964 
Net sales by customer
U.S. Government$4,213 $1,595 $2,511 $2,516 $10,835 
International (a)
2,150 852 971 34 4,007 
U.S. commercial and other38 5 70 9 122 
Total net sales$6,401 $2,452 $3,552 $2,559 $14,964 
Net sales by geographic region
United States$4,251 $1,600 $2,581 $2,525 $10,957 
Europe1,023 256 187 24 1,490 
Asia Pacific721 106 432 7 1,266 
Middle East262 465 176 3 906 
Other144 25 176 — 345 
Total net sales$6,401 $2,452 $3,552 $2,559 $14,964 
(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.
Our Aeronautics business segment includes our largest program, the F-35 Lightning II, an international multi-role, multi-variant, stealth fighter aircraft. Net sales for the F-35 program represented approximately 26% of our total consolidated net sales for the quarter ended March 26, 2023 and 29% of our total consolidated net sales for the quarter ended March 27, 2022.
Assets
Total assets for each of our business segments were as follows (in millions):
March 26,
2023		December 31,
2022
Assets
Aeronautics$13,247 $12,055 
Missiles and Fire Control5,630 5,788 
Rotary and Mission Systems17,923 17,988 
Space 6,471 6,351 
Total business segment assets43,271 42,182 
Corporate assets (a)
11,351 10,698 
Total assets$54,622 $52,880 
(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, property, plant and equipment used in our corporate operations, assets held in a trust for deferred compensation plans, and other marketable investments.