Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Billions, except Share data, unless otherwise specified | Dec. 31, 2014 | Jan. 23, 2015 | Jun. 27, 2014 |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | LMT | ||
Entity Registrant Name | LOCKHEED MARTIN CORP | ||
Entity Central Index Key | 936468 | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 315,583,849 | ||
Entity Public Float | $51.30 |
Consolidated_Statements_of_Ear
Consolidated Statements of Earnings (USD $) | 12 Months Ended | |||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Net sales | ||||||
Products | $36,093 | $35,691 | $37,817 | |||
Services | 9,507 | 9,667 | 9,365 | |||
Total net sales | 45,600 | 45,358 | 47,182 | |||
Cost of sales | ||||||
Products | -31,965 | -31,346 | -33,495 | |||
Services | -8,393 | -8,588 | -8,383 | |||
Goodwill impairment charges | -119 | [1] | -195 | [1] | ||
Severance charges | -201 | [2] | -48 | [2] | ||
Other unallocated, net | 132 | -841 | -1,060 | |||
Total cost of sales | -40,345 | -41,171 | -42,986 | |||
Gross profit | 5,255 | 4,187 | 4,196 | |||
Other income, net | 337 | 318 | 238 | |||
Operating profit | 5,592 | 4,505 | 4,434 | |||
Interest expense | -340 | -350 | -383 | |||
Other non-operating income, net | 6 | 21 | ||||
Earnings from continuing operations before income taxes | 5,258 | 4,155 | 4,072 | |||
Income tax expense | -1,644 | -1,205 | -1,327 | |||
Net earnings from continuing operations | 3,614 | 2,950 | 2,745 | |||
Net earnings from discontinued operations | 31 | |||||
Net earnings | $3,614 | $2,981 | $2,745 | |||
Basic | ||||||
Continuing operations per common share in USD | $11.41 | $9.19 | $8.48 | |||
Discontinued operations per common share in USD | $0.10 | |||||
Basic earnings per common share in USD | $11.41 | $9.29 | $8.48 | |||
Diluted | ||||||
Continuing operations per common share in USD | $11.21 | $9.04 | $8.36 | |||
Discontinued operations per common share in USD | $0.09 | |||||
Diluted earnings per common share in USD | $11.21 | $9.13 | $8.36 | |||
[1] | We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information. | |||||
[2] | See Note 14 for information on charges related to certain severance actions at our business segments. Severance charges for initiatives that are not significant are included in business segment operating profit. |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Net earnings | $3,614 | $2,981 | $2,745 |
Postretirement benefit plans | |||
Net other comprehensive (loss) income recognized during the period, net of tax benefit (expense) of $1.5 billion in 2014, $(1.6) billion in 2013 and $1.8 billion in 2012 | -2,870 | 2,868 | -3,204 |
Amounts reclassified from accumulated other comprehensive loss, net of tax expense of $386 million in 2014, $555 million in 2013 and $469 million in 2012 | 706 | 1,015 | 858 |
Other, net | -105 | 9 | 110 |
Other comprehensive (loss) income, net of tax | -2,269 | 3,892 | -2,236 |
Comprehensive income | $1,345 | $6,873 | $509 |
Consolidated_Statements_of_Com1
Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Tax benefit (expense) on net other comprehensive income (loss) recognized during the period for postretirement benefit plans | $1,500,000,000 | ($1,600,000,000) | $1,800,000,000 |
Tax expense on amounts reclassified from accumulated other comprehensive loss during the period for postretirement benefit plans | $386,000,000 | $555,000,000 | $469,000,000 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Current assets | ||||
Cash and cash equivalents | $1,446 | $2,617 | ||
Receivables, net | 5,884 | 5,834 | ||
Inventories, net | 2,882 | 2,977 | ||
Deferred income taxes | 1,451 | 1,088 | ||
Other current assets | 666 | 813 | ||
Total current assets | 12,329 | 13,329 | ||
Property, plant and equipment, net | 4,755 | 4,706 | ||
Goodwill | 10,862 | [1] | 10,348 | [1] |
Deferred income taxes | 4,013 | 2,850 | ||
Other noncurrent assets | 5,114 | 4,955 | ||
Total assets | 37,073 | 36,188 | ||
Current liabilities | ||||
Accounts payable | 1,570 | 1,397 | ||
Customer advances and amounts in excess of costs incurred | 5,790 | 6,349 | ||
Salaries, benefits and payroll taxes | 1,826 | 1,809 | ||
Other current liabilities | 1,926 | 1,565 | ||
Total current liabilities | 11,112 | 11,120 | ||
Accrued pension liabilities | 11,413 | 9,361 | ||
Other postretirement benefit liabilities | 1,102 | 902 | ||
Long-term debt, net | 6,169 | 6,152 | ||
Other noncurrent liabilities | 3,877 | 3,735 | ||
Total liabilities | 33,673 | 31,270 | ||
Stockholders' equity | ||||
Common stock, $1 par value per share | 314 | 319 | ||
Additional paid-in capital | ||||
Retained earnings | 14,956 | 14,200 | ||
Accumulated other comprehensive loss | -11,870 | [2] | -9,601 | [2] |
Total stockholders' equity | 3,400 | 4,918 | ||
Total liabilities and stockholders' equity | $37,073 | $36,188 | ||
[1] | During 2014, goodwill increased $681 million due to acquisitions primarily consisting of Zeta Associates, Inc. (Zeta) at our Space Systems business segment and Systems Made Simple and Industrial Defender, Inc. (Industrial Defender) at our IS&GS business segment (Note 13) and also decreased by $119 million due to a non-cash impairment charge related to our MFC business segment (Note 1). During 2013, the decrease in goodwill was primarily due to a non-cash impairment charge of $195 million related to our MFC business segment (Note 1), partially offset by the acquisition of Amor Group Ltd. (Amor) at our IS&GS business segment (Note 13). Total accumulated goodwill impairment loss as of the beginning of 2014 was $195 million and related entirely to our MFC business segment. | |||
[2] | AOCL related to postretirement benefit plans is shown net of tax benefits at December 31, 2014, 2013 and 2012 of $6.4 billion, $5.3 billion and $7.4 billion. These tax benefits include amounts recognized on our income tax returns as current deductions and deferred income taxes, which will be recognized on our tax returns in future years. See Note 7 and Note 9 for more information on our income taxes and postretirement benefit plans. |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Common stock, par value (in USD per share) | $1 | $1 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Operating activities | ||||||
Net earnings | $3,614 | $2,981 | $2,745 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities | ||||||
Depreciation and amortization | 994 | 990 | 988 | |||
Stock-based compensation | 164 | 189 | 167 | |||
Deferred income taxes | -401 | -5 | 930 | |||
Goodwill impairment charges | 119 | [1] | 195 | [1] | ||
Severance charges | 201 | [2] | 48 | [2] | ||
Changes in assets and liabilities | ||||||
Receivables, net | 28 | 767 | -460 | |||
Inventories, net | 77 | -60 | -422 | |||
Accounts payable | 95 | -647 | -236 | |||
Customer advances and amounts in excess of costs incurred | -572 | -158 | 57 | |||
Postretirement benefit plans | -880 | -375 | -1,883 | |||
Income taxes | 351 | 364 | -535 | |||
Other, net | 277 | 104 | 162 | |||
Net cash provided by operating activities | 3,866 | 4,546 | 1,561 | |||
Investing activities | ||||||
Capital expenditures | -845 | -836 | -942 | |||
Acquisitions of businesses and investments in affiliates | -898 | -269 | -259 | |||
Other, net | 20 | -16 | 24 | |||
Net cash used for investing activities | -1,723 | -1,121 | -1,177 | |||
Financing activities | ||||||
Repurchases of common stock | -1,900 | -1,762 | -990 | |||
Proceeds from stock option exercises | 308 | 827 | 440 | |||
Dividends paid | -1,760 | -1,540 | -1,352 | |||
Repayments of long-term debt | -150 | |||||
Premium paid on debt exchange | -225 | |||||
Other, net | 38 | -81 | 59 | |||
Net cash used for financing activities | -3,314 | -2,706 | -2,068 | |||
Net change in cash and cash equivalents | -1,171 | 719 | -1,684 | |||
Cash and cash equivalents at beginning of year | 2,617 | 1,898 | 3,582 | |||
Cash and cash equivalents at end of year | $1,446 | $2,617 | $1,898 | |||
[1] | We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information. | |||||
[2] | See Note 14 for information on charges related to certain severance actions at our business segments. Severance charges for initiatives that are not significant are included in business segment operating profit. |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss |
In Millions | |||||
Beginning Balance at Dec. 31, 2011 | $1,001 | $321 | $11,937 | ($11,257) | |
Net earnings | 2,745 | 2,745 | |||
Other comprehensive (loss) income, net of tax | -2,236 | -2,236 | |||
Repurchases of common stock | -1,008 | -11 | -889 | -108 | |
Dividends declared | -1,363 | -1,363 | |||
Stock-based awards and ESOP activity | 900 | 11 | 889 | ||
Ending Balance at Dec. 31, 2012 | 39 | 321 | 13,211 | -13,493 | |
Net earnings | 2,981 | 2,981 | |||
Other comprehensive (loss) income, net of tax | 3,892 | 3,892 | |||
Repurchases of common stock | -1,744 | -16 | -1,294 | -434 | |
Dividends declared | -1,558 | -1,558 | |||
Stock-based awards and ESOP activity | 1,308 | 14 | 1,294 | ||
Ending Balance at Dec. 31, 2013 | 4,918 | 319 | 14,200 | -9,601 | |
Net earnings | 3,614 | 3,614 | |||
Other comprehensive (loss) income, net of tax | -2,269 | -2,269 | |||
Repurchases of common stock | -1,900 | -12 | -792 | -1,096 | |
Dividends declared | -1,762 | -1,762 | |||
Stock-based awards and ESOP activity | 799 | 7 | 792 | ||
Ending Balance at Dec. 31, 2014 | $3,400 | $314 | $14,956 | ($11,870) |
Consolidated_Statements_of_Sto1
Consolidated Statements of Stockholders' Equity (Parenthetical) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Dividends declared, per share | $5.49 | $4.78 | $4.15 |
Significant_Accounting_Policie
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2014 | |
Significant Accounting Policies | Note 1 – Significant Accounting Policies |
Organization – We are a global security and aerospace company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. We also provide a broad range of management, engineering, technical, scientific, logistics and information services. We serve both U.S. and international customers with products and services that have defense, civil and commercial applications, with our principal customers being agencies of the U.S. Government. | |
Basis of presentation – Our consolidated financial statements include the accounts of subsidiaries we control and variable interest entities if we are the primary beneficiary. We eliminate intercompany balances and transactions in consolidation. Our receivables, inventories, customer advances and amounts in excess of costs incurred and certain amounts in other current liabilities primarily are attributable to long-term contracts or programs in progress for which the related operating cycles are longer than one year. In accordance with industry practice, we include these items in current assets and current liabilities. Unless otherwise noted, we present all per share amounts cited in these consolidated financial statements on a “per diluted share” basis. | |
Use of estimates – We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP). In doing so, we are required to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates. Significant estimates inherent in the preparation of our consolidated financial statements include, but are not limited to, accounting for sales and cost recognition, postretirement benefit plans, environmental receivables and liabilities, evaluation of goodwill and other assets for impairment, income taxes including deferred tax assets, fair value measurements and contingencies. | |
Sales and earnings – We record net sales and estimated profits for substantially all of our contracts using the percentage-of-completion method for cost-reimbursable and fixed-price contracts for products and services with the U.S. Government. Sales are recorded on all time-and-materials contracts as the work is performed based on agreed-upon hourly rates and allowable costs. We account for our services contracts with non-U.S. Government customers using the services method of accounting. We classify net sales as products or services on our Statements of Earnings based on the attributes of the underlying contracts. | |
Percentage-of-Completion Method of Accounting – The percentage-of-completion method for product contracts depends on the nature of the products provided under the contract. For example, for contracts that require us to perform a significant level of development effort in comparison to the total value of the contract and/or to deliver minimal quantities, sales are recorded using the cost-to-cost method to measure progress toward completion. Under the cost-to-cost method of accounting, we recognize sales and an estimated profit as costs are incurred based on the proportion that the incurred costs bear to total estimated costs. For contracts that require us to provide a substantial number of similar items without a significant level of development, we record sales and an estimated profit on a percentage-of-completion basis using units-of-delivery as the basis to measure progress toward completing the contract. For contracts to provide services to the U.S. Government, sales are generally recorded using the cost-to-cost method. | |
Award and incentive fees, as well as penalties related to contract performance, are considered in estimating sales and profit rates on contracts accounted for under the percentage-of-completion method. Estimates of award fees are based on past experience and anticipated performance. We record incentives or penalties when there is sufficient information to assess anticipated contract performance. Incentive provisions that increase or decrease earnings based solely on a single significant event are not recognized until the event occurs. | |
Accounting for contracts using the percentage-of-completion method requires judgment relative to assessing risks, estimating contract sales and costs (including estimating award and incentive fees and penalties related to performance) and making assumptions for schedule and technical issues. Due to the number of years it may take to complete many of our contracts and the scope and nature of the work required to be performed on those contracts, the estimation of total sales and costs at completion is complicated and subject to many variables and, accordingly, is subject to change. When adjustments in estimated total contract sales or estimated total costs are required, any changes from prior estimates are recognized in the current period for the inception-to-date effect of such changes. When estimates of total costs to be incurred on a contract exceed estimates of total sales to be earned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined. | |
Many of our contracts span several years and include highly complex technical requirements. At the outset of a contract, we identify and monitor risks to the achievement of the technical, schedule and cost aspects of the contract and assess the effects of those risks on our estimates of total costs to complete the contract. The estimates consider the technical requirements (e.g., a newly-developed product versus a mature product), the schedule and associated tasks (e.g., the number and type of milestone events) and costs (e.g., material, labor, subcontractor, overhead and the estimated costs to fulfill our industrial cooperation agreements, sometimes referred to as offset agreements, required under certain contracts with international customers). The initial profit booking rate of each contract considers risks surrounding the ability to achieve the technical requirements, schedule and costs in the initial estimated total costs to complete the contract. Profit booking rates may increase during the performance of the contract if we successfully retire risks surrounding the technical, schedule and cost aspects of the contract which decreases the estimated total costs to complete the contract. Conversely, our profit booking rates may decrease if the estimated total costs to complete the contract increase. All of the estimates are subject to change during the performance of the contract and may affect the profit booking rate. | |
In addition, comparability of our segment sales, operating profit and operating margins may be impacted by changes in profit booking rates on our contracts accounted for using the percentage-of-completion method of accounting. Increases in the profit booking rates, typically referred to as risk retirements, usually relate to revisions in the estimated total costs that reflect improved conditions on a particular contract. Conversely, conditions on a particular contract may deteriorate resulting in an increase in the estimated total costs to complete and a reduction in the profit booking rate. Increases or decreases in profit booking rates are recognized in the current period and reflect the inception-to-date effect of such changes. Segment operating profit and margins may also be impacted favorably or unfavorably by other items. Favorable items may include the positive resolution of contractual matters, cost recoveries on restructuring charges and insurance recoveries. Unfavorable items may include the adverse resolution of contractual matters; asset impairments; restructuring charges, except for significant severance actions (such as those mentioned below in Note 14) which are excluded from segment operating results; and reserves for disputes. Segment operating profit and items such as risk retirements, reductions of profit booking rates or other matters are presented net of state income taxes. | |
Our consolidated net adjustments not related to volume, including net profit booking rate adjustments and other matters, net of state income taxes, increased segment operating profit, by approximately $1.8 billion in 2014, $2.1 billion in 2013 and $1.9 billion in 2012. These adjustments increased net earnings by approximately $1.1 billion ($3.55 per share) in 2014, $1.3 billion ($4.09 per share) in 2013 and $1.2 billion ($3.70 per share) in 2012. | |
Services Method of Accounting – For cost-reimbursable contracts for services to non-U.S. Government customers, we record net sales as services are performed, except for award and incentive fees. Award and incentive fees are recorded when they are fixed or determinable, generally at the date the amount is communicated to us by the customer. This approach results in the recognition of such fees at contractual intervals (typically every six months) throughout the contract and is dependent on the customer’s processes for notification of awards and issuance of formal notifications. Under fixed-price service contracts, we are paid a predetermined fixed amount for a specified scope of work and generally have full responsibility for the costs associated with the contract and the resulting profit or loss. We record net sales under fixed-price service contracts with non-U.S. Government customers on a straight-line basis over the period of contract performance, unless evidence suggests that net sales are earned or the obligations are fulfilled in a different pattern. Costs for all service contracts are expensed as incurred. | |
Research and development and similar costs – Except for certain arrangements described below, we account for independent research and development costs as part of the general and administrative costs that are allocated among all of our contracts and programs in progress under U.S. Government contractual arrangements and charged to cost of sales. Under certain arrangements in which a customer shares in product development costs, our portion of unreimbursed costs is expensed as incurred in cost of sales. Independent research and development costs charged to cost of sales totaled $751 million in 2014, $697 million in 2013 and $616 million in 2012. Costs we incur under customer-sponsored research and development programs pursuant to contracts are included in net sales and cost of sales. | |
Stock-based compensation – Compensation cost related to all share-based payments is measured at the grant date based on the estimated fair value of the award. We generally recognize the compensation cost ratably over a three-year vesting period. | |
Income taxes – We calculate our provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying amount of assets and liabilities and their respective tax bases, as well as from operating loss and tax credit carry-forwards. We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid. | |
We periodically assess our tax filing exposures related to periods that are open to examination. Based on the latest available information, we evaluate our tax positions to determine whether the position will more likely than not be sustained upon examination by the Internal Revenue Service (IRS). If we cannot reach a more-likely-than-not determination, no benefit is recorded. If we determine that the tax position is more likely than not to be sustained, we record the largest amount of benefit that is more likely than not to be realized when the tax position is settled. We record interest and penalties related to income taxes as a component of income tax expense on our Statements of Earnings. Interest and penalties were not material. | |
Cash and cash equivalents – Cash equivalents include highly liquid instruments with original maturities of 90 days or less. | |
Receivables – Receivables include amounts billed and currently due from customers and unbilled costs and accrued profits primarily related to sales on long-term contracts that have been recognized but not yet billed to customers. Pursuant to contract provisions, agencies of the U.S. Government and certain other customers have title to, or a security interest in, assets related to such contracts as a result of advances, performance-based payments and progress payments. We reflect those advances and payments as an offset to the related receivables balance for contracts that we account for on a percentage-of-completion basis using the cost-to-cost method to measure progress towards completion. | |
Inventories – We record inventories at the lower of cost or estimated net realizable value. Costs on long-term contracts and programs in progress represent recoverable costs incurred for production or contract-specific facilities and equipment, allocable operating overhead, advances to suppliers and, in the case of contracts with the U.S. Government and substantially all other governments, research and development and general and administrative expenses. Pursuant to contract provisions, agencies of the U.S. Government and certain other customers have title to, or a security interest in, inventories related to such contracts as a result of advances, performance-based payments and progress payments. We reflect those advances and payments as an offset against the related inventory balances for contracts that we account for on a percentage-of-completion basis using units-of-delivery as the basis to measure progress toward completing the contract. We determine the costs of other product and supply inventories by the first-in first-out or average cost methods. | |
Property, plant and equipment – We record property, plant and equipment at cost. We provide for depreciation and amortization on plant and equipment generally using accelerated methods during the first half of the estimated useful lives of the assets and the straight-line method thereafter. The estimated useful lives of our plant and equipment generally range from 10 to 40 years for buildings and five to 15 years for machinery and equipment. No depreciation expense is recorded on construction in progress until such assets are placed into operation. Depreciation expense related to plant and equipment was $739 million in 2014, $714 million in 2013 and $715 million in 2012. | |
We review the carrying amounts of long-lived assets for impairment if events or changes in the facts and circumstances indicate that their carrying amounts may not be recoverable. We assess impairment by comparing the estimated undiscounted future cash flows of the related asset grouping to its carrying amount. If an asset is determined to be impaired, we recognize an impairment charge in the current period for the difference between the fair value of the asset and its carrying amount. | |
Capitalized software – We capitalize certain costs associated with the development or purchase of internal-use software. The amounts capitalized are included in other noncurrent assets on our Balance Sheets and are amortized on a straight-line basis over the estimated useful life of the resulting software, which ranges from two to six years. As of December 31, 2014 and 2013, capitalized software totaled $547 million and $653 million, net of accumulated amortization of $1.8 billion and $1.6 billion. No amortization expense is recorded until the software is ready for its intended use. Amortization expense related to capitalized software was $206 million in 2014, $228 million in 2013 and $217 million in 2012. | |
Goodwill – We perform an impairment test of our goodwill at least annually in the fourth quarter and more frequently whenever certain events or changes in circumstances indicate the carrying value of goodwill may be impaired. Such events or changes in circumstances may include a significant deterioration in overall economic conditions, changes in the business climate of our industry, a decline in our market capitalization, operating performance indicators, competition, reorganizations of our business or the disposal of all or a portion of a reporting unit. Our goodwill has been allocated to and is tested for impairment at a level referred to as the reporting unit, which is our business segment level or a level below the business segment. The level at which we test goodwill for impairment requires us to determine whether the operations below the business segment constitute a business for which discrete financial information is available and segment management regularly reviews the operating results. | |
When testing goodwill for impairment, we initially compare the fair value of each reporting unit to its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is not impaired. If the carrying value of a reporting unit exceeds its fair value, we then compare the implied value of the reporting unit’s goodwill with the carrying value of its goodwill. The implied value of the reporting unit’s goodwill is calculated by creating a hypothetical balance sheet as if the reporting unit had just been acquired. This balance sheet contains all assets and liabilities recorded at fair value (including any intangible assets that may not have any corresponding carrying value in our balance sheet). The implied value of the reporting unit’s goodwill is calculated by subtracting the fair value of the net assets from the fair value of the reporting unit. If the carrying value of the reporting unit’s goodwill exceeds the implied value of that goodwill, an impairment loss is recognized in an amount equal to that excess. | |
We estimate the fair value of each reporting unit using a combination of a discounted cash flow (DCF) analysis and market-based valuation methodologies such as comparable public company trading values and values observed in business acquisitions. Determining fair value requires the exercise of significant judgments, including judgments about the amount and timing of expected future cash flows, long-term growth rates, discount rates and relevant comparable public company earnings multiples and transaction multiples. The cash flows employed in the DCF analyses are based on our best estimate of future sales, earnings and cash flows after considering factors such as general market conditions, U.S. Government budgets, existing firm orders, expected future orders, contracts with suppliers, labor agreements, changes in working capital, long-term business plans and recent operating performance. The discount rates utilized in the DCF analysis are based on the respective reporting unit’s weighted average cost of capital, which takes into account the relative weights of each component of capital structure (equity and debt) and represents the expected cost of new capital, adjusted as appropriate to consider the risk inherent in future cash flows of the respective reporting unit. | |
In the fourth quarter of 2014, we completed our annual goodwill impairment test for each of our reporting units. The results of these tests indicated that the estimated fair values of our reporting units exceeded their carrying values, with the exception of our Technical Services reporting unit within our Missiles and Fire Control (MFC) business segment. The impact of market pressures such as lower in-theater support as troop levels are drawn down and increased re-competition on existing contracts that are awarded primarily on the basis of price adversely impacted the fair value of this reporting unit. As a result, we compared the implied value of that reporting unit’s goodwill with the carrying value of its goodwill, and since the carrying value exceeded the implied value, we recorded a non-cash impairment charge of $119 million in the fourth quarter of 2014 equal to that differential. This charge reduced our net earnings by $107 million ($.33 per share). | |
During the fourth quarter of 2013, due to the continuing impact of defense budget reductions and related competitive pressures on the Technical Services business, we recorded a non-cash goodwill impairment charge of $195 million. This charge reduced our 2013 net earnings by $176 million ($.54 per share). | |
Customer advances and amounts in excess of cost incurred – We receive advances, performance-based payments and progress payments from customers that may exceed costs incurred on certain contracts, including contracts with agencies of the U.S. Government. We classify such advances, other than those reflected as a reduction of receivables or inventories as discussed above, as current liabilities. | |
Postretirement benefit plans – Many of our employees are covered by defined benefit pension plans and we provide certain health care and life insurance benefits to eligible retirees (collectively, postretirement benefit plans). GAAP requires that the amounts we record related to our postretirement benefit plans be computed, based on service to date, using actuarial valuations that are based in part on certain key economic assumptions we make, including the discount rate, the expected long-term rate of return on plan assets and other actuarial assumptions including participant longevity (also known as mortality) estimates, the expected rates of increase in future compensation levels through December 31, 2015 for our non-union plans, health care cost trend rates and employee turnover, each as appropriate based on the nature of the plans. We recognize on a plan-by-plan basis the funded status of our postretirement benefit plans under GAAP as either an asset recorded within other noncurrent assets or a liability recorded within noncurrent liabilities on our Balance Sheets. There is a corresponding non-cash adjustment to accumulated other comprehensive loss, net of tax benefits recorded as deferred tax assets, in stockholders’ equity. The GAAP funded status is measured as the difference between the fair value of the plan’s assets and the benefit obligation of the plan. The funded status under the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Pension Protection Act of 2006 (PPA), is calculated on a different basis than under GAAP. | |
Environmental matters – We record a liability for environmental matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. The amount of liability recorded is based on our estimate of the costs to be incurred for remediation at a particular site. We do not discount the recorded liabilities, as the amount and timing of future cash payments are not fixed or cannot be reliably determined. Our environmental liabilities are recorded on our Balance Sheets within other liabilities, both current and noncurrent. We expect to include a substantial portion of environmental costs in our net sales and cost of sales in future periods pursuant to U.S. Government agreement or regulation. At the time a liability is recorded for future environmental costs, we record a receivable for estimated future recovery considered probable through the pricing of products and services to agencies of the U.S. Government, regardless of the contract form (e.g., cost-reimbursable, fixed-price). We continuously evaluate the recoverability of our environmental receivables by assessing, among other factors, U.S. Government regulations, our U.S. Government business base and contract mix and our history of receiving reimbursement of such costs. We include the portion of those environmental costs expected to be allocated to our non-U.S. Government contracts, or that is determined to not be recoverable under U.S. Government contracts, in our cost of sales at the time the liability is established. Our environmental receivables are recorded on our Balance Sheets within other assets, both current and noncurrent. We project costs and recovery of costs over approximately 20 years. | |
Investments in marketable securities – Investments in marketable securities consist of debt and equity securities and are classified as trading securities. As of December 31, 2014 and 2013, the fair value of our trading securities totaled $1.1 billion and $1.0 billion and was included in other noncurrent assets on our Balance Sheets. Our trading securities are held in a separate trust, which includes investments to fund our deferred compensation plan liabilities. Net gains on trading securities in 2014, 2013 and 2012 were $65 million, $64 million and $67 million. Gains and losses on these investments are included in other unallocated, net within cost of sales on our Statements of Earnings in order to align the classification of changes in the market value of investments held for the plan with changes in the value of the corresponding plan liabilities. | |
Equity method investments – Investments where we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other noncurrent assets on our Balance Sheets. Significant influence typically exists if we have a 20% to 50% ownership interest in the investee. Under this method of accounting, our share of the net earnings or losses of the investee is included in operating profit in other income, net on our Statements of Earnings since the activities of the investee are closely aligned with the operations of the business segment holding the investment. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period. As of December 31, 2014 and 2013, our equity method investments totaled $971 million and $914 million, which primarily are composed of our Space Systems business segment’s investment in United Launch Alliance (ULA), as further described in Note 12, and our Aeronautics business segment’s investment in Advanced Military Maintenance, Repair and Overhaul Center. Our share of net earnings related to our equity method investees was $342 million in 2014, $321 million in 2013 and $277 million in 2012, of which approximately $280 million, $300 million and $265 million related to our Space Systems business segment. | |
