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Item 8. Financial Statements and Supplementary Data

2025-02-07 compared with 2024-02-08 · 110 added, 105 removed, 1211 unchanged (15% of the section changed)

28 unchanged sentences

Changes in retirement plans’ funded status 208 722 241

Other comprehensive income (loss), pretax 1,145 ( 227 ) 2,088

Other comprehensive (loss) income, pretax ( 347 ) 1,145 ( 227 )

Provision for income tax, net ( 12 ) ( 152 ) ( 5 )

Other comprehensive income (loss), net of tax 993 ( 232 ) 1,630

Other comprehensive (loss) income, net of tax ( 359 ) 993 ( 232 )

Comprehensive income $ 3,423 $ 4,308 $ 3,158

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Dividends paid ( 1,529 ) ( 1,428 ) ( 1,369 )

Repayment of fixed-rate notes ( 1,250 ) ( 1,000 ) ( 2,500 )

Purchases of common stock ( 1,501 ) ( 434 ) ( 1,229 )

Proceeds from commercial paper, gross (maturities greater than 3 months) — — 1,997

Repayment of commercial paper, gross (maturities greater than 3 months) — — ( 1,997 )

Proceeds from fixed-rate notes — — 1,497

Repayment of floating-rate notes — — ( 500 )

Repayment of fixed-rate notes ( 500 ) ( 1,250 ) ( 1,000 )

Other, net 161 18 127

1 unchanged sentence

Net cash (used) provided by discontinued operations ( 6 ) ( 4 ) 20

Net increase (decrease) increase in cash and equivalents 671 ( 361 ) ( 1,221 )

Net (decrease) increase in cash and equivalents ( 216 ) 671 ( 361 )

Cash and equivalents at beginning of year 1,913 1,242 1,603

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Shares purchased — — — ( 1,207 ) — ( 1,207 )

Other comprehensive income — — — — 1,630 1,630

Other comprehensive loss — — — — ( 232 ) ( 232 )

Other — — ( 16 ) — — ( 16 )

December 31, 2022 482 3,556 37,403 ( 20,721 ) ( 2,152 ) 18,568

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Shares purchased — — — ( 434 ) — ( 434 )

Other comprehensive loss — — — — ( 232 ) ( 232 )

Other — — ( 16 ) — — ( 16 )

Other comprehensive income — — — — 993 993

December 31, 2023 482 3,760 39,270 ( 21,054 ) ( 1,159 ) 21,299

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Shares purchased — — — ( 1,509 ) — ( 1,509 )

Other comprehensive income — — — — 993 993

Other comprehensive loss — — — — ( 359 ) ( 359 )

December 31, 2024 $ 482 $ 4,062 $ 41,487 $ ( 22,450 ) $ ( 1,518 ) $ 22,063

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and technology products and services.

The following is a discussion of certain significant accounting policies, and further discussion is contained in the notes to these financial statements.

The following is a discussion of certain significant accounting policies, and further discussion is contained in other notes to these financial statements.

Basis of Consolidation and Classification.

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Company-sponsored research and development (R&D) expenses, including Aerospace product-development costs, were $ 565 in 2024, $ 510 in 2023 and $ 480 in 2022.

R&D expenses have trended upward driven by activities primarily associated with ongoing new aircraft development efforts.

R&D expenses are included in operating costs and expenses in the Consolidated Statement of Earnings in the period in which they are incurred.

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Acquisitions.

In the last three years, we acquired a business in our Aerospace segment and a business in our Technologies segment.

In the last three years, we acquired a business in our Aerospace segment, a business in our Combat Systems segment and two businesses in our Technologies segment.

The operating results of these acquisitions have been included in our reported results since their respective closing dates.

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Our estimate of a reporting unit’s fair value is based primarily on the discounted cash flows of the underlying operations.

In the fourth quarter of 2023, we completed qualitative assessments for our Aerospace, Marine Systems and Combat Systems reporting units as the estimated fair values of each of the reporting units significantly exceeded the respective carrying values based on our most recent quantitative assessments, which were performed in the fourth quarter of 2018.

