MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. The Company’s system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Based on its assessment, management has concluded that the Company maintained effective internal control over financial reporting as of December 31, 2019, based on criteria in Internal Control – Integrated Framework, issued by the COSO in 2013. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2019, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included below.
/s/ Thomas A. Kennedy |
| /s/ Anthony F. O’Brien |
Thomas A. Kennedy |
| Anthony F. O’Brien |
Chairman and Chief Executive Officer |
| Vice President and Chief Financial Officer |
(In millions, except per share amount) December 31: | 2019 | 2018 | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 4,292 | $ | 3,608 | ||||
Receivables, net | 1,364 | 1,648 | ||||||
Contract assets | 6,122 | 5,594 | ||||||
Inventories | 671 | 758 | ||||||
Prepaid expenses and other current assets | 633 | 529 | ||||||
Total current assets | 13,082 | 12,137 | ||||||
Property, plant and equipment, net | 3,353 | 2,840 | ||||||
Operating lease right-of-use assets | 875 | 805 | ||||||
Goodwill | 14,882 | 14,864 | ||||||
Other assets, net | 2,374 | 2,024 | ||||||
Total assets | $ | 34,566 | $ | 32,670 | ||||
Liabilities, Redeemable Noncontrolling Interests and Equity | ||||||||
Current liabilities | ||||||||
Commercial paper and current portion of long-term debt | $ | 1,499 | $ | 300 | ||||
Contract liabilities | 3,267 | 3,309 | ||||||
Accounts payable | 1,796 | 1,964 | ||||||
Accrued employee compensation | 1,813 | 1,509 | ||||||
Other current liabilities | 1,416 | 1,381 | ||||||
Total current liabilities | 9,791 | 8,463 | ||||||
Accrued retiree benefits and other long-term liabilities | 8,553 | 6,922 | ||||||
Long-term debt | 3,261 | 4,755 | ||||||
Operating lease liabilities | 706 | 647 | ||||||
Commitments and contingencies (Note 10) | ||||||||
Redeemable noncontrolling interests | 32 | 411 | ||||||
Equity | ||||||||
Raytheon Company stockholders’ equity | ||||||||
Common stock, par value, $0.01 per share, 1,450 shares authorized, 278 and 282 shares outstanding at December 31, 2019 and 2018, respectively | 3 | 3 | ||||||
Additional paid-in capital | — | — | ||||||
Accumulated other comprehensive loss | (9,260 | ) | (8,618 | ) | ||||
Retained earnings | 21,480 | 20,087 | ||||||
Total Raytheon Company stockholders’ equity | 12,223 | 11,472 | ||||||
Noncontrolling interests in subsidiaries | — | — | ||||||
Total equity | 12,223 | 11,472 | ||||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 34,566 | $ | 32,670 |
(In millions, except per share amounts) Years Ended December 31: | 2019 | 2018 | 2017 | |||||||||
Net sales | ||||||||||||
Products | $ | 24,435 | $ | 22,633 | $ | 21,416 | ||||||
Services | 4,741 | 4,425 | 3,932 | |||||||||
Total net sales | 29,176 | 27,058 | 25,348 | |||||||||
Operating expenses | ||||||||||||
Cost of sales—products | 17,747 | 16,108 | 15,252 | |||||||||
Cost of sales—services | 3,666 | 3,465 | 3,088 | |||||||||
General and administrative expenses | 2,989 | 2,947 | 2,777 | |||||||||
Total operating expenses | 24,402 | 22,520 | 21,117 | |||||||||
Operating income | 4,774 | 4,538 | 4,231 | |||||||||
Non-operating (income) expense, net | ||||||||||||
Retirement benefits non-service expense | 688 | 1,230 | 913 | |||||||||
Interest expense | 180 | 184 | 205 | |||||||||
Interest income | (42 | ) | (31 | ) | (21 | ) | ||||||
Other (income) expense, net | (38 | ) | 8 | 21 | ||||||||
Total non-operating (income) expense, net | 788 | 1,391 | 1,118 | |||||||||
Income from continuing operations before taxes | 3,986 | 3,147 | 3,113 | |||||||||
Federal and foreign income taxes | 658 | 264 | 1,114 | |||||||||
Income from continuing operations | 3,328 | 2,883 | 1,999 | |||||||||
Income (loss) from discontinued operations, net of tax | 1 | (1 | ) | 2 | ||||||||
Net income | 3,329 | 2,882 | 2,001 | |||||||||
Less: Net income (loss) attributable to noncontrolling interests in subsidiaries | (14 | ) | (27 | ) | (23 | ) | ||||||
Net income attributable to Raytheon Company | $ | 3,343 | $ | 2,909 | $ | 2,024 | ||||||
Basic earnings per share attributable to Raytheon Company common stockholders: | ||||||||||||
Income from continuing operations | $ | 11.93 | $ | 10.16 | $ | 6.95 | ||||||
Income (loss) from discontinued operations, net of tax | — | — | 0.01 | |||||||||
Net income | 11.94 | 10.16 | 6.96 | |||||||||
Diluted earnings per share attributable to Raytheon Company common stockholders: | ||||||||||||
Income from continuing operations | $ | 11.92 | $ | 10.15 | $ | 6.94 | ||||||
Income (loss) from discontinued operations, net of tax | — | — | 0.01 | |||||||||
Net income | 11.93 | 10.15 | 6.95 | |||||||||
Amounts attributable to Raytheon Company common stockholders: | ||||||||||||
Income from continuing operations | $ | 3,342 | $ | 2,910 | $ | 2,022 | ||||||
Income (loss) from discontinued operations, net of tax | 1 | (1 | ) | 2 | ||||||||
Net income | $ | 3,343 | $ | 2,909 | $ | 2,024 |
(In millions) Years Ended December 31: | 2019 | 2018 | 2017 | |||||||||
Net income | $ | 3,329 | $ | 2,882 | $ | 2,001 | ||||||
Other comprehensive income (loss), before tax: | ||||||||||||
Pension and other postretirement benefit plans, net: | ||||||||||||
Prior service cost arising during period | (1 | ) | (10 | ) | (15 | ) | ||||||
Amortization of prior service cost | 5 | 6 | 4 | |||||||||
Actuarial loss arising during period | (1,886 | ) | (626 | ) | (1,816 | ) | ||||||
Amortization of net actuarial loss | 1,060 | 1,362 | 1,187 | |||||||||
Loss due to settlements | 3 | 287 | 3 | |||||||||
Effect of exchange rates | (3 | ) | 9 | (14 | ) | |||||||
Pension and other postretirement benefit plans, net | (822 | ) | 1,028 | (651 | ) | |||||||
Foreign exchange translation | 7 | (36 | ) | 80 | ||||||||
Cash flow hedges | 4 | (12 | ) | 10 | ||||||||
Unrealized gains (losses) on investments and other, net | (3 | ) | 1 | (1 | ) | |||||||
Other comprehensive income (loss), before tax | (814 | ) | 981 | (562 | ) | |||||||
Income tax benefit (expense) related to items of other comprehensive income (loss) | 172 | (213 | ) | 38 | ||||||||
Other comprehensive income (loss), net of tax | (642 | ) | 768 | (524 | ) | |||||||
Reclassification of stranded tax effects | — | (1,451 | ) | — | ||||||||
Total comprehensive income (loss) | 2,687 | 2,199 | 1,477 | |||||||||
Less: Comprehensive income (loss) attributable to noncontrolling interests in subsidiaries | (14 | ) | (27 | ) | (23 | ) | ||||||
Comprehensive income (loss) attributable to Raytheon Company | $ | 2,701 | $ | 2,226 | $ | 1,500 |
(In millions) | Common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Total Raytheon Company stockholders’ equity | Noncontrolling interests in subsidiaries(1) | Total equity | |||||||||||||||||||||
Balance at December 31, 2016 | $ | 3 | $ | — | $ | (7,411 | ) | $ | 17,565 | $ | 10,157 | $ | — | $ | 10,157 | |||||||||||||
Net income (loss) | 2,024 | 2,024 | — | 2,024 | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | (524 | ) | (524 | ) | (524 | ) | ||||||||||||||||||||||
Adjustment of redeemable noncontrolling interests to redemption value | (41 | ) | (41 | ) | (41 | ) | ||||||||||||||||||||||
Dividends declared | 2 | (929 | ) | (927 | ) | (927 | ) | |||||||||||||||||||||
Common stock plans activity | 159 | 159 | 159 | |||||||||||||||||||||||||
Share repurchases | (161 | ) | (724 | ) | (885 | ) | (885 | ) | ||||||||||||||||||||
Balance at December 31, 2017 | 3 | — | (7,935 | ) | 17,895 | 9,963 | — | 9,963 | ||||||||||||||||||||
Net income (loss) | 2,909 | 2,909 | — | 2,909 | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | 768 | 768 | 768 | |||||||||||||||||||||||||
Reclassification of stranded tax effects | (1,451 | ) | 1,451 | — | — | |||||||||||||||||||||||
Adjustment of redeemable noncontrolling interests to redemption value | 73 | 73 | 73 | |||||||||||||||||||||||||
Dividends declared | 2 | (991 | ) | (989 | ) | (989 | ) | |||||||||||||||||||||
Common stock plans activity | 166 | 166 | 166 | |||||||||||||||||||||||||
Share repurchases | (168 | ) | (1,250 | ) | (1,418 | ) | (1,418 | ) | ||||||||||||||||||||
Balance at December 31, 2018 | 3 | — | (8,618 | ) | 20,087 | 11,472 | — | 11,472 | ||||||||||||||||||||
Net income (loss) | 3,343 | 3,343 | — | 3,343 | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | (642 | ) | (642 | ) | (642 | ) | ||||||||||||||||||||||