Derivative financial instruments – We use derivative instruments principally to reduce our exposure to market risks from changes in foreign currency exchange rates and interest rates. We do not enter into or hold derivative instruments for speculative trading purposes. We transact business globally and are subject to risks associated with changing foreign currency exchange rates. We enter into foreign currency hedges such as forward and option contracts that change in value as foreign currency exchange rates change. These contracts hedge forecasted foreign currency transactions in order to mitigate fluctuations in our earnings and cash flows associated with changes in foreign currency exchange rates. We designate foreign currency hedges as cash flow hedges. We also are exposed to the impact of interest rate changes primarily through our borrowing activities. For fixed rate borrowings, we may use variable interest rate swaps, effectively converting fixed rate borrowings to variable rate borrowings in order to reduce the amount of interest paid. These swaps are designated as fair value hedges. For variable rate borrowings, we may use fixed interest rate swaps, effectively converting variable rate borrowings to fixed rate borrowings in order to mitigate the impact of interest rate changes on earnings. These swaps are designated as cash flow hedges. We also may enter into derivative instruments that are not designated as hedges and do not qualify for hedge accounting, which are intended to mitigate certain economic exposures. | |
We record derivatives at their fair value. The classification of gains and losses resulting from changes in the fair values of derivatives is dependent on our intended use of the derivative and its resulting designation. Adjustments to reflect changes in fair values of derivatives attributable to the effective portion of hedges are either reflected in earnings and largely offset by corresponding adjustments to the hedged items or reflected net of income taxes in accumulated other comprehensive loss until the hedged transaction is recognized in earnings. Changes in the fair value of the derivatives that are attributable to the ineffective portion of the hedges or of derivatives that are not considered to be highly effective hedges, if any, are immediately recognized in earnings. The aggregate notional amount of our outstanding interest rate swaps at December 31, 2014 and 2013 was $1.3 billion and $1.2 billion. The aggregate notional amount of our outstanding foreign currency hedges at December 31, 2014 and 2013 was $804 million and $1.0 billion. Derivative instruments did not have a material impact on net earnings and comprehensive income during 2014, 2013 and 2012. Substantially all of our derivatives are designated for hedge accounting. See Note 15 for more information on the fair value measurements related to our derivative instruments. | |
Recent Accounting Pronouncements – In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard that will change the way we recognize revenue and significantly expand the disclosure requirements for revenue arrangements. Unless the FASB delays the effective date of the new standard, it will be effective for us beginning on January 1, 2017 and may be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up adjustment recorded to beginning retained earnings at the effective date for existing contracts with remaining performance obligations. Early adoption is not permitted. We are currently evaluating the methods of adoption allowed by the new standard and the effect the standard is expected to have on our consolidated financial statements and related disclosures. As the new standard will supersede substantially all existing revenue guidance affecting us under GAAP, it could impact revenue and cost recognition on thousands of contracts across all our business segments, in addition to our business processes and our information technology systems. As a result, our evaluation of the effect of the new standard will extend over future periods. |
Earnings_Per_Share
Earnings Per Share | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Earnings Per Share | Note 2 – Earnings Per Share | ||||||||||||
The weighted average number of shares outstanding used to compute earnings per common share were as follows (in millions): | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Weighted average common shares outstanding for basic computations | 316.8 | 320.9 | 323.7 | ||||||||||
Weighted average dilutive effect of equity awards | 5.6 | 5.6 | 4.7 | ||||||||||
Weighted average common shares outstanding for diluted computations | 322.4 | 326.5 | 328.4 | ||||||||||
We compute basic and diluted earnings per common share by dividing net earnings by the respective weighted average number of common shares outstanding for the periods presented. Our calculation of diluted earnings per common share also includes the dilutive effects for the assumed vesting of outstanding restricted stock units and exercise of outstanding stock options based on the treasury stock method. | |||||||||||||
The computation of diluted earnings per common share excluded 2.4 million and 8.0 million stock options for the years ended December 31, 2013 and 2012 because their inclusion would have been anti-dilutive, primarily due to their exercise prices exceeding the average market prices of our common stock during the respective periods. There were no anti-dilutive equity awards for the year ended December 31, 2014. |
Information_on_Business_Segmen
Information on Business Segments | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Information on Business Segments | Note 3 – Information on Business Segments | ||||||||||||
We operate in five business segments: Aeronautics, Information Systems & Global Solutions (IS&GS), MFC, Mission Systems and Training (MST) and Space Systems. We organize our business segments based on the nature of the products and services offered. The 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. | ||||||||||||
• | Information Systems & Global Solutions – Provides advanced technology systems and expertise, integrated information technology solutions and management services across a broad spectrum of applications for civil, defense, intelligence and other government customers. | ||||||||||||
• | Missiles and Fire Control – Provides air and missile defense systems; tactical missiles and air-to-ground precision strike weapon systems; logistics and other technical services; fire control systems; mission operations support, readiness, engineering support and integration services; and manned and unmanned ground vehicles. | ||||||||||||
• | Mission Systems and Training – Provides ship and submarine mission and combat systems; mission systems and sensors for rotary and fixed-wing aircraft; sea and land-based missile defense systems; radar systems; the Littoral Combat Ship; simulation and training services; and unmanned systems and technologies. | ||||||||||||
• | Space Systems – Engaged in the research and development, design, engineering and production of satellites, strategic and defensive missile systems and space transportation systems. Space Systems is also responsible for various classified systems and services in support of vital national security systems. Operating profit for our Space Systems business segment includes our share of earnings for our investment in ULA, which provides expendable launch services to the U.S. Government. | ||||||||||||
The financial information in the following tables includes the results of businesses we have acquired during the past three years (Note 13) from their respective dates of acquisition. The business segment operating results in the following tables exclude businesses included in discontinued operations (Note 13) for all years presented. Net sales of our business segments exclude intersegment sales as these activities are eliminated in consolidation. | |||||||||||||
Operating profit of our business segments includes our share of earnings or losses from equity method investees because the operating activities of the equity method investees are closely aligned with the operations of our business segments. Operating profit of our business segments excludes the FAS/CAS pension adjustment described below; expense for stock-based compensation; the effects of items not considered part of management’s evaluation of segment operating performance, such as charges related to goodwill impairments (Note 1) and significant severance actions (Note 14); gains or losses from divestitures (Note 13); the effects of certain legal settlements; corporate costs not allocated to our business segments; and other miscellaneous corporate activities. These items are included in the reconciling item “Unallocated items” between operating profit from our business segments and our consolidated operating profit. | |||||||||||||
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 cost through the pricing of our products and services on U.S. Government contracts and, therefore, the CAS pension cost is recognized in each of our business segments’ net sales and cost of sales. Since our consolidated financial statements must present pension expense calculated in accordance with the financial accounting standards (FAS) requirements under GAAP, which we refer to as FAS pension expense, the FAS/CAS pension adjustment increases or decreases the CAS pension cost recorded in our business segments’ results of operations to equal the FAS pension expense. As a result, to the extent that CAS pension cost exceeds FAS pension expense, which occurred for 2014, we have FAS/CAS pension income and, conversely, to the extent FAS pension expense exceeds CAS pension cost, which occurred for 2013 and 2012, we have FAS/CAS pension expense. | |||||||||||||
Selected Financial Data by Business Segment | |||||||||||||
Summary operating results for each of our business segments were as follows (in millions): | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Net sales | |||||||||||||
Aeronautics | $ | 14,920 | $ | 14,123 | $ | 14,953 | |||||||
Information Systems & Global Solutions | 7,788 | 8,367 | 8,846 | ||||||||||
Missiles and Fire Control | 7,680 | 7,757 | 7,457 | ||||||||||
Mission Systems and Training | 7,147 | 7,153 | 7,579 | ||||||||||
Space Systems | 8,065 | 7,958 | 8,347 | ||||||||||
Total net sales | $ | 45,600 | $ | 45,358 | $ | 47,182 | |||||||
Operating profit | |||||||||||||
Aeronautics | $ | 1,649 | $ | 1,612 | $ | 1,699 | |||||||
Information Systems & Global Solutions | 699 | 759 | 808 | ||||||||||
Missiles and Fire Control | 1,358 | 1,431 | 1,256 | ||||||||||
Mission Systems and Training | 843 | 905 | 737 | ||||||||||
Space Systems | 1,039 | 1,045 | 1,083 | ||||||||||
Total business segment operating profit | 5,588 | 5,752 | 5,583 | ||||||||||
Unallocated items | |||||||||||||
FAS/CAS pension adjustment | |||||||||||||
FAS pension expense (a) | (1,144 | ) | (1,948 | ) | (1,941) | ||||||||
Less: CAS pension cost (b) | 1,520 | 1,466 | 1,111 | ||||||||||
FAS/CAS pension income (expense) | 376 | (482 | ) | (830) | |||||||||
Goodwill impairment charges (c) | (119 | ) | (195 | ) | — | ||||||||
Severance charges (d) | — | (201 | ) | (48) | |||||||||
Stock-based compensation | (164 | ) | (189 | ) | (167) | ||||||||
Other, net | (89 | ) | (180 | ) | (104) | ||||||||
Total unallocated items | 4 | (1,247 | ) | (1,149) | |||||||||
Total consolidated operating profit | $ | 5,592 | $ | 4,505 | $ | 4,434 | |||||||
(a) | FAS pension expense in 2014 was less than in 2013 due to higher discount rates used to calculate our qualified defined benefit obligations and net periodic benefit cost. Additionally, beginning in the quarter ended September 28, 2014 FAS pension expense was reduced by the June 2014 plan amendments to certain of our defined benefit pension plans to freeze future retirement benefits, partially offset by the impact of using new longevity assumptions (Note 9). | ||||||||||||
(b) | The higher CAS pension cost reflects the impact of phasing in CAS Harmonization, partially offset by the effect of higher interest rates required by the Highway and Transportation Funding Act of 2014 (HATFA), enacted on August 8, 2014. | ||||||||||||
(c) | We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information. | ||||||||||||
(d) | See Note 14 for information on charges related to certain severance actions at our business segments. Severance charges for initiatives that are not significant are included in business segment operating profit. | ||||||||||||
Selected Financial Data by Business Segment (continued) | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Intersegment sales | |||||||||||||
Aeronautics | $ | 99 | $ | 195 | $ | 197 | |||||||
Information Systems & Global Solutions | 665 | 687 | 838 | ||||||||||
Missiles and Fire Control | 336 | 273 | 298 | ||||||||||
Mission Systems and Training | 1,224 | 991 | 908 | ||||||||||
Space Systems | 119 | 101 | 107 | ||||||||||
Total intersegment sales | $ | 2,443 | $ | 2,247 | $ | 2,348 | |||||||
Depreciation and amortization | |||||||||||||
Aeronautics | $ | 322 | $ | 318 | $ | 311 | |||||||
Information Systems & Global Solutions | 91 | 94 | 92 | ||||||||||
Missiles and Fire Control | 99 | 98 | 104 | ||||||||||
Mission Systems and Training | 158 | 174 | 179 | ||||||||||
Space Systems | 217 | 199 | 191 | ||||||||||
Total business segment depreciation and amortization | 887 | 883 | 877 | ||||||||||
Corporate activities | 107 | 107 | 111 | ||||||||||
Total depreciation and amortization | $ | 994 | $ | 990 | $ | 988 | |||||||
Capital expenditures | |||||||||||||
Aeronautics | $ | 283 | $ | 271 | $ | 271 | |||||||
Information Systems & Global Solutions | 35 | 64 | 78 | ||||||||||
Missiles and Fire Control | 142 | 128 | 128 | ||||||||||
Mission Systems and Training | 157 | 132 | 158 | ||||||||||
Space Systems | 162 | 170 | 167 | ||||||||||
Total business segment capital expenditures | 779 | 765 | 802 | ||||||||||
Corporate activities | 66 | 71 | 140 | ||||||||||
Total capital expenditures | $ | 845 | $ | 836 | $ | 942 | |||||||
Selected Financial Data by Business Segment (continued) | |||||||||||||
Net Sales by Customer Category | |||||||||||||
Net sales by customer category were as follows (in millions): | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
U.S. Government | |||||||||||||
Aeronautics | $ | 10,704 | $ | 11,025 | $ | 11,587 | |||||||
Information Systems & Global Solutions | 6,951 | 7,768 | 8,340 | ||||||||||
Missiles and Fire Control | 5,223 | 5,177 | 5,224 | ||||||||||
Mission Systems and Training | 5,395 | 5,370 | 5,685 | ||||||||||
Space Systems | 7,817 | 7,833 | 7,952 | ||||||||||
Total U.S. Government net sales | $ | 36,090 | $ | 37,173 | $ | 38,788 | |||||||
International (a) | |||||||||||||
Aeronautics | $ | 4,183 | $ | 3,078 | $ | 3,323 | |||||||
Information Systems & Global Solutions | 630 | 399 | 380 | ||||||||||
Missiles and Fire Control | 2,443 | 2,546 | 2,208 | ||||||||||
Mission Systems and Training | 1,694 | 1,672 | 1,826 | ||||||||||
Space Systems | 65 | 73 | 319 | ||||||||||
Total international net sales | $ | 9,015 | $ | 7,768 | $ | 8,056 | |||||||
U.S. Commercial and Other | |||||||||||||
Aeronautics | $ | 33 | $ | 20 | $ | 43 | |||||||
Information Systems & Global Solutions | 207 | 200 | 126 | ||||||||||
Missiles and Fire Control | 14 | 34 | 25 | ||||||||||
Mission Systems and Training | 58 | 111 | 68 | ||||||||||
Space Systems | 183 | 52 | 76 | ||||||||||
Total U.S. commercial and other net sales | $ | 495 | $ | 417 | $ | 338 | |||||||
Total net sales | $ | 45,600 | $ | 45,358 | $ | 47,182 | |||||||
(a) | International sales include foreign military sales 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 17%, 16% and 14% of our total net sales during 2014, 2013 and 2012. | |||||||||||||
Selected Financial Data by Business Segment (continued) | |||||||||||||
Total assets, goodwill and customer advances and amounts in excess of costs incurred for each of our business segments were as follows (in millions): | |||||||||||||
2014 | 2013 | ||||||||||||
Assets (a) | |||||||||||||
Aeronautics | $ | 6,021 | $ | 5,821 | |||||||||
Information Systems & Global Solutions | 6,228 | 5,798 | |||||||||||
Missiles and Fire Control | 4,050 | 4,159 | |||||||||||
Mission Systems and Training | 6,277 | 6,512 | |||||||||||
Space Systems | 3,914 | 3,522 | |||||||||||
Total business segment assets | 26,490 | 25,812 | |||||||||||
Corporate assets (b) | 10,583 | 10,376 | |||||||||||
Total assets | $ | 37,073 | $ | 36,188 | |||||||||
Goodwill | |||||||||||||
Aeronautics | $ | 150 | $ | 146 | |||||||||
Information Systems & Global Solutions | 4,310 | 3,942 | |||||||||||
Missiles and Fire Control | 2,165 | 2,288 | |||||||||||
Mission Systems and Training | 3,237 | 3,264 | |||||||||||
Space Systems | 1,000 | 708 | |||||||||||
Total goodwill (c) | $ | 10,862 | $ | 10,348 | |||||||||
Customer advances and amounts in excess of costs incurred | |||||||||||||
Aeronautics | $ | 2,191 | $ | 2,433 | |||||||||
Information Systems & Global Solutions | 376 | 322 | |||||||||||
Missiles and Fire Control | 1,825 | 1,942 | |||||||||||
Mission Systems and Training | 1,069 | 1,188 | |||||||||||
Space Systems | 329 | 464 | |||||||||||
Total customer advances and amounts in excess of costs incurred | $ | 5,790 | $ | 6,349 | |||||||||
(a) | We have no significant long-lived assets located in foreign countries. | ||||||||||||
(b) | Corporate assets primarily include cash and cash equivalents, deferred income taxes, environmental receivables and investments held in a separate trust. | ||||||||||||
(c) | During 2014, goodwill increased $681 million due to acquisitions primarily consisting of Zeta Associates, Inc. (Zeta) at our Space Systems business segment and Systems Made Simple and Industrial Defender, Inc. (Industrial Defender) at our IS&GS business segment (Note 13) and also decreased by $119 million due to a non-cash impairment charge related to our MFC business segment (Note 1). During 2013, the decrease in goodwill was primarily due to a non-cash impairment charge of $195 million related to our MFC business segment (Note 1), partially offset by the acquisition of Amor Group Ltd. (Amor) at our IS&GS business segment (Note 13). Total accumulated goodwill impairment loss as of the beginning of 2014 was $195 million and related entirely to our MFC business segment. |
Receivables_net
Receivables, net | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Receivables, net | Note 4 – Receivables, net | ||||||||
Receivables, net consisted of the following (in millions): | |||||||||
2014 | 2013 | ||||||||
U.S. Government | |||||||||
Amounts billed | $ | 1,434 | $ | 1,275 | |||||
Unbilled costs and accrued profits | 4,577 | 4,767 | |||||||
Less: customer advances and progress payments | (1,012 | ) | (1,008) | ||||||
Total U.S. Government receivables, net | 4,999 | 5,034 | |||||||
Other governments and commercial | |||||||||
Amounts billed | 466 | 391 | |||||||
Unbilled costs and accrued profits | 672 | 600 | |||||||
Less: customer advances | (253 | ) | (191) | ||||||
Total other governments and commercial receivables, net | 885 | 800 | |||||||
Total receivables, net | $ | 5,884 | $ | 5,834 | |||||
We expect to bill substantially all of the December 31, 2014 unbilled costs and accrued profits during 2015. |
Inventories_net
Inventories, net | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventories, net | Note 5 – Inventories, net | ||||||||
Inventories, net consisted of the following (in millions): | |||||||||
2014 | 2013 | ||||||||
Work-in-process, primarily related to long-term contracts and programs in progress | $ | 6,728 | $ | 7,073 | |||||
Less: customer advances and progress payments | (4,701 | ) | (4,834) | ||||||
2,027 | 2,239 | ||||||||
Other inventories | 855 | 738 | |||||||
Total inventories, net | $ | 2,882 | $ | 2,977 | |||||
Work-in-process inventories at December 31, 2014 and 2013 included general and administrative costs of $698 million and $630 million. General and administrative costs incurred and recorded in inventories totaled $2.6 billion in 2014 and $2.4 billion in both 2013 and 2012 and general and administrative costs charged to cost of sales from inventories totaled $2.6 billion in 2014 and $2.4 billion in both 2013 and 2012. |
Property_Plant_and_Equipment_n
Property, Plant and Equipment, net | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment, net | Note 6 – Property, Plant and Equipment, net | ||||||||
Property, plant and equipment, net consisted of the following (in millions): | |||||||||
2014 | 2013 | ||||||||
Land | $ | 99 | $ | 99 | |||||
Buildings | 5,724 | 5,602 | |||||||
Machinery and equipment | 7,036 | 7,043 | |||||||
Construction in progress | 636 | 622 | |||||||
13,495 | 13,366 | ||||||||
Less: accumulated depreciation and amortization | (8,740 | ) | (8,660) | ||||||
Total property, plant and equipment, net | $ | 4,755 | $ | 4,706 |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Income Taxes | Note 7 – Income Taxes | ||||||||||||
Our provision for federal and foreign income tax expense for continuing operations consisted of the following (in millions): | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Federal income tax expense (benefit): | |||||||||||||
Current | $ | 2,020 | $ | 1,204 | $ | 387 | |||||||
Deferred | (387 | ) | 3 | 925 | |||||||||
Total federal income tax expense | 1,633 | 1,207 | 1,312 | ||||||||||
Foreign income tax expense (benefit): | |||||||||||||
Current | 24 | 6 | 14 | ||||||||||
Deferred | (13 | ) | (8 | ) | 1 | ||||||||
Total foreign income tax expense (benefit) | 11 | (2 | ) | 15 | |||||||||
Total income tax expense | $ | 1,644 | $ | 1,205 | $ | 1,327 | |||||||
State income taxes are included in our operations as general and administrative costs and, under U.S. Government regulations, are allowable costs in establishing prices for the products and services we sell to the U.S. Government. Therefore, a substantial portion of state income taxes is included in our net sales and cost of sales. As a result, the impact of certain transactions on our operating profit and of other matters presented in these financial statements is disclosed net of state income taxes. Our total net state income tax expense was $207 million in 2014, $121 million for 2013 and $183 million for 2012. | |||||||||||||
Our reconciliation of the 35% U.S. federal statutory income tax rate to actual income tax expense for continuing operations is as follows (in millions): | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Income tax expense at the U.S. federal statutory tax rate | $ | 1,840 | $ | 1,454 | $ | 1,425 | |||||||
U.S. manufacturing deduction benefit | (127 | ) | (100 | ) | (29) | ||||||||
Research and development tax credit | (66 | ) | (96 | ) | — | ||||||||
Tax deductible dividends | (82 | ) | (77 | ) | (73) | ||||||||
Goodwill impairment – non-deductible portion | 30 | 50 | — | ||||||||||
Other, net | 49 | (26 | ) | 4 | |||||||||
Income tax expense | $ | 1,644 | $ | 1,205 | $ | 1,327 | |||||||
Our tax-deductible pension contributions were significantly higher in 2012 than in 2013 or 2014 and, accordingly, our U.S. manufacturing deduction for 2012 was significantly reduced. | |||||||||||||
We recognized tax benefits of $66 million in 2014 and $96 million in 2013 from U.S. research and development (R&D) tax credits, including benefits attributable to prior periods. In 2014, the R&D tax credit was temporarily reinstated for one year, retroactive to the beginning of 2014, which reduced income tax expense by approximately $45 million. In 2013, the R&D tax credit was temporarily reinstated for two years, retroactive to the beginning of 2012. As a result, income tax expense for 2013 reflects the credit for all of 2013 and 2012, which reduced income tax expense by approximately $76 million. | |||||||||||||
We receive a tax deduction for dividends paid on shares of our common stock held by certain of our defined contribution plans with an employee stock ownership plan feature. The amount of the tax deduction has increased as we increased our dividend over the last three years, partially offset by a decline in the number of shares in these plans. | |||||||||||||
A limited amount of the non-cash goodwill impairment charges will be deductible for tax purposes. Accordingly, the 2014 and 2013 non-cash goodwill impairment charges (Note 1) of $119 million and $195 million increased our 2014 and 2013 effective tax rates. | |||||||||||||
We participate in the IRS Compliance Assurance Process program. The IRS examination of the year 2012 was completed in the fourth quarter of 2013. The examinations of the years 2013 and 2014 remain under review. We also resolved certain issues in our 2009 tax return with the IRS Appeals Division in 2012. The resolution of these examinations and issues did not have a material impact on our effective tax rates. | |||||||||||||
The primary components of our federal and foreign deferred income tax assets and liabilities at December 31 were as follows (in millions): | |||||||||||||
2014 | 2013 | ||||||||||||
Deferred tax assets related to: | |||||||||||||
Accrued compensation and benefits | $ | 965 | $ | 918 | |||||||||
Pensions (a) | 4,317 | 3,198 | |||||||||||
Other postretirement benefit obligations | 386 | 316 | |||||||||||
Contract accounting methods | 989 | 721 | |||||||||||
Foreign company operating losses and credits | 59 | 52 | |||||||||||
Other | 198 | 223 | |||||||||||
Valuation allowance (b) | (9 | ) | (8) | ||||||||||
Deferred tax assets, net | 6,905 | 5,420 | |||||||||||
Deferred tax liabilities related to: | |||||||||||||
Goodwill and purchased intangibles | 454 | 410 | |||||||||||
Property, plant and equipment | 514 | 575 | |||||||||||
Exchanged debt securities and other (c) | 485 | 502 | |||||||||||
Deferred tax liabilities | 1,453 | 1,487 | |||||||||||
Net deferred tax assets (d) | $ | 5,452 | $ | 3,933 | |||||||||
(a) | The increase in 2014 was primarily due to using a lower discount rate for the annual measurement adjustment related to our postretirement benefit plans (Note 9). | ||||||||||||
(b) | A valuation allowance was provided against certain foreign company deferred tax assets arising from carryforwards of unused tax benefits. | ||||||||||||
(c) | Includes deferred taxes associated with the exchange of debt securities in prior years. | ||||||||||||
(d) | Includes net foreign current deferred tax liabilities, which are included on the Balance Sheets in other current liabilities. | ||||||||||||
As of December 31, 2014 and 2013, our liabilities associated with unrecognized tax benefits are not material. | |||||||||||||
We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various foreign jurisdictions. With few exceptions, the statute of limitations is no longer open for U.S. federal or non-U.S. income tax examinations for the years before 2011, other than with respect to refunds. | |||||||||||||
U.S. income taxes and foreign withholding taxes have not been provided on earnings of $291 million, $222 million and $211 million that have not been distributed by our non-U.S. companies as of December 31, 2014, 2013 and 2012. Our intention is to permanently reinvest these earnings, thereby indefinitely postponing their remittance to the U.S. If these earnings had been remitted, we estimate that the additional income taxes after foreign tax credits would have been approximately $55 million in 2014, $50 million in 2013 and $45 million in 2012. | |||||||||||||
Our federal and foreign income tax payments, net of refunds received, were $1.5 billion in 2014, $787 million in 2013 and $890 million in 2012. Our 2014 and 2013 net payments reflect a $200 million and $550 million refund from the IRS primarily attributable to our tax-deductible discretionary pension contributions during the fourth quarters of 2013 and 2012, and our 2012 net payments reflect a $153 million refund from the IRS related to a 2011 capital loss carryback. |
Debt
Debt | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Debt | Note 8 – Debt | ||||||||
Our long-term debt consisted of the following (in millions): | |||||||||
2014 | 2013 | ||||||||
Notes with rates from 2.13% to 6.15%, due 2016 to 2042 | $ | 5,642 | $ | 5,642 | |||||
Notes with rates from 7.00% to 7.75%, due 2016 to 2036 | 916 | 916 | |||||||
Other debt | 483 | 476 | |||||||
Total long-term debt | 7,041 | 7,034 | |||||||
Less: unamortized discounts | (872 | ) | (882) | ||||||
Total long-term debt, net | $ | 6,169 | $ | 6,152 | |||||
In August 2014, we entered into a new $1.5 billion revolving credit facility with a syndicate of banks and concurrently terminated our existing $1.5 billion revolving credit facility which was scheduled to expire in August 2016. The new credit facility expires August 2019 and we may request and the banks may grant, at their discretion, an increase to the new credit facility of up to an additional $500 million. The credit facility also includes a sublimit of up to $300 million available for the issuance of letters of credit. There were no borrowings outstanding under the new facility through December 31, 2014. Borrowings under the new credit facility would be unsecured and bear interest at rates based, at our option, on a Eurodollar Rate or a Base Rate, as defined in the new credit facility. Each bank’s obligation to make loans under the credit facility is subject to, among other things, our compliance with various representations, warranties and covenants, including covenants limiting our ability and certain of our subsidiaries’ ability to encumber assets and a covenant not to exceed a maximum leverage ratio, as defined in the credit facility. The leverage ratio covenant excludes the adjustments recognized in stockholders’ equity related to postretirement benefit plans. As of December 31, 2014, we were in compliance with all covenants contained in the credit facility, as well as in our debt agreements. | |||||||||
We have agreements in place with financial institutions to provide for the issuance of commercial paper. There were no commercial paper borrowings outstanding during 2014 or 2013. If we were to issue commercial paper, the borrowings would be supported by the credit facility. | |||||||||
In April 2013, we repaid $150 million of long-term notes with a fixed interest rate of 7.38% due to their scheduled maturities. During the next five years, we have scheduled long-term debt maturities of $952 million due in 2016 and $900 million due in 2019. Interest payments were $326 million in 2014, $340 million in 2013 and $378 million in 2012. All of our existing unsecured and unsubordinated indebtedness rank equally in right of payment. |
Postretirement_Plans
Postretirement Plans | 12 Months Ended | ||||||||||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||||||||||
Postretirement Plans | Note 9 – Postretirement Plans | ||||||||||||||||||||||||||||||||||||
Defined Benefit Pension Plans and Retiree Medical and Life Insurance Plans | |||||||||||||||||||||||||||||||||||||
Many of our employees are covered by qualified defined benefit pension plans and we provide certain health care and life insurance benefits to eligible retirees (collectively, postretirement benefit plans). We also sponsor nonqualified defined benefit pension plans to provide for benefits in excess of qualified plan limits. Non-union represented employees hired after December 2005 do not participate in our qualified defined benefit pension plans, but are eligible to participate in a qualified defined contribution plan in addition to our other retirement savings plans. They also have the ability to participate in our retiree medical plans, but we do not subsidize the cost of their participation in those plans as we do with employees hired before January 1, 2006. Over the last few years, we have negotiated similar changes with various labor organizations such that new union represented employees do not participate in our defined benefit pension plans. In June 2014, we amended certain of our qualified and nonqualified defined benefit pension plans for non-union employees to freeze future retirement benefits. Currently, the calculation of retirement benefits under the affected defined benefit pension plans is determined by a formula that takes into account the participants’ years of credited service and average compensation. The freeze will take effect in two stages. Beginning on January 1, 2016, the pay-based component of the formula used to determine retirement benefits will be frozen so that future pay increases, annual incentive bonuses or other amounts earned for or related to periods after December 31, 2015 will not be used to calculate retirement benefits. On January 1, 2020, the service-based component of the formula used to determine retirement benefits will also be frozen so that participants will no longer earn further credited service for any period after December 31, 2019. When the freeze is complete, the majority of our salaried employees will have transitioned to an enhanced defined contribution retirement savings plan. | |||||||||||||||||||||||||||||||||||||
We have made contributions to trusts established to pay future benefits to eligible retirees and dependents, including Voluntary Employees’ Beneficiary Association trusts and 401(h) accounts, the assets of which will be used to pay expenses of certain retiree medical plans. We use December 31 as the measurement date. Benefit obligations as of the end of each year reflect assumptions in effect as of those dates. Net periodic benefit cost is based on assumptions in effect at the end of the respective preceding year. | |||||||||||||||||||||||||||||||||||||
The rules related to accounting for postretirement benefit plans under GAAP require us to recognize on a plan-by-plan basis the funded status of our postretirement benefit plans as either an asset or a liability on our Balance Sheets. There is a corresponding non-cash adjustment to accumulated other comprehensive loss, net of tax benefits recorded as deferred tax assets, in stockholders’ equity. The funded status is measured as the difference between the fair value of the plan’s assets and the benefit obligation of the plan. | |||||||||||||||||||||||||||||||||||||
The net periodic benefit cost recognized each year included the following (in millions): | |||||||||||||||||||||||||||||||||||||
Qualified Defined | Retiree Medical and | ||||||||||||||||||||||||||||||||||||
Benefit Pension Plans (a) | |||||||||||||||||||||||||||||||||||||
Life Insurance Plans | |||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||||||||||||||
Service cost | $ | 903 | $ | 1,142 | $ | 1,055 | $ | 22 | $ | 27 | $ | 28 | |||||||||||||||||||||||||
Interest cost | 1,912 | 1,800 | 1,884 | 123 | 116 | 131 | |||||||||||||||||||||||||||||||
Expected return on plan assets | (2,693) | (2,485) | (2,187) | (146) | (145) | (131) | |||||||||||||||||||||||||||||||
Recognized net actuarial losses | 1,173 | 1,410 | 1,116 | 23 | 44 | 32 | |||||||||||||||||||||||||||||||
Amortization of net prior service (credit) cost | (151) | 81 | 73 | 4 | (17) | (12) | |||||||||||||||||||||||||||||||
Total net periodic benefit cost | $ | 1,144 | $ | 1,948 | $ | 1,941 | $ | 26 | $ | 25 | $ | 48 | |||||||||||||||||||||||||