Our qualitative assessments did not present indicators of impairment for the reporting units.

In the fourth quarter of 2023, we also completed a qualitative assessment for our Technologies reporting unit as its estimated fair value exceeded its carrying value by approximately 25% at the time of our last quantitative assessment in the fourth quarter of 2022.

Interest rates rose over the last year, but the increase was within the tolerances established in our previous quantitative analysis.

Our qualitative assessment this year did not present any other indicators of impairment.

In the fourth quarter of 2024, we completed qualitative assessments for each of our reporting units.

Our Aerospace, Marine Systems and Combat Systems reporting units’ estimated fair values significantly exceeded their respective carrying values based on our most recent quantitative assessments, which were performed in the fourth quarter of 2018.

Our Technologies reporting unit’s estimated fair value exceeded its carrying value by approximately 25% at the time of our last quantitative assessment in the fourth quarter of 2022.

Our qualitative assessments this year did not present indicators of impairment.

For a summary of our goodwill by reporting unit, see Note H.

Recent Accounting Pronouncements.

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Improvements to Reportable Segment Disclosures, effective for fiscal years beginning after December 15, 2023.

In 2024, we adopted Accounting Standards Update (ASU) 2023-07, Improvements to Reportable Segment Disclosures, using the retrospective method of adoption.

The ASU adds disclosure requirements for segment expense information.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, effective for annual periods beginning after December 15, 2024.

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Improvements to Income Tax Disclosures, effective for annual periods beginning after December 15, 2024.

The ASU requires disclosure of disaggregated income tax information, including the effective tax rate reconciliation and income taxes paid.

In November 2024, the FASB issued ASU 2024-03, Disaggregation - Income Statement Expenses.

The ASU requires disclosure of certain disaggregated costs and expenses on an annual and interim basis in the notes to the financial statements.

ASU 2024-03 is effective for annual periods beginning after December 15, 2026, using the prospective or retrospective methods of adoption, with early adoption permitted.

Although we have not determined the method or period of adoption, we expect to disclose additional information as required by the standard.

There are other ASUs that have been issued by the FASB but are not yet effective.

We expect to implement these new standards by their effective dates, and do not expect their adoption to have a material impact on our results of operations, financial condition or cash flows.

We do not expect that the adoption of these standards will have a material impact on our results of operations, financial condition or cash flows.

Performance Obligations.

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The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service.

We classify revenue as products or services based on the predominant attributes of the associated performance obligation.

Contract modifications are routine in the performance of our contracts.

Contracts are often modified to account for changes in contract specifications or requirements.

Contracts are often modified to account for changes in customer specifications or requirements.

In most instances, contract modifications are for goods or services that are not distinct and, therefore, are accounted for as part of the existing contract.

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Revenue from products and services transferred to customers over time accounted for 76 % of our revenue in 2024, 79 % in 2023 and 77 % in 2022.

Substantially all of our revenue in the defense segments

is recognized over time because control is transferred continuously to our customers.

Substantially all of our revenue in the defense segments is recognized over time because control is transferred continuously to our customers.

Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations.

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Revenue on these contracts is recognized when the customer obtains control of the asset, which is generally upon delivery and acceptance by the customer of the fully outfitted aircraft.

On December 31, 2023, we had $ 93.6 billion of remaining performance obligations, which we also refer to as total backlog.

On December 31, 2024, we had $ 90.6 billion of remaining performance obligations, which we refer to as total backlog.

We expect to recognize approximately 45 % of our remaining performance obligations as revenue in 2025, an additional 40 % by the end of 2027 and the balance thereafter.

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We include award fees or incentive fees in the estimated transaction price when there is a basis to reasonably estimate the amount of the fee.

These estimates are based on historical award experience, anticipated performance and our best judgment at the time.

These estimates are based on historical award experience, anticipated performance and our best informed judgment at the time.

As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly.