Adjustment of redeemable noncontrolling interests to redemption value | 1 | 1 | 1 | |||||||||||||||||||||||||
Acquisition of redeemable noncontrolling interest | (75 | ) | (125 | ) | (200 | ) | (200 | ) | ||||||||||||||||||||
Dividends declared | 2 | (1,054 | ) | (1,052 | ) | (1,052 | ) | |||||||||||||||||||||
Common stock plans activity | 170 | 170 | 170 | |||||||||||||||||||||||||
Share repurchases | (97 | ) | (772 | ) | (869 | ) | (869 | ) | ||||||||||||||||||||
Balance at December 31, 2019 | $ | 3 | $ | — | $ | (9,260 | ) | $ | 21,480 | $ | 12,223 | $ | — | $ | 12,223 |
(1) | Excludes redeemable noncontrolling interests which are not considered equity. See “Note 11: Redeemable Noncontrolling Interests” for additional information. |
(In millions) Years Ended December 31: | 2019 | 2018 | 2017 | |||||||||
Cash flows from operating activities | ||||||||||||
Net income | $ | 3,329 | $ | 2,882 | $ | 2,001 | ||||||
(Income) loss from discontinued operations, net of tax | (1 | ) | 1 | (2 | ) | |||||||
Income from continuing operations | 3,328 | 2,883 | 1,999 | |||||||||
Adjustments to reconcile to net cash provided by (used in) operating activities from continuing operations, net of the effect of acquisitions and divestitures | ||||||||||||
Depreciation and amortization | 605 | 568 | 550 | |||||||||
Stock-based compensation | 184 | 165 | 173 | |||||||||
Loss on repayment of long-term debt | — | — | 39 | |||||||||
Deferred income taxes | (28 | ) | (24 | ) | 252 | |||||||
Changes in assets and liabilities | ||||||||||||
Receivables, net | 296 | (327 | ) | (157 | ) | |||||||
Contract assets and contract liabilities | (534 | ) | 28 | 88 | ||||||||
Inventories | 87 | (166 | ) | 14 | ||||||||
Prepaid expenses and other current assets | 45 | 73 | 204 | |||||||||
Income taxes receivable/payable | (275 | ) | 174 | (193 | ) | |||||||
Accounts payable | (168 | ) | 406 | (94 | ) | |||||||
Accrued employee compensation | 295 | 165 | 111 | |||||||||
Other current liabilities | 71 | (108 | ) | 106 | ||||||||
Accrued retiree benefits | 731 | (421 | ) | (250 | ) | |||||||
Other, net | (155 | ) | 12 | (95 | ) | |||||||
Net cash provided by (used in) operating activities from continuing operations | 4,482 | 3,428 | 2,747 | |||||||||
Net cash provided by (used in) operating activities from discontinued operations | (2 | ) | — | (2 | ) | |||||||
Net cash provided by (used in) operating activities | 4,480 | 3,428 | 2,745 | |||||||||
Cash flows from investing activities | ||||||||||||
Additions to property, plant and equipment | (942 | ) | (763 | ) | (543 | ) | ||||||
Proceeds from sales of property, plant and equipment | 25 | 2 | 46 | |||||||||
Additions to capitalized internal-use software | (65 | ) | (58 | ) | (68 | ) | ||||||
Purchases of short-term investments | — | — | (696 | ) | ||||||||
Maturities of short-term investments | — | 309 | 517 | |||||||||
Payments for purchases of acquired companies, net of cash received | (8 | ) | — | (93 | ) | |||||||
Proceeds from sale of business, net of transaction costs | — | 11 | — | |||||||||
Payments for settlement of treasury rate lock | (17 | ) | — | — | ||||||||
Other | 1 | (22 | ) | 20 | ||||||||
Net cash provided by (used in) investing activities from continuing operations | (1,006 | ) | (521 | ) | (817 | ) | ||||||
Net cash provided by (used in) investing activities from discontinued operations | 3 | — | — | |||||||||
Net cash provided by (used in) investing activities | (1,003 | ) | (521 | ) | (817 | ) | ||||||
Cash flows from financing activities | ||||||||||||
Dividends paid | (1,036 | ) | (975 | ) | (910 | ) | ||||||
Net borrowings (payments) on commercial paper | (300 | ) | — | 300 | ||||||||
Repayments of long-term debt | — | — | (591 | ) | ||||||||
Loss on repayment of long-term debt | — | — | (38 | ) | ||||||||
Repurchases of common stock under share repurchase programs | (800 | ) | (1,325 | ) | (800 | ) | ||||||
Repurchases of common stock to satisfy tax withholding obligations | (69 | ) | (93 | ) | (85 | ) | ||||||
Acquisition of noncontrolling interest in Forcepoint | (588 | ) | — | — | ||||||||
Contribution from noncontrolling interest in Forcepoint | — | — | 8 | |||||||||
Other | (10 | ) | (5 | ) | — | |||||||
Net cash provided by (used in) financing activities | (2,803 | ) | (2,398 | ) | (2,116 | ) | ||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 674 | 509 | (188 | ) | ||||||||
Cash, cash equivalents and restricted cash at beginning of year | 3,624 | 3,115 | 3,303 | |||||||||
Cash, cash equivalents and restricted cash at end of year | $ | 4,298 | $ | 3,624 | $ | 3,115 |
(In millions, except per share amounts) | 2019(1) | 2018(1) | 2017 | |||||||||
Operating income | $ | 520 | $ | 492 | $ | 442 | ||||||
Income from continuing operations attributable to Raytheon Company | 411 | 389 | 287 | |||||||||
Diluted EPS from continuing operations attributable to Raytheon Company | $ | 1.47 | $ | 1.36 | $ | 0.98 |
(1) | Amounts reflect a U.S. statutory tax rate of 21%, which became effective in 2018 with the adoption of the Tax Cuts and Jobs Act of 2017 (2017 Act). |
(In millions) | 2019 | 2018 | ||||||
U.S. government contracts (including foreign military sales) | $ | 777 | $ | 1,121 | ||||
Other customers | 594 | 539 | ||||||
Allowance for doubtful accounts | (7 | ) | (12 | ) | ||||
Total receivables, net | $ | 1,364 | $ | 1,648 |
(In millions) | 2019 | 2018 | ||||||
Materials and purchased parts | $ | 78 | $ | 75 | ||||
Work in process | 574 | 662 | ||||||
Finished goods | 19 | 21 | ||||||
Total | $ | 671 | $ | 758 |
Years | ||||
Machinery and equipment | 3–10 | |||
Buildings | 20–45 |
(In millions) | Pension and PRB plans, net(1) | Foreign exchange translation | Cash flow hedges(2) | Unrealized gains (losses) on investments and other, net(3) | Total | |||||||||||||||
Balance at December 31, 2016 | $ | (7,234 | ) | $ | (175 | ) | $ | — | $ | (2 | ) | $ | (7,411 | ) | ||||||
Before tax amount | (651 | ) | 80 | 10 | (1 | ) | (562 | ) | ||||||||||||
Tax (expense) benefit | 42 | — | (4 | ) | — | 38 | ||||||||||||||
Net of tax amount | (609 | ) | 80 | 6 | (1 | ) | (524 | ) | ||||||||||||
Balance at December 31, 2017 | (7,843 | ) | (95 | ) | 6 | (3 | ) | (7,935 | ) | |||||||||||
Before tax amount | 1,028 | (36 | ) | (12 | ) | 1 | 981 | |||||||||||||
Tax (expense) benefit | (216 | ) | — | 3 | — | (213 | ) | |||||||||||||
Net of tax amount | 812 | (36 | ) | (9 | ) | 1 | 768 | |||||||||||||
Reclassification of stranded tax effects | (1,452 | ) | — | 1 | — | (1,451 | ) | |||||||||||||
Balance at December 31, 2018 | (8,483 | ) | (131 | ) | (2 | ) | (2 | ) | (8,618 | ) | ||||||||||
Before tax amount | (822 | ) | 7 | 4 | (3 | ) | (814 | ) | ||||||||||||
Tax (expense) benefit | 173 | — | (1 | ) | — | 172 | ||||||||||||||
Net of tax amount | (649 | ) | 7 | 3 | (3 | ) | (642 | ) | ||||||||||||
Balance at December 31, 2019 | $ | (9,132 | ) | $ | (124 | ) | $ | 1 | $ | (5 | ) | $ | (9,260 | ) |
(1) | Pension and PRB plans, net, is shown net of cumulative tax benefits of $2,428 million and $2,255 million at December 31, 2019 and December 31, 2018, respectively. |
(2) | Cash flow hedges are shown net of cumulative tax of zero and tax benefits of $1 million at December 31, 2019 and December 31, 2018, respectively. |
(3) | Unrealized gains (losses) on investments and other, net, are shown net of cumulative tax expense of $1 million at both December 31, 2019 and December 31, 2018. |
(In millions) | 2019 | 2018 | ||||||
Asset derivatives related to foreign currency forward contracts | $ | 29 | $ | 26 | ||||
Liability derivatives related to foreign currency forward contracts | 15 | 34 |
Level 1: | Quoted prices in active markets for identical assets or liabilities. |
Level 2: | Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or that we corroborate with observable market data for substantially the full term of the related assets or liabilities. |
Level 3: | Unobservable inputs supported by little or no market activity that are significant to the fair value of the assets or liabilities. |
2019 | 2018 | 2017 | ||||||||||
Basic EPS attributable to Raytheon Company common stockholders: | ||||||||||||
Distributed earnings | $ | 3.76 | $ | 3.46 | $ | 3.18 | ||||||
Undistributed earnings | 8.17 | 6.70 | 3.77 | |||||||||
Total | $ | 11.93 | $ | 10.16 | $ | 6.95 | ||||||
Diluted EPS attributable to Raytheon Company common stockholders: | ||||||||||||
Distributed earnings | $ | 3.76 | $ | 3.45 | $ | 3.18 | ||||||
Undistributed earnings | 8.16 | 6.70 | 3.76 | |||||||||
