FORM |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Page | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 6. | ||||||||
Three Months Ended March 31 | |||||||||||
$ in millions, except per share amounts | 2022 | 2021 | |||||||||
Sales | |||||||||||
Product | $ | $ | |||||||||
Service | |||||||||||
Total sales | |||||||||||
Operating costs and expenses | |||||||||||
Product | |||||||||||
Service | |||||||||||
General and administrative expenses | |||||||||||
Total operating costs and expenses | |||||||||||
Gain on sale of business | |||||||||||
Operating income | |||||||||||
Other (expense) income | |||||||||||
Interest expense | ( | ( | |||||||||
Non-operating FAS pension benefit | |||||||||||
Other, net | ( | ||||||||||
Earnings before income taxes | |||||||||||
Federal and foreign income tax expense | |||||||||||
Net earnings | $ | $ | |||||||||
Basic earnings per share | $ | $ | |||||||||
Weighted-average common shares outstanding, in millions | |||||||||||
Diluted earnings per share | $ | $ | |||||||||
Weighted-average diluted shares outstanding, in millions | |||||||||||
Net earnings (from above) | $ | $ | |||||||||
Other comprehensive loss, net of tax | |||||||||||
Change in unamortized prior service credit | ( | ( | |||||||||
Change in cumulative translation adjustment and other, net | ( | ( | |||||||||
Other comprehensive loss, net of tax | ( | ( | |||||||||
Comprehensive income | $ | $ |
$ in millions, except par value | March 31, 2022 | December 31, 2021 | |||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net | |||||||||||
Unbilled receivables, net | |||||||||||
Inventoried costs, net | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net of accumulated depreciation of $ | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Deferred tax assets | |||||||||||
Other non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities | |||||||||||
Trade accounts payable | $ | $ | |||||||||
Accrued employee compensation | |||||||||||
Advance payments and billings in excess of costs incurred | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt, net of current portion of $ | |||||||||||
Pension and other postretirement benefit plan liabilities | |||||||||||
Operating lease liabilities | |||||||||||
Deferred tax liabilities | |||||||||||
Other non-current liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 6) | |||||||||||
Shareholders’ equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total shareholders’ equity | |||||||||||
Total liabilities and shareholders’ equity | $ | $ |
Three Months Ended March 31 | |||||||||||
$ in millions | 2022 | 2021 | |||||||||
Operating activities | |||||||||||
Net earnings | $ | $ | |||||||||
Adjustments to reconcile to net cash used in operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation | |||||||||||
Deferred income taxes | ( | ||||||||||
Gain on sale of business | ( | ||||||||||
Net periodic pension and OPB income | ( | ( | |||||||||
Pension and OPB contributions | ( | ( | |||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable, net | ( | ( | |||||||||
Unbilled receivables, net | ( | ( | |||||||||
Inventoried costs, net | ( | ( | |||||||||
Prepaid expenses and other assets | ( | ||||||||||
Accounts payable and other liabilities | ( | ( | |||||||||
Income taxes payable, net | |||||||||||
Other, net | |||||||||||
Net cash used in operating activities | ( | ( | |||||||||
Investing activities | |||||||||||
Divestiture of IT services business | |||||||||||
Capital expenditures | ( | ( | |||||||||
Other, net | ( | ||||||||||