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Diluted earnings per share $ 0.16 $ 0.32 $ 1.05

While no adjustment on any one contract was material to the Consolidated Financial Statements in 2023, 2022 or 2021, our Marine Systems segment’s 2023 results were affected negatively by supply chain impacts to the Virginia-class submarine schedule and cost growth on the Arleigh Burke-class (DDG-51) guided-missile destroyer program, offset partially by improved performance on the John Lewis-class (T-AO-205) fleet replenishment oiler program.

While no adjustment on any one contract was material to the Consolidated Financial Statements in 2024, 2023 or 2022, our Marine Systems segment’s 2024 results were affected negatively by supplier

quality issues and late supply chain deliveries causing cost growth and schedule delays on the Virginia-class submarine Block IV contract.

We have large, long-term contracts with the U.S.

Navy for Virginia-class submarines and an international customer for tracked vehicles in which our estimates for contract revenue include variable consideration from anticipated contract modifications.

Navy for Virginia-class submarines and an international customer for tracked vehicles in which our estimates for contract revenue include variable consideration.

For both contracts, it is reasonably possible that the actual amount of variable consideration realized could be less than our estimate, which could have a material unfavorable impact on our results of operations.

In addition, during 2024 the Navy was informed of deficiencies in welding procedures conducted by our teammate and subcontractor on our Virginia-class and Columbia-class submarine programs.

It is reasonably possible that addressing these deficiencies could potentially impose costs or schedule delays not accounted for in our estimates related to our long-term contracts with the Navy for the construction of submarines.

Revenue by Category.

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We compute basic earnings per share (EPS) using net earnings for the period and the weighted average number of common shares outstanding during the period.

Basic weighted average shares outstanding decreased in 2023 and 2022 due to share repurchases.

See Note N for further discussion of our share repurchases.

Diluted EPS incorporates the additional shares issuable upon the assumed exercise of stock options and the release of restricted stock and restricted stock units (RSUs).

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Diluted weighted average shares outstanding 277,485 275,725 278,169

* Excludes outstanding options to purchase shares of common stock that had exercise prices in excess of the average market price of our common stock during the year and, therefore, the effect of including these options would be antidilutive.

These options to taled 2,961 in 2023 , 1,466 in 2022 and 5,037 in 2021.

* Excludes unvested stock options, and vested stock options that had exercise prices in excess of the average market price of our common stock during the year and, therefore, the effect of including these options would be antidilutive.

These options totaled 1,033 in 2024, 2,961 in 2023 and 1,466 in 2022.

Income Tax Provision.

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The reported tax provision differs from the amounts paid because some income and expense items are recognized in different time periods for financial reporting than for income tax purposes.

This includes the impact of the requirement, effective January 1, 2022, to capitalize and amortize over five years certain research and development expenditures that were previously deductible immediately for tax purposes, which contributed to increased net income tax payments.

This includes the impact of the requirement, effective January 1, 2022, to capitalize and amortize over five years certain R&D expenditures that were previously deductible immediately for tax purposes, which contributed to increased net income tax payments.

State and local income taxes allocable to U.S.

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Retirement benefits 251 311

Tax loss and credit carryforwards 267 259

Salaries and wages 223 215

Tax loss and credit carryforwards 185 267

Workers’ compensation 153 148

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Tax Uncertainties.

We participate in the Internal Revenue Service (IRS) Compliance Assurance Process (CAP), a real-time audit of our consolidated federal corporate income tax return.

We participate in the Internal Revenue Service (IRS) Compliance Assurance Process (CAP), a real-time review of our consolidated federal corporate income tax return.

The IRS has examined our consolidated federal income tax returns through 2022.

For the tax year ending December 31, 2023, the IRS placed us in the phase of CAP reserved for taxpayers whose risk of noncompliance does not warrant the continual use of IRS examination resources.

For the tax year ending December 31, 2024, the IRS placed us into a CAP phase in which they will consider certain tax return information early in 2025 in the interest of expediting their risk assessment and review of our 2024 tax return.

For all periods open to examination by tax authorities, we periodically assess our liabilities and contingencies based on the latest available information.

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In addition, there are no tax positions for which it is reasonably possible that the unrecognized tax benefits will vary significantly over the next 12 months, producing, individually or in the aggregate, a material effect on our results of operations, financial condition or cash flows.

The Organization for Economic Co-operation and Development has issued “Pillar Two” model rules introducing a new global minimum tax of 15% on a country-by-country basis, with certain aspects

intended to be effective on January 1, 2024, and other aspects on January 1, 2025.

Although it is uncertain whether the U.S.

will adopt any Pillar Two rules, some countries have enacted, introduced, or are considering implementing legislation.

Because we generally do not have material operations in jurisdictions with tax rates lower than the proposed Pillar Two minimum, any legislation enacted consistent with the Pillar Two model rules is not expected to have a material effect on our results of operations, financial condition or cash flows.

ACCOUNTS RECEIVABLE

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Net unbilled receivables $ 8,248 $ 7,997

On December 31, 2023 and 2022, net unbilled receivables included $ 1.2 billion and $ 1.7 billion, respectively, associated with a large international tracked vehicle contract in our Combat Systems segment.

The contract, signed in 2010, had been experiencing an unbilled receivables build-up since 2021.

Based on ongoing discussions with the customer and continued successful program activity, the customer resumed payments on the contract in the first quarter of 2023.

On December 31, 2024 and 2023, net unbilled receivables included $ 1.2 billion associated with a large international tracked vehicle contract in our Combat Systems segment.

The contract, signed in 2010, experienced an unbilled receivable build-up in 2021 and 2022.

The customer resumed payments on the contract in the first quarter of 2023.

Other than the balance related to the tracked vehicle contract, we expect to bill substantially all of the remaining year-end 2024 net unbilled receivables balance during 2025, and the amount not expected to be billed in 2025 results primarily from the agreed-upon contractual billing terms.

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Total inventories $ 9,724 $ 8,578

The increase in total inventories during 2023 was due to the ramp-up in production of new Gulfstream aircraft models, including the G700 in anticipation of its certification from the U.S.

Federal Aviation Administration, as well as increased production of in-service aircraft reflecting strong customer demand.

Customer deposits associated with firm orders for these aircraft, which are reported in customer advances and deposits and other noncurrent liabilities on the Consolidated Balance Sheet, have correspondingly increased.

The increase in total inventories during 2024 was due primarily to the ramp-up in production of new Gulfstream aircraft models, including the G700 that began deliveries in the second quarter of 2024.

GOODWILL AND INTANGIBLE ASSETS

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December 31, 2022 (a) $ 3,019 $ 297 $ 2,766 $ 14,252 $ 20,334

Acquisitions — — — 336 336

Acquisitions (b) — — — 16 16

Other (c) 180 — 46 10 236

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Total intangible assets $ 3,910 $ ( 2,390 ) $ 1,520 $ 3,927 $ ( 2,271 ) $ 1,656

(a) Changes in gross carrying amounts consisted primarily of adjustments for foreign currency translation and write-offs of fully amortized intangible assets.

(a) Changes in gross carrying amounts consisted primarily of adjustments for foreign currency translation, acquired and divested intangible assets and write-offs of fully amortized intangible assets.

(b) Consisted of acquired backlog and probable follow-on work and associated customer relationships.

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Interest rate:

May 2023 3.375 % $ — $ 750

August 2023 1.875 % — 500

November 2024 2.375 % $ — $ 500

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Long-term debt $ 7,260 $ 8,754

In May and August of 2023, we repaid fixed-rate notes of $ 750 and $ 500 , respectively, at their respective scheduled maturities using cash on hand.

In November 2024, we repaid fixed-rate notes of $ 500 at the scheduled maturity using cash on hand.

Interest payments associated with our debt were $ 385 in 2024, $ 378 in 2023 and $ 383 in 2022.

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This credit facility expires in March 2027.

We may renew or replace this credit facility in whole or in part at or prior to its expiration date.

We may renew or replace this credit facility

in whole or in part at or prior to its expiration date.

We also have an effective shelf registration on file with the Securities and Exchange Commission (SEC) that allows us to access the debt markets.

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COMMITMENTS AND CONTINGENCIES

In 2015, Electric Boat Corporation, a subsidiary of General Dynamics Corporation, received a civil investigative demand from the U.S.

Department of Justice regarding an investigation of potential False Claims Act violations relating to alleged failures of Electric Boat’s quality system with respect to allegedly non-conforming parts purchased from a supplier.

In 2016, Electric Boat was made aware that it is a defendant in a lawsuit related to this matter which had been filed under seal in U.S.

district court.

Also in 2016, the Suspending and Debarring Official for the U.S.

Department of the Navy issued a show cause letter to Electric Boat requesting that Electric Boat respond to the official’s concerns regarding Electric Boat’s oversight and management with respect to its quality assurance systems for subcontractors and suppliers.

Electric Boat responded to the show cause letter and engaged in discussions with the U.S.

In the third quarter of 2019, the Department of Justice declined to intervene in the qui tam action, noting that its investigation continues, and the court unsealed the relator’s complaint.

In the fourth quarter of 2020, the relator filed a second amended complaint.

In the third quarter of 2021, the court dismissed the relator’s complaint with prejudice.

The relator appealed the dismissal of the complaint to the United States Court of Appeals, which was not granted.

In the third quarter of 2023, the Court of Appeals affirmed dismissal of the relator’s complaint with prejudice.

The relator thereafter filed a

petition for rehearing with the Court of Appeals.

Given the current status of these matters, we are unable to express a view regarding the ultimate outcome or, if the outcome is adverse, to estimate an amount or range of reasonably possible loss.

Depending on the outcome of these matters, there could be a material impact on our results of operations, financial condition and cash flows.

On October 6, 2023, a putative class action lawsuit was filed in the United States District Court for the Eastern District of Virginia against General Dynamics Corporation, certain of its subsidiaries and various other companies alleging that they conspired, in violation of the Sherman Act, not to solicit naval architects and marine engineers from each other.

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We are defending the matter.

However, given the current status of this matter, we are unable to express a view regarding the ultimate outcome or, if the outcome is adverse, to estimate an amount or range of reasonably possible loss.

On April 19, 2024, the District Court dismissed the plaintiffs’ complaint.

Plaintiffs initiated an appeal of the dismissal of their complaint to the U.S.

Court of Appeals for the Fourth Circuit on May 20, 2024.

Given the current status of this matter, we are unable to express a view regarding the ultimate outcome or, if the outcome is adverse, to estimate an amount or range of reasonably possible loss.

Depending on the outcome of this matter, there could be a material impact on our results of operations, financial condition and cash flows.

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The nature of litigation is such that we cannot predict the outcome of these other matters.

However, based on information currently available, we believe any potential liabilities in these other proceedings, individually or in the aggregate, will not have a material impact on our results of operations, financial condition or cash flows.

However, based on information currently available, we believe any potential liabilities in these

other proceedings, individually or in the aggregate, will not have a material impact on our results of operations, financial condition or cash flows.

Environmental

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As a government contractor, we are subject to U.S.

government audits and investigations relating to our operations, including claims for fines, penalties, and compensatory and

treble damages.

government audits and investigations relating to our operations, including claims for fines, penalties, and compensatory and treble damages.

We believe the outcome of such ongoing government audits and investigations will not have a material impact on our results of operations, financial condition or cash flows.

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These commitments present more risk in the event of an adverse change in market conditions.

In either case, any excess of the preestablished trade-in price above the fair market value at the time the new aircraft is delivered is treated as a reduction of revenue in the new-aircraft sales transaction.

In either case, any excess of the preestablished trade-in

price above the fair market value at the time the new aircraft is delivered is treated as a reduction of revenue in the new-aircraft sales transaction.

As of December 31, 2024, the estimated change in fair market values from the date of the commitments was not material.

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Share Repurchases.

Our Board, from time to time, authorizes management to repurchase outstanding shares of our common stock on the open market.

In 2023, we repurchased 2 million of our outstanding shares for $ 434 .

On December 4, 2024, the Board authorized management to repurchase up to 10 million additional shares of the company’s outstanding stock.