Total | $ | 11.92 | $ | 10.15 | $ | 6.94 |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Income from continuing operations attributable to participating securities | $ | 32 | $ | 30 | $ | 24 | ||||||
Income (loss) from discontinued operations, net of tax attributable to participating securities | — | — | — | |||||||||
Net income attributable to participating securities | $ | 32 | $ | 30 | $ | 24 |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Shares for basic EPS(1) | 280.0 | 286.5 | 291.1 | |||||||||
Effect of dilutive securities | 0.2 | 0.3 | 0.3 | |||||||||
Shares for diluted EPS | 280.2 | 286.8 | 291.4 |
(1) | Includes participating securities of 2.7 million, 2.9 million and 3.5 million for 2019, 2018 and 2017, respectively. |
(In millions) | Integrated Defense Systems | Intelligence, Information and Services | Missile Systems | Space and Airborne Systems | Forcepoint | Total | ||||||||||||||||||
Balance at December 31, 2017 | $ | 1,706 | $ | 2,967 | $ | 4,154 | $ | 4,106 | $ | 1,938 | $ | 14,871 | ||||||||||||
Acquisitions and divestitures | — | — | — | (3 | ) | — | (3 | ) | ||||||||||||||||
Effect of foreign exchange rates and other | (2 | ) | (2 | ) | — | — | — | (4 | ) | |||||||||||||||
Balance at December 31, 2018 | 1,704 | 2,965 | 4,154 | 4,103 | 1,938 | 14,864 | ||||||||||||||||||
Acquisitions and divestitures | — | 19 | — | — | — | 19 | ||||||||||||||||||
Effect of foreign exchange rates and other | (1 | ) | — | — | — | — | (1 | ) | ||||||||||||||||
Balance at December 31, 2019 | $ | 1,703 | $ | 2,984 | $ | 4,154 | $ | 4,103 | $ | 1,938 | $ | 14,882 |
(In millions) | 2019 | 2018 | $ Change | % Change | ||||||||||||
Contract assets | $ | 6,122 | $ | 5,594 | $ | 528 | 9.4 | % | ||||||||
Contract liabilities—current | (3,267 | ) | (3,309 | ) | 42 | 1.3 | % | |||||||||
Contract liabilities—noncurrent | (143 | ) | (150 | ) | 7 | 4.7 | % | |||||||||
Net contract assets (liabilities) | $ | 2,712 | $ | 2,135 | $ | 577 | 27.0 | % |
(In millions) | 2019 | 2018 | ||||||
Unbilled | $ | 13,308 | $ | 12,058 | ||||
Progress payments | (7,186 | ) | (6,464 | ) | ||||
Total contract assets | $ | 6,122 | $ | 5,594 |
(In millions) | 2019 | 2018 | ||||||
Land | $ | 81 | $ | 84 | ||||
Buildings and improvements | 3,068 | 2,835 | ||||||
Machinery and equipment | 5,436 | 4,844 | ||||||
Property, plant and equipment, gross | 8,585 | 7,763 | ||||||
Accumulated depreciation and amortization | (5,232 | ) | (4,923 | ) | ||||
Total | $ | 3,353 | $ | 2,840 |
(In millions) | 2019 | 2018 | ||||||
Marketable securities held in trusts(1) | $ | 753 | $ | 642 | ||||
Computer software, net of accumulated amortization of $1,249 and $1,201 at December 31, 2019 and 2018, respectively | 252 | 261 | ||||||
Other intangible assets, net of accumulated amortization of $873 and $760 at December 31, 2019 and 2018, respectively | 283 | 361 | ||||||
Deferred tax asset(2) | 534 | 331 | ||||||
Other noncurrent assets, net | 552 | 429 | ||||||
Total | $ | 2,374 | $ | 2,024 |
(1) | For further details, refer to “Note 14: Pension and Other Employee Benefits.” |
(2) | For further details, refer to “Note 15: Income Taxes.” |
(In millions, except percentages) | 2019 | 2018 | ||||||
$500 notes due 2020, 4.40% | $ | 500 | $ | 499 | ||||
$1,000 notes due 2020, 3.125% | 999 | 998 | ||||||
$1,100 notes due 2022, 2.50% | 1,097 | 1,096 | ||||||
$300 notes due 2024, 3.15% | 298 | 298 | ||||||
$382 notes due 2027, 7.20% | 374 | 373 | ||||||
$185 notes due 2028, 7.00% | 185 | 185 | ||||||
$600 notes due 2040, 4.875% | 592 | 592 | ||||||
$425 notes due 2041, 4.70% | 420 | 419 | ||||||
$300 notes due 2044, 4.20% | 295 | 295 | ||||||
Total debt issued and outstanding | $ | 4,760 | $ | 4,755 |
(In millions) | 2019 | 2018 | ||||||
Fair value of long-term debt(1) | $ | 5,337 | $ | 5,063 |
(1) | Fair value of long-term debt at December 31, 2019 includes current portion of long-term debt fair value of $1,513 million. |
(In millions) | 2019 | 2018 | ||||||
Principal | $ | 4,792 | $ | 4,792 | ||||
Unamortized issue discounts | (26 | ) | (30 | ) | ||||
Unamortized interest rate lock costs | (6 | ) | (7 | ) | ||||
Total | $ | 4,760 | $ | 4,755 |
(In millions) | ||||
2020 | $ | 1,500 | ||
2021 | — | |||
2022 | 1,100 | |||
2023 | — | |||
2024 | 300 | |||
Thereafter | 1,892 |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Operating lease cost | $ | 240 | $ | 236 | $ | 232 | ||||||
Variable lease cost(1) | — | — | — | |||||||||
Sublease income | (1 | ) | (4 | ) | (3 | ) | ||||||
Total lease cost | $ | 239 | $ | 232 | $ | 229 |
(1) | Variable lease cost was less than $1 million for 2019, 2018 and 2017, respectively. |
(In millions) | ||||
2020 | $ | 242 | ||
2021 | 217 | |||
2022 | 168 | |||
2023 | 116 | |||
2024 | 71 | |||
Thereafter | 238 | |||
Total future lease payments(1) | 1,052 | |||
Imputed interest | (133 | ) | ||
Total lease liabilities | $ | 919 |
(1) | Total future lease payments exclude future lease payments related to leases that were signed but had not yet commenced. There were none as of December 31, 2019. |
(In millions) | ||||
Operating lease liabilities—current | $ | 213 | ||
Operating lease liabilities—noncurrent | 706 | |||
Total lease liabilities | $ | 919 |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 243 | $ | 250 | $ | 218 | ||||||
Right-of-use assets obtained in exchange for new operating lease obligations | 271 | 182 | 239 |
(In millions, except percentages) | 2019 | 2018 | ||||||
Total remediation costs—undiscounted | $ | 188 | $ | 193 | ||||
Weighted-average discount rate | 5.1 | % | 5.1 | % | ||||
Total remediation costs—discounted | $ | 124 | $ | 128 | ||||
Recoverable portion | 81 | 82 |
(In millions) | ||||
2020 | $ | 25 | ||
2021 | 16 | |||
2022 | 13 | |||
2023 | 11 | |||
2024 | 11 | |||
Thereafter | 112 |
(In millions) | 2019 | 2018 | ||||||
Guarantees | $ | 219 | $ | 201 | ||||
Letters of credit | 3,485 | 2,503 | ||||||
Surety bonds | 83 | 166 |
(In millions) | Forcepoint | RGNext | Total | |||||||||
Balance at December 31, 2017 | $ | 512 | $ | — | $ | 512 | ||||||
Net income (loss) | (27 | ) | — | (27 | ) | |||||||
Other comprehensive income (loss), net of tax | (1 | ) | — | (1 | ) | |||||||
Adjustment of noncontrolling interests to redemption value | (73 | ) | — | (73 | ) | |||||||
Balance at December 31, 2018 | 411 | — | 411 | |||||||||
RGNext initial recognition | — | 32 | 32 | |||||||||
Net income (loss) | (19 | ) | 5 | (14 | ) | |||||||
Other comprehensive income (loss), net of tax(1) | — | — | — | |||||||||
Distributions related to noncontrolling interest | — | (5 | ) | (5 | ) | |||||||
Adjustment of noncontrolling interests to redemption value | (1 | ) | — | (1 | ) | |||||||
Acquisition of noncontrolling interest in Forcepoint | (391 | ) | — | (391 | ) | |||||||
Balance at December 31, 2019 | $ | — | $ | 32 | $ | 32 |
(1) | Other comprehensive income (loss), net of tax, related to Forcepoint was income of less than $1 million in 2019. |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Beginning balance | 282.1 | 288.4 | 292.8 | |||||||||
Stock plans activity | 1.1 | 0.9 | 1.1 | |||||||||
Share repurchases | (4.8 | ) | (7.2 | ) | (5.5 | ) | ||||||
Ending balance | 278.4 | 282.1 | 288.4 |
2019 | 2018 | 2017 | ||||||||||||||||||||||
(In millions) | $ | Shares | $ | Shares | $ | Shares | ||||||||||||||||||
Shares repurchased under our share repurchase programs | $ | 800 | 4.4 | $ | 1,325 | 6.7 | $ | 800 | 4.9 | |||||||||||||||
Shares repurchased to satisfy tax withholding obligations | 69 | 0.4 | 93 | 0.5 | 85 | 0.6 | ||||||||||||||||||
Total share repurchases | $ | 869 | 4.8 | $ | 1,418 | 7.2 | $ | 885 | 5.5 |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Stock-based compensation expense | ||||||||||||
Restricted stock expense | $ | 99 | $ | 98 | $ | 94 | ||||||
RSU expense | 35 | 32 | 28 | |||||||||
LTPP expense | 37 | 36 | 38 | |||||||||
Total stock-based compensation expense | $ | 171 | $ | 166 | $ | 160 | ||||||
Stock-based tax benefit recognized | 35 | 29 | 30 |
Shares/units (in thousands) | Weighted- average grant date fair value per share | |||||||
Outstanding at December 31, 2016 | 3,294 | $ | 106.56 | |||||
Granted | 1,025 | 152.93 | ||||||
Vested | (1,194 | ) | 91.77 | |||||
Forfeited | (229 | ) | 120.33 | |||||
Outstanding at December 31, 2017 | 2,896 | 127.98 | ||||||
Granted | 774 | 212.96 | ||||||
Vested | (977 | ) | 112.54 | |||||
Forfeited | (215 | ) | 150.67 | |||||
Outstanding at December 31, 2018 | 2,478 | 158.66 | ||||||
Granted | 959 | 180.05 | ||||||
