Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 26, 2017shares | |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Mar. 26, 2017 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | Q1 |
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 | 289,443,053 |
Consolidated Statements of Earn
Consolidated Statements of Earnings - USD ($) $ in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Net sales | ||
Products | $ 9,513 | $ 8,752 |
Services | 1,544 | 1,616 |
Total net sales | 11,057 | 10,368 |
Cost of sales | ||
Products | (8,687) | (7,887) |
Services | (1,376) | (1,437) |
Severance charges | (80) | |
Other unallocated, net | 159 | 131 |
Total cost of sales | (9,904) | (9,273) |
Gross profit | 1,153 | 1,095 |
Other (expense) income, net | (4) | 63 |
Operating profit | 1,149 | 1,158 |
Interest expense | (155) | (165) |
Other non-operating income, net | 1 | 1 |
Earnings from continuing operations before income taxes | 995 | 994 |
Income tax expense | (232) | (188) |
Net earnings from continuing operations | 763 | 806 |
Net earnings from discontinued operations | 92 | |
Net earnings | $ 763 | $ 898 |
Basic | ||
Continuing operations | $ 2.63 | $ 2.65 |
Discontinued operations | 0.30 | |
Basic earnings per common share | 2.63 | 2.95 |
Diluted | ||
Continuing operations | 2.61 | 2.61 |
Discontinued operations | 0.30 | |
Diluted earnings per common share | 2.61 | 2.91 |
Cash dividends paid per common share | $ 1.82 | $ 1.65 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Net earnings | $ 763 | $ 898 |
Postretirement benefit plans | ||
Amounts reclassified from other comprehensive loss | 202 | 173 |
Other comprehensive gain recognized during the period | 3 | |
Other, net | 5 | 17 |
Other comprehensive income, net of tax | 210 | 190 |
Comprehensive income | $ 973 | $ 1,088 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 26, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 2,216 | $ 1,837 |
Receivables, net | 8,869 | 8,202 |
Inventories, net | 5,074 | 4,670 |
Other current assets | 427 | 399 |
Total current assets | 16,586 | 15,108 |
Property, plant and equipment, net | 5,481 | 5,549 |
Goodwill | 10,773 | 10,764 |
Intangible assets, net | 4,019 | 4,093 |
Deferred income taxes | 6,489 | 6,625 |
Other noncurrent assets | 5,488 | 5,667 |
Total assets | 48,836 | 47,806 |
Current liabilities | ||
Accounts payable | 2,718 | 1,653 |
Customer advances and amounts in excess of costs incurred | 6,572 | 6,776 |
Salaries, benefits and payroll taxes | 1,647 | 1,764 |
Other current liabilities | 2,660 | 2,349 |
Total current liabilities | 13,597 | 12,542 |
Long-term debt, net | 14,276 | 14,282 |
Accrued pension liabilities | 13,908 | 13,855 |
Other postretirement benefit liabilities | 861 | 862 |
Other noncurrent liabilities | 4,609 | 4,659 |
Total liabilities | 47,251 | 46,200 |
Stockholders' equity | ||
Common stock, $1 par value per share | 288 | 289 |
Additional paid-in capital | 0 | 0 |
Retained earnings | 13,087 | 13,324 |
Accumulated other comprehensive loss | (11,892) | (12,102) |
Total stockholders' equity | 1,483 | 1,511 |
Noncontrolling interests in subsidiary | 102 | 95 |
Total equity | 1,585 | 1,606 |
Total liabilities and equity | $ 48,836 | $ 47,806 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 26, 2017 | Dec. 31, 2016 |
Common stock, par value (in USD per share) | $ 1 | $ 1 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Operating activities | ||
Net earnings | $ 763 | $ 898 |
Adjustments to reconcile net earnings to net cash provided by operating activities | ||
Depreciation and amortization | 285 | 296 |
Stock-based compensation | 44 | 44 |
Severance charges | 99 | |
Changes in assets and liabilities | ||
Receivables, net | (667) | (558) |
Inventories, net | (404) | (310) |
Accounts payable | 1,111 | 751 |
Customer advances and amounts in excess of costs incurred | (204) | (146) |
Postretirement benefit plans | 345 | 246 |
Income taxes | 175 | 225 |
Other, net | 218 | 122 |
Net cash provided by operating activities | 1,666 | 1,667 |
Investing activities | ||
Capital expenditures | (170) | (151) |
Other, net | 4 | 4 |
Net cash used for investing activities | (166) | (147) |
Financing activities | ||
Repurchases of common stock | (500) | (501) |
Dividends paid | (544) | (533) |
Proceeds from stock option exercises | 31 | 28 |
Other, net | (108) | (152) |
Net cash used for financing activities | (1,121) | (1,158) |
Net change in cash and cash equivalents | 379 | 362 |
Cash and cash equivalents at beginning of period | 1,837 | 1,090 |
Cash and cash equivalents at end of period | $ 2,216 | $ 1,452 |
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, 2015 | $ 3,097 | $ 303 | $ 14,238 | $ (11,444) | $ 3,097 | ||
Net earnings | 898 | 898 | 898 | ||||
Other comprehensive income, net of tax | 190 | 190 | 190 | ||||
Repurchases of common stock | (501) | (2) | $ (3) | (496) | (501) | ||
Dividends declared | (512) | (512) | (512) | ||||
Stock-based awards and ESOP activity | 5 | 2 | 3 | 5 | |||
Ending Balance at Mar. 27, 2016 | 3,177 | 303 | 14,128 | (11,254) | 3,177 | ||
Beginning Balance at Dec. 31, 2016 | 1,606 | 289 | 13,324 | (12,102) | 1,511 | $ 95 | |
Net earnings | 763 | 763 | 763 | ||||
Other comprehensive income, net of tax | 210 | 210 | 210 | ||||
Repurchases of common stock | (500) | (2) | (29) | (469) | (500) | ||
Dividends declared | (531) | (531) | (531) | ||||
Stock-based awards and ESOP activity | 30 | 1 | $ 29 | 30 | |||
Increase in noncontrolling interests in subsidiary | 7 | 7 | |||||
Ending Balance at Mar. 26, 2017 | $ 1,585 | $ 288 | $ 13,087 | $ (11,892) | $ 1,483 | $ 102 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 26, 2017 | |
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 S-X. 10-K 10-K) In the opinion of management, these consolidated financial statements reflect all adjustments that are of a normal recurring nature necessary for a fair presentation of our results of operations, financial condition and cash flows for the interim periods presented. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates. Significant estimates inherent in the preparation of our consolidated financial statements include, but are not limited to, accounting for sales and cost recognition, postretirement benefit plans, environmental receivables and liabilities, evaluation of goodwill and other assets for impairment, income taxes including deferred tax assets, fair value measurements and contingencies. The consolidated financial statements include the accounts of subsidiaries we control and variable interest entities if we are the primary beneficiary. We eliminate intercompany balances and transactions in consolidation. We close our books and records on the last Sunday of the calendar quarter, which was on March 26 for the first quarter of 2017 and March 27 for the first quarter of 2016, to align our financial closing with our business processes. The consolidated financial statements and tables of financial information included herein are labeled based on that convention. This practice only affects interim periods as our fiscal year ends on December 31. 