Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 26, 2016shares | |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Jun. 26, 2016 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q2 |
Trading Symbol | LMT |
Entity Registrant Name | LOCKHEED MARTIN CORP |
Entity Central Index Key | 936,468 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 302,905,786 |
Consolidated Statements of Earn
Consolidated Statements of Earnings - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 26, 2016 | Jun. 28, 2015 | Jun. 26, 2016 | Jun. 28, 2015 | |
Net sales | ||||
Products | $ 10,045 | $ 9,157 | $ 18,989 | $ 17,010 |
Services | 2,869 | 2,486 | 5,627 | 4,744 |
Total net sales | 12,914 | 11,643 | 24,616 | 21,754 |
Cost of sales | ||||
Products | (9,086) | (8,102) | (17,178) | (15,053) |
Services | (2,548) | (2,216) | (5,011) | (4,167) |
Severance charges | (99) | |||
Other unallocated, net | 144 | 46 | 331 | 100 |
Total cost of sales | (11,490) | (10,272) | (21,957) | (19,120) |
Gross profit | 1,424 | 1,371 | 2,659 | 2,634 |
Other income, net | 142 | 74 | 204 | 167 |
Operating profit | 1,566 | 1,445 | 2,863 | 2,801 |
Interest expense | (166) | (104) | (330) | (197) |
Other non-operating income, net | 2 | 1 | 5 | |
Earnings before income taxes | 1,400 | 1,343 | 2,534 | 2,609 |
Income tax expense | (379) | (414) | (615) | (802) |
Net earnings | $ 1,021 | $ 929 | $ 1,919 | $ 1,807 |
Earnings per common share | ||||
Basic earnings per common share in USD | $ 3.37 | $ 2.98 | $ 6.32 | $ 5.76 |
Diluted earnings per common share in USD | 3.32 | 2.94 | 6.23 | 5.68 |
Cash dividends paid per common share in USD | $ 1.65 | $ 1.50 | $ 3.30 | $ 3 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 26, 2016 | Jun. 28, 2015 | Jun. 26, 2016 | Jun. 28, 2015 | |
Net earnings | $ 1,021 | $ 929 | $ 1,919 | $ 1,807 |
Other comprehensive income (loss), net of tax Postretirement benefit plans | ||||
Recognition of previously deferred postretirement benefit plan amounts | 173 | 213 | 346 | 425 |
Other, net | (23) | 46 | (6) | (11) |
Other comprehensive income (loss), net of tax | 150 | 259 | 340 | 414 |
Comprehensive income | $ 1,171 | $ 1,188 | $ 2,259 | $ 2,221 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 26, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 1,269 | $ 1,090 |
Receivables, net | 9,275 | 8,061 |
Inventories, net | 5,136 | 4,962 |
Other current assets | 393 | 460 |
Total current assets | 16,073 | 14,573 |
Property, plant and equipment, net | 5,438 | 5,490 |
Goodwill | 13,621 | 13,576 |
Intangible assets, net | 4,051 | 4,147 |
Deferred income taxes | 5,830 | 5,931 |
Other noncurrent assets | 5,395 | 5,411 |
Total assets | 50,408 | 49,128 |
Current liabilities | ||
Accounts payable | 2,778 | 1,974 |
Customer advances and amounts in excess of costs incurred | 7,236 | 6,988 |
Salaries, benefits and payroll taxes | 2,012 | 1,916 |
Current maturities of long-term debt | 502 | 956 |
Other current liabilities | 3,067 | 2,085 |
Total current liabilities | 15,595 | 13,919 |
Long-term debt, net | 14,307 | 14,305 |
Accrued pension liabilities | 11,816 | 11,807 |
Other postretirement benefit liabilities | 1,073 | 1,070 |
Other noncurrent liabilities | 4,620 | 4,930 |
Total liabilities | 47,411 | 46,031 |
Stockholders' equity | ||
Common stock, $1 par value per share | 301 | 303 |
Additional paid-in capital | 0 | 0 |
Retained earnings | 13,800 | 14,238 |
Accumulated other comprehensive loss | (11,104) | (11,444) |
Total stockholders' equity | 2,997 | 3,097 |
Total liabilities and stockholders' equity | $ 50,408 | $ 49,128 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 26, 2016 | Dec. 31, 2015 |
Common stock, par value (in USD per share) | $ 1 | $ 1 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 26, 2016 | Jun. 28, 2015 | |
Operating activities | ||
Net earnings | $ 1,919 | $ 1,807 |
Adjustments to reconcile net earnings to net cash provided by operating activities | ||
Depreciation and amortization | 593 | 490 |
Stock-based compensation | 97 | 89 |
Severance charges | 99 | |
Changes in assets and liabilities | ||
Receivables, net | (1,214) | (1,183) |
Inventories, net | (233) | (154) |
Accounts payable | 806 | 453 |
Customer advances and amounts in excess of costs incurred | 239 | (211) |
Postretirement benefit plans | 515 | 580 |
Income taxes | 237 | 471 |
Other, net | 82 | (122) |
Net cash provided by operating activities | 3,140 | 2,220 |
Investing activities | ||
Capital expenditures | (386) | (309) |
Other, net | 59 | 91 |
Net cash used for investing activities | (327) | (218) |
Financing activities | ||
Issuance of long-term debt, net of related costs | 2,213 | |
Repayments of long-term debt | (452) | |
Repurchases of common stock | (1,002) | (1,541) |
Dividends paid | (1,034) | (965) |
Proceeds from stock option exercises | 53 | 84 |
Other, net | (199) | (37) |
Net cash used for financing activities | (2,634) | (246) |
Net change in cash and cash equivalents | 179 | 1,756 |
Cash and cash equivalents at beginning of period | 1,090 | 1,446 |
Cash and cash equivalents at end of period | $ 1,269 | $ 3,202 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss |
Beginning Balance at Dec. 31, 2014 | $ 3,400 | $ 314 | $ 14,956 | $ (11,870) | |
Net earnings | 1,807 | 1,807 | |||
Other comprehensive income, net of tax | 414 | 414 | |||
Repurchases of common stock | (1,541) | (8) | $ (318) | (1,215) | |
Dividends declared | (1,419) | (1,419) | |||
Stock-based awards and ESOP activity | 321 | 3 | 318 | ||
Ending Balance at Jun. 28, 2015 | 2,982 | 309 | 14,129 | (11,456) | |
Beginning Balance at Dec. 31, 2015 | 3,097 | 303 | 14,238 | (11,444) | |
Net earnings | 1,919 | 1,919 | |||
Other comprehensive income, net of tax | 340 | 340 | |||
Repurchases of common stock | (1,002) | (5) | (159) | (838) | |
Dividends declared | (1,519) | (1,519) | |||
Stock-based awards and ESOP activity | 162 | 3 | $ 159 | ||
Ending Balance at Jun. 26, 2016 | $ 2,997 | $ 301 | $ 13,800 | $ (11,104) |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 26, 2016 | |
BASIS OF PRESENTATION | NOTE 1 – BASIS OF PRESENTATION We prepared these consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information, the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. We followed the accounting policies disclosed in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 (2015 Form 10-K) filed with the SEC. In the opinion of management, these consolidated financial statements reflect all adjustments that are of a normal recurring nature necessary for a fair presentation of our results of operations, financial condition and cash flows for the interim periods presented. The preparation of these consolidated financial statements requires us 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. The 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. We close our books and records on the last Sunday of the calendar quarter, which was on June 26 for the second quarter of 2016 and June 28 for the second quarter of 2015, to align our financial closing with our business processes. The consolidated financial statements and tables of financial information included herein are labeled based on that convention. This practice only affects interim periods as our fiscal year ends on December 31. On November 6, 2015, we completed the acquisition of Sikorsky Aircraft Corporation (Sikorsky) for $9.0 billion, net of cash acquired, which has been aligned under our Mission Systems and Training (MST) business segment. The financial results of Sikorsky have been included in our consolidated financial results since the November 6, 2015 acquisition date. Accordingly, the results of Sikorsky’s operations are included in our consolidated financial results for the quarter and six months ended June 26, 2016 but not for the quarter and six months ended June 28, 2015. See “Note 3 – Acquisitions and Divestitures” for additional information about the acquisition of Sikorsky and related purchase accounting. On January 26, 2016, we entered into definitive agreements to separate and combine our Information Systems & Global Solutions (IS&GS) business segment with Leidos Holdings, Inc. (Leidos) in a Reverse Morris Trust transaction. The transaction is expected to close in the third quarter of 2016. Until closing, IS&GS will continue to operate as a business segment and the financial results for the IS&GS business segment will be reported in our continuing operations. See “Note 3 – Acquisitions and Divestitures” for additional information about the planned divestiture of our IS&GS business segment. During the fourth quarter of 2015, we realigned certain programs among our business segments. The amounts, discussion and presentation of our business segments for all periods presented in these consolidated financial statements reflect the program realignment. The realignment did not impact our previously reported consolidated financial statements for 2015. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for the full year or future periods. Unless otherwise noted, we present all per share amounts cited in these consolidated financial statements on a “per diluted share” basis. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2015 Form 10-K. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 6 Months Ended |
Jun. 26, 2016 | |
EARNINGS PER COMMON SHARE | NOTE 2 – EARNINGS PER COMMON SHARE The weighted average number of shares outstanding used to compute earnings per common share were as follows (in millions): Quarters Ended Six Months Ended June 26, 2016 June 28, 2015 June 26, 2016 June 28, 2015 Weighted average common shares outstanding for basic computations 303.1 312.0 303.8 313.7 Weighted average dilutive effect of equity awards 4.0 4.1 4.1 4.5 Weighted average common shares outstanding for diluted computations 307.1 316.1 307.9 318.2 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 performance share units and exercise of outstanding stock options based on the treasury stock method. There were no significant anti-dilutive equity awards during the quarters and six months ended June 26, 2016 or June 28, 2015. |
ACQUISITIONS AND DIVESTITURES
ACQUISITIONS AND DIVESTITURES | 6 Months Ended |
Jun. 26, 2016 | |