(a) | Total net periodic benefit cost associated with our qualified defined benefit plans represents pension expense calculated in accordance with GAAP (FAS pension expense). We are required to calculate pension expense in accordance with both GAAP and CAS rules, each of which results in a different calculated amount of pension expense. The CAS pension cost is recovered through the pricing of our products and services on U.S. Government contracts and, therefore, is recognized in net sales and cost of sales for products and services. We include the difference between FAS pension expense and CAS pension cost, referred to as the FAS/CAS pension adjustment, as a component of other unallocated, net on our Statements of Earnings. The FAS/CAS pension adjustment, which was income of $376 million in 2014 and expense of $482 million in 2013 and $830 million in 2012, effectively adjusts the amount of CAS pension cost in the business segment operating profit so that pension expense recorded on our Statements of Earnings is equal to FAS pension expense. | ||||||||||||||||||||||||||||||||||||
The following table provides a reconciliation of benefit obligations, plan assets and unfunded status related to our qualified defined benefit pension plans and our retiree medical and life insurance plans (in millions): | |||||||||||||||||||||||||||||||||||||
Qualified Defined Benefit | Retiree Medical and | ||||||||||||||||||||||||||||||||||||
Pension Plans | |||||||||||||||||||||||||||||||||||||
Life Insurance Plans | |||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||||||||||||
Change in benefit obligation | |||||||||||||||||||||||||||||||||||||
Beginning balance | $ 42,161 | $46,017 | $ 2,823 | $3,184 | |||||||||||||||||||||||||||||||||
Service cost | 903 | 1,142 | 22 | 27 | |||||||||||||||||||||||||||||||||
Interest cost | 1,912 | 1,800 | 123 | 116 | |||||||||||||||||||||||||||||||||
Benefits paid (a) | (2,399) | (2,023) | (352) | (353) | |||||||||||||||||||||||||||||||||
Actuarial losses (gains) | 4,493 | (4,882) | (40) | (319) | |||||||||||||||||||||||||||||||||
New longevity assumptions | 3,390 | — | 266 | — | |||||||||||||||||||||||||||||||||
Plan amendments (b) | (4,578) | 107 | 5 | — | |||||||||||||||||||||||||||||||||
Medicare Part D subsidy | — | — | 26 | 10 | |||||||||||||||||||||||||||||||||
Participants’ contributions | — | — | 161 | 158 | |||||||||||||||||||||||||||||||||
Ending balance | $ 45,882 | $42,161 | $ 3,034 | $2,823 | |||||||||||||||||||||||||||||||||
Change in plan assets | |||||||||||||||||||||||||||||||||||||
Beginning balance at fair value | $ 33,010 | $30,924 | $ 1,921 | $1,964 | |||||||||||||||||||||||||||||||||
Actual return on plan assets | 2,062 | 1,859 | 126 | 44 | |||||||||||||||||||||||||||||||||
Benefits paid (a) | (2,399) | (2,023) | (352) | (353) | |||||||||||||||||||||||||||||||||
Company contributions | 2,000 | 2,250 | 50 | 98 | |||||||||||||||||||||||||||||||||
Medicare Part D subsidy | — | — | 26 | 10 | |||||||||||||||||||||||||||||||||
Participants’ contributions | — | — | 161 | 158 | |||||||||||||||||||||||||||||||||
Ending balance at fair value | $ 34,673 | $33,010 | $ 1,932 | $1,921 | |||||||||||||||||||||||||||||||||
Unfunded status of the plans | $ (11,209) | $ (9,151) | $(1,102) | $ (902) | |||||||||||||||||||||||||||||||||
(a) | Benefits paid in 2014 for qualified defined benefit pension plans include $427 million in the form of lump-sum settlement payments to former employees who had not commenced receiving their vested benefit payments. The corresponding benefit obligation that was released was $529 million. The settlement payments had no impact on our 2014 FAS pension expense and CAS pension cost. | ||||||||||||||||||||||||||||||||||||
(b) | The June 2014 plan amendment which resulted in freezing the pay-based component of the formula used to determine retirement benefits under the affected plans reduced our qualified defined benefit pension obligations by $4.6 billion, which resulted in a corresponding reduction, net of tax, in the accumulated other comprehensive loss (AOCL) component of stockholders’ equity. This amount is being recognized as a reduction of net periodic benefit cost (i.e., amortization of net prior service credit) over the estimated remaining service period of the covered employees, which is approximately 10 years and began in the third quarter of 2014. | ||||||||||||||||||||||||||||||||||||
The following table provides amounts recognized on our Balance Sheets related to our qualified defined benefit pension plans and our retiree medical and life insurance plans (in millions): | |||||||||||||||||||||||||||||||||||||
Qualified Defined Benefit | Retiree Medical and | ||||||||||||||||||||||||||||||||||||
Pension Plans | |||||||||||||||||||||||||||||||||||||
Life Insurance Plans | |||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||||||||||||
Prepaid pension asset | $ 204 | $ 210 | $ — | $ — | |||||||||||||||||||||||||||||||||
Accrued postretirement benefit liabilities | (11,413) | (9,361) | (1,102) | (902) | |||||||||||||||||||||||||||||||||
Accumulated other comprehensive loss (pre-tax) related to: | |||||||||||||||||||||||||||||||||||||
Net actuarial losses | 20,794 | 13,453 | 741 | 516 | |||||||||||||||||||||||||||||||||
Prior service (credit) cost | (3,985) | 443 | 14 | 13 | |||||||||||||||||||||||||||||||||
Total (a) | $16,809 | $13,896 | $ 755 | $ 529 | |||||||||||||||||||||||||||||||||
(a) | Accumulated other comprehensive loss related to postretirement benefit plans, after tax, of $11.8 billion and $9.6 billion at December 31, 2014 and 2013 (Note 10) includes $16.8 billion ($10.8 billion after tax) and $13.9 billion ($9.0 billion after tax) for qualified defined benefit pension plans, $755 million ($488 million after tax) and $529 million ($342 million after tax) for retiree medical and life insurance plans and $692 million ($460 million after tax) and $508 million ($328 million after tax) for other plans. | ||||||||||||||||||||||||||||||||||||
The accumulated benefit obligation (ABO) for all qualified defined benefit pension plans was $45.2 billion and $37.5 billion at December 31, 2014 and 2013, of which $45.0 billion and $37.3 billion related to plans where the ABO was in excess of plan assets. The ABO represents benefits accrued without assuming future compensation increases to plan participants. Certain key information related to our qualified defined benefit pension plans as of December 31, 2014 and 2013 is as follows (in millions): | |||||||||||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||||||||||
Plans where ABO was in excess of plan assets | |||||||||||||||||||||||||||||||||||||
Projected benefit obligation | $ | 45,741 | $ | 41,984 | |||||||||||||||||||||||||||||||||
Less: fair value of plan assets | 34,328 | 32,623 | |||||||||||||||||||||||||||||||||||
Unfunded status of plans (a) | (11,413 | ) | (9,361) | ||||||||||||||||||||||||||||||||||
Plans where ABO was less than plan assets | |||||||||||||||||||||||||||||||||||||
Projected benefit obligation | 141 | 177 | |||||||||||||||||||||||||||||||||||
Less: fair value of plan assets | 345 | 387 | |||||||||||||||||||||||||||||||||||
Funded status of plans (b) | $ | 204 | $ | 210 | |||||||||||||||||||||||||||||||||
(a) | Represent accrued pension liabilities, which are included on our Balance Sheets. | ||||||||||||||||||||||||||||||||||||
(b) | Represent prepaid pension assets, which are included on our Balance Sheets in other noncurrent assets. | ||||||||||||||||||||||||||||||||||||
We also sponsor nonqualified defined benefit plans to provide benefits in excess of qualified plan limits. The aggregate liabilities for these plans at both December 31, 2014 and 2013 were $1.1 billion and $1.0 billion, which also represent the plans’ unfunded status. We have set aside certain assets totaling $397 million and $373 million as of December 31, 2014 and 2013 in a separate trust which we expect to be used to pay obligations under our nonqualified defined benefit plans. In accordance with GAAP, those assets may not be used to offset the amount of the benefit obligation similar to the postretirement benefit plans in the table above. The unrecognized net actuarial losses at December 31, 2014 and 2013 were $662 million and $480 million. The unrecognized prior service credit at December 31, 2014 was $121 million and at December 31, 2013 was not material. The expense associated with these plans totaled $115 million in 2014, $108 million in 2013 and $107 million in 2012. We also sponsor a small number of other postemployment plans and foreign benefit plans. The aggregate liability for the other postemployment plans was $88 million and $108 million as of December 31, 2014 and 2013. The expense for the other postemployment plans, as well as the liability and expense associated with the foreign benefit plans, was not material to our results of operations, financial position or cash flows. The actuarial assumptions used to determine the benefit obligations and expense associated with our nonqualified defined benefit plans and postemployment plans are similar to those assumptions used to determine the benefit obligations and expense related to our qualified defined benefit pension plans and retiree medical and life insurance plans as described below. | |||||||||||||||||||||||||||||||||||||
The following table provides the amounts recognized in other comprehensive income (loss) related to postretirement benefit plans, net of tax, for the years ended December 31, 2014, 2013 and 2012 (in millions): | |||||||||||||||||||||||||||||||||||||
Incurred but Not Yet | Recognition of | ||||||||||||||||||||||||||||||||||||
Recognized in Net | |||||||||||||||||||||||||||||||||||||
Periodic Benefit Cost | Previously | ||||||||||||||||||||||||||||||||||||
Deferred Amounts | |||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||||||||||||||
Gains (losses) | (Gains) losses | ||||||||||||||||||||||||||||||||||||
Actuarial gains and losses | |||||||||||||||||||||||||||||||||||||
Qualified defined benefit pension plans | $ | (5,505) | $ | 2,751 | $ | (2,933 | ) | $ | 758 | $ | 911 | $ | 721 | ||||||||||||||||||||||||
Retiree medical and life insurance plans | (160) | 140 | (104 | ) | 15 | 28 | 21 | ||||||||||||||||||||||||||||||
Other plans | (245) | 46 | (98 | ) | 33 | 34 | 77 | ||||||||||||||||||||||||||||||
(5,910) | 2,937 | (3,135 | ) | 806 | 973 | 819 | |||||||||||||||||||||||||||||||
Credit (cost) | (Credit) cost | ||||||||||||||||||||||||||||||||||||
Prior service credit and cost | |||||||||||||||||||||||||||||||||||||
Qualified defined benefit pension plans | 2,959 | (69) | (73 | ) | (98) | 53 | 47 | ||||||||||||||||||||||||||||||
Retiree medical and life insurance plans | (3) | — | 4 | 3 | (11) | (8) | |||||||||||||||||||||||||||||||
Other plans | 84 | — | — | (5) | — | — | |||||||||||||||||||||||||||||||
3,040 | (69) | (69 | ) | (100) | 42 | 39 | |||||||||||||||||||||||||||||||
$ | (2,870) | $ | 2,868 | $ | (3,204 | ) | $ | 706 | $ | 1,015 | $ | 858 | |||||||||||||||||||||||||
We expect that approximately $1.3 billion, or about $850 million net of tax, of actuarial losses and prior service credit related to postretirement benefit plans included in accumulated other comprehensive loss at the end of 2014 to be recognized in net periodic benefit cost during 2015. Of this amount, $1.2 billion, or $781 million net of tax, primarily relates to actuarial losses associated with our qualified defined benefit plans and is included in our expected 2015 pension expense of $1.1 billion. | |||||||||||||||||||||||||||||||||||||
Actuarial Assumptions | |||||||||||||||||||||||||||||||||||||
The actuarial assumptions used to determine the benefit obligations at December 31 of each year and to determine the net periodic benefit cost for each subsequent year, were as follows: | |||||||||||||||||||||||||||||||||||||
Qualified Defined Benefit | Retiree Medical and | ||||||||||||||||||||||||||||||||||||
Pension Plans | |||||||||||||||||||||||||||||||||||||
Life Insurance Plans | |||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||||||||||||||
Discount rate | 4.00% | 4.75% | 4.00% | 3.75% | 4.50% | 3.75% | |||||||||||||||||||||||||||||||
Expected long-term rate of return on assets | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | |||||||||||||||||||||||||||||||
Rate of increase in future compensation levels | 4.30% | 4.30% | 4.30% | ||||||||||||||||||||||||||||||||||
Health care trend rate assumed for next year | 8.50% | 8.75% | 9.00% | ||||||||||||||||||||||||||||||||||
Ultimate health care trend rate | 5.00% | 5.00% | 5.00% | ||||||||||||||||||||||||||||||||||
Year that the ultimate health care trend rate is reached | 2029 | 2029 | 2029 | ||||||||||||||||||||||||||||||||||
The decrease in the discount rate from December 31, 2013 to December 31, 2014 resulted in an increase in the projected benefit obligations of our qualified defined benefit pension plans of approximately $4.8 billion at December 31, 2014. The increase in the discount rate from December 31, 2012 to December 31, 2013 resulted in a decrease in the projected benefit obligations of our qualified defined benefit pension plans of approximately $4.4 billion at December 31, 2013. | |||||||||||||||||||||||||||||||||||||
The long-term rate of return assumption represents the expected long-term rate of earnings on the funds invested, or to be invested, to provide for the benefits included in the benefit obligations. That assumption is based on several factors including historical market index returns, the anticipated long-term allocation of plan assets, the historical return data for the trust funds, plan expenses and the potential to outperform market index returns. | |||||||||||||||||||||||||||||||||||||
Plan Assets | |||||||||||||||||||||||||||||||||||||
Investment policies and strategies – Lockheed Martin Investment Management Company (LMIMCo), our wholly-owned subsidiary, has the fiduciary responsibility for making investment decisions related to the assets of our postretirement benefit plans. LMIMCo’s investment objectives for the assets of these plans are (1) to minimize the net present value of expected funding contributions; (2) to ensure there is a high probability that each plan meets or exceeds our actuarial long- term rate of return assumptions; and (3) to diversify assets to minimize the risk of large losses. The nature and duration of benefit obligations, along with assumptions concerning asset class returns and return correlations, are considered when determining an appropriate asset allocation to achieve the investment objectives. | |||||||||||||||||||||||||||||||||||||
Investment policies and strategies governing the assets of the plans are designed to achieve investment objectives within prudent risk parameters. Risk management practices include the use of external investment managers; the maintenance of a portfolio diversified by asset class, investment approach and security holdings; and the maintenance of sufficient liquidity to meet benefit obligations as they come due. | |||||||||||||||||||||||||||||||||||||
LMIMCo’s investment policies require that asset allocations of postretirement benefit plans be maintained within the following approximate ranges: | |||||||||||||||||||||||||||||||||||||
Asset Class | Asset Allocation | ||||||||||||||||||||||||||||||||||||
Ranges | |||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | 0-20% | ||||||||||||||||||||||||||||||||||||
Equity | 15-65% | ||||||||||||||||||||||||||||||||||||
Fixed income | 10-60% | ||||||||||||||||||||||||||||||||||||
Alternative investments: | |||||||||||||||||||||||||||||||||||||
Private equity funds | 0-15% | ||||||||||||||||||||||||||||||||||||
Real estate funds | 0-10% | ||||||||||||||||||||||||||||||||||||
Hedge funds | 0-20% | ||||||||||||||||||||||||||||||||||||
Commodities | 0-25% | ||||||||||||||||||||||||||||||||||||
Fair value measurements – The rules related to accounting for postretirement benefit plans under GAAP require certain fair value disclosures related to postretirement benefit plan assets, even though those assets are not included on our Balance Sheets. The following table presents the fair value of the assets (in millions) of our qualified defined benefit pension plans and retiree medical and life insurance plans by asset category and their level within the fair value hierarchy, which has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets, Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs. | |||||||||||||||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||
Cash and cash equivalents (a) | $ | 2,968 | $ | 2,968 | $ — | $ | — | $ | 2,176 | $ | 2,176 | $ — | $ | — | |||||||||||||||||||||||
Equity (a): | |||||||||||||||||||||||||||||||||||||
U.S. equity securities | 6,431 | 6,363 | 67 | 1 | 5,368 | 5,274 | 94 | — | |||||||||||||||||||||||||||||
International equity securities | 5,566 | 5,525 | 31 | 10 | 5,008 | 4,912 | 89 | 7 | |||||||||||||||||||||||||||||
Commingled equity funds | 6,078 | 2,047 | 4,031 | — | 6,037 | 1,212 | 4,825 | — | |||||||||||||||||||||||||||||
Fixed income (a): | |||||||||||||||||||||||||||||||||||||
Corporate debt securities | 4,242 | — | 4,201 | 41 | 2,986 | — | 2,943 | 43 | |||||||||||||||||||||||||||||
U.S. Government securities | 4,579 | — | 4,579 | — | 6,553 | — | 6,553 | — | |||||||||||||||||||||||||||||
U.S. Government-sponsored enterprise securities | 613 | — | 613 | — | 1,451 | — | 1,451 | — | |||||||||||||||||||||||||||||
Other fixed income investments | 1,807 | 39 | 1,759 | 9 | 1,388 | — | 1,293 | 95 | |||||||||||||||||||||||||||||
Alternative investments: | |||||||||||||||||||||||||||||||||||||
Private equity funds | 2,952 | — | — | 2,952 | 2,601 | — | — | 2,601 | |||||||||||||||||||||||||||||
Real estate funds | 762 | — | 33 | 729 | 601 | — | 29 | 572 | |||||||||||||||||||||||||||||
Hedge funds | 570 | — | 66 | 504 | 551 | — | 46 | 505 | |||||||||||||||||||||||||||||
Commodities (a) | 2 | 2 | — | — | 156 | 156 | — | — | |||||||||||||||||||||||||||||
Total | $ | 36,570 | $ | 16,944 | $15,380 | $ | 4,246 | $ | 34,876 | $ | 13,730 | $17,323 | $ | 3,823 | |||||||||||||||||||||||
Receivables, net | 35 | 55 | |||||||||||||||||||||||||||||||||||
Total | $ | 36,605 | $ | 34,931 | |||||||||||||||||||||||||||||||||
(a) | Cash and cash equivalents, equity securities, fixed income securities and commodities included derivative assets and liabilities whose fair values were not material as of December 31, 2014 and 2013. LMIMCo’s investment policies restrict the use of derivatives to either establish long exposures for purposes of expediency or capital efficiency or to hedge risks to the extent of a plan’s current exposure to such risks. Most derivative transactions are settled on a daily basis. | ||||||||||||||||||||||||||||||||||||
As of December 31, 2014 and 2013, the assets associated with our foreign defined benefit pension plans were not material and have not been included in the table above. | |||||||||||||||||||||||||||||||||||||
The following table presents the changes during 2014 and 2013 in the fair value of plan assets categorized as Level 3 in the preceding table (in millions): | |||||||||||||||||||||||||||||||||||||
Private | Real | Hedge | Other | Total | |||||||||||||||||||||||||||||||||
Estate | |||||||||||||||||||||||||||||||||||||
Equity | Funds | ||||||||||||||||||||||||||||||||||||
Funds | |||||||||||||||||||||||||||||||||||||
Funds | |||||||||||||||||||||||||||||||||||||
Balance at January 1, 2013 | $2,461 | $504 | $ 806 | $131 | $ | 3,902 | |||||||||||||||||||||||||||||||
Actual return on plan assets: | |||||||||||||||||||||||||||||||||||||
Realized gains, net | 144 | 43 | 21 | 4 | 212 | ||||||||||||||||||||||||||||||||
Unrealized gains, net | 42 | 19 | 104 | 1 | 166 | ||||||||||||||||||||||||||||||||
Purchases, sales and settlements, net | -46 | (3 | ) | (394 | ) | 2 | (441) | ||||||||||||||||||||||||||||||
Transfers into (out of) Level 3, net | — | 9 | (32 | ) | 7 | (16) | |||||||||||||||||||||||||||||||
Balance at December 31, 2013 | $2,601 | $572 | $ 505 | $145 | $3,823 | ||||||||||||||||||||||||||||||||
Actual return on plan assets: | |||||||||||||||||||||||||||||||||||||
Realized gains, net | 182 | 43 | 34 | 1 | 260 | ||||||||||||||||||||||||||||||||
Unrealized gains (losses), net | 38 | 22 | (11 | ) | (21 | ) | 28 | ||||||||||||||||||||||||||||||
Purchases, sales and settlements, net | 131 | 92 | (24 | ) | 8 | 207 | |||||||||||||||||||||||||||||||
Transfers out of Level 3, net | — | — | — | (72 | ) | (72) | |||||||||||||||||||||||||||||||
Balance at December 31, 2014 | $2,952 | $729 | $ 504 | $ 61 | $4,246 | ||||||||||||||||||||||||||||||||
Valuation techniques – Cash equivalents are mostly comprised of short-term money-market instruments and are valued at cost, which approximates fair value. | |||||||||||||||||||||||||||||||||||||
U.S. equity securities and international equity securities categorized as Level 1 are traded on active national and international exchanges and are valued at their closing prices on the last trading day of the year. For U.S. equity securities and international equity securities not traded on an active exchange, or if the closing price is not available, the trustee obtains indicative quotes from a pricing vendor, broker or investment manager. These securities are categorized as Level 2 if the custodian obtains corroborated quotes from a pricing vendor or categorized as Level 3 if the custodian obtains uncorroborated quotes from a broker or investment manager. | |||||||||||||||||||||||||||||||||||||
Commingled equity funds are investment vehicles valued using the Net Asset Value (NAV) provided by the fund managers. The NAV is the total value of the fund divided by the number of shares outstanding. Commingled equity funds are categorized as Level 1 if traded at their NAV on a nationally recognized securities exchange or categorized as Level 2 if the NAV is corroborated by observable market data (e.g., purchases or sales activity) and we are able to redeem our investment in the near-term. | |||||||||||||||||||||||||||||||||||||
Fixed income investments categorized as Level 2 are valued by the trustee using pricing models that use verifiable observable market data (e.g., interest rates and yield curves observable at commonly quoted intervals and credit spreads), bids provided by brokers or dealers or quoted prices of securities with similar characteristics. Fixed income investments are categorized at Level 3 when valuations using observable inputs are unavailable. The trustee obtains pricing based on indicative quotes or bid evaluations from vendors, brokers or the investment manager. | |||||||||||||||||||||||||||||||||||||
Private equity funds, real estate funds and hedge funds are valued using the NAV based on valuation models of underlying securities which generally include significant unobservable inputs that cannot be corroborated using verifiable observable market data. Valuations for private equity funds and real estate funds are determined by the general partners. Depending on the nature of the assets, the general partners may use various valuation methodologies, including the income and market approaches in their models. The market approach consists of analyzing market transactions for comparable assets while the income approach uses earnings or the net present value of estimated future cash flows adjusted for liquidity and other risk factors. Hedge funds are valued by independent administrators using various pricing sources and models based on the nature of the securities. Private equity funds, real estate funds and hedge funds are generally categorized as Level 3 as we cannot fully redeem our investment in the near-term. | |||||||||||||||||||||||||||||||||||||
Commodities are traded on an active commodity exchange and are valued at their closing prices on the last trading day of the year. | |||||||||||||||||||||||||||||||||||||
Contributions and Expected Benefit Payments | |||||||||||||||||||||||||||||||||||||
The funding of our qualified defined benefit pension plans is determined in accordance with ERISA, as amended by the PPA, and in a manner consistent with CAS and Internal Revenue Code rules. In 2014, we made contributions of $2.0 billion related to our qualified defined benefit pension plans. We do not plan to make contributions to our qualified defined benefit pension plans in 2015 through 2017 because none are required using current assumptions. | |||||||||||||||||||||||||||||||||||||
The following table presents estimated future benefit payments, which reflect expected future employee service, as of December 31, 2014 (in millions): | |||||||||||||||||||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | 2020 - 2024 | ||||||||||||||||||||||||||||||||
Qualified defined benefit pension plans | $ | 2,070 | $ | 2,150 | $ | 2,230 | $ | 2,320 | $ | 2,420 | $13,430 | ||||||||||||||||||||||||||
Retiree medical and life insurance plans | 190 | 200 | 200 | 210 | 210 | 1,020 | |||||||||||||||||||||||||||||||
Defined Contribution Plans | |||||||||||||||||||||||||||||||||||||
We maintain a number of defined contribution plans, most with 401(k) features, that cover substantially all of our employees. Under the provisions of our 401(k) plans, we match most employees’ eligible contributions at rates specified in the plan documents. Our contributions were $385 million in 2014, $383 million in 2013 and $380 million in 2012, the majority of which were funded in our common stock. Our defined contribution plans held approximately 41.7 million and 44.7 million shares of our common stock as of December 31, 2014 and 2013. |
Stockholders_Equity
Stockholders' Equity | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Stockholders' Equity | Note 10 – Stockholders’ Equity | ||||||||||||
At December 31, 2014 and 2013, our authorized capital was composed of 1.5 billion shares of common stock and 50 million shares of series preferred stock. Of the 316 million shares of common stock issued and outstanding as of December 31, 2014, 314 million shares were considered outstanding for Balance Sheet presentation purposes; the remaining shares were held in a separate trust. Of the 321 million shares of common stock issued and outstanding as of December 31, 2013, 319 million shares were considered outstanding for Balance Sheet presentation purposes; the remaining shares were held in a separate trust. No shares of preferred stock were issued and outstanding at December 31, 2014 or 2013. | |||||||||||||
Repurchases of Common Stock | |||||||||||||
During 2014, we repurchased 11.5 million shares of our common stock for $1.9 billion. During 2013 and 2012, we paid $1.8 billion and $990 million to repurchase 16.2 million and 11.1 million shares of our common stock. We reduced stockholders’ equity by $1.7 billion and $1.0 billion which represents the 16.0 million and 11.3 million shares of common stock we committed to repurchase during 2013 and 2012. Of the shares we committed to during 2012, a portion settled in cash during January 2013. | |||||||||||||
In September 2014, our Board of Directors approved a $2.0 billion increase to our share repurchase program. Inclusive of this increase, the total remaining authorization for future common share repurchases under our program was $3.7 billion as of December 31, 2014. As we repurchase our common shares, we reduce common stock for the $1 of par value of the shares repurchased, with the excess purchase price over par value recorded as a reduction of additional paid-in capital. Due to the volume of repurchases made under our share repurchase program, additional paid-in capital was reduced to zero, with the remainder of the excess purchase price over par value of $1.1 billion and $434 million recorded as a reduction of retained earnings in 2014 and 2013. | |||||||||||||
Accumulated Other Comprehensive Loss | |||||||||||||
Changes in the balance of AOCL, net of income taxes, consisted of the following (in millions): | |||||||||||||
Postretirement | Other, net | AOCL | |||||||||||
Benefit Plans | |||||||||||||
Balance at December 31, 2011 (a) | $ (11,186) | $ (71) | $ (11,257) | ||||||||||
Other comprehensive (loss) income before reclassifications | (3,204) | 105 | (3,099) | ||||||||||
Amounts reclassified from AOCL | |||||||||||||
Recognition of net actuarial losses | 819 | — | 819 | ||||||||||
Amortization of net prior service costs | 39 | — | 39 | ||||||||||
Other | — | 5 | 5 | ||||||||||
Total reclassified from AOCL | 858 | 5 | 863 | ||||||||||
Total other comprehensive (loss) income | (2,346) | 110 | (2,236) | ||||||||||
Balance at December 31, 2012 (a) | (13,532) | 39 | (13,493) | ||||||||||
Other comprehensive income before reclassifications | 2,868 | 11 | 2,879 | ||||||||||
Amounts reclassified from AOCL | |||||||||||||
Recognition of net actuarial losses | 973 | — | 973 | ||||||||||
Amortization of net prior service costs | 42 | — | 42 | ||||||||||
Other | — | (2) | (2) | ||||||||||
Total reclassified from AOCL | 1,015 | (2) | 1,013 | ||||||||||
Total other comprehensive income | 3,883 | 9 | 3,892 | ||||||||||
Balance at December 31, 2013 (a) | (9,649) | 48 | (9,601) | ||||||||||
Other comprehensive loss before reclassifications | (2,870) | (103) | (2,973) | ||||||||||
Amounts reclassified from AOCL | |||||||||||||
Recognition of net actuarial losses | 806 | — | 806 | ||||||||||
Amortization of net prior service credits | (100) | — | (100) | ||||||||||
Other | — | (2) | (2) | ||||||||||
Total reclassified from AOCL | 706 | (2) | 704 | ||||||||||
Total other comprehensive loss | (2,164) | (105) | (2,269) | ||||||||||
Balance at December 31, 2014 (a) | $ (11,813) | $ (57) | $ (11,870) | ||||||||||
(a) | AOCL related to postretirement benefit plans is shown net of tax benefits at December 31, 2014, 2013 and 2012 of $6.4 billion, $5.3 billion and $7.4 billion. These tax benefits include amounts recognized on our income tax returns as current deductions and deferred income taxes, which will be recognized on our tax returns in future years. See Note 7 and Note 9 for more information on our income taxes and postretirement benefit plans. |
StockBased_Compensation
Stock-Based Compensation | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Stock-Based Compensation | Note 11 – Stock-Based Compensation | ||||||||||||
During 2014, 2013 and 2012, we recorded non-cash stock-based compensation expense totaling $164 million, $189 million and $167 million, which is included as a component of other unallocated, net on our Statements of Earnings. The net impact to earnings for the respective years was $107 million, $122 million and $108 million. | |||||||||||||
As of December 31, 2014, we had $91 million of unrecognized compensation cost related to nonvested awards, which is expected to be recognized over a weighted average period of 1.6 years. We received cash from the exercise of stock options totaling $308 million, $827 million and $440 million during 2014, 2013 and 2012. In addition, our income tax liabilities for 2014, 2013 and 2012 were reduced by $215 million, $158 million, $96 million due to recognized tax benefits on stock-based compensation arrangements. | |||||||||||||
Stock-Based Compensation Plans | |||||||||||||
Under plans approved by our stockholders, we are authorized to grant key employees stock-based incentive awards, including options to purchase common stock, stock appreciation rights, restricted stock units (RSUs), performance stock units (PSUs) or other stock units. The exercise price of options to purchase common stock may not be less than the fair market value of our stock on the date of grant. No award of stock options may become fully vested prior to the third anniversary of the grant and no portion of a stock option grant may become vested in less than one year. The minimum vesting period for restricted stock or stock units payable in stock is three years. Award agreements may provide for shorter or pro-rated vesting periods or vesting following termination of employment in the case of death, disability, divestiture, retirement, change of control or layoff. The maximum term of a stock option or any other award is 10 years. | |||||||||||||
At December 31, 2014, inclusive of the shares reserved for outstanding stock options, RSUs and PSUs, we had 19 million shares reserved for issuance under the plans. At December 31, 2014, 7.8 million of the shares reserved for issuance remained available for grant under our stock-based compensation plans. We issue new shares upon the exercise of stock options or when restrictions on RSUs and PSUs have been satisfied. | |||||||||||||
RSUs | |||||||||||||
The following table summarizes activity related to nonvested RSUs during 2014: | |||||||||||||
Number | Weighted Average | ||||||||||||
of RSUs | Grant-Date Fair | ||||||||||||
(In thousands) | Value Per Share | ||||||||||||
Nonvested at December 31, 2011 | 4,302 | $ 78.25 | |||||||||||
Granted | 1,987 | 81.93 | |||||||||||
Vested | (1,299 | ) | 80.64 | ||||||||||
Forfeited | (168 | ) | 79.03 | ||||||||||
Nonvested at December 31, 2012 | 4,822 | $ | 79.10 | ||||||||||
Granted | 1,356 | 89.24 | |||||||||||
Vested | (2,093 | ) | 79.26 | ||||||||||
Forfeited | (226 | ) | 81.74 | ||||||||||
Nonvested at December 31, 2013 | 3,859 | $ | 82.42 | ||||||||||
Granted | 745 | 146.85 | |||||||||||
Vested | (2,194 | ) | 87.66 | ||||||||||
Forfeited | (84 | ) | 91.11 | ||||||||||
Nonvested at December 31, 2014 | 2,326 | $ 97.80 | |||||||||||
RSUs are valued based on the fair value of our common stock on the date of grant. Employees who are granted RSUs receive the right to receive shares of stock after completion of the vesting period; however, the shares are not issued and the employees cannot sell or transfer shares prior to vesting and have no voting rights until the RSUs vest, generally three years from the date of the award. Employees who are granted RSUs receive dividend-equivalent cash payments only upon vesting. For these RSU awards, the grant-date fair value is equal to the closing market price of our common stock on the date of grant less a discount to reflect the delay in payment of dividend-equivalent cash payments. We recognize the grant-date fair value of RSUs, less estimated forfeitures, as compensation expense ratably over the requisite service period, which beginning with the RSUs granted in 2013 is shorter than the vesting period if the employee is retirement eligible on the date of grant or will become retirement eligible before the end of the vesting period. | |||||||||||||
Stock Options | |||||||||||||
We generally recognize compensation cost for stock options ratably over the three-year vesting period. At December 31, 2014 and 2013, there were 6.3 million (weighted average exercise price of $84.62) and 10.2 million (weighted average exercise price of $83.65) stock options outstanding. Stock options outstanding at December 31, 2014 have a weighted average remaining contractual life of approximately four years and an aggregate intrinsic value of $681 million. Of the stock options outstanding, 5.6 million (weighted average exercise price of $84.96) have vested as of December 31, 2014 and those stock options have a weighted average remaining contractual life of approximately four years and an aggregate intrinsic value of $601 million. There were 3.7 million (weighted average exercise price of $82.13) stock options exercised during 2014. We did not grant stock options to employees during 2014 and 2013. | |||||||||||||