Net cash (used in) provided by investing activities | ( | ||||||||||
Financing activities | |||||||||||
Payments of long-term debt | ( | ||||||||||
Common stock repurchases | ( | ( | |||||||||
Cash dividends paid | ( | ( | |||||||||
Payments of employee taxes withheld from share-based awards | ( | ( | |||||||||
Other, net | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
Decrease in cash and cash equivalents | ( | ( | |||||||||
Cash and cash equivalents, beginning of year | |||||||||||
Cash and cash equivalents, end of period | $ | $ |
Three Months Ended March 31 | |||||||||||
$ in millions, except per share amounts | 2022 | 2021 | |||||||||
Common stock | |||||||||||
Beginning of period | $ | $ | |||||||||
Common stock repurchased | ( | ( | |||||||||
Shares issued for employee stock awards and options | |||||||||||
End of period | |||||||||||
Paid-in capital | |||||||||||
Beginning of period | |||||||||||
Common stock repurchased | ( | ||||||||||
Stock compensation | ( | ||||||||||
End of period | |||||||||||
Retained earnings | |||||||||||
Beginning of period | |||||||||||
Common stock repurchased | ( | ( | |||||||||
Net earnings | |||||||||||
Dividends declared | ( | ( | |||||||||
Stock compensation | ( | ||||||||||
End of period | |||||||||||
Accumulated other comprehensive loss | |||||||||||
Beginning of period | ( | ( | |||||||||
Other comprehensive loss, net of tax | ( | ( | |||||||||
End of period | ( | ( | |||||||||
Total shareholders’ equity | $ | $ | |||||||||
Cash dividends declared per share | $ | $ |
Three Months Ended March 31 | |||||||||||
$ in millions, except per share data | 2022 | 2021 | |||||||||
Revenue | $ | $ | |||||||||
Operating income | |||||||||||
Net earnings(1) | |||||||||||
Diluted earnings per share(1) |
$ in millions | March 31, 2022 | December 31, 2021 | |||||||||
Unamortized prior service credit | $ | $ | |||||||||
Cumulative translation adjustment and other, net | ( | ( | |||||||||
Total accumulated other comprehensive loss | $ | ( | $ | ( |
Shares Repurchased (in millions) | ||||||||||||||||||||||||||||||||||||||
Repurchase Program Authorization Date | Amount Authorized (in millions) | Total Shares Retired (in millions) | Average Price Per Share(1) | Date Completed | Three Months Ended March 31 | |||||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||||||||
December 4, 2018 | $ | $ | October 2021 | |||||||||||||||||||||||||||||||||||
January 25, 2021 | $ | |||||||||||||||||||||||||||||||||||||
January 24, 2022 | $ |
Three Months Ended March 31 | |||||||||||
$ in millions | 2022 | 2021 | |||||||||
Federal and foreign income tax expense | $ | $ | |||||||||
Effective income tax rate | % | % |
March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
$ in millions | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable securities | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Marketable securities valued using NAV | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total marketable securities | ||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | ( | ( | ( | ( |
$ in millions | Accrued Costs(1)(2) | Reasonably Possible Future Costs in Excess of Accrued Costs(2) | Deferred Costs(3) | |||||||||||||||||
March 31, 2022 | $ | $ | $ | |||||||||||||||||
December 31, 2021 |
Three Months Ended March 31 | |||||||||||||||||||||||
Pension Benefits | OPB | ||||||||||||||||||||||
$ in millions | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Components of net periodic benefit cost (benefit) | |||||||||||||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||||||||||