ACQUISITIONS AND DIVESTITURES | NOTE 3 – ACQUISITIONS AND DIVESTITURES Acquisition of Sikorsky Aircraft Corporation On November 6, 2015, we completed the acquisition of Sikorsky from United Technologies Corporation (UTC) for $9.0 billion, net of cash acquired. Sikorsky is a global company primarily engaged in the research, design, development, manufacture and support of military and commercial helicopters. Sikorsky’s products include military helicopters such as the H-60 Black Hawk, MH-60R Seahawk, CH-53K, H-92, and commercial helicopters such as the S-76 and S-92. The acquisition enables us to extend our core business into the military and commercial rotary wing markets, allowing us to strengthen our position in the aerospace and defense industry. Further, this acquisition will expand our presence in commercial and international markets. Sikorsky has been aligned under our MST business segment. To fund the $9.0 billion acquisition price, we utilized $6.0 billion of proceeds borrowed under our 364-day revolving credit facility (the 364-day Facility), $2.0 billion of cash on hand and $1.0 billion from the issuance of commercial paper. In the fourth quarter of 2015, we repaid all outstanding borrowings under the 364-day Facility with the proceeds from the issuance of $7.0 billion of fixed interest-rate long-term notes in a public offering (the November 2015 Notes). In the fourth quarter of 2015, we also repaid the $1.0 billion in commercial paper borrowings. Preliminary Allocation of Purchase Price to Assets Acquired and Liabilities Assumed We accounted for the acquisition of Sikorsky as a business combination, which requires us to record the assets acquired and liabilities assumed at fair value. The amount by which the purchase price exceeds the fair value of the net assets acquired is recorded as goodwill. We commenced the appraisals necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed and the amount of goodwill to be recognized as of the acquisition date. The amounts recorded for certain assets and liabilities are preliminary in nature and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the acquisition date. The final determination of the fair values of certain assets and liabilities will be completed within the measurement period of up to one year from the acquisition date, as permitted under GAAP. The size and breadth of the Sikorsky acquisition could necessitate the need to use the full one year measurement period to adequately analyze and assess a number of the factors used in establishing the asset and liability fair values as of the acquisition date including contractual and operational factors underlying the customer programs intangible assets, the trademarks intangible asset, customer contractual obligations, inventories, receivables and customer advances, and the assumptions underpinning certain program and legal reserves. The final values may also result in changes to amortization expense related to intangible assets. Any potential adjustments made could be material in relation to the values presented in the table below. During the quarter ended June 26, 2016 we continued to obtain information to refine estimated fair values. As a result of the additional information the significant adjustments to the carrying amounts were as follows; deferred income tax assets and inventories were decreased by about $30 million and $10 million and goodwill was increased by about $45 million. As a result of the additional information obtained during the first six months of 2016, the significant adjustments to the carrying amounts were as follows; inventories, customer programs intangible assets and deferred income tax assets were reduced by about $60 million, $30 million, and $20 million, while the carrying amounts of the trademarks intangible asset, goodwill and customer advances and amounts in excess of costs incurred increased by about $70 million, $45 million and $10 million, respectively. The measurement period adjustments did not result in a significant adjustment to amortization expense for intangible assets during the quarter or the six months ended June 26, 2016. The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date, including the refinements described in the previous paragraph (in millions): Cash and cash equivalents $ 75 Receivables 1,921 Inventories 1,758 Other current assets 25 Property, plant and equipment 653 Goodwill 2,807 Intangible assets: Customer programs 3,099 Trademarks 887 Other noncurrent assets 507 Deferred income tax assets 265 Total identifiable assets and goodwill 11,997 Accounts payable (565 ) Customer advances and amounts in excess of costs incurred (1,229 ) Salaries, benefits and payroll taxes (105 ) Other current liabilities (344 ) Customer contractual obligations (a) (480 ) Other noncurrent liabilities (158 ) Deferred income tax liabilities (a) (38 ) Total liabilities assumed (2,919 ) Total purchase price $ 9,078 (a) Recorded in Other noncurrent liabilities on the consolidated balance sheets. Intangible assets related to customer programs were recognized for each major helicopter and aftermarket program and represent the aggregate value associated with the customer relationships, contracts, technology and tradenames underlying the associated program. These intangible assets are being amortized on a straight-line basis over a weighted-average useful life of approximately 15 years. The useful life is based on the period of expected cash flows used to measure the fair value of each of the intangible assets. Customer contractual obligations represent liabilities on certain development programs where the expected costs exceed the expected sales under contract. We measured these liabilities based on the price to transfer the obligation to a market participant at the measurement date, assuming that the liability will remain outstanding in the marketplace. Based on the estimated net cash outflows of the developmental programs plus a reasonable contracting profit margin required to transfer the contracts to market participants, we recorded assumed liabilities of approximately $480 million. These liabilities will be liquidated in accordance with the underlying economic pattern of the contractual obligations, as reflected by the estimated future net cash outflows incurred on the associated contracts. From the acquisition date through the period ended June 26, 2016, we recognized approximately $50 million in sales related to customer contractual obligations. Estimated liquidation of the customer contractual obligations is approximated as follows: $40 million remaining in 2016, $90 million in 2017, $70 million in 2018, $70 million in 2019, $70 million in 2020, $50 million in 2021 and $40 million thereafter. The fair values of the assets acquired and liabilities assumed were preliminarily determined using income, market and cost valuation methodologies. The fair value measurements were estimated using significant inputs that are not observable in the market and thus represent a Level 3 measurement as defined in Accounting Standards Codification (ASC) 820, Fair Value Measurement The preliminary purchase price allocation resulted in the recognition of $2.8 billion of goodwill, all of which is expected to be amortizable for tax purposes. All of the goodwill was assigned to our MST business segment. The goodwill recognized is attributable to expected revenue synergies generated by the integration of our products and technologies with those of Sikorsky, cost synergies resulting from the consolidation or elimination of certain functions, and intangible assets that do not qualify for separate recognition, such as the assembled workforce of Sikorsky. Determining the fair value of assets acquired and liabilities assumed requires the exercise of significant judgments, including the amount and timing of expected future cash flows, long-term growth rates and discount rates. The cash flows employed in the discounted cash flow analyses are based on our best estimate of future sales, earnings and cash flows after considering factors such as general market conditions, customer budgets, existing firm orders, expected future orders, contracts with suppliers, labor agreements, changes in working capital, long term business plans and recent operating performance. Use of different estimates and judgments could yield different results. Supplemental Pro Forma Financial Information (unaudited) Sikorsky’s financial results have been included in our consolidated financial results for the periods subsequent to the November 6, 2015 acquisition date. The following table presents summarized unaudited pro forma financial information as if Sikorsky had been included in our financial results for the quarter and six months ended June 28, 2015 (in millions): Quarter Ended Six Months Ended Net sales $ 13,309 $ 24,653 Net earnings 935 1,777 Basic earnings per common share 3.00 5.66 Diluted earnings per common share 2.96 5.58 The unaudited supplemental pro forma financial data above have been calculated after applying our accounting policies and adjusting the historical results of Sikorsky with pro forma adjustments, net of tax, that assume the acquisition occurred on January 1, 2014. Significant pro forma adjustments include the recognition of additional amortization expense related to acquired intangible assets (based on our preliminary purchase accounting estimates) and additional interest expense related to the debt used to finance the majority of the Sikorsky purchase price. These adjustments assume the Sikorsky acquisition and debt issued to finance most of the purchase price occurred on January 1, 2014. The adjustments include amortization expense of about $40 million and about $80 million and interest expense of about $45 million and about $90 million for the quarter and six months ended June 28, 2015, respectively. The unaudited supplemental pro forma financial information does not reflect the realization of any expected ongoing revenue or cost synergies relating to the integration of the two companies. Further, the pro forma data should not be considered indicative of the results that would have occurred if the acquisition, related financing and the associated notes issuance and repayment of the 364-day credit facility had been consummated on January 1, 2014, nor are they indicative of future results. Planned Divestiture of the Information Systems & Global Solutions Business On January 26, 2016, we entered into definitive agreements to separate and combine our IS&GS business with Leidos in a Reverse Morris Trust transaction. The transaction will be structured such that initially the IS&GS business segment will be contributed to a newly formed wholly owned subsidiary, Abacus Innovations Corporation (Abacus), and the common stock of Abacus will be distributed to Lockheed Martin stockholders either through a pro rata dividend in a spin-off transaction, an exchange offer pursuant to which Lockheed Martin shareholders will elect whether to exchange shares of Lockheed Martin common stock for shares of Abacus common stock in a split-off transaction, or a combination split-off and spin-off transaction. Following the distribution, Abacus will merge with a subsidiary of Leidos and each share of Abacus common stock held by Lockheed Martin stockholders will automatically convert into one share of Leidos common stock upon completing the merger. Immediately after the completion of the transactions, approximately 50.5% of the outstanding shares of Leidos common stock (approximately 77 million shares) are expected to be held by pre-merger Abacus (former Lockheed Martin) stockholders on a fully-diluted basis. Pre-merger Leidos stockholders are expected to hold approximately 49.5% of the outstanding shares of Leidos common stock on a fully diluted basis. Lockheed Martin will not receive or hold any shares of Leidos common stock. As part of the transaction, we will also receive a one-time special cash payment of $1.8 billion. On July 11, 2016 we announced that we had commenced