The following table pertains to stock options granted in 2012, in addition to stock options that vested and were exercised in 2014, 2013 and 2012 (in millions, except for weighted-average grant-date fair value of stock options granted): | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Weighted average grant-date fair value of stock options granted | $ | — | $ | — | $ | 10.57 | |||||||
Grant-date fair value of all stock options that vested | 18 | 40 | 47 | ||||||||||
Intrinsic value of all stock options exercised | 297 | 293 | 162 | ||||||||||
In 2012, we estimated the fair value for stock options at the date of grant using the Black-Scholes option pricing model, which required us to make certain assumptions. We used the following weighted average assumptions in the model: risk-free interest rate of 0.78%, dividend yield of 5.40%, a five year historical volatility factor of 0.28 and an expected option life of five years. | |||||||||||||
PSUs | |||||||||||||
In January 2014, we granted certain employees PSUs with an aggregate target award of approximately 0.2 million shares of our common stock. The PSUs vest three years from the grant date based on continuous service, with the number of shares earned (0% to 200% of the target award) depending upon the extent to which we achieve certain financial and market performance targets measured over the period from January 1, 2014 through December 31, 2016. About half of the PSUs were valued at $146.85 per PSU in a manner similar to RSUs mentioned above as the financial targets are based on our operating results. We recognize the grant-date fair value of these PSUs, less estimated forfeitures, as compensation expense ratably over the vesting period based on the number of awards expected to vest at each reporting date. The remaining PSUs were valued at $134.15 per PSU using a Monte Carlo model as the performance target is related to our total shareholder return relative to our peer group. We recognize the grant-date fair value of these awards, less estimated forfeitures, as compensation expense ratably over the vesting period. |
Legal_Proceedings_Commitments_
Legal Proceedings, Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2014 | |
Legal Proceedings, Commitments and Contingencies | Note 12 – Legal Proceedings, Commitments and Contingencies |
We are a party to or have property subject to litigation and other proceedings that arise in the ordinary course of our business, including matters arising under provisions relating to the protection of the environment and are subject to contingencies related to certain businesses we previously owned. These types of matters could result in fines, penalties, compensatory or treble damages or non-monetary relief. We believe the probability is remote that the outcome of each of these matters, including the legal proceedings mentioned below, will have a material adverse effect on the Corporation as a whole, notwithstanding that the unfavorable resolution of any matter may have a material effect on our net earnings in any particular interim reporting period. Among the factors that we consider in this assessment are the nature of existing legal proceedings and claims, the asserted or possible damages or loss contingency (if estimable), the progress of the case, existing law and precedent, the opinions or views of legal counsel and other advisers, our experience in similar cases and the experience of other companies, the facts available to us at the time of assessment and how we intend to respond to the proceeding or claim. Our assessment of these factors may change over time as individual proceedings or claims progress. | |
Although we cannot predict the outcome of legal or other proceedings with certainty, GAAP requires us to disclose an estimate of the reasonably possible loss or range of loss or make a statement that such an estimate cannot be made for contingencies where there is at least a reasonable possibility that a loss may have been incurred. We have a thorough process to determine an estimate of the reasonably possible loss or range of loss before we conclude and disclose that an estimate cannot be made. Accordingly, unless otherwise indicated below in our discussion of legal proceedings, a reasonably possible loss or range of loss associated with any individual legal proceeding cannot be estimated. | |
Legal Proceedings | |
On April 24, 2009, we filed a declaratory judgment action against the New York Metropolitan Transportation Authority and its Capital Construction Company (collectively, the MTA) asking the U.S. District Court for the Southern District of New York to find that the MTA is in material breach of our agreement based on the MTA’s failure to provide access to sites where work must be performed and the customer-furnished equipment necessary to complete the contract. The MTA filed an answer and counterclaim alleging that we breached the contract and subsequently terminated the contract for alleged default. The primary damages sought by the MTA are the cost to complete the contract and potential re-procurement costs. While we are unable to estimate the cost of another contractor to complete the contract and the costs of re-procurement, we note that our contract with the MTA had a total value of $323 million, of which $241 million was paid to us, and that the MTA is seeking damages of approximately $190 million. We dispute the MTA’s allegations and are defending against them. Additionally, following an investigation, our sureties on a performance bond related to this matter, who were represented by independent counsel, concluded that the MTA’s termination of the contract was improper. Finally, our declaratory judgment action was later amended to include claims for monetary damages against the MTA of approximately $95 million. This matter was taken under submission by the District Court on December 5, 2014, after a five-week bench trial and the filing of post-trial pleadings by the parties. We expect a decision in the second or third quarter of 2015. | |
On August 28, 2003, the U.S. Department of Justice (DOJ) filed complaints in partial intervention in two lawsuits filed under the civil qui tam provisions of the False Claims Act in the U.S. District Court for the Western District of Kentucky, United States ex rel. Natural Resources Defense Council, et al., v. Lockheed Martin Corporation, et al., and United States ex rel. John D. Tillson v. Lockheed Martin Energy Systems, Inc., et al. The DOJ alleges that we committed violations of the Resource Conservation and Recovery Act at the Paducah Gaseous Diffusion Plant by not properly handling, storing and transporting hazardous waste and that we violated the False Claims Act by misleading Department of Energy officials and state regulators about the nature and extent of environmental noncompliance at the plant. The complaint does not allege a specific calculation of damages. In April 2013, the parties attended a settlement conference ordered by the magistrate judge. The conference focused on the parties’ sharply differing views of the merits of the case and did not significantly contribute to our understanding of the damages sought. The parties participated in confidential mediation pursuant to Federal Rule of Civil Procedure Rule 408 in December 2014. The plaintiffs made settlement demands at this mediation but these were not tied to any theory of damages, were not apportioned between the False Claims Act and Resource Conservation and Recovery Act allegations (as to which our defenses differ) and did not provide insight into what damages plaintiffs would seek to prove if this matter proceeds to trial. Consequently, we continue to be unable to estimate the reasonably possible loss or range of loss, which could be incurred if the plaintiffs were to prevail, but we believe we have substantial defenses. We anticipate filing motions for summary judgment in the second quarter of 2015. | |
Environmental Matters | |
We are involved in environmental proceedings and potential proceedings relating to soil and groundwater contamination, disposal of hazardous waste and other environmental matters at several of our current or former facilities or at third-party sites where we have been designated as a potentially responsible party (PRP). A substantial portion of environmental costs will be included in our net sales and cost of sales in future periods pursuant to U.S. Government regulations. At the time a liability is recorded for future environmental costs, we record a receivable for estimated future recovery considered probable through the pricing of products and services to agencies of the U.S. Government, regardless of the contract form (e.g., cost-reimbursable, fixed-price). We continuously evaluate the recoverability of our environmental receivables by assessing, among other factors, U.S. Government regulations, our U.S. Government business base and contract mix and our history of receiving reimbursement of such costs. We include the portion of those environmental costs expected to be allocated to our non-U.S. Government contracts, or that is determined to not be recoverable under U.S. Government contracts, in our cost of sales at the time the liability is established. | |
At December 31, 2014 and 2013, the aggregate amount of liabilities recorded relative to environmental matters was $965 million and $997 million, most of which are recorded in other noncurrent liabilities on our Balance Sheets. We have recorded receivables totaling $836 million and $863 million at December 31, 2014 and 2013, most of which are recorded in other noncurrent assets on our Balance Sheets, for the estimated future recovery of these costs, as we consider the recovery probable based on the factors previously mentioned. We project costs and recovery of costs over approximately 20 years. | |
Environmental cleanup activities usually span several years, which makes estimating liabilities a matter of judgment because of uncertainties with respect to assessing the extent of the contamination as well as such factors as changing remediation technologies and continually evolving regulatory environmental standards. There are a number of former operating facilities that we are monitoring or investigating for potential future remediation. We perform quarterly reviews of the status of our environmental remediation sites and the related liabilities and receivables. Additionally, in our quarterly reviews we consider these and other factors in estimating the timing and amount of any future costs that may be required for remediation activities and record a liability when it is probable that a loss has occurred and the loss can be reasonably estimated. The amount of liability recorded is based on our estimate of the costs to be incurred for remediation at a particular site. We do not discount the recorded liabilities, as the amount and timing of future cash payments are not fixed or cannot be reliably determined. We reasonably cannot determine the extent of our financial exposure in all cases as, although a loss may be probable or reasonably possible, in some cases it is not possible at this time to estimate the loss or reasonably possible loss or range of loss. | |
We also are pursuing claims for recovery of costs incurred or contribution to site cleanup costs against other PRPs, including the U.S. Government, and are conducting remediation activities under various consent decrees and orders relating to soil, groundwater, sediment or surface water contamination at certain sites of former or current operations. Under an agreement related to our Burbank and Glendale, California, sites, the U.S. Government reimburses us an amount equal to approximately 50% of expenditures for certain remediation activities in its capacity as a PRP under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). | |
On July 1, 2014, a regulation became effective in California setting the maximum level of the contaminant hexavalent chromium in drinking water at 10 parts per billion (ppb). In May 2014, the Manufacturers and Technology Association filed a suit alleging the 10 ppb threshold is lower than is required to protect public health and thus imposes unjustified costs on the regulated community. We cannot predict the outcome of this suit or whether other challenges may be advanced by the regulated community or environmental groups which had sought a significantly higher and lower standard, respectively. If the new standard remains at 10 ppb, it will not have a material impact on our existing remediation costs in California. | |
In addition, California is reevaluating its existing drinking water standard with respect to perchlorate and the U.S. Environmental Protection Agency (U.S. EPA) is also considering whether to regulate perchlorate and hexavalent chromium in drinking water. If substantially lower standards are adopted, in either California or at the federal level, for perchlorate or, if the U.S. EPA were to adopt a standard for hexavalent chromium lower than 10 ppb, we expect a material increase in our estimates for environmental liabilities and the related assets for the portion of the increased costs that are probable of future recovery in the pricing of our products and services for the U.S. Government. The amount that would be allocable to our non-U.S. Government contracts or that is determined to not be recoverable under U.S. Government contracts would be expensed, which may have a material effect on our earnings in any particular interim reporting period. | |
Operating Leases | |
We rent certain equipment and facilities under operating leases. Certain major plant facilities and equipment are furnished by the U.S. Government under short-term or cancelable arrangements. Our total rental expense under operating leases was $258 million, $315 million and $302 million for 2014, 2013 and 2012. Future minimum lease commitments at December 31, 2014 for long-term non-cancelable operating leases were $856 million ($228 million in 2015, $181 million in 2016, $133 million in 2017, $95 million in 2018, $69 million in 2019 and $150 million in later years). | |
Letters of Credit, Surety Bonds and Third-Party Guarantees | |
We have entered into standby letters of credit, surety bonds and third-party guarantees with financial institutions and other third parties primarily relating to advances received from customers and the guarantee of future performance on certain contracts. Letters of credit and surety bonds generally are available for draw down in the event we do not perform. In some cases, we may guarantee the contractual performance of third parties such as venture partners. We had total outstanding letters of credit, surety bonds and third-party guarantees aggregating $2.4 billion each at December 31, 2014 and 2013. | |
At December 31, 2014 and 2013, third-party guarantees totaled $774 million and $696 million, of which approximately 85% and 90% related to guarantees of contractual performance of ventures to which we currently are or previously were a party. This amount represents our estimate of the maximum amount we would expect to incur upon the contractual non-performance of the venture partners. In addition, we generally have cross-indemnities in place that may enable us to recover amounts that may be paid on behalf of a venture partner. We believe our current and former venture partners will be able to perform their obligations, as they have done through December 31, 2014, and that it will not be necessary to make payments under the guarantees. In determining our exposures, we evaluate the reputation, technical capabilities and credit quality of our current and former venture partners. | |
United Launch Alliance | |
In connection with our 50% ownership interest of ULA, we and The Boeing Company (Boeing) have each received distributions from ULA, including distributions of $527 million that we and Boeing have each received (since ULA’s formation in December 2006) which are subject to agreements between us, Boeing and ULA, whereby, if ULA does not have sufficient cash resources or credit capacity to make required payments under the inventory supply agreement it has with Boeing, both we and Boeing would provide to ULA, in the form of an additional capital contribution, the level of funding required for ULA to make those payments. Any such capital contributions would not exceed the amount of the distributions subject to the agreements. Based on current expectations of ULA’s cash flow needs, we currently believe that ULA should have sufficient operating cash flows and credit capacity, including access to its $560 million revolving credit agreement from third-party financial institutions, to meet its obligations such that we would not be required to make a contribution under these agreements. | |
In addition, both we and Boeing have cross-indemnified each other for guarantees by us and Boeing of the performance and financial obligations of ULA under certain launch service contracts. We believe ULA will be able to fully perform its obligations, as it has done through December 31, 2014, and that it will not be necessary to make payments under the cross-indemnities or guarantees. | |
Our 50% ownership share of ULA’s net assets exceeded the book value of our investment by approximately $395 million, which we are recognizing as income ratably over 10 years through 2016. This yearly amortization and our share of ULA’s net earnings are reported as equity in net earnings (losses) of equity investees in other income, net on our Statements of Earnings. Our investment in ULA totaled $706 million and $685 million at December 31, 2014 and 2013. |
Acquisitions_and_Divestitures
Acquisitions and Divestitures | 12 Months Ended |
Dec. 31, 2014 | |
Acquisitions and Divestitures | Note 13 – Acquisitions and Divestitures |
Acquisitions | |
We paid $898 million in 2014 for acquisitions of businesses and investments in affiliates, net of cash acquired, primarily related to the acquisitions of Systems Made Simple, Zeta and Industrial Defender. On December 1, 2014, we completed the acquisition of all interests in Systems Made Simple, which provides solutions that leverage information technology in the healthcare domain to improve, increase, enable and ensure the exchange and interoperability of information between patients, providers, and payers and has been included in our IS&GS business segment. On August 18, 2014, we completed the acquisition of all interests in Zeta, which designs systems that enable collection, processing, safeguarding and dissemination of information for intelligence and defense communities, which has been included in our Space Systems business segment. On April 7, 2014, we completed the acquisition of all interest in Industrial Defender, a provider of cyber security solutions for control systems in the oil and gas, utility and chemical industries, which has been included in our IS&GS business segment. In connection with these acquisitions, we preliminarily recorded goodwill of $657 million, related to expected synergies from combining operations and value of the existing workforce. The recorded goodwill is not deductible for tax purposes. Additionally, we recorded other intangible assets of $223 million, primarily related to customer relationships and technologies, which will be amortized over a weighted average period of eight years. | |
We paid $269 million in 2013 for acquisitions of businesses and investments in affiliates, net of cash acquired, primarily related to the acquisition of all interests in Amor Group, a United Kingdom-based company specializing in information technology, civil government services and the energy market and has been included in our IS&GS business segment. In connection with these acquisitions, we recorded goodwill of $175 million, which is not deductible for tax purposes. Additionally, we recorded other intangible assets of $34 million, related to customer relationships and technologies, which will be amortized over a weighted average period of eight years. | |
We paid $259 million in 2012 for acquisitions of businesses and investments in affiliates, net of cash acquired, primarily related to the acquisitions of Chandler/May, Inc., CDL Systems Ltd. and Procerus Technologies, L.C., and each has been included within our MST business segment. These companies specialize in the design, development, manufacturing, control and support of advanced unmanned systems. In connection with these acquisitions, we recorded goodwill of $197 million, of which $69 million will be amortized for tax purposes. Additionally, we recorded other intangible assets of $41 million, related to technologies and customer relationships, which will be amortized over a weighted average period of six years. | |
Divestitures | |
Discontinued operations for 2013 included a benefit of $31 million resulting from the resolution of certain tax matters related to a business previously sold prior to 2013. |
Restructuring_Charges
Restructuring Charges | 12 Months Ended |
Dec. 31, 2014 | |
Restructuring Charges | Note 14 – Restructuring Charges |
2013 Actions | |
During 2013, we recorded charges related to certain severance actions totaling $201 million of which $83 million, $37 million and $81 million related to our IS&GS, MST and Space Systems business segments. These charges reduced our net earnings by $130 million ($.40 per share) and primarily related to a plan we committed to in November 2013 to close and consolidate certain facilities and reduce our total workforce by approximately 4,000 positions within our IS&GS, MST and Space Systems business segments. These charges also include $30 million related to certain severance actions at our IS&GS business segment that occurred in the first quarter of 2013, which were subsequently paid in 2013. | |
The November 2013 plan resulted from a strategic review of these businesses’ facility capacity and future workload projections and is intended to better align our organization and cost structure and improve the affordability of our products and services given the changes in U.S. Government spending as well as the rapidly changing competitive and economic landscape. Upon separation, terminated employees receive lump-sum severance payments primarily based on years of service. As of December 31, 2014, we have paid approximately $107 million in severance payments associated with this action, of which approximately $92 million was paid during the year ended December 31, 2014. The remaining severance payments are expected to be paid through the middle of 2015. | |
In addition to the severance charges described above, we expect to incur total accelerated costs (e.g., accelerated depreciation expense related to long-lived assets at the sites to be closed) and incremental costs (e.g., relocation of equipment and other employee related costs) of approximately $15 million, $50 million and $175 million at our IS&GS, MST and Space Systems business segments through the completion of this plan in 2015. As of December 31, 2014, we have incurred total accelerated and incremental costs of approximately $110 million, most of which was incurred during the year ended December 31, 2014. The accelerated and incremental costs are recorded as incurred in cost of sales on our Statements of Earnings and included in the respective business segment’s results of operations. | |
We expect to recover a substantial amount of the restructuring charges through the pricing of our products and services to the U.S. Government and other customers in future periods, with the impact included in the respective business segment’s results of operations. | |
2012 Actions | |
During 2012, we recorded charges related to certain severance actions totaling $48 million of which $25 million related to our Aeronautics business segment and $23 million related to the reorganization of our former Electronic Systems business segment. These charges reduced our net earnings by $31 million ($.09 per share) and consisted of severance costs associated with the elimination of certain positions through either voluntary or involuntary actions. These severance actions resulted from cost reduction initiatives to better align our organization with changing economic conditions. Upon separation, terminated employees received lump-sum severance payments primarily based on years of service, all of which were paid in 2013. |
Fair_Value_Measurements
Fair Value Measurements | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Fair Value Measurements | Note 15 – Fair Value Measurements | ||||||||||||||||||||||||
Assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following (in millions): | |||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||
Total | Level 1 | Level 2 | Total | Level 1 | Level 2 | ||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Equity securities | $ | 92 | $ 92 | $ — | $ | 77 | $ 77 | $ — | |||||||||||||||||
Mutual funds | 696 | 696 | — | 613 | 613 | — | |||||||||||||||||||
U.S. Government securities | 136 | — | 136 | 238 | — | 238 | |||||||||||||||||||
Other securities | 153 | — | 153 | 131 | — | 131 | |||||||||||||||||||
Derivatives | 27 | — | 27 | 28 | — | 28 | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Derivatives | 18 | — | 18 | 23 | — | 23 | |||||||||||||||||||
Substantially all assets measured at fair value, other than derivatives, represent investments classified as trading securities held in a separate trust to fund certain of our non-qualified deferred compensation plans and are recorded in other noncurrent assets on our Balance Sheets. The fair values of equity securities and mutual funds are determined by reference to the quoted market price per unit in active markets multiplied by the number of units held without consideration of transaction costs. The fair values of U.S. Government and other securities are determined using pricing models that use observable inputs (e.g., interest rates and yield curves observable at commonly quoted intervals), bids provided by brokers or dealers or quoted prices of securities with similar characteristics. The fair values of derivative instruments, which consist of foreign currency exchange forward and interest rate swap contracts, primarily are determined based on the present value of future cash flows using model-derived valuations that use observable inputs such as interest rates, credit spreads and foreign currency exchange rates. We did not have any transfers of assets or liabilities between levels of the fair value hierarchy during 2014. | |||||||||||||||||||||||||
In addition to the financial instruments listed in the table above, we hold other financial instruments, including cash and cash equivalents, receivables, accounts payable and debt. The carrying amounts for cash and cash equivalents, receivables and accounts payable approximated their fair values. The estimated fair value of our outstanding debt was $7.9 billion and $7.4 billion at December 31, 2014 and 2013 and the outstanding principal amount was $7.0 billion at both December 31, 2014 and 2013, excluding unamortized discounts of $872 million and $882 million. The estimated fair values of our outstanding debt were determined based on quoted prices for similar instruments in active markets (Level 2). | |||||||||||||||||||||||||
In the fourth quarters of 2014 and 2013, we recorded non-cash goodwill impairment charges of $119 million and $195 million in connection with our annual goodwill impairment test. The fair value determination of goodwill was determined using a combination of a DCF analysis and market-based valuation methodologies and was classified as a Level 3 fair value measurement due to the significance of the unobservable inputs used. See Note 1 for further information on this non-cash goodwill impairment charge and our valuation methodologies. |
Summary_of_Quarterly_Informati
Summary of Quarterly Information (Unaudited) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Summary of Quarterly Information (Unaudited) | Note 16 – Summary of Quarterly Information (Unaudited) | ||||||||||||||||
A summary of quarterly information is as follows (in millions, except per share data): | |||||||||||||||||
2014 Quarters | |||||||||||||||||
First | Second | Third | Fourth | ||||||||||||||
Net sales | $10,650 | $11,306 | $11,114 | $12,530 | |||||||||||||
Operating profit | 1,432 | 1,426 | 1,392 | 1,342 | |||||||||||||
Net earnings (a) | 933 | 889 | 888 | 904 | |||||||||||||
Basic earnings per share | 2.92 | 2.81 | 2.81 | 2.87 | |||||||||||||
Diluted earnings per share | 2.87 | 2.76 | 2.76 | 2.82 | |||||||||||||
2013 Quarters | |||||||||||||||||
First | Second | Third | Fourth | ||||||||||||||
Net sales | $11,070 | $11,408 | $11,347 | $11,533 | |||||||||||||
Operating profit | 1,119 | 1,298 | 1,254 | 834 | |||||||||||||
Net earnings from continuing operations (b) | 761 | 859 | 842 | 488 | |||||||||||||
Net earnings from discontinued operations | — | — | 31 | — | |||||||||||||
Net earnings | 761 | 859 | 873 | 488 | |||||||||||||
Basic earnings per share (c) | 2.37 | 2.68 | 2.72 | 1.53 | |||||||||||||
Diluted earnings per share | 2.33 | 2.64 | 2.66 | 1.50 | |||||||||||||
(a) | The fourth quarter of 2014 included a charge of $119 million ($107 million after tax) related to a non-cash goodwill impairment charge (Note 1) and a tax benefit of $45 million due to the retroactive reinstatement of the R&D tax credit for 2014. | ||||||||||||||||
(b) | The first quarter of 2013 included a tax benefit of $37 million from the R&D tax credit attributable to 2012 (Note 7) and a charge of $30 million ($19 million after tax) related to certain severance actions (Note 14). The fourth quarter of 2013 included charges of $195 million ($176 million after tax) related to a non-cash goodwill impairment charge (Note 1) and $171 million ($111 million after tax) related to certain severance actions (Note 14). | ||||||||||||||||
(c) | The sum of the quarterly earnings per share amounts do not equal the earnings per share amount included on our Statements of Earnings, primarily due to the timing of our share repurchases during each respective year. |
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Organization | Organization – We are a global security and aerospace company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. We also provide a broad range of management, engineering, technical, scientific, logistics and information services. We serve both U.S. and international customers with products and services that have defense, civil and commercial applications, with our principal customers being agencies of the U.S. Government. |
Basis of presentation | Basis of presentation – Our consolidated financial statements include the accounts of subsidiaries we control and variable interest entities if we are the primary beneficiary. We eliminate intercompany balances and transactions in consolidation. Our receivables, inventories, customer advances and amounts in excess of costs incurred and certain amounts in other current liabilities primarily are attributable to long-term contracts or programs in progress for which the related operating cycles are longer than one year. In accordance with industry practice, we include these items in current assets and current liabilities. Unless otherwise noted, we present all per share amounts cited in these consolidated financial statements on a “per diluted share” basis. |
Use of estimates | Use of estimates – We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP). In doing so, we are required to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates. Significant estimates inherent in the preparation of our consolidated financial statements include, but are not limited to, accounting for sales and cost recognition, postretirement benefit plans, environmental receivables and liabilities, evaluation of goodwill and other assets for impairment, income taxes including deferred tax assets, fair value measurements and contingencies. |
Sales and earnings | Sales and earnings – We record net sales and estimated profits for substantially all of our contracts using the percentage-of-completion method for cost-reimbursable and fixed-price contracts for products and services with the U.S. Government. Sales are recorded on all time-and-materials contracts as the work is performed based on agreed-upon hourly rates and allowable costs. We account for our services contracts with non-U.S. Government customers using the services method of accounting. We classify net sales as products or services on our Statements of Earnings based on the attributes of the underlying contracts. |
Percentage-of-Completion Method of Accounting – The percentage-of-completion method for product contracts depends on the nature of the products provided under the contract. For example, for contracts that require us to perform a significant level of development effort in comparison to the total value of the contract and/or to deliver minimal quantities, sales are recorded using the cost-to-cost method to measure progress toward completion. Under the cost-to-cost method of accounting, we recognize sales and an estimated profit as costs are incurred based on the proportion that the incurred costs bear to total estimated costs. For contracts that require us to provide a substantial number of similar items without a significant level of development, we record sales and an estimated profit on a percentage-of-completion basis using units-of-delivery as the basis to measure progress toward completing the contract. For contracts to provide services to the U.S. Government, sales are generally recorded using the cost-to-cost method. | |
Award and incentive fees, as well as penalties related to contract performance, are considered in estimating sales and profit rates on contracts accounted for under the percentage-of-completion method. Estimates of award fees are based on past experience and anticipated performance. We record incentives or penalties when there is sufficient information to assess anticipated contract performance. Incentive provisions that increase or decrease earnings based solely on a single significant event are not recognized until the event occurs. | |
Accounting for contracts using the percentage-of-completion method requires judgment relative to assessing risks, estimating contract sales and costs (including estimating award and incentive fees and penalties related to performance) and making assumptions for schedule and technical issues. Due to the number of years it may take to complete many of our contracts and the scope and nature of the work required to be performed on those contracts, the estimation of total sales and costs at completion is complicated and subject to many variables and, accordingly, is subject to change. When adjustments in estimated total contract sales or estimated total costs are required, any changes from prior estimates are recognized in the current period for the inception-to-date effect of such changes. When estimates of total costs to be incurred on a contract exceed estimates of total sales to be earned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined. | |
