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 in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 for further information regarding the impact of this change on the company’s prior period segment information. The following table presents sales and operating income by segment: Three Months Ended September 30 Nine Months Ended September 30 $ in millions 2020 2019 2020 2019 Sales Aeronautics Systems $ 2,914 $ 2,770 $ 8,682 $ 8,309 Defense Systems 1,859 1,931 5,626 5,615 Mission Systems 2,551 2,310 7,344 6,924 Space Systems 2,198 1,885 6,194 5,474 Intersegment eliminations (439 ) (421 ) (1,259 ) (1,202 ) Total sales 9,083 8,475 26,587 25,120 Operating income Aeronautics Systems 294 269 867 879 Defense Systems 217 201 632 617 Mission Systems 370 351 1,070 1,012 Space Systems 224 191 635 574 Intersegment eliminations (56 ) (57 ) (157 ) (156 ) Total segment operating income 1,049 955 3,047 2,926 Net FAS (service)/CAS pension adjustment 108 131 316 346 Unallocated corporate expense (172 ) (135 ) (450 ) (439 ) Total operating income $ 985 $ 951 $ 2,913 $ 2,833 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 September 30 Nine Months Ended September 30 2020 2019 2020 2019 $ in millions $ % (3) $ % (3) $ % (3) $ % (3) Aeronautics Systems U.S. government (1) $ 2,491 85 % $ 2,334 84 % $ 7,329 84 % $ 6,906 83 % International (2) 382 13 % 390 14 % 1,233 14 % 1,264 15 % Other customers 11 1 % 19 1 % 35 1 % 64 1 % Intersegment sales 30 1 % 27 1 % 85 1 % 75 1 % Aeronautics Systems sales 2,914 100 % 2,770 100 % 8,682 100 % 8,309 100 % Defense Systems U.S. government (1) 1,264 68 % 1,299 67 % 3,828 68 % 3,721 66 % International (2) 307 17 % 347 18 % 963 17 % 1,075 19 % Other customers 97 5 % 106 6 % 293 5 % 309 6 % Intersegment sales 191 10 % 179 9 % 542 10 % 510 9 % Defense Systems sales 1,859 100 % 1,931 100 % 5,626 100 % 5,615 100 % Mission Systems U.S. government (1) 1,884 74 % 1,690 73 % 5,331 73 % 5,049 73 % International (2) 455 18 % 407 18 % 1,406 19 % 1,248 18 % Other customers 19 1 % 22 1 % 54 1 % 75 1 % Intersegment sales 193 7 % 191 8 % 553 7 % 552 8 % Mission Systems sales 2,551 100 % 2,310 100 % 7,344 100 % 6,924 100 % Space Systems U.S. government (1) 2,020 92 % 1,743 93 % 5,734 93 % 5,091 93 % International (2) 99 5 % 61 3 % 237 4 % 136 3 % Other customers 54 2 % 57 3 % 144 2 % 182 3 % Intersegment sales 25 1 % 24 1 % 79 1 % 65 1 % Space Systems sales 2,198 100 % 1,885 100 % 6,194 100 % 5,474 100 % Total U.S. government (1) 7,659 84 % 7,066 83 % 22,222 84 % 20,767 83 % International (2) 1,243 14 % 1,205 14 % 3,839 14 % 3,723 15 % Other customers 181 2 % 204 3 % 526 2 % 630 2 % Total Sales $ 9,083 100 % $ 8,475 100 % $ 26,587 100 % $ 25,120 100 % (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 September 30 Nine Months Ended September 30 2020 2019 2020 2019 $ in millions $ % (1) $ % (1) $ % (1) $ % (1) Aeronautics Systems Cost-type $ 1,436 50 % $ 1,326 48 % $ 4,205 49 % $ 3,950 48 % Fixed-price 1,448 50 % 1,417 52 % 4,392 51 % 4,284 52 % Intersegment sales 30 27 85 75 Aeronautics Systems sales 2,914 2,770 8,682 8,309 Defense Systems Cost-type 549 33 % 641 37 % 1,759 35 % 1,896 37 % Fixed-price 1,119 67 % 1,111 63 % 3,325 65 % 3,209 63 % Intersegment sales 191 179 542 510 Defense Systems sales 1,859 1,931 5,626 5,615 Mission Systems Cost-type 948 40 % 797 38 % 2,689 40 % 2,502 39 % Fixed-price 1,410 60 % 1,322 62 % 4,102 60 % 3,870 61 % Intersegment sales 193 191 553 552 Mission Systems sales 2,551 2,310 7,344 6,924 Space Systems Cost-type 1,563 72 % 1,312 70 % 4,429 72 % 3,916 72 % Fixed-price 610 28 % 549 30 % 1,686 28 % 1,493 28 % Intersegment sales 25 24 79 65 Space Systems sales 2,198 1,885 6,194 5,474 Total Cost-type 4,496 49 % 4,076 48 % 13,082 49 % 12,264 49 % Fixed-price 4,587 51 % 4,399 52 % 13,505 51 % 12,856 51 % Total Sales $ 9,083 $ 8,475 $ 26,587 $ 25,120 (1) Percentages calculated based on external customer sales. Sales by Geographic Region Three Months Ended September 30 Nine Months Ended September 30 2020 2019 2020 2019 $ in millions $ % (2) $ % (2) $ % (2) $ % (2) Aeronautics Systems United States $ 2,502 87 % $ 2,353 86 % $ 7,364 86 % $ 6,970 85 % Asia/Pacific 217 7 % 177 6 % 626 7 % 625 7 % All other (1) 165 6 % 213 8 % 607 7 % 639 8 % Intersegment sales 30 27 85 75 Aeronautics Systems sales 2,914 2,770 8,682 8,309 Defense Systems United States 1,361 82 % 1,405 80 % 4,121 81 % 4,030 79 % Asia/Pacific 103 6 % 78 5 % 292 6 % 291 6 % All other (1) 204 12 % 269 15 % 671 13 % 784 15 % Intersegment sales 191 179 542 510 Defense Systems sales 1,859 1,931 5,626 5,615 Mission Systems United States 1,903 81 % 1,712 81 % 5,385 79 % 5,124 81 % Asia/Pacific 122 5 % 135 6 % 489 7 % 412 6 % All other (1) 333 14 % 272 13 % 917 14 % 836 13 % Intersegment sales 193 191 553 552 Mission Systems sales 2,551 2,310 7,344 6,924 Space Systems United States 2,074 96 % 1,800 97 % 5,878 96 % 5,273 98 % Asia/Pacific 5 — % — — % 15 — % 14 — % All other (1) 94 4 % 61 3 % 222 4 % 122 2 % Intersegment sales 25 24 79 65 Space Systems sales 2,198 1,885 6,194 5,474 Total United States 7,840 86 % 7,270 86 % 22,748 86 % 21,397 85 % Asia/Pacific 447 5 % 390 5 % 1,422 5 % 1,342 5 % All other (1) 796 9 % 815 9 % 2,417 9 % 2,381 10 % Total Sales $ 9,083 $ 8,475 $ 26,587 $ 25,120 (1) All other is principally comprised of Europe and the Middle East. (2) Percentages calculated based on external customer sales. |