Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 25, 2016shares | |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Sep. 25, 2016 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q3 |
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 | 292,977,354 |
Consolidated Statements of Earn
Consolidated Statements of Earnings - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2016 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 2015 | |
Net sales | ||||
Products | $ 10,062 | $ 8,593 | $ 28,629 | $ 25,066 |
Services | 1,489 | 1,467 | 4,867 | 3,950 |
Total net sales | 11,551 | 10,060 | 33,496 | 29,016 |
Cost of sales | ||||
Products | (9,027) | (7,668) | (25,787) | (22,238) |
Services | (1,313) | (1,248) | (4,321) | (3,347) |
Severance charges | (15) | (80) | (15) | |
Other unallocated, net | 173 | (32) | 401 | (61) |
Total cost of sales | (10,167) | (8,963) | (29,787) | (25,661) |
Gross profit | 1,384 | 1,097 | 3,709 | 3,355 |
Other income, net | 204 | 95 | 412 | 257 |
Operating profit | 1,588 | 1,192 | 4,121 | 3,612 |
Interest expense | (162) | (104) | (492) | (301) |
Other non-operating income, net | 1 | 1 | 2 | 6 |
Earnings from continuing operations before income taxes | 1,427 | 1,089 | 3,631 | 3,317 |
Income tax expense | (338) | (333) | (837) | (1,008) |
Net earnings from continuing operations | 1,089 | 756 | 2,794 | 2,309 |
Net earnings from discontinued operations | 1,306 | 109 | 1,520 | 363 |
Net earnings | $ 2,395 | $ 865 | $ 4,314 | $ 2,672 |
Basic | ||||
Continuing operations | $ 3.64 | $ 2.45 | $ 9.25 | $ 7.41 |
Discontinued operations | 4.38 | 0.35 | 5.03 | 1.16 |
Basic earnings per common share | 8.02 | 2.80 | 14.28 | 8.57 |
Diluted | ||||
Continuing operations | 3.61 | 2.42 | 9.13 | 7.30 |
Discontinued operations | 4.32 | 0.35 | 4.97 | 1.15 |
Diluted earnings per common share | 7.93 | 2.77 | 14.10 | 8.45 |
Cash dividends paid per common share in USD | $ 1.65 | $ 1.50 | $ 4.95 | $ 4.50 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 25, 2016 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 2015 | ||
Net earnings | $ 2,395 | $ 865 | $ 4,314 | $ 2,672 | |
Other comprehensive income (loss), net of tax Postretirement benefit plans | |||||
Recognition of previously deferred postretirement benefit plan amounts | 175 | 212 | 521 | 637 | |
Reclassifications from divestiture of IS&GS business segment | (134) | (134) | [1] | ||
Other, net | 72 | (77) | 66 | (88) | |
Other comprehensive income, net of tax | 113 | 135 | 453 | 549 | |
Comprehensive income | $ 2,508 | $ 1,000 | $ 4,767 | $ 3,221 | |
[1] | Associated with the divestiture of the IS&GS business segment and included in net gain on divestiture of discontinued operations. |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 25, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 2,895 | $ 1,090 |
Receivables, net | 8,955 | 7,254 |
Inventories, net | 4,852 | 4,819 |
Other current assets | 408 | 441 |
Assets of discontinued operations | 969 | |
Total current assets | 17,110 | 14,573 |
Property, plant and equipment, net | 5,369 | 5,389 |
Goodwill | 10,791 | 10,695 |
Intangible assets, net | 4,205 | 4,022 |
Deferred income taxes | 5,850 | 6,068 |
Other noncurrent assets | 5,414 | 5,396 |
Assets of discontinued operations | 3,161 | |
Total assets | 48,739 | 49,304 |
Current liabilities | ||
Accounts payable | 2,840 | 1,745 |
Customer advances and amounts in excess of costs incurred | 6,830 | 6,703 |
Salaries, benefits and payroll taxes | 1,856 | 1,707 |
Current maturities of long-term debt | 956 | |
Other current liabilities | 2,899 | 1,859 |
Liabilities of discontinued operations | 948 | |
Total current liabilities | 14,425 | 13,918 |
Long-term debt, net | 14,304 | 14,305 |
Accrued pension liabilities | 11,859 | 11,807 |
Other postretirement benefit liabilities | 1,083 | 1,070 |
Other noncurrent liabilities | 4,638 | 4,902 |
Liabilities of discontinued operations | 205 | |
Total liabilities | 46,309 | 46,207 |
Stockholders' equity | ||
Common stock, $1 par value per share | 291 | 303 |
Additional paid-in capital | 0 | 0 |
Retained earnings | 13,023 | 14,238 |
Accumulated other comprehensive loss | (10,991) | (11,444) |
Total stockholders' equity | 2,323 | 3,097 |
Noncontrolling interests in subsidiary | 107 | |
Total equity | 2,430 | 3,097 |
Total liabilities and equity | $ 48,739 | $ 49,304 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 25, 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 | 9 Months Ended | |
Sep. 25, 2016 | Sep. 27, 2015 | |
Operating activities | ||
Net earnings | $ 4,314 | $ 2,672 |
Adjustments to reconcile net earnings to net cash provided by operating activities | ||
Depreciation and amortization | 888 | 726 |
Stock-based compensation | 124 | 118 |
Severance charges | 99 | 35 |
Gain on divestiture of IS&GS business segment | (1,234) | |
Gain on step acquisition of AWE | (104) | |
Changes in assets and liabilities | ||
Receivables, net | (1,537) | (861) |
Inventories, net | (235) | (359) |
Accounts payable | 1,033 | 637 |
Customer advances and amounts in excess of costs incurred | 57 | (421) |
Postretirement benefit plans | 787 | 868 |
Income taxes | 37 | 126 |
Other, net | 231 | 196 |
Net cash provided by operating activities | 4,460 | 3,737 |
Investing activities | ||
Capital expenditures | (627) | (500) |
Other, net | 76 | 89 |
Net cash used for investing activities | (551) | (411) |
Financing activities | ||
Special cash payment from divestiture of IS&GS business segment | 1,800 | |
Issuance of long-term debt, net of related costs | 2,213 | |
Repayments of long-term debt | (952) | |
Repurchases of common stock | (1,280) | (2,364) |
Dividends paid | (1,518) | (1,427) |
Proceeds from stock option exercises | 75 | 126 |
Other, net | (229) | (20) |
Net cash used for financing activities | (2,104) | (1,472) |
Net change in cash and cash equivalents | 1,805 | 1,854 |
Cash and cash equivalents at beginning of period | 1,090 | 1,446 |
Cash and cash equivalents at end of period | $ 2,895 | $ 3,300 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders' Equity | Noncontrolling Interest in Subsidiary |
Beginning Balance at Dec. 31, 2014 | $ 3,400 | $ 314 | $ 14,956 | $ (11,870) | $ 3,400 | ||
Net earnings | 2,672 | 2,672 | 2,672 | ||||
Other comprehensive income, net of tax | 549 | 549 | 549 | ||||
Repurchases of common stock | (2,364) | (12) | $ (478) | (1,874) | (2,364) | ||
Dividends declared | (1,926) | (1,926) | (1,926) | ||||
Stock-based awards and ESOP activity and other | 482 | 4 | 478 | 482 | |||
Ending Balance at Sep. 27, 2015 | 2,813 | 306 | 13,828 | (11,321) | 2,813 | ||
Beginning Balance at Dec. 31, 2015 | 3,097 | 303 | 14,238 | (11,444) | 3,097 | ||
Net earnings | 4,314 | 4,314 | 4,314 | ||||
Other comprehensive income, net of tax | 453 | 453 | 453 | ||||
Shares tendered and retired in connection with divestiture of IS&GS business segment | (2,497) | (9) | (2,488) | (2,497) | |||
Repurchases of common stock | (1,280) | (6) | (272) | (1,002) | (1,280) | ||
Dividends declared | (2,056) | (2,056) | (2,056) | ||||
Stock-based awards and ESOP activity and other | 292 | 3 | $ 272 | 17 | 292 | ||
Increase in noncontrolling interests in subsidiary | 107 | $ 107 | |||||
Ending Balance at Sep. 25, 2016 | $ 2,430 | $ 291 | $ 13,023 | $ (10,991) | $ 2,323 | $ 107 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 25, 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, except for certain aspects of employee share-based payments, which were amended with the adoption of ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting 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, acquisitions and divestitures, 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 September 25 for the third quarter of 2016 and September 27 for the third quarter of 2015, to align our financial closing with our business processes. The consolidated financial statements and tables of financial information included in these consolidated financial statements are labeled based on that convention. This practice only affects interim periods as our fiscal year ends on December 31. The discussion and presentation of the operating results of our business segments have been impacted by the following recent events. On August 16, 2016, we completed the previously announced divestiture of the Information Systems & Global Solutions (IS&GS) business segment, which merged with Leidos Holdings, Inc. (Leidos) in a Reverse Morris Trust transaction (the “Transactions”). The Transactions were the culmination of the strategic review of our government information technology infrastructure services business and our technical services business performed in 2015 to explore whether these businesses could achieve greater growth and create more value for customers and stockholders outside of Lockheed Martin. As a result of the divestiture, the operating results of the IS&GS business segment have been classified as discontinued operations in the consolidated statements of earnings for all periods presented and the assets and liabilities of the IS&GS business segment have been classified as assets and liabilities of discontinued operations in the consolidated balance sheet as of December 31, 2015. However, the cash flows of the IS&GS business segment have not been reclassified in our consolidated statements of cash flows as we retained the cash as part of the Transactions. Refer to “Note 3 – Acquisitions and Divestitures” for additional information about the divestiture of the IS&GS business segment. On August 24, 2016, our ownership interest in the AWE Management Limited (AWE) venture, which operates the United Kingdom’s nuclear deterrent program, increased by 18%. As a result of the increase in ownership interest, we now hold a 51% controlling interest in AWE and are required to consolidate the AWE venture in our consolidated financial statements. Accordingly, the operating results and cash flows of AWE have been included in our consolidated statements of earnings and consolidated statements of cash flows since August 24, 2016, the date we obtained a controlling interest, and the assets and liabilities of AWE are included in the consolidated balance sheet as of September 25, 2016. Previously, we accounted for our investment in AWE using the equity method of accounting. Refer to “Note 3 – Acquisitions and Divestitures” for additional information about the change in ownership of AWE. During the third quarter of 2016, the business segment formerly known as Mission Systems and Training (MST) was renamed Rotary and Missions Systems (RMS) to better reflect a broader range of products and capabilities subsequent to the acquisition of Sikorsky Aircraft Corporation (Sikorsky) in November 2015 and the realignment of certain programs from the former IS&GS business segment to RMS in the fourth quarter of 2015. While RMS was renamed to more accurately reflect the expanded portfolio, there was no additional change to the composition of the portfolio in connection with the name change. The information for this segment for all periods included in these consolidated financial statements has been labeled using the new name. On November 6, 2015, we completed the acquisition of Sikorsky for $9.0 billion, net of cash acquired, and aligned Sikorsky under our RMS business segment. The operating results and cash flows of Sikorsky have been included in our consolidated statements of earnings and consolidated statements of cash flows since the November 6, 2015 acquisition date. Additionally, the assets and liabilities of Sikorsky are included in our consolidated balance sheets as of September 25, 2016 and December 31, 2015. Refer to “Note 3 – Acquisitions and Divestitures” for additional information about the acquisition of Sikorsky and related preliminary purchase accounting. 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 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 | 9 Months Ended |
