0001193125-16-476010 | 10-K | XBRL Viewer

46,132

45,600

45,358

Cost of sales

Products

(32,006)

(31,965)

(31,346)

Services

(9,011)

(8,393)

(8,588)

^[2]

(119)

^[1]

(195)

^[3]

(102)

(201)

Other unallocated, net

187

132

(841)

Total cost of sales

(40,932)

(40,345)

(41,171)

Gross profit

5,200

5,255

4,187

Other income, net

236

337

318

Other non-operating income, net

5,436

5,592

4,505

Interest expense

(443)

(340)

(350)

Earnings from continuing operations before income taxes

5,023

5,258

4,155

Income tax expense

(1,418)

(1,644)

(1,205)

Net earnings from continuing operations

3,605

3,614

2,950

Net earnings from discontinued operations

Continuing operations per common share in USD

$ 3,605

$ 3,614

$ 2,981

Basic

$ 11.62

$ 11.41

$ 9.19

Discontinued operations per common share in USD

0.10

Basic earnings per common share in USD

11.62

11.41

9.29

Diluted

Continuing operations per common share in USD

11.46

11.21

9.04

Discontinued operations per common share in USD

0.09

Diluted earnings per common share in USD

$ 11.46

$ 11.21

$ 9.13

[1]	The impairment in 2014 relates to our Technical Services reporting unit within our IS&GS business segment (Note 1).
[2]	We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information.
[3]	See Note 15 for information on charges related to certain severance actions at our business segments. Severance charges for initiatives that are not significant are included in business segment operating profit.

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Net earnings	$ 3,605	$ 3,614	$ 2,981
Postretirement benefit plans
Net other comprehensive (loss) income recognized during the period, net of tax benefit (expense) of $0.2 billion in 2015, $1.5 billion in 2014 and $(1.6) billion in 2013	(351)	(2,870)	2,868
Amounts reclassified from accumulated other comprehensive loss, net of tax expense of $464 million in 2015, $386 million in 2014 and $555 million in 2013	850	706	1,015
Other, net	(73)	(105)	9
Other comprehensive income (loss), net of tax	426	(2,269)	3,892
Comprehensive income	$ 4,031	$ 1,345	$ 6,873

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

Cash and cash equivalents

Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Tax benefit (expense) on net other comprehensive income (loss) recognized during the period for postretirement benefit plans	$ 200	$ 1,500	$ (1,600)
Tax expense on amounts reclassified from accumulated other comprehensive loss during the period for postretirement benefit plans	$ 464	$ 386	$ 555

Consolidated Balance Sheets - USD ($)
$ in Millions

Dec. 31, 2015

Dec. 31, 2014

Current assets

$ 1,090

$ 1,446

Property, plant and equipment, net

8,061

5,877

Inventories, net

4,962

2,804

Deferred income taxes

1,463

1,451

Other current assets

622

744

Total current assets

16,198

12,322

5,490

4,751

Goodwill

13,576

10,862

Intangible assets

4,147

324

Deferred income taxes

4,470

4,013

Other noncurrent assets

5,247

4,774

Customer advances and amounts in excess of costs incurred

49,128

37,046

Current liabilities

Accounts payable

1,974

1,562

6,988

5,775

Salaries, benefits and payroll taxes

1,916

1,824

Current maturities of long-term debt

956

Other current liabilities

2,223

1,951

Total current liabilities

14,057

11,112

Accrued pension liabilities

11,807

11,413

Other postretirement benefit liabilities

1,070

1,102

Long-term debt, net

14,305

6,142

Other noncurrent liabilities

4,792

3,877

Total liabilities

46,031

33,646

Stockholders' equity

Common stock, $1 par value per share

303

314

Additional paid-in capital

Retained earnings

14,238

14,956

Accumulated other comprehensive loss

^[1]

(11,444)

(11,870)

Total stockholders' equity

3,097

3,400

Total liabilities and stockholders' equity

$ 49,128

$ 37,046

[1]

AOCL related to postretirement benefit plans is shown net of tax benefits at December 31, 2015, 2014 and 2013 of $6.2 billion, $6.4 billion and $5.3 billion. These tax benefits include amounts recognized on our income tax returns as current deductions and deferred income taxes, which will be recognized on our tax returns in future years. See Note 9 and Note 11 for more information on our income taxes and postretirement benefit plans.

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2015	Dec. 31, 2014
Common stock, par value (in USD per share)	$ 1	$ 1

Consolidated Statements of Cash Flows - USD ($)
$ in Millions

12 Months Ended

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

Operating activities

Adjustments to reconcile net earnings to net cash provided by operating activities

$ 3,605

$ 3,614

$ 2,981

Depreciation and amortization

1,026

994

990

Stock-based compensation

138

164

189

Deferred income taxes

(445)

(401)

(5)

^[2]

119

^[1]

195

^[3]

102

201

Changes in assets and liabilities

Customer advances and amounts in excess of costs incurred

(256)

767

Inventories, net

(398)

(60)

Accounts payable

(160)

(647)

(32)

(572)

(158)

Postretirement benefit plans

1,068

(880)

(375)

Income taxes

(48)

351

364

Net cash provided by operating activities

501

277

104

5,101

3,866

4,546

Investing activities

Capital expenditures

(939)

(845)

(836)

Acquisitions of businesses and investments in affiliates

(9,003)

(898)

(269)

Net cash used for investing activities

208

(16)

(9,734)

(1,723)

(1,121)

Financing activities

Repurchases of common stock

(3,071)

(1,900)

(1,762)

Proceeds from stock option exercises

174

308

827

Dividends paid

(1,932)

(1,760)

(1,540)

Proceeds from the issuance of long-term debt

9,101

Repayments of long-term debt

(150)

Proceeds from borrowings under revolving credit facilities

6,000

Repayments of borrowings under revolving credit facilities

(6,000)

Net cash provided by (used for) financing activities

(81)

4,277

(3,314)

(2,706)

Net change in cash and cash equivalents

(356)

(1,171)

719

Cash and cash equivalents at beginning of year

1,446

2,617

1,898

Cash and cash equivalents at end of year

$ 1,090

$ 1,446

$ 2,617

[1]	The impairment in 2014 relates to our Technical Services reporting unit within our IS&GS business segment (Note 1).
[2]	We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information.
[3]	See Note 15 for information on charges related to certain severance actions at our business segments. Severance charges for initiatives that are not significant are included in business segment operating profit.

Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Beginning Balance at Dec. 31, 2012	$ 39	$ 321		$ 13,211	$ (13,493)
Net earnings	2,981			2,981
Other comprehensive income, net of tax	3,892				3,892
Repurchases of common stock	(1,744)	(16)	$ (1,294)	(434)
Dividends declared	(1,558)			(1,558)
Stock-based awards and ESOP activity	1,308	14	1,294
Ending Balance at Dec. 31, 2013	4,918	319		14,200	(9,601)
Net earnings	3,614			3,614
Other comprehensive income, net of tax	(2,269)				(2,269)
Repurchases of common stock	(1,900)	(12)	(792)	(1,096)
Dividends declared	(1,762)			(1,762)
Stock-based awards and ESOP activity	799	7	792
Ending Balance at Dec. 31, 2014	3,400	314		14,956	(11,870)
Net earnings	3,605			3,605
Other comprehensive income, net of tax	426				426
Repurchases of common stock	(3,071)	(15)	(656)	(2,400)
Dividends declared	(1,923)			(1,923)
Stock-based awards and ESOP activity	660	4	$ 656
Ending Balance at Dec. 31, 2015	$ 3,097	$ 303		$ 14,238	$ (11,444)

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

Significant Accounting Policies

Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended												12 Months Ended
	Dec. 31, 2015	Sep. 27, 2015	Jun. 28, 2015	Mar. 29, 2015	Dec. 31, 2014	Sep. 28, 2014	Jun. 29, 2014	Mar. 30, 2014	Dec. 31, 2013	Sep. 29, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Dividends declared, per share	$ 1.65	$ 1.50	$ 1.50	$ 1.50	$ 1.50	$ 1.33	$ 1.33	$ 1.33	$ 1.33	$ 1.15	$ 1.15	$ 1.15	$ 6.15	$ 5.49	$ 4.78

Significant Accounting Policies

12 Months Ended

Dec. 31, 2015

Note 1 – Significant Accounting Policies

Organization – We are a global security and aerospace company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. We also provide a broad range of management, engineering, technical, scientific, logistics and information services. We serve both U.S. and international customers with products and services that have defense, civil and commercial applications, with our principal customers being agencies of the U.S. Government.

Basis of presentation – Our 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. Our receivables, inventories, customer advances and amounts in excess of costs incurred and certain amounts in other current liabilities primarily are attributable to long-term contracts or programs in progress for which the related operating cycles are longer than one year. In accordance with industry practice, we include these items in current assets and current liabilities. Unless otherwise noted, we present all per share amounts cited in these consolidated financial statements on a “per diluted share” basis. Certain prior period amounts have been reclassified to conform with current year presentation.

On November 6, 2015, we completed the acquisition of Sikorsky Aircraft Corporation (Sikorsky) for $9.0 billion, net of cash acquired. Sikorsky, a global company primarily engaged in the design, manufacture, service and support of military and commercial helicopters, has become a wholly-owned subsidiary of ours, aligned under our MST business segment. The financial results of the acquired Sikorsky business have been included in our consolidated results of operations from the November 6, 2015 acquisition date through December 31, 2015. Accordingly, the consolidated financial results for the year ended December 31, 2015 do not reflect a full year of Sikorsky operations.

During the fourth quarter of 2015, we realigned certain programs between our business segments in connection with the strategic review of our government informational technology (IT) and technical services businesses. The amounts, discussion and presentation of our business segments as set forth in all years presented in our consolidated financial statements have been reclassified from prior year presentation to reflect the realignment. The realignment did not impact the Corporation’s previously reported consolidated financial statements. See “Note 5 – Information on Business Segments” for additional information including revised historical segment results under our new structure.

On January 26, 2016 we entered into definitive agreements to separate and combine our Information Systems & Global Solutions (IS&GS) business segment with Leidos Holdings, Inc. (Leidos) in a tax-efficient Reverse Morris Trust transaction. Subsequent to the program realignment described above, our IS&GS business segment represents the government IT and technical services businesses that were under strategic review. The transaction is expected to close in the third or fourth quarter of 2016. Until closing, IS&GS will operate as a business segment and financial results for the IS&GS business segment will be reported in our continuing operations. See “Note 3 – Acquisitions and Divestitures” for additional information about the planned divestiture of our IS&GS business segment.

Use of estimates – We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP). In doing so, we are required 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.

Sales and earnings – We record net sales and estimated profits for substantially all of our contracts using the percentage-of-completion method for cost-reimbursable and fixed-price contracts for products and services with the U.S. Government. Sales are recorded on all time-and-materials contracts as the work is performed based on agreed-upon hourly rates and allowable costs. We account for our services contracts with non-U.S. Government customers using the services method of accounting. We classify net sales as products or services on our Statements of Earnings based on the attributes of the underlying contracts.

Percentage-of-Completion Method – The percentage-of-completion method for product contracts depends on the nature of the products provided under the contract. For example, for contracts that require us to perform a significant level of development effort in comparison to the total value of the contract and/or to deliver minimal quantities, sales are recorded using the cost-to-cost method to measure progress toward completion. Under the cost-to-cost method of accounting, we recognize sales and an estimated profit as costs are incurred based on the proportion that the incurred costs bear to total estimated costs. For contracts that require us to provide a substantial number of similar items without a significant level of development, we record sales and an estimated profit on a percentage-of-completion basis using units-of-delivery as the basis to measure progress toward completing the contract. For contracts to provide services to the U.S. Government, sales are generally recorded using the cost-to-cost method.

Award and incentive fees, as well as penalties related to contract performance, are considered in estimating sales and profit rates on contracts accounted for under the percentage-of-completion method. Estimates of award fees are based on past experience and anticipated performance. We record incentives or penalties when there is sufficient information to assess anticipated contract performance. Incentive provisions that increase or decrease earnings based solely on a single significant event are not recognized until the event occurs.

Accounting for contracts using the percentage-of-completion method requires judgment relative to assessing risks, estimating contract sales and costs (including estimating award and incentive fees and penalties related to performance) and making assumptions for schedule and technical issues. Due to the number of years it may take to complete many of our contracts and the scope and nature of the work required to be performed on those contracts, the estimation of total sales and costs at completion is complicated and subject to many variables and, accordingly, is subject to change. When adjustments in estimated total contract sales or estimated total costs are required, any changes from prior estimates are recognized in the current period for the inception-to-date effect of such changes. When estimates of total costs to be incurred on a contract exceed estimates of total sales to be earned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined.

Many of our contracts span several years and include highly complex technical requirements. At the outset of a contract, we identify and monitor risks to the achievement of the technical, schedule and cost aspects of the contract and assess the effects of those risks on our estimates of total costs to complete the contract. The estimates consider the technical requirements (e.g., a newly-developed product versus a mature product), the schedule and associated tasks (e.g., the number and type of milestone events) and costs (e.g., material, labor, subcontractor, overhead and the estimated costs to fulfill our industrial cooperation agreements, sometimes referred to as offset agreements, required under certain contracts with international customers). The initial profit booking rate of each contract considers risks surrounding the ability to achieve the technical requirements, schedule and costs in the initial estimated total costs to complete the contract. Profit booking rates may increase during the performance of the contract if we successfully retire risks surrounding the technical, schedule and cost aspects of the contract which decreases the estimated total costs to complete the contract. Conversely, our profit booking rates may decrease if the estimated total costs to complete the contract increase. All of the estimates are subject to change during the performance of the contract and may affect the profit booking rate.

In addition, comparability of our business segment sales, operating profit and operating margins may be impacted by changes in profit booking rates on our contracts accounted for using the percentage-of-completion method of accounting. Increases in the profit booking rates, typically referred to as risk retirements, usually relate to revisions in the estimated total costs that reflect improved conditions on a particular contract. Conversely, conditions on a particular contract may deteriorate resulting in an increase in the estimated total costs to complete and a reduction in the profit booking rate. Increases or decreases in profit booking rates are recognized in the current period and reflect the inception-to-date effect of such changes. Segment operating profit and margins may also be impacted favorably or unfavorably by other items. Favorable items may include the positive resolution of contractual matters, cost recoveries on restructuring charges, insurance recoveries and gains on sales of assets. Unfavorable items may include the adverse resolution of contractual matters; restructuring charges, except for significant severance actions (such as those mentioned below in Note 15) which are excluded from segment operating results; reserves for disputes; asset impairments; and losses on sales of assets. Segment operating profit and items such as risk retirements, reductions of profit booking rates or other matters are presented net of state income taxes.

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 $1.9 billion in 2015, $1.8 billion in 2014 and $2.1 billion in 2013. These adjustments increased net earnings by approximately $1.2 billion ($3.87 per share) in 2015, $1.1 billion ($3.55 per share) in 2014 and $1.3 billion ($4.09 per share) in 2013.

Services Method – For cost-reimbursable contracts for services to non-U.S. Government customers, we record net sales as services are performed, except for award and incentive fees. Award and incentive fees are recorded when they are fixed or determinable, generally at the date the amount is communicated to us by the customer. This approach results in the recognition of such fees at contractual intervals (typically every six months) throughout the contract and is dependent on the customer’s processes for notification of awards and issuance of formal notifications. Under fixed-price service contracts, we are paid a predetermined fixed amount for a specified scope of work and generally have full responsibility for the costs associated with the contract and the resulting profit or loss. We record net sales under fixed-price service contracts with non-U.S. Government customers on a straight-line basis over the period of contract performance, unless evidence suggests that net sales are earned or the obligations are fulfilled in a different pattern. Costs for all service contracts are expensed as incurred.

Research and development and similar costs – Except for certain arrangements described below, we account for independent research and development costs as part of the general and administrative costs that are allocated among all of our contracts and programs in progress under U.S. Government contractual arrangements and charged to cost of sales. Under certain arrangements in which a customer shares in product development costs, our portion of unreimbursed costs is expensed as incurred in cost of sales. Independent research and development costs charged to cost of sales totaled $839 million in 2015, $751 million in 2014 and $697 million in 2013. Costs we incur under customer-sponsored research and development programs pursuant to contracts are included in net sales and cost of sales.

Stock-based compensation – Compensation cost related to all share-based payments is measured at the grant date based on the estimated fair value of the award. We generally recognize the compensation cost ratably over a three-year vesting period.

Income taxes – We calculate our provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying amount of assets and liabilities and their respective tax bases, as well as from operating loss and tax credit carry-forwards. We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid.

We periodically assess our tax filing exposures related to periods that are open to examination. Based on the latest available information, we evaluate our tax positions to determine whether the position will more-likely-than-not be sustained upon examination by the Internal Revenue Service (IRS) or other taxing authorities. If we cannot reach a more-likely-than-not determination, no benefit is recorded. If we determine that the tax position is more-likely-than-not to be sustained, we record the largest amount of benefit that is more-likely-than-not to be realized when the tax position is settled. We record interest and penalties related to income taxes as a component of income tax expense on our Statements of Earnings. Interest and penalties were not material.

Cash and cash equivalents – Cash equivalents include highly liquid instruments with original maturities of 90 days or less.

Receivables – Receivables include amounts billed and currently due from customers and unbilled costs and accrued profits primarily related to sales on long-term contracts that have been recognized but not yet billed to customers. Pursuant to contract provisions, agencies of the U.S. Government and certain other customers have title to, or a security interest in, assets related to such contracts as a result of advances, performance-based payments and progress payments. We reflect those advances and payments as an offset to the related receivables balance for contracts that we account for on a percentage-of-completion basis using the cost-to-cost method to measure progress towards completion.

Inventories – We record inventories at the lower of cost or estimated net realizable value. Costs on long-term contracts and programs in progress represent recoverable costs incurred for production or contract-specific facilities and equipment, allocable operating overhead, advances to suppliers and, in the case of contracts with the U.S. Government and substantially all other governments, research and development and general and administrative expenses. Pursuant to contract provisions, agencies of the U.S. Government and certain other customers have title to, or a security interest in, inventories related to such contracts as a result of advances, performance-based payments and progress payments. We reflect those advances and payments as an offset against the related inventory balances for contracts that we account for on a percentage-of-completion basis using units-of-delivery as the basis to measure progress toward completing the contract. We determine the costs of other product and supply inventories by the first-in first-out or average cost methods.

Property, plant and equipment – We record property, plant and equipment at cost. We provide for depreciation and amortization on plant and equipment generally using accelerated methods during the first half of the estimated useful lives of the assets and the straight-line method thereafter. The estimated useful lives of our plant and equipment generally range from 10 to 40 years for buildings and five to 15 years for machinery and equipment. No depreciation expense is recorded on construction in progress until such assets are placed into operation. Depreciation expense related to plant and equipment was $738 million in 2015, $739 million in 2014 and $714 million in 2013.

We review the carrying amounts of long-lived assets for impairment if events or changes in the facts and circumstances indicate that their carrying amounts may not be recoverable. We assess impairment by comparing the estimated undiscounted future cash flows of the related asset grouping to its carrying amount. If an asset is determined to be impaired, we recognize an impairment charge in the current period for the difference between the fair value of the asset and its carrying amount.

Capitalized software – We capitalize certain costs associated with the development or purchase of internal-use software. The amounts capitalized are included in other noncurrent assets on our Balance Sheets and are amortized on a straight-line basis over the estimated useful life of the resulting software, which ranges from two to six years. As of December 31, 2015 and 2014, capitalized software totaled $481 million and $547 million, net of accumulated amortization of $1.9 billion and $1.8 billion. No amortization expense is recorded until the software is ready for its intended use. Amortization expense related to capitalized software was $172 million in 2015, $206 million in 2014 and $228 million in 2013.

Goodwill – The assets and liabilities of acquired businesses are recorded under the acquisition method of accounting at their estimated fair values at the date of acquisition. Goodwill represents costs in excess of fair values assigned to the underlying identifiable net assets of acquired businesses.

We perform an impairment test of our goodwill at least annually in the fourth quarter and more frequently whenever certain events or changes in circumstances indicate the carrying value of goodwill may be impaired. Such events or changes in circumstances may include a significant deterioration in overall economic conditions, changes in the business climate of our industry, a decline in our market capitalization, operating performance indicators, competition, reorganizations of our business or the disposal of all or a portion of a reporting unit. Our goodwill has been allocated to and is tested for impairment at a level referred to as the reporting unit, which is our business segment level or a level below the business segment. The level at which we test goodwill for impairment requires us to determine whether the operations below the business segment constitute a business for which discrete financial information is available and segment management regularly reviews the operating results.

We may use both qualitative and quantitative approaches when testing goodwill for impairment. Under the qualitative approach, for selected reporting units we perform a qualitative evaluation of events and circumstances impacting the reporting unit to determine the likelihood of goodwill impairment. Based on that qualitative evaluation, if we determine it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, no further evaluation is necessary. Otherwise, we perform a quantitative two-step impairment test. For certain reporting units we only perform a quantitative impairment test.

Under step one of the quantitative impairment test, we compare the fair value of each reporting unit to its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is not impaired. If the carrying value of a reporting unit exceeds its fair value, we then perform step two of the quantitative impairment test and compare the implied value of the reporting unit’s goodwill with the carrying value of its goodwill. The implied value of the reporting unit’s goodwill is calculated by creating a hypothetical balance sheet as if the reporting unit had just been acquired. This balance sheet contains all assets and liabilities recorded at fair value (including any intangible assets that may not have any corresponding carrying value in our balance sheet). The implied value of the reporting unit’s goodwill is calculated by subtracting the fair value of the net assets from the fair value of the reporting unit. If the carrying value of the reporting unit’s goodwill exceeds the implied value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

We estimate the fair value of each reporting unit using a combination of a discounted cash flow (DCF) analysis and market-based valuation methodologies such as comparable public company trading values and values observed in recent business acquisitions. Determining fair value requires the exercise of significant judgments, including judgments about the amount and timing of expected future cash flows, long-term growth rates, discount rates and relevant comparable public company earnings multiples and relevant transaction multiples. The cash flows employed in the DCF analyses are based on our best estimate of future sales, earnings and cash flows after considering factors such as general market conditions, U.S. Government budgets, existing firm orders, expected future orders, contracts with suppliers, labor agreements, changes in working capital, long-term business plans and recent operating performance. The discount rates utilized in the DCF analysis are based on the respective reporting unit’s weighted average cost of capital, which takes into account the relative weights of each component of capital structure (equity and debt) and represents the expected cost of new capital, adjusted as appropriate to consider the risk inherent in future cash flows of the respective reporting unit.

In the fourth quarter of 2015, we performed our annual goodwill impairment test for each of our reporting units. During the fourth quarter of 2015, we realigned certain programs between our business segments in connection with our strategic review of our government IT and technical services businesses. As part of the realignment, goodwill was reallocated between affected reporting units on a relative fair value basis. We performed goodwill impairment tests prior and subsequent to the realignment. The results of our 2015 annual impairment tests of goodwill indicated that no impairment existed.

In the fourth quarter of 2014, we completed our annual goodwill impairment test for each of our reporting units. The results of these tests indicated that the estimated fair values of our reporting units exceeded their carrying values, with the exception of our Technical Services reporting unit within our IS&GS business segment. The impact of market pressures such as lower in-theater support as troop levels are drawn down and increased re-competition on existing contracts that are awarded primarily on the basis of price adversely impacted the fair value of this reporting unit. As a result, we compared the implied value of that reporting unit’s goodwill with the carrying value of its goodwill, and since the carrying value exceeded the implied value, we recorded a non-cash impairment charge of $119 million in the fourth quarter of 2014 equal to that differential. This charge reduced our net earnings by $107 million ($.33 per share).

During the fourth quarter of 2013, due to the continuing impact of defense budget reductions and related competitive pressures on the Technical Services business, we recorded a non-cash goodwill impairment charge of $195 million. This charge reduced our 2013 net earnings by $176 million ($.54 per share).

Intangible assets – Intangible assets from acquired businesses are recognized at their estimated fair values at the date of acquisition and consist of customer programs, trademarks, customer relationships, technology and other intangible assets. Customer programs include values assigned to major programs of acquired businesses and represent the aggregate value associated with the customer relationships, contracts, technology and trademarks underlying the associated program. Acquired intangibles deemed to have indefinite lives are not amortized, but are subject to annual impairment testing. This testing compares carrying value to fair value and, when appropriate, the carrying value of these assets is reduced to fair value. Finite-lived intangibles are amortized to expense over the applicable useful lives, ranging from three to twenty years, based on the nature of the asset and the underlying pattern of economic benefit as reflected by future net cash inflows.

Customer advances and amounts in excess of cost incurred – We receive advances, performance-based payments and progress payments from customers that may exceed costs incurred on certain contracts, including contracts with agencies of the U.S. Government. We classify such advances, other than those reflected as a reduction of receivables or inventories as discussed above, as current liabilities.

Debt issuance costs – In 2015, we early adopted a new standard of the Financial Accounting Standards Board (FASB) which simplifies the presentation of debt issuance costs. In accordance with the new standard, we now reflect debt issuance costs as a reduction from the face amount of debt on our consolidated balance sheets. These costs, which are $95 million and $27 million as of December 31, 2015 and 2014, are amortized as interest expense over the life of the related debt. In prior year presentation, these costs were reflected within other noncurrent assets on our consolidated balance sheets.

Postretirement benefit plans – Many of our employees are covered by defined benefit pension plans and we provide certain health care and life insurance benefits to eligible retirees (collectively, postretirement benefit plans). GAAP requires that the amounts we record related to our postretirement benefit plans be computed, based on service to date, using actuarial valuations that are based in part on certain key economic assumptions we make, including the discount rate, the expected long-term rate of return on plan assets and other actuarial assumptions including participant longevity (also known as mortality) estimates, health care cost trend rates and employee turnover, each as appropriate based on the nature of the plans. We recognize on a plan-by-plan basis the funded status of our postretirement benefit plans under GAAP as either an asset recorded within other noncurrent assets or a liability recorded within noncurrent liabilities on our Balance Sheets. There is a corresponding non-cash adjustment to accumulated other comprehensive loss, net of tax benefits recorded as deferred tax assets, in stockholders’ equity. The GAAP funded status is measured as the difference between the fair value of the plan’s assets and the benefit obligation of the plan. The funded status under the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Pension Protection Act of 2006 (PPA), is calculated on a different basis than under GAAP.

Environmental matters – We record a liability for environmental matters when it is probable that a liability has been incurred and the amount 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. Our environmental liabilities are recorded on our Balance Sheets within other liabilities, both current and noncurrent. We expect to include a substantial portion of environmental costs in our net sales and cost of sales in future periods pursuant to U.S. Government agreement or regulation. At the time a liability is recorded for future environmental costs, we record a receivable for estimated future recovery considered probable through the pricing of products and services to agencies of the U.S. Government, regardless of the contract form (e.g., cost-reimbursable, fixed-price). We continuously evaluate the recoverability of our environmental receivables by assessing, among other factors, U.S. Government regulations, our U.S. Government business base and contract mix and our history of receiving reimbursement of such costs. We include the portion of those environmental costs expected to be allocated to our non-U.S. Government contracts, or that is determined to not be recoverable under U.S. Government contracts, in our cost of sales at the time the liability is established. Our environmental receivables are recorded on our Balance Sheets within other assets, both current and noncurrent. We project costs and recovery of costs over approximately 20 years.

Investments in marketable securities – Investments in marketable securities consist of debt and equity securities and are classified as trading securities. As of December 31, 2015 and 2014, the fair value of our trading securities totaled $1.1 billion and $1.1 billion and was included in other noncurrent assets on our Balance Sheets. Our trading securities are held in a separate trust, which includes investments to fund our deferred compensation plan liabilities. Net losses on trading securities in 2015 were $11 million and net gains on trading securities in 2014 and 2013 were $65 million and $64 million. Gains and losses on these investments are included in other unallocated, net within cost of sales on our Statements of Earnings in order to align the classification of changes in the market value of investments held for the plan with changes in the value of the corresponding plan liabilities.

Equity method investments – Investments where we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other noncurrent assets on our Balance Sheets. Significant influence typically exists if we have a 20% to 50% ownership interest in the investee. Under this method of accounting, our share of the net earnings or losses of the investee is included in operating profit in other income, net on our Statements of Earnings since the activities of the investee are closely aligned with the operations of the business segment holding the investment. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period. As of December 31, 2015 and 2014, our equity method investments totaled $1.3 billion and $971 million, which primarily are composed of our Space Systems business segment’s investment in United Launch Alliance (ULA), as further described in Note 14, and our Aeronautics and MST business segments’ investments in Advanced Military Maintenance, Repair and Overhaul Center. Our share of net earnings related to our equity method investees was $343 million in 2015, $342 million in 2014 and $321 million in 2013, of which approximately $245 million, $280 million and $300 million related to our Space Systems business segment.

Derivative financial instruments – 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.

We record derivatives at their fair value. The classification of gains and losses resulting from changes in the fair values of derivatives is dependent on our intended use of the derivative and its resulting designation. Adjustments to reflect changes in fair values of derivatives attributable to the effective portion of hedges are either reflected in earnings and largely offset by corresponding adjustments to the hedged items or reflected net of income taxes in accumulated other comprehensive loss until the hedged transaction is recognized in earnings. Changes in the fair value of the derivatives that are attributable to the ineffective portion of the hedges or of derivatives that are not considered to be highly effective hedges, if any, are immediately recognized in earnings. The aggregate notional amount of our outstanding interest rate swaps at December 31, 2015 and 2014 was $1.5 billion and $1.3 billion. The aggregate notional amount of our outstanding foreign currency hedges at December 31, 2015 and 2014 was $4.1 billion and $804 million. Derivative instruments did not have a material impact on net earnings and comprehensive income during 2015, 2014 and 2013. Substantially all of our derivatives are designated for hedge accounting. See Note 16 for more information on the fair value measurements related to our derivative instruments.