Vested | (882 | ) | 130.35 | |||||
Forfeited | (166 | ) | 172.50 | |||||
Outstanding at December 31, 2019 | 2,389 | $ | 176.73 |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Fair value of restricted stock and RSUs vested | $ | 160 | $ | 206 | $ | 193 | ||||||
Tax benefit realized related to vested restricted stock/RSUs(1) | 30 | 39 | 63 |
(1) | Includes $11 million, $18 million and $29 million of excess tax benefits realized in 2019, 2018 and 2017, respectively. |
2019 | 2018 | 2017 | ||||||||||
Expected stock price volatility | 18.48 | % | 16.87 | % | 18.74 | % | ||||||
Peer group stock price volatility | 20.67 | % | 18.41 | % | 20.01 | % | ||||||
Correlations of returns | 54.49 | % | 52.49 | % | 56.55 | % | ||||||
Risk free interest rate | 2.49 | % | 2.21 | % | 1.53 | % |
Units (in thousands) | Weighted- average grant date fair value per share | |||||||
Outstanding at December 31, 2016 | 665 | $ | 110.32 | |||||
Granted | 142 | 152.29 | ||||||
Increase due to expected performance | 193 | 125.14 | ||||||
Vested | (273 | ) | 97.59 | |||||
Forfeited | (4 | ) | 137.57 | |||||
Outstanding at December 31, 2017 | 723 | 127.16 | ||||||
Granted | 117 | 205.76 | ||||||
Increase due to expected performance | 71 | 135.27 | ||||||
Vested | (303 | ) | 112.15 | |||||
Forfeited | (24 | ) | 164.58 | |||||
Outstanding at December 31, 2018 | 584 | 150.15 | ||||||
Granted | 145 | 176.13 | ||||||
Increase due to expected performance | 96 | 187.90 | ||||||
Vested | (236 | ) | 120.52 | |||||
Forfeited | (10 | ) | 170.42 | |||||
Outstanding at December 31, 2019 | 579 | $ | 174.72 |
(1) | This table excludes dividend equivalent units outstanding of 33 thousand at both December 31, 2019 and December 31, 2018 and 28 thousand at December 31, 2017, based on expected performance at each reporting date. |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Fair value of LTPP awards vested | $ | 45 | $ | 67 | $ | 44 | ||||||
Tax benefit realized related to vested LTPP awards(1) | 10 | 24 | 15 |
(1) | Includes $3 million, $13 million and $7 million of excess tax benefits realized in 2019, 2018 and 2017, respectively. |
2019 | 2018 | 2017 | ||||||||||
Unit Price | $ | 1,244.48 | $ | 1,508.01 | $ | 1,101.31 | ||||||
Expected life (in years) | 1.99 | 3.01 | 2.29 | |||||||||
Expected unit price volatility | 39.19 | % | 43.66 | % | 49.51 | % | ||||||
Risk free interest rate | 2.06 | % | 2.69 | % | 1.46 | % | ||||||
Dividend yield | — | % | — | % | — | % | ||||||
Grant date fair value | $ | 368.61 | $ | 486.94 | $ | 339.72 |
(In millions) | 2019 | 2018 | ||||||
Domestic Pension Benefits plan | $ | 20,366 | $ | 18,488 | ||||
Foreign Pension Benefits plan | 951 | 833 |
(In millions) | 2019 | 2018 | ||||||
Marketable securities held in trusts | $ | 753 | $ | 642 |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Required pension contributions | $ | 343 | $ | 889 | $ | 615 | ||||||
Discretionary pension contributions | — | 1,250 | 1,000 | |||||||||
PRB contributions | 37 | 22 | 27 | |||||||||
Total | $ | 380 | $ | 2,161 | $ | 1,642 |
(In millions) | Pension Benefits | PRB | ||||||
2020 | $ | 1,984 | $ | 61 | ||||
2021 | 1,874 | 58 | ||||||
2022 | 1,806 | 55 | ||||||
2023 | 1,646 | 53 | ||||||
2024 | 1,583 | 50 | ||||||
Thereafter (next 5 years) | 7,641 | 218 |
Pension Benefits | ||||||||||||
Components of Net Periodic Pension Expense (Income) (in millions) | 2019 | 2018 | 2017 | |||||||||
Operating expense | ||||||||||||
Service cost | $ | 420 | $ | 504 | $ | 473 | ||||||
Non-operating expense | ||||||||||||
Interest cost | 1,046 | 1,004 | 1,088 | |||||||||
Expected return on plan assets | (1,436 | ) | (1,435 | ) | (1,377 | ) | ||||||
Amortization of prior service cost | 5 | 6 | 5 | |||||||||
Amortization of net actuarial loss | 1,050 | 1,351 | 1,177 | |||||||||
Loss recognized due to settlements | 1 | 286 | 1 | |||||||||
Total pension non-service expense | 666 | 1,212 | 894 | |||||||||
Net periodic pension expense (income) | $ | 1,086 | $ | 1,716 | $ | 1,367 |
PRB | ||||||||||||
Components of Net Periodic PRB Expense (Income) (in millions) | 2019 | 2018 | 2017 | |||||||||
Operating expense | ||||||||||||
Service cost | $ | 3 | $ | 5 | $ | 6 | ||||||
Non-operating expense | ||||||||||||
Interest cost | 28 | 27 | 30 | |||||||||
Expected return on plan assets | (18 | ) | (21 | ) | (21 | ) | ||||||
Amortization of prior service cost | — | — | (1 | ) | ||||||||
Amortization of net actuarial loss | 10 | 11 | 10 | |||||||||
Loss recognized due to settlements | 2 | 1 | 1 | |||||||||
Total PRB non-service expense | 22 | 18 | 19 | |||||||||
Net periodic PRB expense (income) | $ | 25 | $ | 23 | $ | 25 |
Pension Benefits | PRB | |||||||||||||||
Funded Status – Amounts Recognized on our Balance Sheets (in millions) December 31: | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Noncurrent assets | $ | 174 | $ | 126 | $ | — | $ | — | ||||||||
Current liabilities | (160 | ) | (150 | ) | (18 | ) | (18 | ) | ||||||||
Noncurrent liabilities | (7,687 | ) | (6,111 | ) | (369 | ) | (354 | ) | ||||||||
Net amount recognized on our balance sheets | $ | (7,673 | ) | $ | (6,135 | ) | $ | (387 | ) | $ | (372 | ) |
Pension Benefits | PRB | |||||||||||||||
Reconciliation of Amounts Recognized on our Balance Sheets (in millions) December 31: | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Accumulated other comprehensive loss: | ||||||||||||||||
Prior service (cost) credit | $ | (23 | ) | $ | (27 | ) | $ | — | $ | — | ||||||
Net actuarial loss | (11,389 | ) | (10,590 | ) | (148 | ) | (121 | ) | ||||||||
Accumulated other comprehensive loss | (11,412 | ) | (10,617 | ) | (148 | ) | (121 | ) | ||||||||
Accumulated contributions in excess of (below) net periodic expense | 3,739 | 4,482 | (239 | ) | (251 | ) | ||||||||||
Net amount recognized on our balance sheets | $ | (7,673 | ) | $ | (6,135 | ) | $ | (387 | ) | $ | (372 | ) |
Pension Benefits | PRB | |||||||||||||||
Sources of Change in Accumulated Other Comprehensive Loss (in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Prior service (cost) credit arising during period | $ | (1 | ) | $ | (10 | ) | $ | — | $ | — | ||||||
Amortization of prior service cost (credit) included in net income | 5 | 6 | — | — | ||||||||||||
Net change in prior service (cost) credit not recognized in net income during the period | 4 | (4 | ) | — | — | |||||||||||
Actuarial gain (loss) arising during period | (1,847 | ) | (630 | ) | (39 | ) | 4 | |||||||||
Amortization of net actuarial (gain) loss | 1,050 | 1,351 | 10 | 11 | ||||||||||||
Loss recognized due to settlements | 1 | 286 | 2 | 1 | ||||||||||||
Net change in actuarial gain (loss) not included in net income during the period | (796 | ) | 1,007 | (27 | ) | 16 | ||||||||||
Effect of exchange rates | (3 | ) | 9 | — | — | |||||||||||
Total change in accumulated other comprehensive loss during period | $ | (795 | ) | $ | 1,012 | $ | (27 | ) | $ | 16 |
(In millions) | Pension Benefits | PRB | ||||||
Amortization of net actuarial gain (loss) | $ | (1,197 | ) | $ | (13 | ) | ||
Amortization of prior service (cost) credit | (4 | ) | — | |||||
Total | $ | (1,201 | ) | $ | (13 | ) |
(In millions) | 2019 | 2018 | ||||||
PBO for domestic qualified pension plans | $ | 26,597 | $ | 23,359 | ||||
ABO for domestic qualified pension plans | 24,213 | 21,595 | ||||||
Asset values for domestic qualified pension plans | 20,366 | 18,488 |
Pension Benefits | PRB | |||||||||||||||
Change in Projected Benefit Obligation (in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
PBO at beginning of year | $ | 25,456 | $ | 28,569 | $ | 672 | $ | 745 | ||||||||
Service cost | 420 | 504 | 3 | 5 | ||||||||||||
Interest cost | 1,046 | 1,004 | 28 | 27 | ||||||||||||
Plan participants’ contributions | 4 | 6 | 58 | 49 | ||||||||||||
Amendments | 1 | 10 | — | — | ||||||||||||
Plan settlements | (7 | ) | (474 | ) | (9 | ) | (10 | ) | ||||||||
Actuarial loss (gain) | 3,926 | (1,580 | ) | 71 | (39 | ) | ||||||||||
Foreign exchange loss (gain) | 24 | (56 | ) | — | — | |||||||||||
Benefits paid | (1,880 | ) | (2,527 | ) | (112 | ) | (105 | ) | ||||||||
PBO at end of year | $ | 28,990 | $ | 25,456 | $ | 711 | $ | 672 |
Pension Benefits | PRB | |||||||||||||||
Change in Plan Assets (in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Fair value of plan assets at beginning of year | $ | 19,321 | $ | 21,002 | $ | 300 | $ | 358 | ||||||||
Actual return (loss) on plan assets | 3,516 | (775 | ) | 50 | (14 | ) | ||||||||||