Sep. 25, 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 Nine Months Ended September 25, 2016 September 27, 2015 September 25, 2016 September 27, 2015 Weighted average common shares outstanding for basic computations 298.5 308.4 302.0 311.9 Weighted average dilutive effect of equity awards 3.6 4.3 3.9 4.4 Weighted average common shares outstanding for diluted computations 302.1 312.7 305.9 316.3 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 nine months ended September 25, 2016 or September 27, 2015. |
ACQUISITIONS AND DIVESTITURES
ACQUISITIONS AND DIVESTITURES | 9 Months Ended |
Sep. 25, 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 segments, allowing us to strengthen our position in the aerospace and defense industry. Further, this acquisition expands our presence in commercial and international markets. Sikorsky has been aligned under our RMS 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 will 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. The refinements made during the quarter and nine months ended September 25, 2016 did not have a material effect on the acquired assets and liabilities assumed or on net earnings, however, any potential adjustments made could be material in relation to the values presented in the table below. 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, net 1,948 Inventories, net 1,605 Other current assets 25 Property, plant and equipment 649 Goodwill 2,853 Intangible assets: Customer programs 3,204 Trademarks 887 Other noncurrent assets 507 Deferred income tax assets 265 Total identifiable assets and goodwill $ 12,018 Accounts payable $ (565 ) Customer advances and amounts in excess of costs incurred (1,197 ) Salaries, benefits and payroll taxes (105 ) Other current liabilities (382 ) Customer contractual obligations (a) (507 ) Other noncurrent liabilities (156 ) Deferred income tax liabilities (a) (28 ) Total liabilities assumed $ (2,940 ) Total purchase price $ 9,078 (a) Recorded in other noncurrent liabilities on the consolidated balance sheets. The refinements made during the quarter and nine months ended September 25, 2016 did not have a material effect on the acquired assets and liabilities assumed or on net earnings. 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 $507 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 September 25, 2016, we recognized approximately $100 million in sales related to customer contractual obligations. Estimated liquidation of the customer contractual obligations is approximated as follows: $30 million remaining in 2016, $110 million in 2017, $70 million in 2018, $70 million in 2019, $60 million in 2020, $10 million in 2021 and $57 million thereafter. The fair values of the assets acquired and liabilities assumed were 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 $2.9 billion of goodwill, all of which is expected to be amortizable for tax purposes. All of the goodwill was assigned to our RMS 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 nine months ended September 27, 2015 (in millions): Quarter Ended September 27, 2015 Nine Months Ended September 27, 2015 Net sales $ 11,434 $ 33,289 Net earnings 858 2,631 Basic earnings per common share 2.78 8.44 Diluted earnings per common share 2.74 8.32 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 $115 million (net of about $20 million and $60 million of tax expense) and interest expense of about $45 million and about $130 million (net of about $20 million and $65 million of tax expense) for the quarter and nine months ended September 27, 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. AWE Management Limited On August 24, 2016, our ownership interest in the AWE venture increased by 18% in exchange for our assuming a more significant role in managing the operations of the venture. AWE operates the United Kingdom’s nuclear deterrent program and generated sales of about $1.5 billion and net earnings of about $85 million in 2015. As a result of the increase in ownership, we now own a 51% interest in AWE and control its operations and board of directors. Consequently, we are required to consolidate AWE, which has been aligned under our Space Systems business segment. Previously, we accounted for our investment in AWE using the equity method of accounting. We accounted for this transaction as a “step acquisition” (as defined by U.S. GAAP), which requires us to consolidate and record the assets and liabilities of AWE at fair value. Accordingly, we recorded intangible assets of $243 million related to customer relationships, $32 million of net liabilities, and noncontrolling interests of $107 million. The intangible assets are being amortized over a period of eight years in accordance with the underlying pattern of economic benefit reflected by the future net cash flows. In the quarter ended September 25, 2016, we recognized a non cash net gain of $104 million associated with obtaining a controlling interest in AWE, which consisted of a $127 million pre tax gain recognized in the operating results of our Space Systems business segment and $23 million of tax related items at our corporate office. The gain represents the fair value of our 51% interest in AWE, less the carrying value of our previously held investment in AWE and deferred taxes. The gain was recorded in “other income, net” in the consolidated statements of earnings. The fair value of AWE, our controlling interest, and the noncontrolling interests were determined using the income approach. Divestiture of the Information Systems & Global Solutions Business Segment On August 16, 2016, we completed the previously announced divestiture of the IS&GS business segment, which merged with Leidos in a Reverse Morris Trust transaction (the “Transactions”). The Transactions were completed in a multi-step process pursuant to which, we initially contributed the IS&GS business to Abacus Innovations Corporation (Abacus), a wholly owned subsidiary of Lockheed Martin created to facilitate the Transactions, and the common stock of Abacus was distributed to participating Lockheed Martin stockholders through an exchange offer. Under the terms of the exchange offer, Lockheed Martin stockholders had the option to exchange all, some or none of their shares of Lockheed Martin common stock for shares of Abacus common stock. At the conclusion of the exchange offer, all 76,958,918 shares of Abacus common stock were exchanged for 9,369,694 shares of Lockheed Martin common stock held by Lockheed Martin stockholders that elected to participate in the exchange. The shares of Lockheed Martin common stock that were tendered and accepted in the exchange were retired and reduced the number of shares of our common stock outstanding by approximately three percent. Following the exchange offer, Abacus merged with a subsidiary of Leidos, with Abacus continuing as the surviving corporation and a wholly owned subsidiary of Leidos. As part of the merger, each share of Abacus common stock was automatically converted into one share of Leidos common stock. We did not receive any shares of Leidos common stock as part of the Transactions and do not hold any shares of Leidos or Abacus common stock following the Transactions. Both the exchange offer and merger qualified as tax-free transactions to Lockheed Martin and its stockholders, except to the extent that cash was paid to Lockheed Martin stockholders in lieu of fractional shares. In connection with the Transactions, Abacus borrowed an aggregate principal amount of approximately $1.84 billion under term loan facilities with third party financial institutions, the proceeds of which were used to make a one-time special cash payment of $1.80 billion to Lockheed Martin and to pay associated borrowing fees and expenses. The special cash payment must be used to repay debt, pay dividends or repurchase stock. The obligations under the term loan facilities were assumed by Leidos as part of the Transactions. As a result of the Transactions, we recognized a net gain of approximately $1.2 billion. The net gain represents the $2.5 billion fair value of the shares of Lockheed Martin common stock tendered and retired as part of the exchange offer, plus the $1.8 billion one-time special cash payment, less the net book value of the IS&GS business segment of about $3.0 billion at August 16, 2016 and other adjustments of about $100 million. The final gain is subject to certain post-closing adjustments, including final working capital and tax adjustments, which we expect to complete in the fourth quarter of 2016 or the first quarter of 2017. We classified the operating results of the IS&GS business segment as discontinued operations in our financial statements in accordance with GAAP, as the divestiture of this business represented a strategic shift that had a major effect on our operations and financial results. However, the cash flows of the IS&GS business segment have not been reclassified in our consolidated statements of cash flows as we retained this cash as part of the Transactions. The carrying amounts of major classes of the IS&GS business segment assets and liabilities that were classified as assets and liabilities of discontinued operations as of December 31, 2015 are as follows (in millions): Receivables, net $ 807 Inventories, net 143 Other current assets 19 Property, plant and equipment, net 101 Goodwill 2,881 Intangible assets 125 Other noncurrent assets 54 Total assets of the disposal group $ 4,130 Accounts payable $ (229 ) Customer advances and amounts in excess of costs