Recent Accounting Pronouncements – In May 2014, the FASB issued a new standard that will change the way we recognize revenue and significantly expand the disclosure requirements for revenue arrangements. On July 9, 2015, the FASB approved a one-year deferral of the effective date of the standard to 2018 for public companies, with an option that would permit companies to adopt the standard in 2017. Early adoption prior to 2017 is not permitted. The new standard may be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up adjustment recorded to beginning retained earnings at the effective date for existing contracts with remaining performance obligations. In addition, the FASB is contemplating making additional changes to certain elements of the new standard. We are currently evaluating the methods of adoption allowed by the new standard and the effect the standard is expected to have on our consolidated financial statements and related disclosures. As the new standard will supersede substantially all existing revenue guidance affecting us under GAAP, it could impact revenue and cost recognition on thousands of contracts across all our business segments, in addition to our business processes and our information technology systems. As a result, our evaluation of the effect of the new standard will extend over future periods.

In September 2015, the FASB issued a new standard that simplifies the accounting for adjustments made to preliminary amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. Instead, adjustments will be recognized in the period in which the adjustments are determined, including the effect on earnings of any amounts that would have been recorded in previous periods if the accounting had been completed at the acquisition date. We adopted the standard on January 1, 2016 and will prospectively apply the standard to business combination adjustments identified after the date of adoption.

In November 2015, the FASB issued a new standard that simplifies the presentation of deferred income taxes and requires that deferred tax assets and liabilities, as well as any related valuation allowance, be classified as noncurrent in our consolidated balance sheets. The standard is effective January 1, 2017, with early adoption permitted. The standard may be applied either prospectively from the date of adoption or retrospectively to all prior periods presented. We are currently evaluating when we will adopt the standard and the method of adoption.

Earnings Per Share

12 Months Ended

Dec. 31, 2015

Earnings Per Share

Note 2 – Earnings Per Share

The weighted average number of shares outstanding used to compute earnings per common share were as follows (in millions):


	2015		2014		2013
Weighted average common shares outstanding for basic computations		310.3		316.8		320.9
Weighted average dilutive effect of equity awards		4.4		5.6		5.6
Weighted average common shares outstanding for diluted computations		314.7		322.4		326.5

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.

The computation of diluted earnings per common share excluded 2.4 million stock options for the year ended December 31, 2013 because their inclusion would have been anti-dilutive, primarily due to their exercise prices exceeding the average market prices of our common stock during the respective periods. There were no anti-dilutive equity awards for the years ended December 31, 2015 and 2014.

Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2015

Acquisitions and Divestitures

Note 3 – Acquisitions and Divestitures

Acquisitions

Acquisition of Sikorsky Aircraft Corporation

On November 6, 2015, we completed the acquisition of Sikorsky Aircraft Corporation and certain affiliated companies (collectively “Sikorsky”) from United Technologies Corporation (UTC) and certain of UTC’s subsidiaries. The purchase price of the acquisition was $9.0 billion, net of cash acquired. As a result of the acquisition, Sikorsky became a wholly-owned subsidiary of ours. Sikorsky is a global company primarily engaged in the research, design, development, manufacture and support of military and commercial helicopters. Sikorsky’s products include military helicopters such as the H-60 Black Hawk, MH-60R Seahawk, CH-53K, H-92; and commercial helicopters such as the S-76 and S-92. The acquisition enables us to extend our core business into the military and commercial rotary wing markets, allowing us to strengthen our position in the aerospace and defense industry. Further, this acquisition will expand our presence in commercial and international markets. Sikorsky has been aligned under our MST business segment.

To fund the $9.0 billion acquisition price, we utilized $6.0 billion of proceeds borrowed under our 364-day revolving credit facility (the 364-day Facility), $2.0 billion of cash on hand and $1.0 billion from the issuance of commercial paper. In the fourth quarter of 2015, we repaid all outstanding borrowings under the 364-day Facility with the proceeds from the issuance of $7.0 billion of fixed interest-rate long-term notes in a public offering (the November 2015 Notes). In the fourth quarter of 2015, we also repaid the $1.0 billion in commercial paper borrowings (see Note 10).

We and UTC made a joint election under Section 338(h)(10) of the Internal Revenue Code, which treats the transaction as an asset purchase for tax purposes. This election generates a cash tax benefit with an estimated net present value of $1.9 billion for Lockheed Martin and its stockholders.

Preliminary Allocation of Acquisition Price to Assets Acquired and Liabilities Assumed

We accounted for the acquisition of Sikorsky as a business combination, which requires us to record the assets acquired and liabilities assumed at fair value. The amount by which the purchase price exceeds the fair value of the net assets acquired is recorded as goodwill. We have commenced the appraisals necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed and the amount of goodwill to be recognized as of the acquisition date. The amounts recorded for certain assets and liabilities are preliminary in nature and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the acquisition date. The final determination of the fair values of certain assets and liabilities will be completed within the measurement period of up to one year from the acquisition date permitted under GAAP. The size, breadth, and timing of the Sikorsky acquisition could necessitate the need to use the full one year measurement period to adequately analyze and assess a number of the factors used in establishing the asset and liability fair values as of the acquisition date including contractual and operational factors underlying the customer programs intangible assets, the tradename intangible asset, customer contractual obligations, property, plant and equipment, inventories, receivables and deferred revenue; and the assumptions underpinning certain reserves such as those for environmental and legal obligations. The final values may also result in changes to depreciation and amortization expense related to certain assets such as buildings, equipment and intangible assets. Any potential adjustments made could be material in relation to the preliminary values presented in the table below.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):


	November 6, 2015
Cash and cash equivalents		$ 75
Receivables		1,921
Inventories		1,817
Deferred income taxes, current		72
Other current assets		36
Property, plant and equipment		654
Goodwill		2,764
Intangible assets:
Customer programs		3,127
Trademarks		816
Other noncurrent assets		502
Deferred income taxes, noncurrent		214
Total identifiable assets and goodwill		11,998
Accounts payable		(565)
Customer advances and amounts in excess of costs incurred		(1,220)
Salaries, benefits, and payroll taxes		(105)
Current portion of long-term debt		(5)
Other current liabilities		(347)
Long-term debt		(11)
Customer contractual obligations^(a)		(480)
Other noncurrent liabilities		(150)
Deferred income tax liabilities, noncurrent^(a)		(32)
Total liabilities assumed		(2,915)
Total consideration		$ 9,083

^(a)	Recorded in Other noncurrent liabilities on the consolidated balance sheet.

Intangible assets related to customer programs were recognized for each major helicopter and aftermarket program and represent the aggregate value associated with the customer relationships, contracts, technology and tradenames underlying the associated program. These intangible assets will be amortized over a weighted-average useful life of approximately 15 years in accordance with the underlying pattern of economic benefit as reflected by the future net cash inflows.

Customer contractual obligations represent liabilities on certain development programs where the expected costs exceed the expected sales under contract. We measured these liabilities based on the price to transfer the obligation to a market participant at the measurement date, assuming that the liability will remain outstanding in the marketplace. Based on the estimated net cash outflows of the developmental programs plus a reasonable contracting profit margin required to transfer the contracts to market participants, we recorded assumed liabilities of approximately $480 million. These liabilities will be liquidated in accordance with the underlying economic pattern of the contractual obligations, as reflected by the estimated future net cash outflows incurred on the associated contracts. Estimated liquidation of the contractual obligation is estimated is as follows: $85 million in 2016, $90 million in 2017, $65 million in 2018, $60 million in 2019, $60 million in 2020 and $110 million thereafter.

The fair values of the assets acquired and liabilities assumed were preliminarily determined using income, market and cost valuation methodologies. The fair value measurements were estimated using significant inputs that are not observable in the market and thus represent a Level 3 measurement as defined in Accounting Standards Codification (ASC) 820. The income approach was primarily used to value the customer programs and trademarks intangible assets. The income approach indicates value for an asset or liability based on the present value of cash flow projected to be generated over the remaining economic life of the asset or liability being measured. Both the amount and the duration of the cash flows are considered from a market participant perspective. Our estimates of market participant net cash flows considered historical and projected pricing, remaining developmental effort, operational performance including company specific synergies, aftermarket retention, product life cycles, material and labor pricing, and other relevant customer, contractual and market factors. Where appropriate, the net cash flows are adjusted to reflect the uncertainties associated with the underlying assumptions, as well as the risk profile of the net cash flows utilized in the valuation. The adjusted future cash flows are then discounted to present value using an appropriate discount rate. Projected cash flow is discounted at a required rate of return that reflects the relative risk of achieving the cash flow and the time value of money. The market approach is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities, or a group of assets and liabilities. Valuation techniques consistent with the market approach often use market multiples derived from a set of comparables. The cost approach, which estimates value by determining the current cost of replacing an asset with another of equivalent economic utility, was used, as appropriate, for property, plant and equipment. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the property, less an allowance for loss in value due to depreciation.

The preliminary purchase price allocation resulted in the recognition of $2.8 billion of goodwill, all of which is expected to be amortizable for tax purposes. All of the goodwill was assigned to our MST business segment. The goodwill recognized is attributable to expected revenue synergies generated by the integration of our products and technologies with those of Sikorsky, costs synergies resulting from the consolidation or elimination of certain functions, and intangible assets that do not qualify for separate recognition, such as the assembled workforce of Sikorsky.

Determining the fair value of assets acquired and liabilities assumed requires the exercise of significant judgments, including the amount and timing of expected future cash flows, long-term growth rates and discount rates. The cash flows employed in the DCF analyses are based on our best estimate of future sales, earnings and cash flows after considering factors such as general market conditions, customer budgets, existing firm orders, expected future orders, contracts with suppliers, labor agreements, changes in working capital, long term business plans and recent operating performance. Use of different estimates and judgments could yield different results.

Impact to 2015 Financial Results

Sikorsky’s financial results have been included in our consolidated financial results only for the period from the November 6, 2015 acquisition date through December 31, 2015. As a result, our consolidated financial results for the year ended December 31, 2015 do not reflect a full year of Sikorsky’s results. From the November 6, 2015 acquisition date through December 31, 2015, Sikorsky generated net sales of approximately $400 million and operating loss of approximately $45 million, inclusive of intangible amortization and adjustments required to account for the acquisition.

We incurred approximately $38 million of non-recoverable transaction costs associated with the Sikorsky acquisition in 2015 that were expensed as incurred. These costs are included in “Other income, net” on our Consolidated Statements of Earnings. We also incurred approximately $48 million in costs associated with issuing the $7.0 billion November 2015 Notes used to repay all outstanding borrowings under the 364-day Facility used to finance the acquisition. The financing costs were recorded as a reduction of debt and will be amortized to interest expense over the term of the related debt.

Supplemental Pro Forma Financial Information (unaudited)

The following table presents summarized unaudited pro forma financial information as if Sikorsky had been included in our financial results for the entire years in 2015 and 2014 (in millions):


	2015		2014
Net Sales	$	50,962	$	53,023
Net Earnings from continuing operations		3,538		3,480
Basic earnings per common share from continuing operations		11.40		10.99
Diluted earnings per common share from continuing operations		11.24		10.79

The unaudited supplemental pro forma financial data above has been calculated after applying our accounting policies and adjusting the historical results of Sikorsky with pro forma adjustments, net of tax, that assume the acquisition occurred on January 1, 2014. Significant pro forma adjustments include the recognition of additional amortization expense related to acquired intangible assets and additional interest expense related to the short-term debt used to finance the acquisition. These adjustments assume the application of fair value adjustments to intangibles and the debt issuance occurred on January 1, 2014 and are as follows: amortization expense of $125 million and $148 million in 2015 and 2014, respectively; and interest expense $42 million and $48 million in 2015 and 2014, respectively. In addition, significant nonrecurring adjustments include the elimination of a $72 million pension curtailment loss, net of tax, recognized in 2015 and the elimination of a $58 million income tax charge related to historic earnings of foreign subsidiaries recognized by Sikorsky in 2015.

The unaudited supplemental pro forma financial information also reflects an increase in interest expense, net of tax, of $109 million and $121 million in 2015 and 2014, respectively. The increase in interest expense is the result of assuming the November 2015 Notes were issued on January 1, 2014. Proceeds of the November 2015 Notes were used to repay all outstanding borrowings under the 364-day Facility used to finance a portion of the purchase of Sikorsky, as contemplated at the date of acquisition.

The unaudited supplemental pro forma financial information does not reflect the realization of any expected ongoing cost or revenue synergies relating to the integration of the two companies. Further, the pro forma data should not be considered indicative of the results that would have occurred if the acquisition, related financing and associated notes issuance and repayment of the 364-day credit facility had been consummated on January 1, 2014, nor are they indicative of future results.

Other acquisitions

We paid $898 million in 2014 for acquisitions of businesses and investments in affiliates, net of cash acquired, primarily related to the acquisitions of Systems Made Simple, Zeta and Industrial Defender. On December 1, 2014, we completed the acquisition of all interests in Systems Made Simple, a provider of health information technology solutions, which is included in our IS&GS business segment. On August 18, 2014, we completed the acquisition of all interests in Zeta, a designer of systems that enable collection, processing, safeguarding and dissemination of information for intelligence and defense communities, which is included in our Space Systems business segment. On April 7, 2014, we completed the acquisition of all interest in Industrial Defender, a provider of cybersecurity solutions for control systems in the oil and gas, utility and chemical industries, which is included in our IS&GS business segment. In connection with the 2014 acquisitions, we preliminarily recorded goodwill of $657 million, related to expected synergies from combining operations and value of the existing workforce. The recorded goodwill is not deductible for tax purposes. Additionally, we recorded other intangible assets of $223 million, primarily related to customer relationships and technologies, which will be amortized over a weighted average period of eight years. We plan to include Systems Made Simple and Industrial Defender in any future divestiture of our IS&GS business segment.

We paid $269 million in 2013 for acquisitions of businesses and investments in affiliates, net of cash acquired, primarily related to the acquisition of Amor Group, a United Kingdom-based company specializing in information technology, civil government services and the energy market. Amor Group is included in our IS&GS business segment. In connection with these acquisitions, we recorded goodwill of $175 million, which is not deductible for tax purposes. Additionally, we recorded other intangible assets of $34 million, related to customer relationships and technologies, which will be amortized over a weighted average period of eight years.

Systems Made Simple, Industrial Defender and Amor Group will be divested as part of the IS&GS business segment in connection with the proposed transaction with Leidos (discussed below).

Divestitures

IS&GS Divestiture

On January 26, 2016, we entered into definitive agreements to separate and combine our IS&GS business segment with Leidos in a tax-efficient Reverse Morris Trust transaction. As part of the transaction, we will receive a $1.8 billion one-time special cash payment . The cash payment is subject to adjustment and could be less or more than anticipated due to variances in working capital. Additionally, our stockholders will receive approximately 50.5 percent of the outstanding equity of Leidos on a fully diluted basis (approximately 77 million shares) with an estimated value of $3.2 billion based on Leidos’ stock price on the date of announcement. However, the actual value of the stock to be received by our stockholders will depend on the value of such shares at the time of closing of the transaction and our stockholders may receive more or less than the anticipated value. At our election, the distribution may be effected by means of a pro rata dividend in a spin-off transaction or in an exchange offer for outstanding Lockheed Martin shares in a split-off transaction. The transaction structure, which is subject to market conditions, is currently contemplated to be a split-off transaction resulting in a decrease in our outstanding common shares and a significant book gain at closing. In a split-off transaction, only those stockholders that elect to participate will receive Leidos shares in the merger transaction, provided, that, if the exchange offer is not fully subscribed, Lockheed Martin will spin-off the remaining shares to be converted into Leidos stock in the merger pro rata. The value of the shares of Leidos stock to be received and the value of our stock at the time of the split-off will also impact the number of any shares of our stock retired in the split-off and the amount of any book gain. Although the transaction structure is currently contemplated to be a split-off transaction, there is no assurance that the transaction will be structured as a split-off transaction or that it will result in a reduction in our shares or a gain at closing.

Subsequent to the program realignment completed in the fourth quarter of 2015, the IS&GS business segment consists solely of government IT and technical services businesses. The transaction is expected to close in the third or fourth quarter of 2016. Until closing, IS&GS will operate as a business segment and financial results for the IS&GS business segment will be reported in our continuing operations.

Prior Year Divestiture

Discontinued operations for 2013 included a benefit of $31 million resulting from the resolution of certain tax matters related to a business previously sold prior to 2013.

Goodwill and Acquired Intangibles

12 Months Ended

Dec. 31, 2015

Goodwill by Segment

Goodwill and Acquired Intangibles

Note 4 – Goodwill and Acquired Intangibles

Changes in the carrying amount of goodwill by segment were as follows (in millions):


	Aeronautics		IS&GS		MFC		MST		Space Systems		Total
Balance at December 31, 2013 ^(a)		$ 167		$2,649		$2,185		$4,049		$1,298		$10,348
Acquisitions		4		378		—		—		292		674
Impairments ^(b)		—		(119)		—		—		—		(119)
Other		—		(10)		(4)		(27)		—		(41)
Balance at December 31, 2014		171		2,898		2,181		4,022		1,590		10,862
Sikorsky acquisition		—		—		—		2,764		—		2,764
Impairments		—		—		—		—		—		—
Other		—		(17)		17		(48)		(2)		(50)
Balance at December 31, 2015		$ 171		$2,881		$2,198		$6,738		$1,588		$13,576

^(a)	Includes reclassifications of goodwill among our business segments as a result of our program realignment, which occurred during the fourth quarter of 2015 (Note 1).

^(b)	The impairment in 2014 relates to our Technical Services reporting unit within our IS&GS business segment (Note 1).

The gross carrying amounts and accumulated amortization of our acquired intangible assets consisted of the following (in millions):


	2015						2014
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-Lived:
Customer programs		$ 3,127		$ (38)		$ 3,089		$ —		$ —		$ —
Customer relationships		309		(166)		143		309		(123)		186
Technology		73		(37)		36		73		(21)		52
Trademarks		27		(14)		13		27		(3)		24
Other		71		(39)		32		71		(27)		44
Indefinite Lived:
Trademarks		834		—		834		18		—		18
Total acquired intangibles		$ 4,441		$ (294)		$ 4,147		$498		$(174)		$ 324

Acquired finite-lived intangible assets are amortized to expense over the following estimated useful lives: customer programs, from nine to 20 years; customer relationships, from four to 10 years; technology, from five to seven years; trademarks, from two to five years; and other intangibles, from three to 10 years.

Amortization expense for acquired finite-lived intangible assets was $116 million, $49 million and $48 million in 2015, 2014 and 2013. Estimated future amortization expense is as follows: $292 million in 2016; $274 million in 2017; $260 million in 2018; $254 million in 2019; $248 million in 2020 and $710 million thereafter. Our estimates of amortization expense for finite-lived intangible assets are subject to change, pending the final determination of the fair value of intangible assets acquired in connection with the Sikorsky acquisition (See Note 3).

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

Information on Business Segments

Information on Business Segments

12 Months Ended

Dec. 31, 2015

Note 5 – Information on Business Segments

We operate in five business segments: Aeronautics, Information Systems & Global Solutions (IS&GS), Missiles and Fire Control (MFC), Mission Systems and Training (MST) and Space Systems. We organize our business segments based on the nature of products and services offered.

During the fourth quarter of 2015, we realigned certain programs among our business segments in connection with the strategic review of our government IT and technical services businesses. As part of the realignment, command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) and government cyber programs were transferred from the IS&GS business segment to the MST business segment, energy solutions programs were transferred from the IS&GS business segment to the MFC business segment, space ground station programs were transferred from the IS&GS business segment to Space Systems business segment, and substantially all technical services programs were transferred from the MFC business segment to the IS&GS business segment. Subsequent to the program realignment, our IS&GS business segment which we plan to divest in the third or fourth quarter of 2016 represents the government IT and technical services businesses that were under strategic review.

The amounts, discussion and presentation of our business segments as set forth in our consolidated financial statements have been reclassified from prior year presentation to reflect the program realignment described above for all years presented. The realignment did not impact the Corporation’s previously reported consolidated financial statements.

Following is a brief description of the activities of our business segments:

•

Aeronautics – Engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of advanced military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies.

•

Information Systems & Global Solutions – Provides advanced technology systems and expertise, integrated information technology solutions and management services across a broad spectrum of applications for civil, defense, intelligence and other government customers. IS&GS’ technical services business provides a comprehensive portfolio of technical and sustainment services.

•

Missiles and Fire Control – Provides air and missile defense systems; tactical missiles and air-to-ground precision strike weapon systems; logistics; fire control systems; mission operations support, readiness, engineering support and integration services; manned and unmanned ground vehicles; and energy management solutions.

•

Mission Systems and Training – Provides design, manufacture, service and support for a variety of military and civil helicopters; ship and submarine mission and combat systems; mission systems and sensors for rotary and fixed-wing aircraft; sea and land-based missile defense systems; radar systems; the Littoral Combat Ship; simulation and training services; and unmanned systems and technologies. In addition, MST supports the needs of customers in cybersecurity and delivers communications and command and control capability through complex mission solutions for defense applications. The results of the acquired Sikorsky business have been included in our consolidated results of operations from the November 6, 2015 acquisition date through December 31, 2015. Accordingly, the consolidated results of operations for the year ended December 31, 2015 do not reflect a full year of Sikorsky operations.

•

Space Systems – Engaged in the research and development, design, engineering and production of satellites, strategic and defensive missile systems and space transportation systems. Space systems provides network-enabled situational awareness and integrates complex global systems to help our customers gather, analyze and securely distribute critical intelligence data. Space Systems is also responsible for various classified systems and services in support of vital national security systems. Operating profit for our Space Systems business segment includes our share of earnings for our investment in ULA, which provides expendable launch services to the U.S. Government.

The financial information in the following tables includes the results of businesses we have acquired during the past three years (Note 3) from their respective dates of acquisition. The business segment operating results in the following tables exclude businesses included in discontinued operations (Note 3) for all years presented. 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 significant severance actions (Note 15) and goodwill impairments; 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 1 (under the caption “Use of 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.

Selected Financial Data by Business Segment

Summary operating results for each of our business segments were as follows (in millions):


	2015			2014			2013
Net sales
Aeronautics	$	15,570		$	14,920		$	14,123
Information Systems & Global Solutions		5,596			5,654			6,115
Missiles and Fire Control		6,770			7,092			6,795
Mission Systems and Training		9,091			8,732			9,037
Space Systems		9,105			9,202			9,288
Total net sales	$	46,132		$	45,600		$	45,358
Operating profit
Aeronautics	$	1,681		$	1,649		$	1,612
Information Systems & Global Solutions		508			472			498
Missiles and Fire Control		1,282			1,344			1,379
Mission Systems and Training		844			936			1,065
Space Systems		1,171			1,187			1,198
Total business segment operating profit		5,486			5,588			5,752
Unallocated items
FAS/CAS pension adjustment
FAS pension expense ^(a)		(1,142	)		(1,144	)		(1,948)
Less: CAS pension cost ^(b)		1,613			1,520			1,466
FAS/CAS pension income (expense)		471			376			(482)
Goodwill impairment charges ^(c)		—			(119	)		(195)
Severance charges ^(d)		(102	)		—			(201)
Stock-based compensation		(138	)		(164	)		(189)
Other, net ^{(e), (f)}		(281	)		(89	)		(180)
Total unallocated items		(50	)		4			(1,247)
Total consolidated operating profit	$	5,436		$	5,592		$	4,505

^(a)	FAS pension expense in 2015 and 2014 was less than in 2013 primarily due to the June 2014 plan amendments to certain of our defined benefit pension plans to freeze future retirement benefits, partially offset by the impact of using new longevity assumptions (Note 11).

^(b)	The higher CAS pension cost primarily reflects the impact of phasing in CAS Harmonization.

^(c)	We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information.

^(d)	See Note 15 for information on charges related to certain severance actions at our business segments. Severance charges for initiatives that are not significant are included in business segment operating profit.

^(e)

Other, net in 2015 includes a non-cash asset impairment charge of approximately $90 million related to our decision to divest Lockheed Martin Commercial Flight Training (LMCFT) in 2016. This charge was partially offset by a net deferred tax benefit of about $80 million, which is recorded in income tax expense. The net impact reduced net earnings by about $10 million.

^(f)	Other, net in 2015 includes approximately $45 million of non-recoverable transaction costs associated with the acquisition of Sikorsky and the strategic review of our government IT and technical services businesses.

Selected Financial Data by Business Segment (continued)


	2015		2014		2013
Intersegment sales
Aeronautics	$	102	$	104	$	203
Information Systems & Global Solutions		53		12		14
Missiles and Fire Control		313		255		220
Mission Systems and Training		1,529		1,243		1,030
Space Systems		145		136		119
Total intersegment sales	$	2,142	$	1,750	$	1,586

Depreciation and amortization
Aeronautics	$	317	$	322	$	318
Information Systems & Global Solutions		101		47		48
Missiles and Fire Control		99		99		98
Mission Systems and Training		203		175		194
Space Systems		208		244		225
Total business segment depreciation and amortization		928		887		883
Corporate activities		98		107		107
Total depreciation and amortization	$	1,026	$	994	$	990

Capital expenditures
Aeronautics	$	387	$	283	$	271
Information Systems & Global Solutions		31		18		33
Missiles and Fire Control		120		142		128
Mission Systems and Training		169		164		146
Space Systems		172		172		187
Total business segment capital expenditures		879		779		765
Corporate activities		60		66		71
Total capital expenditures	$	939	$	845	$	836

Selected Financial Data by Business Segment (continued)

Net Sales by Customer Category

Net sales by customer category were as follows (in millions):


	2015		2014		2013
U.S. Government
Aeronautics	$	11,195	$	10,704	$	11,025
Information Systems & Global Solutions		4,990		5,204		5,823
Missiles and Fire Control		4,150		4,509		4,069
Mission Systems and Training		6,961		6,752		7,132
Space Systems		8,845		8,921		9,124
Total U.S. Government net sales	$	36,141	$	36,090	$	37,173
International ^(a)
Aeronautics	$	4,328	$	4,183	$	3,078
Information Systems & Global Solutions		520		401		262
Missiles and Fire Control		2,449		2,421		2,535
Mission Systems and Training		2,016		1,921		1,792
Space Systems		218		89		101
Total international net sales	$	9,531	$	9,015	$	7,768
U.S. Commercial and Other
Aeronautics	$	47	$	33	$	20
Information Systems & Global Solutions		86		49		30
Missiles and Fire Control		171		162		191
Mission Systems and Training		114		59		113
Space Systems		42		192		63
Total U.S. commercial and other net sales	$	460	$	495	$	417
Total net sales	$	46,132	$	45,600	$	45,358

^(a)	International sales include foreign military sales contracted through the U.S. Government, direct commercial sales with international governments and commercial and other sales to international customers.

Our Aeronautics business segment includes our largest program, the F-35 Lightning II Joint Strike Fighter, an international multi-role, multi-variant, stealth fighter aircraft. Net sales for the F-35 program represented approximately 20%, 17% and 16% of our total consolidated net sales during 2015, 2014 and 2013.

Selected Financial Data by Business Segment (continued)

Total assets and customer advances and amounts in excess of costs incurred for each of our business segments were as follows (in millions):


	2015		2014
Assets ^(a)
Aeronautics	$	6,618	$	6,042
Information Systems & Global Solutions		4,206		4,268
Missiles and Fire Control		4,027		3,977
Mission Systems and Training		19,187		7,465
Space Systems		4,861		4,732
Total business segment assets		38,899		26,484
Corporate assets ^(b)		10,229		10,562
Total assets	$	49,128	$	37,046

Customer advances and amounts in excess of costs incurred
Aeronautics	$	2,045	$	2,191
Information Systems & Global Solutions		285		227
Missiles and Fire Control		1,766		1,803
Mission Systems and Training		2,415		1,148
Space Systems		477		406
Total customer advances and amounts in excess of costs incurred	$	6,988	$	5,775

^(a)	We have no significant long-lived assets located in foreign countries.

^(b)	Corporate assets primarily include cash and cash equivalents, deferred income taxes, environmental receivables and investments held in a separate trust.

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8981-108599

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9038-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 33
-URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8971-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8595-108599

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8380-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 35
-URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8984-108599

Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9031-108599

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9054-108599

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-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8538-108599

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+ Details

Receivables, net

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment, net

Note 6 – Receivables, net

Receivables, net consisted of the following (in millions):


	2015			2014
U.S. Government
Amounts billed	$	1,492		$	1,434
Unbilled costs and accrued profits		5,734			4,577
Less: customer advances and progress payments		(1,311	)		(1,012)
Total U.S. Government receivables, net		5,915			4,999
Other governments and commercial
Amounts billed		772			460
Unbilled costs and accrued profits		1,995			671
Less: customer advances		(621	)		(253)
Total other governments and commercial receivables, net		2,146			878
Total receivables, net	$	8,061		$	5,877

We expect to bill substantially all of the December 31, 2015 unbilled costs and accrued profits during 2016.