an exchange offer in which Lockheed Martin stockholders have the opportunity, but are not required, to exchange shares of Lockheed Martin common stock for shares of Abacus common stock, which will automatically convert into shares of Leidos common stock upon completion of the merger. Only those stockholders that elect to participate in the exchange offer will receive shares of Leidos common stock in the merger transaction, provided that, if the exchange offer is not fully subscribed, we will distribute the remaining shares pro rata to all shares not tendered, and the shares distributed will also be converted into Leidos common stock in the merger. We retain the right to distribute the shares of Abacus common stock by means of a spin-off or split-off transaction until the exchange offer is completed. Both the exchange and merger are expected to qualify as tax-free transactions to Lockheed Martin and its stockholders, except to the extent that cash is paid to Lockheed Martin stockholders in lieu of fractional shares. The transactions remain subject to customary closing conditions, including approval by Leidos’ stockholders of the issuance of the Leidos shares in the merger, the absence of a material adverse change with respect to each of IS&GS and Leidos, and the receipt of solvency opinions and opinions of tax counsel. The required regulatory reviews in the U.S. and the U.K. have been completed. The transaction is expected to close in the third quarter of 2016. Upon completing the separation of the IS&GS business, we will classify the financial results of the IS&GS business as discontinued operations in our historical financial statements. We anticipate that the number of Lockheed Martin’s outstanding shares of common stock will be reduced as a result of the exchange offer and also expect to recognize a significant gain on the transaction. The gain would represent the difference between the fair value of the shares of Lockheed Martin common stock tendered by our stockholders over the carrying value of the net assets of the IS&GS business. Additionally, the gain will include the acceleration of deferred pension service credits. Any such gain will be included in the results of discontinued operations. However, the value of the shares of Leidos stock to be received and the number of any shares of our stock retired in the exchange offer and the amount of any book gain will depend on the average trading price of Leidos and Lockheed Martin common stock during an averaging period prior to the closing of the transaction (in the case of Leidos common stock, adjusted for the special dividend of $13.64 per share to be paid to Leidos stockholders in connection with the transaction). However, there is no guarantee that the transaction will be structured as a split-off transaction or that it will result in a reduction in our shares or a gain at closing. Other Divestitures During the second quarter of 2016, we completed the sale of Lockheed Martin Commercial Flight Training (LMCFT), which was classified as held for sale in the fourth quarter of 2015. LMCFT’s financial results are not material and there was no significant impact on our consolidated financial results as a result of completing the sale of LMCFT. Accordingly, LMCFT’s financial results are not classified in discontinued operations. |
GOODWILL AND ACQUIRED INTANGIBL
GOODWILL AND ACQUIRED INTANGIBLE ASSETS | 6 Months Ended |
Jun. 26, 2016 | |
Goodwill by Segment | |
GOODWILL AND ACQUIRED INTANGIBLE ASSETS | NOTE 4 – GOODWILL AND ACQUIRED INTANGIBLE ASSETS Changes in the carrying amount of goodwill by segment were as follows (in millions): Aeronautics IS&GS MFC MST Space Systems Total Balance at December 31, 2015 $ 171 $ 2,881 $ 2,198 $ 6,738 $ 1,588 $ 13,576 Acquisitions — — — 43 — 43 Divestitures — — — (7 ) — (7 ) Foreign currency translation — (13 ) (5 ) 28 (1 ) 9 Balance at June 26, 2016 $ 171 $ 2,868 $ 2,193 $ 6,802 $ 1,587 $ 13,621 Acquired intangible assets consisted of the following (in millions): June 26, 2016 December 31, 2015 Gross Accumulated Net Gross Amount Accumulated Net Finite-Lived: Customer programs $ 3,099 $ (145) $ 2,954 $ 3,127 $ (38) $ 3,089 Customer relationships 309 (167) 142 309 (166) 143 Other 171 (121) 50 171 (90) 81 Total finite-lived intangibles 3,579 (433) 3,146 3,607 (294) 3,313 Indefinite Lived: Trademarks 905 — 905 834 — 834 Total acquired intangibles $ 4,484 $ (433) $ 4,051 $ 4,441 $ (294) $ 4,147 Acquired finite-lived intangible assets are amortized to expense over the following estimated useful lives: customer programs from nine to 20 years, customer relationships from four to 10 years, other finite-lived intangible assets from two to 10 years. During the quarter and six months ended June 26, 2016, we continued to obtain information and refine the appraisals of the fair values of intangible assets related to the Sikorsky acquisition. For further details on changes in intangible asset values (See Note 3). Amortization expense for acquired finite-lived intangible assets was $70 million and $139 million for the quarter and six months ended June 26, 2016 and $20 million and $41 million for the quarter and six months ended June 28, 2015. Estimated future amortization expense is as follows: $139 million remaining in 2016; $262 million in 2017; $248 million in 2018; $243 million in 2019; $236 million in 2020; $231 million in 2021 and $1.8 billion thereafter. Our estimates of amortization expense for finite-lived intangible assets are subject to change, pending the final determination of the fair value of intangible assets acquired in connection with the Sikorsky acquisition (See Note 3). |
BUSINESS SEGMENTS INFORMATION
BUSINESS SEGMENTS INFORMATION | 6 Months Ended |
Jun. 26, 2016 | |
BUSINESS SEGMENTS INFORMATION | NOTE 5 – BUSINESS SEGMENTS INFORMATION We operate in five business segments: Aeronautics, IS&GS, Missiles and Fire Control (MFC), MST and Space Systems. We organize our business segments based on the nature of the products and services offered. The results of our MST business segment include the operations of Sikorsky since its November 6, 2015 acquisition date. Accordingly, the financial results of Sikorsky operations are included in the financial results of our MST business segment for the quarter and six months ended June 26, 2016 but not for the quarter and six months ended June 28, 2015. 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 as the operating activities of the equity method investees are closely aligned with the operations of our business segments. United Launch Alliance (ULA), which is part of our Space Systems business segment, is our primary equity method investee. 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 and significant severance actions; gains or losses from divestitures; 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. See Note 10 (under the caption “Changes in Estimates”) for a discussion related to certain factors that may impact the comparability of net sales and operating profit of our business segments. 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. Summary operating results for each of our business segments were as follows (in millions): Quarters Ended Six Months Ended June 26, 2016 June 28, 2015 June 26, 2016 June 28, 2015 Net sales Aeronautics $ 4,375 $ 4,131 $ 8,174 $ 7,265 Information Systems & Global Solutions 1,337 1,408 2,671 2,798 Missiles and Fire Control 1,680 1,649 3,114 3,032 Mission Systems and Training 3,303 2,165 6,307 4,144 Space Systems 2,219 2,290 4,350 4,515 Total net sales $ 12,914 $ 11,643 $ 24,616 $ 21,754 Operating profit Aeronautics $ 478 $ 444 $ 898 $ 815 Information Systems & Global Solutions 151 107 260 252 Missiles and Fire Control 253 293 474 579 Mission Systems and Training 202 262 431 442 Space Systems 340 294 584 618 Total business segment operating profit 1,424 1,400 2,647 2,706 Unallocated items FAS/CAS pension adjustment FAS pension expense (254) (284) (508) (568) Less: CAS pension cost 497 404 997 807 FAS/CAS pension adjustment 243 120 489 239 Stock-based compensation (53) (49) (97) (89) Severance charges — — (99) — Other, net (48) (26) (77) (55) Total unallocated items 142 45 216 95 Total consolidated operating profit $ 1,566 $ 1,445 $ 2,863 $ 2,801 Intersegment sales Aeronautics $ 39 $ 26 $ 74 $ 46 Information Systems & Global Solutions 29 3 53 5 Missiles and Fire Control 69 81 144 155 Mission Systems and Training 462 384 907 703 Space Systems 36 35 69 68 Total intersegment sales $ 635 $ 529 $ 1,247 $ 977 Total assets for each of our business segments were as follows (in millions): June 26, 2016 December 31, Assets Aeronautics $ 7,768 $ 6,618 Information Systems & Global Solutions 4,103 4,206 Missiles and Fire Control 4,003 4,027 Mission Systems and Training 19,008 19,187 Space Systems 5,056 4,861 Total business segment assets 39,938 38,899 Corporate assets (a) 10,470 10,229 Total assets $ 50,408 $ 49,128 (a) Corporate assets primarily include cash and cash equivalents, deferred income taxes, environmental receivables and investments held in a separate trust to fund certain of our non-qualified deferred compensation plans. 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 approximately 21% and 20% of our total consolidated net sales for the quarter and six months ended June 26, 2016 and 20% and 19% of our total consolidated net sales for the quarter and six months ended June 28, 2015. |
INVENTORIES, NET
INVENTORIES, NET | 6 Months Ended |
Jun. 26, 2016 | |
INVENTORIES, NET | NOTE 6 – INVENTORIES, NET Inventories, net consisted of the following (in millions): June 26, 2016 December 31, 2015 Work-in-process, primarily related to long-term contracts and programs in progress $ 8,996 $ 8,199 Less: customer advances and progress payments (5,345) (5,035) 3,651 3,164 Other inventories 1,485 1,798 Total inventories, net $ 5,136 $ 4,962 |
POSTRETIREMENT BENEFIT PLANS
POSTRETIREMENT BENEFIT PLANS | 6 Months Ended |
Jun. 26, 2016 | |