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 2016 Form 10-K. In the second quarter of 2016, we adopted a new accounting standard that changed the accounting for certain aspects of employee equity awards, including the classification of tax benefits or expenses upon vesting. As a result, we adjusted our results for the first quarter of 2016 to recognize additional income tax benefits of $104 million ($0.34 per share) as an increase to net earnings from continuing operations and cash from operating activities. On August 16, 2016, we completed the divestiture of our Information Systems & Global Solutions (IS&GS) business, which merged with a subsidiary of Leidos Holdings, Inc. (Leidos) in a Reverse Morris Trust transaction. Accordingly, the operating results of the IS&GS business for the quarter ended March 27, 2016 have been classified as discontinued operations in the consolidated statements of earnings. However, the cash flows of the IS&GS business for the quarter ended March 27, 2016 have not been reclassified in our consolidated statements of cash flows as we retained the cash as part of the transaction. See “Note 3 – Divestitures” for additional information about the divestiture of the IS&GS business. On August 24, 2016, we increased our ownership interest in the AWE Management Limited (AWE) venture, which operates the United Kingdom’s nuclear deterrent program, by 18% to 51%. Consequently, our operating results for the first quarter of 2017 include 100% of AWE’s sales and 51% of their operating profit. Prior to increasing our ownership interest, we accounted for our investment in AWE using the equity method of accounting. Under the equity method, we only recognized our share, or 33% of AWE’s earnings or losses. Accordingly, our operating results for the first quarter of 2016 do not include any sales generated by AWE and only 33% of AWE’s net earnings. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 3 Months Ended |
Mar. 26, 2017 | |
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 March 26, March 27, Weighted average common shares outstanding for basic computations 290.0 304.5 Weighted average dilutive effect of equity awards 2.8 4.2 Weighted average common shares outstanding for diluted computations 292.8 308.7 We compute basic and diluted earnings per common share by dividing net earnings by the respective weighted average number of common shares outstanding for the periods presented. Our calculation of diluted earnings per common share also includes the dilutive effects for the assumed vesting of outstanding restricted stock units and exercise of outstanding stock options based on the treasury stock method. There were no significant anti-dilutive |
DIVESTITURES
DIVESTITURES | 3 Months Ended |
Mar. 26, 2017 | |
DIVESTITURES | NOTE 3 – DIVESTITURES Divestiture of the Information Systems & Global Solutions Business On August 16, 2016, we completed the divestiture of our IS&GS business, which merged with a subsidiary of Leidos in a Reverse Morris Trust transaction (the “Transaction”). The Transaction was completed in a multi-step As a result of the Transaction, we recognized a net gain of approximately $1.2 billion in the third quarter of 2016. The net gain represents the $2.5 billion fair value of the shares of Lockheed Martin common stock exchanged and retired as part of the exchange offer, plus a $1.8 billion one-time post-closing The operating results of the IS&GS business for the quarter ended March 27, 2016 that have been reflected within net earnings from discontinued operations are as follows (in millions): Net sales $ 1,334 Cost of sales (1,175) Severance charges (19) Gross profit 140 Other expense, net (1) Operating profit 139 Interest income 1 Earnings from discontinued operations before income taxes 140 Income tax expense (48) Net earnings from discontinued operations $ 92 The operating results of the IS&GS business reported as discontinued operations for the quarter ended March 27, 2016 are different than results previously reported for the IS&GS business segment. Results reported within net earnings from discontinued operations only include costs that were directly attributable to the IS&GS business and exclude general corporate overhead costs that were previously allocated to the IS&GS business. Certain general corporate overhead costs incurred by us and historically allocated to the IS&GS business in the first quarter of 2016 were not directly attributable to the IS&GS business. As a result, we reclassified these costs from the IS&GS business to other unallocated, net in our consolidated statement of earnings. During the quarter ended March 27, 2016, we reclassified $35 million of general corporate overhead costs to other unallocated, net. Additionally, we retained all assets and obligations related to the pension benefits earned by former IS&GS business salaried employees through the date of divestiture of the IS&GS business. As a result, the non-service Financial information related to the IS&GS business’s cash flows, such as depreciation and amortization, capital expenditures, and other non-cash |
INFORMATION ON BUSINESS SEGMENT
INFORMATION ON BUSINESS SEGMENTS | 3 Months Ended |
Mar. 26, 2017 | |
INFORMATION ON BUSINESS SEGMENTS | NOTE 4 – INFORMATION ON BUSINESS SEGMENTS We operate in four business segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space Systems. We organize our business segments based on the nature of the products and services offered. The financial information in the following tables excludes businesses included in discontinued operations for all periods presented and includes the results of businesses we have acquired from their respective acquisition dates (see “Note 3 – Divestitures”). Net sales of our business segments exclude intersegment sales as these activities are eliminated in consolidation. Operating profit of our business segments includes our share of earnings or losses from equity method investees as the operating activities of the equity method investees are closely aligned with the operations of our business segments. United Launch Alliance (ULA), which is part of our Space Systems business segment, is our primary equity method investee. Operating profit of our business segments excludes the FAS/CAS pension adjustment described below; expense for stock-based compensation; the effects of items not considered part of management’s evaluation of segment operating performance, such as charges related to goodwill impairments and significant severance actions; gains or losses from divestitures; the effects of certain legal settlements; corporate costs not allocated to our business segments; and other miscellaneous corporate activities. These items are included in the reconciling item “unallocated items” between operating profit from our business segments and our consolidated operating profit. See “Note 9 – Other” (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 March 26, March 27, Net sales Aeronautics $ 4,106 $ 3,799 Missiles and Fire Control 1,489 1,434 Rotary and Mission Systems 3,101 3,004 Space Systems 2,361 2,131 Total net sales $ 11,057 $ 10,368 Operating profit Aeronautics $ 436 $ 420 Missiles and Fire Control 219 221 Rotary and Mission Systems 108 229 Space Systems 288 244 Total business segment