XML 29 R13.htm IDEA: XBRL DOCUMENT v3.23.4
Information on Business Segments
 12 Months Ended
Dec. 31, 2023
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, laser 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 design, development, 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 and commercial customers. Our investment in ULA totaled $567 million and $571 million at December 31, 2023 and 2022.
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 – Organization and Significant Accounting Policies”, 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 and 2021. Sales and operating profit for each of our business segments were as follows (in millions):
202320222021
Net sales
Aeronautics$27,474 $26,987 $26,748 
Missiles and Fire Control11,253 11,317 11,693 
Rotary and Mission Systems16,239 16,148 16,789 
Space12,605 11,532 11,814 
Total net sales$67,571 $65,984 $67,044 
Operating profit
Aeronautics$2,825 $2,867 $2,800 
Missiles and Fire Control1,541 1,637 1,650 
Rotary and Mission Systems1,865 1,906 2,030 
Space1,158 1,057 1,184 
Total business segment operating profit7,389 7,467 7,664 
Unallocated items
     FAS/CAS pension operating adjustment 1,660 1,709 1,960 
Intangible asset amortization expense(247)(248)(285)
     Severance and other charges (a)
(92)(100)(36)
Other, net (203)(480)(180)
Total unallocated, net1,118 881 1,459 
Total consolidated operating profit$8,507 $8,348 $9,123 
(a)Severance and other charges include severance and other charges totaling $92 million ($73 million, or $0.30 per share, after-tax) associated with severance costs for the planned reduction of certain positions across the corporation and asset impairment charges in 2023; $100 million ($79 million, or $0.31 per share, after-tax) charge related to actions at our RMS business segment, which include severance costs for reduction of positions and asset impairment charges in 2022; and $36 million ($28 million, or $0.10 per share, after-tax) charge associated with plans to close and consolidate certain facilities and reduce total workforce within our RMS business segment in 2021.
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 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 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 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 (expense) and total CAS pension cost. The non-service FAS pension income (expense) components are included in non-service FAS pension income (expense) 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 pension operating adjustment.
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):
202320222021
Intersegment sales
Aeronautics$303 $249 $219 
Missiles and Fire Control688 627 618 
Rotary and Mission Systems2,125 1,930 1,895 
Space 358 381 360 
Total intersegment sales$3,474 $3,187 $3,092 
Disaggregation of Net Sales
Net sales by products and services, contract type, customer category and geographic region for each of our business segments were as follows (in millions):
2023
AeronauticsMFCRMSSpace Total
Net sales
Products$22,758 $9,919 $12,913 $10,675 $56,265 
Services4,716 1,334 3,326 1,930 11,306 
Total net sales$27,474 $11,253 $16,239 $12,605 $67,571 
Net sales by contract type
Fixed-price$18,664 $7,661 $10,403 $3,276 $40,004 
Cost-reimbursable8,810 3,592 5,836 9,329 27,567 
Total net sales$27,474 $11,253 $16,239 $12,605 $67,571 
Net sales by customer
U.S. Government$18,311 $7,769 $10,961 $12,382 $49,423 
International (a)
9,034 3,473 4,983 154 17,644 
U.S. commercial and other129 11 295 69 504 
Total net sales$27,474 $11,253 $16,239 $12,605 $67,571 
Net sales by geographic region
United States$18,440 $7,780 $11,256 $12,451 $49,927 
Europe4,898 786 1,265 62 7,011 
Asia Pacific2,800 687 2,275 89 5,851 
Middle East987 1,844 721 2 3,554 
Other349 156 722 1 1,228 
Total net sales$27,474 $11,253 $16,239 $12,605 $67,571 
2022
AeronauticsMFCRMSSpace Total
Net sales
Products$22,870 $10,048 $12,811 $9,737 $55,466 
Services4,117 1,269 3,337 1,795 10,518 
Total net sales$26,987 $11,317 $16,148 $11,532 $65,984 
Net sales by contract type
Fixed-price$19,431 $8,014 $10,460 $3,064 $40,969 
Cost-reimbursable7,556 3,303 5,688 8,468 25,015 
Total net sales$26,987 $11,317 $16,148 $11,532 $65,984 
Net sales by customer
U.S. Government$18,026 $7,814 $11,331 $11,344 $48,515 
International (a)
8,811 3,496 4,470 154 16,931 
U.S. commercial and other150 7 347 34 538 
Total net sales$26,987 $11,317 $16,148 $11,532 $65,984 
Net sales by geographic region
United States$18,176 $7,821 $11,678 $11,378 $49,053 
Europe4,303 1,020 857 87 6,267 
Asia Pacific2,970 461 1,994 54 5,479 
Middle East1,103 1,858 823 12 3,796 
Other435 157 796 1 1,389 
Total net sales$26,987 $11,317 $16,148 $11,532 $65,984 
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 
(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 26% of our consolidated net sales during 2023 and 27% during both 2022 and 2021.
Capital Expenditures and PP&E Depreciation and Software Amortization
202320222021
Capital expenditures
Aeronautics$535 $461 $477 
Missiles and Fire Control252 253 304 
Rotary and Mission Systems220 266 279 
Space455 391 305 
Total business segment capital expenditures1,462 1,371 1,365 
Corporate activities229 299 157 
Total capital expenditures$1,691 $1,670 $1,522 
PP&E depreciation and software amortization
Aeronautics$416 $383 $348 
Missiles and Fire Control175 160 153 
Rotary and Mission Systems220 245 250 
Space 221 201 205 
Total business segment depreciation and amortization1,032 989 956 
Corporate activities (a)
398 415 408 
Total depreciation and amortization $1,430 $1,404 $1,364 
(a)Includes amortization of purchased intangibles.
Assets
Total assets for each of our business segments were as follows (in millions):
20232022
Assets
Aeronautics$13,167 $12,055 
Missiles and Fire Control5,703 5,788 
Rotary and Mission Systems17,521 17,988 
Space 6,560 6,351 
Total business segment assets42,951 42,182 
Corporate assets (a)
9,505 10,698 
Total assets$52,456 $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.