incurred (285 ) Salaries, benefits and payroll taxes (209 ) Other current liabilities (225 ) Deferred income taxes (145 ) Other noncurrent liabilities (60 ) Total liabilities of the disposal group $ (1,153 ) The operating results of IS&GS that have been reflected within net earnings from discontinued operations are as follows (in millions): Quarters Ended Nine Months Ended September 25, 2016 (a) September 27, 2015 September 25, 2016 (a) September 27, 2015 Net sales $ 739 $ 1,401 $ 3,410 $ 4,199 Cost of sales (635) (1,222) (2,953) (3,644) Severance charges — (20) (19) (20) Gross profit 104 159 438 535 Other income, net 19 3 16 8 Operating profit 123 162 454 543 Earnings from discontinued operations before income taxes 123 162 454 543 Income tax expense (51) (53) (168) (180) Net gain on divestiture of discontinued operations 1,234 — 1,234 — Net earnings from discontinued operations $ 1,306 $ 109 $ 1,520 $ 363 (a) Operating results for the quarter and nine months ended September 25, 2016 reflect operating results prior to the transaction date of August 16, 2016, not the full quarter or nine month period as shown for the prior period. The selected financial information (such as, depreciation and amortization, capital expenditures, and other non-cash items) of IS&GS included in our consolidated statements of cash flows were not significant. The operating profit reflected above does not represent the IS&GS business segment historical operating profit, as the results reported within net earnings from discontinued operations only include certain costs that were directly attributable to IS&GS and exclude certain overhead costs that were previously allocated to IS&GS for each period. For instance, certain corporate overhead costs and certain defined benefit pension costs that were historically allocated to and included in the operating results of the IS&GS business segment have been reclassified and included in the results of our continuing operations because we will continue to incur these costs subsequent to the divestiture of the IS&GS business segment. Certain corporate overhead costs incurred by us and previously allocated to the IS&GS business segment were reclassified from the IS&GS business segment to other unallocated, net in our consolidated statement of earnings. These overhead costs related to expenses for senior management, legal, human resources, finance, accounting, treasury, tax, information technology, communications, ethics and compliance, corporate employee benefits, incentives and stock-based compensation, shared services processing and administration and depreciation for corporate fixed assets, and were not directly attributable to the IS&GS business segment. During the quarter and nine months ended September 25, 2016 we reclassified $17 million and $82 million of corporate overhead costs to other unallocated, net. During the quarter and nine months ended September 27, 2015 we reclassified $40 million and $133 million of corporate overhead costs to other unallocated, net. Additionally, we retained all assets and obligations related to the pension benefits earned by IS&GS employees who historically participated in our defined benefit pension plans. As a result, the non-service portion of pension costs (interest cost, actuarial gains and losses and expected return on plan assets) for these plans was reclassified from the operating results of the IS&GS business segment and reported as a reduction to the FAS/CAS pension adjustment. These net costs were $11 million and $54 million in the quarter and nine months ended September 25, 2016 and $17 million and $53 million in the quarter and nine months ended September 27, 2015. The service portion of pension costs related to IS&GS salaried employees that transferred to Leidos remains in the operating results of the IS&GS business segment classified as discontinued operations because such costs will no longer be incurred by us subsequent to the divestiture of IS&GS. These costs were not material for the quarter and nine months ended September 25, 2016 or for the quarter and nine months ended September 27, 2015. Significant severance charges related to the IS&GS business segment were historically recorded at the Lockheed Martin corporate office. These charges have been reclassified into the operating results of the IS&GS business segment, classified as discontinued operations, and excluded from the operating results of our continuing operations. The amount of severance charges reclassified were $19 million in the nine months ended September 25, 2016 and $20 million in the quarter and nine months ended September 27, 2015. 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 | 9 Months Ended |
Sep. 25, 2016 | |
Operating Segments | |
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 MFC RMS Space Systems Total Balance at December 31, 2015 $ 171 $ 2,198 $ 6,738 $ 1,588 $ 10,695 Purchase accounting adjustments — — 89 — 89 Divestitures — — (7 ) — (7) Foreign currency translation — (8 ) 24 (2) 14 Balance at September 25, 2016 $ 171 $ 2,190 $ 6,844 $ 1,586 $ 10,791 Acquired intangible assets consisted of the following (in millions): September 25, 2016 December 31, 2015 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Finite-Lived: Customer programs $ 3,204 $ (214) $ 2,990 $ 3,127 $ (38) $ 3,089 Customer relationships 380 (82) 298 137 (59) 78 Other 111 (81) 30 111 (72) 39 Total finite-lived intangibles 3,695 (377) 3,318 3,375 (169) 3,206 Indefinite Lived: Trademarks 887 — 887 816 — 816 Total acquired intangibles $ 4,582 $ (377) $ 4,205 $ 4,191 $ (169) $ 4,022 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 nine months ended September 25, 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 refer to “Note 3 – Acquisitions and Divestitures”. Amortization expense from continuing operations for acquired finite-lived intangible assets was $82 million and $203 million for the quarter and nine months ended September 25, 2016 and $7 million and $22 million for the quarter and nine months ended September 27, 2015. Estimated future amortization expense is as follows: $58 million remaining in 2016; $258 million in 2017; $248 million in 2018; $246 million in 2019; $242 million in 2020; $238 million in 2021 and $2.0 billion thereafter. Our estimates of amortization expense for finite-lived |
BUSINESS SEGMENTS INFORMATION
BUSINESS SEGMENTS INFORMATION | 9 Months Ended |
Sep. 25, 2016 | |
BUSINESS SEGMENTS INFORMATION | NOTE 5 – BUSINESS SEGMENTS INFORMATION We operate in four business segments: Aeronautics, Missiles and Fire Control (MFC), RMS and Space Systems. We organize our business segments based on the nature of the products and services offered. 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 not reflected in discontinued operations; 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 Nine Months Ended September 25, 2016 September 27, 2015 September 25, 2016 September 27, 2015 Net sales Aeronautics $ 4,188 $ 3,921 $ 12,362 $ 11,186 Missiles and Fire Control 1,737 1,769 4,851 4,801 Rotary and Mission Systems 3,346 2,162 9,653 6,306 Space Systems 2,280 2,208 6,630 6,723 Total net sales $ 11,551 $ 10,060 $ 33,496 $ 29,016 Operating profit Aeronautics $ 437 $ 418 $ 1,335 $ 1,233 Missiles and Fire Control 289 316 763 895 Rotary and Mission Systems 247 245 678 687 Space Systems 450 265 1,034 883 Total business segment operating profit 1,423 1,244 3,810 3,698 Unallocated items FAS pension expense (a) (256) (280) (758) (841) Less: CAS pension cost (a) 482 382 1,430 1,146 FAS/CAS pension adjustment (a) 226 102 672 305 Stock-based compensation (28) (27) (124) (112) Severance charges — (15) (80) (15) Other, net (33) (112) (157) (264) Total unallocated items 165 (52) 311 (86) Total consolidated operating profit $ 1,588 $ 1,192 $ 4,121 $ 3,612 Intersegment sales Aeronautics $ 30 $ 22 $ 105 $ 68 Missiles and Fire Control 81 86 225 241 Rotary and Mission Systems 469 364 1,382 1,066 Space Systems 21 39 90 108 Total intersegment sales $ 601 $ 511 $ 1,802 $ 1,483 (a) FAS pension expense and CAS pension costs reflect the reclassification for discontinued operations presentation of benefits related to former IS&GS salaried employees (See Note 7). Total assets for each of our business segments were as follows (in millions): September 25, 2016 December 31, 2015 Assets Aeronautics $ 8,012 $ 6,618 Missiles and Fire Control 3,950 4,027 Rotary and Mission Systems 18,978 19,187 Space Systems 5,396 4,861 Total business segment assets 36,336 34,693 Assets of discontinued operations — 4,130 Corporate assets (a) 12,403 10,481 Total assets $ 48,739 $ 49,304 (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 23% of our total consolidated net sales from continuing operations for both the quarter and nine months ended September 25, 2016 and 23% of our total consolidated net sales from continuing operations for both the quarter and nine months ended September 27, 2015. |
INVENTORIES, NET
INVENTORIES, NET | 9 Months Ended |
Sep. 25, 2016 | |
INVENTORIES, NET | NOTE 6 – INVENTORIES, NET Inventories, net consisted of the following (in millions): September 25, 2016 December 31, 2015 Work-in-process, primarily related to long-term contracts and programs in progress $ 8,668 $ 8,081 Less: customer advances and progress payments (5,284) (5,032) 3,384 3,049 Other inventories 1,468 1,770 Total inventories, net $ 4,852 $ 4,819 |
POSTRETIREMENT BENEFIT PLANS
POSTRETIREMENT BENEFIT PLANS | 9 Months Ended |
Sep. 25, 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, which are reflected in net earnings from continuing operations, consisted of the following (in millions): Quarters Ended Nine Months Ended September 25, 2016 September 27, 2015 September 25, 2016 September 27, 2015 Qualified defined benefit pension plans Service cost $ 208 $ 207 $ 615 $ 623 Interest cost 465 448 1,396 1,343 Expected return on plan assets (667) (683) (2,000) (2,050) Recognized net actuarial losses 340 399 1,019 1,199 Amortization of prior service (credits) costs (90) (91) (272) (274) Total net periodic benefit cost $ 256 $ 280 $ 758 $ 841 Retiree medical and life insurance plans Service cost $ 6 $ 6 $ 18 $ 16 Interest cost 30 28 89 83 Expected return on plan assets (34) (37) (103) (111) Recognized net actuarial losses 8 10 25 32 Amortization of prior service costs 5 1 16 3 Total net periodic benefit cost $ 15 $ 8 $ 45 $ 23 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 ($11 million and $32 million during the quarter and nine months ended September 25, 2016 and $16 million and $44 million for the quarter and nine months ended September 27, 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 $175 million (net of $96 million of tax expense) and $521 million (net of $285 million of tax expense) for the quarter and nine months ended September 25, 2016 and $212 million (net of $117 million of tax expense) and $637 million (net of $349 million of tax expense) for the quarter and nine months ended September 27, 2015, which were recorded on our statements of comprehensive income as an increase to other comprehensive income. As a result of the divestiture and classification of the IS&GS business segment as discontinued operations, we reclassified certain pension costs that were historically allocated to and included in the operations of the IS&GS business segment. For further details on changes in the pension costs refer to “Note 3 – Acquisitions and Divestitures”. 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 legacy qualified defined benefit pension plans during the quarters and nine months ended September 25, 2016 and September 27, 2015, other than insignificant contributions to the pension plan we established related to the Sikorsky acquisition. We do not plan to make contributions to our legacy pension plans in 2016 or 2017, other than insignificant contributions to the Sikorsky pension plan, because none are required using current assumptions, including anticipated investment returns on plan assets. |