Interest cost | |||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||
Amortization of prior service (credit) cost | ( | ||||||||||||||||||||||
Net periodic benefit cost (benefit) | $ | ( | $ | ( | $ | ( | $ | ( |
Three Months Ended March 31 | |||||||||||
$ in millions | 2022 | 2021 | |||||||||
Defined benefit pension plans | $ | $ | |||||||||
OPB plans | |||||||||||
Defined contribution plans |
Three Months Ended March 31 | ||||||||||||||
in millions | 2022 | 2021 | ||||||||||||
RSRs granted | ||||||||||||||
RPSRs granted | ||||||||||||||
Grant date aggregate fair value | $ | $ |
Three Months Ended March 31 | ||||||||||||||
$ in millions | 2022 | 2021 | ||||||||||||
Minimum aggregate payout amount | $ | $ | ||||||||||||
Maximum aggregate payout amount |
Three Months Ended March 31 | |||||||||||
$ in millions | 2022 | 2021 | |||||||||
Sales | |||||||||||
Aeronautics Systems | $ | $ | |||||||||
Defense Systems | |||||||||||
Mission Systems | |||||||||||
Space Systems | |||||||||||
Intersegment eliminations | ( | ( | |||||||||
Total sales | |||||||||||
Operating income | |||||||||||
Aeronautics Systems | |||||||||||
Defense Systems | |||||||||||
Mission Systems | |||||||||||
Space Systems | |||||||||||
Intersegment eliminations | ( | ( | |||||||||
Total segment operating income | |||||||||||
FAS/CAS operating adjustment | ( | ||||||||||
Unallocated corporate (expense) income | ( | ||||||||||
Total operating income | $ | $ |
Sales by Customer Type | Three Months Ended March 31 | ||||||||||||||||
2022 | 2021 | ||||||||||||||||
$ in millions | $ | %(3) | $ | %(3) | |||||||||||||
Aeronautics Systems | |||||||||||||||||
U.S. government(1) | $ | % | $ | % | |||||||||||||
International(2) | % | % | |||||||||||||||
Other customers | % | % | |||||||||||||||
Intersegment sales | % | % | |||||||||||||||
Aeronautics Systems sales | % | % | |||||||||||||||
Defense Systems | |||||||||||||||||
U.S. government(1) | % | % | |||||||||||||||
International(2) | % | % | |||||||||||||||
Other customers | % | % | |||||||||||||||
Intersegment sales | % | % | |||||||||||||||
Defense Systems sales | % | % | |||||||||||||||
Mission Systems | |||||||||||||||||
U.S. government(1) | % | % | |||||||||||||||
International(2) | % | % | |||||||||||||||
Other customers | % | % | |||||||||||||||
Intersegment sales | % | % | |||||||||||||||
Mission Systems sales | % | % | |||||||||||||||
Space Systems | |||||||||||||||||
U.S. government(1) | % | % | |||||||||||||||
International(2) | % | % | |||||||||||||||
Other customers | % | % | |||||||||||||||
Intersegment sales | % | % | |||||||||||||||
Space Systems sales | % | % | |||||||||||||||
Total | |||||||||||||||||
U.S. government(1) | % | % | |||||||||||||||
International(2) | % | % | |||||||||||||||
Other customers | % | % | |||||||||||||||
Total Sales | $ | % | $ | % |
Sales by Contract Type | Three Months Ended March 31 | ||||||||||||||||
2022 | 2021 | ||||||||||||||||
$ in millions | $ | %(1) | $ | %(1) | |||||||||||||
Aeronautics Systems | |||||||||||||||||
Cost-type | $ | % | $ | % | |||||||||||||
Fixed-price | % | % | |||||||||||||||
Intersegment sales | |||||||||||||||||
Aeronautics Systems sales | |||||||||||||||||
Defense Systems | |||||||||||||||||
Cost-type | % | % | |||||||||||||||
Fixed-price | % | % | |||||||||||||||
Intersegment sales | |||||||||||||||||
Defense Systems sales | |||||||||||||||||
Mission Systems | |||||||||||||||||
Cost-type | % | % | |||||||||||||||
Fixed-price | % | % | |||||||||||||||
Intersegment sales | |||||||||||||||||
Mission Systems sales | |||||||||||||||||