POSTRETIREMENT BENEFIT PLANS | NOTE 7 – POSTRETIREMENT BENEFIT PLANS Our pretax net periodic benefit cost related to our qualified defined benefit pension plans and retiree medical and life insurance plans consisted of the following (in millions): Quarters Ended Six Months Ended June 26, 2016 June 28, 2015 June 26, 2016 June 28, 2015 Qualified defined benefit pension plans Service cost $ 212 $ 218 $ 424 $ 435 Interest cost 466 447 931 895 Expected return on plan assets (666) (683) (1,333) (1,367) Recognized net actuarial losses 339 400 679 800 Amortization of prior service (credits) costs (97) (98) (193) (195) Total net periodic benefit cost $ 254 $ 284 $ 508 $ 568 Retiree medical and life insurance plans Service cost $ 6 $ 5 $ 12 $ 10 Interest cost 29 27 59 55 Expected return on plan assets (35) (37) (69) (74) Recognized net actuarial losses 9 11 17 22 Amortization of prior service costs 6 1 11 2 Total net periodic benefit cost $ 15 $ 7 $ 30 $ 15 The recognized net actuarial losses and the amortization of net prior service (credits) costs in the table above, as well as similar amounts related to our other postretirement benefit plans ($10 million and $21 million during the quarter and six months ended June 26, 2016 and $15 million and $28 million for the quarter and six months ended June 28, 2015), include amounts that were reclassified from accumulated other comprehensive loss (AOCL) and recorded as a component of net periodic benefit cost for the periods presented. These costs totaled $173 million (net of $94 million of tax expense) and $346 million (net of $189 million of tax expense) for the quarter and six months ended June 26, 2016 and $213 million (net of $116 million of tax expense) and $425 million (net of $232 million of tax expense) for the quarter and six months ended June 28, 2015, which were recorded on our Statements of Comprehensive Income as an increase to other comprehensive income. The funding of our qualified defined benefit pension plans is determined in accordance with the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Pension Protection Act of 2006 (PPA), and in a manner consistent with CAS and Internal Revenue Code rules. There were no contributions to our qualified defined benefit pension plans during the quarters and six months ended June 26, 2016 and June 28, 2015, other than insignificant contributions to the pension plans we assumed in the Sikorsky acquisition. We do not plan to make contributions to our pension plans in 2016 or 2017, other than insignificant contributions to the pension plans we assumed in the Sikorsky acquisition, because none are required using current assumptions, including anticipated investment returns on plan assets. |
LEGAL PROCEEDINGS AND CONTINGEN
LEGAL PROCEEDINGS AND CONTINGENCIES | 6 Months Ended |
Jun. 26, 2016 | |
LEGAL PROCEEDINGS AND CONTINGENCIES | NOTE 8 – LEGAL PROCEEDINGS 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 sanctions or relief. We believe the probability is remote that the outcome of each of these matters, including the legal proceedings described 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 as individual proceedings or claims progress. Although we cannot predict the outcome of legal or other proceedings with certainty, where there is at least a reasonable possibility that a loss may have been incurred, 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. We follow a thorough process in which we seek to estimate the reasonably possible loss or range of loss, and only if we are unable to make such an estimate do 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 As a result of our acquisition of Sikorsky, we assumed the defense of and any potential liability for the following civil False Claims Act lawsuit. In October 2014, the U.S. Government filed a complaint in the U.S. District Court for the Eastern District of Wisconsin alleging that Sikorsky and two of its wholly-owned subsidiaries, Derco Aerospace (Derco) and Sikorsky Support Services, Inc. (SSSI), violated the civil False Claims Act in connection with a contract that the U.S. Navy awarded to SSSI in June 2006 to support the Navy’s T-34 and T-44 fixed-wing turboprop training aircraft. SSSI subcontracted with Derco primarily to procure and manage the spare parts for the training aircraft. The Government alleges that SSSI overbilled the Navy on the contract because Derco added profit and overhead costs to the price of the spare parts that Derco procured and then sold to SSSI. The Government also claims that SSSI submitted false Certificates of Final Indirect Costs in the years 2006 through 2012. The Government’s complaint asserts numerous claims for violations of the False Claims Act, breach of contract and unjust enrichment. In a late April 2015 court filing, the Government disclosed that it seeks damages of approximately $45 million, subject to trebling, plus statutory penalties of approximately $13 million, all totaling approximately $148 million. We believe that we have legal and factual defenses to the government’s claims. Although we continue to evaluate our liability and exposure, we do not currently believe that it is probable that we will incur a material loss. If, contrary to our expectations, the Government prevails in this matter and proves damages at the high end of the range sought and is successful in having these trebled, the outcome could have an adverse effect on our results of operations in the period in which a liability is recognized and on our cash flows for the period in which any damages are paid. 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 completing 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 in December 2014, after a five-week bench trial and the filing of post-trial pleadings by the parties. We expect a decision in 2016. Environmental Matters We are involved in environmental proceedings and potential proceedings relating to soil, sediment 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 both June 26, 2016 and December 31, 2015, the aggregate amount of liabilities recorded relative to environmental matters was $1.0 billion, most of which are recorded in other noncurrent liabilities on our Balance Sheets. We have recorded receivables totaling $897 million and $858 million at June 26, 2016 and December 31, 2015, 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. 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 California 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 a second contaminant, perchlorate, and the U.S. Environmental Protection Agency (U.S. EPA) is also considering whether to regulate perchlorate and hexavalent chromium in drinking water. In February 2016, the Natural Resources Defense Council filed suit in federal court in New York against the U.S. EPA to compel the U.S. EPA to set an enforceable drinking water standard for perchlorate. If a substantially lower standard is 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. 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 ventures in which we participate or venture partners. We had total outstanding letters of credit, surety bonds and third-party guarantees aggregating $3.9 billion and $3.8 billion at June 26, 2016 and December 31, 2015. We do not consider guarantees of subsidiaries and other consolidated entities to be third-party guarantees and they are not included in this figure. At June 26, 2016 and December 31, 2015, third-party guarantees totaled $679 million and $678 million, of which approximately 78% and 79% 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 or 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 June 26, 2016, and that it will not be necessary to make significant payments under the third-party guarantees with respect to the non-performance of the venture partners. In determining our exposures, we evaluate the reputation, performance on contractual obligations, technical capabilities and credit quality of our current and former venture partners. There were no material amounts recorded in our financial statements related to third-party guarantees. United Launch Alliance In connection with our 50% ownership interest of ULA, we and The Boeing Company (Boeing) are required to provide ULA an additional capital contribution if ULA is unable to make required payments under its inventory supply agreement with Boeing. As of June 26, 2016, ULA’s total remaining obligation to Boeing under the inventory supply agreement was $120 million. The parties have agreed to defer the remaining payment obligation, as it is more than offset by other commitments to ULA. Accordingly, we do not expect to be required to make a capital contribution to ULA under this agreement. 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 June 26, 2016, and that it will not be necessary to make payments under the cross-indemnities or guarantees. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 26, 2016 | |
FAIR VALUE MEASUREMENTS | NOTE 9 – FAIR VALUE MEASUREMENTS Assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following (in millions): June 26, 2016 December 31, 2015 Total Level 1 Level 2 Total Level 1 Level 2 Assets Equity securities $ 74 $ 74 $ — $ 89 $ 89 $ — Mutual funds 712 712 — 745 745 — U.S. Government securities 131 — 131 119 — 119 Other securities 155 — 155 147 — 147 Derivatives 73 — 73 15 — 15 Liabilities Derivatives 58 — 58 35 — 35 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 the six months ended June 26, 2016. 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. The aggregate notional amount of our outstanding interest rate swaps at June 26, 2016 and December 31, 2015 was $1.0 billion and $1.5 billion. The aggregate notional amount of our outstanding foreign currency hedges at June 26, 2016 and December 31, 2015 was $4.6 billion and $4.1 billion. Derivative instruments did not have a material impact on net earnings and comprehensive income during the quarters and six months periods ended June 26, 2016 and June 28, 2015. Substantially all of our derivatives are designated for hedge accounting. 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 $17.4 billion and $16.5 billion at June 26, 2016 and December 31, 2015 and the outstanding principal amount was $15.8 billion and $16.2 billion at June 26, 2016 and December 31, 2015, excluding unamortized discounts and deferred financing costs of $1.0 billion at both June 26, 2016 and December 31, 2015. The estimated fair values of our outstanding debt were determined based on quoted prices for similar instruments in active markets (Level 2). |
OTHER
OTHER | 6 Months Ended |
Jun. 26, 2016 | |
OTHER | NOTE 10 – OTHER Changes in Estimates 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. Comparability of our segment sales, operating profit and operating margin may be impacted favorably or unfavorably 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. 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, insurance recoveries and gains on sales of assets. Unfavorable items may include the adverse resolution of contractual matters; restructuring charges, except for significant severance actions which are excluded from segment operating results; reserves for disputes; asset impairments; and losses on sales of assets. Our consolidated net adjustments not related to volume, including net profit booking rate adjustments and other matters, increased segment operating profit by approximately $435 million and $840 million in the quarter and six months ended June 26, 2016 and $550 million and $1.0 billion in the quarter and six months ended June 28, 2015. These adjustments increased net earnings by approximately $280 million ($0.91 per share) and $545 million ($1.77 per share) in the quarter and six months ended June 26, 2016 and $355 million ($1.12 per share) and $675 million ($2.12 per share) in the quarter and six months ended June 28, 2015. Long-Term Debt Repayment In May 2016, we repaid $452 million of long-term notes with a fixed interest rate of 7.65% according to their scheduled maturities. We also had related variable interest rate swaps with a notional amount of $450 million mature, which did not have a significant impact on net earnings or comprehensive income. February 2015 Debt Issuance On February 20, 2015, we issued $2.25 billion of notes (the February 2015 Notes) in a registered public offering. The February 2015 Notes consist of $750 million maturing in 2025 with a fixed interest rate of 2.90%, $500 million maturing in 2035 with a fixed interest rate of 3.60% and $1.0 billion maturing in 2045 with a fixed interest rate of 3.80%. Restructuring Charges 2016 Actions During the first quarter of 2016, we recorded severance charges totaling approximately $99 million, of which $80 million related to our Aeronautics business segment and $19 million related to our IS&GS business segment. The charges consisted of severance costs associated with the planned elimination of certain positions through either voluntary or involuntary actions. Upon separation, terminated employees will receive lump-sum severance payments primarily based on years of service, the majority of which are expected to be paid by the end of 2016. As of June 26, 2016, we have paid approximately $34 million in severance payments associated with these actions, substantially all of which was paid during the quarter ended June 26, 2016. 