Aerospace & Defense: Pensions & postretirement benefits (ASC 715)

Non-operating pension income included in Other income, net was $176 million in 2025, $476 million in 2024 and $529 million in 2023. The decreased income in 2025 compared to 2024 was primarily due to lower expected return on plan assets. The decreased income in 2024 compared to 2023 was primarily due to lower expected return on plan assets and higher amortization of net actuarial losses, partially offset by lower interest cost.

Non-operating postretirement income included in Other income, net was $19 million in 2025, $73 million in 2024 and $58 million in 2023. The decreased income in 2025 was primarily due to lower amortization of net actuarial gains and higher interest cost. The increased income in 2024 was primarily due to lower interest cost, partially offset by amortization of prior service credits.

For additional discussion related to Postretirement Plans, see Note 18 to our Consolidated Financial Statements.

Interest and debt expense increased by $46 million in 2025 primarily due to higher average interest rates. Interest and debt expense increased by $266 million in 2024 primarily due to higher average debt balances.

For a discussion related to Income Taxes, see Note 6 to our Consolidated Financial Statements.

Total Costs and Expenses (“Cost of Sales”)

Cost of sales, for both products and services, consists primarily of raw materials, parts, sub-assemblies, labor, overhead and subcontracting costs. Our BCA segment predominantly uses program accounting to account for cost of sales. Under program accounting, cost of sales for each commercial aircraft program equals the product of (i) revenue recognized in connection with customer deliveries and (ii) the estimated cost of sales percentage applicable to the total remaining program. For long-term contracts, the amount reported as cost of sales is recognized as incurred. Substantially all contracts at our BDS segment and certain contracts at our BGS segment are long-term contracts with the U.S. government and other customers that generally extend over several years. Cost of sales for commercial spare parts is recorded at average cost.

The following table summarizes cost of sales: