Business Segment Reporting
Our reportable segments, organized based on capabilities and technologies, are: IDS; IIS; MS; and SAS.
IDS is a leader in integrated air and missile defense; radar solutions; naval combat and ship electronic systems; command, control, communications, computers and intelligence (C4I) solutions; and international and domestic Air Traffic Management (ATM) systems. IDS delivers combat-proven performance against the complete spectrum of airborne and ballistic missile threats and is a world leader in the technology, development, and production of sensors and mission systems.
IIS provides a full range of technical and professional services to intelligence, defense, federal and commercial customers worldwide. IIS specializes in global Intelligence, Surveillance and Reconnaissance (ISR), navigation, DoD space and weather solutions, cybersecurity, analytics, training, logistics, mission support, and engineering and sustainment solutions. Key customers include the U.S. Intelligence Community, DoD agencies, the U.S. Armed Forces, the FAA, the National Oceanic and Atmospheric Administration (NOAA), Department of Homeland Security (DHS), the National Aeronautics and Space Administration (NASA) and an increasing number of international customers.
MS is a premier developer and producer of missile and combat systems for the armed forces of the U.S. and other allied nations. Leveraging its capabilities in advanced airframes, guidance and navigation systems, high-resolution sensors, surveillance, targeting, and netted systems, MS develops and supports a broad range of advanced weapon systems, including missiles, smart munitions, close-in weapon systems, projectiles, kinetic kill vehicles, directed energy effectors and advanced combat sensor solutions.
SAS is a leader in the design and development of integrated sensor and communication systems for advanced missions, including traditional and non-traditional ISR, precision engagement, unmanned aerial operations, and space. Leveraging advanced concepts, state-of-the-art technologies and mission systems knowledge, SAS provides electro-optical/infrared sensors, airborne radars for surveillance and fire control applications, lasers, precision guidance systems, signals intelligence systems, processors, electronic warfare systems, communication systems, and space-qualified systems for civil and military applications.
Segment total net sales and operating income generally include intersegment sales and profit recorded at cost plus a specified fee, which may differ from what the selling entity would be able to obtain on sales to external customers. Corporate and Eliminations includes corporate expenses and intersegment sales and profit eliminations. Corporate expenses represent unallocated costs and certain other corporate costs not considered part of management’s evaluation of reportable segment operating performance.
Segment financial results were as follows:
|
| | | | | | | | | | | |
Total Net Sales (in millions) | 2013 |
| | 2012 |
| | 2011 |
|
Integrated Defense Systems | $ | 6,489 |
| | $ | 6,492 |
| | $ | 6,441 |
|
Intelligence, Information and Services | 6,045 |
| | 6,335 |
| | 6,470 |
|
Missile Systems | 6,599 |
| | 6,639 |
| | 6,801 |
|
Space and Airborne Systems | 6,371 |
| | 6,823 |
| | 6,818 |
|
Corporate and Eliminations | (1,798 | ) | | (1,875 | ) | | (1,739 | ) |
Total | $ | 23,706 |
| | $ | 24,414 |
| | $ | 24,791 |
|
|
| | | | | | | | | | | |
Intersegment Sales (in millions) | 2013 |
| | 2012 |
| | 2011 |
|
Integrated Defense Systems | $ | 107 |
| | $ | 91 |
| | $ | 83 |
|
Intelligence, Information and Services | 817 |
| | 784 |
| | 741 |
|
Missile Systems | 163 |
| | 161 |
| | 182 |
|
Space and Airborne Systems | 711 |
| | 839 |
| | 733 |
|
Total | $ | 1,798 |
| | $ | 1,875 |
| | $ | 1,739 |
|
|
| | | | | | | | | | | |
Operating Income (in millions) | 2013 |
| | 2012 |
| | 2011 |
|
Integrated Defense Systems | $ | 1,115 |
| | $ | 1,047 |
| | $ | 998 |
|
Intelligence, Information and Services | 510 |
| | 536 |
| | 480 |
|
Missile Systems | 830 |
| | 861 |
| | 939 |
|
Space and Airborne Systems | 920 |
| | 988 |
| | 951 |
|
FAS/CAS Adjustment | (249 | ) | | (255 | ) | | (337 | ) |
Corporate and Eliminations | (188 | ) | | (188 | ) | | (201 | ) |
Total | $ | 2,938 |
| | $ | 2,989 |
| | $ | 2,830 |
|
We must calculate our pension and other postretirement benefits (PRB) costs under both Financial Accounting Standards (FAS) requirements under GAAP and U.S. Government cost accounting standards (CAS). GAAP outlines the methodology used to determine pension expense or income for financial reporting purposes, which is not indicative of the funding requirements for pension and PRB plans that we determine by other factors. CAS prescribes the allocation to and recovery of pension and other PRB costs on U.S. Government contracts. The results of each segment only include pension and PRB expense as determined under CAS. The CAS requirements for pension costs and its calculation methodology differ from the FAS requirements and calculation methodology. As a result, while both FAS and CAS use long-term assumptions in their calculation methodologies, each method results in different calculated amounts of pension and PRB cost. The FAS/CAS Adjustment, which is reported as a separate line in our segment results above, represents the difference between our pension and PRB expense or income under FAS in accordance with GAAP and our pension and PRB expense under CAS.
