Business Segment Information

9 Months Ended

Sep. 25, 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 operating results in the following table for all periods presented excludes the PAE and EIG businesses from the IS&GS business segment information and the Savi business from the Electronics Systems business segment information (Note 3). 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, such as severance charges (Note 2); gains or losses from divestitures (Note 3); the effects of legal settlements; corporate costs not allocated to the business segments; and other miscellaneous corporate activities. The items other than severance charges are included in "Other unallocated corporate expense, net" in the following table which reconciles operating profit from the business segments to operating profit in our Statements of Earnings. Severance charges are presented as a separate reconciling item.

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						Nine Months Ended
	September 25, 2011			September 26, 2010			September 25, 2011			September 26, 2010
	(In millions)
Net sales
Aeronautics	$	3,995		$	3,294		$	10,600		$	9,377
Electronic Systems		3,633			3,556			10,832			10,290
Information Systems & Global Solutions		2,323			2,525			6,833			7,281
Space Systems		2,168			1,968			6,023			5,962
Total	$	12,119		$	11,343		$	34,288		$	32,910
Operating profit
Aeronautics	$	447		$	389		$	1,178		$	1,090
Electronic Systems		444			428			1,348			1,252
Information Systems & Global Solutions		213			208			620			615
Space Systems		251			236			731			689
Total business segments		1,355			1,261			3,877			3,646
Severance charges		(39	)		(178	)		(136	)		(178	)
Other unallocated corporate expense, net		(275	)		(206	)		(843	)		(534	)
Total	$	1,041		$	877		$	2,898		$	2,934
Intersegment revenue
Aeronautics	$	58		$	16		$	140		$	90
Electronic Systems		266			249			770			698
Information Systems & Global Solutions		227			239			635			690
Space Systems		30			28			81			88
Total	$	581		$	532		$	1,626		$	1,566

	September 25, 2011		December 31, 2010
	(In millions)
Assets
Aeronautics	$	5,644	$	5,231
Electronic Systems		9,899		9,925
Information Systems & Global Solutions		5,332		5,463
Space Systems		3,177		3,041
Total business segments		24,052		23,660
Corporate assets (1)		12,135		11,057
Assets of discontinued operation held for sale		—		396
Total	$	36,187	$	35,113

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