v2.3.0.11
Business Segment Information
 6 Months Ended
Jun. 26, 2011
Business Segment Information  
Business Segment Information

NOTE 5 – BUSINESS SEGMENT INFORMATION

We operate in four principal business segments: Aeronautics, Electronic Systems, IS&GS, and Space Systems. We organize our business segments based on the nature of the products and services offered.

The financial information in the following table excludes the PAE and EIG businesses from the IS&GS business segment information (Note 3) for all periods presented. Also, the financial information in the following table for 2010 has been adjusted to reflect our change in the methodology for recognizing net sales for services contracts with the U.S. Government (Note 1).

The following table presents net sales and operating profit of our four business segments. Net sales exclude intersegment revenue, as these activities are eliminated in consolidation. Intercompany transactions are generally negotiated under terms and conditions similar to other government and commercial contracts. Operating profit of the business segments includes the equity earnings or losses from investees in which certain of our business segments hold equity interests, because the activities of the investees are closely aligned with the operations of those segments.

Operating profit of the business segments excludes the FAS/CAS pension adjustment (defined below); expense for certain stock-based compensation programs, including costs for stock options and restricted stock units; the effects of items not considered part of management's evaluation of segment operating performance; gains or losses from divestitures; the effects of legal settlements; Corporate costs not allocated to the business segments; and other miscellaneous Corporate activities. These items are included in "Unallocated corporate expense, net" in the following table which reconciles operating profit from the business segments to operating profit in our Statements of Earnings.

The results of operations of our business segments include pension expense only as determined and funded in accordance with U.S. Government Cost Accounting Standards (CAS) rules. The FAS/CAS pension adjustment represents the difference between pension expense or income calculated under financial accounting standards (FAS) in accordance with GAAP and pension expense calculated and funded in accordance with CAS. CAS is a major factor in determining our pension funding requirements, and governs the extent to which pension costs can be allocated to and recovered on U.S. Government contracts. The CAS expense is recovered through the pricing of our products and services on U.S. Government contracts and, therefore, is recognized in each of our business segments' net sales and cost of sales.

 

Selected Financial Data by Business Segment

 

Quarter Ended     Six Months Ended  
     June 26,
2011		     June 27,
2010		     June 26,
2011		     June 27,
2010		  
     (In millions)  

Net sales

       

Aeronautics

    $ 3,423      $ 3,143      $ 6,605      $ 6,083   

Electronic Systems

      3,755        3,534        7,214        6,784   

Information Systems & Global Solutions

      2,361        2,522        4,510        4,756   

Space Systems

      2,012        2,081        3,855        3,994   
                                

Total (1)

   $ 11,551      $ 11,280      $ 22,184      $ 21,617   
                                

Operating profit

         

Aeronautics

    $ 400      $ 370      $ 731      $ 701   

Electronic Systems

      466        441        883        820   

Information Systems & Global Solutions

      213        210        407        407   

Space Systems

      263        246        480        453   
                                

Total business segments

      1,342        1,267        2,501        2,381   

Unallocated corporate expense, net

      (358 )      (152 )      (665 )      (328 ) 
                                

Total

    $ 984      $ 1,115      $ 1,836      $ 2,053   
                                

Intersegment revenue

         

Aeronautics

    $ 45      $ 35      $ 82      $ 74   

Electronic Systems

      255        232        504        449   

Information Systems & Global Solutions

      213        243        408        451   

Space Systems

      26        37        51        60   
                                

Total

    $ 539      $ 547      $ 1,045      $ 1,034   
                                
(1) Approximately 84% and 82% of our total net sales for the quarter and six months ended June 26, 2011 were made with the U.S. Government. The remainder of our total net sales primarily were made with international customers, including sales made to foreign governments through the U.S. Government (i.e., foreign military sales), which represented 15% of total net sales for the quarter and 17% for the six months ended June 26, 2011.

Approximately 85% of our total net sales for the quarter and six months ended June 27, 2010 were made with the U.S. Government. The remainder of our total net sales primarily were made with international customers, which represented 14% of total net sales for the quarter and six months ended June 27, 2010. These percentages are consistent with fiscal year 2010, during which international sales were 14% of total net sales.

 

     June 26,
2011		      December 31,
2010		  
     (In millions)  

Assets

      

Aeronautics

    $ 5,913       $ 5,231   

Electronic Systems

      9,991         9,925   

Information Systems & Global Solutions

      5,441         5,463   

Space Systems

      3,225         3,041   
                 

Total business segments

      24,570         23,660   

Corporate assets (1)

     11,148         11,057   

Assets of discontinued operation held for sale

      —           396   
                 

Total

    $ 35,718       $ 35,113   
                 
(1) Corporate assets primarily include cash and cash equivalents, short-term investments, deferred income taxes, deferred environmental assets, and investments held in a Rabbi Trust.