Inventories, net

12 Months Ended

Dec. 31, 2015

Inventories, net

Note 7 – Inventories, net

Inventories, net consisted of the following (in millions):


	2015			2014
Work-in-process, primarily related to long-term contracts and programs in progress	$	8,199		$	6,731
Less: customer advances and progress payments		(5,035	)		(4,701)
		3,164			2,030
Other inventories		1,798			774
Total inventories, net	$	4,962		$	2,804

Work-in-process inventories at December 31, 2015 and 2014 included general and administrative costs of $578 million and $698 million. General and administrative costs incurred and recorded in inventories totaled $2.8 billion in 2015, $2.6 billion in 2014 and $2.4 billion in 2013. General and administrative costs charged to cost of sales from inventories totaled $2.9 billion in 2015, $2.6 billion in 2014 and $2.4 billion in 2013.

Property, Plant and Equipment, net

12 Months Ended

Dec. 31, 2015

Note 8 – Property, Plant and Equipment, net

Property, plant and equipment, net consisted of the following (in millions):


	2015			2014
Land	$	123		$	99
Buildings		6,128			5,723
Machinery and equipment		7,409			7,031
Construction in progress		887			636
		14,547			13,489
Less: accumulated depreciation and amortization		(9,057	)		(8,738)
Total property, plant and equipment, net	$	5,490		$	4,751

Income Taxes

12 Months Ended

Dec. 31, 2015

Income Taxes

Note 9 – Income Taxes

Our provision for federal and foreign income tax expense for continuing operations consisted of the following (in millions):


	2015			2014			2013
Federal income tax expense (benefit):
Current	$	1,817		$	2,020		$	1,204
Deferred		(473	)		(387	)		3
Total federal income tax expense		1,344			1,633			1,207
Foreign income tax expense (benefit):
Current		46			24			6
Deferred		28			(13	)		(8)
Total foreign income tax expense (benefit)		74			11			(2)
Total income tax expense	$	1,418		$	1,644		$	1,205

State income taxes are included in our operations as general and administrative costs and, under U.S. Government regulations, are allowable costs in establishing prices for the products and services we sell to the U.S. Government. Therefore, a substantial portion of state income taxes is included in our net sales and cost of sales. As a result, the impact of certain transactions on our operating profit and of other matters presented in these financial statements is disclosed net of state income taxes. Our total net state income tax expense was $127 million for 2015, $207 million for 2014, and $121 million for 2013.

Our reconciliation of the 35% U.S. federal statutory income tax rate to actual income tax expense for continuing operations is as follows (in millions):


	2015			2014			2013
Income tax expense at the U.S. federal statutory tax rate	$	1,758		$	1,840		$	1,454
U.S. manufacturing deduction benefit		(126	)		(127	)		(100)
Tax deductible dividends		(87	)		(82	)		(77)
Research and development tax credit		(71	)		(66	)		(96)
Goodwill impairment – non-deductible portion		—			30			50
Other, net		(56	)		49			(26)
Income tax expense	$	1,418		$	1,644		$	1,205

We recognized tax benefits of $71 million in 2015, $66 million in 2014, and $96 million in 2013 from U.S. research and development (R&D) tax credits, including benefits attributable to prior periods. In 2015, the R&D tax credit was permanently extended and reinstated, retroactive to the beginning of 2015, which reduced income tax expenses by approximately $71 million. In 2014, the R&D tax credit was temporarily reinstated for one year, retroactive to the beginning of 2014, which reduced income tax expense by approximately $45 million. In 2013, the R&D tax credit was temporarily reinstated for two years, retroactive to the beginning of 2012. As a result, income tax expense for 2013 reflects the credit for all of 2013 and 2012, which reduced income tax expense by approximately $76 million.

We receive a tax deduction for dividends paid on shares of our common stock held by certain of our defined contribution plans with an employee stock ownership plan feature. The amount of the tax deduction has increased as we increased our dividend over the last three years, partially offset by a decline in the number of shares in these plans.

A limited amount of the 2014 and 2013 non-cash goodwill impairment charges will be deductible for tax purposes. Accordingly, the 2014 and 2013 non-cash goodwill impairment charges (Note 1) of $119 million and $195 million, respectively, increased our 2014 and 2013 effective tax rates.

As a result of a decision in 2015 to divest Lockheed Martin Commercial Flight Training in 2016, we recorded an asset impairment charge of approximately $90 million. This charge was partially offset by a net deferred tax benefit of about $80 million. The net impact of the resulting tax benefit reduced the effective income tax rate by 1.0 percentage point in 2015.

We participate in the IRS Compliance Assurance Process program. The IRS examination of the year 2012 was completed in the fourth quarter of 2013. The examinations of the years 2013 and 2014 remain under review.

The primary components of our federal and foreign deferred income tax assets and liabilities at December 31 were as follows (in millions):


	2015			2014
Deferred tax assets related to:
Accrued compensation and benefits	$	961		$	965
Pensions ^(a)		4,462			4,317
Other postretirement benefit obligations		375			386
Contract accounting methods		1,039			989
Foreign company operating losses and credits		70			59
Other		434			198
Valuation allowance ^(b)		(76	)		(9)
Deferred tax assets, net		7,265			6,905
Deferred tax liabilities related to:
Goodwill and purchased intangibles		474			454
Property, plant and equipment		457			514
Exchanged debt securities and other ^(c)		409			485
Deferred tax liabilities		1,340			1,453
Net deferred tax assets ^(d)	$	5,925		$	5,452

^(a)	The increase in 2015 was primarily due to the negative investment return on postretirement plan assets (Note 11).

^(b)	A valuation allowance was provided against certain foreign company deferred tax assets arising from carryforwards of unused tax benefits.

^(c)	Includes deferred taxes associated with the exchange of debt securities in prior years.

^(d)	Includes net foreign current deferred tax liabilities, which are included on the Balance Sheets in other current liabilities.

As of December 31, 2015 and 2014, our liabilities associated with unrecognized tax benefits are not material.

We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various foreign jurisdictions. With few exceptions, the statute of limitations is no longer open for U.S. federal or non-U.S. income tax examinations for the years before 2012, other than with respect to refunds.

U.S. income taxes and foreign withholding taxes have not been provided on earnings of $353 million, $291 million, and $222 million that have not been distributed by our non-U.S. companies as of December 31, 2015, 2014, and 2013. Our intention is to permanently reinvest these earnings, thereby indefinitely postponing their remittance to the U.S. If these earnings had been remitted, we estimate that the additional income taxes after foreign tax credits would have been approximately $48 million in 2015, $55 million in 2014, and $50 million in 2013.

Our federal and foreign income tax payments, net of refunds received, were $1.8 billion in 2015, $1.5 billion in 2014, and $787 million in 2013. Our 2014 net payments reflect a $200 million refund from the IRS primarily attributable to our tax-deductible discretionary pension contributions during the fourth quarters of 2013.

Debt

12 Months Ended

Dec. 31, 2015

Debt

Note 10 – Debt

Our long-term debt consisted of the following (in millions):


	2015			2014
Notes with rates from 1.85% to 3.80%, due 2016 to 2045	$	8,150		$	1,400
Notes with rates from 4.07% to 5.72%, due 2019 to 2046		6,089			3,589
Notes with rates from 6.15% to 9.13%, due 2016 to 2036		1,941			1,941
Other debt		116			111
Total long-term debt		16,296			7,041
Less: unamortized discounts and deferred financing costs		(1,035	)		(899)
Total long-term debt, net	$	15,261		$	6,142

Revolving Credit Facilities

On October 9, 2015, we entered into a new $2.5 billion revolving credit facility (the 5-year Facility) with various banks and concurrently terminated our existing $1.5 billion revolving credit facility, which was scheduled to expire in August 2019. The 5-year Facility, which expires on October 9, 2020, is available for general corporate purposes. The undrawn portion of the 5-year Facility is also available to serve as a backup facility for the issuance of commercial paper. We may request and the banks may grant, at their discretion, an increase in the borrowing capacity under the 5-year Facility of up to an additional $500 million. There were no borrowings outstanding under the 5-year Facility as of and during the year ended December 31, 2015.

In contemplation of our acquisition of Sikorsky, on October 9, 2015, we also entered into a 364-day revolving credit facility (the 364-day Facility, and together with the 5-year Facility, the Facilities) with various banks that provided $7.0 billion of funding for general corporate purposes, including the acquisition of Sikorsky. Concurrent with the consummation of the Sikorsky acquisition, we borrowed $6.0 billion under the 364-day Facility. On November 23, 2015, we repaid all outstanding borrowings under the 364-day facility with proceeds received from an issuance of new debt (see below) and terminated any remaining commitments of the lenders under the 364-day Facility.

Borrowings under the Facilities bear interest at rates based, at our option, on a Eurodollar Rate or a Base Rate, as defined in the Facilities’ agreements. Each bank’s obligation to make loans under the 5-year Facility is subject to, among other things, our compliance with various representations, warranties, and covenants, including covenants limiting our ability and certain of our subsidiaries’ ability to encumber assets and a covenant not to exceed a maximum leverage ratio, as defined in the Five-year Facility agreement. As of December 31, 2015, we were in compliance with all covenants contained in the 5-year Facility agreement, as well as in our debt agreements.

Long-Term Debt

On November 23, 2015, we issued $7.0 billion of notes (the November 2015 Notes) in a registered public offering. We received net proceeds of $6.9 billion from the offering, after deducting discounts and debt issuance costs, which are being amortized as interest expense over the life of the debt. The November 2015 Notes consist of:

•

$750 million maturing in 2018 with a fixed interest rate of 1.85% (the 2018 Notes);

•

$1.25 billion maturing in 2020 with a fixed interest rate of 2.50% (the 2020 Notes);

•

$500 million maturing in 2023 with a fixed interest rate of 3.10% the 2023 Notes);

•

$2.0 billion maturing in 2026 with a fixed interest rate of 3.55% (the 2026 Notes);

•

$500 million maturing in 2036 with a fixed interest rate of 4.50% (the 2036 Notes); and

•

$2.0 billion maturing in 2046 with a fixed interest rate of 4.70% (the 2046 Notes).

We may, at our option, redeem some or all of the November 2015 Notes and unpaid interest at any time by paying the principal amount of notes being redeemed plus any make-whole premium and accrued and unpaid interest to the date of redemption. Interest is payable on the 2018 Notes and the 2020 Notes on May 23 and November 23 of each year, beginning on May 23, 2016; on the 2023 Notes and the 2026 Notes on January 15 and July 15 of each year, beginning on July 15, 2016; and on the 2036 Notes and the 2046 Notes on May 15 and November 15 of each year, beginning on May 15, 2016. The November 2015 Notes rank equally in right of payment with all of our existing unsecured and unsubordinated indebtedness. The proceeds of the November 2015 Notes were used to repay $6.0 billion of borrowings under our 364-day Facility and for general corporate purposes.

On February 20, 2015, we issued $2.25 billion of notes (the February 2015 Notes) in a registered public offering. We received net proceeds of $2.21 billion from the offering, after deducting discounts and debt issuance costs, which are being amortized as interest expense over the life of the debt. The February 2015 Notes consist of $750 million maturing in 2025 with a fixed interest rate of 2.90%, $500 million maturing in 2035 with a fixed interest rate of 3.60% and $1.0 billion maturing in 2045 with a fixed interest rate of 3.80%. We may, at our option, redeem some or all of the notes at any time by paying the principal amount of notes being redeemed plus any make-whole premium and accrued and unpaid interest to the date of redemption. Interest on the notes is payable on March 1 and September 1 of each year, beginning on September 1, 2015. These notes rank equally in right of payment with all of our existing unsecured and unsubordinated indebtedness. The proceeds of the February 2015 Notes were used for general corporate purposes.

Commercial Paper

We have agreements in place with financial institutions to provide for the issuance of commercial paper. In connection with the Sikorsky acquisition, in the fourth quarter of 2015 we borrowed and repaid approximately $1.0 billion under our commercial paper programs. There were no commercial paper borrowings outstanding as of December 31, 2015. If we were to issue commercial paper in the future, the borrowings would be supported by the credit facility.

Postretirement Plans

12 Months Ended

Dec. 31, 2015

Postretirement Plans

Note 11 – Postretirement Plans

Defined Benefit Pension Plans and Retiree Medical and Life Insurance Plans

Many of our employees are covered by qualified defined benefit pension plans and we provide certain health care and life insurance benefits to eligible retirees (collectively, postretirement benefit plans). We also sponsor nonqualified defined benefit pension plans to provide for benefits in excess of qualified plan limits. Non-union employees hired after December 2005 do not participate in our qualified defined benefit pension plans, but are eligible to participate in a qualified defined contribution plan in addition to our other retirement savings plans. They also have the ability to participate in our retiree medical plans, but we do not subsidize the cost of their participation in those plans as we do with employees hired before January 1, 2006. Over the last few years, we have negotiated similar changes with various labor organizations such that new union represented employees do not participate in our defined benefit pension plans. In June 2014, we amended certain of our qualified and nonqualified defined benefit pension plans for non-union employees to freeze future retirement benefits. The calculation of retirement benefits under the affected defined benefit pension plans is determined by a formula that takes into account the participants’ years of credited service and average compensation. The freeze will take effect in two stages. Beginning on January 1, 2016, the pay-based component of the formula used to determine retirement benefits is frozen so that future pay increases, annual incentive bonuses or other amounts earned for or related to periods after December 31, 2015 are not used to calculate retirement benefits. On January 1, 2020, the service-based component of the formula used to determine retirement benefits will also be frozen so that participants will no longer earn further credited service for any period after December 31, 2019. When the freeze is complete, the majority of our salaried employees will have transitioned to an enhanced defined contribution retirement savings plan. As part of the November 6, 2015 acquisition of Sikorsky, we established a new open defined benefit pension plan for Sikorsky’s union workforce that provides benefits for their prospective service with us. The Sikorsky salaried employees participate in a defined contribution plan. We did not transfer any legacy pension liability from UTC.

We have made contributions to trusts established to pay future benefits to eligible retirees and dependents, including Voluntary Employees’ Beneficiary Association trusts and 401(h) accounts, the assets of which will be used to pay expenses of certain retiree medical plans. We use December 31 as the measurement date. Benefit obligations as of the end of each year reflect assumptions in effect as of those dates. Net periodic benefit cost is based on assumptions in effect at the end of the respective preceding year.

The rules related to accounting for postretirement benefit plans under GAAP require us to recognize on a plan-by-plan basis the funded status of our postretirement benefit plans as either an asset or a liability on our Balance Sheets. There is a corresponding non-cash adjustment to accumulated other comprehensive loss, net of tax benefits recorded as deferred tax assets, in stockholders’ equity. The funded status is measured as the difference between the fair value of the plan’s assets and the benefit obligation of the plan.

The net periodic benefit cost recognized each year included the following (in millions):


	Qualified Defined Benefit Pension Plans ^(a)						Retiree Medical and Life Insurance Plans
	2015		2014		2013		2015		2014		2013
Service cost	$	875	$	903	$	1,142	$	21	$	22	$	27
Interest cost		1,791		1,912		1,800		110		123		116
Expected return on plan assets		(2,734)		(2,693)		(2,485)		(147)		(146)		(145)
Recognized net actuarial losses		1,599		1,173		1,410		43		23		44
Amortization of net prior service (credit) cost		(389)		(151)		81		4		4		(17)
Total net periodic benefit cost	$	1,142	$	1,144	$	1,948	$	31	$	26	$	25

^(a)

Total net periodic benefit cost associated with our qualified defined benefit plans represents pension expense calculated in accordance with GAAP (FAS pension expense). We are required to calculate pension expense in accordance with both GAAP and CAS rules, each of which results in a different calculated amount of pension expense. The CAS pension cost is recovered through the pricing of our products and services on U.S. Government contracts and, therefore, is recognized in net sales and cost of sales for products and services. We include the difference between FAS pension expense and CAS pension cost, referred to as the FAS/CAS pension adjustment, as a component of other unallocated, net on our Statements of Earnings. The FAS/CAS pension adjustment, which was income of $471 million in 2015; income of $376 million in 2014; and expense of $482 million in 2013, effectively adjusts the amount of CAS pension cost in the business segment operating profit so that pension expense recorded on our Statements of Earnings is equal to FAS pension expense.

The following table provides a reconciliation of benefit obligations, plan assets and unfunded status related to our qualified defined benefit pension plans and our retiree medical and life insurance plans (in millions):


	Qualified Defined Benefit Pension Plans				Retiree Medical and Life Insurance Plans
	2015		2014		2015		2014
Change in benefit obligation
Beginning balance	$	45,882	$	42,161	$	3,034	$	2,823
Service cost		875		903		21		22
Interest cost		1,791		1,912		110		123
Benefits paid ^(a)		(2,055)		(2,399)		(307)		(352)
Actuarial losses (gains)		(1,988)		4,493		(170)		(40)
New longevity assumptions		(834)		3,390		(77)		266
Plan amendments and acquisitions ^(b)		31		(4,578)		157		5
Medicare Part D subsidy		—		—		14		26
Participants’ contributions		—		—		101		161
Ending balance	$	43,702	$	45,882	$	2,883	$	3,034

Change in plan assets
Beginning balance at fair value	$	34,673	$	33,010	$	1,932	$	1,921
Actual return on plan assets		(527)		2,062		(27)		126
Benefits paid ^(a)		(2,055)		(2,399)		(307)		(352)
Company contributions		5		2,000		100		50
Medicare Part D subsidy		—		—		14		26
Participants’ contributions		—		—		101		161
Ending balance at fair value	$	32,096	$	34,673	$	1,813	$	1,932
Unfunded status of the plans	$	(11,606)	$	(11,209)	$	(1,070)	$	(1,102)

^(a)

Benefits paid in 2014 for qualified defined benefit pension plans include $427 million in the form of lump-sum settlement payments to former employees who had not commenced receiving their vested benefit payments. The corresponding benefit obligation that was released was $529 million. The settlement payments had no impact on our 2014 FAS pension expense and CAS pension cost.

^(b)

The June 2014 plan amendment which resulted in freezing the pay-based component of the formula used to determine retirement benefits under the affected plans reduced our qualified defined benefit pension obligations by $4.6 billion, which resulted in a corresponding reduction, net of tax, in the accumulated other comprehensive loss (AOCL) component of stockholders’ equity. This amount is being recognized as a reduction of net periodic benefit cost (i.e., amortization of net prior service credit) over the estimated remaining service period of the covered employees, which is approximately 10 years and began in the third quarter of 2014. The November 2015 acquisition of Sikorsky increased our qualified defined benefit pension obligations by about $30 million.

The following table provides amounts recognized on our Balance Sheets related to our qualified defined benefit pension plans and our retiree medical and life insurance plans (in millions):

Qualified Defined Benefit
Pension Plans

Retiree Medical and

Life Insurance Plans

2015

2014

2015

2014

Prepaid pension asset

$ 201

$ 204

$ —

$ —

Accrued postretirement benefit liabilities

(11,807)

(11,413)

(1,070)

(1,102)

Accumulated other comprehensive loss (pre-tax) related to:

Net actuarial losses

19,632

20,794

627

741

Prior service (credit) cost

(3,565)

(3,985)

167

Total ^(a)

$16,067

$16,809

$ 794

$ 755

^(a)

Accumulated other comprehensive loss related to postretirement benefit plans, after tax, of $11.3 billion and $11.8 billion at December 31, 2015 and 2014 (Note 12) includes $16.1 billion ($10.4 billion after tax) and $16.8 billion ($10.8 billion after tax) for qualified defined benefit pension plans, $794 million ($514 million after tax) and $755 million ($488 million after tax) for retiree medical and life insurance plans and $620 million ($408 million after tax) and $692 million ($460 million after tax) for other plans.

The accumulated benefit obligation (ABO) for all qualified defined benefit pension plans was $43.5 billion and $45.2 billion at December 31, 2015 and 2014, of which $43.4 billion and $45.0 billion related to plans where the ABO was in excess of plan assets. The ABO represents benefits accrued without assuming future compensation increases to plan participants. Certain key information related to our qualified defined benefit pension plans as of December 31, 2015 and 2014 is as follows (in millions):


	2015			2014
Plans where ABO was in excess of plan assets
Projected benefit obligation		$ 43,575			$ 45,741
Less: fair value of plan assets		31,768			34,328
Unfunded status of plans ^(a)		(11,807	)		(11,413)

Plans where ABO was less than plan assets
Projected benefit obligation		127			141
Less: fair value of plan assets		328			345
Funded status of plans ^(b)		$ 201			$ 204

^(a)	Represent accrued pension liabilities, which are included on our Balance Sheets.

^(b)	Represent prepaid pension assets, which are included on our Balance Sheets in other noncurrent assets.

We also sponsor nonqualified defined benefit plans to provide benefits in excess of qualified plan limits. The aggregate liabilities for these plans at December 31, 2015 and 2014 were $1.2 billion and $1.1 billion, which also represent the plans’ unfunded status. We have set aside certain assets totaling $421 million and $397 million as of December 31, 2015 and 2014 in a separate trust which we expect to be used to pay obligations under our nonqualified defined benefit plans. In accordance with GAAP, those assets may not be used to offset the amount of the benefit obligation similar to the postretirement benefit plans in the table above. The unrecognized net actuarial losses at December 31, 2015 and 2014 were $632 million and $662 million. The unrecognized prior service credit at December 31, 2015 was $95 million and was $121 million at December 31, 2014. The expense associated with these plans totaled $117 million in 2015, $115 million in 2014 and $108 million in 2013. We also sponsor a small number of other postemployment plans and foreign benefit plans. The aggregate liability for the other postemployment plans was $70 million and $88 million as of December 31, 2015 and 2014. The expense for the other postemployment plans, as well as the liability and expense associated with the foreign benefit plans, was not material to our results of operations, financial position or cash flows. The actuarial assumptions used to determine the benefit obligations and expense associated with our nonqualified defined benefit plans and postemployment plans are similar to those assumptions used to determine the benefit obligations and expense related to our qualified defined benefit pension plans and retiree medical and life insurance plans as described below.

The following table provides the amounts recognized in other comprehensive income (loss) related to postretirement benefit plans, net of tax, for the years ended December 31, 2015, 2014 and 2013 (in millions):


	Incurred but Not Yet Recognized in Net Periodic Benefit Cost						Recognition of Previously Deferred Amounts
	2015		2014		2013		2015		2014		2013
	Gains (losses)						(Gains) losses
Actuarial gains and losses
Qualified defined benefit pension plans		$(291)		$(5,505)		$2,751		$1,034		$758		$ 911
Retiree medical and life insurance plans		46		(160)		140		28		15		28
Other plans		21		(245)		46		47		33		34
		(224)		(5,910)		2,937		1,109		806		973

	Credit (cost)						(Credit) cost
Net prior service credit and cost
Qualified defined benefit pension plans		(18)		2,959		(69)		(251)		(98)		53
Retiree medical and life insurance plans		(102)		(3)		—		2		3		(11)
Other plans		(7)		84		—		(10)		(5)		—
		(127)		3,040		(69)		(259)		(100)		42
		$(351)		$(2,870)		$2,868		$ 850		$706		$1,015

We expect that approximately $1.1 billion, or about $693 million net of tax, of actuarial losses and net prior service credit related to postretirement benefit plans included in accumulated other comprehensive loss at the end of 2015 to be recognized in net periodic benefit cost during 2016. Of this amount, $1.0 billion, or $629 million net of tax, relates to our qualified defined benefit plans and is included in our expected 2016 pension expense of $1.0 billion.

Actuarial Assumptions

The actuarial assumptions used to determine the benefit obligations at December 31 of each year and to determine the net periodic benefit cost for each subsequent year, were as follows:


	Qualified Defined Benefit Pension Plans						Retiree Medical and Life Insurance Plans
	2015		2014		2013		2015		2014		2013
Discount rate		4.375%		4.00%		4.75%		4.25%		3.75%		4.50%
Expected long-term rate of return on assets		8.00%		8.00%		8.00%		8.00%		8.00%		8.00%
Rate of increase in future compensation levels		4.50%		4.30%		4.30%
Health care trend rate assumed for next year								9.00%		8.50%		8.75%
Ultimate health care trend rate								5.00%		5.00%		5.00%
Year that the ultimate health care trend rate is reached								2032		2029		2029

The increase in the discount rate from December 31, 2014 to December 31, 2015 resulted in a decrease in the projected benefit obligations of our qualified defined benefit pension plans of approximately $2.1 billion at December 31, 2015. The decrease in the discount rate from December 31, 2013 to December 31, 2014 resulted in an increase in the projected benefit obligations of our qualified defined benefit pension plans of approximately $4.8 billion at December 31, 2014.

The long-term rate of return assumption represents the expected long-term rate of earnings on the funds invested, or to be invested, to provide for the benefits included in the benefit obligations. That assumption is based on several factors including historical market index returns, the anticipated long-term allocation of plan assets, the historical return data for the trust funds, plan expenses and the potential to outperform market index returns.

Plan Assets

Investment policies and strategies – Lockheed Martin Investment Management Company (LMIMCo), our wholly-owned subsidiary, has the fiduciary responsibility for making investment decisions related to the assets of our postretirement benefit plans. LMIMCo’s investment objectives for the assets of these plans are (1) to minimize the net present value of expected funding contributions; (2) to ensure there is a high probability that each plan meets or exceeds our actuarial long-term rate of return assumptions; and (3) to diversify assets to minimize the risk of large losses. The nature and duration of benefit obligations, along with assumptions concerning asset class returns and return correlations, are considered when determining an appropriate asset allocation to achieve the investment objectives.

Investment policies and strategies governing the assets of the plans are designed to achieve investment objectives within prudent risk parameters. Risk management practices include the use of external investment managers; the maintenance of a portfolio diversified by asset class, investment approach and security holdings; and the maintenance of sufficient liquidity to meet benefit obligations as they come due.

LMIMCo’s investment policies require that asset allocations of postretirement benefit plans be maintained within the following approximate ranges:


Asset Class		Asset Allocation Ranges
Cash and cash equivalents		0-20%
Equity		15-65%
Fixed income		10-60%
Alternative investments:
Private equity funds		0-15%
Real estate funds		0-10%
Hedge funds		0-20%
Commodities		0-25%

Fair value measurements – The rules related to accounting for postretirement benefit plans under GAAP require certain fair value disclosures related to postretirement benefit plan assets, even though those assets are not included on our Balance Sheets. The following table presents the fair value of the assets (in millions) of our qualified defined benefit pension plans and retiree medical and life insurance plans by asset category and their level within the fair value hierarchy, which has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets, Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs.


	December 31, 2015										December 31, 2014
	Total			Level 1		Level 2			Level 3		Total		Level 1		Level 2		Level 3
Cash and cash equivalents ^(a)	$	2,658		$	2,658		$ —		$	—	$	2,968	$	2,968		$ —	$	—
Equity ^(a):
U.S. equity securities		4,790			4,771		19			—		6,431		6,363		67		1
International equity securities		6,121			6,087		24			10		5,566		5,525		31		10
Commingled equity funds		1,935			614		1,321			—		6,078		2,047		4,031		—
Fixed income ^(a):
Corporate debt securities		3,929			—		3,914			15		4,242		—		4,201		41
U.S. Government securities		5,069			—		5,069			—		4,579		—		4,579		—
U.S. Government-sponsored enterprise securities		1,377			—		1,377			—		613		—		613		—
Other fixed income investments		3,252			—		3,246			6		1,807		39		1,759		9
Alternative investments:
Private equity funds		3,131			—		—			3,131		2,952		—		—		2,952
Real estate funds		1,108			—		92			1,016		762		—		33		729
Hedge funds		522			—		167			355		570		—		66		504
Commodities ^(a)		(26	)		1		(27	)		—		2		2		—		—
Total	$	33,866		$	14,131		$15,202		$	4,533	$	36,570	$	16,944		$15,380	$	4,246
Receivables, net		43										35
Total	$	33,909									$	36,605

^(a)

Cash and cash equivalents, equity securities, fixed income securities and commodities included derivative assets and liabilities whose fair values were not material as of December 31, 2015 and 2014. LMIMCO’s investment policies restrict the use of derivatives to either establish long exposures for purposes of expediency or capital efficiency or to hedge risks to the extent of a plan’s current exposure to such risks. Most derivative transactions are settled on a daily basis.

As of December 31, 2015 and 2014, the assets associated with our foreign defined benefit pension plans were not material and have not been included in the table above.

The following table presents the changes during 2015 and 2014 in the fair value of plan assets categorized as Level 3 in the preceding table (in millions):


	Private Equity Funds			Real Estate Funds		Hedge Funds			Other			Total
Balance at January 1, 2014		$2,601			$572		$ 505			$145		$	3,823
Actual return on plan assets:
Realized gains, net		182			43		34			1			260
Unrealized gains (losses), net		38			22		(11	)		(21	)		28
Purchases, sales and settlements, net		131			92		(24	)		8			207
Transfers out of Level 3, net		—			—		—			(72	)		(72)
Balance at December 31, 2014		$2,952			$729		$ 504			$61		$	4,246
Actual return on plan assets:
Realized gains, net		315			84		23			(12	)		410
Unrealized (losses) gains, net		(163	)		20		5			7			(131)
Purchases, sales and settlements, net		27			183		(177	)		(22	)		11
Transfers out of Level 3, net		—			—		—			(3	)		(3)
Balance at December 31, 2015		$3,131			$1,016		$ 355			$ 31		$	4,533

Valuation techniques – Cash equivalents are mostly comprised of short-term money-market instruments and are valued at cost, which approximates fair value.