Many of our contracts span several years and include highly complex technical requirements. At the outset of a contract, we identify and monitor risks to the achievement of the technical, schedule and cost aspects of the contract and assess the effects of those risks on our estimates of total costs to complete the contract. The estimates consider the technical requirements (e.g., a newly-developed product versus a mature product), the schedule and associated tasks (e.g., the number and type of milestone events) and costs (e.g., material, labor, subcontractor, overhead and the estimated costs to fulfill our industrial cooperation agreements, sometimes referred to as offset agreements, required under certain contracts with international customers). The initial profit booking rate of each contract considers risks surrounding the ability to achieve the technical requirements, schedule and costs in the initial estimated total costs to complete the contract. Profit booking rates may increase during the performance of the contract if we successfully retire risks surrounding the technical, schedule and cost aspects of the contract which decreases the estimated total costs to complete the contract. Conversely, our profit booking rates may decrease if the estimated total costs to complete the contract increase. All of the estimates are subject to change during the performance of the contract and may affect the profit booking rate. | |
In addition, comparability of our segment sales, operating profit and operating margins may be impacted by changes in profit booking rates on our contracts accounted for using the percentage-of-completion method of accounting. Increases in the profit booking rates, typically referred to as risk retirements, usually relate to revisions in the estimated total costs that reflect improved conditions on a particular contract. Conversely, conditions on a particular contract may deteriorate resulting in an increase in the estimated total costs to complete and a reduction in the profit booking rate. Increases or decreases in profit booking rates are recognized in the current period and reflect the inception-to-date effect of such changes. Segment operating profit and margins may also be impacted favorably or unfavorably by other items. Favorable items may include the positive resolution of contractual matters, cost recoveries on restructuring charges and insurance recoveries. Unfavorable items may include the adverse resolution of contractual matters; asset impairments; restructuring charges, except for significant severance actions (such as those mentioned below in Note 14) which are excluded from segment operating results; and reserves for disputes. Segment operating profit and items such as risk retirements, reductions of profit booking rates or other matters are presented net of state income taxes. | |
Our consolidated net adjustments not related to volume, including net profit booking rate adjustments and other matters, net of state income taxes, increased segment operating profit, by approximately $1.8 billion in 2014, $2.1 billion in 2013 and $1.9 billion in 2012. These adjustments increased net earnings by approximately $1.1 billion ($3.55 per share) in 2014, $1.3 billion ($4.09 per share) in 2013 and $1.2 billion ($3.70 per share) in 2012. | |
Services Method of Accounting – For cost-reimbursable contracts for services to non-U.S. Government customers, we record net sales as services are performed, except for award and incentive fees. Award and incentive fees are recorded when they are fixed or determinable, generally at the date the amount is communicated to us by the customer. This approach results in the recognition of such fees at contractual intervals (typically every six months) throughout the contract and is dependent on the customer’s processes for notification of awards and issuance of formal notifications. Under fixed-price service contracts, we are paid a predetermined fixed amount for a specified scope of work and generally have full responsibility for the costs associated with the contract and the resulting profit or loss. We record net sales under fixed-price service contracts with non-U.S. Government customers on a straight-line basis over the period of contract performance, unless evidence suggests that net sales are earned or the obligations are fulfilled in a different pattern. Costs for all service contracts are expensed as incurred. | |
Research and development and similar costs | Research and development and similar costs – Except for certain arrangements described below, we account for independent research and development costs as part of the general and administrative costs that are allocated among all of our contracts and programs in progress under U.S. Government contractual arrangements and charged to cost of sales. Under certain arrangements in which a customer shares in product development costs, our portion of unreimbursed costs is expensed as incurred in cost of sales. Independent research and development costs charged to cost of sales totaled $751 million in 2014, $697 million in 2013 and $616 million in 2012. Costs we incur under customer-sponsored research and development programs pursuant to contracts are included in net sales and cost of sales. |
Stock-based compensation | Stock-based compensation – Compensation cost related to all share-based payments is measured at the grant date based on the estimated fair value of the award. We generally recognize the compensation cost ratably over a three-year vesting period. |
Income taxes | Income taxes – We calculate our provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying amount of assets and liabilities and their respective tax bases, as well as from operating loss and tax credit carry-forwards. We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid. |
We periodically assess our tax filing exposures related to periods that are open to examination. Based on the latest available information, we evaluate our tax positions to determine whether the position will more likely than not be sustained upon examination by the Internal Revenue Service (IRS). If we cannot reach a more-likely-than-not determination, no benefit is recorded. If we determine that the tax position is more likely than not to be sustained, we record the largest amount of benefit that is more likely than not to be realized when the tax position is settled. We record interest and penalties related to income taxes as a component of income tax expense on our Statements of Earnings. Interest and penalties were not material. | |
Cash and cash equivalents | Cash and cash equivalents – Cash equivalents include highly liquid instruments with original maturities of 90 days or less. |
Receivables | Receivables – Receivables include amounts billed and currently due from customers and unbilled costs and accrued profits primarily related to sales on long-term contracts that have been recognized but not yet billed to customers. Pursuant to contract provisions, agencies of the U.S. Government and certain other customers have title to, or a security interest in, assets related to such contracts as a result of advances, performance-based payments and progress payments. We reflect those advances and payments as an offset to the related receivables balance for contracts that we account for on a percentage-of-completion basis using the cost-to-cost method to measure progress towards completion. |
Inventories | Inventories – We record inventories at the lower of cost or estimated net realizable value. Costs on long-term contracts and programs in progress represent recoverable costs incurred for production or contract-specific facilities and equipment, allocable operating overhead, advances to suppliers and, in the case of contracts with the U.S. Government and substantially all other governments, research and development and general and administrative expenses. Pursuant to contract provisions, agencies of the U.S. Government and certain other customers have title to, or a security interest in, inventories related to such contracts as a result of advances, performance-based payments and progress payments. We reflect those advances and payments as an offset against the related inventory balances for contracts that we account for on a percentage-of-completion basis using units-of-delivery as the basis to measure progress toward completing the contract. We determine the costs of other product and supply inventories by the first-in first-out or average cost methods. |
Property, plant and equipment | Property, plant and equipment – We record property, plant and equipment at cost. We provide for depreciation and amortization on plant and equipment generally using accelerated methods during the first half of the estimated useful lives of the assets and the straight-line method thereafter. The estimated useful lives of our plant and equipment generally range from 10 to 40 years for buildings and five to 15 years for machinery and equipment. No depreciation expense is recorded on construction in progress until such assets are placed into operation. Depreciation expense related to plant and equipment was $739 million in 2014, $714 million in 2013 and $715 million in 2012. |
We review the carrying amounts of long-lived assets for impairment if events or changes in the facts and circumstances indicate that their carrying amounts may not be recoverable. We assess impairment by comparing the estimated undiscounted future cash flows of the related asset grouping to its carrying amount. If an asset is determined to be impaired, we recognize an impairment charge in the current period for the difference between the fair value of the asset and its carrying amount. | |
Capitalized software | Capitalized software – We capitalize certain costs associated with the development or purchase of internal-use software. The amounts capitalized are included in other noncurrent assets on our Balance Sheets and are amortized on a straight-line basis over the estimated useful life of the resulting software, which ranges from two to six years. As of December 31, 2014 and 2013, capitalized software totaled $547 million and $653 million, net of accumulated amortization of $1.8 billion and $1.6 billion. No amortization expense is recorded until the software is ready for its intended use. Amortization expense related to capitalized software was $206 million in 2014, $228 million in 2013 and $217 million in 2012. |
Goodwill | Goodwill – We perform an impairment test of our goodwill at least annually in the fourth quarter and more frequently whenever certain events or changes in circumstances indicate the carrying value of goodwill may be impaired. Such events or changes in circumstances may include a significant deterioration in overall economic conditions, changes in the business climate of our industry, a decline in our market capitalization, operating performance indicators, competition, reorganizations of our business or the disposal of all or a portion of a reporting unit. Our goodwill has been allocated to and is tested for impairment at a level referred to as the reporting unit, which is our business segment level or a level below the business segment. The level at which we test goodwill for impairment requires us to determine whether the operations below the business segment constitute a business for which discrete financial information is available and segment management regularly reviews the operating results. |
When testing goodwill for impairment, we initially compare the fair value of each reporting unit to its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is not impaired. If the carrying value of a reporting unit exceeds its fair value, we then compare the implied value of the reporting unit’s goodwill with the carrying value of its goodwill. The implied value of the reporting unit’s goodwill is calculated by creating a hypothetical balance sheet as if the reporting unit had just been acquired. This balance sheet contains all assets and liabilities recorded at fair value (including any intangible assets that may not have any corresponding carrying value in our balance sheet). The implied value of the reporting unit’s goodwill is calculated by subtracting the fair value of the net assets from the fair value of the reporting unit. If the carrying value of the reporting unit’s goodwill exceeds the implied value of that goodwill, an impairment loss is recognized in an amount equal to that excess. | |
We estimate the fair value of each reporting unit using a combination of a discounted cash flow (DCF) analysis and market-based valuation methodologies such as comparable public company trading values and values observed in business acquisitions. Determining fair value requires the exercise of significant judgments, including judgments about the amount and timing of expected future cash flows, long-term growth rates, discount rates and relevant comparable public company earnings multiples and transaction multiples. The cash flows employed in the DCF analyses are based on our best estimate of future sales, earnings and cash flows after considering factors such as general market conditions, U.S. Government budgets, existing firm orders, expected future orders, contracts with suppliers, labor agreements, changes in working capital, long-term business plans and recent operating performance. The discount rates utilized in the DCF analysis are based on the respective reporting unit’s weighted average cost of capital, which takes into account the relative weights of each component of capital structure (equity and debt) and represents the expected cost of new capital, adjusted as appropriate to consider the risk inherent in future cash flows of the respective reporting unit. | |
In the fourth quarter of 2014, we completed our annual goodwill impairment test for each of our reporting units. The results of these tests indicated that the estimated fair values of our reporting units exceeded their carrying values, with the exception of our Technical Services reporting unit within our Missiles and Fire Control (MFC) business segment. The impact of market pressures such as lower in-theater support as troop levels are drawn down and increased re-competition on existing contracts that are awarded primarily on the basis of price adversely impacted the fair value of this reporting unit. As a result, we compared the implied value of that reporting unit’s goodwill with the carrying value of its goodwill, and since the carrying value exceeded the implied value, we recorded a non-cash impairment charge of $119 million in the fourth quarter of 2014 equal to that differential. This charge reduced our net earnings by $107 million ($.33 per share). | |
During the fourth quarter of 2013, due to the continuing impact of defense budget reductions and related competitive pressures on the Technical Services business, we recorded a non-cash goodwill impairment charge of $195 million. This charge reduced our 2013 net earnings by $176 million ($.54 per share). | |
Customer advances and amounts in excess of cost incurred | Customer advances and amounts in excess of cost incurred – We receive advances, performance-based payments and progress payments from customers that may exceed costs incurred on certain contracts, including contracts with agencies of the U.S. Government. We classify such advances, other than those reflected as a reduction of receivables or inventories as discussed above, as current liabilities. |
Postretirement benefit plans | Postretirement benefit plans – Many of our employees are covered by defined benefit pension plans and we provide certain health care and life insurance benefits to eligible retirees (collectively, postretirement benefit plans). GAAP requires that the amounts we record related to our postretirement benefit plans be computed, based on service to date, using actuarial valuations that are based in part on certain key economic assumptions we make, including the discount rate, the expected long-term rate of return on plan assets and other actuarial assumptions including participant longevity (also known as mortality) estimates, the expected rates of increase in future compensation levels through December 31, 2015 for our non-union plans, health care cost trend rates and employee turnover, each as appropriate based on the nature of the plans. We recognize on a plan-by-plan basis the funded status of our postretirement benefit plans under GAAP as either an asset recorded within other noncurrent assets or a liability recorded within noncurrent liabilities on our Balance Sheets. There is a corresponding non-cash adjustment to accumulated other comprehensive loss, net of tax benefits recorded as deferred tax assets, in stockholders’ equity. The GAAP funded status is measured as the difference between the fair value of the plan’s assets and the benefit obligation of the plan. The funded status under the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Pension Protection Act of 2006 (PPA), is calculated on a different basis than under GAAP. |
Environmental matters | Environmental matters – We record a liability for environmental matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. The amount of liability recorded is based on our estimate of the costs to be incurred for remediation at a particular site. We do not discount the recorded liabilities, as the amount and timing of future cash payments are not fixed or cannot be reliably determined. Our environmental liabilities are recorded on our Balance Sheets within other liabilities, both current and noncurrent. We expect to include a substantial portion of environmental costs in our net sales and cost of sales in future periods pursuant to U.S. Government agreement or regulation. At the time a liability is recorded for future environmental costs, we record a receivable for estimated future recovery considered probable through the pricing of products and services to agencies of the U.S. Government, regardless of the contract form (e.g., cost-reimbursable, fixed-price). We continuously evaluate the recoverability of our environmental receivables by assessing, among other factors, U.S. Government regulations, our U.S. Government business base and contract mix and our history of receiving reimbursement of such costs. We include the portion of those environmental costs expected to be allocated to our non-U.S. Government contracts, or that is determined to not be recoverable under U.S. Government contracts, in our cost of sales at the time the liability is established. Our environmental receivables are recorded on our Balance Sheets within other assets, both current and noncurrent. We project costs and recovery of costs over approximately 20 years. |
Investments in marketable securities | Investments in marketable securities – Investments in marketable securities consist of debt and equity securities and are classified as trading securities. As of December 31, 2014 and 2013, the fair value of our trading securities totaled $1.1 billion and $1.0 billion and was included in other noncurrent assets on our Balance Sheets. Our trading securities are held in a separate trust, which includes investments to fund our deferred compensation plan liabilities. Net gains on trading securities in 2014, 2013 and 2012 were $65 million, $64 million and $67 million. Gains and losses on these investments are included in other unallocated, net within cost of sales on our Statements of Earnings in order to align the classification of changes in the market value of investments held for the plan with changes in the value of the corresponding plan liabilities. |
Equity method investments | Equity method investments – Investments where we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other noncurrent assets on our Balance Sheets. Significant influence typically exists if we have a 20% to 50% ownership interest in the investee. Under this method of accounting, our share of the net earnings or losses of the investee is included in operating profit in other income, net on our Statements of Earnings since the activities of the investee are closely aligned with the operations of the business segment holding the investment. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period. As of December 31, 2014 and 2013, our equity method investments totaled $971 million and $914 million, which primarily are composed of our Space Systems business segment’s investment in United Launch Alliance (ULA), as further described in Note 12, and our Aeronautics business segment’s investment in Advanced Military Maintenance, Repair and Overhaul Center. Our share of net earnings related to our equity method investees was $342 million in 2014, $321 million in 2013 and $277 million in 2012, of which approximately $280 million, $300 million and $265 million related to our Space Systems business segment. |
Derivative financial instruments | Derivative financial instruments – We use derivative instruments principally to reduce our exposure to market risks from changes in foreign currency exchange rates and interest rates. We do not enter into or hold derivative instruments for speculative trading purposes. We transact business globally and are subject to risks associated with changing foreign currency exchange rates. We enter into foreign currency hedges such as forward and option contracts that change in value as foreign currency exchange rates change. These contracts hedge forecasted foreign currency transactions in order to mitigate fluctuations in our earnings and cash flows associated with changes in foreign currency exchange rates. We designate foreign currency hedges as cash flow hedges. We also are exposed to the impact of interest rate changes primarily through our borrowing activities. For fixed rate borrowings, we may use variable interest rate swaps, effectively converting fixed rate borrowings to variable rate borrowings in order to reduce the amount of interest paid. These swaps are designated as fair value hedges. For variable rate borrowings, we may use fixed interest rate swaps, effectively converting variable rate borrowings to fixed rate borrowings in order to mitigate the impact of interest rate changes on earnings. These swaps are designated as cash flow hedges. We also may enter into derivative instruments that are not designated as hedges and do not qualify for hedge accounting, which are intended to mitigate certain economic exposures. |
We record derivatives at their fair value. The classification of gains and losses resulting from changes in the fair values of derivatives is dependent on our intended use of the derivative and its resulting designation. Adjustments to reflect changes in fair values of derivatives attributable to the effective portion of hedges are either reflected in earnings and largely offset by corresponding adjustments to the hedged items or reflected net of income taxes in accumulated other comprehensive loss until the hedged transaction is recognized in earnings. Changes in the fair value of the derivatives that are attributable to the ineffective portion of the hedges or of derivatives that are not considered to be highly effective hedges, if any, are immediately recognized in earnings. The aggregate notional amount of our outstanding interest rate swaps at December 31, 2014 and 2013 was $1.3 billion and $1.2 billion. The aggregate notional amount of our outstanding foreign currency hedges at December 31, 2014 and 2013 was $804 million and $1.0 billion. Derivative instruments did not have a material impact on net earnings and comprehensive income during 2014, 2013 and 2012. Substantially all of our derivatives are designated for hedge accounting. See Note 15 for more information on the fair value measurements related to our derivative instruments. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements – In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard that will change the way we recognize revenue and significantly expand the disclosure requirements for revenue arrangements. Unless the FASB delays the effective date of the new standard, it will be effective for us beginning on January 1, 2017 and may be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up adjustment recorded to beginning retained earnings at the effective date for existing contracts with remaining performance obligations. Early adoption is not permitted. We are currently evaluating the methods of adoption allowed by the new standard and the effect the standard is expected to have on our consolidated financial statements and related disclosures. As the new standard will supersede substantially all existing revenue guidance affecting us under GAAP, it could impact revenue and cost recognition on thousands of contracts across all our business segments, in addition to our business processes and our information technology systems. As a result, our evaluation of the effect of the new standard will extend over future periods. |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Schedule of Weighted Average Shares Outstanding Used to Compute Earnings Per Common Share | The weighted average number of shares outstanding used to compute earnings per common share were as follows (in millions): | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Weighted average common shares outstanding for basic computations | 316.8 | 320.9 | 323.7 | ||||||||||
Weighted average dilutive effect of equity awards | 5.6 | 5.6 | 4.7 | ||||||||||
Weighted average common shares outstanding for diluted computations | 322.4 | 326.5 | 328.4 |
Information_on_Business_Segmen1
Information on Business Segments (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Summary Of Financial Information For Each Business Segment | Summary operating results for each of our business segments were as follows (in millions): | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Net sales | |||||||||||||
Aeronautics | $ | 14,920 | $ | 14,123 | $ | 14,953 | |||||||
Information Systems & Global Solutions | 7,788 | 8,367 | 8,846 | ||||||||||
Missiles and Fire Control | 7,680 | 7,757 | 7,457 | ||||||||||
Mission Systems and Training | 7,147 | 7,153 | 7,579 | ||||||||||
Space Systems | 8,065 | 7,958 | 8,347 | ||||||||||
Total net sales | $ | 45,600 | $ | 45,358 | $ | 47,182 | |||||||
Operating profit | |||||||||||||
Aeronautics | $ | 1,649 | $ | 1,612 | $ | 1,699 | |||||||
Information Systems & Global Solutions | 699 | 759 | 808 | ||||||||||
Missiles and Fire Control | 1,358 | 1,431 | 1,256 | ||||||||||
Mission Systems and Training | 843 | 905 | 737 | ||||||||||
Space Systems | 1,039 | 1,045 | 1,083 | ||||||||||
Total business segment operating profit | 5,588 | 5,752 | 5,583 | ||||||||||
Unallocated items | |||||||||||||
FAS/CAS pension adjustment | |||||||||||||
FAS pension expense (a) | (1,144 | ) | (1,948 | ) | (1,941) | ||||||||
Less: CAS pension cost (b) | 1,520 | 1,466 | 1,111 | ||||||||||
FAS/CAS pension income (expense) | 376 | (482 | ) | (830) | |||||||||
Goodwill impairment charges (c) | (119 | ) | (195 | ) | — | ||||||||
Severance charges (d) | — | (201 | ) | (48) | |||||||||
Stock-based compensation | (164 | ) | (189 | ) | (167) | ||||||||
Other, net | (89 | ) | (180 | ) | (104) | ||||||||
Total unallocated items | 4 | (1,247 | ) | (1,149) | |||||||||
Total consolidated operating profit | $ | 5,592 | $ | 4,505 | $ | 4,434 | |||||||
(a) | FAS pension expense in 2014 was less than in 2013 due to higher discount rates used to calculate our qualified defined benefit obligations and net periodic benefit cost. Additionally, beginning in the quarter ended September 28, 2014 FAS pension expense was reduced by the June 2014 plan amendments to certain of our defined benefit pension plans to freeze future retirement benefits, partially offset by the impact of using new longevity assumptions (Note 9). | ||||||||||||
(b) | The higher CAS pension cost reflects the impact of phasing in CAS Harmonization, partially offset by the effect of higher interest rates required by the Highway and Transportation Funding Act of 2014 (HATFA), enacted on August 8, 2014. | ||||||||||||
(c) | We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information. | ||||||||||||
(d) | See Note 14 for information on charges related to certain severance actions at our business segments. Severance charges for initiatives that are not significant are included in business segment operating profit. | ||||||||||||
Selected Financial Data by Business Segment (continued) | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Intersegment sales | |||||||||||||
Aeronautics | $ | 99 | $ | 195 | $ | 197 | |||||||
Information Systems & Global Solutions | 665 | 687 | 838 | ||||||||||
Missiles and Fire Control | 336 | 273 | 298 | ||||||||||
Mission Systems and Training | 1,224 | 991 | 908 | ||||||||||
Space Systems | 119 | 101 | 107 | ||||||||||
Total intersegment sales | $ | 2,443 | $ | 2,247 | $ | 2,348 | |||||||
Depreciation and amortization | |||||||||||||
Aeronautics | $ | 322 | $ | 318 | $ | 311 | |||||||
Information Systems & Global Solutions | 91 | 94 | 92 | ||||||||||
Missiles and Fire Control | 99 | 98 | 104 | ||||||||||
Mission Systems and Training | 158 | 174 | 179 | ||||||||||
Space Systems | 217 | 199 | 191 | ||||||||||
Total business segment depreciation and amortization | 887 | 883 | 877 | ||||||||||
Corporate activities | 107 | 107 | 111 | ||||||||||
Total depreciation and amortization | $ | 994 | $ | 990 | $ | 988 | |||||||
Capital expenditures | |||||||||||||
Aeronautics | $ | 283 | $ | 271 | $ | 271 | |||||||
Information Systems & Global Solutions | 35 | 64 | 78 | ||||||||||
Missiles and Fire Control | 142 | 128 | 128 | ||||||||||
Mission Systems and Training | 157 | 132 | 158 | ||||||||||
Space Systems | 162 | 170 | 167 | ||||||||||
Total business segment capital expenditures | 779 | 765 | 802 | ||||||||||
Corporate activities | 66 | 71 | 140 | ||||||||||
Total capital expenditures | $ | 845 | $ | 836 | $ | 942 | |||||||
Net Sales By Customer Category | Net sales by customer category were as follows (in millions): | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
U.S. Government | |||||||||||||
Aeronautics | $ | 10,704 | $ | 11,025 | $ | 11,587 | |||||||
Information Systems & Global Solutions | 6,951 | 7,768 | 8,340 | ||||||||||
Missiles and Fire Control | 5,223 | 5,177 | 5,224 | ||||||||||
Mission Systems and Training | 5,395 | 5,370 | 5,685 | ||||||||||
Space Systems | 7,817 | 7,833 | 7,952 | ||||||||||
Total U.S. Government net sales | $ | 36,090 | $ | 37,173 | $ | 38,788 | |||||||
International (a) | |||||||||||||
Aeronautics | $ | 4,183 | $ | 3,078 | $ | 3,323 | |||||||
Information Systems & Global Solutions | 630 | 399 | 380 | ||||||||||
Missiles and Fire Control | 2,443 | 2,546 | 2,208 | ||||||||||
Mission Systems and Training | 1,694 | 1,672 | 1,826 | ||||||||||
Space Systems | 65 | 73 | 319 | ||||||||||
Total international net sales | $ | 9,015 | $ | 7,768 | $ | 8,056 | |||||||
U.S. Commercial and Other | |||||||||||||
Aeronautics | $ | 33 | $ | 20 | $ | 43 | |||||||
Information Systems & Global Solutions | 207 | 200 | 126 | ||||||||||
Missiles and Fire Control | 14 | 34 | 25 | ||||||||||
Mission Systems and Training | 58 | 111 | 68 | ||||||||||
Space Systems | 183 | 52 | 76 | ||||||||||
Total U.S. commercial and other net sales | $ | 495 | $ | 417 | $ | 338 | |||||||
Total net sales | $ | 45,600 | $ | 45,358 | $ | 47,182 | |||||||
(a) | International sales include foreign military sales contracted through the U.S. Government, direct commercial sales with international governments and commercial and other sales to international customers. | ||||||||||||
Selected Financial Data By Business Segment | Total assets, goodwill and customer advances and amounts in excess of costs incurred for each of our business segments were as follows (in millions): | ||||||||||||
2014 | 2013 | ||||||||||||
Assets (a) | |||||||||||||
Aeronautics | $ | 6,021 | $ | 5,821 | |||||||||
Information Systems & Global Solutions | 6,228 | 5,798 | |||||||||||
Missiles and Fire Control | 4,050 | 4,159 | |||||||||||
Mission Systems and Training | 6,277 | 6,512 | |||||||||||
Space Systems | 3,914 | 3,522 | |||||||||||
Total business segment assets | 26,490 | 25,812 | |||||||||||
Corporate assets (b) | 10,583 | 10,376 | |||||||||||
Total assets | $ | 37,073 | $ | 36,188 | |||||||||
Goodwill | |||||||||||||
Aeronautics | $ | 150 | $ | 146 | |||||||||
Information Systems & Global Solutions | 4,310 | 3,942 | |||||||||||
Missiles and Fire Control | 2,165 | 2,288 | |||||||||||
Mission Systems and Training | 3,237 | 3,264 | |||||||||||
Space Systems | 1,000 | 708 | |||||||||||
Total goodwill (c) | $ | 10,862 | $ | 10,348 | |||||||||
Customer advances and amounts in excess of costs incurred | |||||||||||||
Aeronautics | $ | 2,191 | $ | 2,433 | |||||||||
Information Systems & Global Solutions | 376 | 322 | |||||||||||
Missiles and Fire Control | 1,825 | 1,942 | |||||||||||
Mission Systems and Training | 1,069 | 1,188 | |||||||||||
Space Systems | 329 | 464 | |||||||||||
Total customer advances and amounts in excess of costs incurred | $ | 5,790 | $ | 6,349 | |||||||||
(a) | We have no significant long-lived assets located in foreign countries. | ||||||||||||
(b) | Corporate assets primarily include cash and cash equivalents, deferred income taxes, environmental receivables and investments held in a separate trust. | ||||||||||||
(c) | During 2014, goodwill increased $681 million due to acquisitions primarily consisting of Zeta Associates, Inc. (Zeta) at our Space Systems business segment and Systems Made Simple and Industrial Defender, Inc. (Industrial Defender) at our IS&GS business segment (Note 13) and also decreased by $119 million due to a non-cash impairment charge related to our MFC business segment (Note 1). During 2013, the decrease in goodwill was primarily due to a non-cash impairment charge of $195 million related to our MFC business segment (Note 1), partially offset by the acquisition of Amor Group Ltd. (Amor) at our IS&GS business segment (Note 13). Total accumulated goodwill impairment loss as of the beginning of 2014 was $195 million and related entirely to our MFC business segment. |
Receivables_net_Tables
Receivables, net (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Receivables | Receivables, net consisted of the following (in millions): | ||||||||
2014 | 2013 | ||||||||
U.S. Government | |||||||||
Amounts billed | $ | 1,434 | $ | 1,275 | |||||
Unbilled costs and accrued profits | 4,577 | 4,767 | |||||||
Less: customer advances and progress payments | (1,012 | ) | (1,008) | ||||||
Total U.S. Government receivables, net | 4,999 | 5,034 | |||||||
Other governments and commercial | |||||||||
Amounts billed | 466 | 391 | |||||||
Unbilled costs and accrued profits | 672 | 600 | |||||||
Less: customer advances | (253 | ) | (191) | ||||||
Total other governments and commercial receivables, net | 885 | 800 | |||||||
Total receivables, net | $ | 5,884 | $ | 5,834 |
Inventories_net_Tables
Inventories, net (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventories | Inventories, net consisted of the following (in millions): | ||||||||
