SEGMENT INFORMATION | SEGMENT INFORMATION Effective January 1, 2020, the company reorganized its operating sectors to better align the company’s broad portfolio to serve its customers’ needs. The four new sectors, which also comprise our reportable segments, are Aeronautics Systems, Defense Systems, Mission Systems and Space Systems. As discussed in Note 1 , beginning in the second quarter of 2020, the company no longer considers certain unallowable costs as part of management’s evaluation of segment operating performance. As a result, certain unallowable costs, which were previously included in segment operating results, are now reported in Unallocated corporate expense within operating income. This change has been applied retrospectively in the amounts below. See Part II, Item 5 for further information regarding the impact of this change on the company’s current and prior period segment information. The following table presents sales and operating income by segment: Three Months Ended June 30 Six Months Ended June 30 $ in millions 2020 2019 2020 2019 Sales Aeronautics Systems $ 2,925 $ 2,721 $ 5,768 $ 5,539 Defense Systems 1,886 1,916 3,767 3,684 Mission Systems 2,446 2,404 4,793 4,614 Space Systems 2,048 1,788 3,996 3,589 Intersegment eliminations (421 ) (373 ) (820 ) (781 ) Total sales 8,884 8,456 17,504 16,645 Operating income Aeronautics Systems 310 299 573 610 Defense Systems 217 212 415 416 Mission Systems 347 338 700 661 Space Systems 209 193 411 383 Intersegment eliminations (52 ) (49 ) (101 ) (99 ) Total segment operating income 1,031 993 1,998 1,971 Net FAS (service)/CAS pension adjustment 103 107 208 215 Unallocated corporate expense (140 ) (154 ) (278 ) (304 ) Total operating income $ 994 $ 946 $ 1,928 $ 1,882 Net FAS (Service)/CAS Pension Adjustment For financial statement purposes, we account for our employee pension plans in accordance with FAS. However, the cost of these plans is charged to our contracts in accordance with the Federal Acquisition Regulation (FAR) and the related U.S. Government Cost Accounting Standards (CAS). The net FAS (service)/CAS pension adjustment reflects the difference between CAS pension expense included as cost in segment operating income and the service cost component of FAS expense included in total operating income. Unallocated Corporate Expense Unallocated corporate expense includes the portion of corporate costs not considered allowable or allocable under applicable CAS or FAR, and therefore not allocated to the segments, such as a portion of management and administration, legal, environmental, compensation, retiree benefits, advertising and other corporate unallowable costs. Unallocated corporate expense also includes costs not considered part of management’s evaluation of segment operating performance, such as amortization of purchased intangible assets and the additional depreciation expense related to the step-up in fair value of property, plant and equipment acquired through business combinations, as well as certain compensation and other costs. Disaggregation of Revenue Sales by Customer Type Three Months Ended June 30 Six Months Ended June 30 2020 2019 2020 2019 $ in millions $ % (3) $ % (3) $ % (3) $ % (3) Aeronautics Systems U.S. government (1) $ 2,477 85 % $ 2,238 82 % $ 4,838 84 % $ 4,572 82 % International (2) 407 14 % 439 16 % 851 15 % 874 16 % Other customers 12 — % 20 1 % 24 — % 45 1 % Intersegment sales 29 1 % 24 1 % 55 1 % 48 1 % Aeronautics Systems sales 2,925 100 % 2,721 100 % 5,768 100 % 5,539 100 % Defense Systems U.S. government (1) 1,305 69 % 1,281 67 % 2,564 68 % 2,422 66 % International (2) 316 17 % 365 19 % 656 18 % 728 20 % Other customers 85 4 % 106 5 % 196 5 % 203 5 % Intersegment sales 180 10 % 164 9 % 351 9 % 331 9 % Defense Systems sales 1,886 100 % 1,916 100 % 3,767 100 % 3,684 100 % Mission Systems U.S. government (1) 1,776 73 % 1,746 