Space Systems | |||||||||||||||||
Cost-type | % | % | |||||||||||||||
Fixed-price | % | % | |||||||||||||||
Intersegment sales | |||||||||||||||||
Space Systems sales | |||||||||||||||||
Total | |||||||||||||||||
Cost-type | % | % | |||||||||||||||
Fixed-price | % | % | |||||||||||||||
Total Sales | $ | $ |
Sales by Geographic Region | Three Months Ended March 31 | ||||||||||||||||
2022 | 2021 | ||||||||||||||||
$ in millions | $ | %(2) | $ | %(2) | |||||||||||||
Aeronautics Systems | |||||||||||||||||
United States | $ | % | $ | % | |||||||||||||
Asia/Pacific | % | % | |||||||||||||||
Europe | % | % | |||||||||||||||
All other(1) | % | % | |||||||||||||||
Intersegment sales | |||||||||||||||||
Aeronautics Systems sales | |||||||||||||||||
Defense Systems | |||||||||||||||||
United States | % | % | |||||||||||||||
Asia/Pacific | % | % | |||||||||||||||
Europe | % | % | |||||||||||||||
All other(1) | % | % | |||||||||||||||
Intersegment sales | |||||||||||||||||
Defense Systems sales | |||||||||||||||||
Mission Systems | |||||||||||||||||
United States | % | % | |||||||||||||||
Asia/Pacific | % | % | |||||||||||||||
Europe | % | % | |||||||||||||||
All other(1) | % | % | |||||||||||||||
Intersegment sales | |||||||||||||||||
Mission Systems sales | |||||||||||||||||
Space Systems | |||||||||||||||||
United States | % | % | |||||||||||||||
Asia/Pacific | % | % | |||||||||||||||
Europe | % | % | |||||||||||||||
All other(1) | % | % | |||||||||||||||
Intersegment sales | |||||||||||||||||
Space Systems sales | |||||||||||||||||
Total | |||||||||||||||||
United States | % | % | |||||||||||||||
Asia/Pacific | % | % | |||||||||||||||
Europe | % | % | |||||||||||||||
All other(1) | % | % | |||||||||||||||
Total Sales | $ | $ |
/s/ | Deloitte & Touche LLP | ||||
McLean, Virginia | |||||
April 27, 2022 |
Three Months Ended March 31 | % | ||||||||||||||||
$ in millions, except per share amounts | 2022 | 2021 | Change | ||||||||||||||
Sales | $ | 8,797 | $ | 9,157 | (4) | % | |||||||||||
Operating costs and expenses | 7,900 | 8,315 | (5) | % | |||||||||||||
Operating costs and expenses as a % of sales | 89.8 | % | 90.8 | % | |||||||||||||
Gain on sale of business | — | 1,980 | NM | ||||||||||||||
Operating income | 897 | 2,822 | NM | ||||||||||||||
Operating margin rate | 10.2 | % | 30.8 | % | |||||||||||||
Federal and foreign income tax expense | 189 | 821 | (77) | % | |||||||||||||
Effective income tax rate | 16.5 | % | 27.2 | % | |||||||||||||
Net earnings | 955 | 2,195 | (56) | % | |||||||||||||
Diluted earnings per share | $ | 6.10 | $ | 13.43 | (55) | % |
Three Months Ended March 31 | |||||||||||||||||||||||||||||
2022 | 2021 | ||||||||||||||||||||||||||||
$ in millions | Sales | IT services sales | Organic sales | Sales | IT services sales | Organic sales | Organic sales % change | ||||||||||||||||||||||
Aeronautics Systems | $ | 2,703 | $ | — | $ | 2,703 | $ | 2,990 | $ | — | $ | 2,990 | (10) | % | |||||||||||||||
Defense Systems | 1,283 | — | 1,283 | 1,562 | (106) | 1,456 | (12) | % | |||||||||||||||||||||
Mission Systems | 2,497 | — | 2,497 | 2,589 | (42) | 2,547 | (2) | % | |||||||||||||||||||||
Space Systems | 2,855 | — | 2,855 | 2,521 | (16) | 2,505 | 14 | % | |||||||||||||||||||||
Intersegment eliminations | (541) | — | (541) | (505) | 2 | (503) | |||||||||||||||||||||||
Total | $ | 8,797 | $ | — | $ | 8,797 | $ | 9,157 | $ | (162) | $ | 8,995 | (2) | % |
Three Months Ended March 31 | % | ||||||||||||||||
$ in millions | 2022 | 2021 | Change | ||||||||||||||
Net earnings | $ | 955 | $ | 2,195 | (56) | % | |||||||||||