U.S. equity securities and international equity securities categorized as Level 1 are traded on active national and international exchanges and are valued at their closing prices on the last trading day of the year. For U.S. equity securities and international equity securities not traded on an active exchange, or if the closing price is not available, the trustee obtains indicative quotes from a pricing vendor, broker or investment manager. These securities are categorized as Level 2 if the custodian obtains corroborated quotes from a pricing vendor or categorized as Level 3 if the custodian obtains uncorroborated quotes from a broker or investment manager.

Commingled equity funds are investment vehicles valued using the Net Asset Value (NAV) provided by the fund managers. The NAV is the total value of the fund divided by the number of shares outstanding. Commingled equity funds are categorized as Level 1 if traded at their NAV on a nationally recognized securities exchange or categorized as Level 2 if the NAV is corroborated by observable market data (e.g., purchases or sales activity) and we are able to redeem our investment in the near-term.

Fixed income investments categorized as Level 2 are valued by the trustee using pricing models that use verifiable observable market data (e.g., interest rates and yield curves observable at commonly quoted intervals and credit spreads), bids provided by brokers or dealers or quoted prices of securities with similar characteristics. Fixed income investments are categorized at Level 3 when valuations using observable inputs are unavailable. The trustee obtains pricing based on indicative quotes or bid evaluations from vendors, brokers or the investment manager.

Private equity funds, real estate funds and hedge funds are valued using the NAV based on valuation models of underlying securities which generally include significant unobservable inputs that cannot be corroborated using verifiable observable market data. Valuations for private equity funds and real estate funds are determined by the general partners. Depending on the nature of the assets, the general partners may use various valuation methodologies, including the income and market approaches in their models. The market approach consists of analyzing market transactions for comparable assets while the income approach uses earnings or the net present value of estimated future cash flows adjusted for liquidity and other risk factors. Hedge funds are valued by independent administrators using various pricing sources and models based on the nature of the securities. Private equity funds, real estate funds and hedge funds are generally categorized as Level 3 as we cannot fully redeem our investment in the near-term.

Commodities are traded on an active commodity exchange and are valued at their closing prices on the last trading day of the year.

Contributions and Expected Benefit Payments

The funding of our qualified defined benefit pension plans is determined in accordance with ERISA, as amended by the PPA, and in a manner consistent with CAS and Internal Revenue Code rules. In 2015, we made $5 million in contributions to our new Sikorsky bargained qualified defined benefit pension plan and we plan to make approximately $25 million in contributions to this plan in 2016.

The following table presents estimated future benefit payments, which reflect expected future employee service, as of December 31, 2015 (in millions):


	2016		2017		2018		2019		2020		2021 - 2025
Qualified defined benefit pension plans	$	2,160	$	2,240	$	2,320	$	2,410	$	2,500		$13,670
Retiree medical and life insurance plans		190		190		200		200		200		940

Defined Contribution Plans

We maintain a number of defined contribution plans, most with 401(k) features, that cover substantially all of our employees. Under the provisions of our 401(k) plans, we match most employees’ eligible contributions at rates specified in the plan documents. Our contributions were $393 million in 2015, $385 million in 2014 and $383 million in 2013, the majority of which were funded in our common stock. Our defined contribution plans held approximately 40.0 million and 41.7 million shares of our common stock as of December 31, 2015 and 2014.

Stockholders' Equity

12 Months Ended

Dec. 31, 2015

Stockholders' Equity

Note 12 – Stockholders’ Equity

At December 31, 2015 and 2014, our authorized capital was composed of 1.5 billion shares of common stock and 50 million shares of series preferred stock. Of the 305 million shares of common stock issued and outstanding as of December 31, 2015, 303 million shares were considered outstanding for Balance Sheet presentation purposes; the remaining shares were held in a separate trust. Of the 316 million shares of common stock issued and outstanding as of December 31, 2014, 314 million shares were considered outstanding for Balance Sheet presentation purposes; the remaining shares were held in a separate trust. No shares of preferred stock were issued and outstanding at December 31, 2015 or 2014.

Repurchases of Common Stock

During 2015, we repurchased 15.2 million shares of our common stock for $3.1 billion. During 2014 and 2013, we paid $1.9 billion and $1.8 billion to repurchase 11.5 million and 16.2 million shares of our common stock.

On September 24, 2015, our Board of Directors approved a $3.0 billion increase to our share repurchase program. Inclusive of this increase, the total remaining authorization for future common share repurchases under our program was $3.6 billion as of December 31, 2015. As we repurchase our common shares, we reduce common stock for the $1 of par value of the shares repurchased, with the excess purchase price over par value recorded as a reduction of additional paid-in capital. Due to the volume of repurchases made under our share repurchase program, additional paid-in capital was reduced to zero, with the remainder of the excess purchase price over par value of $2.4 billion and $1.1 billion recorded as a reduction of retained earnings in 2015 and 2014.

We paid dividends totaling $1.9 billion ($6.15 per share) in 2015, $1.8 billion ($5.49 per share) in 2014 and $1.5 billion ($4.78 per share) in 2013. We have increased our quarterly dividend rate in each of the last three years, including a 10% increase in the quarterly dividend rate in the fourth quarter of 2015. We declared quarterly dividends of $1.50 per share during each of the first three quarters of 2015 and $1.65 per share during the fourth quarter of 2015; $1.33 per share during each of the first three quarters of 2014 and $1.50 per share during the fourth quarter of 2014; and $1.15 per share during each of the first three quarters of 2013 and $1.33 per share during the fourth quarter of 2013.

Accumulated Other Comprehensive Loss

Changes in the balance of AOCL, net of income taxes, consisted of the following (in millions):


	Postretirement Benefit Plans		Other, net		AOCL
Balance at December 31, 2012 ^(a)		$(13,532)		$ 39		$(13,493)
Other comprehensive income before reclassifications		2,868		11		2,879
Amounts reclassified from AOCL
Recognition of net actuarial losses		973		—		973
Amortization of net prior service costs		42		—		42
Other		—		(2)		(2)
Total reclassified from AOCL		1,015		(2)		1,013
Total other comprehensive income		3,883		9		3,892
Balance at December 31, 2013 ^(a)		(9,649)		48		(9,601)
Other comprehensive loss before reclassifications		(2,870)		(103)		(2,973)
Amounts reclassified from AOCL
Recognition of net actuarial losses		806		—		806
Amortization of net prior service credits		(100)		—		(100)
Other		—		(2)		(2)
Total reclassified from AOCL		706		(2)		704
Total other comprehensive loss		(2,164)		(105)		(2,269)
Balance at December 31, 2014 ^(a)		(11,813)		(57)		(11,870)
Other comprehensive loss before reclassifications		(351)		(73)		(424)
Amounts reclassified from AOCL
Recognition of net actuarial losses		1,109		—		1,109
Amortization of net prior service credits		(259)		—		(259)
Other		—		—		—
Total reclassified from AOCL		850		—		850
Total other comprehensive loss		499		(73)		426
Balance at December 31, 2015 ^(a)		$(11,314)		$ (130)		$(11,444)

^(a)

Legal Proceedings, Commitments and Contingencies

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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Reference 15: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Stock-Based Compensation

12 Months Ended

Dec. 31, 2015

Stock-Based Compensation

Note 13 – Stock-Based Compensation

During 2015, 2014 and 2013, we recorded non-cash stock-based compensation expense totaling $138 million, $164 million and $189 million, which is included as a component of other unallocated, net on our Statements of Earnings. The net impact to earnings for the respective years was $90 million, $107 million and $122 million.

As of December 31, 2015, we had $79 million of unrecognized compensation cost related to nonvested awards, which is expected to be recognized over a weighted average period of 1.7 years. We received cash from the exercise of stock options totaling $174 million, $308 million and $827 million during 2015, 2014 and 2013. In addition, our income tax liabilities for 2015, 2014 and 2013 were reduced by $213 million, $215 million, $158 million due to recognized tax benefits on stock-based compensation arrangements.

Stock-Based Compensation Plans

Under plans approved by our stockholders, we are authorized to grant key employees stock-based incentive awards, including options to purchase common stock, stock appreciation rights, restricted stock units (RSUs), performance stock units (PSUs) or other stock units. The exercise price of options to purchase common stock may not be less than the fair market value of our stock on the date of grant. No award of stock options may become fully vested prior to the third anniversary of the grant and no portion of a stock option grant may become vested in less than one year. The minimum vesting period for restricted stock or stock units payable in stock is three years. Award agreements may provide for shorter or pro-rated vesting periods or vesting following termination of employment in the case of death, disability, divestiture, retirement, change of control or layoff. The maximum term of a stock option or any other award is 10 years.

At December 31, 2015, inclusive of the shares reserved for outstanding stock options, RSUs and PSUs, we had approximately 15 million shares reserved for issuance under the plans. At December 31, 2015, approximately 7 million of the shares reserved for issuance remained available for grant under our stock-based compensation plans. We issue new shares upon the exercise of stock options or when restrictions on RSUs and PSUs have been satisfied.

RSUs

The following table summarizes activity related to nonvested RSUs during 2015:


	Number of RSUs (In thousands)	Weighted Average Grant-Date Fair Value Per Share
Nonvested at December 31, 2012	4,822		$ 79.10
Granted	1,356		89.24
Vested	(2,093)		79.26
Forfeited	(226)		81.74
Nonvested at December 31, 2013	3,859		$ 82.42
Granted	745		146.85
Vested	(2,194)		87.66
Forfeited	(84)		91.11
Nonvested at December 31, 2014	2,326		$ 97.80
Granted	595		192.47
Vested	(1,642)		103.30
Forfeited	(43)		132.28
Nonvested at December 31, 2015	1,236		$ 134.87

In January 2015, we granted certain employees approximately 0.6 million restricted stock units (RSUs) with a grant-date fair value of $192.28 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.

Stock Options

We generally recognize compensation cost for stock options ratably over the three-year vesting period. At December 31, 2015 and 2014, there were 4.2 million (weighted average exercise price of $86.61) and 6.3 million (weighted average exercise price of $84.62) stock options outstanding. Stock options outstanding at December 31, 2015 have a weighted average remaining contractual life of approximately four years and an aggregate intrinsic value of $544 million. Of the stock options outstanding, 4.2 million (weighted average exercise price of $86.61) have vested as of December 31, 2015 and those stock options have a weighted average remaining contractual life of approximately four years and an aggregate intrinsic value of $544 million. There were 2.2 million (weighted average exercise price of $80.77) stock options exercised during 2015. We did not grant stock options to employees during 2015 and 2014.

The following table pertains to stock options granted in 2012, in addition to stock options that vested and were exercised in 2015, 2014 and 2013 (in millions, except for weighted-average grant-date fair value of stock options granted):


	2015		2014		2013
Weighted average grant-date fair value of stock options granted	$	—	$	—	$	—
Grant-date fair value of all stock options that vested		8		18		40
Intrinsic value of all stock options exercised		265		297		293

In 2012, we estimated the fair value for stock options at the date of grant using the Black-Scholes option pricing model, which required us to make certain assumptions. We used the following weighted average assumptions in the model: risk-free interest rate of 0.78%, dividend yield of 5.40%, a five year historical volatility factor of 0.28 and an expected option life of five years.

PSUs

In January 2015, we granted certain employees PSUs with an aggregate target award of approximately 0.2 million shares of our common stock. The PSUs vest three years from the grant date based on continuous service, with the number of shares earned (0% to 200% of the target award) depending upon the extent to which we achieve certain financial and market performance targets measured over the period from January 1, 2015 through December 31, 2017. About half of the PSUs were valued at $192.28 per PSU in a manner similar to RSUs mentioned above as the financial targets are based on our operating results. We recognize the grant-date fair value of these PSUs, less estimated forfeitures, as compensation expense ratably over the vesting period based on the number of awards expected to vest at each reporting date. The remaining PSUs were valued at $188.96 per PSU using a Monte Carlo model as the performance target is related to our total shareholder return relative to our peer group. We recognize the grant-date fair value of these awards, less estimated forfeitures, as compensation expense ratably over the vesting period.

Legal Proceedings, Commitments and Contingencies

12 Months Ended

Dec. 31, 2015

Note 14 – Legal Proceedings, Commitments and Contingencies

We are a party to or have property subject to litigation and other proceedings that arise in the ordinary course of our business, including matters arising under provisions relating to the protection of the environment and are subject to contingencies related to certain businesses we previously owned. These types of matters could result in fines, penalties, compensatory or treble damages or non-monetary sanctions or relief. We believe the probability is remote that the outcome of each of these matters, including the legal proceedings described below, will have a material adverse effect on the Corporation as a whole, notwithstanding that the unfavorable resolution of any matter may have a material effect on our net earnings in any particular interim reporting period. Among the factors that we consider in this assessment are the nature of existing legal proceedings and claims, the asserted or possible damages or loss contingency (if estimable), the progress of the case, existing law and precedent, the opinions or views of legal counsel and other advisers, our experience in similar cases and the experience of other companies, the facts available to us at the time of assessment and how we intend to respond to the proceeding or claim. Our assessment of these factors may change over time as individual proceedings or claims progress.

Although we cannot predict the outcome of legal or other proceedings with certainty, where there is at least a reasonable possibility that a loss may have been incurred, GAAP requires us to disclose an estimate of the reasonably possible loss or range of loss or make a statement that such an estimate cannot be made. We follow a thorough process in which we seek to estimate the reasonably possible loss or range of loss, and only if we are unable to make such an estimate do we conclude and disclose that an estimate cannot be made. Accordingly, unless otherwise indicated below in our discussion of legal proceedings, a reasonably possible loss or range of loss associated with any individual legal proceeding cannot be estimated.

Legal Proceedings

As a result of our acquisition of Sikorsky, we have assumed the defense of and any potential liability for the following civil False Claims Act lawsuit. In October 2014, the U.S. Government filed a complaint in the U.S. District Court for the Eastern District of Wisconsin alleging that Sikorsky and two of its wholly-owned subsidiaries, Derco Aerospace (Derco) and Sikorsky Support Services, Inc. (SSSI), violated the civil False Claims Act in connection with a contract that the U.S. Navy awarded to SSSI in June 2006 to support the Navy’s T-34 and T-44 fixed-wing turboprop training aircraft. SSSI subcontracted with Derco primarily to procure and manage the spare parts for the training aircraft. The Government alleges that SSSI overbilled the Navy on the contract because Derco added profit and overhead costs to the price of the spare parts that Derco procured and then sold to SSSI. The Government also claims that SSSI submitted false Certificates of Final Indirect Costs in the years 2006 through 2012.

The Government’s complaint asserts numerous claims for violations of the False Claims Act, breach of contract and unjust enrichment. In a late April 2015 court filing, the Government disclosed that it seeks damages of approximately $45 million, subject to trebling, plus statutory penalties of approximately $13 million, all totaling approximately $147 million. We believe that we have substantial legal and factual defenses to the government’s claims. Although we continue to evaluate 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.

Additionally, by letter dated July 13, 2015, the United States Department of Justice notified Sikorsky that it had opened a criminal investigation into this matter, and requested that Sikorsky and its two subsidiaries voluntarily produce documents. Sikorsky and its subsidiaries cooperated fully in the investigation. On February 4, 2016, we were informed that the Department of Justice is closing the criminal investigation with no action to the corporate entities or individuals.

On April 24, 2009, we filed a declaratory judgment action against the New York Metropolitan Transportation Authority and its Capital Construction Company (collectively, the MTA) asking the U.S. District Court for the Southern District of New York to find that the MTA is in material breach of our agreement based on the MTA’s failure to provide access to sites where work must be performed and the customer-furnished equipment necessary to complete the contract. The MTA filed an answer and counterclaim alleging that we breached the contract and subsequently terminated the contract for alleged default. The primary damages sought by the MTA are the cost to complete the contract and potential re-procurement costs. While we are unable to estimate the cost of another contractor to complete the contract and the costs of re-procurement, we note that our contract with the MTA had a total value of $323 million, of which $241 million was paid to us, and that the MTA is seeking damages of approximately $190 million. We dispute the MTA’s allegations and are defending against them. Additionally, following an investigation, our sureties on a performance bond related to this matter, who were represented by independent counsel, concluded that the MTA’s termination of the contract was improper. Finally, our declaratory judgment action was later amended to include claims for monetary damages against the MTA of approximately $95 million. This matter was taken under submission by the District Court in December 2014, after a five-week bench trial and the filing of post-trial pleadings by the parties. We expect a decision in 2016.

We have reached an agreement to settle with the U.S. Department of Justice (DOJ) and the qui tam relators two lawsuits in which the DOJ filed complaints in partial intervention on August 28, 2003. The lawsuits, United States ex rel. Natural Resources Defense Council, et al., v. Lockheed Martin Corporation, et al., and United States ex rel. John D. Tillson v. Lockheed Martin Energy Systems, Inc., et al., were filed by the relators in 1999 under the civil qui tam provisions of the False Claims Act in the U.S. District Court for the Western District of Kentucky and alleged that we committed violations of the Resource Conservation and Recovery Act (RCRA) at the Paducah Gaseous Diffusion Plant by not properly handling, storing and transporting hazardous waste and that we violated the False Claims Act by misleading Department of Energy officials and state regulators about the nature and extent of environmental noncompliance at the plant. The parties are finalizing the terms of the settlement agreement, which is considered a tentative agreement until it is formally approved by the United States Government. The amount of the settlement is not material. We believe that we have substantial defenses to all of the allegations and have agreed to settle the case to avoid the costs of further litigation of this matter which has been ongoing in excess of sixteen years. We will admit no liability or wrongdoing in resolving the matter. See Item 3 - Legal Proceedings of our Annual Report on Form 10-K for the year ended December 31, 2015 for additional information.

Environmental Matters

We are involved in environmental proceedings and potential proceedings relating to soil and groundwater contamination, disposal of hazardous waste and other environmental matters at several of our current or former facilities or at third-party sites where we have been designated as a potentially responsible party (PRP). A substantial portion of environmental costs will be included in our net sales and cost of sales in future periods pursuant to U.S. Government regulations. At the time a liability is recorded for future environmental costs, we record a receivable for estimated future recovery considered probable through the pricing of products and services to agencies of the U.S. Government, regardless of the contract form (e.g., cost-reimbursable, fixed-price). We continuously evaluate the recoverability of our environmental receivables by assessing, among other factors, U.S. Government regulations, our U.S. Government business base and contract mix and our history of receiving reimbursement of such costs. We include the portion of those environmental costs expected to be allocated to our non-U.S. Government contracts, or that is determined to not be recoverable under U.S. Government contracts, in our cost of sales at the time the liability is established.

At December 31, 2015 and 2014, the aggregate amount of liabilities recorded relative to environmental matters was $1.0 billion and $965 million, most of which are recorded in other noncurrent liabilities on our Balance Sheets. We have recorded receivables totaling $858 million and $836 million at December 31, 2015 and 2014, most of which are recorded in other noncurrent assets on our Balance Sheets, for the estimated future recovery of these costs, as we consider the recovery probable based on the factors previously mentioned. We project costs and recovery of costs over approximately 20 years. Our acquisition of Sikorsky included certain environmental remediation liabilities that are among those recorded on our Balance Sheet, along with the related receivables for probable future recovery. These amounts did not materially impact our consolidated financial statements.

Environmental cleanup activities usually span several 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 continually evolving regulatory environmental standards. There are a number of former 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 are pursuing claims for recovery of costs incurred or contribution to site cleanup costs against other PRPs, including the U.S. Government, and are conducting remediation activities under various consent decrees and orders relating to soil, groundwater, sediment or surface water contamination at certain sites of former or current operations. Under an agreement related to our Burbank and Glendale, California, sites, the U.S. Government reimburses us an amount equal to approximately 50% of expenditures for certain remediation activities in its capacity as a PRP under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).

On July 1, 2014, a regulation became effective in California setting the maximum level of the contaminant hexavalent chromium in drinking water at 10 parts per billion (ppb). In May 2014, the California Manufacturers and Technology Association filed a suit alleging the 10 ppb threshold is lower than is required to protect public health and thus imposes unjustified costs on the regulated community. We cannot predict the outcome of this suit or whether other challenges may be advanced by the regulated community or environmental groups which had sought a significantly higher and lower standard, respectively. If the new standard remains at 10 ppb, it will not have a material impact on our existing remediation costs in California.

In addition, California is reevaluating its existing drinking water standard with respect to a second contaminant, perchlorate, and the U.S. Environmental Protection Agency (U.S. EPA) is also considering whether to regulate perchlorate and hexavalent chromium in drinking water. In February 2016, the Natural Resources Defense Council filed suit in federal court in New York against the U.S. EPA to compel the U.S. EPA to set an enforceable drinking water standard for perchlorate. If substantially lower standards are adopted, in either California or at the federal level, for perchlorate, or if the U.S. EPA were to adopt a standard for hexavalent chromium lower than 10 ppb, we expect a material increase in our estimates for environmental liabilities and the related assets for the portion of the increased costs that are probable of future recovery in the pricing of our products and services for the U.S. Government. The amount that would be allocable to our non-U.S. Government contracts or that is determined to not be recoverable under U.S. Government contracts would be expensed, which may have a material effect on our earnings in any particular interim reporting period.

Operating Leases

We rent certain equipment and facilities under operating leases. Certain major plant facilities and equipment are furnished by the U.S. Government under short-term or cancelable arrangements. Our total rental expense under operating leases was $256 million, $258 million and $315 million for 2015, 2014 and 2013. Future minimum lease commitments at December 31, 2015 for long-term non-cancelable operating leases were $793 million ($205 million in 2016, $161 million in 2017, $128 million in 2018, $101 million in 2019, $64 million in 2020 and $134 million in later years).

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 $3.8 billion at December 31, 2015 and $2.4 billion at December 31, 2014.

At December 31, 2015 and 2014, third-party guarantees totaled $678 million and $774 million, of which approximately 79% and 85% 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 of the venture partners. In addition, we generally have cross-indemnities in place that may enable us to recover amounts that may be paid on behalf of a venture partner. We believe our current and former venture partners will be able to perform their obligations, as they have done through December 31, 2015, and that it will not be necessary to make payments under the guarantees. In determining our exposures, we evaluate the reputation, technical capabilities and credit quality of our current and former venture partners. There were no material amounts recorded in our financial statements related to third-party guarantees.

United Launch Alliance

In connection with our 50% ownership interest of ULA, we and The Boeing Company (Boeing) are required to provide ULA an additional capital contribution if ULA is unable to make required payments under its inventory supply agreement with Boeing. As of December 31, 2015, 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 December 31, 2015, and that it will not be necessary to make payments under the cross-indemnities or guarantees.

Our 50% ownership share of ULA’s net assets exceeded the book value of our investment by approximately $395 million (of which approximately $40 million remains at December 31, 2015 that will be amortized in 2016). This yearly amortization and our share of ULA’s net earnings are reported as equity in net earnings (losses) of equity investees in other income, net on our Statements of Earnings. Our investment in ULA totaled $748 million and $706 million at December 31, 2015 and 2014.

Restructuring Charges

12 Months Ended

Dec. 31, 2015

Restructuring Charges

Note 15 – Restructuring Charges

2015 Actions

During 2015, we recorded severance charges totaling $102 million, of which $67 million related to our MST business segment and $35 million related to our IS&GS business segment (prior to realignment). These charges reduced our 2015 net earnings by $66 million ($.21 per share). These severance actions resulted from a review of future workload projections and to reduce our overhead costs in order to improve the affordability of our products and services. The charges consisted of severance costs associated with the planned elimination of certain positions through either voluntary or involuntary actions. Upon separation, terminated employees will receive lump-sum severance payments primarily based on years of service, the majority of which are expected to be paid over the next several quarters. As of December 31, 2015, we have paid approximately $18 million in severance payments associated with these actions.

In connection with the Sikorsky acquisition, we assumed obligations related to certain restructuring actions committed to by Sikorsky in June 2015. These actions included a global workforce reduction of approximately 1,400 production-related positions and facilities consolidations. As of December 31, 2015, accrued restructuring costs associated with these actions are approximately $15 million, all of which are expected to be paid in 2016. Net of amounts we anticipate to recover through the pricing of our products and services to our customers, we also expect to incur an additional $40 million of costs in 2016 related to these actions.

2013 Actions

During 2013, we recorded charges related to certain severance actions totaling $201 million, of which $83 million, $37 million and $81 million related to our IS&GS, MST and Space Systems business segments (prior to realignment). These charges reduced our 2013 net earnings by $130 million ($.40 per share) and primarily related to a plan we committed to in November 2013 to close and consolidate certain facilities and reduce our total workforce by approximately 4,000 positions. These charges also include $30 million related to certain severance actions that occurred in the first quarter of 2013, which were subsequently paid in 2013.

The November 2013 plan resulted from a strategic review of these businesses’ facility capacity and future workload projections. Upon separation, terminated employees receive lump-sum severance payments primarily based on years of service. As of December 31, 2015, we have paid approximately $153 million in severance payments associated with this action, of which approximately $46 million, $92 million and $15 million was paid in 2015, 2014 and 2013, respectively. The remaining severance payments are expected to be paid in 2016.

We also expect to incur accelerated costs (e.g., accelerated depreciation expense related to long-lived assets at sites closed) and incremental costs (e.g., relocation of equipment and other employee related costs) of approximately $10 million, $50 million and $180 million at our IS&GS, MST and Space Systems business segments through the completion of the plan in 2016. As of December 31, 2015, we have incurred total accelerated and incremental costs of approximately $225 million, of which approximately $115 million, $90 million and $20 million was recorded in 2015, 2014 and 2013, respectively. The accelerated and incremental costs are recorded as incurred in cost of sales on our Statements of Earnings and included in the respective business segment’s results of operations.

We expect to recover a substantial amount of the restructuring charges through the pricing of our products and services to the U.S. Government and other customers in future periods, with the impact included in the respective business segment’s results of operations. Of the total severance, accelerated and incremental costs mentioned above, we recovered approximately $65 million in 2015 and $50 million in 2014 and expect to recover approximately $60 million in 2016.

Fair Value Measurements

12 Months Ended

Dec. 31, 2015

Fair Value Measurements

Note 16 – Fair Value Measurements

Assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following (in millions):


	December 31, 2015						December 31, 2014
	Total		Level 1		Level 2		Total		Level 1		Level 2
Assets
Equity securities	$	89		$ 89		$ —	$	92		$ 92		$ —
Mutual funds		745		745		—		696		696		—
U.S. Government securities		119		—		119		136		—		136
Other securities		147		—		147		153		—		153
Derivatives		15		—		15		27		—		27
Liabilities
Derivatives		35		—		35		18		—		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 deferred compensation plans and are recorded in other noncurrent assets on our Balance Sheets. The fair values of equity securities and mutual funds are determined by reference to the quoted market price per unit in active markets multiplied by the number of units held without consideration of transaction costs. The fair values of U.S. Government and other securities are determined using pricing models that use observable inputs (e.g., interest rates and yield curves observable at commonly quoted intervals), bids provided by brokers or dealers or quoted prices of securities with similar characteristics. The fair values of derivative instruments, which consist of foreign currency exchange forward and interest rate swap contracts, primarily are determined based on the present value of future cash flows using model-derived valuations that use observable inputs such as interest rates, credit spreads and foreign currency exchange rates. We did not have any transfers of assets or liabilities between levels of the fair value hierarchy during 2015.

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 $16.5 billion and $7.9 billion at December 31, 2015 and 2014 and the outstanding principal amount was $16.2 billion and $7.0 billion at December 31, 2015 and 2014, excluding unamortized discounts of $941 million and $872 million. The estimated fair values of our outstanding debt were determined based on quoted prices for similar instruments in active markets (Level 2).

In connection with the Sikorsky acquisition, we recorded the assets acquired and liabilities assumed at fair value. The amounts recorded for certain assets and liabilities are preliminary in nature and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the November 6, 2015 acquisition date. See Note 3 for further information about the fair values assigned and amounts subject to adjustment.

In the fourth quarter of 2014, we recorded non-cash goodwill impairment charge of $119 million in connection with our annual goodwill impairment test. The fair value determination of goodwill was determined using a combination of a DCF analysis and market-based valuation methodologies and was classified as a Level 3 fair value measurement due to the significance of the unobservable inputs used. See Note 1 for further information on this non-cash goodwill impairment charge and our valuation methodologies.

Summary of Quarterly Information (Unaudited)

12 Months Ended

Dec. 31, 2015

Summary of Quarterly Information (Unaudited)

Note 17 – Summary of Quarterly Information (Unaudited)

A summary of quarterly information is as follows (in millions, except per share data):

2015 Quarters

First

Second

Third

Fourth ^(a)

Net sales

$10,111

$11,643

$11,461

$12,917

Operating profit

1,356

1,445

1,354

1,281

Net earnings ^(b)

878

929

865

933

Basic earnings per share ^(c)

2.78

2.98

2.80

3.05

Diluted earnings per share

2.74

2.94

2.77

3.01

2014 Quarters

First

Second

Third

Fourth

Net sales

$10,650

$11,306

$11,114

$12,530

Operating profit

1,432

1,426

1,392

1,342

Net earnings ^(d)

933

889

888

904

Basic earnings per share

2.92

2.81

2.87

Diluted earnings per share

2.87

2.76

2.82

^(a)

The fourth quarter of 2015 incorporates the results of Sikorsky from the November 6, 2015 acquisition date through December 31, 2015, including approximately $400 million in net sales and about $45 million in operating loss, inclusive of intangible amortization and adjustments required to account for the acquisition.

^(b)	The fourth quarter of 2015 includes a charge for workforce reductions of approximately $67 million ($44 million after tax) and a tax benefit of about $71 million due to the retroactive reinstatement of the R&D tax credit in 2015.

^(c)	The sum of the quarterly earnings per share amounts do not equal the earnings per share amounts included on our Statements of Earnings, primarily due to the timing of our share repurchases during each respective year.

^(d)	The fourth quarter of 2014 includes a charge of approximately $119 million ($107 million after tax) related to a non-cash goodwill impairment charge and a tax benefit of about $45 million due to the retroactive reinstatement of the R&D tax credit in 2014.

Significant Accounting Policies (Policies)	12 Months Ended
Significant Accounting Policies (Policies)	Dec. 31, 2015
Organization	Organization – We are a global security and aerospace company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. We also provide a broad range of management, engineering, technical, scientific, logistics and information services. We serve both U.S. and international customers with products and services that have defense, civil and commercial applications, with our principal customers being agencies of the U.S. Government.
Basis of presentation	Basis of presentation – Our 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. Our receivables, inventories, customer advances and amounts in excess of costs incurred and certain amounts in other current liabilities primarily are attributable to long-term contracts or programs in progress for which the related operating cycles are longer than one year. In accordance with industry practice, we include these items in current assets and current liabilities. Unless otherwise noted, we present all per share amounts cited in these consolidated financial statements on a “per diluted share” basis. Certain prior period amounts have been reclassified to conform with current year presentation. On November 6, 2015, we completed the acquisition of Sikorsky Aircraft Corporation (Sikorsky) for $9.0 billion, net of cash acquired. Sikorsky, a global company primarily engaged in the design, manufacture, service and support of military and commercial helicopters, has become a wholly-owned subsidiary of ours, aligned under our MST business segment. The financial results of the acquired Sikorsky business have been included in our consolidated results of operations from the November 6, 2015 acquisition date through December 31, 2015. Accordingly, the consolidated financial results for the year ended December 31, 2015 do not reflect a full year of Sikorsky operations. During the fourth quarter of 2015, we realigned certain programs between our business segments in connection with the strategic review of our government informational technology (IT) and technical services businesses. The amounts, discussion and presentation of our business segments as set forth in all years presented in our consolidated financial statements have been reclassified from prior year presentation to reflect the realignment. The realignment did not impact the Corporation’s previously reported consolidated financial statements. See “Note 5 – Information on Business Segments” for additional information including revised historical segment results under our new structure. On January 26, 2016 we entered into definitive agreements to separate and combine our Information Systems & Global Solutions (IS&GS) business segment with Leidos Holdings, Inc. (Leidos) in a tax-efficient Reverse Morris Trust transaction. Subsequent to the program realignment described above, our IS&GS business segment represents the government IT and technical services businesses that were under strategic review. The transaction is expected to close in the third or fourth quarter of 2016. Until closing, IS&GS will operate as a business segment and financial results for the IS&GS business segment will be reported in our continuing operations. See “Note 3 – Acquisitions and Divestitures” for additional information about the planned divestiture of our IS&GS business segment.
Use of estimates	Use of estimates – We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP). In doing so, we are required 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.
Sales and earnings	Sales and earnings – We record net sales and estimated profits for substantially all of our contracts using the percentage-of-completion method for cost-reimbursable and fixed-price contracts for products and services with the U.S. Government. Sales are recorded on all time-and-materials contracts as the work is performed based on agreed-upon hourly rates and allowable costs. We account for our services contracts with non-U.S. Government customers using the services method of accounting. We classify net sales as products or services on our Statements of Earnings based on the attributes of the underlying contracts. Percentage-of-Completion Method – The percentage-of-completion method for product contracts depends on the nature of the products provided under the contract. For example, for contracts that require us to perform a significant level of development effort in comparison to the total value of the contract and/or to deliver minimal quantities, sales are recorded using the cost-to-cost method to measure progress toward completion. Under the cost-to-cost method of accounting, we recognize sales and an estimated profit as costs are incurred based on the proportion that the incurred costs bear to total estimated costs. For contracts that require us to provide a substantial number of similar items without a significant level of development, we record sales and an estimated profit on a percentage-of-completion basis using units-of-delivery as the basis to measure progress toward completing the contract. For contracts to provide services to the U.S. Government, sales are generally recorded using the cost-to-cost method. Award and incentive fees, as well as penalties related to contract performance, are considered in estimating sales and profit rates on contracts accounted for under the percentage-of-completion method. Estimates of award fees are based on past experience and anticipated performance. We record incentives or penalties when there is sufficient information to assess anticipated contract performance. Incentive provisions that increase or decrease earnings based solely on a single significant event are not recognized until the event occurs. Accounting for contracts using the percentage-of-completion method requires judgment relative to assessing risks, estimating contract sales and costs (including estimating award and incentive fees and penalties related to performance) and making assumptions for schedule and technical issues. Due to the number of years it may take to complete many of our contracts and the scope and nature of the work required to be performed on those contracts, the estimation of total sales and costs at completion is complicated and subject to many variables and, accordingly, is subject to change. When adjustments in estimated total contract sales or estimated total costs are required, any changes from prior estimates are recognized in the current period for the inception-to-date effect of such changes. When estimates of total costs to be incurred on a contract exceed estimates of total sales to be earned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined. Many of our contracts span several years and include highly complex technical requirements. At the outset of a contract, we identify and monitor risks to the achievement of the technical, schedule and cost aspects of the contract and assess the effects of those risks on our estimates of total costs to complete the contract. The estimates consider the technical requirements (e.g., a newly-developed product versus a mature product), the schedule and associated tasks (e.g., the number and type of milestone events) and costs (e.g., material, labor, subcontractor, overhead and the estimated costs to fulfill our industrial cooperation agreements, sometimes referred to as offset agreements, required under certain contracts with international customers). The initial profit booking rate of each contract considers risks surrounding the ability to achieve the technical requirements, schedule and costs in the initial estimated total costs to complete the contract. Profit booking rates may increase during the performance of the contract if we successfully retire risks surrounding the technical, schedule and cost aspects of the contract which decreases the estimated total costs to complete the contract. Conversely, our profit booking rates may decrease if the estimated total costs to complete the contract increase. All of the estimates are subject to change during the performance of the contract and may affect the profit booking rate. In addition, comparability of our business segment sales, operating profit and operating margins may be impacted by changes in profit booking rates on our contracts accounted for using the percentage-of-completion method of accounting. Increases in the profit booking rates, typically referred to as risk retirements, usually relate to revisions in the estimated total costs that reflect improved conditions on a particular contract. Conversely, conditions on a particular contract may deteriorate resulting in an increase in the estimated total costs to complete and a reduction in the profit booking rate. Increases or decreases in profit booking rates are recognized in the current period and reflect the inception-to-date effect of such changes. Segment operating profit and margins may also be impacted favorably or unfavorably by other items. Favorable items may include the positive resolution of contractual matters, cost recoveries on restructuring charges, insurance recoveries and gains on sales of assets. Unfavorable items may include the adverse resolution of contractual matters; restructuring charges, except for significant severance actions (such as those mentioned below in Note 15) which are excluded from segment operating results; reserves for disputes; asset impairments; and losses on sales of assets. Segment operating profit and items such as risk retirements, reductions of profit booking rates or other matters are presented net of state income taxes. 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 $1.9 billion in 2015, $1.8 billion in 2014 and $2.1 billion in 2013. These adjustments increased net earnings by approximately $1.2 billion ($3.87 per share) in 2015, $1.1 billion ($3.55 per share) in 2014 and $1.3 billion ($4.09 per share) in 2013. Services Method – For cost-reimbursable contracts for services to non-U.S. Government customers, we record net sales as services are performed, except for award and incentive fees. Award and incentive fees are recorded when they are fixed or determinable, generally at the date the amount is communicated to us by the customer. This approach results in the recognition of such fees at contractual intervals (typically every six months) throughout the contract and is dependent on the customer’s processes for notification of awards and issuance of formal notifications. Under fixed-price service contracts, we are paid a predetermined fixed amount for a specified scope of work and generally have full responsibility for the costs associated with the contract and the resulting profit or loss. We record net sales under fixed-price service contracts with non-U.S. Government customers on a straight-line basis over the period of contract performance, unless evidence suggests that net sales are earned or the obligations are fulfilled in a different pattern. Costs for all service contracts are expensed as incurred.
Research and development and similar costs	Research and development and similar costs – Except for certain arrangements described below, we account for independent research and development costs as part of the general and administrative costs that are allocated among all of our contracts and programs in progress under U.S. Government contractual arrangements and charged to cost of sales. Under certain arrangements in which a customer shares in product development costs, our portion of unreimbursed costs is expensed as incurred in cost of sales. Independent research and development costs charged to cost of sales totaled $839 million in 2015, $751 million in 2014 and $697 million in 2013. Costs we incur under customer-sponsored research and development programs pursuant to contracts are included in net sales and cost of sales.
Stock-based compensation	Stock-based compensation – Compensation cost related to all share-based payments is measured at the grant date based on the estimated fair value of the award. We generally recognize the compensation cost ratably over a three-year vesting period.
Income taxes	Income taxes – We calculate our provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying amount of assets and liabilities and their respective tax bases, as well as from operating loss and tax credit carry-forwards. We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid. We periodically assess our tax filing exposures related to periods that are open to examination. Based on the latest available information, we evaluate our tax positions to determine whether the position will more-likely-than-not be sustained upon examination by the Internal Revenue Service (IRS) or other taxing authorities. If we cannot reach a more-likely-than-not determination, no benefit is recorded. If we determine that the tax position is more-likely-than-not to be sustained, we record the largest amount of benefit that is more-likely-than-not to be realized when the tax position is settled. We record interest and penalties related to income taxes as a component of income tax expense on our Statements of Earnings. Interest and penalties were not material.
Cash and cash equivalents	Cash and cash equivalents – Cash equivalents include highly liquid instruments with original maturities of 90 days or less.
Receivables	Receivables – Receivables include amounts billed and currently due from customers and unbilled costs and accrued profits primarily related to sales on long-term contracts that have been recognized but not yet billed to customers. Pursuant to contract provisions, agencies of the U.S. Government and certain other customers have title to, or a security interest in, assets related to such contracts as a result of advances, performance-based payments and progress payments. We reflect those advances and payments as an offset to the related receivables balance for contracts that we account for on a percentage-of-completion basis using the cost-to-cost method to measure progress towards completion.
Inventories	Inventories – We record inventories at the lower of cost or estimated net realizable value. Costs on long-term contracts and programs in progress represent recoverable costs incurred for production or contract-specific facilities and equipment, allocable operating overhead, advances to suppliers and, in the case of contracts with the U.S. Government and substantially all other governments, research and development and general and administrative expenses. Pursuant to contract provisions, agencies of the U.S. Government and certain other customers have title to, or a security interest in, inventories related to such contracts as a result of advances, performance-based payments and progress payments. We reflect those advances and payments as an offset against the related inventory balances for contracts that we account for on a percentage-of-completion basis using units-of-delivery as the basis to measure progress toward completing the contract. We determine the costs of other product and supply inventories by the first-in first-out or average cost methods.
Property, plant and equipment	Property, plant and equipment – We record property, plant and equipment at cost. We provide for depreciation and amortization on plant and equipment generally using accelerated methods during the first half of the estimated useful lives of the assets and the straight-line method thereafter. The estimated useful lives of our plant and equipment generally range from 10 to 40 years for buildings and five to 15 years for machinery and equipment. No depreciation expense is recorded on construction in progress until such assets are placed into operation. Depreciation expense related to plant and equipment was $738 million in 2015, $739 million in 2014 and $714 million in 2013. We review the carrying amounts of long-lived assets for impairment if events or changes in the facts and circumstances indicate that their carrying amounts may not be recoverable. We assess impairment by comparing the estimated undiscounted future cash flows of the related asset grouping to its carrying amount. If an asset is determined to be impaired, we recognize an impairment charge in the current period for the difference between the fair value of the asset and its carrying amount.
Capitalized software	Capitalized software – We capitalize certain costs associated with the development or purchase of internal-use software. The amounts capitalized are included in other noncurrent assets on our Balance Sheets and are amortized on a straight-line basis over the estimated useful life of the resulting software, which ranges from two to six years. As of December 31, 2015 and 2014, capitalized software totaled $481 million and $547 million, net of accumulated amortization of $1.9 billion and $1.8 billion. No amortization expense is recorded until the software is ready for its intended use. Amortization expense related to capitalized software was $172 million in 2015, $206 million in 2014 and $228 million in 2013.
Goodwill	Goodwill – The assets and liabilities of acquired businesses are recorded under the acquisition method of accounting at their estimated fair values at the date of acquisition. Goodwill represents costs in excess of fair values assigned to the underlying identifiable net assets of acquired businesses. We perform an impairment test of our goodwill at least annually in the fourth quarter and more frequently whenever certain events or changes in circumstances indicate the carrying value of goodwill may be impaired. Such events or changes in circumstances may include a significant deterioration in overall economic conditions, changes in the business climate of our industry, a decline in our market capitalization, operating performance indicators, competition, reorganizations of our business or the disposal of all or a portion of a reporting unit. Our goodwill has been allocated to and is tested for impairment at a level referred to as the reporting unit, which is our business segment level or a level below the business segment. The level at which we test goodwill for impairment requires us to determine whether the operations below the business segment constitute a business for which discrete financial information is available and segment management regularly reviews the operating results. We may use both qualitative and quantitative approaches when testing goodwill for impairment. Under the qualitative approach, for selected reporting units we perform a qualitative evaluation of events and circumstances impacting the reporting unit to determine the likelihood of goodwill impairment. Based on that qualitative evaluation, if we determine it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, no further evaluation is necessary. Otherwise, we perform a quantitative two-step impairment test. For certain reporting units we only perform a quantitative impairment test. Under step one of the quantitative impairment test, we compare the fair value of each reporting unit to its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is not impaired. If the carrying value of a reporting unit exceeds its fair value, we then perform step two of the quantitative impairment test and compare the implied value of the reporting unit’s goodwill with the carrying value of its goodwill. The implied value of the reporting unit’s goodwill is calculated by creating a hypothetical balance sheet as if the reporting unit had just been acquired. This balance sheet contains all assets and liabilities recorded at fair value (including any intangible assets that may not have any corresponding carrying value in our balance sheet). The implied value of the reporting unit’s goodwill is calculated by subtracting the fair value of the net assets from the fair value of the reporting unit. If the carrying value of the reporting unit’s goodwill exceeds the implied value of that goodwill, an impairment loss is recognized in an amount equal to that excess. We estimate the fair value of each reporting unit using a combination of a discounted cash flow (DCF) analysis and market-based valuation methodologies such as comparable public company trading values and values observed in recent business acquisitions. Determining fair value requires the exercise of significant judgments, including judgments about the amount and timing of expected future cash flows, long-term growth rates, discount rates and relevant comparable public company earnings multiples and relevant transaction multiples. The cash flows employed in the DCF analyses are based on our best estimate of future sales, earnings and cash flows after considering factors such as general market conditions, U.S. Government budgets, existing firm orders, expected future orders, contracts with suppliers, labor agreements, changes in working capital, long-term business plans and recent operating performance. The discount rates utilized in the DCF analysis are based on the respective reporting unit’s weighted average cost of capital, which takes into account the relative weights of each component of capital structure (equity and debt) and represents the expected cost of new capital, adjusted as appropriate to consider the risk inherent in future cash flows of the respective reporting unit. In the fourth quarter of 2015, we performed our annual goodwill impairment test for each of our reporting units. During the fourth quarter of 2015, we realigned certain programs between our business segments in connection with our strategic review of our government IT and technical services businesses. As part of the realignment, goodwill was reallocated between affected reporting units on a relative fair value basis. We performed goodwill impairment tests prior and subsequent to the realignment. The results of our 2015 annual impairment tests of goodwill indicated that no impairment existed. In the fourth quarter of 2014, we completed our annual goodwill impairment test for each of our reporting units. The results of these tests indicated that the estimated fair values of our reporting units exceeded their carrying values, with the exception of our Technical Services reporting unit within our IS&GS business segment. The impact of market pressures such as lower in-theater support as troop levels are drawn down and increased re-competition on existing contracts that are awarded primarily on the basis of price adversely impacted the fair value of this reporting unit. As a result, we compared the implied value of that reporting unit’s goodwill with the carrying value of its goodwill, and since the carrying value exceeded the implied value, we recorded a non-cash impairment charge of $119 million in the fourth quarter of 2014 equal to that differential. This charge reduced our net earnings by $107 million ($.33 per share). During the fourth quarter of 2013, due to the continuing impact of defense budget reductions and related competitive pressures on the Technical Services business, we recorded a non-cash goodwill impairment charge of $195 million. This charge reduced our 2013 net earnings by $176 million ($.54 per share).
Intangible assets	Intangible assets – Intangible assets from acquired businesses are recognized at their estimated fair values at the date of acquisition and consist of customer programs, trademarks, customer relationships, technology and other intangible assets. Customer programs include values assigned to major programs of acquired businesses and represent the aggregate value associated with the customer relationships, contracts, technology and trademarks underlying the associated program. Acquired intangibles deemed to have indefinite lives are not amortized, but are subject to annual impairment testing. This testing compares carrying value to fair value and, when appropriate, the carrying value of these assets is reduced to fair value. Finite-lived intangibles are amortized to expense over the applicable useful lives, ranging from three to twenty years, based on the nature of the asset and the underlying pattern of economic benefit as reflected by future net cash inflows.
Customer advances and amounts in excess of cost incurred	Customer advances and amounts in excess of cost incurred – We receive advances, performance-based payments and progress payments from customers that may exceed costs incurred on certain contracts, including contracts with agencies of the U.S. Government. We classify such advances, other than those reflected as a reduction of receivables or inventories as discussed above, as current liabilities.
Debt issuance costs	Debt issuance costs – In 2015, we early adopted a new standard of the Financial Accounting Standards Board (FASB) which simplifies the presentation of debt issuance costs. In accordance with the new standard, we now reflect debt issuance costs as a reduction from the face amount of debt on our consolidated balance sheets. These costs, which are $95 million and $27 million as of December 31, 2015 and 2014, are amortized as interest expense over the life of the related debt. In prior year presentation, these costs were reflected within other noncurrent assets on our consolidated balance sheets.
Postretirement benefit plans	Postretirement benefit plans – Many of our employees are covered by defined benefit pension plans and we provide certain health care and life insurance benefits to eligible retirees (collectively, postretirement benefit plans). GAAP requires that the amounts we record related to our postretirement benefit plans be computed, based on service to date, using actuarial valuations that are based in part on certain key economic assumptions we make, including the discount rate, the expected long-term rate of return on plan assets and other actuarial assumptions including participant longevity (also known as mortality) estimates, health care cost trend rates and employee turnover, each as appropriate based on the nature of the plans. We recognize on a plan-by-plan basis the funded status of our postretirement benefit plans under GAAP as either an asset recorded within other noncurrent assets or a liability recorded within noncurrent liabilities on our Balance Sheets. There is a corresponding non-cash adjustment to accumulated other comprehensive loss, net of tax benefits recorded as deferred tax assets, in stockholders’ equity. The GAAP funded status is measured as the difference between the fair value of the plan’s assets and the benefit obligation of the plan. The funded status under the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Pension Protection Act of 2006 (PPA), is calculated on a different basis than under GAAP.
Environmental matters	Environmental matters – We record a liability for environmental matters when it is probable that a liability has been incurred and the amount 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. Our environmental liabilities are recorded on our Balance Sheets within other liabilities, both current and noncurrent. We expect to include a substantial portion of environmental costs in our net sales and cost of sales in future periods pursuant to U.S. Government agreement or regulation. At the time a liability is recorded for future environmental costs, we record a receivable for estimated future recovery considered probable through the pricing of products and services to agencies of the U.S. Government, regardless of the contract form (e.g., cost-reimbursable, fixed-price). We continuously evaluate the recoverability of our environmental receivables by assessing, among other factors, U.S. Government regulations, our U.S. Government business base and contract mix and our history of receiving reimbursement of such costs. We include the portion of those environmental costs expected to be allocated to our non-U.S. Government contracts, or that is determined to not be recoverable under U.S. Government contracts, in our cost of sales at the time the liability is established. Our environmental receivables are recorded on our Balance Sheets within other assets, both current and noncurrent. We project costs and recovery of costs over approximately 20 years.
Investments in marketable securities	Investments in marketable securities – Investments in marketable securities consist of debt and equity securities and are classified as trading securities. As of December 31, 2015 and 2014, the fair value of our trading securities totaled $1.1 billion and $1.1 billion and was included in other noncurrent assets on our Balance Sheets. Our trading securities are held in a separate trust, which includes investments to fund our deferred compensation plan liabilities. Net losses on trading securities in 2015 were $11 million and net gains on trading securities in 2014 and 2013 were $65 million and $64 million. Gains and losses on these investments are included in other unallocated, net within cost of sales on our Statements of Earnings in order to align the classification of changes in the market value of investments held for the plan with changes in the value of the corresponding plan liabilities.
Equity method investments	Equity method investments – Investments where we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other noncurrent assets on our Balance Sheets. Significant influence typically exists if we have a 20% to 50% ownership interest in the investee. Under this method of accounting, our share of the net earnings or losses of the investee is included in operating profit in other income, net on our Statements of Earnings since the activities of the investee are closely aligned with the operations of the business segment holding the investment. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period. As of December 31, 2015 and 2014, our equity method investments totaled $1.3 billion and $971 million, which primarily are composed of our Space Systems business segment’s investment in United Launch Alliance (ULA), as further described in Note 14, and our Aeronautics and MST business segments’ investments in Advanced Military Maintenance, Repair and Overhaul Center. Our share of net earnings related to our equity method investees was $343 million in 2015, $342 million in 2014 and $321 million in 2013, of which approximately $245 million, $280 million and $300 million related to our Space Systems business segment.
Derivative financial instruments	Derivative financial instruments – 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. We record derivatives at their fair value. The classification of gains and losses resulting from changes in the fair values of derivatives is dependent on our intended use of the derivative and its resulting designation. Adjustments to reflect changes in fair values of derivatives attributable to the effective portion of hedges are either reflected in earnings and largely offset by corresponding adjustments to the hedged items or reflected net of income taxes in accumulated other comprehensive loss until the hedged transaction is recognized in earnings. Changes in the fair value of the derivatives that are attributable to the ineffective portion of the hedges or of derivatives that are not considered to be highly effective hedges, if any, are immediately recognized in earnings. The aggregate notional amount of our outstanding interest rate swaps at December 31, 2015 and 2014 was $1.5 billion and $1.3 billion. The aggregate notional amount of our outstanding foreign currency hedges at December 31, 2015 and 2014 was $4.1 billion and $804 million. Derivative instruments did not have a material impact on net earnings and comprehensive income during 2015, 2014 and 2013. Substantially all of our derivatives are designated for hedge accounting. See Note 16 for more information on the fair value measurements related to our derivative instruments.
Recent Accounting Pronouncements	Recent Accounting Pronouncements – In May 2014, the FASB issued a new standard that will change the way we recognize revenue and significantly expand the disclosure requirements for revenue arrangements. On July 9, 2015, the FASB approved a one-year deferral of the effective date of the standard to 2018 for public companies, with an option that would permit companies to adopt the standard in 2017. Early adoption prior to 2017 is not permitted. The new standard may be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up adjustment recorded to beginning retained earnings at the effective date for existing contracts with remaining performance obligations. In addition, the FASB is contemplating making additional changes to certain elements of the new standard. We are currently evaluating the methods of adoption allowed by the new standard and the effect the standard is expected to have on our consolidated financial statements and related disclosures. As the new standard will supersede substantially all existing revenue guidance affecting us under GAAP, it could impact revenue and cost recognition on thousands of contracts across all our business segments, in addition to our business processes and our information technology systems. As a result, our evaluation of the effect of the new standard will extend over future periods. In September 2015, the FASB issued a new standard that simplifies the accounting for adjustments made to preliminary amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. Instead, adjustments will be recognized in the period in which the adjustments are determined, including the effect on earnings of any amounts that would have been recorded in previous periods if the accounting had been completed at the acquisition date. We adopted the standard on January 1, 2016 and will prospectively apply the standard to business combination adjustments identified after the date of adoption. In November 2015, the FASB issued a new standard that simplifies the presentation of deferred income taxes and requires that deferred tax assets and liabilities, as well as any related valuation allowance, be classified as noncurrent in our consolidated balance sheets. The standard is effective January 1, 2017, with early adoption permitted. The standard may be applied either prospectively from the date of adoption or retrospectively to all prior periods presented. We are currently evaluating when we will adopt the standard and the method of adoption.

Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2015

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):


	2015		2014		2013
Weighted average common shares outstanding for basic computations		310.3		316.8		320.9
Weighted average dilutive effect of equity awards		4.4		5.6		5.6
Weighted average common shares outstanding for diluted computations		314.7		322.4		326.5

Acquisitions and Divestitures (Tables)

12 Months Ended

Dec. 31, 2015

Summary of Estimated Fair Values of Assets Acquired and Liabilities Assumed

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):


	November 6, 2015
Cash and cash equivalents		$ 75
Receivables		1,921
Inventories		1,817
Deferred income taxes, current		72
Other current assets		36
Property, plant and equipment		654
Goodwill		2,764
Intangible assets:
Customer programs		3,127
Trademarks		816
Other noncurrent assets		502
Deferred income taxes, noncurrent		214
Total identifiable assets and goodwill		11,998
Accounts payable		(565)
Customer advances and amounts in excess of costs incurred		(1,220)
Salaries, benefits, and payroll taxes		(105)
Current portion of long-term debt		(5)
Other current liabilities		(347)
Long-term debt		(11)
Customer contractual obligations ^(a)		(480)
Other noncurrent liabilities		(150)
Deferred income tax liabilities, noncurrent^(a)		(32)
Total liabilities assumed		(2,915)
Total consideration		$ 9,083

^(a)	Recorded in Other noncurrent liabilities on the consolidated balance sheet.

Summary of Pro Forma Financial Information

The following table presents summarized unaudited pro forma financial information as if Sikorsky had been included in our financial results for the entire years in 2015 and 2014 (in millions):


	2015		2014
Net Sales	$	50,962	$	53,023
Net Earnings from continuing operations		3,538		3,480
Basic earnings per common share from continuing operations		11.40		10.99
Diluted earnings per common share from continuing operations		11.24		10.79

Goodwill and Acquired Intangibles (Tables)

12 Months Ended

Dec. 31, 2015

Changes in the Carrying Amount of Goodwill by Segment

The gross carrying amounts and accumulated amortization of our acquired intangible assets consisted of the following (in millions):


	2015						2014
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-Lived:
Customer programs		$ 3,127		$ (38)		$ 3,089		$ —		$ —		$ —
Customer relationships		309		(166)		143		309		(123)		186
Technology		73		(37)		36		73		(21)		52
Trademarks		27		(14)		13		27		(3)		24
Other		71		(39)		32		71		(27)		44
Indefinite Lived:
Trademarks		834		—		834		18		—		18
Total acquired intangibles		$ 4,441		$ (294)		$ 4,147		$498		$(174)		$ 324

Goodwill by Segment

Changes in the Carrying Amount of Goodwill by Segment

Changes in the carrying amount of goodwill by segment were as follows (in millions):


	Aeronautics		IS&GS		MFC		MST		Space Systems		Total
Balance at December 31, 2013 ^(a)		$ 167		$2,649		$2,185		$4,049		$1,298		$10,348
Acquisitions		4		378		—		—		292		674
Impairments ^(b)		—		(119)		—		—		—		(119)
Other		—		(10)		(4)		(27)		—		(41)
Balance at December 31, 2014		171		2,898		2,181		4,022		1,590		10,862
Sikorsky acquisition		—		—		—		2,764		—		2,764
Impairments		—		—		—		—		—		—
Other		—		(17)		17		(48)		(2)		(50)
Balance at December 31, 2015		$ 171		$2,881		$2,198		$6,738		$1,588		$13,576

^(a)	Includes reclassifications of goodwill among our business segments as a result of our program realignment, which occurred during the fourth quarter of 2015 (Note 1).

^(b)	The impairment in 2014 relates to our Technical Services reporting unit within our IS&GS business segment (Note 1).

Information on Business Segments (Tables)

12 Months Ended

Dec. 31, 2015

Summary Of Financial Information For Each Business Segment

Summary operating results for each of our business segments were as follows (in millions):


	2015			2014			2013
Net sales
Aeronautics	$	15,570		$	14,920		$	14,123
Information Systems & Global Solutions		5,596			5,654			6,115
Missiles and Fire Control		6,770			7,092			6,795
Mission Systems and Training		9,091			8,732			9,037
Space Systems		9,105			9,202			9,288
Total net sales	$	46,132		$	45,600		$	45,358
Operating profit
Aeronautics	$	1,681		$	1,649		$	1,612
Information Systems & Global Solutions		508			472			498
Missiles and Fire Control		1,282			1,344			1,379
Mission Systems and Training		844			936			1,065
Space Systems		1,171			1,187			1,198
Total business segment operating profit		5,486			5,588			5,752
Unallocated items
FAS/CAS pension adjustment
FAS pension expense ^(a)		(1,142	)		(1,144	)		(1,948)
Less: CAS pension cost ^(b)		1,613			1,520			1,466
FAS/CAS pension income (expense)		471			376			(482)
Goodwill impairment charges ^(c)		—			(119	)		(195)
Severance charges ^(d)		(102	)		—			(201)
Stock-based compensation		(138	)		(164	)		(189)
Other, net ^{(e), (f)}		(281	)		(89	)		(180)
Total unallocated items		(50	)		4			(1,247)
Total consolidated operating profit	$	5,436		$	5,592		$	4,505

^(a)	FAS pension expense in 2015 and 2014 was less than in 2013 primarily due to the June 2014 plan amendments to certain of our defined benefit pension plans to freeze future retirement benefits, partially offset by the impact of using new longevity assumptions (Note 11).

^(b)	The higher CAS pension cost primarily reflects the impact of phasing in CAS Harmonization.

^(c)	We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information.

^(d)	See Note 15 for information on charges related to certain severance actions at our business segments. Severance charges for initiatives that are not significant are included in business segment operating profit.

^(e)

^(f)	Other, net in 2015 includes approximately $45 million of non-recoverable transaction costs associated with the acquisition of Sikorsky and the strategic review of our government IT and technical services businesses.

Selected Financial Data by Business Segment (continued)


	2015		2014		2013
Intersegment sales
Aeronautics	$	102	$	104	$	203
Information Systems & Global Solutions		53		12		14
Missiles and Fire Control		313		255		220
Mission Systems and Training		1,529		1,243		1,030
Space Systems		145		136		119
Total intersegment sales	$	2,142	$	1,750	$	1,586

Depreciation and amortization
Aeronautics	$	317	$	322	$	318
Information Systems & Global Solutions		101		47		48
Missiles and Fire Control		99		99		98
Mission Systems and Training		203		175		194
Space Systems		208		244		225
Total business segment depreciation and amortization		928		887		883
Corporate activities		98		107		107
Total depreciation and amortization	$	1,026	$	994	$	990

Capital expenditures
Aeronautics	$	387	$	283	$	271
Information Systems & Global Solutions		31		18		33
Missiles and Fire Control		120		142		128
Mission Systems and Training		169		164		146
Space Systems		172		172		187
Total business segment capital expenditures		879		779		765
Corporate activities		60		66		71
Total capital expenditures	$	939	$	845	$	836

Net Sales By Customer Category

Net sales by customer category were as follows (in millions):


	2015		2014		2013
U.S. Government
Aeronautics	$	11,195	$	10,704	$	11,025
Information Systems & Global Solutions		4,990		5,204		5,823
Missiles and Fire Control		4,150		4,509		4,069
Mission Systems and Training		6,961		6,752		7,132
Space Systems		8,845		8,921		9,124
Total U.S. Government net sales	$	36,141	$	36,090	$	37,173
International ^(a)
Aeronautics	$	4,328	$	4,183	$	3,078
Information Systems & Global Solutions		520		401		262
Missiles and Fire Control		2,449		2,421		2,535
Mission Systems and Training		2,016		1,921		1,792
Space Systems		218		89		101
Total international net sales	$	9,531	$	9,015	$	7,768
U.S. Commercial and Other
Aeronautics	$	47	$	33	$	20
Information Systems & Global Solutions		86		49		30
Missiles and Fire Control		171		162		191
Mission Systems and Training		114		59		113
Space Systems		42		192		63
Total U.S. commercial and other net sales	$	460	$	495	$	417
Total net sales	$	46,132	$	45,600	$	45,358

^(a)	International sales include foreign military sales contracted through the U.S. Government, direct commercial sales with international governments and commercial and other sales to international customers.

Selected Financial Data By Business Segment

Total assets and customer advances and amounts in excess of costs incurred for each of our business segments were as follows (in millions):


	2015		2014
Assets ^(a)
Aeronautics	$	6,618	$	6,042
Information Systems & Global Solutions		4,206		4,268
Missiles and Fire Control		4,027		3,977
Mission Systems and Training		19,187		7,465
Space Systems		4,861		4,732
Total business segment assets		38,899		26,484
Corporate assets ^(b)		10,229		10,562
Total assets	$	49,128	$	37,046

Customer advances and amounts in excess of costs incurred
Aeronautics	$	2,045	$	2,191
Information Systems & Global Solutions		285		227
Missiles and Fire Control		1,766		1,803
Mission Systems and Training		2,415		1,148
Space Systems		477		406
Total customer advances and amounts in excess of costs incurred	$	6,988	$	5,775

^(a)	We have no significant long-lived assets located in foreign countries.

^(b)	Corporate assets primarily include cash and cash equivalents, deferred income taxes, environmental receivables and investments held in a separate trust.

Receivables, net (Tables)

12 Months Ended

Dec. 31, 2015

Receivables

Receivables, net consisted of the following (in millions):


	2015			2014
U.S. Government
Amounts billed	$	1,492		$	1,434
Unbilled costs and accrued profits		5,734			4,577
Less: customer advances and progress payments		(1,311	)		(1,012)
Total U.S. Government receivables, net		5,915			4,999
Other governments and commercial
Amounts billed		772			460
Unbilled costs and accrued profits		1,995			671
Less: customer advances		(621	)		(253)
Total other governments and commercial receivables, net		2,146			878
Total receivables, net	$	8,061		$	5,877

Inventories, net (Tables)

12 Months Ended

Dec. 31, 2015

Inventories

Inventories, net consisted of the following (in millions):


	2015			2014
Work-in-process, primarily related to long-term contracts and programs in progress	$	8,199		$	6,731
Less: customer advances and progress payments		(5,035	)		(4,701)
		3,164			2,030
Other inventories		1,798			774
Total inventories, net	$	4,962		$	2,804

Property, Plant and Equipment, net (Tables)

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment

Property, plant and equipment, net consisted of the following (in millions):


	2015			2014
Land	$	123		$	99
Buildings		6,128			5,723
Machinery and equipment		7,409			7,031
Construction in progress		887			636
		14,547			13,489
Less: accumulated depreciation and amortization		(9,057	)		(8,738)
Total property, plant and equipment, net	$	5,490		$	4,751

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Provision for Federal & Foreign Income Tax Expense

Our provision for federal and foreign income tax expense for continuing operations consisted of the following (in millions):


	2015			2014			2013
Federal income tax expense (benefit):
Current	$	1,817		$	2,020		$	1,204
Deferred		(473	)		(387	)		3
Total federal income tax expense		1,344			1,633			1,207
Foreign income tax expense (benefit):
Current		46			24			6
Deferred		28			(13	)		(8)
Total foreign income tax expense (benefit)		74			11			(2)
Total income tax expense	$	1,418		$	1,644		$	1,205

Reconciliation of Income Tax Expense Computed Using U.S. Statutory Federal Tax Rate to Actual Income Tax Expense

Our reconciliation of the 35% U.S. federal statutory income tax rate to actual income tax expense for continuing operations is as follows (in millions):


	2015			2014			2013
Income tax expense at the U.S. federal statutory tax rate	$	1,758		$	1,840		$	1,454
U.S. manufacturing deduction benefit		(126	)		(127	)		(100)
Tax deductible dividends		(87	)		(82	)		(77)
Research and development tax credit		(71	)		(66	)		(96)
Goodwill impairment – non-deductible portion		—			30			50
Other, net		(56	)		49			(26)
Income tax expense	$	1,418		$	1,644		$	1,205

Components of Federal and Foreign Deferred Tax Assets and Liabilities

The primary components of our federal and foreign deferred income tax assets and liabilities at December 31 were as follows (in millions):


	2015			2014
Deferred tax assets related to:
Accrued compensation and benefits	$	961		$	965
Pensions ^(a)		4,462			4,317
Other postretirement benefit obligations		375			386
Contract accounting methods		1,039			989
Foreign company operating losses and credits		70			59
Other		434			198
Valuation allowance ^(b)		(76	)		(9)
Deferred tax assets, net		7,265			6,905
Deferred tax liabilities related to:
Goodwill and purchased intangibles		474			454
Property, plant and equipment		457			514
Exchanged debt securities and other ^(c)		409			485
Deferred tax liabilities		1,340			1,453
Net deferred tax assets ^(d)	$	5,925		$	5,452

^(a)	The increase in 2015 was primarily due to the negative investment return on postretirement plan assets (Note 11).

^(b)	A valuation allowance was provided against certain foreign company deferred tax assets arising from carryforwards of unused tax benefits.

^(c)	Includes deferred taxes associated with the exchange of debt securities in prior years.

^(d)	Includes net foreign current deferred tax liabilities, which are included on the Balance Sheets in other current liabilities.

Debt (Tables)

12 Months Ended

Dec. 31, 2015

Long-term Debt

Our long-term debt consisted of the following (in millions):


	2015			2014
Notes with rates from 1.85% to 3.80%, due 2016 to 2045	$	8,150		$	1,400
Notes with rates from 4.07% to 5.72%, due 2019 to 2046		6,089			3,589
Notes with rates from 6.15% to 9.13%, due 2016 to 2036		1,941			1,941
Other debt		116			111
Total long-term debt		16,296			7,041
Less: unamortized discounts and deferred financing costs		(1,035	)		(899)
Total long-term debt, net	$	15,261		$	6,142

Postretirement Plans (Tables)

12 Months Ended

Dec. 31, 2015

Schedule Of Net Periodic Benefit Costs

The net periodic benefit cost recognized each year included the following (in millions):


	Qualified Defined Benefit Pension Plans ^(a)						Retiree Medical and Life Insurance Plans
	2015		2014		2013		2015		2014		2013
Service cost	$	875	$	903	$	1,142	$	21	$	22	$	27
Interest cost		1,791		1,912		1,800		110		123		116
Expected return on plan assets		(2,734)		(2,693)		(2,485)		(147)		(146)		(145)
Recognized net actuarial losses		1,599		1,173		1,410		43		23		44
Amortization of net prior service (credit) cost		(389)		(151)		81		4		4		(17)
Total net periodic benefit cost	$	1,142	$	1,144	$	1,948	$	31	$	26	$	25

^(a)

Reconciliation of Benefit Obligations, Plan Assets, and Unfunded or Funded Status


	Qualified Defined Benefit Pension Plans				Retiree Medical and Life Insurance Plans
	2015		2014		2015		2014
Change in benefit obligation
Beginning balance	$	45,882	$	42,161	$	3,034	$	2,823
Service cost		875		903		21		22
Interest cost		1,791		1,912		110		123
Benefits paid ^(a)		(2,055)		(2,399)		(307)		(352)
Actuarial losses (gains)		(1,988)		4,493		(170)		(40)
New longevity assumptions		(834)		3,390		(77)		266
Plan amendments and acquisitions ^(b)		31		(4,578)		157		5
Medicare Part D subsidy		—		—		14		26
Participants’ contributions		—		—		101		161
Ending balance	$	43,702	$	45,882	$	2,883	$	3,034

Change in plan assets
Beginning balance at fair value	$	34,673	$	33,010	$	1,932	$	1,921
Actual return on plan assets		(527)		2,062		(27)		126
Benefits paid ^(a)		(2,055)		(2,399)		(307)		(352)
Company contributions		5		2,000		100		50
Medicare Part D subsidy		—		—		14		26
Participants’ contributions		—		—		101		161
Ending balance at fair value	$	32,096	$	34,673	$	1,813	$	1,932
Unfunded status of the plans	$	(11,606)	$	(11,209)	$	(1,070)	$	(1,102)

^(a)

^(b)

Amounts Recognized on Balance Sheets Related to Qualified Defined Benefit Pension Plans and Retiree Medical and Life Insurance Plans

The following table provides amounts recognized on our Balance Sheets related to our qualified defined benefit pension plans and our retiree medical and life insurance plans (in millions):

Qualified Defined Benefit
Pension Plans

Retiree Medical and

Life Insurance Plans

2015

2014

2015

2014

Prepaid pension asset

$ 201

$ 204

$ —

$ —

Accrued postretirement benefit liabilities

(11,807)

(11,413)

(1,070)

(1,102)

Accumulated other comprehensive loss (pre-tax) related to:

Net actuarial losses

19,632

20,794

627

741

Prior service (credit) cost

(3,565)

(3,985)

167

Total ^(a)

$16,067

$16,809

$ 794

$ 755

^(a)

Accumulated Benefit Obligations In Excess Of Fair Value Of Plan Assets

Certain key information related to our qualified defined benefit pension plans as of December 31, 2015 and 2014 is as follows (in millions):


	2015			2014
Plans where ABO was in excess of plan assets
Projected benefit obligation		$ 43,575			$ 45,741
Less: fair value of plan assets		31,768			34,328
Unfunded status of plans ^(a)		(11,807	)		(11,413)

Plans where ABO was less than plan assets
Projected benefit obligation		127			141
Less: fair value of plan assets		328			345
Funded status of plans ^(b)		$ 201			$ 204

^(a)	Represent accrued pension liabilities, which are included on our Balance Sheets.

^(b)	Represent prepaid pension assets, which are included on our Balance Sheets in other noncurrent assets.

Amounts Recognized In Other Comprehensive Income (Loss) Related To Postretirement Benefit Plans


	Incurred but Not Yet Recognized in Net Periodic Benefit Cost						Recognition of Previously Deferred Amounts
	2015		2014		2013		2015		2014		2013
	Gains (losses)						(Gains) losses
Actuarial gains and losses
Qualified defined benefit pension plans		$(291)		$(5,505)		$2,751		$1,034		$758		$ 911
Retiree medical and life insurance plans		46		(160)		140		28		15		28
Other plans		21		(245)		46		47		33		34
		(224)		(5,910)		2,937		1,109		806		973

	Credit (cost)						(Credit) cost
Net prior service credit and cost
Qualified defined benefit pension plans		(18)		2,959		(69)		(251)		(98)		53
Retiree medical and life insurance plans		(102)		(3)		—		2		3		(11)
Other plans		(7)		84		—		(10)		(5)		—
		(127)		3,040		(69)		(259)		(100)		42
		$(351)		$(2,870)		$2,868		$ 850		$706		$1,015

Actuarial Assumptions Used to Determine Net Periodic Benefit Cost

The actuarial assumptions used to determine the benefit obligations at December 31 of each year and to determine the net periodic benefit cost for each subsequent year, were as follows:


	Qualified Defined Benefit Pension Plans						Retiree Medical and Life Insurance Plans
	2015		2014		2013		2015		2014		2013
Discount rate		4.375%		4.00%		4.75%		4.25%		3.75%		4.50%
Expected long-term rate of return on assets		8.00%		8.00%		8.00%		8.00%		8.00%		8.00%
Rate of increase in future compensation levels		4.50%		4.30%		4.30%
Health care trend rate assumed for next year								9.00%		8.50%		8.75%
Ultimate health care trend rate								5.00%		5.00%		5.00%
Year that the ultimate health care trend rate is reached								2032		2029		2029

Schedule of Allocation of Plan Assets

The following table presents the fair value of the assets (in millions) of our qualified defined benefit pension plans and retiree medical and life insurance plans by asset category and their level within the fair value hierarchy, which has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets, Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs.


	December 31, 2015										December 31, 2014
	Total			Level 1		Level 2			Level 3		Total		Level 1		Level 2		Level 3
Cash and cash equivalents ^(a)	$	2,658		$	2,658		$ —		$	—	$	2,968	$	2,968		$ —	$	—
Equity ^(a):
U.S. equity securities		4,790			4,771		19			—		6,431		6,363		67		1
International equity securities		6,121			6,087		24			10		5,566		5,525		31		10
Commingled equity funds		1,935			614		1,321			—		6,078		2,047		4,031		—
Fixed income ^(a):
Corporate debt securities		3,929			—		3,914			15		4,242		—		4,201		41
U.S. Government securities		5,069			—		5,069			—		4,579		—		4,579		—
U.S. Government-sponsored enterprise securities		1,377			—		1,377			—		613		—		613		—
Other fixed income investments		3,252			—		3,246			6		1,807		39		1,759		9
Alternative investments:
Private equity funds		3,131			—		—			3,131		2,952		—		—		2,952
Real estate funds		1,108			—		92			1,016		762		—		33		729
Hedge funds		522			—		167			355		570		—		66		504
Commodities ^(a)		(26	)		1		(27	)		—		2		2		—		—
Total	$	33,866		$	14,131		$15,202		$	4,533	$	36,570	$	16,944		$15,380	$	4,246
Receivables, net		43										35
Total	$	33,909									$	36,605

^(a)

Changes In Fair Value of Level 3 Plan Assets

The following table presents the changes during 2015 and 2014 in the fair value of plan assets categorized as Level 3 in the preceding table (in millions):


	Private Equity Funds			Real Estate Funds		Hedge Funds			Other			Total
Balance at January 1, 2014		$2,601			$572		$ 505			$145		$	3,823
Actual return on plan assets:
Realized gains, net		182			43		34			1			260
Unrealized gains (losses), net		38			22		(11	)		(21	)		28
Purchases, sales and settlements, net		131			92		(24	)		8			207
Transfers out of Level 3, net		—			—		—			(72	)		(72)
Balance at December 31, 2014		$2,952			$729		$ 504			$61		$	4,246
Actual return on plan assets:
Realized gains, net		315			84		23			(12	)		410
Unrealized (losses) gains, net		(163	)		20		5			7			(131)
Purchases, sales and settlements, net		27			183		(177	)		(22	)		11
Transfers out of Level 3, net		—			—		—			(3	)		(3)
Balance at December 31, 2015		$3,131			$1,016		$ 355			$ 31		$	4,533

Estimated Future Benefit Payments

The following table presents estimated future benefit payments, which reflect expected future employee service, as of December 31, 2015 (in millions):


	2016		2017		2018		2019		2020		2021 - 2025
Qualified defined benefit pension plans	$	2,160	$	2,240	$	2,320	$	2,410	$	2,500		$13,670
Retiree medical and life insurance plans		190		190		200		200		200		940

Target Allocation Range

Schedule of Allocation of Plan Assets

LMIMCo’s investment policies require that asset allocations of postretirement benefit plans be maintained within the following approximate ranges:


Asset Class		Asset Allocation Ranges
Cash and cash equivalents		0-20%
Equity		15-65%
Fixed income		10-60%
Alternative investments:
Private equity funds		0-15%
Real estate funds		0-10%
Hedge funds		0-20%
Commodities		0-25%

Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2015

Accumulated Other Comprehensive Loss

Changes in the balance of AOCL, net of income taxes, consisted of the following (in millions):


	Postretirement Benefit Plans		Other, net		AOCL
Balance at December 31, 2012 ^(a)		$(13,532)		$ 39		$(13,493)
Other comprehensive income before reclassifications		2,868		11		2,879
Amounts reclassified from AOCL
Recognition of net actuarial losses		973		—		973
Amortization of net prior service costs		42		—		42
Other		—		(2)		(2)
Total reclassified from AOCL		1,015		(2)		1,013
Total other comprehensive income		3,883		9		3,892
Balance at December 31, 2013 ^(a)		(9,649)		48		(9,601)
Other comprehensive loss before reclassifications		(2,870)		(103)		(2,973)
Amounts reclassified from AOCL
Recognition of net actuarial losses		806		—		806
Amortization of net prior service credits		(100)		—		(100)
Other		—		(2)		(2)
Total reclassified from AOCL		706		(2)		704
Total other comprehensive loss		(2,164)		(105)		(2,269)
Balance at December 31, 2014 ^(a)		(11,813)		(57)		(11,870)
Other comprehensive loss before reclassifications		(351)		(73)		(424)
Amounts reclassified from AOCL
Recognition of net actuarial losses		1,109		—		1,109
Amortization of net prior service credits		(259)		—		(259)
Other		—		—		—
Total reclassified from AOCL		850		—		850
Total other comprehensive loss		499		(73)		426
Balance at December 31, 2015 ^(a)		$(11,314)		$ (130)		$(11,444)

^(a)

Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2015

Summary of Stock Based Compensation Activity Related to Nonvested RSUs

The following table summarizes activity related to nonvested RSUs during 2015:


	Number of RSUs (In thousands)	Weighted Average Grant-Date Fair Value Per Share
Nonvested at December 31, 2012	4,822		$ 79.10
Granted	1,356		89.24
Vested	(2,093)		79.26
Forfeited	(226)		81.74
Nonvested at December 31, 2013	3,859		$ 82.42
Granted	745		146.85
Vested	(2,194)		87.66
Forfeited	(84)		91.11
Nonvested at December 31, 2014	2,326		$ 97.80
Granted	595		192.47
Vested	(1,642)		103.30
Forfeited	(43)		132.28
Nonvested at December 31, 2015	1,236		$ 134.87

Stock Options


	2015		2014		2013
Weighted average grant-date fair value of stock options granted	$	—	$	—	$	—
Grant-date fair value of all stock options that vested		8		18		40
Intrinsic value of all stock options exercised		265		297		293

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2015

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):


	December 31, 2015						December 31, 2014
	Total		Level 1		Level 2		Total		Level 1		Level 2
Assets
Equity securities	$	89		$ 89		$ —	$	92		$ 92		$ —
Mutual funds		745		745		—		696		696		—
U.S. Government securities		119		—		119		136		—		136
Other securities		147		—		147		153		—		153
Derivatives		15		—		15		27		—		27
Liabilities
Derivatives		35		—		35		18		—		18

Summary of Quarterly Information (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2015

Quarterly Financial Information Table

A summary of quarterly information is as follows (in millions, except per share data):

2015 Quarters

First

Second

Third

Fourth ^(a)

Net sales

$10,111

$11,643

$11,461

$12,917

Operating profit

1,356

1,445

1,354

1,281

Net earnings ^(b)

878

929

865

933

Basic earnings per share ^(c)

2.78

2.98

2.80

3.05

Diluted earnings per share

2.74

2.94

2.77

3.01

2014 Quarters

First

Second

Third

Fourth

Net sales

$10,650

$11,306

$11,114

$12,530

Operating profit

1,432

1,426

1,392

1,342

Net earnings ^(d)

933

889

888

904

Basic earnings per share

2.92

2.81

2.87

Diluted earnings per share

2.87

2.76

2.82

^(a)

^(b)	The fourth quarter of 2015 includes a charge for workforce reductions of approximately $67 million ($44 million after tax) and a tax benefit of about $71 million due to the retroactive reinstatement of the R&D tax credit in 2015.

^(c)	The sum of the quarterly earnings per share amounts do not equal the earnings per share amounts included on our Statements of Earnings, primarily due to the timing of our share repurchases during each respective year.

^(d)	The fourth quarter of 2014 includes a charge of approximately $119 million ($107 million after tax) related to a non-cash goodwill impairment charge and a tax benefit of about $45 million due to the retroactive reinstatement of the R&D tax credit in 2014.

Significant Accounting Policies - Additional Information (Detail) - USD ($)
$ / shares in Units, $ in Millions

2 Months Ended

3 Months Ended

12 Months Ended

Nov. 06, 2015

Dec. 31, 2015

Sep. 27, 2015

Jun. 28, 2015

Mar. 29, 2015

Dec. 31, 2014

Sep. 28, 2014

Jun. 29, 2014

Mar. 30, 2014

Dec. 31, 2013

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

Acquisitions of businesses and investments in affiliates

$ 9,003

$ 898

$ 269

$ 1,281

^[1]

$ 1,354

$ 1,445

$ 1,356

$ 1,342

$ 1,392

$ 1,426

$ 1,432

5,436

5,592

4,505

Diluted earnings per share

$ 933

^[1],[2]

$ 865

^[2]

$ 929

^[2]

$ 878

^[2]

$ 904

^[3]

$ 888

^[3]

$ 889

^[3]

$ 933

^[3]

$ 3,605

$ 3,614

$ 2,981

$ 3.01

^[1]

$ 2.77

$ 2.94

$ 2.74

$ 2.82

$ 2.76

$ 2.87

$ 11.46

$ 11.21

$ 9.13

Independent research and development costs charged to cost of sales

$ 839

$ 751

$ 697

Number of years over which stock awards vest

3 years

Depreciation

$ 738

739

714

Capitalized internal-use software, net

$ 481

$ 547

481

547

Capitalized internal-use software accumulated amortization

1,900

1,800

1,900

1,800

Non-cash goodwill impairment charge

119

$ 195

119

^[4],[5]

195

^[5]

Reduction in net earnings due to non-cash goodwill impairment charge

$ 107

$ 176

Decrease in diluted earnings per share due to non-cash goodwill impairment charge

$ 0.33

$ 0.54

Debt issuance cost

$ 95

Time period environmental costs and recovery of environmental costs are projected over, years

20 years

Fair value of trading securities

1,100

$ 1,100

1,100

Net gains (losses) on marketable securities

(11)

Total equity method investments

1,300

971

1,300

971

Net earnings from equity method investments

343

342

321

Contracts Accounted for under Percentage of Completion

1,900

1,800

2,100

Diluted earnings per share

$ 1,200

$ 1,100

$ 1,300

$ 3.87

$ 3.55

$ 4.09

Minimum

Acquired finite-lived intangible assets are amortized

3 years

Maximum

Acquired finite-lived intangible assets are amortized

20 years

Interest rate swaps | Designated as hedges

Aggregate notional amount of derivatives

1,500

1,300

$ 1,500

$ 1,300

Foreign currency contracts | Designated as hedges

Aggregate notional amount of derivatives

4,100

$ 4,100

$ 804

4,100

804

Acquisitions of businesses and investments in affiliates

$ 9,003

Debt issuance cost

$ 48

Net earnings from equity method investments

$ 245

280

$ 300

Buildings | Minimum

Property, plant and equipment, estimated life (years)

10 years

Buildings | Maximum

Property, plant and equipment, estimated life (years)

40 years

Machinery and equipment | Minimum

Property, plant and equipment, estimated life (years)

5 years

Machinery and equipment | Maximum

Property, plant and equipment, estimated life (years)

15 years

Capitalized Software

Capitalized internal-use software amortization

$ 172

$ 206

$ 228

Capitalized Software | Minimum

Property, plant and equipment, estimated life (years)

2 years

Capitalized Software | Maximum

Property, plant and equipment, estimated life (years)

6 years

[1]	The fourth quarter of 2015 incorporates the results of Sikorsky from the November 6, 2015 acquisition date through December 31, 2015, including approximately $400 million in net sales and about $45 million in operating loss, inclusive of intangible amortization and adjustments required to account for the acquisition.
[2]	The fourth quarter of 2015 includes a charge for workforce reductions of approximately $67 million ($44 million after tax) and a tax benefit of about $71 million due to the retroactive reinstatement of the R&D tax credit in 2015.
[3]	The fourth quarter of 2014 includes a charge of approximately $119 million ($107 million after tax) related to a non-cash goodwill impairment charge and a tax benefit of about $45 million due to the retroactive reinstatement of the R&D tax credit in 2014.
[4]	The impairment in 2014 relates to our Technical Services reporting unit within our IS&GS business segment (Note 1).
[5]	We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information.

Schedule of Weighted Average Shares Outstanding Used to Compute Earnings Per Common Share (Detail) - shares shares in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Weighted Average Shares Used In Computing Earnings Per Share [Line Items]
Weighted average common shares outstanding for basic computations	310.3	316.8	320.9
Weighted average dilutive effect of equity awards	4.4	5.6	5.6
Weighted average common shares outstanding for diluted computations	314.7	322.4	326.5

Earnings Per Share - Additional Information (Detail) shares in Millions	12 Months Ended
	Dec. 31, 2013 shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options excluded from the computation of diluted earnings per common share, because their inclusion would have been anti-dilutive	2.4

Acquisition and Divestitures - Additional Information (Detail) - USD ($)
shares in Millions, $ in Millions

2 Months Ended

3 Months Ended

12 Months Ended

Jan. 26, 2016

Nov. 06, 2015

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

Acquisitions of businesses and investments in affiliates

$ 9,003

$ 898

$ 269

Proceeds from borrowings under revolving credit facilities

6,000

Proceeds from Issuance of Commercial Paper

$ 1,000

Proceeds from issuance of fixed interest-rate long-term notes

9,101

Cash tax benefit, estimated net present value

$ 1,900

Aggregate amount of goodwill arising from acquisitions

$ 13,576

13,576

10,862

10,348

^[1]

Non-recoverable transaction costs

Costs associated with issuance of fixed interest-rate long-term notes

Income tax charge related to historic earnings of foreign subsidiaries

353

291

222

Amortization of intangible assets

116

Net earnings from discontinued operations

$ 31

Subsequent Event | Leidos

One-time special cash receipt

$ 1,800

Outstanding equity to be received by stockholders, percentage

50.50%

Outstanding equity to be received by stockholders, shares

Outstanding equity to be received by stockholders, value

$ 3,200

Acquisitions of businesses and investments in affiliates

9,003

Cash on hand

2,000

Proceeds from Issuance of Commercial Paper

$ 1,000

1,000

Acquired intangible assets, weighted average period of amortization

15 years

Customer contractual obligations

$ 480

Customer contractual obligations due in 2016

Customer contractual obligations due in 2017

Customer contractual obligations due in 2018

Customer contractual obligations due in 2019

Customer contractual obligations due in 2020

Customer contractual obligations due after 2020

110

Aggregate amount of goodwill arising from acquisitions

2,764

Net sales

400

Costs associated with issuance of fixed interest-rate long-term notes

(45)

Sikorsky Aircraft Corporation | Unaudited Supplemental Pro Forma Financial Information

Increase in interest expense, net of tax

109

121

Sikorsky Aircraft Corporation | Pro Forma Adjustment

Income tax charge related to historic earnings of foreign subsidiaries

Pension curtailment loss

Amortization of intangible assets

125

148

Interest expense, debt

$ 42

$ 48

Sikorsky Aircraft Corporation | Three Hundred And Sixty Four Day Revolving Credit Facility And Five Year Revolving Credit Facility

Proceeds from borrowings under revolving credit facilities

$ 6,000

Non-recoverable transaction costs

$ 38

Sikorsky Aircraft Corporation | November 2015 Notes

Proceeds from issuance of fixed interest-rate long-term notes

$ 7,000

Business Acquisitions

Acquired intangible assets, weighted average period of amortization

8 years

Aggregate amount of goodwill arising from acquisitions

$ 657

$ 175

Aggregate amount allocated to other intangibles arising from acquisitions

$ 223

$ 34

[1]	Includes reclassifications of goodwill among our business segments as a result of our program realignment, which occurred during the fourth quarter of 2015 (Note 1).