operating profit 1,051 1,114 Unallocated items FAS/CAS pension adjustment FAS pension expense (345) (251) Less: CAS pension cost 562 475 FAS/CAS pension adjustment 217 224 Stock-based compensation (44) (44) Severance charges — (80) Other, net (a) (b) (75) (56) Total unallocated items 98 44 Total consolidated operating profit $ 1,149 $ 1,158 Intersegment sales Aeronautics $ 32 $ 36 Missiles and Fire Control 64 75 Rotary and Mission Systems 439 447 Space Systems 26 33 Total intersegment sales $ 561 $ 591 (a) In the first quarter of 2017, we recognized a $64 million charge, which represents our portion of a noncash asset impairment charge recorded by an international equity method investee. See “Note 9 – Other” (under the caption “Equity Method Investee Impairment”) for more information. (b) As a result of the IS&GS divestiture in August 2016, we reclassified $35 million of general corporate overhead costs incurred in the first quarter of 2016 and previously allocated to the IS&GS business segment. These costs were not reported as discontinued operations because they were not directly attributable to the IS&GS business and will continue to be incurred by us. See “Note 3 – Divestitures” for more information. Total assets for each of our business segments were as follows (in millions): March 26, 2017 December 31, Assets Aeronautics $ 7,900 $ 7,896 Missiles and Fire Control 4,322 4,000 Rotary and Mission Systems 18,435 18,367 Space Systems 5,545 5,250 Total business segment assets 36,202 35,513 Corporate assets (a) 12,634 12,293 Total assets $ 48,836 $ 47,806 (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 Our Aeronautics business segment includes our largest program, the F-35 F-35 |
INVENTORIES, NET
INVENTORIES, NET | 3 Months Ended |
Mar. 26, 2017 | |
INVENTORIES, NET | NOTE 5 – INVENTORIES, NET Inventories, net consisted of the following (in millions): March 26, 2017 December 31, Work-in-process, $ 8,090 $ 7,864 Spare parts, used aircraft and general stock materials 785 833 Other inventories 819 719 Total inventories 9,694 9,416 Less: customer advances and progress payments (4,620) (4,746) Total inventories, net $ 5,074 $ 4,670 |
POSTRETIREMENT PLANS
POSTRETIREMENT PLANS | 3 Months Ended |
Mar. 26, 2017 | |
POSTRETIREMENT PLANS | NOTE 6 – POSTRETIREMENT PLANS Our pretax net periodic benefit cost related to our qualified defined benefit pension plans and retiree medical and life insurance plans consisted of the following (in millions): Quarters Ended March 26, 2017 March 27, Qualified defined benefit pension plans Service cost $ 205 $ 203 Interest cost 452 465 Expected return on plan assets (602) (667) Recognized net actuarial losses 376 340 Amortization of net prior service credits (86) (90) Total net periodic benefit cost $ 345 $ 251 Retiree medical and life insurance plans Service cost $ 5 $ 6 Interest cost 26 30 Expected return on plan assets (32) (34) Recognized net actuarial losses 5 8 Amortization of net prior service costs 3 5 Total net periodic benefit cost $ 7 $ 15 The recognized net actuarial losses and the amortization of net prior service (credits) costs in the table above, as well as similar amounts related to our other postretirement benefit plans ($14 million during the quarter ended March 26, 2017 and $11 million during the quarter ended March 27, 2016), 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 $202 million (net of $110 million of taxes) during the quarter ended March 26, 2017 and $173 million (net of $95 million of taxes) during the quarter ended March 27, 2016, which were recorded on our consolidated statements of comprehensive income as an increase to other comprehensive income. The funding of our qualified defined benefit pension plans is determined in accordance with the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Pension Protection Act of 2006 (PPA), and in a manner consistent with CAS and Internal Revenue Code rules. There were no material contributions to our qualified defined benefit pension plans during the quarters ended March 26, 2017 and March 27, 2016. We do not plan to make material contributions to our pension plans in 2017 because none are required using current assumptions, including anticipated investment returns on plan assets. |
LEGAL PROCEEDINGS AND CONTINGEN
LEGAL PROCEEDINGS AND CONTINGENCIES | 3 Months Ended |
Mar. 26, 2017 | |
LEGAL PROCEEDINGS AND CONTINGENCIES | NOTE 7 – 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 protection of the environment and are subject to contingencies related to certain businesses we previously owned. These types of matters could result in fines, penalties, compensatory or treble damages or non-monetary 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 T-44 fixed-wing On March 16, 2017, the Government filed a notice of partial intervention in a lawsuit also pending in the U.S. District Court for the Eastern District of Wisconsin brought by qui tam T-34 T-44 The Government currently seeks damages in these lawsuits of approximately $52 million, subject to trebling, plus statutory penalties. This number could change based on the allegations the Government advances in its amended complaint. 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 re-procurement, Environmental Matters We are involved in proceedings and potential proceedings relating to soil, sediment, surface water 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 continually 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, our history of receiving reimbursement of such costs, and recent efforts by some U.S. Government representatives to limit such reimbursement. We include the portion of those environmental costs expected to be allocated to our non-U.S. At March 26, 2017 and December 31, 2016, the aggregate amount of liabilities recorded relative to environmental matters was $978 million and $1.0 billion, most of which are recorded in other noncurrent liabilities on our consolidated balance sheets. We have recorded receivables totaling $842 million and $870 million at March 26, 2017 and December 31, 2016, most of which are recorded in other noncurrent assets on our consolidated balance sheets, for the estimated future recovery of these costs, as we consider the recovery probable based on the factors previously mentioned. We project costs and recovery of costs over approximately 20 years. Environmental remediation activities usually span many years, which makes estimating liabilities a matter of judgment because of uncertainties with respect to assessing the extent of the contamination as well as such factors as changing remediation technologies and changing regulatory environmental standards. There are a number of former and present operating facilities that we are monitoring or investigating for potential future remediation. We perform quarterly reviews of the status of our environmental remediation sites and the related liabilities and receivables. Additionally, in our quarterly reviews we consider these and other factors in estimating the timing and amount of any future costs that may be required for remediation activities and record a liability when it is probable that a loss has occurred and the loss can be reasonably