2014 | 2013 | ||||||||
Work-in-process, primarily related to long-term contracts and programs in progress | $ | 6,728 | $ | 7,073 | |||||
Less: customer advances and progress payments | (4,701 | ) | (4,834) | ||||||
2,027 | 2,239 | ||||||||
Other inventories | 855 | 738 | |||||||
Total inventories, net | $ | 2,882 | $ | 2,977 |
Property_Plant_and_Equipment_n1
Property, Plant and Equipment, net (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment | Property, plant and equipment, net consisted of the following (in millions): | ||||||||
2014 | 2013 | ||||||||
Land | $ | 99 | $ | 99 | |||||
Buildings | 5,724 | 5,602 | |||||||
Machinery and equipment | 7,036 | 7,043 | |||||||
Construction in progress | 636 | 622 | |||||||
13,495 | 13,366 | ||||||||
Less: accumulated depreciation and amortization | (8,740 | ) | (8,660) | ||||||
Total property, plant and equipment, net | $ | 4,755 | $ | 4,706 |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Provision for Federal & Foreign Income Tax Expense | Our provision for federal and foreign income tax expense for continuing operations consisted of the following (in millions): | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Federal income tax expense (benefit): | |||||||||||||
Current | $ | 2,020 | $ | 1,204 | $ | 387 | |||||||
Deferred | (387 | ) | 3 | 925 | |||||||||
Total federal income tax expense | 1,633 | 1,207 | 1,312 | ||||||||||
Foreign income tax expense (benefit): | |||||||||||||
Current | 24 | 6 | 14 | ||||||||||
Deferred | (13 | ) | (8 | ) | 1 | ||||||||
Total foreign income tax expense (benefit) | 11 | (2 | ) | 15 | |||||||||
Total income tax expense | $ | 1,644 | $ | 1,205 | $ | 1,327 | |||||||
Reconciliation of Income Tax Expense Computed Using U.S. Statutory Federal Tax Rate to Actual Income Tax Expense | Our reconciliation of the 35% U.S. federal statutory income tax rate to actual income tax expense for continuing operations is as follows (in millions): | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Income tax expense at the U.S. federal statutory tax rate | $ | 1,840 | $ | 1,454 | $ | 1,425 | |||||||
U.S. manufacturing deduction benefit | (127 | ) | (100 | ) | (29) | ||||||||
Research and development tax credit | (66 | ) | (96 | ) | — | ||||||||
Tax deductible dividends | (82 | ) | (77 | ) | (73) | ||||||||
Goodwill impairment – non-deductible portion | 30 | 50 | — | ||||||||||
Other, net | 49 | (26 | ) | 4 | |||||||||
Income tax expense | $ | 1,644 | $ | 1,205 | $ | 1,327 | |||||||
Components of Federal and Foreign Deferred Tax Assets and Liabilities | The primary components of our federal and foreign deferred income tax assets and liabilities at December 31 were as follows (in millions): | ||||||||||||
2014 | 2013 | ||||||||||||
Deferred tax assets related to: | |||||||||||||
Accrued compensation and benefits | $ | 965 | $ | 918 | |||||||||
Pensions (a) | 4,317 | 3,198 | |||||||||||
Other postretirement benefit obligations | 386 | 316 | |||||||||||
Contract accounting methods | 989 | 721 | |||||||||||
Foreign company operating losses and credits | 59 | 52 | |||||||||||
Other | 198 | 223 | |||||||||||
Valuation allowance (b) | (9 | ) | (8) | ||||||||||
Deferred tax assets, net | 6,905 | 5,420 | |||||||||||
Deferred tax liabilities related to: | |||||||||||||
Goodwill and purchased intangibles | 454 | 410 | |||||||||||
Property, plant and equipment | 514 | 575 | |||||||||||
Exchanged debt securities and other (c) | 485 | 502 | |||||||||||
Deferred tax liabilities | 1,453 | 1,487 | |||||||||||
Net deferred tax assets (d) | $ | 5,452 | $ | 3,933 | |||||||||
(a) | The increase in 2014 was primarily due to using a lower discount rate for the annual measurement adjustment related to our postretirement benefit plans (Note 9). | ||||||||||||
(b) | A valuation allowance was provided against certain foreign company deferred tax assets arising from carryforwards of unused tax benefits. | ||||||||||||
(c) | Includes deferred taxes associated with the exchange of debt securities in prior years. | ||||||||||||
(d) | Includes net foreign current deferred tax liabilities, which are included on the Balance Sheets in other current liabilities. |
Debt_Tables
Debt (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Long-term Debt | Our long-term debt consisted of the following (in millions): | ||||||||
2014 | 2013 | ||||||||
Notes with rates from 2.13% to 6.15%, due 2016 to 2042 | $ | 5,642 | $ | 5,642 | |||||
Notes with rates from 7.00% to 7.75%, due 2016 to 2036 | 916 | 916 | |||||||
Other debt | 483 | 476 | |||||||
Total long-term debt | 7,041 | 7,034 | |||||||
Less: unamortized discounts | (872 | ) | (882) | ||||||
Total long-term debt, net | $ | 6,169 | $ | 6,152 |
Postretirement_Plans_Tables
Postretirement Plans (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||||||||||
Schedule Of Net Periodic Benefit Costs | The net periodic benefit cost recognized each year included the following (in millions): | ||||||||||||||||||||||||||||||||||||
Qualified Defined | Retiree Medical and | ||||||||||||||||||||||||||||||||||||
Benefit Pension Plans (a) | Life Insurance Plans | ||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||||||||||||||
Service cost | $ | 903 | $ | 1,142 | $ | 1,055 | $ | 22 | $ | 27 | $ | 28 | |||||||||||||||||||||||||
Interest cost | 1,912 | 1,800 | 1,884 | 123 | 116 | 131 | |||||||||||||||||||||||||||||||
Expected return on plan assets | (2,693) | (2,485) | (2,187) | (146) | (145) | (131) | |||||||||||||||||||||||||||||||
Recognized net actuarial losses | 1,173 | 1,410 | 1,116 | 23 | 44 | 32 | |||||||||||||||||||||||||||||||
Amortization of net prior service (credit) cost | (151) | 81 | 73 | 4 | (17) | (12) | |||||||||||||||||||||||||||||||
Total net periodic benefit cost | $ | 1,144 | $ | 1,948 | $ | 1,941 | $ | 26 | $ | 25 | $ | 48 | |||||||||||||||||||||||||
(a) | Total net periodic benefit cost associated with our qualified defined benefit plans represents pension expense calculated in accordance with GAAP (FAS pension expense). We are required to calculate pension expense in accordance with both GAAP and CAS rules, each of which results in a different calculated amount of pension expense. The CAS pension cost is recovered through the pricing of our products and services on U.S. Government contracts and, therefore, is recognized in net sales and cost of sales for products and services. We include the difference between FAS pension expense and CAS pension cost, referred to as the FAS/CAS pension adjustment, as a component of other unallocated, net on our Statements of Earnings. The FAS/CAS pension adjustment, which was income of $376 million in 2014 and expense of $482 million in 2013 and $830 million in 2012, effectively adjusts the amount of CAS pension cost in the business segment operating profit so that pension expense recorded on our Statements of Earnings is equal to FAS pension expense. | ||||||||||||||||||||||||||||||||||||
Reconciliation of Benefit Obligations, Plan Assets, and Unfunded or Funded Status | The following table provides a reconciliation of benefit obligations, plan assets and unfunded status related to our qualified defined benefit pension plans and our retiree medical and life insurance plans (in millions): | ||||||||||||||||||||||||||||||||||||
Qualified Defined Benefit | Retiree Medical and | ||||||||||||||||||||||||||||||||||||
Pension Plans | Life Insurance Plans | ||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||||||||||||
Change in benefit obligation | |||||||||||||||||||||||||||||||||||||
Beginning balance | $ 42,161 | $46,017 | $ 2,823 | $3,184 | |||||||||||||||||||||||||||||||||
Service cost | 903 | 1,142 | 22 | 27 | |||||||||||||||||||||||||||||||||
Interest cost | 1,912 | 1,800 | 123 | 116 | |||||||||||||||||||||||||||||||||
Benefits paid (a) | (2,399) | (2,023) | (352) | (353) | |||||||||||||||||||||||||||||||||
Actuarial losses (gains) | 4,493 | (4,882) | (40) | (319) | |||||||||||||||||||||||||||||||||
New longevity assumptions | 3,390 | — | 266 | — | |||||||||||||||||||||||||||||||||
Plan amendments (b) | (4,578) | 107 | 5 | — | |||||||||||||||||||||||||||||||||
Medicare Part D subsidy | — | — | 26 | 10 | |||||||||||||||||||||||||||||||||
Participants’ contributions | — | — | 161 | 158 | |||||||||||||||||||||||||||||||||
Ending balance | $ 45,882 | $42,161 | $ 3,034 | $2,823 | |||||||||||||||||||||||||||||||||
Change in plan assets | |||||||||||||||||||||||||||||||||||||
Beginning balance at fair value | $ 33,010 | $30,924 | $ 1,921 | $1,964 | |||||||||||||||||||||||||||||||||
Actual return on plan assets | 2,062 | 1,859 | 126 | 44 | |||||||||||||||||||||||||||||||||
Benefits paid (a) | (2,399) | (2,023) | (352) | (353) | |||||||||||||||||||||||||||||||||
Company contributions | 2,000 | 2,250 | 50 | 98 | |||||||||||||||||||||||||||||||||
Medicare Part D subsidy | — | — | 26 | 10 | |||||||||||||||||||||||||||||||||
Participants’ contributions | — | — | 161 | 158 | |||||||||||||||||||||||||||||||||
Ending balance at fair value | $ 34,673 | $33,010 | $ 1,932 | $1,921 | |||||||||||||||||||||||||||||||||
Unfunded status of the plans | $ (11,209) | $ (9,151) | $(1,102) | $ (902) | |||||||||||||||||||||||||||||||||
(a) | Benefits paid in 2014 for qualified defined benefit pension plans include $427 million in the form of lump-sum settlement payments to former employees who had not commenced receiving their vested benefit payments. The corresponding benefit obligation that was released was $529 million. The settlement payments had no impact on our 2014 FAS pension expense and CAS pension cost. | ||||||||||||||||||||||||||||||||||||
(b) | The June 2014 plan amendment which resulted in freezing the pay-based component of the formula used to determine retirement benefits under the affected plans reduced our qualified defined benefit pension obligations by $4.6 billion, which resulted in a corresponding reduction, net of tax, in the accumulated other comprehensive loss (AOCL) component of stockholders’ equity. This amount is being recognized as a reduction of net periodic benefit cost (i.e., amortization of net prior service credit) over the estimated remaining service period of the covered employees, which is approximately 10 years and began in the third quarter of 2014. | ||||||||||||||||||||||||||||||||||||
Amounts Recognized on Balance Sheets Related to Qualified Defined Benefit Pension Plans and Retiree Medical and Life Insurance Plans | The following table provides amounts recognized on our Balance Sheets related to our qualified defined benefit pension plans and our retiree medical and life insurance plans (in millions): | ||||||||||||||||||||||||||||||||||||
Qualified Defined Benefit | Retiree Medical and | ||||||||||||||||||||||||||||||||||||
Pension Plans | |||||||||||||||||||||||||||||||||||||
Life Insurance Plans | |||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||||||||||||
Prepaid pension asset | $ 204 | $ 210 | $ — | $ — | |||||||||||||||||||||||||||||||||
Accrued postretirement benefit liabilities | (11,413) | (9,361) | (1,102) | (902) | |||||||||||||||||||||||||||||||||
Accumulated other comprehensive loss (pre-tax) related to: | |||||||||||||||||||||||||||||||||||||
Net actuarial losses | 20,794 | 13,453 | 741 | 516 | |||||||||||||||||||||||||||||||||
Prior service (credit) cost | (3,985) | 443 | 14 | 13 | |||||||||||||||||||||||||||||||||
Total (a) | $16,809 | $13,896 | $ 755 | $ 529 | |||||||||||||||||||||||||||||||||
(a) | Accumulated other comprehensive loss related to postretirement benefit plans, after tax, of $11.8 billion and $9.6 billion at December 31, 2014 and 2013 (Note 10) includes $16.8 billion ($10.8 billion after tax) and $13.9 billion ($9.0 billion after tax) for qualified defined benefit pension plans, $755 million ($488 million after tax) and $529 million ($342 million after tax) for retiree medical and life insurance plans and $692 million ($460 million after tax) and $508 million ($328 million after tax) for other plans. | ||||||||||||||||||||||||||||||||||||
Accumulated Benefit Obligations In Excess Of Fair Value Of Plan Assets | Certain key information related to our qualified defined benefit pension plans as of December 31, 2014 and 2013 is as follows (in millions): | ||||||||||||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||||||||||||
Plans where ABO was in excess of plan assets | |||||||||||||||||||||||||||||||||||||
Projected benefit obligation | $ | 45,741 | $ | 41,984 | |||||||||||||||||||||||||||||||||
Less: fair value of plan assets | 34,328 | 32,623 | |||||||||||||||||||||||||||||||||||
Unfunded status of plans (a) | (11,413 | ) | (9,361) | ||||||||||||||||||||||||||||||||||
Plans where ABO was less than plan assets | |||||||||||||||||||||||||||||||||||||
Projected benefit obligation | 141 | 177 | |||||||||||||||||||||||||||||||||||
Less: fair value of plan assets | 345 | 387 | |||||||||||||||||||||||||||||||||||
Funded status of plans (b) | $ | 204 | $ | 210 | |||||||||||||||||||||||||||||||||
(a) | Represent accrued pension liabilities, which are included on our Balance Sheets. | ||||||||||||||||||||||||||||||||||||
(b) | Represent prepaid pension assets, which are included on our Balance Sheets in other noncurrent assets. | ||||||||||||||||||||||||||||||||||||
Amounts Recognized In Other Comprehensive Income (Loss) Related To Postretirement Benefit Plans | The following table provides the amounts recognized in other comprehensive income (loss) related to postretirement benefit plans, net of tax, for the years ended December 31, 2014, 2013 and 2012 (in millions): | ||||||||||||||||||||||||||||||||||||
Incurred but Not Yet | Recognition of | ||||||||||||||||||||||||||||||||||||
Recognized in Net | Previously | ||||||||||||||||||||||||||||||||||||
Periodic Benefit Cost | Deferred Amounts | ||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||||||||||||||
Gains (losses) | (Gains) losses | ||||||||||||||||||||||||||||||||||||
Actuarial gains and losses | |||||||||||||||||||||||||||||||||||||
Qualified defined benefit pension plans | $ | (5,505) | $ | 2,751 | $ | (2,933 | ) | $ | 758 | $ | 911 | $ | 721 | ||||||||||||||||||||||||
Retiree medical and life insurance plans | (160) | 140 | (104 | ) | 15 | 28 | 21 | ||||||||||||||||||||||||||||||
Other plans | (245) | 46 | (98 | ) | 33 | 34 | 77 | ||||||||||||||||||||||||||||||
(5,910) | 2,937 | (3,135 | ) | 806 | 973 | 819 | |||||||||||||||||||||||||||||||
Credit (cost) | (Credit) cost | ||||||||||||||||||||||||||||||||||||
Prior service credit and cost | |||||||||||||||||||||||||||||||||||||
Qualified defined benefit pension plans | 2,959 | (69) | (73 | ) | (98) | 53 | 47 | ||||||||||||||||||||||||||||||
Retiree medical and life insurance plans | (3) | — | 4 | 3 | (11) | (8) | |||||||||||||||||||||||||||||||
Other plans | 84 | — | — | (5) | — | — | |||||||||||||||||||||||||||||||
3,040 | (69) | (69 | ) | (100) | 42 | 39 | |||||||||||||||||||||||||||||||
$ | (2,870) | $ | 2,868 | $ | (3,204 | ) | $ | 706 | $ | 1,015 | $ | 858 | |||||||||||||||||||||||||
Actuarial Assumptions Used to Determine Net Periodic Benefit Cost | The actuarial assumptions used to determine the benefit obligations at December 31 of each year and to determine the net periodic benefit cost for each subsequent year, were as follows: | ||||||||||||||||||||||||||||||||||||
Qualified Defined Benefit | Retiree Medical and | ||||||||||||||||||||||||||||||||||||
Pension Plans | Life Insurance Plans | ||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||||||||||||||||
Discount rate | 4.00% | 4.75% | 4.00% | 3.75% | 4.50% | 3.75% | |||||||||||||||||||||||||||||||
Expected long-term rate of return on assets | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | |||||||||||||||||||||||||||||||
Rate of increase in future compensation levels | 4.30% | 4.30% | 4.30% | ||||||||||||||||||||||||||||||||||
Health care trend rate assumed for next year | 8.50% | 8.75% | 9.00% | ||||||||||||||||||||||||||||||||||
Ultimate health care trend rate | 5.00% | 5.00% | 5.00% | ||||||||||||||||||||||||||||||||||
Year that the ultimate health care trend rate is reached | 2029 | 2029 | 2029 | ||||||||||||||||||||||||||||||||||
Schedule of Allocation of Plan Assets | The following table presents the fair value of the assets (in millions) of our qualified defined benefit pension plans and retiree medical and life insurance plans by asset category and their level within the fair value hierarchy, which has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets, Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs. | ||||||||||||||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||
Cash and cash equivalents (a) | $ | 2,968 | $ | 2,968 | $ — | $ | — | $ | 2,176 | $ | 2,176 | $ — | $ | — | |||||||||||||||||||||||
Equity (a): | |||||||||||||||||||||||||||||||||||||
U.S. equity securities | 6,431 | 6,363 | 67 | 1 | 5,368 | 5,274 | 94 | — | |||||||||||||||||||||||||||||
International equity securities | 5,566 | 5,525 | 31 | 10 | 5,008 | 4,912 | 89 | 7 | |||||||||||||||||||||||||||||
Commingled equity funds | 6,078 | 2,047 | 4,031 | — | 6,037 | 1,212 | 4,825 | — | |||||||||||||||||||||||||||||
Fixed income (a): | |||||||||||||||||||||||||||||||||||||
Corporate debt securities | 4,242 | — | 4,201 | 41 | 2,986 | — | 2,943 | 43 | |||||||||||||||||||||||||||||
U.S. Government securities | 4,579 | — | 4,579 | — | 6,553 | — | 6,553 | — | |||||||||||||||||||||||||||||
U.S. Government-sponsored enterprise securities | 613 | — | 613 | — | 1,451 | — | 1,451 | — | |||||||||||||||||||||||||||||
Other fixed income investments | 1,807 | 39 | 1,759 | 9 | 1,388 | — | 1,293 | 95 | |||||||||||||||||||||||||||||
Alternative investments: | |||||||||||||||||||||||||||||||||||||
Private equity funds | 2,952 | — | — | 2,952 | 2,601 | — | — | 2,601 | |||||||||||||||||||||||||||||
Real estate funds | 762 | — | 33 | 729 | 601 | — | 29 | 572 | |||||||||||||||||||||||||||||
Hedge funds | 570 | — | 66 | 504 | 551 | — | 46 | 505 | |||||||||||||||||||||||||||||
Commodities (a) | 2 | 2 | — | — | 156 | 156 | — | — | |||||||||||||||||||||||||||||
Total | $ | 36,570 | $ | 16,944 | $15,380 | $ | 4,246 | $ | 34,876 | $ | 13,730 | $17,323 | $ | 3,823 | |||||||||||||||||||||||
Receivables, net | 35 | 55 | |||||||||||||||||||||||||||||||||||
Total | $ | 36,605 | $ | 34,931 | |||||||||||||||||||||||||||||||||
(a) | Cash and cash equivalents, equity securities, fixed income securities and commodities included derivative assets and liabilities whose fair values were not material as of December 31, 2014 and 2013. LMIMCo’s investment policies restrict the use of derivatives to either establish long exposures for purposes of expediency or capital efficiency or to hedge risks to the extent of a plan’s current exposure to such risks. Most derivative transactions are settled on a daily basis. | ||||||||||||||||||||||||||||||||||||
Changes In Fair Value of Level 3 Plan Assets | The following table presents the changes during 2014 and 2013 in the fair value of plan assets categorized as Level 3 in the preceding table (in millions): | ||||||||||||||||||||||||||||||||||||
Private | Real | Hedge | Other | Total | |||||||||||||||||||||||||||||||||
Estate | |||||||||||||||||||||||||||||||||||||
Equity | Funds | ||||||||||||||||||||||||||||||||||||
Funds | |||||||||||||||||||||||||||||||||||||
Funds | |||||||||||||||||||||||||||||||||||||
Balance at January 1, 2013 | $2,461 | $504 | $ 806 | $131 | $ | 3,902 | |||||||||||||||||||||||||||||||
Actual return on plan assets: | |||||||||||||||||||||||||||||||||||||
Realized gains, net | 144 | 43 | 21 | 4 | 212 | ||||||||||||||||||||||||||||||||
Unrealized gains, net | 42 | 19 | 104 | 1 | 166 | ||||||||||||||||||||||||||||||||
Purchases, sales and settlements, net | -46 | (3 | ) | (394 | ) | 2 | (441) | ||||||||||||||||||||||||||||||
Transfers into (out of) Level 3, net | — | 9 | (32 | ) | 7 | (16) | |||||||||||||||||||||||||||||||
Balance at December 31, 2013 | $2,601 | $572 | $ 505 | $145 | $3,823 | ||||||||||||||||||||||||||||||||
Actual return on plan assets: | |||||||||||||||||||||||||||||||||||||
Realized gains, net | 182 | 43 | 34 | 1 | 260 | ||||||||||||||||||||||||||||||||
Unrealized gains (losses), net | 38 | 22 | (11 | ) | (21 | ) | 28 | ||||||||||||||||||||||||||||||
Purchases, sales and settlements, net | 131 | 92 | (24 | ) | 8 | 207 | |||||||||||||||||||||||||||||||
Transfers out of Level 3, net | — | — | — | (72 | ) | (72) | |||||||||||||||||||||||||||||||
Balance at December 31, 2014 | $2,952 | $729 | $ 504 | $ 61 | $4,246 | ||||||||||||||||||||||||||||||||
Estimated Future Benefit Payments | The following table presents estimated future benefit payments, which reflect expected future employee service, as of December 31, 2014 (in millions): | ||||||||||||||||||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | 2020 - 2024 | ||||||||||||||||||||||||||||||||
Qualified defined benefit pension plans | $ | 2,070 | $ | 2,150 | $ | 2,230 | $ | 2,320 | $ | 2,420 | $13,430 | ||||||||||||||||||||||||||
Retiree medical and life insurance plans | 190 | 200 | 200 | 210 | 210 | 1,020 | |||||||||||||||||||||||||||||||
Target Allocation Range | |||||||||||||||||||||||||||||||||||||
Schedule of Allocation of Plan Assets | LMIMCo’s investment policies require that asset allocations of postretirement benefit plans be maintained within the following approximate ranges: | ||||||||||||||||||||||||||||||||||||
Asset Class | Asset Allocation | ||||||||||||||||||||||||||||||||||||
Ranges | |||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | 0-20% | ||||||||||||||||||||||||||||||||||||
Equity | 15-65% | ||||||||||||||||||||||||||||||||||||
Fixed income | 10-60% | ||||||||||||||||||||||||||||||||||||
Alternative investments: | |||||||||||||||||||||||||||||||||||||
Private equity funds | 0-15% | ||||||||||||||||||||||||||||||||||||
Real estate funds | 0-10% | ||||||||||||||||||||||||||||||||||||
Hedge funds | 0-20% | ||||||||||||||||||||||||||||||||||||
Commodities | 0-25% |
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Accumulated Other Comprehensive Loss | Changes in the balance of AOCL, net of income taxes, consisted of the following (in millions): | ||||||||||||
Postretirement | Other, net | AOCL | |||||||||||
Benefit Plans | |||||||||||||
Balance at December 31, 2011 (a) | $ (11,186) | $ (71) | $ (11,257) | ||||||||||
Other comprehensive (loss) income before reclassifications | (3,204) | 105 | (3,099) | ||||||||||
Amounts reclassified from AOCL | |||||||||||||
Recognition of net actuarial losses | 819 | — | 819 | ||||||||||
Amortization of net prior service costs | 39 | — | 39 | ||||||||||
Other | — | 5 | 5 | ||||||||||
Total reclassified from AOCL | 858 | 5 | 863 | ||||||||||
Total other comprehensive (loss) income | (2,346) | 110 | (2,236) | ||||||||||
Balance at December 31, 2012 (a) | (13,532) | 39 | (13,493) | ||||||||||
Other comprehensive income before reclassifications | 2,868 | 11 | 2,879 | ||||||||||
Amounts reclassified from AOCL | |||||||||||||
Recognition of net actuarial losses | 973 | — | 973 | ||||||||||
Amortization of net prior service costs | 42 | — | 42 | ||||||||||
Other | — | (2) | (2) | ||||||||||
Total reclassified from AOCL | 1,015 | (2) | 1,013 | ||||||||||
Total other comprehensive income | 3,883 | 9 | 3,892 | ||||||||||
Balance at December 31, 2013 (a) | (9,649) | 48 | (9,601) | ||||||||||
Other comprehensive loss before reclassifications | (2,870) | (103) | (2,973) | ||||||||||
Amounts reclassified from AOCL | |||||||||||||
Recognition of net actuarial losses | 806 | — | 806 | ||||||||||
Amortization of net prior service credits | (100) | — | (100) | ||||||||||
Other | — | (2) | (2) | ||||||||||
Total reclassified from AOCL | 706 | (2) | 704 | ||||||||||
Total other comprehensive loss | (2,164) | (105) | (2,269) | ||||||||||
Balance at December 31, 2014 (a) | $ (11,813) | $ (57) | $ (11,870) | ||||||||||
(a) | AOCL related to postretirement benefit plans is shown net of tax benefits at December 31, 2014, 2013 and 2012 of $6.4 billion, $5.3 billion and $7.4 billion. These tax benefits include amounts recognized on our income tax returns as current deductions and deferred income taxes, which will be recognized on our tax returns in future years. See Note 7 and Note 9 for more information on our income taxes and postretirement benefit plans. |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Summary of Stock Based Compensation Activity Related to Nonvested RSUs | The following table summarizes activity related to nonvested RSUs during 2014: | ||||||||||||
Number | Weighted Average | ||||||||||||
of RSUs | Grant-Date Fair | ||||||||||||
(In thousands) | Value Per Share | ||||||||||||
Nonvested at December 31, 2011 | 4,302 | $ 78.25 | |||||||||||
Granted | 1,987 | 81.93 | |||||||||||
Vested | (1,299 | ) | 80.64 | ||||||||||
Forfeited | (168 | ) | 79.03 | ||||||||||
Nonvested at December 31, 2012 | 4,822 | $ | 79.10 | ||||||||||
Granted | 1,356 | 89.24 | |||||||||||
Vested | (2,093 | ) | 79.26 | ||||||||||
Forfeited | (226 | ) | 81.74 | ||||||||||
Nonvested at December 31, 2013 | 3,859 | $ | 82.42 | ||||||||||
Granted | 745 | 146.85 | |||||||||||
Vested | (2,194 | ) | 87.66 | ||||||||||
Forfeited | (84 | ) | 91.11 | ||||||||||
Nonvested at December 31, 2014 | 2,326 | $ 97.80 | |||||||||||
Stock Options | The following table pertains to stock options granted in 2012, in addition to stock options that vested and were exercised in 2014, 2013 and 2012 (in millions, except for weighted-average grant-date fair value of stock options granted): | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Weighted average grant-date fair value of stock options granted | $ | — | $ | — | $ | 10.57 | |||||||
Grant-date fair value of all stock options that vested | 18 | 40 | 47 | ||||||||||
Intrinsic value of all stock options exercised | 297 | 293 | 162 |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring Basis | Assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following (in millions): | ||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||
Total | Level 1 | Level 2 | Total | Level 1 | Level 2 | ||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Equity securities | $ | 92 | $ 92 | $ — | $ | 77 | $ 77 | $ — | |||||||||||||||||
Mutual funds | 696 | 696 | — | 613 | 613 | — | |||||||||||||||||||
U.S. Government securities | 136 | — | 136 | 238 | — | 238 | |||||||||||||||||||
Other securities | 153 | — | 153 | 131 | — | 131 | |||||||||||||||||||
Derivatives | 27 | — | 27 | 28 | — | 28 | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Derivatives | 18 | — | 18 | 23 | — | 23 |
Summary_of_Quarterly_Informati1
Summary of Quarterly Information (Unaudited) (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Quarterly Financial Information Table | A summary of quarterly information is as follows (in millions, except per share data): | ||||||||||||||||
2014 Quarters | |||||||||||||||||
First | Second | Third | Fourth | ||||||||||||||
Net sales | $10,650 | $11,306 | $11,114 | $12,530 | |||||||||||||
Operating profit | 1,432 | 1,426 | 1,392 | 1,342 | |||||||||||||
Net earnings (a) | 933 | 889 | 888 | 904 | |||||||||||||
Basic earnings per share | 2.92 | 2.81 | 2.81 | 2.87 | |||||||||||||
Diluted earnings per share | 2.87 | 2.76 | 2.76 | 2.82 | |||||||||||||
2013 Quarters | |||||||||||||||||
First | Second | Third | Fourth | ||||||||||||||
Net sales | $11,070 | $11,408 | $11,347 | $11,533 | |||||||||||||
Operating profit | 1,119 | 1,298 | 1,254 | 834 | |||||||||||||
Net earnings from continuing operations (b) | 761 | 859 | 842 | 488 | |||||||||||||
Net earnings from discontinued operations | — | — | 31 | — | |||||||||||||
Net earnings | 761 | 859 | 873 | 488 | |||||||||||||
Basic earnings per share (c) | 2.37 | 2.68 | 2.72 | 1.53 | |||||||||||||
Diluted earnings per share | 2.33 | 2.64 | 2.66 | 1.50 | |||||||||||||
(a) | The fourth quarter of 2014 included a charge of $119 million ($107 million after tax) related to a non-cash goodwill impairment charge (Note 1) and a tax benefit of $45 million due to the retroactive reinstatement of the R&D tax credit for 2014. | ||||||||||||||||
(b) | The first quarter of 2013 included a tax benefit of $37 million from the R&D tax credit attributable to 2012 (Note 7) and a charge of $30 million ($19 million after tax) related to certain severance actions (Note 14). The fourth quarter of 2013 included charges of $195 million ($176 million after tax) related to a non-cash goodwill impairment charge (Note 1) and $171 million ($111 million after tax) related to certain severance actions (Note 14). | ||||||||||||||||
(c) | The sum of the quarterly earnings per share amounts do not equal the earnings per share amount included on our Statements of Earnings, primarily due to the timing of our share repurchases during each respective year. |
Significant_Accounting_Policie2
Significant Accounting Policies - Additional Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | Sep. 28, 2014 | Jun. 29, 2014 | Mar. 30, 2014 | Dec. 31, 2013 | Sep. 29, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Operating profit | $1,342,000,000 | $1,392,000,000 | $1,426,000,000 | $1,432,000,000 | $834,000,000 | $1,254,000,000 | $1,298,000,000 | $1,119,000,000 | $5,592,000,000 | $4,505,000,000 | $4,434,000,000 | ||||||
Net earnings | 904,000,000 | [1] | 888,000,000 | [1] | 889,000,000 | [1] | 933,000,000 | [1] | 488,000,000 | 873,000,000 | 859,000,000 | 761,000,000 | 3,614,000,000 | 2,981,000,000 | 2,745,000,000 | ||
Diluted earnings per share | $2.82 | $2.76 | $2.76 | $2.87 | $1.50 | $2.66 | $2.64 | $2.33 | $11.21 | $9.13 | $8.36 | ||||||
Independent research and development costs charged to cost of sales | 751,000,000 | 697,000,000 | 616,000,000 | ||||||||||||||
Number of years over which stock awards vest | 3 years | ||||||||||||||||
Depreciation | 739,000,000 | 714,000,000 | 715,000,000 | ||||||||||||||
Capitalized internal-use software, net | 547,000,000 | 653,000,000 | 547,000,000 | 653,000,000 | |||||||||||||
Capitalized internal-use software accumulated amortization | 1,800,000,000 | 1,600,000,000 | 1,800,000,000 | 1,600,000,000 | |||||||||||||
Non-cash goodwill impairment charge | 119,000,000 | 195,000,000 | 119,000,000 | [2] | 195,000,000 | [2] | |||||||||||
Reduction in net earnings due to non-cash goodwill impairment charge | 107,000,000 | 176,000,000 | |||||||||||||||
Decrease in diluted earnings per share due to non-cash goodwill impairment charge | $0.33 | $0.54 | |||||||||||||||
Time period environmental costs and recovery of environmental costs are projected over, years | 20 years | ||||||||||||||||
Fair value of trading securities | 1,100,000,000 | 1,000,000,000 | 1,100,000,000 | 1,000,000,000 | |||||||||||||
Net gains on marketable securities | 65,000,000 | 64,000,000 | 67,000,000 | ||||||||||||||
Total equity method investments | 971,000,000 | 914,000,000 | 971,000,000 | 914,000,000 | |||||||||||||
Net earnings from equity method investments | 342,000,000 | 321,000,000 | 277,000,000 | ||||||||||||||
Contracts Accounted for under Percentage of Completion | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Operating profit | 1,800,000,000 | 2,100,000,000 | 1,900,000,000 | ||||||||||||||
Net earnings | 1,100,000,000 | 1,300,000,000 | 1,200,000,000 | ||||||||||||||
Diluted earnings per share | $3.55 | $4.09 | $3.70 | ||||||||||||||
Interest rate swaps | Designated as hedges | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Aggregate notional amount of derivatives | 1,300,000,000 | 1,200,000,000 | 1,300,000,000 | 1,200,000,000 | |||||||||||||
Foreign currency contracts | Designated as hedges | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Aggregate notional amount of derivatives | 804,000,000 | 1,000,000,000 | 804,000,000 | 1,000,000,000 | |||||||||||||
Space Systems | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Net earnings from equity method investments | 280,000,000 | 300,000,000 | 265,000,000 | ||||||||||||||
Buildings | Minimum | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Property, plant and equipment, estimated life (years) | 10 years | ||||||||||||||||
Buildings | Maximum | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Property, plant and equipment, estimated life (years) | 40 years | ||||||||||||||||
Machinery and equipment | Minimum | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Property, plant and equipment, estimated life (years) | 5 years | ||||||||||||||||
Machinery and equipment | Maximum | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Property, plant and equipment, estimated life (years) | 15 years | ||||||||||||||||
Capitalized Software | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Capitalized internal-use software amortization | $206,000,000 | $228,000,000 | $217,000,000 | ||||||||||||||
Capitalized Software | Minimum | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Property, plant and equipment, estimated life (years) | 2 years | ||||||||||||||||
Capitalized Software | Maximum | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Property, plant and equipment, estimated life (years) | 6 years | ||||||||||||||||
[1] | The fourth quarter of 2014 included a charge of $119 million ($107 million after tax) related to a non-cash goodwill impairment charge (Note 1) and a tax benefit of $45 million due to the retroactive reinstatement of the R&D tax credit for 2014. | ||||||||||||||||
[2] | We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information. |
Schedule_of_Weighted_Average_S
Schedule of Weighted Average Shares Outstanding Used to Compute Earnings Per Common Share (Detail) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Weighted Average Shares Used In Computing Earnings Per Share [Line Items] | |||
Weighted average common shares outstanding for basic computations | 316.8 | 320.9 | 323.7 |
Weighted average dilutive effect of equity awards | 5.6 | 5.6 | 4.7 |
Weighted average common shares outstanding for diluted computations | 322.4 | 326.5 | 328.4 |
Earnings_Per_Share_Additional_
Earnings Per Share - Additional Information (Detail) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Stock options excluded from the computation of diluted earnings per common share, because their inclusion would have been anti-dilutive | 2.4 | 8 |
Information_on_Business_Segmen2
Information on Business Segments - Additional Information (Detail) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Segment Reporting Information [Line Items] | |||
Number of business segments | 5 | ||
F-35 program | Aeronautics | |||
Segment Reporting Information [Line Items] | |||
Program net sales as percent of total net sales | 17.00% | 16.00% | 14.00% |
Summary_of_Financial_Informati
Summary of Financial Information for Each Business Segment (Detail) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 28, 2014 | Jun. 29, 2014 | Mar. 30, 2014 | Dec. 31, 2013 | Sep. 29, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Total net sales | $12,530 | $11,114 | $11,306 | $10,650 | $11,533 | $11,347 | $11,408 | $11,070 | $45,600 | $45,358 | $47,182 | |||||
Operating profit | 1,342 | 1,392 | 1,426 | 1,432 | 834 | 1,254 | 1,298 | 1,119 | 5,592 | 4,505 | 4,434 | |||||
Less: CAS pension cost | 1,520 | [1] | 1,466 | [1] | 1,111 | [1] | ||||||||||