Summary of Estimated Fair Values of Assets Acquired and Liabilities Assumed at Acquisition Date (Detail) - USD ($)
$ in Millions

Dec. 31, 2015

Nov. 06, 2015

Dec. 31, 2014

Dec. 31, 2013

^[1]

Goodwill

$ 13,576

$ 10,862

$ 10,348

Cash and cash equivalents

$ 75

Receivables

1,921

Inventories

1,817

Deferred income taxes, current

Other current assets

Property, plant and equipment

654

Goodwill

2,764

Other noncurrent assets

502

Deferred income taxes, noncurrent

214

Total identifiable assets and goodwill

11,998

Accounts payable

(565)

Customer advances and amounts in excess of costs incurred

(1,220)

Salaries, benefits, and payroll taxes

(105)

Current portion of long-term debt

(5)

Other current liabilities

(347)

Long-term debt

(11)

Customer contractual obligations

^[2]

(480)

Other noncurrent liabilities

(150)

Deferred income tax liabilities, noncurrent

(32)

Total liabilities assumed

(2,915)

Total consideration

9,083

Sikorsky Aircraft Corporation | Customer Programs

Sikorsky Aircraft Corporation | Trademarks

Intangible assets

3,127

Intangible assets

$ 816

[1]	Includes reclassifications of goodwill among our business segments as a result of our program realignment, which occurred during the fourth quarter of 2015 (Note 1).
[2]	Recorded in Other noncurrent liabilities on the consolidated balance sheet.

Summary of Pro Forma Financial Information As If Included in Financial Results (Detail) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Business Acquisition [Line Items]
Net Sales	$ 50,962	$ 53,023
Net Earnings from continuing operations	$ 3,538	$ 3,480
Basic earnings per common share from continuing operations	$ 11.40	$ 10.99
Diluted earnings per common share from continuing operations	$ 11.24	$ 10.79

Goodwill and Acquired Intangibles (Detail) - USD ($)
$ in Millions

3 Months Ended

12 Months Ended

Dec. 31, 2014

Dec. 31, 2013

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

$ 10,862

$ 10,348

^[1]

674

Impairments

$ (119)

$ (195)

(119)

^[2],[3]

$ (195)

^[3]

(50)

(41)

10,862

10,348

^[1]

13,576

10,862

10,348

^[1]

2,764

Aeronautics

171

167

^[1]

Information Systems & Global Solutions

171

167

^[1]

171

167

^[1]

2,898

2,649

^[1]

378

Impairments

^[2]

(119)

(17)

(10)

Missiles and Fire Control

2,898

2,649

^[1]

2,881

2,898

2,649

^[1]

2,181

2,185

^[1]

(4)

Mission Systems and Training

2,181

2,185

^[1]

2,198

2,181

2,185

^[1]

4,022

4,049

^[1]

(48)

(27)

Mission Systems and Training | Sikorsky Aircraft Corporation

4,022

4,049

^[1]

6,738

4,022

4,049

^[1]

2,764

1,590

1,298

^[1]

292

(2)

$ 1,590

$ 1,298

^[1]

$ 1,588

$ 1,590

$ 1,298

^[1]

[1]	Includes reclassifications of goodwill among our business segments as a result of our program realignment, which occurred during the fourth quarter of 2015 (Note 1).
[2]	The impairment in 2014 relates to our Technical Services reporting unit within our IS&GS business segment (Note 1).
[3]	We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information.

Gross Carrying Amounts and Accumulated Amortization of Acquired Intangible Assets (Detail) - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 4,441	$ 498
Accumulated Amortization	(294)	(174)
Net Carrying Amount	4,147	324
Trademarks \| Indefinite-lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	834	18
Net Carrying Amount	834	18
Customer Programs \| Finite-Lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	3,127
Accumulated Amortization	(38)
Net Carrying Amount	3,089
Customer relationships \| Finite-Lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	309	309
Accumulated Amortization	(166)	(123)
Net Carrying Amount	143	186
Technology-Based Intangible Assets \| Finite-Lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	73	73
Accumulated Amortization	(37)	(21)
Net Carrying Amount	36	52
Trademarks \| Finite-Lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	27	27
Accumulated Amortization	(14)	(3)
Net Carrying Amount	13	24
Other Intangibles \| Finite-Lived Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	71	71
Accumulated Amortization	(39)	(27)
Net Carrying Amount	$ 32	$ 44

Goodwill and Acquired Intangibles - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Amortization expense for acquired finite lived intangible assets	$ 116	$ 49	$ 48
Amortization of finite lived intangible assets in 2016	292
Amortization of finite lived intangible assets in 2017	274
Amortization of finite lived intangible assets in 2018	260
Amortization of finite lived intangible assets in 2019	254
Amortization of finite lived intangible assets in 2020	248
Amortization of finite lived intangible assets after 2020	$ 710
Minimum
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets are amortized	3 years
Maximum
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets are amortized	20 years
Customer Programs \| Minimum
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets are amortized	9 years
Customer Programs \| Maximum
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets are amortized	20 years
Customer relationships \| Minimum
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets are amortized	4 years
Customer relationships \| Maximum
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets are amortized	10 years
Technology-Based Intangible Assets \| Minimum
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets are amortized	5 years
Technology-Based Intangible Assets \| Maximum
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets are amortized	7 years
Trademarks \| Minimum
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets are amortized	2 years
Trademarks \| Maximum
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets are amortized	5 years
Other Intangibles \| Minimum
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets are amortized	3 years
Other Intangibles \| Maximum
Finite-Lived Intangible Assets [Line Items]
Acquired finite-lived intangible assets are amortized	10 years

Information on Business Segments - Additional Information (Detail) - Segment	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Segment Reporting Information [Line Items]
Number of business segments	5
F-35 program \| Aeronautics
Segment Reporting Information [Line Items]
Program net sales as percent of total net sales	20.00%	17.00%	16.00%

Summary of Financial Information for Each Business Segment (Detail) - USD ($)
$ in Millions

3 Months Ended

12 Months Ended

Dec. 31, 2015

Sep. 27, 2015

Jun. 28, 2015

Mar. 29, 2015

Dec. 31, 2014

Sep. 28, 2014

Jun. 29, 2014

Mar. 30, 2014

Dec. 31, 2013

Mar. 31, 2013

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

FAS/CAS pension income (expense)

$ 12,917

^[1]

$ 11,461

$ 11,643

$ 10,111

$ 12,530

$ 11,114

$ 11,306

$ 10,650

$ 46,132

$ 45,600

$ 45,358

Less: CAS pension cost

^[2]

1,613

1,520

1,466

471

376

(482)

(119)

$ (195)

(119)

^[3],[4]

(195)

^[4]

$ (30)

(102)

^[5]

(201)

^[5]

Stock-based compensation

(138)

(164)

(189)

^[6],[7]

(281)

(89)

(180)

Total unallocated items

(50)

(1,247)

1,281

^[1]

$ 1,354

$ 1,445

$ 1,356

1,342

$ 1,392

$ 1,426

$ 1,432

5,436

5,592

4,505

1,026

994

990

939

845

836

Total customer advances and amounts in excess of costs incurred

49,128

37,046

49,128

37,046

6,988

5,775

6,988

5,775

Information Systems & Global Solutions

FAS pension expense

^[8],[9]

(1,142)

(1,144)

(1,948)

^[3]

(119)

Mission Systems and Training

(35)

(83)

(67)

(37)

(81)

Goodwill by Segment

5,486

5,588

5,752

928

887

883

879

779

765

Goodwill by Segment | Aeronautics

^[10]

38,899

26,484

38,899

26,484

15,570

14,920

14,123

1,681

1,649

1,612

317

322

318

387

283

271

Total customer advances and amounts in excess of costs incurred

^[10]

6,618

6,042

6,618

6,042

2,045

2,191

2,045

2,191

Goodwill by Segment | Information Systems & Global Solutions

5,596

5,654

6,115

508

472

498

101

Total customer advances and amounts in excess of costs incurred

^[10]

4,206

4,268

4,206

4,268

285

227

285

227

Goodwill by Segment | Missiles and Fire Control

6,770

7,092

6,795

1,282

1,344

1,379

120

142

128

Total customer advances and amounts in excess of costs incurred

^[10]

4,027

3,977

4,027

3,977

1,766

1,803

1,766

1,803

Goodwill by Segment | Mission Systems and Training

9,091

8,732

9,037

844

936

1,065

203

175

194

169

164

146

Total customer advances and amounts in excess of costs incurred

^[10]

19,187

7,465

19,187

7,465

2,415

1,148

2,415

1,148

Goodwill by Segment | Space Systems

9,105

9,202

9,288

1,171

1,187

1,198

208

244

225

172

187

Total customer advances and amounts in excess of costs incurred

^[10]

4,861

4,732

4,861

4,732

477

406

477

406

Intersegment elimination

Intersegment elimination | Aeronautics

2,142

1,750

1,586

Intersegment elimination | Information Systems & Global Solutions

102

104

203

Intersegment elimination | Missiles and Fire Control

Intersegment elimination | Mission Systems and Training

313

255

220

Intersegment elimination | Space Systems

1,529

1,243

1,030

145

136

119

Corporate

107

$ 71

^[11]

$ 10,229

$ 10,562

$ 10,229

$ 10,562

[1]	The fourth quarter of 2015 incorporates the results of Sikorsky from the November 6, 2015 acquisition date through December 31, 2015, including approximately $400 million in net sales and about $45 million in operating loss, inclusive of intangible amortization and adjustments required to account for the acquisition.
[2]	The higher CAS pension cost primarily reflects the impact of phasing in CAS Harmonization.
[3]	The impairment in 2014 relates to our Technical Services reporting unit within our IS&GS business segment (Note 1).
[4]	We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information.
[5]	See Note 15 for information on charges related to certain severance actions at our business segments. Severance charges for initiatives that are not significant are included in business segment operating profit.
[6]	Other, net in 2015 includes a non-cash asset impairment charge of approximately $90 million related to our decision to divest Lockheed Martin Commercial Flight Training (LMCFT) in 2016. This charge was partially offset by a net deferred tax benefit of about $80 million, which is recorded in income tax expense. The net impact reduced net earnings by about $10 million.
[7]	Other, net in 2015 includes approximately $45 million of non-recoverable transaction costs associated with the acquisition of Sikorsky and the strategic review of our government IT and technical services businesses.
[8]	FAS pension expense in 2015 and 2014 was less than in 2013 primarily due to the June 2014 plan amendments to certain of our defined benefit pension plans to freeze future retirement benefits, partially offset by the impact of using new longevity assumptions (Note 11).
[9]	Total net periodic benefit cost associated with our qualified defined benefit plans represents pension expense calculated in accordance with GAAP (FAS pension expense). We are required to calculate pension expense in accordance with both GAAP and CAS rules, each of which results in a different calculated amount of pension expense. The CAS pension cost is recovered through the pricing of our products and services on U.S. Government contracts and, therefore, is recognized in net sales and cost of sales for products and services. We include the difference between FAS pension expense and CAS pension cost, referred to as the FAS/CAS pension adjustment, as a component of other unallocated, net on our Statements of Earnings. The FAS/CAS pension adjustment, which was income of $471 million in 2015; income of $376 million in 2014; and expense of $482 million in 2013, effectively adjusts the amount of CAS pension cost in the business segment operating profit so that pension expense recorded on our Statements of Earnings is equal to FAS pension expense.
[10]	We have no significant long-lived assets located in foreign countries.
[11]	Corporate assets primarily include cash and cash equivalents, deferred income taxes, environmental receivables and investments held in a separate trust.

Summary of Financial Information for Each Business Segment (Parenthetical) (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Segment Reporting Information [Line Items]
Net deferred tax (benefit)	$ (473)	$ (387)	$ 3
Non-recoverable transaction costs	45
Lockheed Martin Commercial Flight Training
Segment Reporting Information [Line Items]
Asset impairment charges	90
Net deferred tax (benefit)	(80)
Reduction in net earnings	$ 10

Net Sales By Customer (Detail) - USD ($)
$ in Millions

3 Months Ended

12 Months Ended

Dec. 31, 2015

^[1]

Sep. 27, 2015

Jun. 28, 2015

Mar. 29, 2015

Dec. 31, 2014

Sep. 28, 2014

Jun. 29, 2014

Mar. 30, 2014

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

$ 12,917

$ 11,461

$ 11,643

$ 10,111

$ 12,530

$ 11,114

$ 11,306

$ 10,650

$ 46,132

$ 45,600

$ 45,358

U.S. Government

U.S. Government | Aeronautics

36,141

36,090

37,173

U.S. Government | Information Systems & Global Solutions

11,195

10,704

11,025

U.S. Government | Missiles and Fire Control

4,990

5,204

5,823

U.S. Government | Mission Systems and Training

4,150

4,509

4,069

U.S. Government | Space Systems

6,961

6,752

7,132

8,845

8,921

9,124

International

International | Aeronautics

^[2]

9,531

9,015

7,768

International | Information Systems & Global Solutions

^[2]

4,328

4,183

3,078

International | Missiles and Fire Control

^[2]

520

401

262

International | Mission Systems and Training

^[2]

2,449

2,421

2,535

International | Space Systems

^[2]

2,016

1,921

1,792

United States Commercial and Other

^[2]

218

101

United States Commercial and Other | Aeronautics

460

495

417

United States Commercial and Other | Information Systems & Global Solutions

United States Commercial and Other | Missiles and Fire Control

United States Commercial and Other | Mission Systems and Training

171

162

191

United States Commercial and Other | Space Systems

114

113

$ 42

$ 192

$ 63

[1]	The fourth quarter of 2015 incorporates the results of Sikorsky from the November 6, 2015 acquisition date through December 31, 2015, including approximately $400 million in net sales and about $45 million in operating loss, inclusive of intangible amortization and adjustments required to account for the acquisition.
[2]	International sales include foreign military sales contracted through the U.S. Government, direct commercial sales with international governments and commercial and other sales to international customers.

Receivables (Detail) - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivables, net	$ 8,061	$ 5,877
U.S. Government
Accounts, Notes, Loans and Financing Receivable [Line Items]
Amounts billed	1,492	1,434
Unbilled costs and accrued profits	5,734	4,577
Less: customer advances and progress payments	(1,311)	(1,012)
Receivables, net	5,915	4,999
Other governments and commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Amounts billed	772	460
Unbilled costs and accrued profits	1,995	671
Less: customer advances and progress payments	(621)	(253)
Receivables, net	$ 2,146	$ 878

Inventories (Detail) - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Inventory [Line Items]
Work-in-process, primarily related to long-term contracts and programs in progress	$ 8,199	$ 6,731
Less: customer advances and progress payments	(5,035)	(4,701)
Inventory for long term contracts or programs net of customer advances and progress payments	3,164	2,030
Other inventories	1,798	774
Total inventories, net	$ 4,962	$ 2,804

Inventories, Net - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Inventory [Line Items]
General and administrative costs included in work-in-process inventories	$ 578	$ 698
General and administrative costs incurred and recorded in inventories	2,800	2,600	$ 2,400
General and administrative costs charged to cost of sales from inventories	$ 2,900	$ 2,600	$ 2,400

Property, Plant and Equipment (Detail) - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Property, Plant, and Equipment [Line Items]
Property, plant, and equipment, gross	$ 14,547	$ 13,489
Less: accumulated depreciation and amortization	(9,057)	(8,738)
Total property, plant, and equipment, net	5,490	4,751
Land
Property, Plant, and Equipment [Line Items]
Property, plant, and equipment, gross	123	99
Buildings
Property, Plant, and Equipment [Line Items]
Property, plant, and equipment, gross	6,128	5,723
Machinery and equipment
Property, Plant, and Equipment [Line Items]
Property, plant, and equipment, gross	7,409	7,031
Construction in progress
Property, Plant, and Equipment [Line Items]
Property, plant, and equipment, gross	$ 887	$ 636

Provision for Federal & Foreign Income Tax Expense (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Federal income tax expense (benefit):
Current	$ 1,817	$ 2,020	$ 1,204
Deferred	(473)	(387)	3
Total federal income tax expense	1,344	1,633	1,207
Foreign income tax expense (benefit):
Current	46	24	6
Deferred	28	(13)	(8)
Total foreign income tax expense (benefit)	74	11	(2)
Total income tax expense	$ 1,418	$ 1,644	$ 1,205

Income Taxes - Additional Information (Detail) - USD ($)
$ in Millions

3 Months Ended

12 Months Ended

Dec. 31, 2014

Dec. 31, 2013

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

Total net state income tax expense

$ 127

$ 207

$ 121

U.S. federal statutory income tax rate

35.00%

Recognized tax benefit for the impact of the tax credit

$ 71

Non-cash goodwill impairment charge

$ 119

$ 195

119

^[1],[2]

195

^[2]

Net deferred tax (benefit)

(473)

(387)

Undistributed earnings of foreign subsidiaries not taxed to U.S. income taxes and foreign withholding taxes

291

$ 222

353

291

222

Estimated additional income tax expense after foreign tax credits on undistributed earnings of foreign companies if remitted

Federal and foreign income tax payments made, net of refunds received

1,800

1,500

787

Refund received from the IRS

200

Lockheed Martin Commercial Flight Training

Net deferred tax (benefit)

Asset impairment charge

$ (80)

Tax benefit reduced the effective income tax rate

1.00%

Tax Year 2012 And 2013

Recognized tax benefit for the impact of the tax credit

$ 76

Tax Year 2014

Recognized tax benefit for the impact of the tax credit

$ 45

Earliest Tax Year | Internal Revenue Service (IRS)

Tax years subject to examination

2013

Latest Tax Year | Internal Revenue Service (IRS)

Tax years subject to examination

2014

[1]	The impairment in 2014 relates to our Technical Services reporting unit within our IS&GS business segment (Note 1).
[2]	We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information.

Reconciliation of Income Tax Expense Computed Using U.S. Statutory Federal Tax Rate to Actual Income Tax Expense (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Reconciliation Of Income Taxes [Line Items]
Income tax expense at the U.S. federal statutory tax rate	$ 1,758	$ 1,840	$ 1,454
U.S. manufacturing deduction benefit	(126)	(127)	(100)
Tax deductible dividends	(87)	(82)	(77)
Research and development tax credit	(71)	(66)	(96)
Goodwill impairment - non-deductible portion		30	50
Other, net	(56)	49	(26)
Total income tax expense	$ 1,418	$ 1,644	$ 1,205

Components of Federal and Foreign Deferred Tax Assets and Liabilities (Detail) - USD ($)
$ in Millions

Dec. 31, 2015

Dec. 31, 2014

Deferred tax assets related to:

Accrued compensation and benefits

$ 961

$ 965

Pensions

^[1]

4,462

4,317

Other postretirement benefit obligations

375

386

Contract accounting methods

1,039

989

Foreign company operating losses and credits

Deferred tax liabilities related to:

434

198

Valuation allowance

^[2]

(76)

(9)

Deferred tax assets, net

7,265

6,905

Goodwill and purchased intangibles

474

454

Property, plant and equipment

457

514

Exchanged debt securities and other

^[3]

409

485

Deferred tax liabilities

1,340

1,453

Net deferred tax assets

^[4]

$ 5,925

$ 5,452

[1]	The increase in 2015 was primarily due to the negative investment return on postretirement plan assets (Note 11).
[2]	A valuation allowance was provided against certain foreign company deferred tax assets arising from carryforwards of unused tax benefits.
[3]	Includes deferred taxes associated with the exchange of debt securities in prior years.
[4]	Includes net foreign current deferred tax liabilities, which are included on the Balance Sheets in other current liabilities.

Long Term Debt (Detail) - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Other debt	$ 116	$ 111
Total long-term debt	16,296	7,041
Less: unamortized discounts and deferred financing costs	(1,035)	(899)
Total long-term debt, net	15,261	6,142
1.85% to 3.80%, due 2016 to 2045
Debt Instrument [Line Items]
Notes	8,150	1,400
4.07% to 5.72%, due 2019 to 2046
Debt Instrument [Line Items]
Notes	6,089	3,589
6.15% to 9.13%, due 2016 to 2036
Debt Instrument [Line Items]
Notes	$ 1,941	$ 1,941

Long Term Debt (Parenthetical) (Detail)	12 Months Ended
Long Term Debt (Parenthetical) (Detail)	Dec. 31, 2015
1.85% to 3.80%, due 2016 to 2045
Debt Instrument [Line Items]
Interest Rate, minimum	1.85%
Interest Rate, maximum	3.80%
1.85% to 3.80%, due 2016 to 2045 \| Minimum
Debt Instrument [Line Items]
Long-term debt maturity year	2016
1.85% to 3.80%, due 2016 to 2045 \| Maximum
Debt Instrument [Line Items]
Long-term debt maturity year	2045
4.07% to 5.72%, due 2019 to 2046
Debt Instrument [Line Items]
Interest Rate, minimum	4.07%
Interest Rate, maximum	5.72%
4.07% to 5.72%, due 2019 to 2046 \| Minimum
Debt Instrument [Line Items]
Long-term debt maturity year	2019
4.07% to 5.72%, due 2019 to 2046 \| Maximum
Debt Instrument [Line Items]
Long-term debt maturity year	2046
6.15% to 9.13%, due 2016 to 2036
Debt Instrument [Line Items]
Interest Rate, minimum	6.15%
Interest Rate, maximum	9.13%
6.15% to 9.13%, due 2016 to 2036 \| Minimum
Debt Instrument [Line Items]
Long-term debt maturity year	2016
6.15% to 9.13%, due 2016 to 2036 \| Maximum
Debt Instrument [Line Items]
Long-term debt maturity year	2036

Debt - Additional Information (Detail) - USD ($)				3 Months Ended	12 Months Ended
Debt - Additional Information (Detail) - USD ($)	Nov. 23, 2015	Oct. 09, 2015	Feb. 20, 2015	Dec. 31, 2015	Dec. 31, 2015
Debt Instrument [Line Items]
Repayment of line of credit facility					$ 6,000,000,000
Repayment of commercial paper				$ 1,000,000,000
Borrowings under commercial paper				0	$ 0
November 2015 Notes
Debt Instrument [Line Items]
Amount of issued debt	$ 7,000,000,000
Net proceeds from notes offering	6,900,000,000
2018 Notes
Debt Instrument [Line Items]
Amount of issued debt	$ 750,000,000
Long-term debt maturity year	2018
Interest Rate	1.85%
Notes interest payment dates					May 23 and November 23 of each year, beginning on May 23, 2016
2020 Notes
Debt Instrument [Line Items]
Amount of issued debt	$ 1,250,000,000
Long-term debt maturity year	2020
Interest Rate	2.50%
Notes interest payment dates					May 23 and November 23 of each year, beginning on May 23, 2016
2023 Notes
Debt Instrument [Line Items]
Amount of issued debt	$ 500,000,000
Long-term debt maturity year	2023
Interest Rate	3.10%
Notes interest payment dates					January 15 and July 15 of each year, beginning on July 15, 2016
2026 Notes
Debt Instrument [Line Items]
Amount of issued debt	$ 2,000,000,000
Long-term debt maturity year	2026
Interest Rate	3.55%
Notes interest payment dates					January 15 and July 15 of each year, beginning on July 15, 2016
2036 Notes
Debt Instrument [Line Items]
Amount of issued debt	$ 500,000,000
Long-term debt maturity year	2036
Interest Rate	4.50%
Notes interest payment dates					May 15 and November 15 of each year, beginning on May 15, 2016
2046 Notes
Debt Instrument [Line Items]
Amount of issued debt	$ 2,000,000,000
Long-term debt maturity year	2046
Interest Rate	4.70%
Notes interest payment dates					May 15 and November 15 of each year, beginning on May 15, 2016
February 2015 Notes
Debt Instrument [Line Items]
Amount of issued debt			$ 2,250,000,000
Net proceeds from notes offering			2,210,000,000
Notes interest payment dates					March 1 and September 1 of each year, beginning on September 1, 2015
2.90% Notes Due 2025
Debt Instrument [Line Items]
Amount of issued debt			$ 750,000,000
Long-term debt maturity year			2025
Interest Rate			2.90%
3.60% Notes Due 2035
Debt Instrument [Line Items]
Amount of issued debt			$ 500,000,000
Long-term debt maturity year			2035
Interest Rate			3.60%
3.80% Notes Due 2045
Debt Instrument [Line Items]
Amount of issued debt			$ 1,000,000,000
Long-term debt maturity year			2045
Interest Rate			3.80%
Unsecured Debt \| Three Hundred And Sixty Four Day Revolving Credit Facility And Five Year Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit facility		$ 7,000,000,000
Line of credit facility expiration date		Nov. 23, 2015
Line of credit facility expiration period		364 days
Line of credit facility, amount outstanding		$ 6,000,000,000
Repayment of line of credit facility	$ 6,000,000,000
Unsecured Debt \| Five Year Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit facility		$ 2,500,000,000		$ 0	$ 0
Line of credit facility expiration date		Oct. 09, 2020
Additional amount to increase credit facility, granted at banks' discretion		$ 500,000,000
Terminated revolving credit facility		$ 1,500,000,000

Schedule of Net Periodic Benefit Costs (Detail) - USD ($)
$ in Millions

12 Months Ended

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

^[1]

$ 875

$ 903

$ 1,142

Expected return on plan assets

^[1]

1,791

1,912

1,800

^[1]

(2,734)

(2,693)

(2,485)

Recognized net actuarial losses

^[1]

1,599

1,173

1,410

Amortization of net prior service (credit) cost

^[1]

(389)

(151)

Total net periodic benefit cost

^[1],[2]

1,142

1,144

1,948

Expected return on plan assets

110

123

116

(147)

(146)

(145)

Recognized net actuarial losses

Amortization of net prior service (credit) cost

(17)

Total net periodic benefit cost

$ 31

$ 26

$ 25

[1]

[2]

FAS pension expense in 2015 and 2014 was less than in 2013 primarily due to the June 2014 plan amendments to certain of our defined benefit pension plans to freeze future retirement benefits, partially offset by the impact of using new longevity assumptions (Note 11).

Schedule of Net Periodic Benefit Costs (Parenthetical) (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Defined Benefit Plan Disclosure [Line Items]
FAS/CAS pension adjustment	$ 471	$ 376	$ (482)

Reconciliation of Benefit Obligations, Plan Assets, and Unfunded or Funded Status (Detail) - USD ($)
$ in Millions

12 Months Ended

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

Change in plan assets

Fair value of plan assets at beginning of year

$ 36,605

33,909

$ 36,605

Benefit obligations at beginning of year

Change in benefit obligation

45,882

42,161

^[1]

875

903

$ 1,142

^[1]

1,791

1,912

1,800

New longevity assumptions

^[2]

(2,055)

(2,399)

Actuarial losses (gains)

(1,988)

4,493

(834)

3,390

Plan amendments and acquisitions

^[3]

(4,578)

Benefit obligations at end of year

43,702

45,882

42,161

Change in plan assets

Fair value of plan assets at beginning of year

34,673

33,010

Actual return on plan assets

(527)

2,062

^[2]

(2,055)

(2,399)

Company contributions

2,000

Unfunded status of the plans

32,096

34,673

33,010

(11,606)

(11,209)

Benefit obligations at beginning of year

Change in benefit obligation

3,034

2,823

110

123

116

New longevity assumptions

^[2]

(307)

(352)

Actuarial losses (gains)

(170)

(40)

(77)

266

Plan amendments and acquisitions

^[3]

157

Medicare Part D subsidy

Participants' contributions

101

161

Benefit obligations at end of year

2,883

3,034

2,823

Change in plan assets

Fair value of plan assets at beginning of year

1,932

1,921

Actual return on plan assets

(27)

126

Participants' contributions

^[2]

(307)

(352)

Company contributions

100

Medicare Part D subsidy

101

161

Unfunded status of the plans

1,813

1,932

$ 1,921

$ (1,070)

$ (1,102)

[1]	Total net periodic benefit cost associated with our qualified defined benefit plans represents pension expense calculated in accordance with GAAP (FAS pension expense). We are required to calculate pension expense in accordance with both GAAP and CAS rules, each of which results in a different calculated amount of pension expense. The CAS pension cost is recovered through the pricing of our products and services on U.S. Government contracts and, therefore, is recognized in net sales and cost of sales for products and services. We include the difference between FAS pension expense and CAS pension cost, referred to as the FAS/CAS pension adjustment, as a component of other unallocated, net on our Statements of Earnings. The FAS/CAS pension adjustment, which was income of $471 million in 2015; income of $376 million in 2014; and expense of $482 million in 2013, effectively adjusts the amount of CAS pension cost in the business segment operating profit so that pension expense recorded on our Statements of Earnings is equal to FAS pension expense.
[2]	Benefits paid in 2014 for qualified defined benefit pension plans include $427 million in the form of lump-sum settlement payments to former employees who had not commenced receiving their vested benefit payments. The corresponding benefit obligation that was released was $529 million. The settlement payments had no impact on our 2014 FAS pension expense and CAS pension cost.
[3]	The June 2014 plan amendment which resulted in freezing the pay-based component of the formula used to determine retirement benefits under the affected plans reduced our qualified defined benefit pension obligations by $4.6 billion, which resulted in a corresponding reduction, net of tax, in the accumulated other comprehensive loss (AOCL) component of stockholders' equity. This amount is being recognized as a reduction of net periodic benefit cost (i.e., amortization of net prior service credit) over the estimated remaining service period of the covered employees, which is approximately 10 years and began in the third quarter of 2014.