estimated. The amount of liability recorded is based on our estimate of the costs to be incurred for remediation at a particular site. We do not discount the recorded liabilities, as the amount and timing of future cash payments are not fixed or cannot be reliably determined. We reasonably cannot determine the extent of our financial exposure in all cases as, although a loss may be probable or reasonably possible, in some cases it is not possible at this time to estimate the loss or reasonably possible loss or range of loss. We also pursue 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, orders, and agreements relating to soil, groundwater, sediment or surface water contamination at certain sites of former or current operations. Under agreements related to our Burbank and Glendale, California, sites, our Redlands, Beaumont 1, and Beaumont 2, California, sites, and our Great Neck, New York, site, the U.S. Government reimburses us an amount equal to a percentage, specific to each site, of expenditures for certain remediation activities in the U.S. Government’s capacity as a PRP under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The current standard in California for the maximum level of the contaminant hexavalent chromium in drinking water is 10 parts per billion (ppb). This standard is being challenged by the California Manufacturers and Technology Association (CMTA) as being lower than is required to protect public health. If the standard remains at 10 ppb, it will not have a material impact on our existing remediation costs in California. The U.S. Environmental Protection Agency (U.S. EPA) is considering whether to regulate hexavalent chromium. In addition, California is reevaluating its existing drinking water standard of 6 ppb for perchlorate, and the U.S. EPA is taking steps to regulate perchlorate in drinking water. If substantially lower standards are adopted, in either California or at the federal level for perchlorate or for hexavalent chromium, 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. Letters of Credit, Surety Bonds and Third-Party Guarantees We have entered into standby letters of credit, surety bonds and third-party guarantees with financial institutions and other third parties primarily relating to advances received from customers and the guarantee of future performance on certain contracts. Letters of credit and surety bonds generally are available for draw down in the event we do not perform. In some cases, we may guarantee the contractual performance of third parties such as venture partners. We had total outstanding letters of credit, surety bonds and third-party guarantees aggregating $3.7 billion at both March 26, 2017 and December 31, 2016. Third-party guarantees do not include guarantees of subsidiaries and other consolidated entities. At March 26, 2017 and December 31, 2016, third-party guarantees totaled $694 million and $709 million, of which approximately 58% and 56% related to guarantees of contractual performance of ventures to which we currently are or previously were a party. This amount represents our estimate of the maximum amount we would expect to incur upon the contractual non-performance cross-indemnities third-party 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 March 26, 2017, 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 March 26, 2017, and that it will not be necessary to make payments under the cross-indemnities or guarantees. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 26, 2017 | |
FAIR VALUE MEASUREMENTS | NOTE 8 – FAIR VALUE MEASUREMENTS Assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following (in millions): March 26, 2017 December 31, 2016 Total Level 1 Level 2 Total Level 1 Level 2 Assets Equity securities $ 68 $ 68 $ — $ 79 $ 79 $ — Mutual funds 845 845 — 856 856 — U.S. Government securities 104 — 104 113 — 113 Other securities 166 — 166 151 — 151 Derivatives 23 — 23 27 — 27 Liabilities Derivatives 106 — 106 85 — 85 Assets measured at NAV Other commingled funds 18 — 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 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 both March 26, 2017 and December 31, 2016 was $1.2 billion and the fair value was a net liability of approximately $5 million and $1 million at March 26, 2017 and December 31, 2016. The aggregate notional amount of our outstanding foreign currency hedges at March 26, 2017 and December 31, 2016 was $4.2 billion and $4.0 billion and the fair value was a net liability of approximately $78 million and $57 million at March 26, 2017 and December 31, 2016. Derivative instruments did not have a material impact on net earnings and comprehensive income during the quarters ended March 26, 2017 and March 27, 2016, respectively. 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 $16.1 billion and $16.2 billion at March 26, 2017 and December 31, 2016. The outstanding principal amount was $15.3 billion, excluding unamortized discounts and issuance costs of $1.0 billion at both March 26, 2017 and December 31, 2016. The estimated fair values of our outstanding debt were determined based on quoted prices for similar instruments in active markets (Level 2). |
OTHER
OTHER | 3 Months Ended |
Mar. 26, 2017 | |
OTHER | NOTE 9 – OTHER Changes in Estimates Accounting for contracts using the percentage-of-completion inception-to-date 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 inception-to-date As previously disclosed, we have a program to design, integrate, and install an air missile defense command, control, communications, computers – intelligence (C4I) systems for an international customer that has experienced performance matters and for which we have periodically accrued reserves. During the quarter ended March 26, 2017, we revised our estimated costs to complete the program, EADGE-T, Our consolidated net adjustments not related to volume, including net profit booking rate adjustments and other matters, net of state income taxes, increased segment operating profit by approximately $290 million and $360 million in the quarters ended March 26, 2017 and March 27, 2016, respectively. These adjustments increased net earnings by approximately $189 million ($0.65 per share) and $234 million ($0.76 per share) in the quarters ended March 26, 2017 and March 27, 2016, respectively. Restructuring Charges During the quarter ended March 27, 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 received lump-sum Equity Method Investee Impairment During the quarter ended March 26, 2017, equity earnings included our portion of a noncash asset impairment charge related to certain long-lived assets held by an international equity method investee of approximately $64 million ($40 million or $0.14 per share, after tax), which was recorded at our corporate office. We are continuing to monitor our investment in this equity method investee. It is possible that we may have to record our portion of additional charges should their business continue to experience performance issues, which could adversely affect our business, financial condition and results of operations. Income Taxes Our effective income tax rates were 23.3% and 18.9% during the quarters ended March 26, 2017 and March 27, 2016, respectively. The rates for both periods benefited from tax deductions for U.S. manufacturing activities, dividends paid to our defined contribution plans with an employee stock ownership plan feature, tax benefits of employee equity awards, and the research and development tax credit. The tax benefits of employee equity awards reduced our effective tax rate for the quarters ended March 26, 2017 and March 27, 2016 by 6.2 and 10.4 percentage points, respectively. Stockholders’ Equity Repurchases of Common Stock During the quarter ended March 26, 2017, we repurchased 1.9 million shares of our common stock for $500 million. The total remaining authorization for future common share repurchases under our share repurchase program was $3.0 billion as of March 26, 2017. 