LEGAL PROCEEDINGS AND CONTINGEN
LEGAL PROCEEDINGS AND CONTINGENCIES | 9 Months Ended |
Sep. 25, 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, including liabilities retained from, or indemnities provided in connection with, divested businesses. 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. The Government seeks damages in excess of $45 million, subject to trebling, plus statutory penalties. 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. At this time we are awaiting a decision from the District Court. Although this matter relates to the IS&GS business segment, we retained it when IS&GS was divested. 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 September 25, 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 $896 million and $858 million at September 25, 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. On August 25, 2016, the California Superior Court issued a tentative ruling in favor of the CMTA petition and held a hearing on August 26, 2016. Although we cannot predict the outcome of this suit, it is likely that the tentative ruling will be finalized and the standard will be remanded to the responsible agency for reconsideration. If the new standard remains at 10 ppb or is higher, 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, venture partners or businesses we previously owned. We had total outstanding letters of credit, surety bonds and third-party guarantees aggregating $3.8 billion at September 25, 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 amount. At September 25, 2016 and December 31, 2015, third-party guarantees totaled $694 million and $678 million, of which approximately 55% and 79% related to guarantees of contractual performance of ventures to which we currently are, or previously were, a party. Of the total third-party guarantees, at September 25, 2016, approximately $278 million, or 40%, related to the contractual performance of our former IS&GS business under the terms of guarantees that existed prior to the divestiture of this business. These guarantees are not included in the amounts of third-party guarantees at December 31, 2015 because the IS&GS business was a consolidated entity prior to its divestiture in the third quarter of 2016. We are currently negotiating the termination of the pre-existing guarantees with the related beneficiaries. The termination of these guarantees may be conditioned upon the replacement of the guarantees by guarantees to be issued by Leidos. The amounts of third-party guarantees represent our estimate of the maximum amount we would expect to incur upon the contractual non-performance of the venture, the venture partners or divested businesses. 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 or divested business. We believe our current and former venture partners and divested businesses will be able to perform their obligations, as they have done through September 25, 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 or divested businesses. In determining our exposures, we evaluate the reputation, performance on contractual obligations, technical capabilities and credit quality of our current and former venture partners and divested businesses. 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 September 25, 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 September 25, 2016, and that it will not be necessary to make payments under the cross-indemnities or guarantees. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 25, 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): September 25, 2016 December 31, 2015 Total Level 1 Level 2 Total Level 1 Level 2 Assets Equity securities $ 77 $ 77 $ — $ 89 $ 89 $ — Mutual funds 748 748 — 745 745 — U.S. Government securities 127 — 127 119 — 119 Other securities 150 — 150 147 — 147 Derivatives 90 — 90 15 — 15 Liabilities Derivatives 87 — 87 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 consolidated 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 nine months ended September 25, 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 September 25, 2016 and December 31, 2015 was $1.0 billion and $1.5 billion. The aggregate notional amount of our outstanding foreign currency hedges at September 25, 2016 and December 31, 2015 was $4.3 billion and $4.1 billion. Derivative instruments did not have a material impact on net earnings and comprehensive income during the quarters and nine months periods ended September 25, 2016 and September 27, 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 $17.1 billion and $16.5 billion at September 25, 2016 and December 31, 2015 and the outstanding principal amount was $15.3 billion and $16.2 billion at September 25, 2016 and December 31, 2015, excluding unamortized discounts and deferred financing costs of $1.0 billion at both September 25, 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 | 9 Months Ended |
Sep. 25, 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 from continuing operations by approximately $405 million and $1.1 billion in the quarter and nine months ended September 25, 2016 and $390 million and $1.3 billion in the quarter and nine months ended September 27, 2015. These adjustments increased net earnings by approximately $265 million ($0.88 per share) and $730 million ($2.39 per share) in the quarter and nine months ended September 25, 2016 and $255 million ($0.82 per share) and $865 million ($2.73 per share) in the quarter and nine months ended September 27, 2015. Revolving Credit Facility Extension In October 2016, our $2.5 billion revolving credit facility (the 5-year Facility) was amended to extend its expiration date by one year from October 9, 2020 to October 9, 2021. Long-Term Debt In September 2016, we repaid $500 million of long-term notes with a fixed interest rate of 2.13% according to their scheduled maturities. 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. 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 $80 million related to our Aeronautics 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 September 25, 2016, we have paid $56 million in severance payments associated with these actions, of which $31 million was paid in the quarter ended September 25, 2016. During the first quarter of 2016, we also recorded severance charges totaling $19 million related to our former IS&GS business segment which are recorded in net earnings from discontinued operations in our consolidated statement of earnings. 2015 Actions During the third and fourth quarters of 2015, we recorded severance charges totaling $82 million, of which $67 million related to our RMS business segment and $15 million related to businesses that were reported in our former 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 September 25, 2016, we have paid $45 million in severance payments associated with these actions, of which $25 million was paid in the quarter ended September 25, 2016. Additionally during the third and fourth quarters of 2015, we recorded severance charges totaling $20 million related to our former IS&GS business segment which are recorded in net earnings from discontinued operations in our consolidated statements of earnings. 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 nine months ended September 25, 2016, we incurred about $35 million of costs and the remaining $5 million are expected to be incurred during the fourth quarter 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 for earnings from continuing operations were 23.7% and 23.1% for the quarter and nine months ended September 25, 2016, and 30.6% and 30.4% for the quarter and nine months ended September 27, 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 nine months ended September 25, 2016 also benefited from the research and development tax credit, which was permanently extended and reinstated in the fourth quarter of 2015 and from the nontaxable gain recorded in connection with the increase in AWE ownership. The rate in the quarter and nine months ended September 25, 2016 also benefited 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 $22 million and $137 million during the quarter and nine months ended September 25, 2016. The adjustments for the third quarter included only the quarterly impacts, whereas the adjustments for the first nine months of 2016 include the second and third 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 Exchange and Retirement of Common Stock Related to Divestiture of IS&GS Business Segment On August 16, 2016, as part of the previously announced divestiture of the IS&GS business segment and merger of this business with Leidos in a Reverse Morris Trust transaction, we completed an exchange offer that resulted in a reduction of our common stock outstanding by approximately 9.4 million shares (approximately three percent). Repurchases of Common Stock During the nine months ended September 25, 2016, we repurchased 5.7 million shares of our common stock for $1.3 billion. On September 22, 2016, we increased our share repurchase program by $2.0 billion. Inclusive of this increase, the total remaining authorization for future common share repurchases under our share repurchase program was $4.3 billion as of September 25, 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 $537 million ($1.82 per share) and $2.0 billion ($6.77 per share) during the quarter and nine months ended September 25, 2016. The 2016 dividend amounts include the declaration of our 2016 fourth quarter dividend of $1.82 per