Company contributions | 343 | 2,139 | 37 | 22 | ||||||||||||
Plan participants’ contributions | 4 | 6 | 58 | 49 | ||||||||||||
Plan settlements | (7 | ) | (474 | ) | (9 | ) | (10 | ) | ||||||||
Foreign exchange gain (loss) | 20 | (50 | ) | — | — | |||||||||||
Benefits paid | (1,880 | ) | (2,527 | ) | (112 | ) | (105 | ) | ||||||||
Fair value of plan assets at end of year | $ | 21,317 | $ | 19,321 | $ | 324 | $ | 300 |
Pension Benefits | ||||||||||||
Weighted-Average Net Periodic Benefit Cost Assumptions | 2019 | 2018 | 2017 | |||||||||
Discount rate | 4.28 | % | 3.68 | % | 4.31 | % | ||||||
Expected long-term rate of return on plan assets | 7.38 | % | 7.38 | % | 7.39 | % | ||||||
Rate of compensation increase | ||||||||||||
Range | 2%–7 | % | 2%–7 | % | 2%–7 | % | ||||||
Average | 4.43 | % | 4.43 | % | 4.43 | % |
PRB | ||||||||||||
Weighted-Average Net Periodic Benefit Cost Assumptions | 2019 | 2018 | 2017 | |||||||||
Discount rate | 4.31 | % | 3.72 | % | 4.28 | % | ||||||
Expected long-term rate of return on plan assets | 6.25 | % | 6.25 | % | 6.25 | % | ||||||
Rate of compensation increase | ||||||||||||
Range | 2%–7 | % | 2%–7 | % | 2%–7 | % | ||||||
Average | 4.50 | % | 4.50 | % | 4.50 | % | ||||||
Health care trend rate* | 4.00 | % | 4.00 | % | 4.00 | % |
Pension Benefits | PRB | |||||||||||||||
Weighted-Average Year-End Benefit Obligation Assumptions | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Discount rate | 3.25 | % | 4.28 | % | 3.29 | % | 4.31 | % | ||||||||
Rate of compensation increase | ||||||||||||||||
Range | 3%–8 | % | 2%–7 | % | 3%–8 | % | 2%–7 | % | ||||||||
Average | 4.40 | % | 4.40 | % | 4.50 | % | 4.50 | % | ||||||||
Health care trend rate* | 3.50 | % | 4.00 | % |
Percentile | 2019 | 2018 | 2017 | |||||||||
35th | 5.49 | % | 5.67 | % | 5.82 | % | ||||||
65th | 7.57 | % | 7.81 | % | 7.96 | % |
Asset Category | ||||
Global equity (combined U.S. and international equity) | 30%-60 | % | ||
U.S. equities | 20%-35 | % | ||
International equities | 10%-25 | % | ||
Fixed income | 20%-45 | % | ||
Cash and cash equivalents | 0%-10 | % | ||
Private equity and private real estate funds | 10%-20 | % | ||
Real assets | 0%-4 | % | ||
Other (including absolute return funds) | 5%-15 | % |
December 31, 2019 (in millions) | Total | Level 1 | Level 2 | Level 3 | Not subject to leveling(7) | |||||||||||||||
U.S. equities(1) | $ | 5,563 | $ | 715 | $ | — | $ | — | $ | 4,848 | ||||||||||
International equities(1) | 3,403 | 2,838 | 13 | — | 552 | |||||||||||||||
Real assets(2) | 157 | — | — | — | 157 | |||||||||||||||
Fixed income | ||||||||||||||||||||
U.S. government and agency securities | 2,026 | 1,836 | 190 | — | — | |||||||||||||||
Corporate debt securities/instruments(3) | 3,039 | 378 | 2,308 | — | 353 | |||||||||||||||
Global multi-sector fixed income(4) | 303 | 303 | — | — | — | |||||||||||||||
Securitized and structured credit(5) | 573 | — | — | — | 573 | |||||||||||||||
Cash and cash equivalents(6) | 603 | 43 | — | — | 560 | |||||||||||||||
Absolute return funds | 1,564 | — | — | — | 1,564 | |||||||||||||||
Private equity funds | 1,579 | — | — | — | 1,579 | |||||||||||||||
Private real estate funds | 1,403 | — | — | — | 1,403 | |||||||||||||||
Insurance contracts | 32 | — | — | 32 | — | |||||||||||||||
Total investments | 20,245 | 6,113 | 2,511 | 32 | 11,589 | |||||||||||||||
Net receivables and payables | 121 | — | — | — | 121 | |||||||||||||||
Total assets | $ | 20,366 | $ | 6,113 | $ | 2,511 | $ | 32 | $ | 11,710 |
(1) | U.S. and International equities primarily include investments across the spectrum of large, medium and small market capitalization stocks. |
(2) | Real assets primarily include investments in physical and permanent assets, including infrastructure. |
(3) | Corporate debt securities/instruments primarily include investments in investment grade and non-investment grade fixed income securities. |
(4) | Global multi-sector fixed income primarily includes investments that invest globally among several sectors including governments, investment grade corporate bonds, high yield corporate bonds and emerging market securities. |
(5) | Securitized and structured credit primarily includes investments that pool together various cash flow producing financial assets that are structured in a way that can achieve desired targeted credit, maturity or other characteristics and are typically collateralized by residential mortgages, commercial mortgages and other assets, and other fixed income related securities. |
(6) | Cash and cash equivalents are primarily investments in highly liquid money market funds and bank sponsored collective funds. Included in cash and cash equivalents is excess cash in investment manager accounts which is available for immediate use and is used to fund daily operations and execute the investment policy. Excess cash in investment manager accounts is not considered to be part of the cash target allocation set forth in the investment policy. |
(7) | Receivables, payables and certain investments that are valued using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amount presented for the total domestic pension benefits plan assets. |
December 31, 2018 (in millions) | Total | Level 1 | Level 2 | Level 3 | Not subject to leveling(7) | |||||||||||||||
U.S. equities(1) | $ | 4,701 | $ | 2,189 | $ | — | $ | — | $ | 2,512 | ||||||||||
International equities(1) | 3,141 | 2,522 | 4 | — | 615 | |||||||||||||||
Real assets(2) | 53 | — | — | — | 53 | |||||||||||||||
Fixed income | ||||||||||||||||||||
U.S. government and agency securities | 1,923 | 1,727 | 196 | — | — | |||||||||||||||
Corporate debt securities/instruments(3) | 2,907 | 329 | 2,088 | — | 490 | |||||||||||||||
Global multi-sector fixed income(4) | 400 | 400 | — | — | — | |||||||||||||||
Securitized and structured credit(5) | 534 | — | — | — | 534 | |||||||||||||||
Cash and cash equivalents(6) | 486 | 39 | — | — | 447 | |||||||||||||||
Absolute return funds | 1,432 | — | — | — | 1,432 | |||||||||||||||
Private equity funds | 1,419 | — | — | — | 1,419 | |||||||||||||||
Private real estate funds | 1,264 | — | — | — | 1,264 | |||||||||||||||
Insurance contracts | 31 | — | — | 31 | — | |||||||||||||||
Total investments | 18,291 | 7,206 | 2,288 | 31 | 8,766 | |||||||||||||||
Net receivables and payables | 197 | — | — | — | 197 | |||||||||||||||
Total assets | $ | 18,488 | $ | 7,206 | $ | 2,288 | $ | 31 | $ | 8,963 |
(1) | U.S. and International equities primarily include investments across the spectrum of large, medium and small market capitalization stocks. |
(2) | Real assets primarily include investments in physical and permanent assets, including infrastructure. |
(3) | Corporate debt securities/instruments primarily include investments in investment grade and non-investment grade fixed income securities. |
(4) | Global multi-sector fixed income primarily includes investments that invest globally among several sectors including governments, investment grade corporate bonds, high yield corporate bonds and emerging market securities. |
(5) | Securitized and structured credit primarily includes investments that pool together various cash flow producing financial assets that are structured in a way that can achieve desired targeted credit, maturity or other characteristics and are typically collateralized by residential mortgages, commercial mortgages and other assets, and other fixed income related securities. |
(6) | Cash and cash equivalents are primarily investments in highly liquid money market funds and bank sponsored collective funds. Included in cash and cash equivalents is excess cash in investment manager accounts which is available for immediate use and is used to fund daily operations and execute the investment policy. Excess cash in investment manager accounts is not considered to be part of the cash target allocation set forth in the investment policy. |
(7) | Receivables, payables and certain investments that are valued using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amount presented for the total domestic pension benefits plan assets. |
% of Plan Assets at Dec 31: | ||||||||
Asset category | 2019 | 2018 | ||||||
Fixed income securities | 43 | % | 42 | % | ||||
U.S. equities | 38 | % | 36 | % | ||||
International equities | 10 | % | 10 | % | ||||
Cash and cash equivalents | 9 | % | 12 | % | ||||
Total | 100 | % | 100 | % |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Current income tax expense (benefit) | ||||||||||||
Federal | $ | 638 | $ | 245 | $ | 822 | ||||||