Reconciliation of Benefit Obligations, Plan Assets, and Unfunded or Funded Status (Parenthetical) (Detail) - Qualified defined benefit pension plans - USD ($)
$ in Millions

12 Months Ended

Dec. 31, 2015

Dec. 31, 2014

Benefit obligation released

^[1]

$ 2,055

$ 2,399

529

Plan amendments related to the salary freeze

$ (4,578)

Estimated remaining service period of covered employees, years

10 years

Acquisition increased qualified defined benefit pension obligation

$ 30

Lump-sum settlement payments

$ 427

[1]

Amounts Recognized on Balance Sheets Related to Qualified Defined Benefit Pension Plans and Retiree Medical and Life Insurance PlansDisclosure - Amounts Recognized on Balance Sheets Related to Qualified Defined Benefit Pension Plans and Retiree Medical and Life Insurance Plans (Detail) - USD ($)
$ in Millions

Dec. 31, 2015

Dec. 31, 2014

Accrued postretirement benefit liabilities

$ (11,807)

$ (11,413)

Accrued postretirement benefit liabilities

Prepaid pension asset

201

204

(11,807)

(11,413)

Accumulated other comprehensive loss (pre-tax) related to net actuarial losses

19,632

20,794

Accumulated other comprehensive loss (pre-tax) related to prior service (credit) cost

(3,565)

(3,985)

Total

^[1]

16,067

16,809

Accrued postretirement benefit liabilities

(1,070)

(1,102)

Accumulated other comprehensive loss (pre-tax) related to net actuarial losses

627

741

Accumulated other comprehensive loss (pre-tax) related to prior service (credit) cost

167

Total

^[1]

$ 794

$ 755

[1]

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

Dec. 31, 2012

Accumulated other comprehensive loss, after tax

^[1]

$ (11,444)

$ (11,870)

$ (9,601)

$ (13,493)

Accumulated other comprehensive loss before tax

^[2]

16,067

16,809

Accumulated other comprehensive loss after tax

10,400

10,800

Accumulated other comprehensive loss before tax

^[2]

794

755

Accumulated other comprehensive loss after tax

514

488

Other Plans

Accumulated other comprehensive loss before tax

620

692

Accumulated other comprehensive loss after tax

408

460

Postretirement Benefit Plan Adjustments

Accumulated other comprehensive loss, after tax

^[1]

$ (11,314)

$ (11,813)

$ (9,649)

$ (13,532)

[1]

[2]

Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at period end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, unrealized gains and losses on certain investments in debt and equity securities, other than temporary impairment (OTTI) losses related to factors other than credit losses on available-for-sale and held-to-maturity debt securities that an entity does not intend to sell and it is not more likely than not that the entity will be required to sell before recovery of the amortized cost basis, as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.

Plans where ABO was in excess of plan assets

Postretirement Plans - Additional Information (Detail) - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Defined Benefit Plan Disclosure [Line Items]
Assets set aside expected to be used to pay obligations of defined benefit pension plans and retiree medical and life insurance plans	$ 33,909	$ 36,605
Aggregate liability for postemployment plans	70	88
Actuarial losses and net prior service cost related to postretirement benefit plans expected to be recognized in net periodic benefit cost during 2016	1,100
Actuarial losses and net prior service cost related to postretirement benefit plans expected to be recognized in net periodic benefit cost during 2016, net of tax	693
Expected pension plan expenses during next fiscal year	1,000
Contributions made to defined contribution plans	$ 393	$ 385	$ 383
Shares of our stock held in defined contribution plans we sponsor	40.0	41.7
Qualified defined benefit pension plans
Defined Benefit Plan Disclosure [Line Items]
Accumulated benefit obligation for defined benefit pension plans	$ 43,500	$ 45,200
Accumulated benefit obligation in excess of plan assets	43,400	45,000
Assets set aside expected to be used to pay obligations of defined benefit pension plans and retiree medical and life insurance plans	32,096	34,673	33,010
Unrecognized net actuarial losses	19,632	20,794
Actuarial losses related to postretirement benefit plans expected to be recognized in net periodic benefit cost during 2016	1,000
Actuarial losses related to postretirement benefit plans expected to be recognized in net periodic benefit cost during 2016, net of tax	629
Increase (decrease) in projected benefit obligations due to a change in discount rate	(2,100)	4,800
Contributions made by the employer	5	2,000
Contributions expected to made by employer in 2016	25
Non-Qualified Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Defined benefit pension plan, liabilities	1,200	1,100
Unrecognized net actuarial losses	632	662
Benefit plan expense	117	115	$ 108
Unrecognized prior service credit	95	121
Separate Trust
Defined Benefit Plan Disclosure [Line Items]
Assets set aside expected to be used to pay obligations of defined benefit pension plans and retiree medical and life insurance plans	$ 421	$ 397

Accumulated Benefit Obligations in Excess of Fair Value of Plan Assets (Detail) - Qualified defined benefit pension plans - USD ($)
$ in Millions

Dec. 31, 2015

Dec. 31, 2014

Projected benefit obligation

$ 43,575

$ 45,741

Less: fair value of plan assets

31,768

34,328

Unfunded status of plans

^[1]

(11,807)

(11,413)

Plans where ABO was less than plan assets

Projected benefit obligation

127

141

Less: fair value of plan assets

328

345

Funded status of plans

^[2]

$ 201

$ 204

[1]	Represent accrued pension liabilities, which are included on our Balance Sheets.
[2]	Represent prepaid pension assets, which are included on our Balance Sheets in other noncurrent assets.

Amounts Recognized in Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss Related to Postretirement Benefit Plans and Expected Costs to be Recognized in Net Periodic Benefit Cost (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Actuarial gains and (losses) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost	$ (224)	$ (5,910)	$ 2,937
Net prior service credit and (cost) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost	(127)	3,040	(69)
Total Incurred but Not Recognized	(351)	(2,870)	2,868
Actuarial (gains) and losses - Recognition of Previously Deferred Amounts	1,109	806	973
Net prior service (credit) and cost - Recognition of Previously Deferred Amounts	(259)	(100)	42
Total Reclassification Adjustment for Prior Period Amounts Recognized	850	706	1,015
Qualified defined benefit pension plans
Accumulated Other Comprehensive Income (Loss) [Line Items]
Actuarial gains and (losses) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost	(291)	(5,505)	2,751
Net prior service credit and (cost) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost	(18)	2,959	(69)
Actuarial (gains) and losses - Recognition of Previously Deferred Amounts	1,034	758	911
Net prior service (credit) and cost - Recognition of Previously Deferred Amounts	(251)	(98)	53
Retiree medical and life insurance plans
Accumulated Other Comprehensive Income (Loss) [Line Items]
Actuarial gains and (losses) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost	46	(160)	140
Net prior service credit and (cost) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost	(102)	(3)
Actuarial (gains) and losses - Recognition of Previously Deferred Amounts	28	15	28
Net prior service (credit) and cost - Recognition of Previously Deferred Amounts	2	3	(11)
Other Plans
Accumulated Other Comprehensive Income (Loss) [Line Items]
Actuarial gains and (losses) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost	21	(245)	46
Net prior service credit and (cost) - Incurred but Not Yet Recognized in Net Periodic Benefit Cost	(7)	84
Actuarial (gains) and losses - Recognition of Previously Deferred Amounts	47	33	$ 34
Net prior service (credit) and cost - Recognition of Previously Deferred Amounts	$ (10)	$ (5)

Actuarial Assumptions Used to Determine Net Periodic Benefit Cost (Detail)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Qualified defined benefit pension plans
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.375%	4.00%	4.75%
Expected long-term rate of return on assets	8.00%	8.00%	8.00%
Rate of increase in future compensation levels	4.50%	4.30%	4.30%
Retiree medical and life insurance plans
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.25%	3.75%	4.50%
Expected long-term rate of return on assets	8.00%	8.00%	8.00%
Health care trend rate assumed for next year	9.00%	8.50%	8.75%
Ultimate health care trend rate	5.00%	5.00%	5.00%
Year that the ultimate health care trend rate is reached	2032	2029	2029

Asset Allocations of Postretirement Benefit Plans (Detail)	12 Months Ended
	Dec. 31, 2015
Cash and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, target allocation percentage of assets, range minimum	0.00%
Defined benefit plan, target allocation percentage of assets, range maximum	20.00%
Equity securities
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, target allocation percentage of assets, range minimum	15.00%
Defined benefit plan, target allocation percentage of assets, range maximum	65.00%
Fixed income
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, target allocation percentage of assets, range minimum	10.00%
Defined benefit plan, target allocation percentage of assets, range maximum	60.00%
Private equity funds
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, target allocation percentage of assets, range minimum	0.00%
Defined benefit plan, target allocation percentage of assets, range maximum	15.00%
Real estate funds
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, target allocation percentage of assets, range minimum	0.00%
Defined benefit plan, target allocation percentage of assets, range maximum	10.00%
Hedge funds
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, target allocation percentage of assets, range minimum	0.00%
Defined benefit plan, target allocation percentage of assets, range maximum	20.00%
Commodities
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, target allocation percentage of assets, range minimum	0.00%
Defined benefit plan, target allocation percentage of assets, range maximum	25.00%

Qualified Defined Benefit Pension Plans and Retiree Medical and Life Insurance Plans by Asset Category (Detail) - USD ($)
$ in Millions

Dec. 31, 2015

Dec. 31, 2014

Cash and cash equivalents

$ 33,909

$ 36,605

^[1]

2,658

2,968

U.S. equity securities

International equity securities

^[1]

4,790

6,431

^[1]

6,121

5,566

Commingled equity funds

Corporate debt securities

^[1]

1,935

6,078

U.S. Government securities

^[1]

3,929

4,242

U.S. Government-sponsored enterprise securities

^[1]

5,069

4,579

Other fixed income investments

^[1]

1,377

613

^[1]

3,252

1,807

Private equity funds

3,131

2,952

Real estate funds

1,108

762

Hedge funds

522

570

Commodities

Total excluding receivables

^[1]

(26)

33,866

36,570

Fair value, inputs, level 1 | Cash and cash equivalents

Fair value, inputs, level 1 | U.S. equity securities

^[1]

2,658

2,968

Fair value, inputs, level 1 | International equity securities

^[1]

4,771

6,363

Fair value, inputs, level 1 | Commingled equity funds

^[1]

6,087

5,525

Fair value, inputs, level 1 | Other fixed income investments

^[1]

614

2,047

Fair value, inputs, level 1 | Commodities

^[1]

Fair value, inputs, level 1 | Total excluding receivables

^[1]

Fair value, inputs, level 2 | U.S. equity securities

14,131

16,944

Fair value, inputs, level 2 | International equity securities

^[1]

Fair value, inputs, level 2 | Commingled equity funds

^[1]

Fair value, inputs, level 2 | Corporate debt securities

^[1]

1,321

4,031

Fair value, inputs, level 2 | U.S. Government securities

^[1]

3,914

4,201

Fair value, inputs, level 2 | U.S. Government-sponsored enterprise securities

^[1]

5,069

4,579

Fair value, inputs, level 2 | Other fixed income investments

^[1]

1,377

613

Fair value, inputs, level 2 | Real estate funds

^[1]

3,246

1,759

Fair value, inputs, level 2 | Hedge funds

Fair value, inputs, level 2 | Commodities

167

Fair value, inputs, level 2 | Total excluding receivables

^[1]

(27)

Fair value, inputs, level 3 | U.S. equity securities

15,202

15,380

Fair value, inputs, level 3 | International equity securities

^[1]

Fair value, inputs, level 3 | Corporate debt securities

^[1]

Fair value, inputs, level 3 | Other fixed income investments

^[1]

Fair value, inputs, level 3 | Private equity funds

^[1]

Fair value, inputs, level 3 | Real estate funds

3,131

2,952

Fair value, inputs, level 3 | Hedge funds

1,016

729

Fair value, inputs, level 3 | Total excluding receivables

355

504

Accumulated Other Comprehensive Income (Loss) [Line Items]

$ 4,533

$ 4,246

[1]

Cash and cash equivalents, equity securities, fixed income securities and commodities included derivative assets and liabilities whose fair values were not material as of December 31, 2015 and 2014. LMIMCO's investment policies restrict the use of derivatives to either establish long exposures for purposes of expediency or capital efficiency or to hedge risks to the extent of a plan's current exposure to such risks. Most derivative transactions are settled on a daily basis.

Changes in Fair Value of Level 3 Plan Assets (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Defined Benefit Plan Disclosure [Line Items]
Beginning Balance	$ 4,246	$ 3,823
Realized gains, net	410	260
Unrealized (losses) gains, net	(131)	28
Purchases, sales, and settlements, net	11	207
Transfers out of Level 3, net	(3)	(72)
Ending Balance	4,533	4,246
Private equity funds
Defined Benefit Plan Disclosure [Line Items]
Beginning Balance	2,952	2,601
Realized gains, net	315	182
Unrealized (losses) gains, net	(163)	38
Purchases, sales, and settlements, net	27	131
Ending Balance	3,131	2,952
Real estate funds
Defined Benefit Plan Disclosure [Line Items]
Beginning Balance	729	572
Realized gains, net	84	43
Unrealized (losses) gains, net	20	22
Purchases, sales, and settlements, net	183	92
Ending Balance	1,016	729
Hedge funds
Defined Benefit Plan Disclosure [Line Items]
Beginning Balance	504	505
Realized gains, net	23	34
Unrealized (losses) gains, net	5	(11)
Purchases, sales, and settlements, net	(177)	(24)
Ending Balance	355	504
Other
Defined Benefit Plan Disclosure [Line Items]
Beginning Balance	61	145
Realized gains, net	(12)	1
Unrealized (losses) gains, net	7	(21)
Purchases, sales, and settlements, net	(22)	8
Transfers out of Level 3, net	(3)	(72)
Ending Balance	$ 31	$ 61

Benefit Payments (Detail) $ in Millions	Dec. 31, 2015 USD ($)
Qualified defined benefit pension plans
Defined Benefit Plan Disclosure [Line Items]
Payments in 2016	$ 2,160
Payments in 2017	2,240
Payments in 2018	2,320
Payments in 2019	2,410
Payments in 2020	2,500
Payments in 2021 - 2025	13,670
Retiree medical and life insurance plans
Defined Benefit Plan Disclosure [Line Items]
Payments in 2016	190
Payments in 2017	190
Payments in 2018	200
Payments in 2019	200
Payments in 2020	200
Payments in 2021 - 2025	$ 940

Stockholders' Equity - Additional Information (Detail) - USD ($)	3 Months Ended												12 Months Ended
	Dec. 31, 2015	Sep. 27, 2015	Jun. 28, 2015	Mar. 29, 2015	Dec. 31, 2014	Sep. 28, 2014	Jun. 29, 2014	Mar. 30, 2014	Dec. 31, 2013	Sep. 29, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Sep. 24, 2015
Shareholders Equity [Line Items]
Common stock, shares authorized	1,500,000,000				1,500,000,000								1,500,000,000	1,500,000,000
Preferred stock, shares authorized	50,000,000				50,000,000								50,000,000	50,000,000
Common stock, shares issued and outstanding	305,000,000				316,000,000								305,000,000	316,000,000
Common stock, shares outstanding for Balance Sheet presentation purposes	303,000,000				314,000,000								303,000,000	314,000,000
Preferred stock, shares issued and outstanding	0				0								0	0
Cash paid for repurchases of common stock													$ 3,071,000,000	$ 1,900,000,000	$ 1,762,000,000
Number of shares of common stock repurchased with cash													15,200,000	11,500,000	16,200,000
Additional share repurchase program authorized amount																$ 3,000,000,000
Remaining authorized repurchase amount under share repurchase program	$ 3,600,000,000												$ 3,600,000,000
Common stock par value, per share	$ 1				$ 1								$ 1	$ 1
Additional paid-in capital	$ 0				$ 0								$ 0	$ 0
Reduction to stockholder's equity due to repurchases of common stock													3,071,000,000	1,900,000,000	$ 1,744,000,000
Dividends preferred stock cash													$ 1,900,000,000	$ 1,800,000,000	$ 1,500,000,000
Dividends, per share													$ 6.15	$ 5.49	$ 4.78
Quarterly increase dividend rate													10.00%	10.00%	10.00%
Common stock dividends per share declared	$ 1.65	$ 1.50	$ 1.50	$ 1.50	$ 1.50	$ 1.33	$ 1.33	$ 1.33	$ 1.33	$ 1.15	$ 1.15	$ 1.15	$ 6.15	$ 5.49	$ 4.78
Retained Earnings
Shareholders Equity [Line Items]
Reduction to stockholder's equity due to repurchases of common stock													$ 2,400,000,000	$ 1,096,000,000	$ 434,000,000

Changes in Balance of Accumulated Other Comprehensive Loss (Detail) - USD ($)
$ in Millions

12 Months Ended

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

Beginning balance

^[1]

$ (11,870)

$ (9,601)

$ (13,493)

Other comprehensive (loss) income before reclassifications

(424)

(2,973)

2,879

Amounts reclassified from AOCL

Recognition of net actuarial losses

1,109

806

973

Amortization of net prior service (credits) costs

(259)

(100)

Total reclassified from AOCL

(2)

850

704

1,013

Other comprehensive income (loss), net of tax

426

(2,269)

3,892

Ending balance

^[1]

(11,444)

(11,870)

(9,601)

Postretirement Benefit Plan Adjustments

Accumulated Other Comprehensive Income (Loss) [Line Items]

Beginning balance

^[1]

(11,813)

(9,649)

(13,532)

Other comprehensive (loss) income before reclassifications

(351)

(2,870)

2,868

Amounts reclassified from AOCL

Recognition of net actuarial losses

1,109

806

973

Amortization of net prior service (credits) costs

(259)

(100)

Total reclassified from AOCL

850

706

1,015

Other comprehensive income (loss), net of tax

499

(2,164)

3,883

Ending balance

^[1]

(11,314)

(11,813)

(9,649)

Accumulated Other Comprehensive Income (Loss) [Line Items]

Beginning balance

^[1]

(57)

Other comprehensive (loss) income before reclassifications

(73)

(103)

Amounts reclassified from AOCL

Total reclassified from AOCL

(2)

(2)

Other comprehensive income (loss), net of tax

(73)

(105)

Ending balance

^[1]

$ (130)

$ (57)

$ 48

[1]

Changes in Balance of Accumulated Other Comprehensive Loss (Parenthetical) (Detail) - USD ($) $ in Billions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Post retirement benefit plan adjustments, tax benefits	$ 6.2	$ 6.4	$ 5.3

Stock-Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended	12 Months Ended
	Jan. 31, 2015	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation		$ 138	$ 164	$ 189
Share-based compensation, net of tax		90	107	122
Unrecognized compensation cost		$ 79
Period over which unrecognized compensation costs are expected to be recognized (years)		1 year 8 months 12 days
Cash received from exercise of stock options		$ 174	308	827
Realized tax benefits from stock-based compensation activities		$ 213	$ 215	$ 158
Number of years over which equity awards expire		10 years
Share-based compensation arrangement by share-based payment award, number of shares authorized		15,000,000
Shares reserved for issuance		7,000,000
Number of years over which equity awards vest		3 years
Number of Stock Options, Outstanding		4,200,000	6,300,000
Weighted Average Exercise Price, Outstanding		$ 86.61	$ 84.62
Weighted Average Remaining Contractual Life, Outstanding		4 years
Aggregate Intrinsic Value, Outstanding		$ 544
Number of Stock Options, Vested		4,200,000
Weighted Average Exercise Price, Vested		$ 86.61
Weighted Average Remaining Contractual Life, Vested		4 years
Aggregate Intrinsic Value, Vested		$ 544
Number of Stock Options, Exercised		2,200,000
Weighted Average Exercise Price, Exercised		$ 80.77
Risk-free interest rate					0.78%
Dividend yield					5.40%
Volatility factors					0.28
Expected option life (in years)					5 years
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock units, granted, in shares	600,000	595,000	745,000	1,356,000
Average grant date fair value per unit	$ 192.28	$ 192.47	$ 146.85	$ 89.24
Number of years over which equity awards vest	3 years
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of years over which equity awards vest		3 years
Performance Stock Units (PSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock units, granted, in shares	200,000
Number of years over which equity awards vest	3 years
Performance Stock Units (PSUs) \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of shares that can be earned from stock awards, as a percentage of the target award	0.00%
Performance Stock Units (PSUs) \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of shares that can be earned from stock awards, as a percentage of the target award	200.00%
Performance Stock Units (PSUs) \| Half Of PSUs Granted In Period
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average grant date fair value per unit	$ 192.28
Performance Stock Units (PSUs) \| Remaining Half Of PSUs Granted In Period
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average grant date fair value per unit	$ 188.96

Summary of Activity Related to Nonvested RSUs (Detail) - Restricted Stock Units (RSUs) - $ / shares shares in Thousands	1 Months Ended	12 Months Ended
	Jan. 31, 2015	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of RSUs, beginning balance, in shares	2,326	2,326	3,859	4,822
Number of RSUs, Granted, in shares	600	595	745	1,356
Number of RSUs, Vested, in shares		(1,642)	(2,194)	(2,093)
Number of RSUs, Forfeited, in shares		(43)	(84)	(226)
Number of RSUs, ending balance, in shares		1,236	2,326	3,859
Nonvested beginning balance, in dollars per share	$ 97.80	$ 97.80	$ 82.42	$ 79.10
Granted, in dollars per share	$ 192.28	192.47	146.85	89.24
Vested, in dollars per share		103.30	87.66	79.26
Forfeited, in dollars per share		132.28	91.11	81.74
Nonvested Ending balance, in dollars per share		$ 134.87	$ 97.80	$ 82.42

Stock Options (Detail) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant-date fair value of stock options granted	$ 0	$ 0	$ 0
Grant-date fair value of all stock options that vested	$ 8	$ 18	$ 40
Intrinsic value of all stock options exercised	$ 265	$ 297	$ 293

Legal Proceedings, Commitments and Contingencies - Additional Information (Detail) $ in Millions	1 Months Ended	12 Months Ended
	Apr. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Jul. 13, 2015 Subsidiary	Apr. 24, 2009 USD ($)
Legal Proceedings And Contingencies [Line Items]
Damages sought by plaintiff	$ 45
Statutory penalty	13
Total damages	$ 147
Number of subsidiaries held \| Subsidiary					2
Liabilities recorded relative to environmental matters		$ 1,000	$ 965
Environmental costs eligible for future recovery		$ 858	836
Time period environmental costs and recovery of environmental costs are projected over, years		20 years
Percentage of expenditures that are reimbursed for certain remediation activities		50.00%
Total rental expense under operating leases		$ 256	258	$ 315
Future minimum lease commitments, total		793
Future minimum lease commitments, due in 2016		205
Future minimum lease commitments, due in 2017		161
Future minimum lease commitments, due in 2018		128
Future minimum lease commitments, due in 2019		101
Future minimum lease commitments, due in 2020		64
Future minimum lease commitments, due in later years		134
Outstanding letters of credit, surety bonds, and third-party guarantees		3,800	2,400
Third-party guarantees outstanding		$ 678	$ 774
Percentage of total guarantees that relate to guarantees of contractual performance of joint ventures		79.00%	85.00%
Total equity method investment		$ 1,300	$ 971
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
Amount of net assets that exceeded book value of investment that is being recognized		395
Total equity method investment		748	$ 706
United Launch Alliance \| Amortized in 2016
Legal Proceedings And Contingencies [Line Items]
Amount of net assets that exceeded book value of investment that is being recognized		$ 40

Restructuring Charges - Additional Information (Detail)
$ / shares in Units, $ in Millions

3 Months Ended

12 Months Ended

36 Months Ended

Mar. 31, 2013

USD ($)

Dec. 31, 2016

USD ($)

Dec. 31, 2015

USD ($)

Employee

$ / shares

Dec. 31, 2014

USD ($)

Dec. 31, 2013

USD ($)

Employee

$ / shares

Dec. 31, 2015

USD ($)

Reduction in net earnings due to severance charges

$ 30

$ 102

^[1]

$ 201

^[1]

$ 66

$ 130

Decrease in diluted earnings per share due to severance charges | $ / shares

$ 0.21

$ 0.40

Severance payments

$ 18

Accelerated and incremental costs incurred to date

225

$ 225

Accelerated and incremental costs incurred

115

$ 90

$ 20

Accelerated and incremental costs recovered

November 2013 Severance Actions

Information Systems & Global Solutions

Severance payments

$ 92

153

Information Systems & Global Solutions | Incremental expected costs as a result of the November 2013 restructuring plan

Mission Systems and Training

Mission Systems and Training | Incremental expected costs as a result of the November 2013 restructuring plan

Space Systems | Incremental expected costs as a result of the November 2013 restructuring plan

$ 81

Information Systems & Global Solutions, Mission Systems & Training, and Space Systems

$ 180

180

Number of employees terminated | Employee

4,000

Scenario, Forecast

Accelerated and incremental costs recovered

$ 60

Number of employees terminated | Employee

1,400

Accrued restructuring cost expected to be paid in 2016

$ 15

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

$ 40

[1]	See Note 15 for information on charges related to certain severance actions at our business segments. Severance charges for initiatives that are not significant are included in business segment operating profit.

Fair Value, Assets and Liabilities Measured on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	$ 15	$ 27
Derivative liabilities	35	18
Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of investments measured on recurring basis	89	92
Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of investments measured on recurring basis	745	696
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	119	136
Other securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of investments measured on recurring basis	147	153
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	89	92
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	745	696
Fair value, inputs, level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	15	27
Derivative liabilities	35	18
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	119	136
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	$ 147	$ 153

Fair Value Measurements - Additional Information (Detail) - USD ($)
$ in Millions

3 Months Ended

12 Months Ended

Dec. 31, 2014

Dec. 31, 2013

Dec. 31, 2014

Dec. 31, 2013

^[2]

Dec. 31, 2015

Estimated fair values of debt instruments

$ 7,900

$ 16,500

Outstanding principal amount of debt instruments

7,041

16,296

Unamortized discount on long-term debt

872

$ 941

Goodwill impairment charge

$ 119

$ 195

$ 119

^[1],[2]

$ 195

[1]	The impairment in 2014 relates to our Technical Services reporting unit within our IS&GS business segment (Note 1).
[2]	We recognized non-cash goodwill impairment charges related to the Technical Services reporting unit within our MFC business segment in 2014 and 2013. See Note 1 for more information.

Summary of Quarterly Information (Detail) - USD ($)
$ / shares in Units, $ in Millions

3 Months Ended

12 Months Ended

Dec. 31, 2015

^[1]

Sep. 27, 2015

Jun. 28, 2015

Mar. 29, 2015

Dec. 31, 2014

Sep. 28, 2014

Jun. 29, 2014

Mar. 30, 2014

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

Net sales

$ 12,917

$ 11,461

$ 11,643

$ 10,111

$ 12,530

$ 11,114

$ 11,306

$ 10,650

$ 46,132

$ 45,600

$ 45,358

1,281

1,354

1,445

1,356

1,342

1,392

1,426

1,432

5,436

5,592

4,505

Diluted earnings per share

$ 933

^[2]

$ 865

^[2]

$ 929

^[2]

$ 878

^[2]

$ 904

^[3]

$ 888

^[3]

$ 889

^[3]

$ 933

^[3]

$ 3,605

$ 3,614

$ 2,981

Basic earnings per share

$ 3.05

^[4]

$ 2.80

^[4]

$ 2.98

^[4]

$ 2.78

^[4]

$ 2.87

$ 2.81

$ 2.92

$ 11.62

$ 11.41

$ 9.29

$ 3.01

$ 2.77

$ 2.94

$ 2.74

$ 2.82

$ 2.76

$ 2.87

$ 11.46

$ 11.21

$ 9.13

[1]	The fourth quarter of 2015 incorporates the results of Sikorsky from the November 6, 2015 acquisition date through December 31, 2015, including approximately $400 million in net sales and about $45 million in operating loss, inclusive of intangible amortization and adjustments required to account for the acquisition.
[2]	The fourth quarter of 2015 includes a charge for workforce reductions of approximately $67 million ($44 million after tax) and a tax benefit of about $71 million due to the retroactive reinstatement of the R&D tax credit in 2015.
[3]	The fourth quarter of 2014 includes a charge of approximately $119 million ($107 million after tax) related to a non-cash goodwill impairment charge and a tax benefit of about $45 million due to the retroactive reinstatement of the R&D tax credit in 2014.
[4]	The sum of the quarterly earnings per share amounts do not equal the earnings per share amounts included on our Statements of Earnings, primarily due to the timing of our share repurchases during each respective year.

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

Summary of Quarterly Information (Parenthetical) (Detail) - USD ($)
$ in Millions

2 Months Ended

3 Months Ended

12 Months Ended

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

Dec. 31, 2015

Dec. 31, 2014

Dec. 31, 2013

Recognized tax benefit for the impact of the tax credit

$ 71

$ 66

$ 96

Non-cash goodwill impairment charge

$ 119

$ 195

119

^[1],[2]

$ 195

^[2]

Reduction in net earnings due to non-cash goodwill impairment charge

107

$ 176

Net sales

$ 400

$ (45)

Workforce Reductions

Restructuring charges, after tax

Restructuring charges

$ 67

Tax Year 2015

Recognized tax benefit for the impact of the tax credit

$ 71

Tax Year 2014