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 paid-in paid-in Dividends We declared cash dividends totaling $531 million ($1.82 per share) and $512 million ($1.65 per share) during the quarters ended March 26, 2017 and March 27, 2016, respectively. Dividends paid during the quarters ended March 26, 2017 and March 27, 2016 are higher than dividends declared due to dividends paid to holders of restricted stock units (RSUs) upon vesting of the RSU. These dividends are accrued through the RSU vesting period and are paid upon the vesting of the RSU. Restricted Stock Unit Grants During the quarter ended March 26, 2017, we granted certain employees approximately 0.5 million RSUs with a grant-date fair value of $254.53 per RSU. The grant-date fair value of these RSUs is equal to the closing market price of our common stock on the grant date less a discount to reflect the delay in payment of dividend-equivalent cash payments that are made only upon vesting, which is generally three years from the grant date. We recognize the grant-date fair value of RSUs, less estimated forfeitures, as compensation expense ratably over the requisite service period, which is shorter than the vesting period if the employee is retirement eligible on the date of grant or will become retirement eligible before the end of the vesting period. Accumulated Other Comprehensive Loss Changes in the balance of AOCL, net of tax, consisted of the following (in millions): Postretirement Other, net AOCL Balance at December 31, 2016 $ (11,981) $ (121) $ (12,102) Other comprehensive income before reclassifications 3 4 7 Amounts reclassified from AOCL Recognition of net actuarial losses (a) 258 — 258 Amortization of net prior service credits (a) (56) — (56) Other — 1 1 Total reclassified from AOCL 202 1 203 Total other comprehensive income 205 5 210 Balance at March 26, 2017 $ (11,776) $ (116) $ (11,892) Balance at December 31, 2015 $ (11,314) $ (130) $ (11,444) Other comprehensive income before reclassifications — 15 15 Amounts reclassified from AOCL Recognition of net actuarial losses (a) 234 — 234 Amortization of net prior service credits (a) (61) — (61) Other — 2 2 Total reclassified from AOCL 173 2 175 Total other comprehensive income 173 17 190 Balance at March 27, 2016 $ (11,141) $ (113) $ (11,254) (a) Reclassifications from AOCL related to our postretirement benefit plans were recorded as a component of net periodic benefit cost for each period presented (see “Note 6 – Postretirement Plans”). Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, (Topic 606) one-year 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 of our business segments, as well as our business processes and our information technology systems. As a result, our evaluation of the effect of the ASU will extend through 2017. We have closely monitored the standard setting process, including amendments and technical corrections to the ASU following its issuance in May 2014 and participated in aerospace and defense forums to understand the impact of the ASU on our industry. We commenced our evaluation of the impact of the ASU in late 2014, by evaluating its impact on selected contracts at each of our business segments. With this baseline understanding, we developed a project plan to evaluate thousands of contracts across our business segments, develop processes and tools to dual report financial results under both GAAP and the ASU and assess the internal control structure in order to adopt the ASU on January 1, 2018. We have periodically briefed our Audit Committee on our progress made towards adoption. Based on our evaluation to date, we anticipate being able to estimate the impacts of adopting the ASU in the second half of 2017. We recognize the majority of our revenue using the percentage-of-completion percentage-of-completion cost-to-cost F-35 percentage-of-completion units-of-delivery C-130J C-5 PAC-3 ® ® percentage-of-completion cost-to-cost Under the ASU, revenue will be recognized as the customer obtains control of the goods and services promised in the contract (i.e., performance obligations). Given the nature of our products and terms and conditions in our contracts, in particular those with the U. S. Government (including foreign military sales (FMS) contracts), the customer obtains control as we perform work under the contract. Therefore, we expect to recognize revenue over time for almost all of our contracts using a method similar to our current percentage-of-completion cost-to-cost percentage-of-completion units-of-delivery units-of-delivery cost-to-cost In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715) In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350) In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) |
EARNINGS PER COMMON SHARE (Poli
EARNINGS PER COMMON SHARE (Policies) | 3 Months Ended |
Mar. 26, 2017 | |
Earnings per share computation | We compute basic and diluted earnings per common share by dividing net earnings by the respective weighted average number of common shares outstanding for the periods presented. Our calculation of diluted earnings per common share also includes the dilutive effects for the assumed vesting of outstanding restricted stock units and exercise of outstanding stock options based on the treasury stock method. There were no significant anti-dilutive |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
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 March 26, March 27, Weighted average common shares outstanding for basic computations 290.0 304.5 Weighted average dilutive effect of equity awards 2.8 4.2 Weighted average common shares outstanding for diluted computations 292.8 308.7 |
DIVESTITURES (Tables)
DIVESTITURES (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
Operating Results of Discontinued Operations and Information of IS and GS Included in Consolidated Statements of Cash Flows | The operating results of the IS&GS business for the quarter ended March 27, 2016 that have been reflected within net earnings from discontinued operations are as follows (in millions): Net sales $ 1,334 Cost of sales (1,175) Severance charges (19) Gross profit 140 Other expense, net (1) Operating profit 139 Interest income 1 Earnings from discontinued operations before income taxes 140 Income tax expense (48) Net earnings from discontinued operations $ 92 |
INFORMATION ON BUSINESS SEGME20