Foreign | 48 | 43 | 40 | |||||||||
State | — | — | — | |||||||||
Deferred income tax expense (benefit) | ||||||||||||
Federal | (26 | ) | (42 | ) | 235 | |||||||
Foreign | 1 | 15 | 18 | |||||||||
State | (3 | ) | 3 | (1 | ) | |||||||
Total | $ | 658 | $ | 264 | $ | 1,114 |
2019 | 2018 | 2017 | ||||||||||
Statutory tax rate | 21.0 | % | 21.0 | % | 35.0 | % | ||||||
Foreign derived intangible income (FDII) | (3.3 | ) | (4.2 | ) | — | |||||||
Research and development tax credit (R&D tax credit) | (2.3 | ) | (2.4 | ) | (1.5 | ) | ||||||
Equity compensation | (0.3 | ) | (1.0 | ) | (1.2 | ) | ||||||
Foreign income tax rate differential | 0.8 | 1.3 | 0.2 | |||||||||
Prior year true-up | 0.4 | (1.1 | ) | 0.1 | ||||||||
Tax benefit related to discretionary pension contributions | — | (3.0 | ) | — | ||||||||
R&D tax credit claims related to the 2014–2017 tax years | — | (2.1 | ) | — | ||||||||
Irish restructuring | — | (2.0 | ) | — | ||||||||
Change in valuation allowance | — | 2.0 | — | |||||||||
Domestic manufacturing deduction benefit | — | — | (2.5 | ) | ||||||||
Remeasurement of deferred taxes | — | — | 3.2 | |||||||||
One-time transition tax on previously undistributed foreign earnings | — | — | 2.3 | |||||||||
Other items, net | 0.2 | (0.1 | ) | 0.2 | ||||||||
Effective tax rate | 16.5 | % | 8.4 | % | 35.8 | % |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Domestic income from continuing operations before taxes | $ | 3,889 | $ | 2,937 | $ | 3,027 | ||||||
Foreign income from continuing operations before taxes | 97 | 210 | 86 |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Federal | $ | 754 | $ | (69 | ) | $ | 765 | |||||
Foreign | 43 | 63 | 77 | |||||||||
State | 34 | 23 | 36 |
(In millions) | 2019 | 2018 | 2017 | |||||||||
Unrecognized tax benefits, beginning of year | $ | 92 | $ | 9 | $ | 7 | ||||||
Additions based on current year tax positions | 46 | 20 | 1 | |||||||||
Additions based on prior year tax positions | 90 | 68 | 4 | |||||||||
Reductions based on prior year tax positions | — | (5 | ) | (1 | ) | |||||||
Settlements based on prior year tax positions | (1 | ) | — | (2 | ) | |||||||
Unrecognized tax benefits, end of year | $ | 227 | $ | 92 | $ | 9 |
(In millions) | 2019 | 2018 | ||||||
Noncurrent deferred tax assets (liabilities) | ||||||||
Accrued employee compensation and benefits | $ | 246 | $ | 209 | ||||
Other accrued expenses and reserves | (21 | ) | 77 | |||||
Contract balances and inventories | (611 | ) | (494 | ) | ||||
Pension benefits | 1,701 | 1,306 | ||||||
Other retiree benefits | 68 | 67 | ||||||
Operating lease right-of-use assets | (204 | ) | (187 | ) | ||||
Operating lease liabilities | 214 | 196 | ||||||
Net operating loss and tax credit carryforwards | 405 | 83 | ||||||
Depreciation and amortization | (921 | ) | (827 | ) | ||||
Partnership outside basis difference | (25 | ) | (29 | ) | ||||
Other | 21 | 12 | ||||||
Valuation allowance | (360 | ) | (84 | ) | ||||
Deferred income taxes—noncurrent | $ | 513 | $ | 329 |
Total Net Sales (in millions) | 2019 | 2018 | 2017 | |||||||||
Integrated Defense Systems | $ | 6,927 | $ | 6,180 | $ | 5,804 | ||||||
Intelligence, Information and Services | 7,151 | 6,722 | 6,177 | |||||||||
Missile Systems | 8,726 | 8,298 | 7,787 | |||||||||
Space and Airborne Systems | 7,427 | 6,748 | 6,430 | |||||||||
Forcepoint | 658 | 634 | 608 | |||||||||
Eliminations | (1,712 | ) | (1,514 | ) | (1,423 | ) | ||||||
Total business segment sales | 29,177 | 27,068 | 25,383 | |||||||||
Acquisition Accounting Adjustments | (1 | ) | (10 | ) | (35 | ) | ||||||
Total | $ | 29,176 | $ | 27,058 | $ | 25,348 |
Intersegment Sales (in millions) | 2019 | 2018 | 2017 | |||||||||
Integrated Defense Systems | $ | 87 | $ | 65 | $ | 64 | ||||||
Intelligence, Information and Services | 700 | 666 | 666 | |||||||||
Missile Systems | 210 | 161 | 132 | |||||||||
Space and Airborne Systems | 686 | 596 | 540 | |||||||||
Forcepoint | 29 | 26 | 21 | |||||||||
Total | $ | 1,712 | $ | 1,514 | $ | 1,423 |
Operating Income (in millions) | 2019 | 2018 | 2017 | |||||||||
Integrated Defense Systems | $ | 1,111 | $ | 1,023 | $ | 935 | ||||||
Intelligence, Information and Services(1) | 658 | 538 | 455 | |||||||||
Missile Systems | 959 | 973 | 1,010 | |||||||||
Space and Airborne Systems | 991 | 884 | 862 | |||||||||
Forcepoint | 8 | 5 | 33 | |||||||||
Eliminations | (184 | ) | (170 | ) | (148 | ) | ||||||
Total business segment operating income | 3,543 | 3,253 | 3,147 | |||||||||
Acquisition Accounting Adjustments | (112 | ) | (126 | ) | (160 | ) | ||||||
FAS/CAS Operating Adjustment | 1,454 | 1,428 | 1,303 | |||||||||
Corporate and Reclassification(1)(2) | (111 | ) | (17 | ) | (59 | ) | ||||||
Total | $ | 4,774 | $ | 4,538 | $ | 4,231 |
(1) | In the third quarter of 2019, the Company revalued an investment in equity securities of a non-publicly traded company due to the availability of updated pricing data from a recent transaction and recognized a non-cash gain of $14 million. The gain is included in IIS’s operating income in 2019 as it is part of management’s evaluation of the segment’s performance and reclassified to other (income) expense, net on our consolidated statements of operations for financial reporting purposes as the gain is not related to our core operations. No amounts were recorded in 2018 or 2017. |
(2) | In the fourth quarter of 2019, we were selected by the U.S. Army for the Lower Tier Air and Missile Defense Sensor (LTAMDS). The net expenses related to the LTAMDS project of $13 million in 2019 are included in Corporate operating income as they are not included in management’s evaluation of business segment results. No amounts were recorded in 2018 or 2017. |
Intersegment Operating Income (in millions) | 2019 | 2018 | 2017 | |||||||||
Integrated Defense Systems | $ | 8 | $ | 6 | $ | 5 | ||||||
Intelligence, Information and Services | 68 | 68 | 64 | |||||||||
Missile Systems | 20 | 15 | 13 | |||||||||
Space and Airborne Systems | 67 | 60 | 51 | |||||||||
Forcepoint | 21 | 21 | 15 | |||||||||
Total | $ | 184 | $ | 170 | $ | 148 |
(In millions) | 2019 | 2018 | 2017 | |||||||||
FAS/CAS Pension Operating Adjustment | $ | 1,439 | $ | 1,415 | $ | 1,291 | ||||||
FAS/CAS PRB Operating Adjustment | 15 | 13 | 12 | |||||||||
FAS/CAS Operating Adjustment | $ | 1,454 | $ | 1,428 | $ | 1,303 |
Capital Expenditures (in millions) | 2019 | 2018 | 2017 | |||||||||
Integrated Defense Systems | $ | 309 | $ | 242 | $ | 200 | ||||||
Intelligence, Information and Services | 50 | 46 | 22 | |||||||||
Missile Systems | 232 | 337 | 221 | |||||||||
Space and Airborne Systems | 304 | 136 | 158 | |||||||||
Forcepoint | 17 | 13 | 14 | |||||||||
Corporate | 28 | 24 | 19 | |||||||||
Total(1) | $ | 940 | $ | 798 | $ | 634 |
(1) | Total capital expenditures may not agree to our consolidated statements of cash flows due to non-cash transactions. |
Depreciation and Amortization (in millions) | 2019 | 2018 | 2017 | |||||||||
Integrated Defense Systems | $ | 118 | $ | 98 | $ | 98 | ||||||
Intelligence, Information and Services | 49 | 51 | 50 | |||||||||
Missile Systems | 129 | 98 | 84 | |||||||||
Space and Airborne Systems | 132 | 140 | 132 | |||||||||
Forcepoint | 14 | 17 | 17 | |||||||||
Acquisition Accounting Adjustments | 111 | 116 | 125 | |||||||||
Corporate | 52 | 48 | 44 | |||||||||
Total | $ | 605 | $ | 568 | $ | 550 |
Total Assets (in millions) | 2019 | 2018(2) | ||||||
Integrated Defense Systems(1) | $ | 5,103 | $ | 4,826 | ||||
Intelligence, Information and Services(1) | 4,291 | 4,238 | ||||||
Missile Systems(1) | 8,408 | 8,229 | ||||||
Space and Airborne Systems(1) | 6,979 | 6,740 | ||||||
Forcepoint(1) | 2,424 | 2,529 | ||||||
Corporate | 7,361 | 6,108 | ||||||
Total | $ | 34,566 | $ | 32,670 |
(1) | Total assets includes intangible assets. Related amortization expense is included in Acquisition Accounting Adjustments. |
(2) | Amounts have been recast to reflect the adoption of ASU 2016-02, Leases (Topic 842). Operating lease right-of-use assets are all recorded at Corporate. |
Property, Plant and Equipment, Net, by Geographic Area (in millions) | 2019 | 2018 | ||||||
United States | $ | 3,251 | $ | 2,751 | ||||
All other (principally Europe) | 102 | 89 | ||||||
Total | $ | 3,353 | $ | 2,840 |
We disaggregate our revenue from contracts with customers by geographic location, customer-type and contract-type for each of our segments, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. See details in the tables below.