In 2024, we repurchased 5.4 million of

our outstanding shares for $ 1.5 billion.

On December 31, 2024, 9.2 million shares remained authorized by our Board for repurchase, representing 3.4 % of our total shares outstanding.

We repurchased 5.3 million shares for $ 1.2 billion in 2022 and 10.3 million shares for $ 1.8 billion in 2021.

We repurchased 2 million shares for $ 434 in 2023 and 5.3 million shares for $ 1.2 billion in 2022.

Dividends per Share.

Our Board declared dividends per share of $ 5.68 in 2024 , $ 5.28 in 2023 and $ 5.04 in 2022.

We paid cash dividends of $ 1.4 billion in 2023 and 2022, and $ 1.3 billion in 2021.

We paid cash dividends of $ 1.5 billion in 2024, and $ 1.4 billion in 2023 and 2022.

Accumulated Other Comprehensive Loss.

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December 31, 2021 $ 144 $ 538 $ ( 2,602 ) $ ( 1,920 )

Other comprehensive income, pretax ( 174 ) ( 103 ) 2,365 2,088

Provision from income tax, net 46 — ( 504 ) ( 458 )

Other comprehensive income, net of tax ( 128 ) ( 103 ) 1,861 1,630

December 31, 2021 144 538 ( 2,602 ) ( 1,920 )

Other comprehensive loss, pretax ( 190 ) ( 278 ) 241 ( 227 )

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December 31, 2023 11 673 ( 1,843 ) ( 1,159 )

Other comprehensive loss, pretax ( 117 ) ( 438 ) 208 ( 347 )

Provision for income tax, net 30 — ( 42 ) ( 12 )

Other comprehensive loss, net of tax ( 87 ) ( 438 ) 166 ( 359 )

December 31, 2024 $ ( 76 ) $ 235 $ ( 1,677 ) $ ( 1,518 )

Amounts reclassified out of AOCL related primarily to changes in our retirement plans’ funded status and included pretax recognized net actuarial losses and amortization of prior service credit.

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We organize our segments in accordance with the nature of products and services offered.

Our chief operating decision maker is our Chairman and Chief Executive Officer (CEO).

We measure each segment’s profitability based on operating earnings.

As a result, we do not allocate net interest, other income and expense items, and income taxes to our segments.

Segment operating earnings exclude net interest and other income and expense items.

The Chairman and CEO uses segment operating earnings as an input when assessing segment performance and when making decisions to allocate financial resources between segments.

The Chairman and CEO uses operating earnings in assessing segment performance by comparing operating earnings to prior period results and plan-to-actual variances.

The Chairman and CEO also uses forecasted expense information for each segment to manage operations.

Summary financial information for each of our segments follows:

Revenue (a) Operating Earnings Revenue from

Revenue (a) Other Segment Items (b) Operating Earnings

Year Ended December 31 2024 2023 2022 2024 2023 2022 2024 2023 2022

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Technologies 13,127 12,922 12,492 ( 11,867 ) ( 11,720 ) ( 11,265 ) 1,260 1,202 1,227

Corporate (b) — — — ( 160 ) ( 118 ) ( 84 ) — — —

Corporate (c) — — — — — — ( 139 ) ( 160 ) ( 118 )

Total $ 47,716 $ 42,272 $ 39,407 $ ( 42,781 ) $ ( 37,867 ) $ ( 35,078 ) $ 4,796 $ 4,245 $ 4,211

(a) See Note B for additional revenue information by segment.

(b) Corporate operating costs consisted primarily of equity-based compensation expense.

(b) Other segment items consist of material and labor costs, depreciation and amortization, and other overhead and general and administrative expenses.

The following is additional summary financial information for each of our segments:

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Total $ 55,880 $ 54,810 $ 51,585 $ 916 $ 904 $ 1,114 $ 886 $ 863 $ 884

* Depreciation and amortization by reportable segment is included within the other segment items expense caption.

The following table presents our revenue by geographic area based on the location of our customers:

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operations were $ 732 in 2024, $ 631 in 2023 and $ 567 in 2022.