2015 Actions During the third and fourth quarters of 2015, we recorded severance charges totaling $102 million, of which $67 million related to our MST business segment and $35 million related to our IS&GS business segment (prior to our fourth quarter 2015 program realignment). The charges consisted of severance costs associated with the planned elimination of certain positions through either voluntary or involuntary actions. Upon separation, terminated employees will receive lump-sum severance payments primarily based on years of service, the majority of which are expected to be paid over the next several quarters. As of June 26, 2016, we have paid approximately $49 million in severance payments associated with these actions, of which approximately $17 million was paid in the quarter ended June 26, 2016. In connection with the Sikorsky acquisition, we assumed obligations related to certain restructuring actions committed to by Sikorsky in June 2015. Net of amounts we anticipate to recover through the pricing of our products and services to our customers, we also expect to incur an additional $40 million of costs in 2016 related to these actions. During the six months ended June 26, 2016 we incurred about $15 million of costs and the remaining $25 million are expected to be incurred during the second half of 2016. 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. Income Taxes Our effective income tax rates were 27.1% and 24.3% for the quarter and six months ended June 26, 2016 and 30.8% and 30.7% for the quarter and six months ended June 28, 2015. The rates for both periods benefited from tax deductions for U.S. manufacturing activities and for dividends paid to our defined contribution plans with an employee stock ownership plan feature. The rates in the quarter and six months ended June 26, 2016 also benefited from the research and development tax credit, which was permanently extended and reinstated in the fourth quarter of 2015, and from additional tax benefits related to employee share-based payment awards which are now recorded as income tax benefit or expense in earnings effective with the adoption of an accounting standard update during the quarter ended June 26, 2016. We early adopted the accounting standard update during the second quarter of 2016 and are therefore required to report the impacts as though the accounting standard update had been adopted on January 1, 2016. Accordingly, we recognized additional income tax benefits of $11 million and $115 million during the quarter and six months ended June 26, 2016. The adjustments for the second quarter included only the quarterly impacts, whereas the adjustments for the first six months of 2016 include the second quarter impacts and the reclassification of income tax benefits of $104 million originally recognized in additional paid-in capital and cash flows from financing activities in the first quarter of 2016. Stockholders’ Equity Repurchases of Common Stock During the six months ended June 26, 2016, we repurchased 4.5 million shares of our common stock for $1.0 billion. The total remaining authorization for future common share repurchases under our share repurchase program was $2.6 billion as of June 26, 2016. 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. If additional paid-in capital is reduced to zero, we record the remainder of the excess purchase price over par value as a reduction of retained earnings. Dividends We declared cash dividends totaling $1.0 billion ($3.30 per share) and $1.5 billion ($4.95 per share) during the quarter and six months ended June 26, 2016. The 2016 dividend amounts include the declaration of our 2016 third quarter dividend of $1.65 per share, which totaled $503 million. We declared cash dividends totaling $942 million ($3.00 per share) and $1.4 billion ($4.50 per share) during the quarter and six months ended June 28, 2015. The 2015 dividend amounts include the declaration of our 2015 third quarter dividend of ($1.50 per share), which totaled $471 million. Restricted Stock Unit Grants During the three months ended June 26, 2016, there were no significant grants of restricted stock units (RSUs). During the six months ended June 26, 2016, we granted certain employees approximately 0.7 million RSUs with a grant-date fair value of $206.69 per RSU. The grant-date fair value of these RSUs is equal to the closing market price of our common stock on the grant date less a discount to reflect the delay in payment of dividend-equivalent cash payments that are made only upon vesting, which is generally three years from the grant date. We recognize the grant-date fair value of RSUs, less estimated forfeitures, as compensation expense ratably over the requisite service period, which 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. Accumulated Other Comprehensive Loss Changes in the balance of AOCL, net of tax, consisted of the following (in millions): Postretirement Other, net AOCL Balance at December 31, 2015 $ (11,314) $ (130) $ (11,444) Other comprehensive loss before reclassifications — (7) (7) Amounts reclassified from AOCL Recognition of net actuarial losses (a) 469 — 469 Amortization of net prior service credits (a) (123) — (123) Other — 1 1 Total reclassified from AOCL 346 (6) 340 Total other comprehensive income (loss) 346 (6) 340 Balance at June 26, 2016 $ (10,968) $ (136) $ (11,104) Balance at December 31, 2014 $ (11,813) $ (57) $ (11,870) Other comprehensive loss before reclassifications — (11) (11) Amounts reclassified from AOCL Recognition of net actuarial losses (a) 554 — 554 Amortization of net prior service credits (a) (129) — (129) Total reclassified from AOCL 425 — 425 Total other comprehensive income (loss) 425 (11) 414 Balance at June 28, 2015 $ (11,388) $ (68) $ (11,456) (a) Reclassifications from AOCL, net of tax, related to our postretirement benefit plans were recorded as a component of net periodic benefit cost for each period presented (Note 7). These amounts include $173 million and $213 million for the quarters ended June 26, 2016 and June 28, 2015, which are comprised of the recognition of net actuarial losses of $235 million and $277 million for the quarters ended June 26, 2016 and June 28, 2015 and the amortization of net prior service (credits) costs of $(62) million and $(64) million for the quarters ended June 26, 2016 and June 28, 2015. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers Topic 606 In February 2016, the FASB issued ASU No. 2016-02, Leases Topic 842 On March 30, 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In September 2015, the FASB issued ASU No. 2015-16 , Business Combinations Topic 805 In November 2015, the FASB issued ASU No. 2015-17, Income Taxes Topic 740 |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 6 Months Ended |
Jun. 26, 2016 | |
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): Quarters Ended Six Months Ended June 26, 2016 June 28, 2015 June 26, 2016 June 28, 2015 Weighted average common shares outstanding for basic computations 303.1 312.0 303.8 313.7 Weighted average dilutive effect of equity awards 4.0 4.1 4.1 4.5 Weighted average common shares outstanding for diluted computations 307.1 316.1 307.9 318.2 |
ACQUISITIONS AND DIVESTITURES (
ACQUISITIONS AND DIVESTITURES (Tables) | 6 Months Ended |
Jun. 26, 2016 | |
Summary of Preliminary Estimated Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date, including the refinements described in the previous paragraph (in millions): Cash and cash equivalents $ 75 Receivables 1,921 Inventories 1,758 Other current assets 25 Property, plant and equipment 653 Goodwill 2,807 Intangible assets: Customer programs 3,099 Trademarks 887 Other noncurrent assets 507 Deferred income tax assets 265 Total identifiable assets and goodwill 11,997 Accounts payable (565 ) Customer advances and amounts in excess of costs incurred (1,229 ) Salaries, benefits and payroll taxes (105 ) Other current liabilities (344 ) Customer contractual obligations (a) (480 ) Other noncurrent liabilities (158 ) Deferred income tax liabilities (a) (38 ) Total liabilities assumed (2,919 ) Total purchase price $ 9,078 (a) Recorded in Other noncurrent liabilities on the consolidated balance sheets. |
Summary of Pro Forma Financial Information | The following table presents summarized unaudited pro forma financial information as if Sikorsky had been included in our financial results for the quarter and six months ended June 28, 2015 (in millions): Quarter Ended Six Months Ended Net sales $ 13,309 $ 24,653 Net earnings 935 1,777 Basic earnings per common share 3.00 5.66 Diluted earnings per common share 2.96 5.58 |
GOODWILL AND ACQUIRED INTANGI20
GOODWILL AND ACQUIRED INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 26, 2016 | |
Acquired Intangible Assets | Acquired intangible assets consisted of the following (in millions): June 26, 2016 December 31, 2015 Gross Accumulated Net Gross Amount Accumulated Net Finite-Lived: Customer programs $ 3,099 $ (145) $ 2,954 $ 3,127 $ (38) $ 3,089 Customer relationships 309 (167) 142 309 (166) 143 Other 171 (121) 50 171 (90) 81 Total finite-lived intangibles 3,579 (433) 3,146 3,607 (294) 3,313 Indefinite Lived: Trademarks 905 — 905 834 — 834 Total acquired intangibles $ 4,484 $ (433) $ 4,051 $ 4,441 $ (294) $ 4,147 |
Goodwill by Segment | |
Acquired Intangible Assets | Changes in the carrying amount of goodwill by segment were as follows (in millions): Aeronautics IS&GS MFC MST Space Systems Total Balance at December 31, 2015 $ 171 $ 2,881 $ 2,198 $ 6,738 $ 1,588 $ 13,576 Acquisitions — — — 43 — 43 Divestitures — — — (7 ) — (7 ) Foreign currency translation — (13 ) (5 ) 28 (1 ) 9 Balance at June 26, 2016 $ 171 $ 2,868 $ 2,193 $ 6,802 $ 1,587 $ 13,621 |
BUSINESS SEGMENTS INFORMATION (
BUSINESS SEGMENTS INFORMATION (Tables) | 6 Months Ended |
Jun. 26, 2016 | |