share, which totaled $537 million. On September 22, 2016 we increased our quarterly dividend rate by 10% or $0.17 per share to $1.82 per share. We declared cash dividends totaling $507 million ($1.65 per share) and $1.9 billion ($6.15 per share) during the quarter and nine months ended September 27, 2015. The 2015 dividend amounts include the declaration of our 2015 fourth quarter dividend of ($1.65 per share), which totaled $507 million. Restricted Stock Unit Grants During the quarter ended September 25, 2016, there were no significant grants of restricted stock units (RSUs). During the nine months ended September 25, 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 Benefit Plans Other, net AOCL Balance at December 31, 2015 $ (11,314 ) $ (130 ) $ (11,444) Other comprehensive loss before reclassifications — (46 ) (46) Amounts reclassified from AOCL Recognition of net actuarial losses (a) 703 — 703 Amortization of net prior service credits (a) (182 ) — (182) Recognition of net prior service credits from divestiture of IS&GS segment (b) (134 ) — (134) Other (b) — 112 112 Total reclassified from AOCL 387 112 499 Total other comprehensive income (loss) 387 66 453 Balance at September 25, 2016 $ (10,927 ) $ (64 ) $ (10,991) Balance at December 31, 2014 $ (11,813 ) $ (57 ) $ (11,870) Other comprehensive loss before reclassifications — (88 ) (88) Amounts reclassified from AOCL Recognition of net actuarial losses (a) 831 — 831 Amortization of net prior service credits (a) (194 ) — (194) Total reclassified from AOCL 637 — 637 Total other comprehensive income (loss) 637 (88 ) 549 Balance at September 27, 2015 $ (11,176 ) $ (145 ) $ (11,321) (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 $175 million and $212 million for the quarters ended September 25, 2016 and September 27, 2015, which are composed of the recognition of net actuarial losses of $234 million and $277 million for the quarters ended September 25, 2016 and September 27, 2015 and the amortization of net prior service (credits) costs of $(59) million and $(65) million for the quarters ended September 25, 2016 and September 27, 2015. (b) Associated with the divestiture of the IS&GS business segment and included in net gain on divestiture of discontinued operations. 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 We are currently evaluating the effect the ASU is expected to have on our consolidated financial statements and related disclosures. As the ASU will supersede substantially all existing revenue guidance affecting us under GAAP, it could impact revenue and cost recognition on thousands of contracts across all our business segments, in addition to our business processes and our information technology systems. As a result, our evaluation of the effect of the ASU will extend over future periods. We will adopt the requirements of the new standard effective January 1, 2018 and we anticipate using the full retrospective transition method. 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) | 9 Months Ended |
Sep. 25, 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 Nine Months Ended September 25, 2016 September 27, 2015 September 25, 2016 September 27, 2015 Weighted average common shares outstanding for basic computations 298.5 308.4 302.0 311.9 Weighted average dilutive effect of equity awards 3.6 4.3 3.9 4.4 Weighted average common shares outstanding for diluted computations 302.1 312.7 305.9 316.3 |
ACQUISITIONS AND DIVESTITURES (
ACQUISITIONS AND DIVESTITURES (Tables) | 9 Months Ended |
Sep. 25, 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, net 1,948 Inventories, net 1,605 Other current assets 25 Property, plant and equipment 649 Goodwill 2,853 Intangible assets: Customer programs 3,204 Trademarks 887 Other noncurrent assets 507 Deferred income tax assets 265 Total identifiable assets and goodwill $ 12,018 Accounts payable $ (565 ) Customer advances and amounts in excess of costs incurred (1,197 ) Salaries, benefits and payroll taxes (105 ) Other current liabilities (382 ) Customer contractual obligations (a) (507 ) Other noncurrent liabilities (156 ) Deferred income tax liabilities (a) (28 ) Total liabilities assumed $ (2,940 ) Total purchase price $ 9,078 (a) Recorded in other noncurrent liabilities on the consolidated balance sheets. The refinements made during the quarter and nine months ended September 25, 2016 did not have a material effect on the acquired assets and liabilities assumed or on net earnings. |
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 nine months ended September 27, 2015 (in millions): Quarter Ended September 27, 2015 Nine Months Ended September 27, 2015 Net sales $ 11,434 $ 33,289 Net earnings 858 2,631 Basic earnings per common share 2.78 8.44 Diluted earnings per common share 2.74 8.32 |
Carrying Amounts of Major Classes of Business Segment Assets and Liabilities, Operating Results of Discontinued Operations and Information of IS and GS Included in Consolidated Statements of Cash Flows | The carrying amounts of major classes of the IS&GS business segment assets and liabilities that were classified as assets and liabilities of discontinued operations as of December 31, 2015 are as follows (in millions): Receivables, net $ 807 Inventories, net 143 Other current assets 19 Property, plant and equipment, net 101 Goodwill 2,881 Intangible assets 125 Other noncurrent assets 54 Total assets of the disposal group $ 4,130 Accounts payable $ (229 ) Customer advances and amounts in excess of costs incurred (285 ) Salaries, benefits and payroll taxes (209 ) Other current liabilities (225 ) Deferred income taxes (145 ) Other noncurrent liabilities (60 ) Total liabilities of the disposal group $ (1,153 ) The operating results of IS&GS that have been reflected within net earnings from discontinued operations are as follows (in millions): Quarters Ended Nine Months Ended September 25, 2016 (a) September 27, 2015 September 25, 2016 (a) September 27, 2015 Net sales $ 739 $ 1,401 $ 3,410 $ 4,199 Cost of sales (635) (1,222) (2,953) (3,644) Severance charges — (20) (19) (20) Gross profit 104 159 438 535 Other income, net 19 3 16 8 Operating profit 123 162 454 543 Earnings from discontinued operations before income taxes 123 162 454 543 Income tax expense (51) (53) (168) (180) Net gain on divestiture of discontinued operations 1,234 — 1,234 — Net earnings from discontinued operations $ 1,306 $ 109 $ 1,520 $ 363 (a) Operating results for the quarter and nine months ended September 25, 2016 reflect operating results prior to the transaction date of August 16, 2016, not the full quarter or nine month period as shown for the prior period. |
GOODWILL AND ACQUIRED INTANGI20
GOODWILL AND ACQUIRED INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 25, 2016 | |
Changes in the Carrying Amount of Goodwill by Segment | Changes in the carrying amount of goodwill by segment were as follows (in millions): Aeronautics MFC RMS Space Systems Total Balance at December 31, 2015 $ 171 $ 2,198 $ 6,738 $ 1,588 $ 10,695 Purchase accounting adjustments — — 89 — 89 Divestitures — — (7 ) — (7) Foreign currency translation — (8 ) 24 (2) 14 Balance at September 25, 2016 $ 171 $ 2,190 $ 6,844 $ 1,586 $ 10,791 |
Acquired Intangible Assets | Acquired intangible assets consisted of the following (in millions): September 25, 2016 December 31, 2015 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Finite-Lived: Customer programs $ 3,204 $ (214) $ 2,990 $ 3,127 $ (38) $ 3,089 Customer relationships 380 (82) 298 137 (59) 78 Other 111 (81) 30 111 (72) 39 Total finite-lived intangibles 3,695 (377) 3,318 3,375 (169) 3,206 Indefinite Lived: Trademarks 887 — 887 816 — 816 Total acquired intangibles $ 4,582 $ (377) $ 4,205 $ 4,191 $ (169) $ 4,022 |
BUSINESS SEGMENTS INFORMATION (
BUSINESS SEGMENTS INFORMATION (Tables) | 9 Months Ended |
Sep. 25, 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 Nine Months Ended September 25, 2016 September 27, 2015 September 25, 2016 September 27, 2015 Net sales Aeronautics $ 4,188 $ 3,921 $ 12,362 $ 11,186 Missiles and Fire Control 1,737 1,769 4,851 4,801 Rotary and Mission Systems 3,346 2,162 9,653 6,306 Space Systems 2,280 2,208 6,630 6,723 Total net sales $ 11,551 $ 10,060 $ 33,496 $ 29,016 Operating profit Aeronautics $ 437 $ 418 $ 1,335 $ 1,233 Missiles and Fire Control 289 316 763 895 Rotary and Mission Systems 247 245 678 687 Space Systems 450 265 1,034 883 Total business segment operating profit 1,423 1,244 3,810 3,698 Unallocated items FAS pension expense (a) (256) (280) (758) (841) Less: CAS pension cost (a) 482 382 1,430 1,146 FAS/CAS pension adjustment (a) 226 102 672 305 Stock-based compensation (28) (27) (124) (112) Severance charges — (15) (80) (15) Other, net (33) (112) (157) (264) Total unallocated items 165 (52) 311 (86) Total consolidated operating profit $ 1,588 $ 1,192 $ 4,121 $ 3,612 Intersegment sales Aeronautics $ 30 $ 22 $ 105 $ 68 Missiles and Fire Control 81 86 225 241 Rotary and Mission Systems 469 364 1,382 1,066 Space Systems 21 39 90 108 Total intersegment sales $ 601 $ 511 $ 1,802 $ 1,483 (a) FAS pension expense and CAS pension costs reflect the reclassification for discontinued operations presentation of benefits related to former IS&GS salaried employees (See Note 7). |
Selected Financial Data By Business Segment | Total assets for each of our business segments were as follows (in millions): September 25, 2016 December 31, 2015 Assets Aeronautics $ 8,012 $ 6,618 Missiles and Fire Control 3,950 4,027 Rotary and Mission Systems 18,978 19,187 Space Systems 5,396 4,861 Total business segment assets 36,336 34,693 Assets of discontinued operations — 4,130 Corporate assets (a) 12,403 10,481 Total assets $ 48,739 $ 49,304 (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) | 9 Months Ended |
Sep. 25, 2016 | |
Inventories | Inventories, net consisted of the following (in millions): September 25, 2016 December 31, 2015 Work-in-process, primarily related to long-term contracts and programs in progress $ 8,668 $ 8,081 Less: customer advances and progress payments (5,284) (5,032) 3,384 3,049 Other inventories 1,468 1,770 Total inventories, net $ 4,852 $ 4,819 |
POSTRETIREMENT BENEFIT PLANS (T
POSTRETIREMENT BENEFIT PLANS (Tables) | 9 Months Ended |