The long-lived assets associated with these operations were 4 % of our total long-lived assets on December 31, 2023, 2022 and 2021.

The long-lived assets associated with these operations were 3 % of our total long-lived assets on December 31, 2024 and 4 % of our total long-lived assets on December 31, 2023 and 2022.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants.

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The carrying values of cash and equivalents and accounts receivable and payable on the Consolidated Balance Sheet approximate their fair value.

The following tables present the fair values of

our other financial assets and liabilities on December 31, 2023 and 2022, and the basis for determining their fair values:

The following tables present the fair values of our other financial assets and liabilities on December 31, 2024 and 2023, and the basis for determining their fair values:

Value Quoted Prices in Active Markets for Identical Assets

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Our foreign currency exchange rate risk relates to receipts from customers, payments to suppliers and intercompany transactions denominated in foreign currencies.

To the extent possible, we include terms in our contracts that are designed to protect us from this risk.

Otherwise, we enter into derivative financial instruments, principally foreign currency forward purchase and sale contracts, designed to offset and minimize our risk.

The dollar-weighted one-year average maturity of these instruments generally matches the duration of the activities that are at risk.

To the extent possible, we include in our contracts terms that are designed to protect us from this risk.

Otherwise, we

enter into derivative financial instruments, principally foreign currency forward purchase and sale contracts, designed to offset and minimize our risk.

The dollar-weighted two-year average maturity of these instruments generally matches the duration of the activities that are at risk.

Commodity Price Risk.

We are subject to commodity price risk, primarily on long-term, fixed-price contracts.

To the extent possible, we include terms in our contracts that are designed to protect us from these risks.

To the extent possible, we include in our contracts terms that are designed to protect us from these risks.

Some of the protective terms included in our contracts are considered derivative financial instruments but are not accounted for separately because they are clearly and closely related to the host contract.

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operations’ revenue and earnings into U.S.

dollars was not material to our results of operations in any of the past three years.

dollars was not material to our results of operations in any of

the past three years.

In addition, the effect of changes in foreign exchange rates on non-U.S.

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Participants generally vest in stock options over three years – with 50 % of the options vesting after two years and the remaining 50 % vesting the following year – and expire 10 years after the grant date.

We recognize compensation expense related to stock options on a straight-line basis over the vesting period of the awards, net of estimated forfeitures, except for awards to retirement-eligible participants that are recognized on an accelerated basis effective with the 2022 grant.

Estimated forfeitures are based on our historical forfeiture experience.

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Participants generally vest in restricted stock and RSUs, over a three-year restriction period after the grant date, during which recipients may not sell, transfer, pledge, assign or otherwise convey their restricted shares to another party.

During this period, restricted stock recipients receive cash dividends on their restricted shares and are entitled to vote those shares, while RSU recipients receive dividend-equivalent units instead of cash dividends and are not entitled to vote their RSUs or dividend-equivalent units.

During this period, restricted stock recipients receive cash dividends

on their restricted shares and are entitled to vote those shares, while RSU recipients receive dividend-equivalent units instead of cash dividends and are not entitled to vote their RSUs or dividend-equivalent units.

We grant RSUs with one or more performance measures (performance stock units or PSUs) determined by the compensation committee of the Board as described in our proxy statement.

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Our contributions to these plans totaled $ 517 in 2024, $ 462 in 2023 and $ 415 in 2022.

The defined-contribution plans held approximately 16 million shares of our common stock, representing approximately 6 % of our outstanding shares, on December 31, 2023 and 2022.

On December 31, 2024 and 2023, the defined-contribution plans held approximately 15 million and 16 million shares of our common stock respectively, each representing approximately 6 % of our outstanding shares.

Defined Benefit Plans

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Net annual benefit credit $ ( 45 ) $ ( 21 ) $ ( 32 )

In October 2024, we purchased an irrevocable group annuity contract (referred to as a buy-out contract) for $ 673 using retirement plan assets held in trust to transfer the related outstanding qualified pension obligations to two insurance companies.