Summary of Financial Information For Each Business Segment | Summary operating results for each of our business segments were as follows (in millions): Quarters Ended Six Months Ended June 26, 2016 June 28, 2015 June 26, 2016 June 28, 2015 Net sales Aeronautics $ 4,375 $ 4,131 $ 8,174 $ 7,265 Information Systems & Global Solutions 1,337 1,408 2,671 2,798 Missiles and Fire Control 1,680 1,649 3,114 3,032 Mission Systems and Training 3,303 2,165 6,307 4,144 Space Systems 2,219 2,290 4,350 4,515 Total net sales $ 12,914 $ 11,643 $ 24,616 $ 21,754 Operating profit Aeronautics $ 478 $ 444 $ 898 $ 815 Information Systems & Global Solutions 151 107 260 252 Missiles and Fire Control 253 293 474 579 Mission Systems and Training 202 262 431 442 Space Systems 340 294 584 618 Total business segment operating profit 1,424 1,400 2,647 2,706 Unallocated items FAS/CAS pension adjustment FAS pension expense (254) (284) (508) (568) Less: CAS pension cost 497 404 997 807 FAS/CAS pension adjustment 243 120 489 239 Stock-based compensation (53) (49) (97) (89) Severance charges — — (99) — Other, net (48) (26) (77) (55) Total unallocated items 142 45 216 95 Total consolidated operating profit $ 1,566 $ 1,445 $ 2,863 $ 2,801 Intersegment sales Aeronautics $ 39 $ 26 $ 74 $ 46 Information Systems & Global Solutions 29 3 53 5 Missiles and Fire Control 69 81 144 155 Mission Systems and Training 462 384 907 703 Space Systems 36 35 69 68 Total intersegment sales $ 635 $ 529 $ 1,247 $ 977 |
Selected Financial Data By Business Segment | Total assets for each of our business segments were as follows (in millions): June 26, 2016 December 31, Assets Aeronautics $ 7,768 $ 6,618 Information Systems & Global Solutions 4,103 4,206 Missiles and Fire Control 4,003 4,027 Mission Systems and Training 19,008 19,187 Space Systems 5,056 4,861 Total business segment assets 39,938 38,899 Corporate assets (a) 10,470 10,229 Total assets $ 50,408 $ 49,128 (a) Corporate assets primarily include cash and cash equivalents, deferred income taxes, environmental receivables and investments held in a separate trust to fund certain of our non-qualified deferred compensation plans. |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 6 Months Ended |
Jun. 26, 2016 | |
Inventories | Inventories, net consisted of the following (in millions): June 26, 2016 December 31, 2015 Work-in-process, primarily related to long-term contracts and programs in progress $ 8,996 $ 8,199 Less: customer advances and progress payments (5,345) (5,035) 3,651 3,164 Other inventories 1,485 1,798 Total inventories, net $ 5,136 $ 4,962 |
POSTRETIREMENT BENEFIT PLANS (T
POSTRETIREMENT BENEFIT PLANS (Tables) | 6 Months Ended |
Jun. 26, 2016 | |
Pretax Net Periodic Benefit Cost | Our pretax net periodic benefit cost related to our qualified defined benefit pension plans and retiree medical and life insurance plans consisted of the following (in millions): Quarters Ended Six Months Ended June 26, 2016 June 28, 2015 June 26, 2016 June 28, 2015 Qualified defined benefit pension plans Service cost $ 212 $ 218 $ 424 $ 435 Interest cost 466 447 931 895 Expected return on plan assets (666) (683) (1,333) (1,367) Recognized net actuarial losses 339 400 679 800 Amortization of prior service (credits) costs (97) (98) (193) (195) Total net periodic benefit cost $ 254 $ 284 $ 508 $ 568 Retiree medical and life insurance plans Service cost $ 6 $ 5 $ 12 $ 10 Interest cost 29 27 59 55 Expected return on plan assets (35) (37) (69) (74) Recognized net actuarial losses 9 11 17 22 Amortization of prior service costs 6 1 11 2 Total net periodic benefit cost $ 15 $ 7 $ 30 $ 15 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 26, 2016 | |
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): June 26, 2016 December 31, 2015 Total Level 1 Level 2 Total Level 1 Level 2 Assets Equity securities $ 74 $ 74 $ — $ 89 $ 89 $ — Mutual funds 712 712 — 745 745 — U.S. Government securities 131 — 131 119 — 119 Other securities 155 — 155 147 — 147 Derivatives 73 — 73 15 — 15 Liabilities Derivatives 58 — 58 35 — 35 |
OTHER (Tables)
OTHER (Tables) | 6 Months Ended |
Jun. 26, 2016 | |
Accumulated Other Comprehensive Loss | Changes in the balance of AOCL, net of tax, consisted of the following (in millions): Postretirement Other, net AOCL Balance at December 31, 2015 $ (11,314) $ (130) $ (11,444) Other comprehensive loss before reclassifications — (7) (7) Amounts reclassified from AOCL Recognition of net actuarial losses (a) 469 — 469 Amortization of net prior service credits (a) (123) — (123) Other — 1 1 Total reclassified from AOCL 346 (6) 340 Total other comprehensive income (loss) 346 (6) 340 Balance at June 26, 2016 $ (10,968) $ (136) $ (11,104) Balance at December 31, 2014 $ (11,813) $ (57) $ (11,870) Other comprehensive loss before reclassifications — (11) (11) Amounts reclassified from AOCL Recognition of net actuarial losses (a) 554 — 554 Amortization of net prior service credits (a) (129) — (129) Total reclassified from AOCL 425 — 425 Total other comprehensive income (loss) 425 (11) 414 Balance at June 28, 2015 $ (11,388) $ (68) $ (11,456) (a) Reclassifications from AOCL, net of tax, related to our postretirement benefit plans were recorded as a component of net periodic benefit cost for each period presented (Note 7). These amounts include $173 million and $213 million for the quarters ended June 26, 2016 and June 28, 2015, which are comprised of the recognition of net actuarial losses of $235 million and $277 million for the quarters ended June 26, 2016 and June 28, 2015 and the amortization of net prior service (credits) costs of $(62) million and $(64) million for the quarters ended June 26, 2016 and June 28, 2015. |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Detail) $ in Billions | Nov. 06, 2015USD ($) |
Sikorsky Aircraft Corporation | |
Significant Accounting Policies [Line Items] | |
Acquisitions of businesses and investments in affiliates | $ 9 |
Schedule of Weighted Average Sh
Schedule of Weighted Average Shares Outstanding Used to Compute Earnings Per Common Share (Detail) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 26, 2016 | Jun. 28, 2015 | Jun. 26, 2016 | Jun. 28, 2015 | |
Weighted Average Shares Used In Computing Earnings Per Share [Line Items] | ||||
Weighted average common shares outstanding for basic computations | 303.1 | 312 | 303.8 | 313.7 |
Weighted average dilutive effect of equity awards | 4 | 4.1 | 4.1 | 4.5 |
Weighted average common shares outstanding for diluted computations | 307.1 | 316.1 | 307.9 | 318.2 |
Earnings Per Common Share - Add
Earnings Per Common Share - Additional Information (Detail) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 26, 2016 | Jun. 28, 2015 | Jun. 26, 2016 | Jun. 28, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Equity awards excluded from the computation of diluted earnings per common share, because their inclusion would have been anti-dilutive | 0 | 0 | 0 | 0 |
Acquisition and Divestitures -
Acquisition and Divestitures - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | Jan. 26, 2016 | Nov. 06, 2015 | Jun. 26, 2016 | Dec. 31, 2015 | Jun. 28, 2015 | Jun. 26, 2016 | Jun. 28, 2015 |
Acquisitions And Divestitures [Line Items] | |||||||
Goodwill | $ 13,621 | $ 13,576 | $ 13,621 | ||||
Amortization of intangible assets | 70 | $ 20 | $ 139 | $ 41 | |||
Special dividend per share to be paid to Leidos stockholders | $ 13.64 | ||||||
Leidos | |||||||
Acquisitions And Divestitures [Line Items] | |||||||
Outstanding equity to be received by stockholders, percentage | 50.50% | ||||||
Conversion ratio of Abacus common stock held by Lockheed Martin stockholders upon completing the merger | 1 | ||||||
Outstanding equity to be received by stockholders, shares | 77 | ||||||
Outstanding equity to be held by Leidos stockholders, percentage | 49.50% | ||||||
One-time special cash receipt | $ 1,800 | ||||||
Sikorsky Aircraft Corporation | |||||||
Acquisitions And Divestitures [Line Items] | |||||||
Acquisitions of businesses and investments in affiliates | $ 9,000 | ||||||
Cash on hand | 2,000 | ||||||
Proceeds from Issuance of Commercial Paper | $ 1,000 | ||||||
Repayment of commercial paper | 1,000 | ||||||
Inventories | (10) | $ (60) | |||||
Deferred income tax assets | (30) | (20) | |||||
Customer advances and amounts in excess of costs incurred | 10 | ||||||
Goodwill | 45 | 45 | |||||
Intangible assets weighted-average useful life | 15 years | ||||||
Customer contractual obligations | $ 480 | ||||||
Customer contractual obligations remaining in 2016 | 40 | 40 | |||||
Customer contractual obligations due in 2017 | 90 | 90 | |||||
Customer contractual obligations due in 2018 | 70 | 70 | |||||
Customer contractual obligations due in 2019 | 70 | 70 | |||||
Customer contractual obligations due in 2020 | 70 | 70 | |||||
Customer contractual obligations due in 2021 | 50 | 50 | |||||
Customer contractual obligations due after 2021 | 40 | 40 | |||||
Sales related to customer contractual obligations, to date | 50 | 50 | |||||
Goodwill | 2,807 | ||||||
Sikorsky Aircraft Corporation | Three Hundred And Sixty Four Day Revolving Credit Facility And Five Year Revolving Credit Facility | |||||||
Acquisitions And Divestitures [Line Items] | |||||||
Proceeds from borrowings under revolving credit facilities | $ 6,000 | ||||||
Sikorsky Aircraft Corporation | November 2015 Notes | |||||||
Acquisitions And Divestitures [Line Items] | |||||||
Proceeds from issuance of fixed interest-rate long-term notes | $ 7,000 | ||||||
Sikorsky Aircraft Corporation | Pro Forma Adjustment | |||||||
Acquisitions And Divestitures [Line Items] | |||||||
Amortization of intangible assets | 40 | 80 | |||||
Interest expense, debt | $ 45 | $ 90 | |||||
Sikorsky Aircraft Corporation | Customer Programs | |||||||
Acquisitions And Divestitures [Line Items] | |||||||
Intangible assets | (30) | ||||||
Sikorsky Aircraft Corporation | Trademarks | |||||||
Acquisitions And Divestitures [Line Items] | |||||||
Intangible assets | $ 70 |
Summary of Preliminary Estimate
Summary of Preliminary Estimated Fair Values of Assets Acquired and Liabilities Assumed at Acquisition Date (Detail) - USD ($) $ in Millions | Jun. 26, 2016 | Dec. 31, 2015 | Nov. 06, 2015 | |
Business Acquisition [Line Items] | ||||
Goodwill | $ 13,621 | $ 13,576 | ||
Sikorsky Aircraft Corporation | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 75 | |||
Receivables | 1,921 | |||
Inventories | 1,758 | |||
Other current assets | 25 | |||
Property, plant and equipment | 653 | |||
Goodwill | 2,807 | |||
Other noncurrent assets | 507 | |||
Deferred income tax assets | 265 | |||
Total identifiable assets and goodwill | 11,997 | |||
Accounts payable | (565) | |||
Customer advances and amounts in excess of costs incurred | (1,229) | |||
Salaries, benefits and payroll taxes | (105) | |||
Other current liabilities | (344) | |||
Customer contractual obligations | [1] | (480) | ||
Other noncurrent liabilities | (158) | |||
Deferred income tax liabilities | [1] | (38) | ||
Total liabilities assumed | (2,919) | |||
Total purchase price | 9,078 | |||
Sikorsky Aircraft Corporation | Customer Programs | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | 3,099 | |||
Sikorsky Aircraft Corporation | Trademarks | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 887 | |||