FAS/CAS pension income (expense) | 376 | -482 | -830 | |||||||||||||
Goodwill impairment charges | -119 | -195 | -119 | [2] | -195 | [2] | ||||||||||
Severance charges | -171 | -30 | -201 | [3] | -48 | [3] | ||||||||||
Stock-based compensation | -164 | -189 | -167 | |||||||||||||
Other, net | -89 | -180 | -104 | |||||||||||||
Total unallocated items | 4 | -1,247 | -1,149 | |||||||||||||
Total depreciation and amortization | 994 | 990 | 988 | |||||||||||||
Capitalized expenditures | 845 | 836 | 942 | |||||||||||||
Total assets | 37,073 | 36,188 | 37,073 | 36,188 | ||||||||||||
Total goodwill | 10,862 | [4] | 10,348 | [4] | 10,862 | [4] | 10,348 | [4] | ||||||||
Total customer advances and amounts in excess of costs incurred | 5,790 | 6,349 | 5,790 | 6,349 | ||||||||||||
Qualified defined benefit pension plans | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
FAS pension expense | -1,144 | [5],[6] | -1,948 | [5],[6] | -1,941 | [5],[6] | ||||||||||
Aeronautics | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Severance charges | -25 | |||||||||||||||
Information Systems & Global Solutions | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Severance charges | -30 | -83 | ||||||||||||||
Mission Systems and Training | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Severance charges | -37 | |||||||||||||||
Space Systems | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Severance charges | -81 | |||||||||||||||
Business segments | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Operating profit | 5,588 | 5,752 | 5,583 | |||||||||||||
Total depreciation and amortization | 887 | 883 | 877 | |||||||||||||
Capitalized expenditures | 779 | 765 | 802 | |||||||||||||
Total assets | 26,490 | [7] | 25,812 | [7] | 26,490 | [7] | 25,812 | [7] | ||||||||
Business segments | Aeronautics | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Total net sales | 14,920 | 14,123 | 14,953 | |||||||||||||
Operating profit | 1,649 | 1,612 | 1,699 | |||||||||||||
Total depreciation and amortization | 322 | 318 | 311 | |||||||||||||
Capitalized expenditures | 283 | 271 | 271 | |||||||||||||
Total assets | 6,021 | [7] | 5,821 | [7] | 6,021 | [7] | 5,821 | [7] | ||||||||
Total goodwill | 150 | 146 | 150 | 146 | ||||||||||||
Total customer advances and amounts in excess of costs incurred | 2,191 | 2,433 | 2,191 | 2,433 | ||||||||||||
Business segments | Information Systems & Global Solutions | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Total net sales | 7,788 | 8,367 | 8,846 | |||||||||||||
Operating profit | 699 | 759 | 808 | |||||||||||||
Total depreciation and amortization | 91 | 94 | 92 | |||||||||||||
Capitalized expenditures | 35 | 64 | 78 | |||||||||||||
Total assets | 6,228 | [7] | 5,798 | [7] | 6,228 | [7] | 5,798 | [7] | ||||||||
Total goodwill | 4,310 | 3,942 | 4,310 | 3,942 | ||||||||||||
Total customer advances and amounts in excess of costs incurred | 376 | 322 | 376 | 322 | ||||||||||||
Business segments | Missiles and Fire Control | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Total net sales | 7,680 | 7,757 | 7,457 | |||||||||||||
Operating profit | 1,358 | 1,431 | 1,256 | |||||||||||||
Total depreciation and amortization | 99 | 98 | 104 | |||||||||||||
Capitalized expenditures | 142 | 128 | 128 | |||||||||||||
Total assets | 4,050 | [7] | 4,159 | [7] | 4,050 | [7] | 4,159 | [7] | ||||||||
Total goodwill | 2,165 | 2,288 | 2,165 | 2,288 | ||||||||||||
Total customer advances and amounts in excess of costs incurred | 1,825 | 1,942 | 1,825 | 1,942 | ||||||||||||
Business segments | Mission Systems and Training | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Total net sales | 7,147 | 7,153 | 7,579 | |||||||||||||
Operating profit | 843 | 905 | 737 | |||||||||||||
Total depreciation and amortization | 158 | 174 | 179 | |||||||||||||
Capitalized expenditures | 157 | 132 | 158 | |||||||||||||
Total assets | 6,277 | [7] | 6,512 | [7] | 6,277 | [7] | 6,512 | [7] | ||||||||
Total goodwill | 3,237 | 3,264 | 3,237 | 3,264 | ||||||||||||
Total customer advances and amounts in excess of costs incurred | 1,069 | 1,188 | 1,069 | 1,188 | ||||||||||||
Business segments | Space Systems | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Total net sales | 8,065 | 7,958 | 8,347 | |||||||||||||
Operating profit | 1,039 | 1,045 | 1,083 | |||||||||||||
Total depreciation and amortization | 217 | 199 | 191 | |||||||||||||
Capitalized expenditures | 162 | 170 | 167 | |||||||||||||
Total assets | 3,914 | [7] | 3,522 | [7] | 3,914 | [7] | 3,522 | [7] | ||||||||
Total goodwill | 1,000 | 708 | 1,000 | 708 | ||||||||||||
Total customer advances and amounts in excess of costs incurred | 329 | 464 | 329 | 464 | ||||||||||||
Intersegment elimination | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Total intersegment sales | 2,443 | 2,247 | 2,348 | |||||||||||||
Intersegment elimination | Aeronautics | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Total intersegment sales | 99 | 195 | 197 | |||||||||||||
Intersegment elimination | Information Systems & Global Solutions | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Total intersegment sales | 665 | 687 | 838 | |||||||||||||
Intersegment elimination | Missiles and Fire Control | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Total intersegment sales | 336 | 273 | 298 | |||||||||||||
Intersegment elimination | Mission Systems and Training | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Total intersegment sales | 1,224 | 991 | 908 | |||||||||||||
Intersegment elimination | Space Systems | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Total intersegment sales | 119 | 101 | 107 | |||||||||||||
Corporate | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Total depreciation and amortization | 107 | 107 | 111 | |||||||||||||
Capitalized expenditures | 66 | 71 | 140 | |||||||||||||
Total assets | $10,583 | [8] | $10,376 | [8] | $10,583 | [8] | $10,376 | [8] | ||||||||
[1] | The higher CAS pension cost reflects the impact of phasing in CAS Harmonization, partially offset by the effect of higher interest rates required by the Highway and Transportation Funding Act of 2014 (HATFA), enacted on August 8, 2014. | |||||||||||||||
[2] | We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information. | |||||||||||||||
[3] | See Note 14 for information on charges related to certain severance actions at our business segments. Severance charges for initiatives that are not significant are included in business segment operating profit. | |||||||||||||||
[4] | During 2014, goodwill increased $681 million due to acquisitions primarily consisting of Zeta Associates, Inc. (Zeta) at our Space Systems business segment and Systems Made Simple and Industrial Defender, Inc. (Industrial Defender) at our IS&GS business segment (Note 13) and also decreased by $119 million due to a non-cash impairment charge related to our MFC business segment (Note 1). During 2013, the decrease in goodwill was primarily due to a non-cash impairment charge of $195 million related to our MFC business segment (Note 1), partially offset by the acquisition of Amor Group Ltd. (Amor) at our IS&GS business segment (Note 13). Total accumulated goodwill impairment loss as of the beginning of 2014 was $195 million and related entirely to our MFC business segment. | |||||||||||||||
[5] | Total net periodic benefit cost associated with our qualified defined benefit plans represents pension expense calculated in accordance with GAAP (FAS pension expense). We are required to calculate pension expense in accordance with both GAAP and CAS rules, each of which results in a different calculated amount of pension expense. The CAS pension cost is recovered through the pricing of our products and services on U.S. Government contracts and, therefore, is recognized in net sales and cost of sales for products and services. We include the difference between FAS pension expense and CAS pension cost, referred to as the FAS/CAS pension adjustment, as a component of other unallocated, net on our Statements of Earnings. The FAS/CAS pension adjustment, which was income of $376 million in 2014 and expense of $482 million in 2013 and $830 million in 2012, effectively adjusts the amount of CAS pension cost in the business segment operating profit so that pension expense recorded on our Statements of Earnings is equal to FAS pension expense. | |||||||||||||||
[6] | FAS pension expense in 2014 was less than in 2013 due to higher discount rates used to calculate our qualified defined benefit obligations and net periodic benefit cost. Additionally, beginning in the quarter ended September 28, 2014 FAS pension expense was reduced by the June 2014 plan amendments to certain of our defined benefit pension plans to freeze future retirement benefits, partially offset by the impact of using new longevity assumptions (Note 9). | |||||||||||||||
[7] | We have no significant long-lived assets located in foreign countries. | |||||||||||||||
[8] | Corporate assets primarily include cash and cash equivalents, deferred income taxes, environmental receivables and investments held in a separate trust. |
Net_Sales_By_Customer_Detail
Net Sales By Customer (Detail) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 28, 2014 | Jun. 29, 2014 | Mar. 30, 2014 | Dec. 31, 2013 | Sep. 29, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | $12,530 | $11,114 | $11,306 | $10,650 | $11,533 | $11,347 | $11,408 | $11,070 | $45,600 | $45,358 | $47,182 | |||
U.S. Government | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 36,090 | 37,173 | 38,788 | |||||||||||
U.S. Government | Aeronautics | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 10,704 | 11,025 | 11,587 | |||||||||||
U.S. Government | Information Systems & Global Solutions | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 6,951 | 7,768 | 8,340 | |||||||||||
U.S. Government | Missiles and Fire Control | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 5,223 | 5,177 | 5,224 | |||||||||||
U.S. Government | Mission Systems and Training | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 5,395 | 5,370 | 5,685 | |||||||||||
U.S. Government | Space Systems | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 7,817 | 7,833 | 7,952 | |||||||||||
International | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 9,015 | [1] | 7,768 | [1] | 8,056 | [1] | ||||||||
International | Aeronautics | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 4,183 | [1] | 3,078 | [1] | 3,323 | [1] | ||||||||
International | Information Systems & Global Solutions | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 630 | [1] | 399 | [1] | 380 | [1] | ||||||||
International | Missiles and Fire Control | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 2,443 | [1] | 2,546 | [1] | 2,208 | [1] | ||||||||
International | Mission Systems and Training | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 1,694 | [1] | 1,672 | [1] | 1,826 | [1] | ||||||||
International | Space Systems | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 65 | [1] | 73 | [1] | 319 | [1] | ||||||||
United States Commercial and Other | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 495 | 417 | 338 | |||||||||||
United States Commercial and Other | Aeronautics | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 33 | 20 | 43 | |||||||||||
United States Commercial and Other | Information Systems & Global Solutions | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 207 | 200 | 126 | |||||||||||
United States Commercial and Other | Missiles and Fire Control | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 14 | 34 | 25 | |||||||||||
United States Commercial and Other | Mission Systems and Training | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | 58 | 111 | 68 | |||||||||||
United States Commercial and Other | Space Systems | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total net sales | $183 | $52 | $76 | |||||||||||
[1] | International sales include foreign military sales contracted through the U.S. Government, direct commercial sales with international governments and commercial and other sales to international customers. |
Summary_of_Financial_Informati1
Summary of Financial Information for Each Business Segment (Parenthetical) (Detail) (USD $) | 3 Months Ended | 12 Months Ended | ||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Segment Reporting Information [Line Items] | ||||||
The increase in goodwill during the year | $681 | |||||
Non-cash goodwill impairment charge | 119 | 195 | 119 | [1] | 195 | [1] |
Total accumulated goodwill impairment loss | $195 | $195 | ||||
[1] | We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information. |
Receivables_Detail
Receivables (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables, net | $5,884 | $5,834 |
U.S. Government | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Amounts billed | 1,434 | 1,275 |
Unbilled costs and accrued profits | 4,577 | 4,767 |
Less: customer advances and progress payments | -1,012 | -1,008 |
Receivables, net | 4,999 | 5,034 |
Other governments and commercial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Amounts billed | 466 | 391 |
Unbilled costs and accrued profits | 672 | 600 |
Less: customer advances and progress payments | -253 | -191 |
Receivables, net | $885 | $800 |
Inventories_Detail
Inventories (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Inventory [Line Items] | ||
Work-in-process, primarily related to long-term contracts and programs in progress | $6,728 | $7,073 |
Less: customer advances and progress payments | -4,701 | -4,834 |
Inventory for long term contracts or programs net of customer advances and progress payments | 2,027 | 2,239 |
Other inventories | 855 | 738 |
Total inventories, net | $2,882 | $2,977 |
Inventories_Net_Additional_Inf
Inventories, Net - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Inventory [Line Items] | |||
General and administrative costs included in work-in-process inventories | $698,000,000 | $630,000,000 | |
General and administrative costs incurred and recorded in inventories | 2,600,000,000 | 2,400,000,000 | 2,400,000,000 |
General and administrative costs charged to cost of sales from inventories | $2,600,000,000 | $2,400,000,000 | $2,400,000,000 |
Property_Plant_and_Equipment_D
Property, Plant and Equipment (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Property, Plant, and Equipment [Line Items] | ||
Property, plant, and equipment, gross | $13,495 | $13,366 |
Less: accumulated depreciation and amortization | -8,740 | -8,660 |
Total property, plant, and equipment, net | 4,755 | 4,706 |
Land | ||
Property, Plant, and Equipment [Line Items] | ||
Property, plant, and equipment, gross | 99 | 99 |
Buildings | ||
Property, Plant, and Equipment [Line Items] | ||
Property, plant, and equipment, gross | 5,724 | 5,602 |
Machinery and equipment | ||
Property, Plant, and Equipment [Line Items] | ||
Property, plant, and equipment, gross | 7,036 | 7,043 |
Construction in progress | ||
Property, Plant, and Equipment [Line Items] | ||
Property, plant, and equipment, gross | $636 | $622 |
Provision_for_Federal_Foreign_
Provision for Federal & Foreign Income Tax Expense (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Federal income tax expense (benefit): | |||
Current | $2,020 | $1,204 | $387 |
Deferred | -387 | 3 | 925 |
Total federal income tax expense | 1,633 | 1,207 | 1,312 |
Foreign income tax expense (benefit): | |||
Current | 24 | 6 | 14 |
Deferred | -13 | -8 | 1 |
Total foreign income tax expense (benefit) | 11 | -2 | 15 |
Total income tax expense | $1,644 | $1,205 | $1,327 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Income Taxes [Line Items] | |||||||
Total net state income tax expense | $207 | $121 | $183 | ||||
U.S. federal statutory income tax rate | 35.00% | ||||||
Recognized tax benefit for the impact of the tax credit | 66 | 96 | |||||
Non-cash goodwill impairment charge | 119 | 195 | 119 | [1] | 195 | [1] | |
Undistributed earnings of foreign subsidiaries not taxed to U.S. income taxes and foreign withholding taxes | 291 | 222 | 291 | 222 | 211 | ||
Estimated additional income tax expense after foreign tax credits on undistributed earnings of foreign companies if remitted | 55 | 50 | 45 | ||||
Federal and foreign income tax payments made, net of refunds received | 1,500 | 787 | 890 | ||||
Refund received from the IRS | 200 | 550 | 153 | ||||
Tax Year 2012 And 2013 | |||||||
Income Taxes [Line Items] | |||||||
Recognized tax benefit for the impact of the tax credit | 76 | ||||||
Tax Year 2014 | |||||||
Income Taxes [Line Items] | |||||||
Recognized tax benefit for the impact of the tax credit | $45 | $45 | |||||
Earliest Tax Year | Internal Revenue Service (IRS) | |||||||
Income Taxes [Line Items] | |||||||
Tax years subject to examination | 2013 | ||||||
Latest Tax Year | Internal Revenue Service (IRS) | |||||||
Income Taxes [Line Items] | |||||||
Tax years subject to examination | 2014 | ||||||
[1] | We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information. |
Reconciliation_of_Income_Tax_E
Reconciliation of Income Tax Expense Computed Using U.S. Statutory Federal Tax Rate to Actual Income Tax Expense (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Reconciliation Of Income Taxes [Line Items] | |||
Income tax expense at the U.S. federal statutory tax rate | $1,840 | $1,454 | $1,425 |
U.S. manufacturing deduction benefit | -127 | -100 | -29 |
Research and development tax credit | -66 | -96 | |
Tax deductible dividends | -82 | -77 | -73 |
Goodwill impairment - non-deductible portion | 30 | 50 | |
Other, net | 49 | -26 | 4 |
Total income tax expense | $1,644 | $1,205 | $1,327 |
Components_of_Federal_and_Fore
Components of Federal and Foreign Deferred Tax Assets and Liabilities (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Deferred tax assets related to: | ||||
Accrued compensation and benefits | $965 | $918 | ||
Pensions | 4,317 | [1] | 3,198 | [1] |
Other postretirement benefit obligations | 386 | 316 | ||
Contract accounting methods | 989 | 721 | ||
Foreign company operating losses and credits | 59 | 52 | ||
Other | 198 | 223 | ||
Valuation allowance | -9 | [2] | -8 | [2] |
Deferred tax assets, net | 6,905 | 5,420 | ||
Deferred tax liabilities related to: | ||||
Goodwill and purchased intangibles | 454 | 410 | ||
Property, plant, and equipment | 514 | 575 | ||
Exchanged debt securities and other | 485 | [3] | 502 | [3] |
Deferred tax liabilities | 1,453 | 1,487 | ||
Net deferred tax assets | $5,452 | [4] | $3,933 | [4] |
[1] | The increase in 2014 was primarily due to using a lower discount rate for the annual measurement adjustment related to our postretirement benefit plans (Note 9). | |||
[2] | A valuation allowance was provided against certain foreign company deferred tax assets arising from carryforwards of unused tax benefits. | |||
[3] | Includes deferred taxes associated with the exchange of debt securities in prior years. | |||
[4] | Includes net foreign current deferred tax liabilities, which are included on the Balance Sheets in other current liabilities. |
Long_Term_Debt_Detail
Long Term Debt (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Debt Instrument [Line Items] | ||
Other debt | $483 | $476 |
Total long-term debt | 7,041 | 7,034 |
Less: unamortized discounts | -872 | -882 |
Total long-term debt, net | 6,169 | 6,152 |
2.13% to 6.15%, due 2016 to 2042 | ||
Debt Instrument [Line Items] | ||
Notes | 5,642 | 5,642 |
7.00% To 7.75%, Due 2016 To 2036 | ||
Debt Instrument [Line Items] | ||
Notes | $916 | $916 |
Long_Term_Debt_Parenthetical_D
Long Term Debt (Parenthetical) (Detail) | 12 Months Ended |
Dec. 31, 2014 | |
2.13% to 6.15%, due 2016 to 2042 | |
Debt Instrument [Line Items] | |
Interest Rate, minimum | 2.13% |
Interest Rate, maximum | 6.15% |
7.00% To 7.75%, Due 2016 To 2036 | |
Debt Instrument [Line Items] | |
Interest Rate, minimum | 7.00% |
Interest Rate, maximum | 7.75% |
Minimum | 2.13% to 6.15%, due 2016 to 2042 | |
Debt Instrument [Line Items] | |
Long-term debt maturity year | 2016 |
Minimum | 7.00% To 7.75%, Due 2016 To 2036 | |
Debt Instrument [Line Items] | |
Long-term debt maturity year | 2016 |
Maximum | 2.13% to 6.15%, due 2016 to 2042 | |
Debt Instrument [Line Items] | |
Long-term debt maturity year | 2042 |
Maximum | 7.00% To 7.75%, Due 2016 To 2036 | |
Debt Instrument [Line Items] | |
Long-term debt maturity year | 2036 |
Debt_Additional_Information_De
Debt - Additional Information (Detail) (USD $) | 1 Months Ended | 12 Months Ended | 1 Months Ended | ||
In Millions, unless otherwise specified | Apr. 30, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Aug. 31, 2014 |
Long term debt repayment | $150 | $150 | |||
Long-term debt, due in 2016 | 952 | ||||
Long-term debt, due in 2019 | 900 | ||||
Interest payments | 326 | 340 | 378 | ||
Note that matured in 2013 | |||||
Long term debt fixed interest rate | 7.38% | ||||
New Revolving Credit Facility | |||||
Line of credit facility | 1,500 | ||||
Line of credit facility expiration date | 2019-08 | ||||
Additional amount to increase credit facility, granted at banks' discretion | 500 | ||||
Terminated Revolving Credit Facility | |||||
Line of credit facility | 1,500 | ||||
Line of credit facility expiration date | 2016-08 | ||||
Credit Facility Sublimit Available For Letters Of Credit | |||||
Line of credit facility | $300 |
Schedule_of_Net_Periodic_Benef
Schedule of Net Periodic Benefit Costs (Detail) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Qualified defined benefit pension plans | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Service cost | $903 | [1] | $1,142 | [1] | $1,055 | [1] |
Interest cost | 1,912 | [1] | 1,800 | [1] | 1,884 | [1] |
Expected return on plan assets | -2,693 | [1] | -2,485 | [1] | -2,187 | [1] |
Recognized net actuarial losses | 1,173 | [1] | 1,410 | [1] | 1,116 | [1] |
Amortization of net prior service (credit) cost | -151 | [1] | 81 | [1] | 73 | [1] |
Total net periodic benefit cost | 1,144 | [1],[2] | 1,948 | [1],[2] | 1,941 | [1],[2] |
Retiree medical and life insurance plans | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Service cost | 22 | 27 | 28 | |||
Interest cost | 123 | 116 | 131 | |||
Expected return on plan assets | -146 | -145 | -131 | |||
Recognized net actuarial losses | 23 | 44 | 32 | |||
Amortization of net prior service (credit) cost | 4 | -17 | -12 | |||
Total net periodic benefit cost | $26 | $25 | $48 | |||
[1] | Total net periodic benefit cost associated with our qualified defined benefit plans represents pension expense calculated in accordance with GAAP (FAS pension expense). We are required to calculate pension expense in accordance with both GAAP and CAS rules, each of which results in a different calculated amount of pension expense. The CAS pension cost is recovered through the pricing of our products and services on U.S. Government contracts and, therefore, is recognized in net sales and cost of sales for products and services. We include the difference between FAS pension expense and CAS pension cost, referred to as the FAS/CAS pension adjustment, as a component of other unallocated, net on our Statements of Earnings. The FAS/CAS pension adjustment, which was income of $376 million in 2014 and expense of $482 million in 2013 and $830 million in 2012, effectively adjusts the amount of CAS pension cost in the business segment operating profit so that pension expense recorded on our Statements of Earnings is equal to FAS pension expense. | |||||
[2] | FAS pension expense in 2014 was less than in 2013 due to higher discount rates used to calculate our qualified defined benefit obligations and net periodic benefit cost. Additionally, beginning in the quarter ended September 28, 2014 FAS pension expense was reduced by the June 2014 plan amendments to certain of our defined benefit pension plans to freeze future retirement benefits, partially offset by the impact of using new longevity assumptions (Note 9). |
Schedule_of_Net_Periodic_Benef1
Schedule of Net Periodic Benefit Costs (Parenthetical) (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Defined Benefit Plan Disclosure [Line Items] | |||
FAS/CAS pension adjustment | ($376) | $482 | $830 |
Reconciliation_of_Benefit_Obli
Reconciliation of Benefit Obligations, Plan Assets, and Unfunded or Funded Status (Detail) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Change in plan assets | ||||||
Fair value of plan assets at end of year | $36,605 | $34,931 | ||||
Qualified defined benefit pension plans | ||||||
Change in benefit obligation | ||||||
Benefit obligations at beginning of year | 42,161 | 46,017 | ||||
Service cost | 903 | [1] | 1,142 | [1] | 1,055 | [1] |
Interest cost | 1,912 | [1] | 1,800 | [1] | 1,884 | [1] |
Benefits paid | -2,399 | [2] | -2,023 | [2] | ||
Actuarial losses (gains) | 4,493 | -4,882 | ||||
New longevity assumptions | 3,390 | |||||
Plan amendments | -4,578 | [3] | 107 | [3] | ||
Benefit obligations at end of year | 45,882 | 42,161 | 46,017 | |||
Change in plan assets | ||||||
Fair value of plan assets at beginning of year | 33,010 | 30,924 | ||||
Actual return on plan assets | 2,062 | 1,859 | ||||
Benefits paid | -2,399 | [2] | -2,023 | [2] | ||
Company contributions | 2,000 | 2,250 | ||||
Fair value of plan assets at end of year | 34,673 | 33,010 | 30,924 | |||
Unfunded status of the plans | -11,209 | -9,151 | ||||
Retiree medical and life insurance plans | ||||||
Change in benefit obligation | ||||||
Benefit obligations at beginning of year | 2,823 | 3,184 | ||||
Service cost | 22 | 27 | 28 | |||
Interest cost | 123 | 116 | 131 | |||
Benefits paid | -352 | [2] | -353 | [2] | ||
Actuarial losses (gains) | -40 | -319 | ||||
New longevity assumptions | 266 | |||||
Plan amendments | 5 | [3] | ||||
Medicare Part D subsidy | 26 | 10 | ||||
Participants' contributions | 161 | 158 | ||||
Benefit obligations at end of year | 3,034 | 2,823 | 3,184 | |||
Change in plan assets | ||||||
Fair value of plan assets at beginning of year | 1,921 | 1,964 | ||||
Actual return on plan assets | 126 | 44 | ||||
Benefits paid | -352 | [2] | -353 | [2] | ||
Company contributions | 50 | 98 | ||||
Medicare Part D subsidy | 26 | 10 | ||||
Participants' contributions | 161 | 158 | ||||
Fair value of plan assets at end of year | 1,932 | 1,921 | 1,964 | |||
Unfunded status of the plans | ($1,102) | ($902) | ||||
[1] | Total net periodic benefit cost associated with our qualified defined benefit plans represents pension expense calculated in accordance with GAAP (FAS pension expense). We are required to calculate pension expense in accordance with both GAAP and CAS rules, each of which results in a different calculated amount of pension expense. The CAS pension cost is recovered through the pricing of our products and services on U.S. Government contracts and, therefore, is recognized in net sales and cost of sales for products and services. We include the difference between FAS pension expense and CAS pension cost, referred to as the FAS/CAS pension adjustment, as a component of other unallocated, net on our Statements of Earnings. The FAS/CAS pension adjustment, which was income of $376 million in 2014 and expense of $482 million in 2013 and $830 million in 2012, effectively adjusts the amount of CAS pension cost in the business segment operating profit so that pension expense recorded on our Statements of Earnings is equal to FAS pension expense. | |||||
[2] | Benefits paid in 2014 for qualified defined benefit pension plans include $427 million in the form of lump-sum settlement payments to former employees who had not commenced receiving their vested benefit payments. The corresponding benefit obligation that was released was $529 million. The settlement payments had no impact on our 2014 FAS pension expense and CAS pension cost. | |||||
[3] | The June 2014 plan amendment which resulted in freezing the pay-based component of the formula used to determine retirement benefits under the affected plans reduced our qualified defined benefit pension obligations by $4.6 billion, which resulted in a corresponding reduction, net of tax, in the accumulated other comprehensive loss (AOCL) component of stockholders' equity. This amount is being recognized as a reduction of net periodic benefit cost (i.e., amortization of net prior service credit) over the estimated remaining service period of the covered employees, which is approximately 10 years and began in the third quarter of 2014. |
Reconciliation_of_Benefit_Obli1
Reconciliation of Benefit Obligations, Plan Assets, and Unfunded or Funded Status (Parenthetical) (Detail) (Qualified defined benefit pension plans, USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Defined Benefit Plan Disclosure [Line Items] | ||||
Benefits paid | $2,399 | [1] | $2,023 | [1] |
Benefit obligation released | 529 | |||
Plan amendments related to the salary freeze | -4,578 | [2] | 107 | [2] |
Estimated remaining service period of covered employees, years | 10 years | |||
Lump-sum settlement payments | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Benefits paid | $427 | |||
[1] | Benefits paid in 2014 for qualified defined benefit pension plans include $427 million in the form of lump-sum settlement payments to former employees who had not commenced receiving their vested benefit payments. The corresponding benefit obligation that was released was $529 million. The settlement payments had no impact on our 2014 FAS pension expense and CAS pension cost. | |||
[2] | The June 2014 plan amendment which resulted in freezing the pay-based component of the formula used to determine retirement benefits under the affected plans reduced our qualified defined benefit pension obligations by $4.6 billion, which resulted in a corresponding reduction, net of tax, in the accumulated other comprehensive loss (AOCL) component of stockholders' equity. This amount is being recognized as a reduction of net periodic benefit cost (i.e., amortization of net prior service credit) over the estimated remaining service period of the covered employees, which is approximately 10 years and began in the third quarter of 2014. |
Amounts_Recognized_on_Balance_
Amounts Recognized on Balance Sheets Related to Qualified Defined Benefit Pension Plans and Retiree Medical and Life Insurance PlansDisclosure - Amounts Recognized on Balance Sheets Related to Qualified Defined Benefit Pension Plans and Retiree Medical and Life Insurance Plans (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Accrued postretirement benefit liabilities | ($11,413) | ($9,361) | ||
Qualified defined benefit pension plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Prepaid pension asset | 204 | 210 | ||
Accrued postretirement benefit liabilities | -11,413 | -9,361 | ||
Accumulated other comprehensive loss (pre-tax) related to net actuarial losses | 20,794 | 13,453 | ||
Accumulated other comprehensive loss (pre-tax) related to prior service (credit) cost | -3,985 | 443 | ||
Total | 16,809 | [1] | 13,896 | [1] |
Retiree medical and life insurance plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Accrued postretirement benefit liabilities | -1,102 | -902 | ||
Accumulated other comprehensive loss (pre-tax) related to net actuarial losses | 741 | 516 | ||
Accumulated other comprehensive loss (pre-tax) related to prior service (credit) cost | 14 | 13 | ||
Total | $755 | [1] | $529 | [1] |
[1] | Accumulated other comprehensive loss related to postretirement benefit plans, after tax, of $11.8 billion and $9.6 billion at December 31, 2014 and 2013 (Note 10) includes $16.8 billion ($10.8 billion after tax) and $13.9 billion ($9.0 billion after tax) for qualified defined benefit pension plans, $755 million ($488 million after tax) and $529 million ($342 million after tax) for retiree medical and life insurance plans and $692 million ($460 million after tax) and $508 million ($328 million after tax) for other plans. |
Amounts_Recognized_on_Balance_1
Amounts Recognized on Balance Sheets Related to Qualified Defined Benefit Pension Plans and Retiree Medical and Life Insurance PlansDisclosure - Amounts Recognized on Balance Sheets Related to Qualified Defined Benefit Pension Plans and Retiree Medical and Life Insurance Plans (Parenthetical) (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | ||||
In Millions, unless otherwise specified | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Accumulated other comprehensive loss, after tax | $11,870 | [1] | $9,601 | [1] | $13,493 | [1] | $11,257 | [1] |
Postretirement Benefit Plan Adjustments | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Accumulated other comprehensive loss, after tax | 11,813 | [1] | 9,649 | [1] | 13,532 | [1] | 11,186 | [1] |
Qualified defined benefit pension plans | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Accumulated other comprehensive loss before tax | 16,809 | [2] | 13,896 | [2] | ||||
Accumulated other comprehensive loss after tax | 10,800 | 9,000 | ||||||
Retiree medical and life insurance plans | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Accumulated other comprehensive loss before tax | 755 | [2] | 529 | [2] | ||||
Accumulated other comprehensive loss after tax | 488 | 342 | ||||||
Other Plans | ||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||
Accumulated other comprehensive loss before tax | 692 | 508 | ||||||
Accumulated other comprehensive loss after tax | $460 | $328 | ||||||
[1] | AOCL related to postretirement benefit plans is shown net of tax benefits at December 31, 2014, 2013 and 2012 of $6.4 billion, $5.3 billion and $7.4 billion. These tax benefits include amounts recognized on our income tax returns as current deductions and deferred income taxes, which will be recognized on our tax returns in future years. See Note 7 and Note 9 for more information on our income taxes and postretirement benefit plans. | |||||||
[2] | Accumulated other comprehensive loss related to postretirement benefit plans, after tax, of $11.8 billion and $9.6 billion at December 31, 2014 and 2013 (Note 10) includes $16.8 billion ($10.8 billion after tax) and $13.9 billion ($9.0 billion after tax) for qualified defined benefit pension plans, $755 million ($488 million after tax) and $529 million ($342 million after tax) for retiree medical and life insurance plans and $692 million ($460 million after tax) and $508 million ($328 million after tax) for other plans. |
Postretirement_Plans_Additiona
Postretirement Plans - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Share data in Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Defined Benefit Plan Disclosure [Line Items] | |||
Assets set aside expected to be used to pay obligations of defined benefit pension plans and retiree medical and life insurance plans | $36,605,000,000 | $34,931,000,000 | |
Aggregate liability for postemployment plans | 88,000,000 | 108,000,000 | |
Actuarial losses and prior service cost related to postretirement benefit plans expected to be recognized in net periodic benefit cost during 2015 | 1,300,000,000 | ||
Actuarial losses and prior service cost related to postretirement benefit plans expected to be recognized in net periodic benefit cost during 2015, net of tax | 850,000,000 | ||
Expected pension plan expenses during next fiscal year | 1,100,000,000 | ||