Sep. 25, 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, which are reflected in net earnings from continuing operations, consisted of the following (in millions): Quarters Ended Nine Months Ended September 25, 2016 September 27, 2015 September 25, 2016 September 27, 2015 Qualified defined benefit pension plans Service cost $ 208 $ 207 $ 615 $ 623 Interest cost 465 448 1,396 1,343 Expected return on plan assets (667) (683) (2,000) (2,050) Recognized net actuarial losses 340 399 1,019 1,199 Amortization of prior service (credits) costs (90) (91) (272) (274) Total net periodic benefit cost $ 256 $ 280 $ 758 $ 841 Retiree medical and life insurance plans Service cost $ 6 $ 6 $ 18 $ 16 Interest cost 30 28 89 83 Expected return on plan assets (34) (37) (103) (111) Recognized net actuarial losses 8 10 25 32 Amortization of prior service costs 5 1 16 3 Total net periodic benefit cost $ 15 $ 8 $ 45 $ 23 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 25, 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): September 25, 2016 December 31, 2015 Total Level 1 Level 2 Total Level 1 Level 2 Assets Equity securities $ 77 $ 77 $ — $ 89 $ 89 $ — Mutual funds 748 748 — 745 745 — U.S. Government securities 127 — 127 119 — 119 Other securities 150 — 150 147 — 147 Derivatives 90 — 90 15 — 15 Liabilities Derivatives 87 — 87 35 — 35 |
OTHER (Tables)
OTHER (Tables) | 9 Months Ended |
Sep. 25, 2016 | |
Accumulated Other Comprehensive Loss | Changes in the balance of AOCL, net of tax, consisted of the following (in millions): Postretirement Benefit Plans Other, net AOCL Balance at December 31, 2015 $ (11,314 ) $ (130 ) $ (11,444) Other comprehensive loss before reclassifications — (46 ) (46) Amounts reclassified from AOCL Recognition of net actuarial losses (a) 703 — 703 Amortization of net prior service credits (a) (182 ) — (182) Recognition of net prior service credits from divestiture of IS&GS segment (b) (134 ) — (134) Other (b) — 112 112 Total reclassified from AOCL 387 112 499 Total other comprehensive income (loss) 387 66 453 Balance at September 25, 2016 $ (10,927 ) $ (64 ) $ (10,991) Balance at December 31, 2014 $ (11,813 ) $ (57 ) $ (11,870) Other comprehensive loss before reclassifications — (88 ) (88) Amounts reclassified from AOCL Recognition of net actuarial losses (a) 831 — 831 Amortization of net prior service credits (a) (194 ) — (194) Total reclassified from AOCL 637 — 637 Total other comprehensive income (loss) 637 (88 ) 549 Balance at September 27, 2015 $ (11,176 ) $ (145 ) $ (11,321) (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 $175 million and $212 million for the quarters ended September 25, 2016 and September 27, 2015, which are composed of the recognition of net actuarial losses of $234 million and $277 million for the quarters ended September 25, 2016 and September 27, 2015 and the amortization of net prior service (credits) costs of $(59) million and $(65) million for the quarters ended September 25, 2016 and September 27, 2015. (b) Associated with the divestiture of the IS&GS business segment and included in net gain on divestiture of discontinued operations. |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Detail) - USD ($) $ in Billions | Nov. 06, 2015 | Aug. 24, 2016 |
Sikorsky Aircraft Corporation | ||
Basis of Presentation [Line Items] | ||
Acquisitions of businesses and investments in affiliates | $ 9 | |
AWE Management Limited | ||
Basis of Presentation [Line Items] | ||
Ownership interest percentage acquired | 18.00% | |
Noncontrolling Interest, Ownership Percentage by Parent | 51.00% |
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 | 9 Months Ended | ||
Sep. 25, 2016 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 2015 | |
Weighted Average Shares Used In Computing Earnings Per Share [Line Items] | ||||
Weighted average common shares outstanding for basic computations | 298.5 | 308.4 | 302 | 311.9 |
Weighted average dilutive effect of equity awards | 3.6 | 4.3 | 3.9 | 4.4 |
Weighted average common shares outstanding for diluted computations | 302.1 | 312.7 | 305.9 | 316.3 |
Earnings Per Common Share - Add
Earnings Per Common Share - Additional Information (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2016 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 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 ($) $ in Millions | Aug. 24, 2016 | Aug. 16, 2016 | Nov. 06, 2015 | Sep. 25, 2016 | Dec. 31, 2015 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 2015 | Dec. 31, 2015 |
Acquisitions And Divestitures [Line Items] | |||||||||
Goodwill | $ 10,791 | $ 10,695 | $ 10,791 | $ 10,695 | |||||
Gain on step acquisition of AWE, net of tax | 104 | ||||||||
One-time special cash payment received from Abacus | $ 1,800 | 1,800 | |||||||
Net gain on divestiture of business segment | 1,234 | ||||||||
Fair value of shares of common stock tendered and retired | 2,497 | ||||||||
Other unallocated, net | (173) | $ 32 | (401) | $ 61 | |||||
Severance charges | 82 | 82 | 99 | 35 | |||||
Abacus | Term Loan Facilities | |||||||||
Acquisitions And Divestitures [Line Items] | |||||||||
Amount of issued debt | $ 1,840 | ||||||||
Information Systems & Global Solutions | |||||||||
Acquisitions And Divestitures [Line Items] | |||||||||
Percentage of reduction in common stock outstanding | 3.00% | ||||||||
Net gain on divestiture of business segment | $ 1,200 | ||||||||
Fair value of shares of common stock tendered and retired | 2,500 | ||||||||
Net book value | 3,000 | ||||||||
Other adjustments | $ 100 | ||||||||
Other unallocated, net | 17 | 40 | 82 | 133 | |||||
Information Systems & Global Solutions | Abacus | |||||||||
Acquisitions And Divestitures [Line Items] | |||||||||
Number of common stock exchanged | 76,958,918 | ||||||||
Information Systems & Global Solutions | Lockheed Martin | |||||||||
Acquisitions And Divestitures [Line Items] | |||||||||
Number of common stock exchanged | 9,369,694 | ||||||||
Information Systems & Global Solutions | Continuing Operations | |||||||||
Acquisitions And Divestitures [Line Items] | |||||||||
Pension costs | 11 | 17 | 54 | 53 | |||||
Information Systems & Global Solutions | Discontinued Operations | |||||||||
Acquisitions And Divestitures [Line Items] | |||||||||
Severance charges | 20 | 19 | 20 | ||||||
Information Systems & Global Solutions | Restatement Adjustment | |||||||||
Acquisitions And Divestitures [Line Items] | |||||||||
Corporate overhead costs | (17) | (40) | (82) | (133) | |||||
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 | ||||||||
Intangible assets weighted-average useful life | 15 years | ||||||||
Customer contractual obligations | $ 507 | ||||||||
Customer contractual obligations remaining in 2016 | 30 | 30 | |||||||
Customer contractual obligations due in 2017 | 110 | 110 | |||||||
Customer contractual obligations due in 2018 | 70 | 70 | |||||||
Customer contractual obligations due in 2019 | 70 | 70 | |||||||
Customer contractual obligations due in 2020 | 60 | 60 | |||||||
Customer contractual obligations due in 2021 | 10 | 10 | |||||||
Customer contractual obligations due after 2021 | 57 | 57 | |||||||
Sales related to customer contractual obligations, to date | 100 | $ 100 | |||||||
Goodwill | 2,853 | ||||||||
Net liabilities | 2,940 | ||||||||
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 expense, net of tax expense | 40 | 115 | |||||||
Amortization expense, tax expense | 20 | 60 | |||||||
Interest expense, net of tax expense | 45 | 130 | |||||||
Interest expense, tax expense | $ 20 | $ 65 | |||||||
AWE Management Limited | |||||||||
Acquisitions And Divestitures [Line Items] | |||||||||
Ownership interest percentage acquired | 18.00% | ||||||||
Sales | 1,500 | ||||||||
Net earnings | $ 85 | ||||||||
Noncontrolling Interest, Ownership Percentage by Parent | 51.00% | ||||||||
Net liabilities | $ 32 | ||||||||
Business combination, acquisition of less than 100 percent, noncontrolling interest, fair value | 107 | ||||||||
AWE Management Limited | Other income, net | |||||||||
Acquisitions And Divestitures [Line Items] | |||||||||
Gain on step acquisition of AWE, net of tax | 104 | ||||||||
Pre tax gain on step acquisition of AWE | 127 | ||||||||
Tax on gain on step acquisition of AWE | $ 23 | ||||||||
AWE Management Limited | Customer relationships | |||||||||
Acquisitions And Divestitures [Line Items] | |||||||||
Intangible assets | $ 243 | ||||||||
Acquired finite-lived intangible assets are amortized | 8 years |
Summary of Preliminary Estimate
Summary of Preliminary Estimated Fair Values of Assets Acquired and Liabilities Assumed at Acquisition Date (Detail) - USD ($) $ in Millions | Sep. 25, 2016 | Dec. 31, 2015 | Nov. 06, 2015 | |
Business Acquisition [Line Items] | ||||
Goodwill | $ 10,791 | $ 10,695 | ||
Sikorsky Aircraft Corporation | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 75 | |||
Receivables, net | 1,948 | |||
Inventories, net | 1,605 | |||
Other current assets | 25 | |||
Property, plant and equipment | 649 | |||
Goodwill | 2,853 | |||
Other noncurrent assets | 507 | |||
Deferred income tax assets | 265 | |||
Total identifiable assets and goodwill | 12,018 | |||
Accounts payable | (565) | |||
Customer advances and amounts in excess of costs incurred | (1,197) | |||
Salaries, benefits and payroll taxes | (105) | |||
Other current liabilities | (382) | |||
Customer contractual obligations | [1] | (507) | ||
Other noncurrent liabilities | (156) | |||
Deferred income tax liabilities | [1] | (28) | ||
Total liabilities assumed | (2,940) | |||
Total purchase price | 9,078 | |||
Sikorsky Aircraft Corporation | Customer Programs | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | 3,204 | |||
Sikorsky Aircraft Corporation | Trademarks | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | $ 887 | |||
[1] | Recorded in other noncurrent liabilities on the consolidated balance sheets. The refinements made during the quarter and nine months ended September 25, 2016 did not have a material effect on the acquired assets and liabilities assumed or on net earnings. |
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 | 9 Months Ended |
Sep. 27, 2015 | Sep. 27, 2015 | |
Business Acquisition [Line Items] | ||
Net sales | $ 11,434 | $ 33,289 |
Net earnings | $ 858 | $ 2,631 |
Basic earnings per common share | $ 2.78 | $ 8.44 |
Diluted earnings per common share | $ 2.74 | $ 8.32 |
Carrying Amounts of Major Class
Carrying Amounts of Major Classes of Business Segment Assets and Liabilities Classified as Discontinued Operations (Detail) - Information Systems & Global Solutions $ in Millions | Dec. 31, 2015USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Receivables, net | $ 807 |
Inventories, net | 143 |
Other current assets | 19 |
Property, plant and equipment, net | 101 |
Goodwill | 2,881 |
Intangible assets | 125 |
Other noncurrent assets | 54 |
Total assets of the disposal group | 4,130 |
Accounts payable | (229) |
Customer advances and amounts in excess of costs incurred | (285) |
Salaries, benefits and payroll taxes | (209) |
Other current liabilities | (225) |
Deferred income taxes | (145) |
Other noncurrent liabilities | (60) |
Total liabilities of the disposal group | $ (1,153) |
Operating Results Reflected wit