2019 | ||||||||||||||||||||||||||||
Disaggregation of Total Net Sales (in millions) | Integrated Defense Systems | Intelligence, Information and Services | Missile Systems | Space and Airborne Systems | Forcepoint | Other | Total | |||||||||||||||||||||
United States | ||||||||||||||||||||||||||||
Sales to the U.S. government(1) | ||||||||||||||||||||||||||||
Fixed-price contracts | $ | 897 | $ | 1,035 | $ | 3,175 | $ | 2,696 | $ | 179 | $ | — | $ | 7,982 | ||||||||||||||
Cost-type contracts | 1,854 | 4,461 | 2,986 | 2,812 | 16 | — | 12,129 | |||||||||||||||||||||
Direct commercial sales and other U.S. sales | ||||||||||||||||||||||||||||
Fixed-price contracts | 6 | 122 | 33 | 121 | 175 | — | 457 | |||||||||||||||||||||
Cost-type contracts | — | 22 | — | 3 | 1 | — | 26 | |||||||||||||||||||||
Asia/Pacific | ||||||||||||||||||||||||||||
Foreign military sales through the U.S. government | ||||||||||||||||||||||||||||
Fixed-price contracts | 174 | 245 | 487 | 163 | — | — | 1,069 | |||||||||||||||||||||
Cost-type contracts | 70 | 37 | 58 | 33 | — | — | 198 | |||||||||||||||||||||
Direct commercial sales and other foreign sales(1) | ||||||||||||||||||||||||||||
Fixed-price contracts | 719 | 181 | 169 | 238 | 67 | — | 1,374 | |||||||||||||||||||||
Cost-type contracts | 78 | — | 2 | — | — | — | 80 | |||||||||||||||||||||
Middle East and North Africa | ||||||||||||||||||||||||||||
Foreign military sales through the U.S. government | ||||||||||||||||||||||||||||
Fixed-price contracts | 740 | 12 | 594 | 322 | — | — | 1,668 | |||||||||||||||||||||
Cost-type contracts | 290 | 21 | 11 | 84 | — | — | 406 | |||||||||||||||||||||
Direct commercial sales and other foreign sales(1) | ||||||||||||||||||||||||||||
Fixed-price contracts | 1,221 | 39 | 592 | 43 | 34 | — | 1,929 | |||||||||||||||||||||
Cost-type contracts | — | — | 92 | — | — | — | 92 | |||||||||||||||||||||
All other (principally Europe) | ||||||||||||||||||||||||||||
Foreign military sales through the U.S. government | ||||||||||||||||||||||||||||
Fixed-price contracts | 555 | 1 | 138 | 68 | — | — | 762 | |||||||||||||||||||||
Cost-type contracts | 50 | — | 37 | 8 | — | — | 95 | |||||||||||||||||||||
Direct commercial sales and other foreign sales(1) | ||||||||||||||||||||||||||||
Fixed-price contracts | 176 | 230 | 139 | 150 | 156 | — | 851 | |||||||||||||||||||||
Cost-type contracts | 10 | 45 | 3 | — | — | — | 58 | |||||||||||||||||||||
Total net sales | 6,840 | 6,451 | 8,516 | 6,741 | 628 | — | 29,176 | |||||||||||||||||||||
Intersegment sales | 87 | 700 | 210 | 686 | 29 | (1,712 | ) | — | ||||||||||||||||||||
Acquisition Accounting Adjustments | — | — | — | — | 1 | (1 | ) | — | ||||||||||||||||||||
Reconciliation to business segment sales | $ | 6,927 | $ | 7,151 | $ | 8,726 | $ | 7,427 | $ | 658 | $ | (1,713 | ) | $ | 29,176 |
(1) | Excludes foreign military sales through the U.S. government. |
2019 | ||||||||||||||||||||||||
Total Net Sales by Geographic Area (in millions) | Integrated Defense Systems | Intelligence, Information and Services | Missile Systems | Space and Airborne Systems | Forcepoint | Total | ||||||||||||||||||
United States | $ | 2,757 | $ | 5,640 | $ | 6,194 | $ | 5,632 | $ | 371 | $ | 20,594 | ||||||||||||
Asia/Pacific | 1,041 | 463 | 716 | 434 | 67 | 2,721 | ||||||||||||||||||
Middle East and North Africa | 2,251 | 72 | 1,289 | 449 | 34 | 4,095 | ||||||||||||||||||
All other (principally Europe) | 791 | 276 | 317 | 226 | 156 | 1,766 | ||||||||||||||||||
Total net sales | $ | 6,840 | $ | 6,451 | $ | 8,516 | $ | 6,741 | $ | 628 | $ | 29,176 |
2019 | ||||||||||||||||||||||||
Total Net Sales by Major Customer (in millions) | Integrated Defense Systems | Intelligence, Information and Services | Missile Systems | Space and Airborne Systems | Forcepoint | Total | ||||||||||||||||||
Sales to the U.S. government(1) | $ | 2,751 | $ | 5,496 | $ | 6,161 | $ | 5,508 | $ | 195 | $ | 20,111 | ||||||||||||
U.S. direct commercial sales and other U.S. sales | 6 | 144 | 33 | 124 | 176 | 483 | ||||||||||||||||||
Foreign military sales through the U.S. government | 1,879 | 316 | 1,325 | 678 | — | 4,198 | ||||||||||||||||||
Foreign direct commercial sales and other foreign sales(1) | 2,204 | 495 | 997 | 431 | 257 | 4,384 | ||||||||||||||||||
Total net sales | $ | 6,840 | $ | 6,451 | $ | 8,516 | $ | 6,741 | $ | 628 | $ | 29,176 |
(1) | Excludes foreign military sales through the U.S. government. |
2019 | ||||||||||||||||||||||||
Total Net Sales by Contract-Type (in millions) | Integrated Defense Systems | Intelligence, Information and Services | Missile Systems | Space and Airborne Systems | Forcepoint | Total | ||||||||||||||||||
Fixed-price contracts | $ | 4,488 | $ | 1,865 | $ | 5,327 | $ | 3,801 | $ | 611 | $ | 16,092 | ||||||||||||
Cost-type contracts | 2,352 | 4,586 | 3,189 | 2,940 | 17 | 13,084 | ||||||||||||||||||
Total net sales | $ | 6,840 | $ | 6,451 | $ | 8,516 | $ | 6,741 | $ | 628 | $ | 29,176 |
2018 | ||||||||||||||||||||||||||||
Disaggregation of Total Net Sales (in millions) | Integrated Defense Systems | Intelligence, Information and Services | Missile Systems | Space and Airborne Systems | Forcepoint | Other | Total | |||||||||||||||||||||
United States | ||||||||||||||||||||||||||||
Sales to the U.S. government(1) | ||||||||||||||||||||||||||||
Fixed-price contracts | $ | 818 | $ | 1,008 | $ | 2,953 | $ | 2,480 | $ | 118 | $ | — | $ | 7,377 | ||||||||||||||
Cost-type contracts | 1,706 | 4,110 | 2,675 | 2,565 | 14 | — | 11,070 | |||||||||||||||||||||
Direct commercial sales and other U.S. sales | ||||||||||||||||||||||||||||
Fixed-price contracts | 5 | 118 | 41 | 111 | 209 | — | 484 | |||||||||||||||||||||
Cost-type contracts | 1 | 18 | — | 3 | — | — | 22 | |||||||||||||||||||||
Asia/Pacific | ||||||||||||||||||||||||||||
Foreign military sales through the U.S. government | ||||||||||||||||||||||||||||
Fixed-price contracts | 189 | 243 | 450 | 152 | — | — | 1,034 | |||||||||||||||||||||
Cost-type contracts | 79 | 45 | 61 | 22 | — | — | 207 | |||||||||||||||||||||
Direct commercial sales and other foreign sales(1) | ||||||||||||||||||||||||||||
Fixed-price contracts | 711 | 198 | 173 | 211 | 70 | — | 1,363 | |||||||||||||||||||||
Cost-type contracts | 117 | — | 1 | 1 | — | — | 119 | |||||||||||||||||||||
Middle East and North Africa | ||||||||||||||||||||||||||||
Foreign military sales through the U.S. government | ||||||||||||||||||||||||||||
Fixed-price contracts | 849 | 20 | 452 | 237 | — | — | 1,558 | |||||||||||||||||||||
Cost-type contracts | 170 | 5 | 23 | 69 | — | — | 267 | |||||||||||||||||||||
Direct commercial sales and other foreign sales(1) | ||||||||||||||||||||||||||||
Fixed-price contracts | 1,137 | 15 | 785 | 95 | 33 | — | 2,065 | |||||||||||||||||||||
Cost-type contracts | — | — | 96 | — | — | — | 96 | |||||||||||||||||||||
All other (principally Europe) | ||||||||||||||||||||||||||||
Foreign military sales through the U.S. government | ||||||||||||||||||||||||||||
Fixed-price contracts | 151 | 2 | 124 | 56 | — | — | 333 | |||||||||||||||||||||
Cost-type contracts | 27 | — | 70 | 6 | — | — | 103 | |||||||||||||||||||||
Direct commercial sales and other foreign sales(1) | ||||||||||||||||||||||||||||
Fixed-price contracts | 145 | 230 | 231 | 144 | 154 | — | 904 | |||||||||||||||||||||
Cost-type contracts | 10 | 44 | 2 | — | — | — | 56 | |||||||||||||||||||||
Total net sales | 6,115 | 6,056 | 8,137 | 6,152 | 598 | — | 27,058 | |||||||||||||||||||||
Intersegment sales | 65 | 666 | 161 | 596 | 26 | (1,514 | ) | — | ||||||||||||||||||||
Acquisition Accounting Adjustments | — | — | — | — | 10 | (10 | ) | — | ||||||||||||||||||||
Reconciliation to business segment sales | $ | 6,180 | $ | 6,722 | $ | 8,298 | $ | 6,748 | $ | 634 | $ | (1,524 | ) | $ | 27,058 |
(1) | Excludes foreign military sales through the U.S. government. |
2018 | ||||||||||||||||||||||||
Total Net Sales by Geographic Area (in millions) | Integrated Defense Systems | Intelligence, Information and Services | Missile Systems | Space and Airborne Systems | Forcepoint | Total | ||||||||||||||||||
United States | $ | 2,530 | $ | 5,254 | $ | 5,669 | $ | 5,159 | $ | 341 | $ | 18,953 | ||||||||||||
Asia/Pacific | 1,096 | 486 | 685 | 386 | 70 | 2,723 | ||||||||||||||||||
Middle East and North Africa | 2,156 | 40 | 1,356 | 401 | 33 | 3,986 | ||||||||||||||||||
All other (principally Europe) | 333 | 276 | 427 | 206 | 154 | 1,396 | ||||||||||||||||||
Total net sales | $ | 6,115 | $ | 6,056 | $ | 8,137 | $ | 6,152 | $ | 598 | $ | 27,058 |