Gain on sale of business | — | (1,980) | NM | ||||||||||||||
State tax impact1 | — | 160 | NM | ||||||||||||||
Transaction costs | — | 32 | NM | ||||||||||||||
Make-whole premium | — | 54 | NM | ||||||||||||||
Federal tax impact of items above2 | — | 614 | NM | ||||||||||||||
Transaction adjustment, net of tax | $ | — | $ | (1,120) | NM | ||||||||||||
Transaction-adjusted net earnings | $ | 955 | $ | 1,075 | (11) | % |
Three Months Ended March 31 | % | ||||||||||||||||
2022 | 2021 | Change | |||||||||||||||
Diluted EPS | $ | 6.10 | $ | 13.43 | (55) | % | |||||||||||
Gain on sale of business per share | — | (12.11) | NM | ||||||||||||||
State tax impact per share1 | — | 0.98 | NM | ||||||||||||||
Transaction costs per share | — | 0.19 | NM | ||||||||||||||
Make-whole premium per share | — | 0.33 | NM | ||||||||||||||
Federal tax impact of line items above per share2 | — | 3.75 | NM | ||||||||||||||
Transaction adjustment per share, net of tax | $ | — | $ | (6.86) | NM | ||||||||||||
Transaction-adjusted EPS | $ | 6.10 | $ | 6.57 | (7) | % |
Aeronautics Systems | Defense Systems | Mission Systems | Space Systems | |||||||||||||||||
Autonomous Systems | Battle Management & Missile Systems | Airborne Multifunction Sensors | Launch & Strategic Missiles | |||||||||||||||||
Manned Aircraft | Mission Readiness | Maritime/Land Systems & Sensors | Space | |||||||||||||||||
Navigation, Targeting & Survivability | ||||||||||||||||||||
Networked Information Solutions |
Three Months Ended March 31 | % | ||||||||||||||||
$ in millions | 2022 | 2021 | Change | ||||||||||||||
Operating income | $ | 897 | $ | 2,822 | NM | ||||||||||||
Reconciliation to segment operating income: | |||||||||||||||||
CAS pension expense | $ | (46) | $ | (123) | (63) | % | |||||||||||
FAS pension service expense | 92 | 104 | (12) | % | |||||||||||||
FAS/CAS operating adjustment | 46 | (19) | (342) | % | |||||||||||||
Gain on sale of business | — | (1,980) | NM | ||||||||||||||
IT services divestiture – unallowable state taxes and transaction costs | — | 192 | NM | ||||||||||||||
Intangible asset amortization and PP&E step-up depreciation | 60 | 65 | (8) | % | |||||||||||||
Other unallocated corporate expense | 34 | 15 | 127 | % | |||||||||||||
Unallocated corporate expense (income) | 94 | (1,708) | NM | ||||||||||||||
Segment operating income | $ | 1,037 | $ | 1,095 | (5) | % | |||||||||||
Segment operating margin rate | 11.8 | % | 12.0 | % |
Three Months Ended March 31 | |||||||||||
$ in millions | 2022 | 2021 | |||||||||
Favorable EAC adjustments | $ | 357 | $ | 348 | |||||||
Unfavorable EAC adjustments | (184) | (158) | |||||||||
Net EAC adjustments | $ | 173 | $ | 190 |
Three Months Ended March 31 | |||||||||||
$ in millions | 2022 | 2021 | |||||||||
Aeronautics Systems | $ | 103 | $ | 37 | |||||||
Defense Systems | 25 | 30 | |||||||||
Mission Systems | 57 | 88 | |||||||||
Space Systems | (8) | 37 | |||||||||
Eliminations | (4) | (2) | |||||||||
Net EAC adjustments | $ | 173 | $ | 190 |
AERONAUTICS SYSTEMS | Three Months Ended March 31 | % | |||||||||||||||
$ in millions | 2022 | 2021 | Change | ||||||||||||||
Sales | $ | 2,703 | $ | 2,990 | (10) | % | |||||||||||
Operating income | 307 | 308 | — | % | |||||||||||||
Operating margin rate | 11.4 | % | 10.3 | % |
DEFENSE SYSTEMS | Three Months Ended March 31 | % | |||||||||||||||
$ in millions | 2022 | 2021 | Change | ||||||||||||||
Sales | $ | 1,283 | $ | 1,562 | (18) | % | |||||||||||
Operating income | 155 | 177 | (12) | % | |||||||||||||
Operating margin rate | 12.1 | % | 11.3 | % |
