Business Segment Information

6 Months Ended

Jun. 26, 2011

Business Segment Information

Business Segment Information

NOTE 5 – BUSINESS SEGMENT INFORMATION

We operate in four principal business segments: Aeronautics, Electronic Systems, IS&GS, and Space Systems. We organize our business segments based on the nature of the products and services offered.

The financial information in the following table excludes the PAE and EIG businesses from the IS&GS business segment information (Note 3) for all periods presented. Also, the financial information in the following table for 2010 has been adjusted to reflect our change in the methodology for recognizing net sales for services contracts with the U.S. Government (Note 1).

The following table presents net sales and operating profit of our four business segments. Net sales exclude intersegment revenue, as these activities are eliminated in consolidation. Intercompany transactions are generally negotiated under terms and conditions similar to other government and commercial contracts. Operating profit of the business segments includes the equity earnings or losses from investees in which certain of our business segments hold equity interests, because the activities of the investees are closely aligned with the operations of those segments.

Operating profit of the business segments excludes the FAS/CAS pension adjustment (defined below); expense for certain stock-based compensation programs, including costs for stock options and restricted stock units; the effects of items not considered part of management's evaluation of segment operating performance; gains or losses from divestitures; the effects of legal settlements; Corporate costs not allocated to the business segments; and other miscellaneous Corporate activities. These items are included in "Unallocated corporate expense, net" in the following table which reconciles operating profit from the business segments to operating profit in our Statements of Earnings.

The results of operations of our business segments include pension expense only as determined and funded in accordance with U.S. Government Cost Accounting Standards (CAS) rules. The FAS/CAS pension adjustment represents the difference between pension expense or income calculated under financial accounting standards (FAS) in accordance with GAAP and pension expense calculated and funded in accordance with CAS. CAS is a major factor in determining our pension funding requirements, and governs the extent to which pension costs can be allocated to and recovered on U.S. Government contracts. The CAS expense is recovered through the pricing of our products and services on U.S. Government contracts and, therefore, is recognized in each of our business segments' net sales and cost of sales.

Selected Financial Data by Business Segment

Quarter Ended						Six Months Ended
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
	(In millions)
Net sales
Aeronautics	$	3,423		$	3,143		$	6,605		$	6,083
Electronic Systems		3,755			3,534			7,214			6,784
Information Systems & Global Solutions		2,361			2,522			4,510			4,756
Space Systems		2,012			2,081			3,855			3,994
Total (1)	$	11,551		$	11,280		$	22,184		$	21,617
Operating profit
Aeronautics	$	400		$	370		$	731		$	701
Electronic Systems		466			441			883			820
Information Systems & Global Solutions		213			210			407			407
Space Systems		263			246			480			453
Total business segments		1,342			1,267			2,501			2,381
Unallocated corporate expense, net		(358	)		(152	)		(665	)		(328	)
Total	$	984		$	1,115		$	1,836		$	2,053
Intersegment revenue
Aeronautics	$	45		$	35		$	82		$	74
Electronic Systems		255			232			504			449
Information Systems & Global Solutions		213			243			408			451
Space Systems		26			37			51			60
Total	$	539		$	547		$	1,045		$	1,034

(1) Approximately 84% and 82% of our total net sales for the quarter and six months ended June 26, 2011 were made with the U.S. Government. The remainder of our total net sales primarily were made with international customers, including sales made to foreign governments through the U.S. Government (i.e., foreign military sales), which represented 15% of total net sales for the quarter and 17% for the six months ended June 26, 2011.

Approximately 85% of our total net sales for the quarter and six months ended June 27, 2010 were made with the U.S. Government. The remainder of our total net sales primarily were made with international customers, which represented 14% of total net sales for the quarter and six months ended June 27, 2010. These percentages are consistent with fiscal year 2010, during which international sales were 14% of total net sales.

	June 26, 2011		December 31, 2010
	(In millions)
Assets
Aeronautics	$	5,913	$	5,231
Electronic Systems		9,991		9,925
Information Systems & Global Solutions		5,441		5,463
Space Systems		3,225		3,041
Total business segments		24,570		23,660
Corporate assets (1)		11,148		11,057
Assets of discontinued operation held for sale		—		396
Total	$	35,718	$	35,113

(1) Corporate assets primarily include cash and cash equivalents, short-term investments, deferred income taxes, deferred environmental assets, and investments held in a Rabbi Trust.