Operating Results Reflected within Earnings from Discontinued Operations, Net of Tax (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 25, 2016 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 2015 | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Net earnings from discontinued operations | $ 1,306 | $ 109 | $ 1,520 | $ 363 | |||
Information Systems & Global Solutions | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Net sales | 739 | [1] | 1,401 | 3,410 | [1] | 4,199 | |
Cost of sales | (635) | [1] | (1,222) | (2,953) | [1] | (3,644) | |
Severance charges | (20) | (19) | [1] | (20) | |||
Gross profit | 104 | [1] | 159 | 438 | [1] | 535 | |
Other income, net | 19 | [1] | 3 | 16 | [1] | 8 | |
Operating profit | 123 | [1] | 162 | 454 | [1] | 543 | |
Earnings from discontinued operations before income taxes | 123 | [1] | 162 | 454 | [1] | 543 | |
Income tax expense | (51) | [1] | (53) | (168) | [1] | (180) | |
Net gain on divestiture of discontinued operations | [1] | 1,234 | 1,234 | ||||
Net earnings from discontinued operations | $ 1,306 | [1] | $ 109 | $ 1,520 | [1] | $ 363 | |
[1] | Operating results for the quarter and nine months ended September 25, 2016 reflect operating results prior to the transaction date of August 16, 2016, not the full quarter or nine month period as shown for the prior period. |
Goodwill and Acquired Intangi34
Goodwill and Acquired Intangibles (Detail) $ in Millions | 9 Months Ended |
Sep. 25, 2016USD ($) | |
Goodwill [Line Items] | |
Goodwill, beginning balance | $ 10,695 |
Purchase accounting adjustments | 89 |
Divestitures | (7) |
Foreign currency translation | 14 |
Goodwill, ending balance | 10,791 |
Aeronautics | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 171 |
Goodwill, ending balance | 171 |
Missiles and Fire Control | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 2,198 |
Foreign currency translation | (8) |
Goodwill, ending balance | 2,190 |
Rotary and Mission Systems | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 6,738 |
Purchase accounting adjustments | 89 |
Divestitures | (7) |
Foreign currency translation | 24 |
Goodwill, ending balance | 6,844 |
Space Systems | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 1,588 |
Foreign currency translation | (2) |
Goodwill, ending balance | $ 1,586 |
Acquired Intangible Assets (Det
Acquired Intangible Assets (Detail) - USD ($) $ in Millions | Sep. 25, 2016 | Dec. 31, 2015 |
Indefinite Lived And Finite Lived Intangible Assets [Line Items] | ||
Finite-Lived, Gross Carrying Amount | $ 3,695 | $ 3,375 |
Indefinite Lived, Trademarks, Gross Carrying Amount | 887 | 816 |
Finite-Lived, Accumulated Amortization | (377) | (169) |
Total acquired intangibles | 4,582 | 4,191 |
Finite-Lived, Net Carrying Amount | 3,318 | 3,206 |
Indefinite Lived, Trademarks, Net Carrying Amount | 887 | 816 |
Total acquired intangibles, Net Carrying Amount | 4,205 | 4,022 |
Customer Programs | ||
Indefinite Lived And Finite Lived Intangible Assets [Line Items] | ||
Finite-Lived, Gross Carrying Amount | 3,204 | 3,127 |
Finite-Lived, Accumulated Amortization | (214) | (38) |
Finite-Lived, Net Carrying Amount | 2,990 | 3,089 |
Customer relationships | ||
Indefinite Lived And Finite Lived Intangible Assets [Line Items] | ||
Finite-Lived, Gross Carrying Amount | 380 | 137 |
Finite-Lived, Accumulated Amortization | (82) | (59) |
Finite-Lived, Net Carrying Amount | 298 | 78 |
Other Finite-lived Intangibles | ||
Indefinite Lived And Finite Lived Intangible Assets [Line Items] | ||
Finite-Lived, Gross Carrying Amount | 111 | 111 |
Finite-Lived, Accumulated Amortization | (81) | (72) |
Finite-Lived, Net Carrying Amount | $ 30 | $ 39 |
Goodwill and Acquired Intangi36
Goodwill and Acquired Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2016 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense for acquired finite lived intangible assets | $ 82 | $ 7 | $ 203 | $ 22 |
Amortization of finite lived intangible assets remaining in 2016 | 58 | 58 | ||
Amortization of finite lived intangible assets in 2017 | 258 | 258 | ||
Amortization of finite lived intangible assets in 2018 | 248 | 248 | ||
Amortization of finite lived intangible assets in 2019 | 246 | 246 | ||
Amortization of finite lived intangible assets in 2020 | 242 | 242 | ||
Amortization of finite lived intangible assets in 2021 | 238 | 238 | ||
Amortization of finite lived intangible assets after 2021 | $ 2,000 | $ 2,000 | ||
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 | 9 Months Ended | ||
Sep. 25, 2016 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 2015 | |
Segment Reporting Information [Line Items] | ||||
Number of business segments | 4 | |||
F-35 program | Aeronautics | ||||
Segment Reporting Information [Line Items] | ||||
Program net sales as percent of total net sales from continuing operations | 23.00% | 23.00% | 23.00% | 23.00% |
Summary of Financial Informatio
Summary of Financial Information for Each Business Segment (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 25, 2016 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 2015 | Dec. 31, 2015 | ||
Segment Reporting Information [Line Items] | ||||||
Total net sales | $ 11,551 | $ 10,060 | $ 33,496 | $ 29,016 | ||
Less: CAS pension cost | [1] | 482 | 382 | 1,430 | 1,146 | |
FAS/CAS pension adjustment | [1] | 226 | 102 | 672 | 305 | |
Stock-based compensation | (28) | (27) | (124) | (112) | ||
Severance charges | (15) | (80) | (15) | |||
Other, net | (33) | (112) | (157) | (264) | ||
Total unallocated items | 165 | (52) | 311 | (86) | ||
Operating profit | 1,588 | 1,192 | 4,121 | 3,612 | ||
Total assets | 48,739 | 48,739 | $ 49,304 | |||
Discontinued Operations | ||||||
Segment Reporting Information [Line Items] | ||||||
Total assets | 4,130 | |||||
Qualified defined benefit pension plans | ||||||
Segment Reporting Information [Line Items] | ||||||
FAS pension expense | [1] | (256) | (280) | (758) | (841) | |
Operating Segments | ||||||
Segment Reporting Information [Line Items] | ||||||
Operating profit | 1,423 | 1,244 | 3,810 | 3,698 | ||
Total assets | 36,336 | 36,336 | 34,693 | |||
Operating Segments | Aeronautics | ||||||
Segment Reporting Information [Line Items] | ||||||
Total net sales | 4,188 | 3,921 | 12,362 | 11,186 | ||
Operating profit | 437 | 418 | 1,335 | 1,233 | ||
Total assets | 8,012 | 8,012 | 6,618 | |||
Operating Segments | Missiles and Fire Control | ||||||
Segment Reporting Information [Line Items] | ||||||
Total net sales | 1,737 | 1,769 | 4,851 | 4,801 | ||
Operating profit | 289 | 316 | 763 | 895 | ||
Total assets | 3,950 | 3,950 | 4,027 | |||
Operating Segments | Rotary and Mission Systems | ||||||
Segment Reporting Information [Line Items] | ||||||
Total net sales | 3,346 | 2,162 | 9,653 | 6,306 | ||
Operating profit | 247 | 245 | 678 | 687 | ||
Total assets | 18,978 | 18,978 | 19,187 | |||
Operating Segments | Space Systems | ||||||
Segment Reporting Information [Line Items] | ||||||
Total net sales | 2,280 | 2,208 | 6,630 | 6,723 | ||
Operating profit | 450 | 265 | 1,034 | 883 | ||
Total assets | 5,396 | 5,396 | 4,861 | |||
Intersegment elimination | ||||||
Segment Reporting Information [Line Items] | ||||||
Total intersegment sales | 601 | 511 | 1,802 | 1,483 | ||
Intersegment elimination | Aeronautics | ||||||
Segment Reporting Information [Line Items] | ||||||
Total intersegment sales | 30 | 22 | 105 | 68 | ||
Intersegment elimination | Missiles and Fire Control | ||||||
Segment Reporting Information [Line Items] | ||||||
Total intersegment sales | 81 | 86 | 225 | 241 | ||
Intersegment elimination | Rotary and Mission Systems | ||||||
Segment Reporting Information [Line Items] | ||||||
Total intersegment sales | 469 | 364 | 1,382 | 1,066 | ||
Intersegment elimination | Space Systems | ||||||
Segment Reporting Information [Line Items] | ||||||
Total intersegment sales | 21 | $ 39 | 90 | $ 108 | ||
Corporate | ||||||
Segment Reporting Information [Line Items] | ||||||
Total assets | [2] | $ 12,403 | $ 12,403 | $ 10,481 | ||
[1] | FAS pension expense and CAS pension costs reflect the reclassification for discontinued operations presentation of benefits related to former IS&GS salaried employees (See Note 7). | |||||
[2] | 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 | Sep. 25, 2016 | Dec. 31, 2015 |
Inventory [Line Items] | ||
Work-in-process, primarily related to long-term contracts and programs in progress | $ 8,668 | $ 8,081 |
Less: customer advances and progress payments | (5,284) | (5,032) |
Inventory for long term contracts or programs net of customer advances and progress payments | 3,384 | 3,049 |
Other inventories | 1,468 | 1,770 |
Total inventories, net | $ 4,852 | $ 4,819 |
Pretax Net Periodic Benefit Cos
Pretax Net Periodic Benefit Cost (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 25, 2016 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 2015 | ||
Qualified defined benefit pension plans | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Service cost | $ 208 | $ 207 | $ 615 | $ 623 | |
Interest cost | 465 | 448 | 1,396 | 1,343 | |
Expected return on plan assets | (667) | (683) | (2,000) | (2,050) | |
Recognized net actuarial losses | 340 | 399 | 1,019 | 1,199 | |
Amortization of prior service (credits) costs | (90) | (91) | (272) | (274) | |
Total net periodic benefit cost | [1] | 256 | 280 | 758 | 841 |
Retiree medical and life insurance plans | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Service cost | 6 | 6 | 18 | 16 | |
Interest cost | 30 | 28 | 89 | 83 | |
Expected return on plan assets | (34) | (37) | (103) | (111) | |
Recognized net actuarial losses | 8 | 10 | 25 | 32 | |
Amortization of prior service (credits) costs | 5 | 1 | 16 | 3 | |
Total net periodic benefit cost | $ 15 | $ 8 | $ 45 | $ 23 | |
[1] | FAS pension expense and CAS pension costs reflect the reclassification for discontinued operations presentation of benefits related to former IS&GS salaried employees (See Note 7). |
Postretirement Benefit Plans -
Postretirement Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 25, 2016 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 2015 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Recognition of previously deferred postretirement benefit plan amounts, net of tax | $ 175 | $ 212 | $ 521 | $ 637 |
Recognition of previously deferred postretirement benefit plan amounts, tax | 96 | 117 | 285 | 349 |
Other postretirement benefit plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Recognition of previously deferred postretirement benefit plan amounts, before tax | 11 | 16 | 32 | 44 |
Qualified defined benefit pension plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Contributions made by the employer | $ 0 | $ 0 | $ 0 | $ 0 |
Legal Proceedings and Conting42