[1] | Recorded in Other noncurrent liabilities on the consolidated balance sheets. |
Summary of Pro Forma Financial
Summary of Pro Forma Financial Information As If Included in Financial Results (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 28, 2015 | Jun. 28, 2015 | |
Business Acquisition [Line Items] | ||
Net sales | $ 13,309 | $ 24,653 |
Net earnings | $ 935 | $ 1,777 |
Basic earnings per common share | $ 3 | $ 5.66 |
Diluted earnings per common share | $ 2.96 | $ 5.58 |
Goodwill and Acquired Intangi32
Goodwill and Acquired Intangibles (Detail) $ in Millions | 6 Months Ended |
Jun. 26, 2016USD ($) | |
Goodwill [Line Items] | |
Goodwill, beginning balance | $ 13,576 |
Acquisitions | 43 |
Divestitures | (7) |
Foreign currency translation | 9 |
Goodwill, ending balance | 13,621 |
Aeronautics | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 171 |
Goodwill, ending balance | 171 |
Information Systems & Global Solutions | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 2,881 |
Foreign currency translation | (13) |
Goodwill, ending balance | 2,868 |
Missiles and Fire Control | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 2,198 |
Foreign currency translation | (5) |
Goodwill, ending balance | 2,193 |
Mission Systems and Training | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 6,738 |
Acquisitions | 43 |
Divestitures | (7) |
Foreign currency translation | 28 |
Goodwill, ending balance | 6,802 |
Space Systems | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 1,588 |
Foreign currency translation | (1) |
Goodwill, ending balance | $ 1,587 |
Acquired Intangible Assets (Det
Acquired Intangible Assets (Detail) - USD ($) $ in Millions | Jun. 26, 2016 | Dec. 31, 2015 |
Indefinite Lived And Finite Lived Intangible Assets [Line Items] | ||
Finite-Lived, Gross Carrying Amount | $ 3,579 | $ 3,607 |
Indefinite Lived, Trademarks, Gross Carrying Amount | 905 | 834 |
Finite-Lived, Accumulated Amortization | (433) | (294) |
Total acquired intangibles | 4,484 | 4,441 |
Finite-Lived, Net Carrying Amount | 3,146 | 3,313 |
Indefinite Lived, Trademarks, Net Carrying Amount | 905 | 834 |
Total acquired intangibles, Net Carrying Amount | 4,051 | 4,147 |
Customer Programs | ||
Indefinite Lived And Finite Lived Intangible Assets [Line Items] | ||
Finite-Lived, Gross Carrying Amount | 3,099 | 3,127 |
Finite-Lived, Accumulated Amortization | (145) | (38) |
Finite-Lived, Net Carrying Amount | 2,954 | 3,089 |
Customer relationships | ||
Indefinite Lived And Finite Lived Intangible Assets [Line Items] | ||
Finite-Lived, Gross Carrying Amount | 309 | 309 |
Finite-Lived, Accumulated Amortization | (167) | (166) |
Finite-Lived, Net Carrying Amount | 142 | 143 |
Other Finite-lived Intangibles | ||
Indefinite Lived And Finite Lived Intangible Assets [Line Items] | ||
Finite-Lived, Gross Carrying Amount | 171 | 171 |
Finite-Lived, Accumulated Amortization | (121) | (90) |
Finite-Lived, Net Carrying Amount | $ 50 | $ 81 |
Goodwill and Acquired Intangi34
Goodwill and Acquired Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 26, 2016 | Jun. 28, 2015 | Jun. 26, 2016 | Jun. 28, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense for acquired finite lived intangible assets | $ 70 | $ 20 | $ 139 | $ 41 |
Amortization of finite lived intangible assets remaining in 2016 | 139 | 139 | ||
Amortization of finite lived intangible assets in 2017 | 262 | 262 | ||
Amortization of finite lived intangible assets in 2018 | 248 | 248 | ||
Amortization of finite lived intangible assets in 2019 | 243 | 243 | ||
Amortization of finite lived intangible assets in 2020 | 236 | 236 | ||
Amortization of finite lived intangible assets in 2021 | 231 | 231 | ||
Amortization of finite lived intangible assets after 2021 | $ 1,800 | $ 1,800 | ||
Customer Programs | Minimum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Acquired finite-lived intangible assets are amortized | 9 years | |||
Customer Programs | Maximum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Acquired finite-lived intangible assets are amortized | 20 years | |||
Customer relationships | Minimum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Acquired finite-lived intangible assets are amortized | 4 years | |||
Customer relationships | Maximum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Acquired finite-lived intangible assets are amortized | 10 years | |||
Other Finite-lived Intangibles | Minimum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Acquired finite-lived intangible assets are amortized | 2 years | |||
Other Finite-lived Intangibles | Maximum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Acquired finite-lived intangible assets are amortized | 10 years |
Business Segments Information -
Business Segments Information - Additional Information (Detail) - Segment | 3 Months Ended | 6 Months Ended | ||
Jun. 26, 2016 | Jun. 28, 2015 | Jun. 26, 2016 | Jun. 28, 2015 | |
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 | 21.00% | 20.00% | 20.00% | 19.00% |
Summary of Financial Informatio
Summary of Financial Information for Each Business Segment (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||||
Jun. 26, 2016 | Mar. 27, 2016 | Dec. 31, 2015 | Sep. 27, 2015 | Jun. 28, 2015 | Jun. 26, 2016 | Jun. 28, 2015 | ||
Segment Reporting Information [Line Items] | ||||||||
Total net sales | $ 12,914 | $ 11,643 | $ 24,616 | $ 21,754 | ||||
Less: CAS pension cost | 497 | 404 | 997 | 807 | ||||
FAS/CAS pension adjustment | 243 | 120 | 489 | 239 | ||||
Stock-based compensation | (53) | (49) | (97) | (89) | ||||
Severance charges | $ (99) | $ (102) | $ (102) | (99) | ||||
Other, net | (48) | (26) | (77) | (55) | ||||
Total unallocated items | 142 | 45 | 216 | 95 | ||||
Operating profit | 1,566 | 1,445 | 2,863 | 2,801 | ||||
Total assets | 50,408 | 49,128 | 50,408 | |||||
Qualified defined benefit pension plans | ||||||||
Segment Reporting Information [Line Items] | ||||||||
FAS pension expense | (254) | (284) | (508) | (568) | ||||
Aeronautics | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Severance charges | (80) | |||||||
Information Systems & Global Solutions | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Severance charges | $ (19) | (35) | (35) | |||||
Mission Systems and Training | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Severance charges | (67) | $ (67) | ||||||
Goodwill by Segment | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Operating profit | 1,424 | 1,400 | 2,647 | 2,706 | ||||
Total assets | 39,938 | 38,899 | 39,938 | |||||
Goodwill by Segment | Aeronautics | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Total net sales | 4,375 | 4,131 | 8,174 | 7,265 | ||||
Operating profit | 478 | 444 | 898 | 815 | ||||
Total assets | 7,768 | 6,618 | 7,768 | |||||
Goodwill by Segment | Information Systems & Global Solutions | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Total net sales | 1,337 | 1,408 | 2,671 | 2,798 | ||||
Operating profit | 151 | 107 | 260 | 252 | ||||
Total assets | 4,103 | 4,206 | 4,103 | |||||
Goodwill by Segment | Missiles and Fire Control | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Total net sales | 1,680 | 1,649 | 3,114 | 3,032 | ||||
Operating profit | 253 | 293 | 474 | 579 | ||||
Total assets | 4,003 | 4,027 | 4,003 | |||||
Goodwill by Segment | Mission Systems and Training | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Total net sales | 3,303 | 2,165 | 6,307 | 4,144 | ||||
Operating profit | 202 | 262 | 431 | 442 | ||||
Total assets | 19,008 | 19,187 | 19,008 | |||||
Goodwill by Segment | Space Systems | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Total net sales | 2,219 | 2,290 | 4,350 | 4,515 | ||||
Operating profit | 340 | 294 | 584 | 618 | ||||
Total assets | 5,056 | 4,861 | 5,056 | |||||
Intersegment elimination | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Total intersegment sales | 635 | 529 | 1,247 | 977 | ||||
Intersegment elimination | Aeronautics | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Total intersegment sales | 39 | 26 | 74 | 46 | ||||
Intersegment elimination | Information Systems & Global Solutions | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Total intersegment sales | 29 | 3 | 53 | 5 | ||||
Intersegment elimination | Missiles and Fire Control | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Total intersegment sales | 69 | 81 | 144 | 155 | ||||
Intersegment elimination | Mission Systems and Training | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Total intersegment sales | 462 | 384 | 907 | 703 | ||||
Intersegment elimination | Space Systems | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Total intersegment sales | 36 | $ 35 | 69 | $ 68 | ||||
Corporate | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Total assets | [1] | $ 10,470 | $ 10,229 | $ 10,470 | ||||
[1] | Corporate assets primarily include cash and cash equivalents, deferred income taxes, environmental receivables and investments held in a separate trust to fund certain of our non-qualified deferred compensation plans. |
Inventories (Detail)
Inventories (Detail) - USD ($) $ in Millions | Jun. 26, 2016 | Dec. 31, 2015 |
Inventory [Line Items] | ||
Work-in-process, primarily related to long-term contracts and programs in progress | $ 8,996 | $ 8,199 |
Less: customer advances and progress payments | (5,345) | (5,035) |
Inventory for long term contracts or programs net of customer advances and progress payments | 3,651 | 3,164 |
Other inventories | 1,485 | 1,798 |
Total inventories, net | $ 5,136 | $ 4,962 |
Pretax Net Periodic Benefit Cos
Pretax Net Periodic Benefit Cost (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 26, 2016 | Jun. 28, 2015 | Jun. 26, 2016 | Jun. 28, 2015 | |
Qualified defined benefit pension plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 212 | $ 218 | $ 424 | $ 435 |
Interest cost | 466 | 447 | 931 | 895 |
Expected return on plan assets | (666) | (683) | (1,333) | (1,367) |
Recognized net actuarial losses | 339 | 400 | 679 | 800 |
Amortization of prior service (credits) costs | (97) | (98) | (193) | (195) |
Total net periodic benefit cost | 254 | 284 | 508 | 568 |
Retiree medical and life insurance plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 6 | 5 | 12 | 10 |
Interest cost | 29 | 27 | 59 | 55 |
Expected return on plan assets | (35) | (37) | (69) | (74) |
Recognized net actuarial losses | 9 | 11 | 17 | 22 |
Amortization of prior service (credits) costs | 6 | 1 | 11 | 2 |
Total net periodic benefit cost | $ 15 | $ 7 | $ 30 | $ 15 |
Postretirement Benefit Plans -
Postretirement Benefit Plans - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 26, 2016 | Jun. 28, 2015 | Jun. 26, 2016 | Jun. 28, 2015 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Recognition of previously deferred postretirement benefit plan amounts, net of tax | $ 173,000,000 | $ 213,000,000 | $ 346,000,000 | $ 425,000,000 |
Recognition of previously deferred postretirement benefit plan amounts, tax | 94,000,000 | 116,000,000 | 189,000,000 | 232,000,000 |