73 % 3,447 72 % 3,359 73 % International (2) 468 19 % 465 19 % 951 20 % 841 18 % Other customers 18 1 % 29 1 % 35 1 % 53 1 % Intersegment sales 184 7 % 164 7 % 360 7 % 361 8 % Mission Systems sales 2,446 100 % 2,404 100 % 4,793 100 % 4,614 100 % Space Systems U.S. government (1) 1,911 93 % 1,679 94 % 3,714 93 % 3,348 93 % International (2) 70 4 % 32 2 % 138 3 % 75 2 % Other customers 39 2 % 56 3 % 90 3 % 125 4 % Intersegment sales 28 1 % 21 1 % 54 1 % 41 1 % Space Systems sales 2,048 100 % 1,788 100 % 3,996 100 % 3,589 100 % Total U.S. government (1) 7,469 84 % 6,944 82 % 14,563 83 % 13,701 82 % International (2) 1,261 14 % 1,301 16 % 2,596 15 % 2,518 15 % Other customers 154 2 % 211 2 % 345 2 % 426 3 % Total Sales $ 8,884 100 % $ 8,456 100 % $ 17,504 100 % $ 16,645 100 % (1) Sales to the U.S. government include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is the U.S. government. Each of the company’s segments derives substantial revenue from the U.S. government. (2) International sales include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is an international customer. These sales include foreign military sales contracted through the U.S. government. (3) Percentages calculated based on total segment sales. Sales by Contract Type Three Months Ended June 30 Six Months Ended June 30 2020 2019 2020 2019 $ in millions $ % (1) $ % (1) $ % (1) $ % (1) Aeronautics Systems Cost-type $ 1,426 49 % $ 1,312 49 % $ 2,769 48 % $ 2,624 48 % Fixed-price 1,470 51 % 1,385 51 % 2,944 52 % 2,867 52 % Intersegment sales 29 24 55 48 Aeronautics Systems sales 2,925 2,721 5,768 5,539 Defense Systems Cost-type 582 34 % 632 36 % 1,210 35 % 1,255 37 % Fixed-price 1,124 66 % 1,120 64 % 2,206 65 % 2,098 63 % Intersegment sales 180 164 351 331 Defense Systems sales 1,886 1,916 3,767 3,684 Mission Systems Cost-type 895 40 % 870 39 % 1,741 39 % 1,705 40 % Fixed-price 1,367 60 % 1,370 61 % 2,692 61 % 2,548 60 % Intersegment sales 184 164 360 361 Mission Systems sales 2,446 2,404 4,793 4,614 Space Systems Cost-type 1,468 73 % 1,298 73 % 2,866 73 % 2,604 73 % Fixed-price 552 27 % 469 27 % 1,076 27 % 944 27 % Intersegment sales 28 21 54 41 Space Systems sales 2,048 1,788 3,996 3,589 Total Cost-type 4,371 49 % 4,112 49 % 8,586 49 % 8,188 49 % Fixed-price 4,513 51 % 4,344 51 % 8,918 51 % 8,457 51 % Total Sales $ 8,884 $ 8,456 $ 17,504 $ 16,645 (1) Percentages calculated based on external customer sales. Sales by Geographic Region Three Months Ended June 30 Six Months Ended June 30 2020 2019 2020 2019 $ in millions $ % (2) $ % (2) $ % (2) $ % (2) Aeronautics Systems United States $ 2,489 86 % $ 2,258 84 % $ 4,862 85 % $ 4,617 84 % Asia/Pacific 202 7 % 215 8 % 409 7 % 448 8 % All other (1) 205 7 % 224 8 % 442 8 % 426 8 % Intersegment sales 29 24 55 48 Aeronautics Systems sales 2,925 2,721 5,768 5,539 Defense Systems United States 1,390 82 % 1,387 79 % 2,760 81 % 2,625 78 % Asia/Pacific 107 6 % 125 7 % 189 5 % 213 6 % All other (1) 209 12 % 240 14 % 467 14 % 515 16 % Intersegment sales 180 164 351 331 Defense Systems sales 1,886 1,916 3,767 3,684 Mission Systems United States 1,794 79 % 1,775 79 % 3,482 79 % 3,412 80 % Asia/Pacific 191 9 % 142 6 % 367 8 % 277 7 % All other (1) 277 12 % 323 15 % 584 13 % 564 13 % Intersegment sales 184 164 360 361 Mission Systems sales 2,446 2,404 4,793 4,614 Space Systems United States 1,950 97 % 1,735 98 % 3,804 97 % 3,473 98 % Asia/Pacific 5 — % 2 — % 10 — % 14 — % All other (1) 65 3 % 30 2 % 128 3 % 61 2 % Intersegment sales 28 21 54 41 Space Systems sales 2,048 1,788 3,996 3,589 Total United States 7,623 86 % 7,155 84 % 14,908 85 % 14,127 85 % Asia/Pacific 505 6 % 484 6 % 975 6 % 952 6 % All other (1) 756 8 % 817 10 % 1,621 9 % 1,566 9 % Total Sales $ 8,884 $ 8,456 $ 17,504 $ 16,645 (1) All other is principally comprised of Europe and the Middle East. (2) Percentages calculated based on external customer sales. |