MISSION SYSTEMS | Three Months Ended March 31 | % | |||||||||||||||
$ in millions | 2022 | 2021 | Change | ||||||||||||||
Sales | $ | 2,497 | $ | 2,589 | (4) | % | |||||||||||
Operating income | 385 | 397 | (3) | % | |||||||||||||
Operating margin rate | 15.4 | % | 15.3 | % |
SPACE SYSTEMS | Three Months Ended March 31 | % | |||||||||||||||
$ in millions | 2022 | 2021 | Change | ||||||||||||||
Sales | $ | 2,855 | $ | 2,521 | 13 | % | |||||||||||
Operating income | 261 | 276 | (5) | % | |||||||||||||
Operating margin rate | 9.1 | % | 10.9 | % |
Three Months Ended March 31 | ||||||||||||||
$ in millions | 2022 | 2021 | ||||||||||||
Segment Information: | Sales | Operating Costs and Expenses | Sales | Operating Costs and Expenses | ||||||||||
Aeronautics Systems | ||||||||||||||
Product | $ | 2,045 | $ | 1,804 | $ | 2,524 | $ | 2,274 | ||||||
Service | 593 | 533 | 422 | 369 | ||||||||||
Intersegment eliminations | 65 | 59 | 44 | 39 | ||||||||||
Total Aeronautics Systems | 2,703 | 2,396 | 2,990 | 2,682 | ||||||||||
Defense Systems | ||||||||||||||
Product | 610 | 527 | 680 | 595 | ||||||||||
Service | 474 | 425 | 697 | 624 | ||||||||||
Intersegment eliminations | 199 | 176 | 185 | 166 | ||||||||||
Total Defense Systems | 1,283 | 1,128 | 1,562 | 1,385 | ||||||||||
Mission Systems | ||||||||||||||
Product | 1,762 | 1,509 | 1,760 | 1,493 | ||||||||||
Service | 489 | 396 | 592 | 497 | ||||||||||
Intersegment eliminations | 246 | 207 | 237 | 202 | ||||||||||
Total Mission Systems | 2,497 | 2,112 | 2,589 | 2,192 | ||||||||||
Space Systems | ||||||||||||||
Product | 2,424 | 2,195 | 2,058 | 1,829 | ||||||||||
Service | 400 | 371 | 424 | 381 | ||||||||||
Intersegment eliminations | 31 | 28 | 39 | 35 | ||||||||||
Total Space Systems | 2,855 | 2,594 | 2,521 | 2,245 | ||||||||||
Segment Totals | ||||||||||||||
Total Product | $ | 6,841 | $ | 6,035 | $ | 7,022 | $ | 6,191 | ||||||
Total Service | 1,956 | 1,725 | 2,135 | 1,871 | ||||||||||
Total Segment(1) | $ | 8,797 | $ | 7,760 | $ | 9,157 | $ | 8,062 |
March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||
$ in millions | Funded | Unfunded | Total Backlog | Total Backlog | % Change in 2022 | |||||||||||||||||||||||||||
Aeronautics Systems | $ | 8,906 | $ | 8,735 | $ | 17,641 | $ | 18,277 | (3) | % | ||||||||||||||||||||||
Defense Systems | 5,404 | 737 | 6,141 | 6,349 | (3) | % | ||||||||||||||||||||||||||
Mission Systems | 9,960 | 4,055 | 14,015 | 14,306 | (2) | % | ||||||||||||||||||||||||||
Space Systems | 6,828 | 31,168 | 37,996 | 37,114 | 2 | % | ||||||||||||||||||||||||||
Total backlog | $ | 31,098 | $ | 44,695 | $ | 75,793 | $ | 76,046 | — | % |
Three Months Ended March 31 | % | ||||||||||||||||
$ in millions | 2022 | 2021 | Change | ||||||||||||||
Net earnings | $ | 955 | $ | 2,195 | (56) | % | |||||||||||
Gain on sale of business | — | (1,980) | NM | ||||||||||||||
Non-cash items(1) | (178) | 41 | (534) | % | |||||||||||||
Pension and OPB contributions | (36) | (38) | (5) | % | |||||||||||||
Changes in trade working capital | (1,254) | (310) | 305 | % | |||||||||||||
Other, net | 25 | 26 | (4) | % | |||||||||||||
Net cash used in operating activities | $ | (488) | $ | (66) | 639 | % |
Three Months Ended March 31 | % | ||||||||||||||||
$ in millions | 2022 | 2021 | Change | ||||||||||||||
Net cash used in operating activities | $ | (488) | $ | (66) | 639 | % | |||||||||||
Capital expenditures | (244) | (205) | 19 | % | |||||||||||||
Adjusted free cash flow | $ | (732) | $ | (271) | 170 | % | |||||||||||