2018 | ||||||||||||||||||||||||
Total Net Sales by Major Customer (in millions) | Integrated Defense Systems | Intelligence, Information and Services | Missile Systems | Space and Airborne Systems | Forcepoint | Total | ||||||||||||||||||
Sales to the U.S. government(1) | $ | 2,524 | $ | 5,118 | $ | 5,628 | $ | 5,045 | $ | 132 | $ | 18,447 | ||||||||||||
U.S. direct commercial sales and other U.S. sales | 6 | 136 | 41 | 114 | 209 | 506 | ||||||||||||||||||
Foreign military sales through the U.S. government | 1,465 | 315 | 1,180 | 542 | — | 3,502 | ||||||||||||||||||
Foreign direct commercial sales and other foreign sales(1) | 2,120 | 487 | 1,288 | 451 | 257 | 4,603 | ||||||||||||||||||
Total net sales | $ | 6,115 | $ | 6,056 | $ | 8,137 | $ | 6,152 | $ | 598 | $ | 27,058 |
(1) | Excludes foreign military sales through the U.S. government. |
2018 | ||||||||||||||||||||||||
Total Net Sales by Contract-Type (in millions) | Integrated Defense Systems | Intelligence, Information and Services | Missile Systems | Space and Airborne Systems | Forcepoint | Total | ||||||||||||||||||
Fixed-price contracts | $ | 4,005 | $ | 1,834 | $ | 5,209 | $ | 3,486 | $ | 584 | $ | 15,118 | ||||||||||||
Cost-type contracts | 2,110 | 4,222 | 2,928 | 2,666 | 14 | 11,940 | ||||||||||||||||||
Total net sales | $ | 6,115 | $ | 6,056 | $ | 8,137 | $ | 6,152 | $ | 598 | $ | 27,058 |
2017 | ||||||||||||||||||||||||||||
Disaggregation of Total Net Sales (in millions) | Integrated Defense Systems | Intelligence, Information and Services | Missile Systems | Space and Airborne Systems | Forcepoint | Other | Total | |||||||||||||||||||||
United States | ||||||||||||||||||||||||||||
Sales to the U.S. government(1) | ||||||||||||||||||||||||||||
Fixed-price contracts | $ | 812 | $ | 1,090 | $ | 2,914 | $ | 2,233 | $ | 111 | $ | — | $ | 7,160 | ||||||||||||||
Cost-type contracts | 1,507 | 3,576 | 1,991 | 2,614 | 12 | — | 9,700 | |||||||||||||||||||||
Direct commercial sales and other U.S. sales | ||||||||||||||||||||||||||||
Fixed-price contracts | 6 | 130 | 1 | 51 | 202 | — | 390 | |||||||||||||||||||||
Cost-type contracts | 1 | 9 | — | 2 | 1 | — | 13 | |||||||||||||||||||||
Asia/Pacific | ||||||||||||||||||||||||||||
Foreign military sales through the U.S. government | ||||||||||||||||||||||||||||
Fixed-price contracts | 167 | 181 | 410 | 113 | — | — | 871 | |||||||||||||||||||||
Cost-type contracts | 138 | 51 | 64 | 9 | — | — | 262 | |||||||||||||||||||||
Direct commercial sales and other foreign sales(1) | ||||||||||||||||||||||||||||
Fixed-price contracts | 596 | 193 | 309 | 284 | 59 | — | 1,441 | |||||||||||||||||||||
Cost-type contracts | 145 | — | 1 | 1 | — | — | 147 | |||||||||||||||||||||
Middle East and North Africa | ||||||||||||||||||||||||||||
Foreign military sales through the U.S. government | ||||||||||||||||||||||||||||
Fixed-price contracts | 1,066 | 18 | 371 | 191 | — | — | 1,646 | |||||||||||||||||||||
Cost-type contracts | 154 | 1 | 22 | 30 | — | — | 207 | |||||||||||||||||||||
Direct commercial sales and other foreign sales(1) | ||||||||||||||||||||||||||||
Fixed-price contracts | 979 | 18 | 1,013 | 175 | 25 | — | 2,210 | |||||||||||||||||||||
Cost-type contracts | — | — | — | — | — | — | — | |||||||||||||||||||||
All other (principally Europe) | ||||||||||||||||||||||||||||
Foreign military sales through the U.S. government | ||||||||||||||||||||||||||||
Fixed-price contracts | 7 | 3 | 157 | 51 | — | — | 218 | |||||||||||||||||||||
Cost-type contracts | 22 | 2 | 78 | 5 | — | — | 107 | |||||||||||||||||||||
Direct commercial sales and other foreign sales(1) | ||||||||||||||||||||||||||||
Fixed-price contracts | 128 | 209 | 320 | 131 | 142 | — | 930 | |||||||||||||||||||||
Cost-type contracts | 12 | 30 | 4 | — | — | — | 46 | |||||||||||||||||||||
Total net sales | 5,740 | 5,511 | 7,655 | 5,890 | 552 | — | 25,348 | |||||||||||||||||||||
Intersegment sales | 64 | 666 | 132 | 540 | 21 | (1,423 | ) | — | ||||||||||||||||||||
Acquisition Accounting Adjustments | — | — | — | — | 35 | (35 | ) | — | ||||||||||||||||||||
Reconciliation to business segment sales | $ | 5,804 | $ | 6,177 | $ | 7,787 | $ | 6,430 | $ | 608 | $ | (1,458 | ) | $ | 25,348 |
(1) | Excludes foreign military sales through the U.S. government. |
2017 | ||||||||||||||||||||||||
Total Net Sales by Geographic Area (in millions) | Integrated Defense Systems | Intelligence, Information and Services | Missile Systems | Space and Airborne Systems | Forcepoint | Total | ||||||||||||||||||
United States | $ | 2,326 | $ | 4,805 | $ | 4,906 | $ | 4,900 | $ | 326 | $ | 17,263 | ||||||||||||
Asia/Pacific | 1,046 | 425 | 784 | 407 | 59 | 2,721 | ||||||||||||||||||
Middle East and North Africa | 2,199 | 37 | 1,406 | 396 | 25 | 4,063 | ||||||||||||||||||
All other (principally Europe) | 169 | 244 | 559 | 187 | 142 | 1,301 | ||||||||||||||||||
Total net sales | $ | 5,740 | $ | 5,511 | $ | 7,655 | $ | 5,890 | $ | 552 | $ | 25,348 |
2017 | ||||||||||||||||||||||||
Total Net Sales by Major Customer (in millions) | Integrated Defense Systems | Intelligence, Information and Services | Missile Systems | Space and Airborne Systems | Forcepoint | Total | ||||||||||||||||||
Sales to the U.S. government(1) | $ | 2,319 | $ | 4,666 | $ | 4,905 | $ | 4,847 | $ | 123 | $ | 16,860 | ||||||||||||
U.S. direct commercial sales and other U.S. sales | 7 | 139 | 1 | 53 | 203 | 403 | ||||||||||||||||||
Foreign military sales through the U.S. government | 1,554 | 256 | 1,102 | 399 | — | 3,311 | ||||||||||||||||||
Foreign direct commercial sales and other foreign sales(1) | 1,860 | 450 | 1,647 | 591 | 226 | 4,774 | ||||||||||||||||||
Total net sales | $ | 5,740 | $ | 5,511 | $ | 7,655 | $ | 5,890 | $ | 552 | $ | 25,348 |
(1) | Excludes foreign military sales through the U.S. government. |
2017 | ||||||||||||||||||||||||
Total Net Sales by Contract-Type (in millions) | Integrated Defense Systems | Intelligence, Information and Services | Missile Systems | Space and Airborne Systems | Forcepoint | Total | ||||||||||||||||||
Fixed-price contracts | $ | 3,761 | $ | 1,842 | $ | 5,495 | $ | 3,229 | $ | 539 | $ | 14,866 | ||||||||||||
Cost-type contracts | 1,979 | 3,669 | 2,160 | 2,661 | 13 | 10,482 | ||||||||||||||||||
Total net sales | $ | 5,740 | $ | 5,511 | $ | 7,655 | $ | 5,890 | $ | 552 | $ | 25,348 |
2019 (in millions, except per share amounts and workdays) | First | Second | Third | Fourth | ||||||||||||
Total net sales | $ | 6,729 | $ | 7,159 | $ | 7,446 | $ | 7,842 | ||||||||
Gross margin | 1,852 | 1,954 | 1,947 | 2,010 | ||||||||||||
Income from continuing operations | 775 | 813 | 861 | 879 | ||||||||||||
Net income attributable to Raytheon Company | 781 | 817 | 860 | 885 | ||||||||||||
EPS from continuing operations attributable to Raytheon Company common stockholders(1) | ||||||||||||||||
Basic | $ | 2.77 | $ | 2.92 | $ | 3.08 | $ | 3.17 | ||||||||
Diluted | 2.77 | 2.92 | 3.08 | 3.16 | ||||||||||||
EPS attributable to Raytheon Company common stockholders(1) | ||||||||||||||||
Basic | 2.77 | 2.92 | 3.08 | 3.16 | ||||||||||||
Diluted | 2.77 | 2.92 | 3.08 | 3.16 | ||||||||||||
Workdays(2) | 63 | 64 | 63 | 59 |
2018 (in millions, except per share amounts and workdays) | First | Second | Third(3) | Fourth | ||||||||||||
Total net sales | $ | 6,267 | $ | 6,625 | $ | 6,806 | $ | 7,360 | ||||||||
Gross margin | 1,735 | 1,848 | 1,935 | 1,967 | ||||||||||||
Income from continuing operations | 624 | 790 | 641 | 828 | ||||||||||||
Net income attributable to Raytheon Company | 633 | 800 | 644 | 832 | ||||||||||||
EPS from continuing operations attributable to Raytheon Company common stockholders(1) | ||||||||||||||||
Basic | $ | 2.20 | $ | 2.78 | $ | 2.25 | $ | 2.93 | ||||||||
Diluted | 2.20 | 2.78 | 2.25 | 2.93 | ||||||||||||
EPS attributable to Raytheon Company common stockholders(1) | ||||||||||||||||
Basic | 2.20 | 2.78 | 2.25 | 2.93 | ||||||||||||
Diluted | 2.19 | 2.78 | 2.25 | 2.93 | ||||||||||||
Workdays(2) | 64 | 64 | 63 | 58 |
(1) | EPS is computed independently for each of the quarters presented; therefore, the sum of the quarterly EPS may not equal the total computed for each year. |
(2) | Number of workdays per our fiscal calendar, which excludes holidays and weekends. |
(3) | In the third quarter of 2018, we recognized a non-cash pension settlement charge of $288 million for certain Raytheon-sponsored pension plans that purchased a group annuity contract from an insurance company to transfer some of our outstanding pension benefit obligations. |