Legal Proceedings and Contingencies - Additional Information (Detail) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Apr. 30, 2015 | Sep. 25, 2016 | Dec. 31, 2015 | Apr. 24, 2009 | |
Legal Proceedings And Contingencies [Line Items] | ||||
Liabilities recorded relative to environmental matters | $ 1,000 | $ 1,000 | ||
Environmental costs eligible for future recovery | $ 896 | 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 | $ 3,800 | 3,800 | ||
Third-party guarantees outstanding | $ 694 | $ 678 | ||
Percentage of total guarantees that relate to guarantees of contractual performance of joint ventures | 55.00% | 79.00% | ||
Information Systems & Global Solutions | Contractual performance | ||||
Legal Proceedings And Contingencies [Line Items] | ||||
Third-party guarantees outstanding | $ 278 | |||
Percentage of total guarantees that relate to guarantees of contractual performance of joint ventures | 40.00% | |||
Minimum | ||||
Legal Proceedings And Contingencies [Line Items] | ||||
Damages sought by plaintiff | $ 45 | |||
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 | Sep. 25, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | $ 90 | $ 15 |
Derivative liabilities | 87 | 35 |
Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 77 | 89 |
Mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 748 | 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 | 127 | 119 |
Other securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 150 | 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 | 77 | 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 | 748 | 745 |
Fair value, inputs, level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 90 | 15 |
Derivative liabilities | 87 | 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 | 127 | 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 | $ 150 | $ 147 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Billions | Sep. 25, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair values of debt instruments | $ 17.1 | $ 16.5 |
Outstanding principal amount of debt instruments | 15.3 | 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 | $ 4.3 | $ 4.1 |
Other - Additional Information
Other - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | Sep. 25, 2016 | Sep. 22, 2016 | Feb. 20, 2015 | Oct. 27, 2016 | Sep. 25, 2016 | May 31, 2016 | Sep. 25, 2016 | Mar. 27, 2016 | Dec. 31, 2015 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 2015 | Dec. 31, 2016 | Aug. 16, 2016 |
Increase in operating profit due to profit rate adjustments from continuing operations | $ 405 | $ 390 | $ 1,100 | $ 1,300 | ||||||||||
Increase in net earnings due to profit rate adjustments | $ 265 | $ 255 | $ 730 | $ 865 | ||||||||||
Increase in diluted earnings per common share due to profit rate adjustments | $ 0.88 | $ 0.82 | $ 2.39 | $ 2.73 | ||||||||||
Repayment of long-term notes | $ 952 | |||||||||||||
Severance charges | $ 82 | $ 82 | $ 99 | $ 35 | ||||||||||
Effective income tax rate for earnings from continuing operations | 23.70% | 30.60% | 23.10% | 30.40% | ||||||||||
Cash paid for repurchases of common stock | $ 1,280 | $ 2,364 | ||||||||||||
Number of shares of common stock repurchased with cash | 5,700,000 | |||||||||||||
Remaining authorized repurchase amount under share repurchase program | $ 4,300 | $ 4,300 | $ 4,300 | $ 4,300 | ||||||||||
Additional paid-in capital | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | |||||||||
Common stock par value, per share | $ 1 | $ 1 | $ 1 | $ 1 | $ 1 | |||||||||
Additional share repurchase program authorized amount | $ 2,000 | |||||||||||||
Dividends declared | $ 537 | $ 507 | $ 2,056 | $ 1,926 | ||||||||||
Dividends declared, per share (in USD) | $ 1.82 | $ 1.65 | $ 6.77 | $ 6.15 | ||||||||||
Quarterly increase dividend rate | 10.00% | |||||||||||||
Increase quarterly dividend, per share | $ 0.17 | |||||||||||||
Deferred income taxes assets, noncurrent | $ 5,850 | $ 5,850 | $ 5,850 | $ 6,068 | $ 5,850 | |||||||||
Variable Interest Rate Swap | Designated as hedges | ||||||||||||||
Aggregate notional amount of derivatives | $ 450 | |||||||||||||
Sikorsky Aircraft Corporation | ||||||||||||||
Restructuring cost expected in 2016 | 40 | 40 | 40 | 40 | ||||||||||
Restructuring cost incurred | $ 35 | |||||||||||||
Restricted Stock Units (RSUs) | ||||||||||||||
Number of stock units, granted, in shares | 700,000 | |||||||||||||
Average grant date fair value per unit | $ 206.69 | |||||||||||||
Number of years over which equity awards vest | 3 years | |||||||||||||
Scenario, Forecast | Sikorsky Aircraft Corporation | ||||||||||||||
Restructuring cost expected to be incurred | $ 5 | |||||||||||||
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 | 22 | $ 137 | ||||||||||||
Additional income tax benefit | $ 22 | $ 137 | ||||||||||||
Additional income tax benefit, per share | $ 0.07 | $ 0.45 | ||||||||||||
Accounting Standards Update 2015-17 | Restatement Adjustment | ||||||||||||||
Deferred income taxes assets, noncurrent | 1,600 | |||||||||||||
Deferred income taxes liabilities, noncurrent | 140 | |||||||||||||
Accounting Standards Update 2015-17 | Scenario, Previously Reported | ||||||||||||||
Deferred income taxes assets, current | 1,600 | |||||||||||||
Deferred income taxes liabilities, current | 140 | |||||||||||||
2016 Fourth Quarter Dividend | ||||||||||||||
Dividends declared | $ 537 | |||||||||||||
Dividends declared, per share (in USD) | $ 1.82 | |||||||||||||
2015 Fourth Quarter Dividend | ||||||||||||||
Dividends declared | $ 507 | |||||||||||||
Dividends declared, per share (in USD) | $ 1.65 | |||||||||||||
2016 Action | ||||||||||||||
Severance charges | $ 31 | |||||||||||||
Severance payments | 56 | |||||||||||||
2015 Action | ||||||||||||||
Severance charges | $ 25 | |||||||||||||
Severance payments | $ 45 | |||||||||||||
Aeronautics | ||||||||||||||
Severance charges | $ 80 | |||||||||||||
Information Systems & Global Solutions | ||||||||||||||
Severance charges | 15 | $ 15 | ||||||||||||
Information Systems & Global Solutions | Net earnings from discontinued operations | ||||||||||||||
Severance charges | $ 19 | 20 | 20 | |||||||||||
Rotary and Mission Systems | ||||||||||||||
Severance charges | $ 67 | $ 67 | ||||||||||||
Information Systems & Global Solutions | ||||||||||||||
Percentage of reduction in common stock outstanding | 3.00% | |||||||||||||
Information Systems & Global Solutions | Lockheed Martin | ||||||||||||||
Number of common stock exchanged | 9,369,694 | |||||||||||||
2.13% Long-term notes | ||||||||||||||
Repayment of long-term notes | $ 500 | |||||||||||||
Long-term notes, fixed Interest | 2.13% | 2.13% | 2.13% | 2.13% | ||||||||||
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% | |||||||||||||
Five Year Revolving Credit Facility | Unsecured Debt | Subsequent Event | ||||||||||||||
Line of credit facility | $ 2,500 | |||||||||||||
Line of credit facility expiration period | 5 years | |||||||||||||
Line of credit facility extended expiration period | 1 year | |||||||||||||
Line of credit facility expiration date | Oct. 9, 2020 | |||||||||||||
Line of credit facility extended expiration date | Oct. 9, 2021 |
Changes in Balance of Accumulat
Changes in Balance of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 25, 2016 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 2015 | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Beginning balance | $ (11,444) | $ (11,870) | |||||
Other comprehensive loss before reclassifications | (46) | (88) | |||||
Amounts reclassified from AOCL | |||||||
Recognition of net actuarial losses | [1] | 703 | 831 | ||||
Amortization of net prior service credits | [1] | (182) | (194) | ||||
Recognition of net prior service credits from divestiture of IS&GS segment | $ (134) | (134) | [2] | ||||
Other | [2] | 112 | |||||
Total reclassified from AOCL | 499 | 637 | |||||
Other comprehensive income, net of tax | 113 | $ 135 | 453 | 549 | |||
Ending balance | (10,991) | (11,321) | (10,991) | (11,321) | |||
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 | 234 | 277 | 703 | [1] | 831 | [1] | |
Amortization of net prior service credits | (59) | (65) | (182) | [1] | (194) | [1] | |
Recognition of net prior service credits from divestiture of IS&GS segment | [2] | (134) | |||||
Total reclassified from AOCL | 175 | 212 | 387 | 637 | |||
Other comprehensive income, net of tax | 387 | 637 | |||||
Ending balance | (10,927) | (11,176) | (10,927) | (11,176) | |||
Other, net | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Beginning balance | (130) | (57) | |||||
Other comprehensive loss before reclassifications | (46) | (88) | |||||
Amounts reclassified from AOCL | |||||||
Other | [2] | 112 | |||||
Total reclassified from AOCL | 112 | ||||||
Other comprehensive income, net of tax | 66 | (88) | |||||
Ending balance | $ (64) | $ (145) | $ (64) | $ (145) | |||
[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 $175 million and $212 million for the quarters ended September 25, 2016 and September 27, 2015, which are composed of the recognition of net actuarial losses of $234 million and $277 million for the quarters ended September 25, 2016 and September 27, 2015 and the amortization of net prior service (credits) costs of $(59) million and $(65) million for the quarters ended September 25, 2016 and September 27, 2015. | ||||||
[2] | Associated with the divestiture of the IS&GS business segment and included in net gain on divestiture of discontinued operations. |
Changes in Balance of Accumul47
Changes in Balance of Accumulated Other Comprehensive Loss (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 25, 2016 | Sep. 27, 2015 | Sep. 25, 2016 | Sep. 27, 2015 | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Total reclassified from AOCL, net of tax | $ 499 | $ 637 | |||||
Recognition of net actuarial losses | [1] | 703 | 831 | ||||
Amortization of net prior service cost (credits) | [1] | (182) | (194) | ||||
Postretirement Benefit Plan Adjustments | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Total reclassified from AOCL, net of tax | $ 175 | $ 212 | 387 | 637 | |||
Recognition of net actuarial losses | 234 | 277 | 703 | [1] | 831 | [1] | |
Amortization of net prior service cost (credits) | $ (59) | $ (65) | $ (182) | [1] | $ (194) | [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 $175 million and $212 million for the quarters ended September 25, 2016 and September 27, 2015, which are composed of the recognition of net actuarial losses of $234 million and $277 million for the quarters ended September 25, 2016 and September 27, 2015 and the amortization of net prior service (credits) costs of $(59) million and $(65) million for the quarters ended September 25, 2016 and September 27, 2015. |