Other postretirement benefit plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Recognition of previously deferred postretirement benefit plan amounts, before tax | 10,000,000 | $ 15,000,000 | $ 21,000,000 | 28,000,000 |
Qualified defined benefit pension plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Contributions made by the employer | $ 0 | $ 0 |
Legal Proceedings and Conting40
Legal Proceedings and Contingencies - Additional Information (Detail) - USD ($) $ in Millions | 1 Months Ended | 6 Months Ended | 12 Months Ended | |
Apr. 30, 2015 | Jun. 26, 2016 | Dec. 31, 2015 | Apr. 24, 2009 | |
Legal Proceedings And Contingencies [Line Items] | ||||
Damages sought by plaintiff | $ 45 | |||
Statutory penalty | 13 | |||
Total damages | $ 148 | |||
Liabilities recorded relative to environmental matters | $ 1,000 | $ 1,000 | ||
Environmental costs eligible for future recovery | $ 897 | 858 | ||
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% | |||
Outstanding letters of credit, surety bonds, and third-party guarantees | $ 3,900 | 3,800 | ||
Third-party guarantees outstanding | $ 679 | $ 678 | ||
Percentage of total guarantees that relate to guarantees of contractual performance of joint ventures | 78.00% | 79.00% | ||
United Launch Alliance | ||||
Legal Proceedings And Contingencies [Line Items] | ||||
Percentage of ownership interest in affiliated entity | 50.00% | |||
Inventory supply agreement | $ 120 | |||
N.Y. Metropolitan Transportation Authority | ||||
Legal Proceedings And Contingencies [Line Items] | ||||
Damages sought by plaintiff | 190 | |||
Contract value | $ 323 | |||
Contract payments received to date | 241 | |||
Claims for monetary damages against the plaintiff | $ 95 |
Fair Value, Assets and Liabilit
Fair Value, Assets and Liabilities Measured on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Jun. 26, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | $ 73 | $ 15 |
Derivative liabilities | 58 | 35 |
Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 74 | 89 |
Mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 712 | 745 |
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 | 131 | 119 |
Other securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 155 | 147 |
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 | 74 | 89 |
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 | 712 | 745 |
Fair value, inputs, level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 73 | 15 |
Derivative liabilities | 58 | 35 |
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 | 131 | 119 |
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 | $ 155 | $ 147 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Billions | Jun. 26, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair values of debt instruments | $ 17.4 | $ 16.5 |
Outstanding principal amount of debt instruments | 15.8 | 16.2 |
Unamortized discounts and deferred financing costs | 1 | 1 |
Interest rate swaps | Designated as hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate notional amount of derivatives | 1 | 1.5 |
Foreign currency contracts | Designated as hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate notional amount of derivatives | $ 4.6 | $ 4.1 |
Other - Additional Information
Other - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | Jun. 26, 2016 | Feb. 20, 2015 | May 31, 2016 | Jun. 26, 2016 | Mar. 27, 2016 | Dec. 31, 2015 | Sep. 27, 2015 | Jun. 28, 2015 | Jun. 26, 2016 | Jun. 28, 2015 |
Increase in operating profit due to profit rate adjustments | $ 435 | $ 550 | $ 840 | $ 1,000 | ||||||
Increase in net earnings due to profit rate adjustments | $ 280 | $ 355 | $ 545 | $ 675 | ||||||
Increase in diluted earnings per common share due to profit rate adjustments | $ 0.91 | $ 1.12 | $ 1.77 | $ 2.12 | ||||||
Repayment of long-term notes | $ 452 | |||||||||
Severance charges | $ 99 | $ 102 | $ 102 | $ 99 | ||||||
Effective income tax rate | 27.10% | 30.80% | 24.30% | 30.70% | ||||||
Cash paid for repurchases of common stock | $ 1,002 | $ 1,541 | ||||||||
Number of shares of common stock repurchased with cash | 4.5 | |||||||||
Remaining authorized repurchase amount under share repurchase program | $ 2,600 | $ 2,600 | $ 2,600 | |||||||
Additional paid-in capital | $ 0 | $ 0 | $ 0 | $ 0 | ||||||
Common stock par value, per share | $ 1 | $ 1 | $ 1 | $ 1 | ||||||
Dividends declared | $ 1,000 | $ 942 | $ 1,519 | $ 1,419 | ||||||
Dividends declared, per share (in USD) | $ 3.30 | $ 3 | $ 4.95 | $ 4.50 | ||||||
Deferred income taxes assets, noncurrent | $ 5,830 | $ 5,830 | $ 5,931 | $ 5,830 | ||||||
Variable Interest Rate Swap | Designated as hedges | ||||||||||
Aggregate notional amount of derivatives | $ 450 | |||||||||
Sikorsky Aircraft Corporation | ||||||||||
Restructuring cost expected in 2016 | 40 | 40 | 40 | |||||||
Restructuring cost incurred | 15 | |||||||||
Restructuring cost expected to be incurred | 25 | 25 | 25 | |||||||
2015 Action | ||||||||||
Severance charges | 17 | |||||||||
Severance payments | 49 | |||||||||
2016 Action | ||||||||||
Severance payments | $ 34 | |||||||||
2016 Third Quarter Dividend | ||||||||||
Dividends declared | $ 503 | |||||||||
Dividends declared, per share (in USD) | $ 1.65 | |||||||||
2015 Third Quarter Dividend | ||||||||||
Dividends declared | $ 471 | |||||||||
Dividends declared, per share (in USD) | $ 1.50 | |||||||||
Restricted Stock Units (RSUs) | ||||||||||
Number of stock units, granted, in shares | 0.7 | |||||||||
Average grant date fair value per unit | $ 206.69 | |||||||||
Number of years over which equity awards vest | 3 years | |||||||||
Accounting Standards Update 2015-17 | Scenario, Previously Reported | ||||||||||
Deferred income taxes assets, current | 1,600 | |||||||||
Deferred income taxes liabilities, current | 140 | |||||||||
Accounting Standards Update 2015-17 | Restatement Adjustment | ||||||||||
Deferred income taxes assets, noncurrent | 1,600 | |||||||||
Deferred income taxes liabilities, noncurrent | 140 | |||||||||
Accounting Standards Update 2016-09 | Adjustments for New Accounting Principle, Early Adoption | ||||||||||
Excess income tax benefit from share-based compensation, financing activities | 104 | |||||||||
Excess income tax benefit recognized in additional paid-in capital | 104 | |||||||||
Accounting Standards Update 2016-09 | Restatement Adjustment | Adjustments for New Accounting Principle, Early Adoption | ||||||||||
Excess income tax benefit from share-based compensation, operating activities | 11 | $ 115 | ||||||||
Additional income tax benefit | $ 11 | $ 115 | ||||||||
Additional income tax benefit, per share | $ 0.04 | $ 0.37 | ||||||||
7.65% Long-term notes | ||||||||||
Repayment of long-term notes | $ 452 | |||||||||
Long-term notes, fixed Interest | 7.65% | |||||||||
February Twenty Fifteen Notes | ||||||||||
Amount of issued debt | $ 2,250 | |||||||||
2.90% Notes Due 2025 | ||||||||||
Amount of issued debt | $ 750 | |||||||||
Long-term debt maturity year | 2,025 | |||||||||
Interest Rate | 2.90% | |||||||||
3.60% Notes Due 2035 | ||||||||||
Amount of issued debt | $ 500 | |||||||||
Long-term debt maturity year | 2,035 | |||||||||
Interest Rate | 3.60% | |||||||||
3.80% Notes Due 2045 | ||||||||||
Amount of issued debt | $ 1,000 | |||||||||
Long-term debt maturity year | 2,045 | |||||||||
Interest Rate | 3.80% | |||||||||
Mission Systems and Training | ||||||||||
Severance charges | 67 | 67 | ||||||||
Information Systems & Global Solutions | ||||||||||
Severance charges | 19 | $ 35 | $ 35 | |||||||
Aeronautics | ||||||||||
Severance charges | $ 80 |
Changes in Balance of Accumulat
Changes in Balance of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 26, 2016 | Jun. 28, 2015 | Jun. 26, 2016 | Jun. 28, 2015 | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Beginning balance | $ (11,444) | $ (11,870) | |||||
Other comprehensive loss before reclassifications | (7) | (11) | |||||
Amounts reclassified from AOCL | |||||||
Recognition of net actuarial losses | [1] | 469 | 554 | ||||
Amortization of net prior service credits | [1] | (123) | (129) | ||||
Other | 1 | ||||||
Total reclassified from AOCL | 340 | 425 | |||||
Other comprehensive income (loss), net of tax | $ 150 | $ 259 | 340 | 414 | |||
Ending balance | (11,104) | (11,456) | (11,104) | (11,456) | |||
Postretirement Benefit Plan Adjustments | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Beginning balance | (11,314) | (11,813) | |||||
Amounts reclassified from AOCL | |||||||
Recognition of net actuarial losses | 235 | 277 | 469 | [1] | 554 | [1] | |
Amortization of net prior service credits | (62) | (64) | (123) | [1] | (129) | [1] | |
Total reclassified from AOCL | 173 | 213 | 346 | 425 | |||
Other comprehensive income (loss), net of tax | 346 | 425 | |||||
Ending balance | (10,968) | (11,388) | (10,968) | (11,388) | |||
Other, net | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Beginning balance | (130) | (57) | |||||
Other comprehensive loss before reclassifications | (7) | (11) | |||||
Amounts reclassified from AOCL | |||||||
Other | 1 | ||||||
Total reclassified from AOCL | (6) | ||||||
Other comprehensive income (loss), net of tax | (6) | (11) | |||||
Ending balance | $ (136) | $ (68) | $ (136) | $ (68) | |||
[1] | Reclassifications from AOCL, net of tax, related to our postretirement benefit plans were recorded as a component of net periodic benefit cost for each period presented (Note 7). These amounts include $173 million and $213 million for the quarters ended June 26, 2016 and June 28, 2015, which are comprised of the recognition of net actuarial losses of $235 million and $277 million for the quarters ended June 26, 2016 and June 28, 2015 and the amortization of net prior service (credits) costs of $(62) million and $(64) million for the quarters ended June 26, 2016 and June 28, 2015. |
Changes in Balance of Accumul45
Changes in Balance of Accumulated Other Comprehensive Loss (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 26, 2016 | Jun. 28, 2015 | Jun. 26, 2016 | Jun. 28, 2015 | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Total reclassified from AOCL, net of tax | $ 340 | $ 425 | |||||
Recognition of net actuarial losses | [1] | 469 | 554 | ||||
Amortization of net prior service cost (credits) | [1] | (123) | (129) | ||||
Postretirement Benefit Plan Adjustments | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Total reclassified from AOCL, net of tax | $ 173 | $ 213 | 346 | 425 | |||
Recognition of net actuarial losses | 235 | 277 | 469 | [1] | 554 | [1] | |
Amortization of net prior service cost (credits) | $ (62) | $ (64) | $ (123) | [1] | $ (129) | [1] | |
[1] | Reclassifications from AOCL, net of tax, related to our postretirement benefit plans were recorded as a component of net periodic benefit cost for each period presented (Note 7). These amounts include $173 million and $213 million for the quarters ended June 26, 2016 and June 28, 2015, which are comprised of the recognition of net actuarial losses of $235 million and $277 million for the quarters ended June 26, 2016 and June 28, 2015 and the amortization of net prior service (credits) costs of $(62) million and $(64) million for the quarters ended June 26, 2016 and June 28, 2015. |