INFORMATION ON BUSINESS SEGMENTS (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
Summary Of Financial Information For Each Business Segment | Summary operating results for each of our business segments were as follows (in millions): Quarters Ended March 26, March 27, Net sales Aeronautics $ 4,106 $ 3,799 Missiles and Fire Control 1,489 1,434 Rotary and Mission Systems 3,101 3,004 Space Systems 2,361 2,131 Total net sales $ 11,057 $ 10,368 Operating profit Aeronautics $ 436 $ 420 Missiles and Fire Control 219 221 Rotary and Mission Systems 108 229 Space Systems 288 244 Total business segment operating profit 1,051 1,114 Unallocated items FAS/CAS pension adjustment FAS pension expense (345) (251) Less: CAS pension cost 562 475 FAS/CAS pension adjustment 217 224 Stock-based compensation (44) (44) Severance charges — (80) Other, net (a) (b) (75) (56) Total unallocated items 98 44 Total consolidated operating profit $ 1,149 $ 1,158 Intersegment sales Aeronautics $ 32 $ 36 Missiles and Fire Control 64 75 Rotary and Mission Systems 439 447 Space Systems 26 33 Total intersegment sales $ 561 $ 591 (a) In the first quarter of 2017, we recognized a $64 million charge, which represents our portion of a noncash asset impairment charge recorded by an international equity method investee. See “Note 9 – Other” (under the caption “Equity Method Investee Impairment”) for more information. (b) As a result of the IS&GS divestiture in August 2016, we reclassified $35 million of general corporate overhead costs incurred in the first quarter of 2016 and previously allocated to the IS&GS business segment. These costs were not reported as discontinued operations because they were not directly attributable to the IS&GS business and will continue to be incurred by us. See “Note 3 – Divestitures” for more information. Total assets for each of our business segments were as follows (in millions): March 26, 2017 December 31, Assets Aeronautics $ 7,900 $ 7,896 Missiles and Fire Control 4,322 4,000 Rotary and Mission Systems 18,435 18,367 Space Systems 5,545 5,250 Total business segment assets 36,202 35,513 Corporate assets (a) 12,634 12,293 Total assets $ 48,836 $ 47,806 (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 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
Inventories | Inventories, net consisted of the following (in millions): March 26, 2017 December 31, Work-in-process, $ 8,090 $ 7,864 Spare parts, used aircraft and general stock materials 785 833 Other inventories 819 719 Total inventories 9,694 9,416 Less: customer advances and progress payments (4,620) (4,746) Total inventories, net $ 5,074 $ 4,670 |
POSTRETIREMENT PLANS (Tables)
POSTRETIREMENT PLANS (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
Pretax Net Periodic Benefit Cost | Our pretax net periodic benefit cost related to our qualified defined benefit pension plans and retiree medical and life insurance plans consisted of the following (in millions): Quarters Ended March 26, 2017 March 27, Qualified defined benefit pension plans Service cost $ 205 $ 203 Interest cost 452 465 Expected return on plan assets (602) (667) Recognized net actuarial losses 376 340 Amortization of net prior service credits (86) (90) Total net periodic benefit cost $ 345 $ 251 Retiree medical and life insurance plans Service cost $ 5 $ 6 Interest cost 26 30 Expected return on plan assets (32) (34) Recognized net actuarial losses 5 8 Amortization of net prior service costs 3 5 Total net periodic benefit cost $ 7 $ 15 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
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): March 26, 2017 December 31, 2016 Total Level 1 Level 2 Total Level 1 Level 2 Assets Equity securities $ 68 $ 68 $ — $ 79 $ 79 $ — Mutual funds 845 845 — 856 856 — U.S. Government securities 104 — 104 113 — 113 Other securities 166 — 166 151 — 151 Derivatives 23 — 23 27 — 27 Liabilities Derivatives 106 — 106 85 — 85 Assets measured at NAV Other commingled funds 18 — |
OTHER (Tables)
OTHER (Tables) | 3 Months Ended |
Mar. 26, 2017 | |
Accumulated Other Comprehensive Loss | Changes in the balance of AOCL, net of tax, consisted of the following (in millions): Postretirement Other, net AOCL Balance at December 31, 2016 $ (11,981) $ (121) $ (12,102) Other comprehensive income before reclassifications 3 4 7 Amounts reclassified from AOCL Recognition of net actuarial losses (a) 258 — 258 Amortization of net prior service credits (a) (56) — (56) Other — 1 1 Total reclassified from AOCL 202 1 203 Total other comprehensive income 205 5 210 Balance at March 26, 2017 $ (11,776) $ (116) $ (11,892) Balance at December 31, 2015 $ (11,314) $ (130) $ (11,444) Other comprehensive income before reclassifications — 15 15 Amounts reclassified from AOCL Recognition of net actuarial losses (a) 234 — 234 Amortization of net prior service credits (a) (61) — (61) Other — 2 2 Total reclassified from AOCL 173 2 175 Total other comprehensive income 173 17 190 Balance at March 27, 2016 $ (11,141) $ (113) $ (11,254) (a) Reclassifications from AOCL related to our postretirement benefit plans were recorded as a component of net periodic benefit cost for each period presented (see “Note 6 – Postretirement Plans”). |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 26, 2017 | Mar. 27, 2016 | Aug. 24, 2016 | |
Basis of Presentation [Line Items] | |||
Income Tax Expense (Benefit) | $ 232 | $ 188 | |
AWE Management Limited | |||
Basis of Presentation [Line Items] | |||
Ownership interest percentage acquired | 18.00% | ||
Noncontrolling Interest, Ownership Percentage by Parent | 51.00% | ||
AWE Management Limited | Net Sales | Segment Concentration Risk | Space Systems | |||
Basis of Presentation [Line Items] | |||
Concentration percentage | 100.00% | ||
AWE Management Limited | Net Sales | Equity Method Investment Risk | Space Systems | |||
Basis of Presentation [Line Items] | |||
Concentration percentage | 0.00% | ||
AWE Management Limited | Operating profit | Segment Concentration Risk | Space Systems | |||
Basis of Presentation [Line Items] | |||
Concentration percentage | 51.00% | ||
AWE Management Limited | Net Earnings | Equity Method Investment Risk | Space Systems | |||
Basis of Presentation [Line Items] | |||
Concentration percentage | 33.00% | ||
Adjustments for New Accounting Principle, Early Adoption | |||
Basis of Presentation [Line Items] | |||
Income Tax Expense (Benefit) | $ 104 | ||
Income tax benefit per share | $ 0.34 |
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 | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Weighted Average Shares Used In Computing Earnings Per Share [Line Items] | ||
Weighted average common shares outstanding for basic computations | 290 | 304.5 |
Weighted average dilutive effect of equity awards | 2.8 | 4.2 |
Weighted average common shares outstanding for diluted computations | 292.8 | 308.7 |
Earnings Per Common Share - Add
Earnings Per Common Share - Additional Information (Detail) - shares | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
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 |
Divestitures - Additional Infor
Divestitures - Additional Information (Detail) - Information Systems & Global Solutions - USD ($) $ in Millions | Aug. 16, 2016 | Mar. 27, 2016 |