Contributions made to defined contribution plans | 385,000,000 | 383,000,000 | 380,000,000 |
Shares of our stock held in defined contribution plans we sponsor | 41.7 | 44.7 | |
Qualified defined benefit pension plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Accumulated benefit obligation for defined benefit pension plans | 45,200,000,000 | 37,500,000,000 | |
Accumulated benefit obligation in excess of plan assets | 45,000,000,000 | 37,300,000,000 | |
Assets set aside expected to be used to pay obligations of defined benefit pension plans and retiree medical and life insurance plans | 34,673,000,000 | 33,010,000,000 | 30,924,000,000 |
Unrecognized net actuarial losses | 20,794,000,000 | 13,453,000,000 | |
Actuarial losses related to postretirement benefit plans expected to be recognized in net periodic benefit cost during 2015 | 1,200,000,000 | ||
Actuarial losses related to postretirement benefit plans expected to be recognized in net periodic benefit cost during 2015, net of tax | 781,000,000 | ||
Increase (decrease) in projected benefit obligations due to a change in discount rate | 4,800,000,000 | -4,400,000,000 | |
Contributions made by the employer | 2,000,000,000 | 2,250,000,000 | |
Non-Qualified Pension Plans, Defined Benefit | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit pension plan, liabilities | 1,100,000,000 | 1,000,000,000 | |
Unrecognized net actuarial losses | 662,000,000 | 480,000,000 | |
Benefit plan expense | 115,000,000 | 108,000,000 | 107,000,000 |
Unrecognized prior service credit | 121,000,000 | ||
Separate Trust | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Assets set aside expected to be used to pay obligations of defined benefit pension plans and retiree medical and life insurance plans | $397,000,000 | $373,000,000 |
Accumulated_Benefit_Obligation
Accumulated Benefit Obligations in Excess of Fair Value of Plan Assets (Detail) (Qualified defined benefit pension plans, USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Qualified defined benefit pension plans | ||||
Plans where ABO was in excess of plan assets | ||||
Projected benefit obligation | $45,741 | $41,984 | ||
Less: fair value of plan assets | 34,328 | 32,623 | ||
Unfunded status of plans | -11,413 | [1] | -9,361 | [1] |
Plans where ABO was less than plan assets | ||||
Projected benefit obligation | 141 | 177 | ||
Less: fair value of plan assets | 345 | 387 | ||
Funded status of plans | $204 | [2] | $210 | [2] |
[1] | Represent accrued pension liabilities, which are included on our Balance Sheets. | |||
[2] | Represent prepaid pension assets, which are included on our Balance Sheets in other noncurrent assets. |
Amounts_Recognized_in_Other_Co
Amounts Recognized in Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss Related to Postretirement Benefit Plans and Expected Costs to be Recognized in Net Periodic Benefit Cost (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Amounts Recognized In Other Comprehensive Loss Related To Postretirement Benefit Plans [Line Items] | |||
Actuarial gains and (losses) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost | ($5,910) | $2,937 | ($3,135) |
Prior service credit and (cost) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost | 3,040 | -69 | -69 |
Total Incurred but Not Recognized | -2,870 | 2,868 | -3,204 |
Actuarial (gains) and losses - Recognition of Previously Deferred Amounts | 806 | 973 | 819 |
Prior service (credit) and cost - Recognition of Previously Deferred Amounts | -100 | 42 | 39 |
Total Reclassification Adjustment for Prior Period Amounts Recognized | 706 | 1,015 | 858 |
Qualified defined benefit pension plans | |||
Amounts Recognized In Other Comprehensive Loss Related To Postretirement Benefit Plans [Line Items] | |||
Actuarial gains and (losses) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost | -5,505 | 2,751 | -2,933 |
Prior service credit and (cost) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost | 2,959 | -69 | -73 |
Actuarial (gains) and losses - Recognition of Previously Deferred Amounts | 758 | 911 | 721 |
Prior service (credit) and cost - Recognition of Previously Deferred Amounts | -98 | 53 | 47 |
Retiree medical and life insurance plans | |||
Amounts Recognized In Other Comprehensive Loss Related To Postretirement Benefit Plans [Line Items] | |||
Actuarial gains and (losses) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost | -160 | 140 | -104 |
Prior service credit and (cost) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost | -3 | 4 | |
Actuarial (gains) and losses - Recognition of Previously Deferred Amounts | 15 | 28 | 21 |
Prior service (credit) and cost - Recognition of Previously Deferred Amounts | 3 | -11 | -8 |
Other Plans | |||
Amounts Recognized In Other Comprehensive Loss Related To Postretirement Benefit Plans [Line Items] | |||
Actuarial gains and (losses) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost | -245 | 46 | -98 |
Prior service credit and (cost) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost | 84 | ||
Actuarial (gains) and losses - Recognition of Previously Deferred Amounts | 33 | 34 | 77 |
Prior service (credit) and cost - Recognition of Previously Deferred Amounts | ($5) |
Actuarial_Assumptions_Used_to_
Actuarial Assumptions Used to Determine Net Periodic Benefit Cost (Detail) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Qualified defined benefit pension plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 4.00% | 4.75% | 4.00% |
Expected long-term rate of return on assets | 8.00% | 8.00% | 8.00% |
Rate of increase in future compensation levels | 4.30% | 4.30% | 4.30% |
Retiree medical and life insurance plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 3.75% | 4.50% | 3.75% |
Expected long-term rate of return on assets | 8.00% | 8.00% | 8.00% |
Health care trend rate assumed for next year | 8.50% | 8.75% | 9.00% |
Ultimate health care trend rate | 5.00% | 5.00% | 5.00% |
Year that the ultimate health care trend rate is reached | 2029 | 2029 | 2029 |
Asset_Allocations_of_Postretir
Asset Allocations of Postretirement Benefit Plans (Detail) | 12 Months Ended |
Dec. 31, 2014 | |
Cash and cash equivalents | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined benefit plan, target allocation percentage of assets, range minimum | 0.00% |
Defined benefit plan, target allocation percentage of assets, range maximum | 20.00% |
Equity securities | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined benefit plan, target allocation percentage of assets, range minimum | 15.00% |
Defined benefit plan, target allocation percentage of assets, range maximum | 65.00% |
Fixed income | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined benefit plan, target allocation percentage of assets, range minimum | 10.00% |
Defined benefit plan, target allocation percentage of assets, range maximum | 60.00% |
Private equity funds | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined benefit plan, target allocation percentage of assets, range minimum | 0.00% |
Defined benefit plan, target allocation percentage of assets, range maximum | 15.00% |
Real estate funds | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined benefit plan, target allocation percentage of assets, range minimum | 0.00% |
Defined benefit plan, target allocation percentage of assets, range maximum | 10.00% |
Hedge funds | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined benefit plan, target allocation percentage of assets, range minimum | 0.00% |
Defined benefit plan, target allocation percentage of assets, range maximum | 20.00% |
Commodities | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined benefit plan, target allocation percentage of assets, range minimum | 0.00% |
Defined benefit plan, target allocation percentage of assets, range maximum | 25.00% |
Qualified_Defined_Benefit_Pens
Qualified Defined Benefit Pension Plans and Retiree Medical and Life Insurance Plans by Asset Category (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | $36,605 | $34,931 | ||
Cash and cash equivalents | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 2,968 | [1] | 2,176 | [1] |
U.S. equity securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 6,431 | [1] | 5,368 | [1] |
International equity securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 5,566 | [1] | 5,008 | [1] |
Commingled equity funds | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 6,078 | [1] | 6,037 | [1] |
Corporate debt securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 4,242 | [1] | 2,986 | [1] |
U.S. Government securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 4,579 | [1] | 6,553 | [1] |
U.S. Government-sponsored enterprise securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 613 | [1] | 1,451 | [1] |
Other fixed income investments | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 1,807 | [1] | 1,388 | [1] |
Private equity funds | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 2,952 | 2,601 | ||
Real estate funds | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 762 | 601 | ||
Hedge funds | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 570 | 551 | ||
Commodities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 2 | [1] | 156 | [1] |
Total excluding receivables | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 36,570 | 34,876 | ||
Receivables, net | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 35 | 55 | ||
Fair value, inputs, level 1 | Cash and cash equivalents | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 2,968 | [1] | 2,176 | [1] |
Fair value, inputs, level 1 | U.S. equity securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 6,363 | [1] | 5,274 | [1] |
Fair value, inputs, level 1 | International equity securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 5,525 | [1] | 4,912 | [1] |
Fair value, inputs, level 1 | Commingled equity funds | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 2,047 | [1] | 1,212 | [1] |
Fair value, inputs, level 1 | Other fixed income investments | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 39 | [1] | ||
Fair value, inputs, level 1 | Commodities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 2 | [1] | 156 | [1] |
Fair value, inputs, level 1 | Total excluding receivables | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 16,944 | 13,730 | ||
Fair value, inputs, level 2 | U.S. equity securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 67 | [1] | 94 | [1] |
Fair value, inputs, level 2 | International equity securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 31 | [1] | 89 | [1] |
Fair value, inputs, level 2 | Commingled equity funds | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 4,031 | [1] | 4,825 | [1] |
Fair value, inputs, level 2 | Corporate debt securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 4,201 | [1] | 2,943 | [1] |
Fair value, inputs, level 2 | U.S. Government securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 4,579 | [1] | 6,553 | [1] |
Fair value, inputs, level 2 | U.S. Government-sponsored enterprise securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 613 | [1] | 1,451 | [1] |
Fair value, inputs, level 2 | Other fixed income investments | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 1,759 | [1] | 1,293 | [1] |
Fair value, inputs, level 2 | Real estate funds | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 33 | 29 | ||
Fair value, inputs, level 2 | Hedge funds | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 66 | 46 | ||
Fair value, inputs, level 2 | Total excluding receivables | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 15,380 | 17,323 | ||
Fair value, inputs, level 3 | U.S. equity securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 1 | [1] | ||
Fair value, inputs, level 3 | International equity securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 10 | [1] | 7 | [1] |
Fair value, inputs, level 3 | Corporate debt securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 41 | [1] | 43 | [1] |
Fair value, inputs, level 3 | Other fixed income investments | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 9 | [1] | 95 | [1] |
Fair value, inputs, level 3 | Private equity funds | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 2,952 | 2,601 | ||
Fair value, inputs, level 3 | Real estate funds | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 729 | 572 | ||
Fair value, inputs, level 3 | Hedge funds | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | 504 | 505 | ||
Fair value, inputs, level 3 | Total excluding receivables | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan assets at end of year | $4,246 | $3,823 | ||
[1] | Cash and cash equivalents, equity securities, fixed income securities and commodities included derivative assets and liabilities whose fair values were not material as of December 31, 2014 and 2013. LMIMCo's investment policies restrict the use of derivatives to either establish long exposures for purposes of expediency or capital efficiency or to hedge risks to the extent of a plan's current exposure to such risks. Most derivative transactions are settled on a daily basis. |
Changes_in_Fair_Value_of_Level
Changes in Fair Value of Level 3 Plan Assets (Detail) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Defined Benefit Plan Disclosure [Line Items] | ||
Beginning Balance | $3,823 | $3,902 |
Realized gains, net | 260 | 212 |
Unrealized gains (losses), net | 28 | 166 |
Purchases, sales, and settlements, net | 207 | -441 |
Transfers into (out of) Level 3, net | -72 | -16 |
Ending Balance | 4,246 | 3,823 |
Private equity funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Beginning Balance | 2,601 | 2,461 |
Realized gains, net | 182 | 144 |
Unrealized gains (losses), net | 38 | 42 |
Purchases, sales, and settlements, net | 131 | -46 |
Ending Balance | 2,952 | 2,601 |
Real estate funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Beginning Balance | 572 | 504 |
Realized gains, net | 43 | 43 |
Unrealized gains (losses), net | 22 | 19 |
Purchases, sales, and settlements, net | 92 | -3 |
Transfers into (out of) Level 3, net | 9 | |
Ending Balance | 729 | 572 |
Hedge funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Beginning Balance | 505 | 806 |
Realized gains, net | 34 | 21 |
Unrealized gains (losses), net | -11 | 104 |
Purchases, sales, and settlements, net | -24 | -394 |
Transfers into (out of) Level 3, net | -32 | |
Ending Balance | 504 | 505 |
Other | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Beginning Balance | 145 | 131 |
Realized gains, net | 1 | 4 |
Unrealized gains (losses), net | -21 | 1 |
Purchases, sales, and settlements, net | 8 | 2 |
Transfers into (out of) Level 3, net | -72 | 7 |
Ending Balance | $61 | $145 |
Benefit_Payments_Detail
Benefit Payments (Detail) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Qualified defined benefit pension plans | |
Defined Benefit Plan Disclosure [Line Items] | |
Payments in 2015 | $2,070 |
Payments in 2016 | 2,150 |
Payments in 2017 | 2,230 |
Payments in 2018 | 2,320 |
Payments in 2019 | 2,420 |
Payments in 2020 - 2024 | 13,430 |
Retiree medical and life insurance plans | |
Defined Benefit Plan Disclosure [Line Items] | |
Payments in 2015 | 190 |
Payments in 2016 | 200 |
Payments in 2017 | 200 |
Payments in 2018 | 210 |
Payments in 2019 | 210 |
Payments in 2020 - 2024 | $1,020 |
Stockholders_Equity_Additional
Stockholders' Equity - Additional Information (Detail) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | |
Class of Stock [Line Items] | ||||
Common stock, shares authorized | 1,500,000,000 | 1,500,000,000 | ||
Preferred stock, shares authorized | 50,000,000 | 50,000,000 | ||
Common stock, shares issued and outstanding | 316,000,000 | 321,000,000 | ||
Common stock, shares outstanding for Balance Sheet presentation purposes | 314,000,000 | 319,000,000 | ||
Preferred stock, shares issued and outstanding | ||||
Cash paid for repurchases of common stock | $1,900,000,000 | $1,762,000,000 | $990,000,000 | |
Number of shares of common stock repurchased with cash | 11,500,000 | 16,200,000 | 11,100,000 | |
Reduction to stockholder's equity due to repurchases of common stock | 1,900,000,000 | 1,744,000,000 | 1,008,000,000 | |
Number of shares repurchased under share repurchase program | 16,000,000 | 11,300,000 | ||
Additional share repurchase program authorized amount | 2,000,000,000 | |||
Remaining authorized repurchase amount under share repurchase program | 3,700,000,000 | |||
Common stock par value, per share | $1 | $1 | ||
Additional paid-in capital | ||||
Retained Earnings | ||||
Class of Stock [Line Items] | ||||
Reduction to stockholder's equity due to repurchases of common stock | $1,096,000,000 | $434,000,000 | $108,000,000 |
Changes_in_Balance_of_Accumula
Changes in Balance of Accumulated Other Comprehensive Loss (Detail) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Beginning balance | ($9,601) | [1] | ($13,493) | [1] | ($11,257) | [1] |
Other comprehensive (loss) income before reclassifications | -2,973 | 2,879 | -3,099 | |||
Amounts reclassified from AOCL | ||||||
Recognition of net actuarial losses | 806 | 973 | 819 | |||
Amortization of net prior service (credits) costs | -100 | 42 | 39 | |||
Other | -2 | -2 | 5 | |||
Total reclassified from AOCL | 704 | 1,013 | 863 | |||
Other comprehensive (loss) income, net of tax | -2,269 | 3,892 | -2,236 | |||
Ending balance | -11,870 | [1] | -9,601 | [1] | -13,493 | [1] |
Postretirement Benefit Plan Adjustments | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Beginning balance | -9,649 | [1] | -13,532 | [1] | -11,186 | [1] |
Other comprehensive (loss) income before reclassifications | -2,870 | 2,868 | -3,204 | |||
Amounts reclassified from AOCL | ||||||
Recognition of net actuarial losses | 806 | 973 | 819 | |||
Amortization of net prior service (credits) costs | -100 | 42 | 39 | |||
Total reclassified from AOCL | 706 | 1,015 | 858 | |||
Other comprehensive (loss) income, net of tax | -2,164 | 3,883 | -2,346 | |||
Ending balance | -11,813 | [1] | -9,649 | [1] | -13,532 | [1] |
Other, net | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Beginning balance | 48 | [1] | 39 | [1] | -71 | [1] |
Other comprehensive (loss) income before reclassifications | -103 | 11 | 105 | |||
Amounts reclassified from AOCL | ||||||
Other | -2 | -2 | 5 | |||
Total reclassified from AOCL | -2 | -2 | 5 | |||
Other comprehensive (loss) income, net of tax | -105 | 9 | 110 | |||
Ending balance | ($57) | [1] | $48 | [1] | $39 | [1] |
[1] | AOCL related to postretirement benefit plans is shown net of tax benefits at December 31, 2014, 2013 and 2012 of $6.4 billion, $5.3 billion and $7.4 billion. These tax benefits include amounts recognized on our income tax returns as current deductions and deferred income taxes, which will be recognized on our tax returns in future years. See Note 7 and Note 9 for more information on our income taxes and postretirement benefit plans. |
Changes_in_Balance_of_Accumula1
Changes in Balance of Accumulated Other Comprehensive Loss (Parenthetical) (Detail) (USD $) | 12 Months Ended | ||
In Billions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Post retirement benefit plan adjustments, tax benefits | $6.40 | $5.30 | $7.40 |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Information (Detail) (USD $) | 12 Months Ended | 1 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation | $164 | $189 | $167 | |
Share-based compensation, net of tax | 107 | 122 | 108 | |
Unrecognized compensation cost | 91 | |||
Period over which unrecognized compensation costs are expected to be recognized (years) | 1 year 7 months 6 days | |||
Cash received from exercise of stock options | 308 | 827 | 440 | |
Realized tax benefits from stock-based compensation activities | 215 | 158 | 96 | |
Number of years over which equity awards expire | 10 years | |||
Share-based compensation arrangement by share-based payment award, number of shares authorized | 19,000,000 | |||
Shares reserved for issuance | 7,800,000 | |||
Number of years over which equity awards vest | 3 years | |||
Number of Stock Options, Outstanding | 6,300,000 | 10,200,000 | ||
Weighted Average Exercise Price, Outstanding | $84.62 | $83.65 | ||
Weighted Average Remaining Contractual Life, Outstanding | 4 years | |||
Aggregate Intrinsic Value, Outstanding | 681 | |||
Number of Stock Options, Vested | 5,600,000 | |||
Weighted Average Exercise Price, Vested | $84.96 | |||
Weighted Average Remaining Contractual Life, Vested | 4 years | |||
Aggregate Intrinsic Value, Vested | $601 | |||
Number of Stock Options, Exercised | 3,700,000 | |||
Weighted Average Exercise Price, Exercised | $82.13 | |||
Risk-free interest rate | 0.78% | |||
Dividend yield | 5.40% | |||
Volatility factors | 0.28 | |||
Expected option life (in years) | 5 years | |||
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of years over which equity awards vest | 3 years | |||
Number of stock units, granted, in shares | 745,000 | 1,356,000 | 1,987,000 | |
Average grant date fair value per unit | $146.85 | $89.24 | $81.93 | |
Employee Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of years over which equity awards vest | 3 years | |||
Performance Stock Units (PSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of years over which equity awards vest | 3 years | |||
Number of stock units, granted, in shares | 200,000 | |||
Performance Stock Units (PSUs) | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Range of shares that can be earned from stock awards, as a percentage of the target award | 0.00% | |||
Performance Stock Units (PSUs) | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Range of shares that can be earned from stock awards, as a percentage of the target award | 200.00% | |||
Performance Stock Units (PSUs) | Half Of PSUs Granted In Period | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Average grant date fair value per unit | 146.85 | |||
Performance Stock Units (PSUs) | Remaining Half Of PSUs Granted In Period | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Average grant date fair value per unit | 134.15 |
Summary_of_Activity_Related_to
Summary of Activity Related to Nonvested RSUs (Detail) (Restricted Stock Units (RSUs), USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of RSUs, beginning balance, in shares | 3,859 | 4,822 | 4,302 |
Number of RSUs, Granted, in shares | 745 | 1,356 | 1,987 |
Number of RSUs, Vested, in shares | -2,194 | -2,093 | -1,299 |
Number of RSUs, Forfeited, in shares | -84 | -226 | -168 |
Number of RSUs, ending balance, in shares | 2,326 | 3,859 | 4,822 |
Nonvested beginning balance, in dollars per share | $82.42 | $79.10 | $78.25 |
Granted, in dollars per share | $146.85 | $89.24 | $81.93 |
Vested, in dollars per share | $87.66 | $79.26 | $80.64 |
Forfeited, in dollars per share | $91.11 | $81.74 | $79.03 |
Nonvested Ending balance, in dollars per share | $97.80 | $82.42 | $79.10 |
Stock_Options_Detail
Stock Options (Detail) (USD $) | 12 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average grant-date fair value of stock options granted | $10.57 | ||
Grant-date fair value of all stock options that vested | $18 | $40 | $47 |
Intrinsic value of all stock options exercised | $297 | $293 | $162 |
Legal_Proceedings_Commitments_1
Legal Proceedings, Commitments and Contingencies - Additional Information (Detail) (USD $) | 12 Months Ended | 96 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Apr. 24, 2009 | |
Legal Proceedings And Contingencies [Line Items] | |||||
Liabilities recorded relative to environmental matters | $965,000,000 | $997,000,000 | $965,000,000 | ||
Environmental costs eligible for future recovery | 836,000,000 | 863,000,000 | 836,000,000 | ||
Time period environmental costs and recovery of environmental costs are projected over, years | 20 years | ||||
Percentage of expenditures that are reimbursed for certain remediation activities | 50.00% | ||||
Total rental expense under operating leases | 258,000,000 | 315,000,000 | 302,000,000 | ||
Future minimum lease commitments, total | 856,000,000 | 856,000,000 | |||
Future minimum lease commitments, due in 2015 | 228,000,000 | 228,000,000 | |||
Future minimum lease commitments, due in 2016 | 181,000,000 | 181,000,000 | |||
Future minimum lease commitments, due in 2017 | 133,000,000 | 133,000,000 | |||
Future minimum lease commitments, due in 2018 | 95,000,000 | 95,000,000 | |||
Future minimum lease commitments, due in 2019 | 69,000,000 | 69,000,000 | |||
Future minimum lease commitments, due in later years | 150,000,000 | 150,000,000 | |||
Outstanding letters of credit, surety bonds, and third-party guarantees | 2,400,000,000 | 2,400,000,000 | 2,400,000,000 | ||
Third-party guarantees outstanding | 774,000,000 | 696,000,000 | 774,000,000 | ||
Percentage of total guarantees that relate to guarantees of contractual performance of joint ventures | 85.00% | 90.00% | 85.00% | ||
Total equity method investment | 971,000,000 | 914,000,000 | 971,000,000 | ||
United Launch Alliance | |||||
Legal Proceedings And Contingencies [Line Items] | |||||
Percentage of ownership interest in affiliated entity | 50.00% | 50.00% | |||
Dividends that are subject to contingency | 527,000,000 | ||||
Revolving line of credit | 560,000,000 | 560,000,000 | |||
Amount of net assets that exceeded book value of investment that is being recognized ratably over 10 years | 395,000,000 | 395,000,000 | |||
Number of years the difference between book value and underlying equity in equity method investment is being recognized ratably | 10 years | ||||
Total equity method investment | 706,000,000 | 685,000,000 | 706,000,000 | ||
N.Y. Metropolitan Transportation Authority | |||||
Legal Proceedings And Contingencies [Line Items] | |||||
Contract value | 323,000,000 | ||||
Contract payments received to date | 241,000,000 | 241,000,000 | |||
Damages sought by plaintiff | 190,000,000 | ||||
Claims for monetary damages against the plaintiff | $95,000,000 |
Acquisitions_and_Divestitures_
Acquisitions and Divestitures - Additional Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended | ||||
In Millions, unless otherwise specified | Sep. 29, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Acquisitions And Divestitures [Line Items] | ||||||
Acquisitions of businesses and investments in affiliates | $898 | $269 | $259 | |||
Aggregate amount of goodwill arising from acquisitions | 10,862 | [1] | 10,348 | [1] | ||
Net earnings from discontinued operations | 31 | 31 | ||||
Business Acquisitions | ||||||
Acquisitions And Divestitures [Line Items] | ||||||
Aggregate amount of goodwill arising from acquisitions | 657 | 175 | 197 | |||
Aggregate amount allocated to other intangibles arising from acquisitions | 223 | 34 | 41 | |||
Acquired intangible assets, weighted average period of amortization | 8 years | 8 years | 6 years | |||
Aggregate amount of goodwill arising from acquisitions that is expected to be deductible for tax purposes | $69 | |||||
[1] | During 2014, goodwill increased $681 million due to acquisitions primarily consisting of Zeta Associates, Inc. (Zeta) at our Space Systems business segment and Systems Made Simple and Industrial Defender, Inc. (Industrial Defender) at our IS&GS business segment (Note 13) and also decreased by $119 million due to a non-cash impairment charge related to our MFC business segment (Note 1). During 2013, the decrease in goodwill was primarily due to a non-cash impairment charge of $195 million related to our MFC business segment (Note 1), partially offset by the acquisition of Amor Group Ltd. (Amor) at our IS&GS business segment (Note 13). Total accumulated goodwill impairment loss as of the beginning of 2014 was $195 million and related entirely to our MFC business segment. |
Restructuring_Charges_Addition
Restructuring Charges - Additional Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended | 14 Months Ended | |||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | ||
Restructuring Cost and Reserve [Line Items] | ||||||||
Severance charges | $171 | $30 | $201 | [1] | $48 | [1] | ||
Reduction in net earnings due to severance charges | 111 | 19 | 130 | 31 | ||||
Decrease in diluted earnings per share due to severance charges | $0.40 | $0.09 | ||||||
Accelerated and incremental costs incurred | 110 | 110 | ||||||
November 2013 Severance Actions | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Severance payments | 92 | 107 | ||||||
Year that severance payments will be paid by | 2015 | |||||||
Information Systems & Global Solutions | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Severance charges | 30 | 83 | ||||||
Information Systems & Global Solutions | Incremental expected costs as a result of the November 2013 restructuring plan | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Expected total accelerated and incremental costs | 15 | 15 | ||||||
Mission Systems and Training | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Severance charges | 37 | |||||||
Mission Systems and Training | Incremental expected costs as a result of the November 2013 restructuring plan | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Expected total accelerated and incremental costs | 50 | 50 | ||||||
Space Systems | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Severance charges | 81 | |||||||
Space Systems | Incremental expected costs as a result of the November 2013 restructuring plan | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Expected total accelerated and incremental costs | 175 | 175 | ||||||
Information Systems & Global Solutions, Mission Systems & Training, and Space Systems | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Number of employees terminated | 4,000 | |||||||
Aeronautics | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Severance charges | 25 | |||||||
Former Electronic Systems business segment | ||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||
Severance charges | $23 | |||||||
[1] | See Note 14 for information on charges related to certain severance actions at our business segments. Severance charges for initiatives that are not significant are included in business segment operating profit. |
Fair_Value_Assets_and_Liabilit
Fair Value, Assets and Liabilities Measured on Recurring Basis (Detail) (Fair Value, Measurements, Recurring, USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | $27 | $28 |
Derivative liabilities | 18 | 23 |
Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 92 | 77 |
Mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 696 | 613 |
U.S. Government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 136 | 238 |
Other securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 153 | 131 |
Fair value, inputs, level 1 | Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 92 | 77 |
Fair value, inputs, level 1 | Mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 696 | 613 |
Fair value, inputs, level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 27 | 28 |
Derivative liabilities | 18 | 23 |
Fair value, inputs, level 2 | U.S. Government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 136 | 238 |
Fair value, inputs, level 2 | Other securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | $153 | $131 |
Fair_Value_Measurements_Additi
Fair Value Measurements - Additional Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Estimated fair values of debt instruments | $7,900,000,000 | $7,400,000,000 | $7,900,000,000 | $7,400,000,000 | ||
Outstanding principal amount of debt instruments | 7,041,000,000 | 7,034,000,000 | 7,041,000,000 | 7,034,000,000 | ||
Unamortized discount on long-term debt | 872,000,000 | 882,000,000 | 872,000,000 | 882,000,000 | ||
Goodwill impairment charge | $119,000,000 | $195,000,000 | $119,000,000 | [1] | $195,000,000 | [1] |
[1] | We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information. |
Summary_of_Quarterly_Informati2
Summary of Quarterly Information (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||||||||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 28, 2014 | Jun. 29, 2014 | Mar. 30, 2014 | Dec. 31, 2013 | Sep. 29, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||||||
Quarterly Financial Information [Line Items] | |||||||||||||||||||
Net sales | $12,530 | $11,114 | $11,306 | $10,650 | $11,533 | $11,347 | $11,408 | $11,070 | $45,600 | $45,358 | $47,182 | ||||||||
Operating profit | 1,342 | 1,392 | 1,426 | 1,432 | 834 | 1,254 | 1,298 | 1,119 | 5,592 | 4,505 | 4,434 | ||||||||
Net earnings | 904 | [1] | 888 | [1] | 889 | [1] | 933 | [1] | 488 | 873 | 859 | 761 | 3,614 | 2,981 | 2,745 | ||||
Basic earnings per share | $2.87 | $2.81 | $2.81 | $2.92 | $1.53 | [2] | $2.72 | [2] | $2.68 | [2] | $2.37 | [2] | $11.41 | $9.29 | $8.48 | ||||
Diluted earnings per share | $2.82 | $2.76 | $2.76 | $2.87 | $1.50 | $2.66 | $2.64 | $2.33 | $11.21 | $9.13 | $8.36 | ||||||||
Net earnings from continuing operations | 488 | [3] | 842 | [3] | 859 | [3] | 761 | [3] | 3,614 | 2,950 | 2,745 | ||||||||
Net earnings from discontinued operations | $31 | $31 | |||||||||||||||||
[1] | The fourth quarter of 2014 included a charge of $119 million ($107 million after tax) related to a non-cash goodwill impairment charge (Note 1) and a tax benefit of $45 million due to the retroactive reinstatement of the R&D tax credit for 2014. | ||||||||||||||||||
[2] | The sum of the quarterly earnings per share amounts do not equal the earnings per share amount included on our Statements of Earnings, primarily due to the timing of our share repurchases during each respective year. | ||||||||||||||||||
[3] | The first quarter of 2013 included a tax benefit of $37 million from the R&D tax credit attributable to 2012 (Note 7) and a charge of $30 million ($19 million after tax) related to certain severance actions (Note 14). The fourth quarter of 2013 included charges of $195 million ($176 million after tax) related to a non-cash goodwill impairment charge (Note 1) and $171 million ($111 million after tax) related to certain severance actions (Note 14). |
Summary_of_Quarterly_Informati3
Summary of Quarterly Information (Parenthetical) (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Quarterly Financial Information [Line Items] | |||||||||
Non-cash goodwill impairment charge | $119 | $195 | $119 | [1] | $195 | [1] | |||
Reduction in net earnings due to non-cash goodwill impairment charge | 107 | 176 | |||||||
Recognized tax benefit for the impact of the tax credit | 66 | 96 | |||||||
Severance charges | 171 | 30 | 201 | [2] | 48 | [2] | |||
Reduction in net earnings due to severance charges | 111 | 19 | 130 | 31 | |||||
Tax Benefit Attributable to 2012 | |||||||||
Quarterly Financial Information [Line Items] | |||||||||
Recognized tax benefit for the impact of the tax credit | 37 | ||||||||
Tax Year 2014 | |||||||||
Quarterly Financial Information [Line Items] | |||||||||
Recognized tax benefit for the impact of the tax credit | $45 | $45 | |||||||
[1] | We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information. | ||||||||
[2] | See Note 14 for information on charges related to certain severance actions at our business segments. Severance charges for initiatives that are not significant are included in business segment operating profit. |