The components of operating income related to Corporate and Eliminations were as follows:
|
| | | | | | | | | | | |
(In millions) | 2013 |
| | 2012 |
| | 2011 |
|
Intersegment profit eliminations | $ | (160 | ) | | $ | (177 | ) | | $ | (161 | ) |
Corporate | (28 | ) | | (11 | ) | | (40 | ) |
Total | $ | (188 | ) | | $ | (188 | ) | | $ | (201 | ) |
|
| | | | | | | | | | | |
Intersegment Operating Income (in millions) | 2013 |
| | 2012 |
| | 2011 |
|
Integrated Defense Systems | $ | 9 |
| | $ | 8 |
| | $ | 7 |
|
Intelligence, Information and Services | 72 |
| | 72 |
| | 68 |
|
Missile Systems | 17 |
| | 24 |
| | 20 |
|
Space and Airborne Systems | 62 |
| | 73 |
| | 66 |
|
Total | $ | 160 |
| | $ | 177 |
| | $ | 161 |
|
|
| | | | | | | | | | | |
Capital Expenditures (in millions) | 2013 |
| | 2012 |
| | 2011 |
|
Integrated Defense Systems | $ | 69 |
| | $ | 67 |
| | $ | 91 |
|
Intelligence, Information and Services | 28 |
| | 34 |
| | 51 |
|
Missile Systems | 55 |
| | 66 |
| | 81 |
|
Space and Airborne Systems | 117 |
| | 132 |
| | 98 |
|
Corporate | 11 |
| | 40 |
| | 19 |
|
Total | $ | 280 |
| | $ | 339 |
| | $ | 340 |
|
|
| | | | | | | | | | | |
Depreciation and Amortization (in millions) | 2013 |
| | 2012 |
| | 2011 |
|
Integrated Defense Systems | $ | 96 |
| | $ | 101 |
| | $ | 98 |
|
Intelligence, Information and Services | 62 |
| | 65 |
| | 63 |
|
Missile Systems | 76 |
| | 68 |
| | 66 |
|
Space and Airborne Systems | 158 |
| | 161 |
| | 162 |
|
Corporate | 53 |
| | 60 |
| | 55 |
|
Total | $ | 445 |
| | $ | 455 |
| | $ | 444 |
|
|
| | | | | | | |
Total Assets (in millions) | 2013 |
| | 2012 |
|
Integrated Defense Systems | $ | 3,897 |
| | $ | 3,710 |
|
Intelligence, Information and Services | 3,772 |
| | 3,827 |
|
Missile Systems | 6,316 |
| | 6,319 |
|
Space and Airborne Systems | 6,399 |
| | 6,470 |
|
Corporate | 5,583 |
| | 6,360 |
|
Total | $ | 25,967 |
| | $ | 26,686 |
|
|
| | | | | | | | | | | |
Total Net Sales by Geographic Areas (in millions) | 2013 |
| | 2012 |
| | 2011 |
|
United States | $ | 17,260 |
| | $ | 18,182 |
| | $ | 18,652 |
|
Asia/Pacific | 2,590 |
| | 2,510 |
| | 2,556 |
|
Middle East and North Africa | 2,396 |
| | 2,470 |
| | 2,216 |
|
All Other (Principally Europe) | 1,460 |
| | 1,252 |
| | 1,367 |
|
Total | $ | 23,706 |
| | $ | 24,414 |
| | $ | 24,791 |
|
The following is a breakdown of net sales to major customers:
|
| | | | | | | | | | | |
(In millions) | 2013 |
| | 2012 |
| | 2011 |
|
Sales to the U.S. Government(1) | $ | 17,019 |
| | $ | 17,861 |
| | $ | 18,360 |
|
Sales to the U.S. Department of Defense(1) | 16,015 |
| | 16,818 |
| | 17,308 |
|
Total international sales(2) | 6,446 |
| | 6,232 |
| | 6,139 |
|
Foreign military sales through the U.S. Government | 3,062 |
| | 3,196 |
| | 2,998 |
|
| |
(1) | Excludes foreign military sales through the U.S. Government. |
| |
(2) | Includes foreign military sales through the U.S. Government. |
|
| | | | | | | |
Property, Plant and Equipment, net by Geographic Area (in millions) | 2013 |
| | 2012 |
|
United States | $ | 1,841 |
| | $ | 1,878 |
|
All Other (Principally Europe) | 96 |
| | 108 |
|
Total | $ | 1,937 |
| | $ | 1,986 |
|