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 | |
Lockheed Martin | ||
Divestitures [Line Items] | ||
Number of common stock exchanged | 9,369,694 | |
Continuing Operations | ||
Divestitures [Line Items] | ||
Pension costs | $ 22 | |
Restatement Adjustment | ||
Divestitures [Line Items] | ||
Corporate overhead costs | $ (35) |
Operating Results Reflected wit
Operating Results Reflected within Earnings from Discontinued Operations, Net of Tax (Detail) $ in Millions | 3 Months Ended |
Mar. 27, 2016USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Net earnings from discontinued operations | $ 92 |
Information Systems & Global Solutions | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Net sales | 1,334 |
Cost of sales | (1,175) |
Severance charges | (19) |
Gross profit | 140 |
Other expense, net | (1) |
Operating profit | 139 |
Interest income | 1 |
Earnings from discontinued operations before income taxes | 140 |
Income tax expense | (48) |
Net earnings from discontinued operations | $ 92 |
Information on Business Segme30
Information on Business Segments - Additional Information (Detail) - Segment | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
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 | 24.00% | 22.00% |
Summary of Financial Informatio
Summary of Financial Information for Each Business Segment (Detail) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 26, 2017 | Mar. 27, 2016 | Dec. 31, 2016 | ||
Segment Reporting Information [Line Items] | ||||
Total net sales | $ 11,057 | $ 10,368 | ||
Less: CAS pension cost | 562 | 475 | ||
FAS/CAS pension adjustment | 217 | 224 | ||
Stock-based compensation | (44) | (44) | ||
Severance charges | (80) | |||
Other, net | [1],[2] | (75) | (56) | |
Total unallocated items | 98 | 44 | ||
Operating profit | 1,149 | 1,158 | ||
Total assets | 48,836 | $ 47,806 | ||
Qualified defined benefit pension plans | ||||
Segment Reporting Information [Line Items] | ||||
FAS pension expense | (345) | (251) | ||
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Operating profit | 1,051 | 1,114 | ||
Total assets | 36,202 | 35,513 | ||
Operating Segments | Aeronautics | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 4,106 | 3,799 | ||
Operating profit | 436 | 420 | ||
Total assets | 7,900 | 7,896 | ||
Operating Segments | Missiles and Fire Control | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 1,489 | 1,434 | ||
Operating profit | 219 | 221 | ||
Total assets | 4,322 | 4,000 | ||
Operating Segments | Rotary and Mission Systems | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 3,101 | 3,004 | ||
Operating profit | 108 | 229 | ||
Total assets | 18,435 | 18,367 | ||
Operating Segments | Space Systems | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 2,361 | 2,131 | ||
Operating profit | 288 | 244 | ||
Total assets | 5,545 | 5,250 | ||
Intersegment elimination | ||||
Segment Reporting Information [Line Items] | ||||
Total intersegment sales | 561 | 591 | ||
Intersegment elimination | Aeronautics | ||||
Segment Reporting Information [Line Items] | ||||
Total intersegment sales | 32 | 36 | ||
Intersegment elimination | Missiles and Fire Control | ||||
Segment Reporting Information [Line Items] | ||||
Total intersegment sales | 64 | 75 | ||
Intersegment elimination | Rotary and Mission Systems | ||||
Segment Reporting Information [Line Items] | ||||
Total intersegment sales | 439 | 447 | ||
Intersegment elimination | Space Systems | ||||
Segment Reporting Information [Line Items] | ||||
Total intersegment sales | 26 | $ 33 | ||
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | [3] | $ 12,634 | $ 12,293 | |
[1] | As a result of the IS&GS divestiture in August 2016, we reclassified $35 million of general corporate overhead costs incurred in the first quarter of 2016 and previously allocated to the IS&GS business segment. These costs were not reported as discontinued operations because they were not directly attributable to the IS&GS business and will continue to be incurred by us. See "Note 3 - Divestitures" for more information. | |||
[2] | In the first quarter of 2017, we recognized a $64 million charge, which represents our portion of a noncash asset impairment charge recorded by an international equity method investee. See "Note 9 - Other" (under the caption "Equity Method Investee Impairment") for more information. | |||
[3] | Corporate assets primarily include cash and cash equivalents, deferred income taxes, environmental receivables and investments held in a separate trust to fund certain of our non-qualified deferred compensation plans. |
Summary of Financial Informat32
Summary of Financial Information for Each Business Segment (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Segment Reporting Information [Line Items] | ||
Equity method investment noncash asset impairment charge | $ 64 | |
Information Systems & Global Solutions | Restatement Adjustment | ||
Segment Reporting Information [Line Items] | ||
Corporate overhead costs | $ (35) |
Inventories (Detail)
Inventories (Detail) - USD ($) $ in Millions | Mar. 26, 2017 | Dec. 31, 2016 |
Inventory [Line Items] | ||
Work-in-process, primarily related to long-term contracts and programs in progress | $ 8,090 | $ 7,864 |
Spare parts, used aircraft and general stock materials | 785 | 833 |
Other inventories | 819 | 719 |
Total inventories | 9,694 | 9,416 |
Less: customer advances and progress payments | (4,620) | (4,746) |
Total inventories, net | $ 5,074 | $ 4,670 |
Pretax Net Periodic Benefit Cos
Pretax Net Periodic Benefit Costs (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Qualified defined benefit pension plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 205 | $ 203 |
Interest cost | 452 | 465 |
Expected return on plan assets | (602) | (667) |
Recognized net actuarial losses | 376 | 340 |
Amortization of net prior service costs | (86) | (90) |
Total net periodic benefit cost | 345 | 251 |
Retiree medical and life insurance plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 5 | 6 |
Interest cost | 26 | 30 |
Expected return on plan assets | (32) | (34) |
Recognized net actuarial losses | 5 | 8 |
Amortization of net prior service costs | 3 | 5 |
Total net periodic benefit cost | $ 7 | $ 15 |
Postretirement Plans - Addition
Postretirement Plans - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Mar. 26, 2017 | Mar. 27, 2016 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Recognition of previously deferred postretirement benefit plan amounts, net of tax | $ 202,000,000 | $ 173,000,000 |
Recognition of previously deferred postretirement benefit plan amounts, tax | 110,000,000 | 95,000,000 |
Other postretirement benefit plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Recognition of previously deferred postretirement benefit plan amounts, before tax | 14,000,000 | 11,000,000 |
Qualified defined benefit pension plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Contributions made by the employer | $ 0 | $ 0 |
Legal Proceedings and Conting36
Legal Proceedings and Contingencies - Additional Information (Detail) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Apr. 30, 2015 | Mar. 26, 2017 | Dec. 31, 2016 | Apr. 24, 2009 | |