As a result of the transaction, the insurance companies are now required to pay and administer the retirement benefits owed to approximately 16,000 U.S.

retirees and beneficiaries, with no change to the amount, timing or form of the monthly retirement benefit payments.

In connection with this transaction, we recognized a non-cash settlement charge of approximately $ 80 in our qualified U.S.

government pension plans related to the GAAP acceleration of deferred actuarial losses included in AOCL for the plans.

Our contractual arrangements with the U.S.

government provide for the recovery of pension and other post-retirement benefit costs related to employees working on government contracts.

government provide for the recovery of pension and other post-retirement benefit costs related to employees working on government contracts, including settlement costs.

The amount allocated to U.S.

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Amendments 1 1 — ( 5 )

Actuarial (loss) gain ( 377 ) 3,884 8 185

Actuarial gain (loss) 643 ( 377 ) 32 8

Settlement/curtailment/other 727 ( 52 ) 11 ( 3 )

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Funded status at end of year $ ( 1,689 ) $ ( 1,850 ) $ 107 $ 51

The overall decrease in our pension benefit obligation for the year ended December 31, 2024, was due primarily to the settlement resulting from the buy-out contract, and actuarial gain created by the change in the weighted-average discount rate, which increased from 4.83 % at December 31, 2023, to 5.40 % at December 31, 2024.

The overall increase in our pension benefit obligation for the year ended December 31, 2023, was due primarily to actuarial loss created by the change in the weighted-average discount rate, which decreased from 5.08 % at December 31, 2022, to 4.83 % at December 31, 2023.

The overall decrease in our pension benefit obligation for the year ended December 31, 2022, was due primarily to actuarial gains created by the change in the weighted-average discount rate, which increased from 2.84 % at December 31, 2021, to 5.08 % at December 31, 2022.

Amounts recognized on the Consolidated Balance Sheet consisted of the following:

66 unchanged sentences

We determine the long-term rates of return on assets based on consideration of historical and forward-looking returns and the current and expected asset allocation.

In 2023, we decreased the expected long-term rates of return on assets by 44 basis points for our pension plans and by 8 basis points for our other post-retirement benefit plans, resulting from changes in our asset allocations.

In 2024, we increased the

expected long-term rates of return on assets by 1 basis point for our pension plans and by 3 basis points for our other post-retirement benefit plans, resulting from changes in our asset allocations.

Retirement plan assumptions are based on our best judgment, including consideration of current and future market conditions.

81 unchanged sentences

Real estate funds 5

Hedge funds —

Total other post-retirement benefit plan assets $ 645

12 unchanged sentences

Real estate funds 7

Hedge funds 2

Total other post-retirement benefit plan assets $ 649

5 unchanged sentences

Actual return on plan assets:

Unrealized losses, net ( 10 ) ( 12 ) — ( 22 )

Realized losses, net — — ( 1 ) ( 1 )

Unrealized gains (losses), net 23 2 ( 1 ) 24

Realized gains, net — — 3 3

Purchases, sales and settlements, net — — ( 1 ) ( 1 )

1 unchanged sentence

Actual return on plan assets:

Unrealized gains (losses), net 23 2 ( 1 ) 24

Realized gains, net — — 3 3

Unrealized (losses) gains, net ( 9 ) ( 3 ) 1 ( 11 )

Purchases, sales and settlements, net 8 — — 8

30 unchanged sentences

Specifically, changes to certain assumptions may have a significant impact on the revenue recorded during the period.

The following are primary procedures we performed to address this critical audit matter.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the assumptions used to recognize revenue for the select group of long-term contracts.

14 unchanged sentences

The selected discount rates have a significant effect on the measurement of the pension benefit obligation.

We identified the evaluation of the discount rates for certain plans’ pension benefit obligations to be a critical audit matter, due to the extent of specialized skills required to assess the discount rate assumption used to discount estimated future benefit payments.

We identified the evaluation of the discount rates for certain plans’ pension benefit obligations as a critical audit matter.

This is due to the extent of specialized skills required to assess the discount rate assumption used to discount estimated future benefit payments.

In addition, certain plans’ pension benefit obligations were sensitive to changes in this assumption.

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data