Legal Proceedings And Contingencies [Line Items] | ||||
Damages sought by plaintiff | $ 52 | |||
Liabilities recorded relative to environmental matters | $ 978 | $ 1,000 | ||
Environmental costs eligible for future recovery | $ 842 | 870 | ||
Time period environmental costs and recovery of environmental costs are projected over, years | 20 years | |||
Outstanding letters of credit, surety bonds, and third-party guarantees | $ 3,700 | 3,700 | ||
Third-party guarantees outstanding | $ 694 | $ 709 | ||
Percentage of total guarantees that relate to guarantees of contractual performance of joint ventures | 58.00% | 56.00% | ||
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 | |||
United Launch Alliance | ||||
Legal Proceedings And Contingencies [Line Items] | ||||
Percentage of ownership interest in affiliated entity | 50.00% | |||
Inventory supply agreement | $ 120 |
Fair Value, Assets and Liabilit
Fair Value, Assets and Liabilities Measured on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Mar. 26, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | $ 23 | $ 27 |
Derivative liabilities | 106 | 85 |
Equity securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 68 | 79 |
Mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 845 | 856 |
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 | 104 | 113 |
Other securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured on recurring basis | 166 | 151 |
Other commingled funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of investments measured at NAV | 18 | |
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 | 68 | 79 |
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 | 845 | 856 |
Fair value, inputs, level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 23 | 27 |
Derivative liabilities | 106 | 85 |
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 | 104 | 113 |
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 | $ 166 | $ 151 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions | Mar. 26, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated fair values of debt instruments | $ 16,100 | $ 16,200 |
Outstanding principal amount of debt instruments | 15,300 | 15,300 |
Unamortized discounts and issuance costs | 1,000 | 1,000 |
Interest rate swaps | Designated as hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate notional amount of derivatives | 1,200 | 1,200 |
Derivative liability, fair value | 5 | 1 |
Foreign currency contracts | Designated as hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Aggregate notional amount of derivatives | 4,200 | 4,000 |
Derivative liability, fair value | $ 78 | $ 57 |
Other - Additional Information
Other - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | Mar. 26, 2017 | Mar. 26, 2017 | Mar. 27, 2016 |
Additional charge to costs | $ 120 | ||
Additional charge to costs, after tax | $ 74 | ||
Additional charge to costs, per share | $ 0.25 | ||
Cumulative losses including reserves | $ 260 | ||
Increase in operating profit due to profit rate adjustments | $ 290 | $ 360 | |
Increase in net earnings due to profit rate adjustments | $ 189 | $ 234 | |
Increase in diluted earnings per common share due to profit rate adjustments | $ 0.65 | $ 0.76 | |
Effective income tax rate | 23.30% | 18.90% | |
Percentage of reduction of effective tax rate due to equity awards tax benefit | 6.20% | 10.40% |
Restructuring Charges - Additio
Restructuring Charges - Additional Information (Detail) $ in Millions | 3 Months Ended |
Mar. 27, 2016USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Severance charges | $ 99 |
Aeronautics | |
Restructuring Cost and Reserve [Line Items] | |
Severance charges | $ 80 |
Equity Method Investee Impairme
Equity Method Investee Impairment - Additional Information (Detail) $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 26, 2017USD ($)$ / shares | |
Schedule of Equity Method Investments [Line Items] | |
Equity method investee impairment | $ 64 |
Equity method investee impairment, after tax | $ 40 |
Equity method investee impairment, per share | $ / shares | $ 0.14 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | ||
Mar. 26, 2017 | Mar. 27, 2016 | Dec. 31, 2016 | |
Shareholders Equity [Line Items] | |||
Cash paid for repurchases of common stock | $ 500 | $ 501 | |
Number of shares of common stock repurchased with cash | 1.9 | ||
Remaining authorized repurchase amount under share repurchase program | $ 3,000 | ||
Additional paid-in capital | $ 0 | $ 0 | |
Common stock par value, per share | $ 1 | $ 1 | |
Reduction to stockholder's equity due to repurchases of common stock | $ 500 | 501 | |
Dividends declared | $ 531 | $ 512 | |
Dividends declared, per share (in USD) | $ 1.82 | $ 1.65 | |
Retained Earnings | |||
Shareholders Equity [Line Items] | |||
Reduction to stockholder's equity due to repurchases of common stock | $ 469 | $ 496 | |
Dividends declared | $ 531 | $ 512 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - Restricted Stock Units (RSUs) shares in Millions | 3 Months Ended |
Mar. 26, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of stock units, granted, in shares | shares | 0.5 |
Average grant date fair value per unit | $ / shares | $ 254.53 |
Number of years over which equity awards vest | 3 years |
Changes in Balance of Accumulat
Changes in Balance of Accumulated Other Comprehensive Loss, Net of Income Taxes (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 26, 2017 | Mar. 27, 2016 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | $ 1,606 | $ 3,097 | |
Other comprehensive income before reclassifications | 7 | 15 | |
Amounts reclassified from AOCL | |||
Recognition of net actuarial losses | 258 | [1] | 234 |
Amortization of net prior service credits | (56) | [1] | (61) |
Other | 1 | 2 | |
Total reclassified from AOCL | 203 | 175 | |
Other comprehensive income, net of tax | 210 | 190 | |
Ending Balance | 1,585 | 3,177 | |
Postretirement Benefit Plan Adjustments | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | (11,981) | (11,314) | |
Other comprehensive income before reclassifications | 3 | ||
Amounts reclassified from AOCL | |||
Recognition of net actuarial losses | 258 | [1] | 234 |
Amortization of net prior service credits | (56) | [1] | (61) |
Total reclassified from AOCL | 202 | 173 | |
Other comprehensive income, net of tax | 205 | 173 | |
Ending Balance | (11,776) | (11,141) | |
Other, net | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | (121) | (130) | |
Other comprehensive income before reclassifications | 4 | 15 | |
Amounts reclassified from AOCL | |||
Other | 1 | 2 | |
Total reclassified from AOCL | 1 | 2 | |
Other comprehensive income, net of tax | 5 | 17 | |
Ending Balance | (116) | (113) | |
AOCI Attributable to Parent | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | (12,102) | (11,444) | |
Amounts reclassified from AOCL | |||
Other comprehensive income, net of tax | 210 | 190 | |
Ending Balance | $ (11,892) | $ (11,254) | |
[1] | Reclassifications from AOCL related to our postretirement benefit plans were recorded as a component of net periodic benefit cost for each period presented (see "Note 6 - Postretirement Plans"). |