Period | Total Number of Shares Purchased | Average Price Paid per Share(1)(3) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs ($ in millions)(2) | ||||||||||||||||||||||
January 1, 2022 - January 28, 2022 | 255,824 | $ | 396.46 | 255,824 | $ | 4,107 | ||||||||||||||||||||
January 29, 2022 - February 25, 2022 | 404,647 | NM(3) | 404,647 | 3,930 | ||||||||||||||||||||||
February 26, 2022 - April 1, 2022 | 251,153 | 447.04 | 251,153 | 3,818 | ||||||||||||||||||||||
Total | 911,624 | NM(3) | 911,624 | $ | 3,818 |
*+10.1 | |||||
*+10.2 | |||||
*+10.3 | |||||
*15 | |||||
*31.1 | |||||
*31.2 | |||||
**32.1 | |||||
**32.2 | |||||
*101 | Northrop Grumman Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted as inline XBRL (Extensible Business Reporting Language): (i) the Cover Page, (ii) Condensed Consolidated Statements of Earnings and Comprehensive Income, (iii) Condensed Consolidated Statements of Financial Position, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Changes in Shareholders’ Equity, and (vi) Notes to Condensed Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||
*104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
+ | Management contract or compensatory plan or arrangement | ||||
* | Filed with this report | ||||
** | Furnished with this report |
NORTHROP GRUMMAN CORPORATION (Registrant) | ||||||||
By: | /s/ Michael A. Hardesty | |||||||
Michael A. Hardesty Corporate Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer) |
/s/ Kathy J. Warden | ||
Kathy J. Warden | ||
Chair, Chief Executive Officer and President |
/s/ David F. Keffer | ||
David F. Keffer | ||
Corporate Vice President and Chief Financial Officer |
/s/ Kathy J. Warden | ||
Kathy J. Warden | ||
Chair, Chief Executive Officer and President |
/s/ David F. Keffer | ||
David F. Keffer | ||
Corporate Vice President and Chief Financial Officer |
Condensed Consolidated Statements of Financial Position (Unaudited) (Parentheticals) - USD ($) $ in Millions |
Mar. 31, 2022 |
Dec. 31, 2021 |
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Statement of Financial Position [Abstract] | ||
Accumulated Depreciation | $ 6,961 | $ 6,819 |
Long-term Debt, Current Maturities | $ 7 | $ 6 |
Preferred Stock, Par Value | $ 1 | $ 1 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 1 | $ 1 |
Common Stock, Shares Authorized | 800,000,000 | 800,000,000 |
Common Stock, Shares, Issued | 155,581,611 | 156,284,423 |
Common Stock, Shares, Outstanding | 155,581,611 | 156,284,423 |
Basis of Presentation (Unaudited) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION | BASIS OF PRESENTATION Principles of Consolidation and Reporting These unaudited condensed consolidated financial statements (the “financial statements”) include the accounts of Northrop Grumman Corporation and its subsidiaries and joint ventures or other investments for which we consolidate the financial results (herein referred to as “Northrop Grumman,” the “company,” “we,” “us,” or “our”). Intercompany accounts, transactions and profits are eliminated in consolidation. Investments in equity securities and joint ventures where the company has significant influence, but not control, are accounted for using the equity method. Effective January 30, 2021 (the “Divestiture date”), we completed the sale of our IT and mission support services business (the “IT services divestiture”) for $3.4 billion in cash and recorded a pre-tax gain on sale of $2.0 billion. The IT and mission support services business was comprised of the majority of the former Information Solutions and Services (IS&S) division of Defense Systems (excluding the Vinnell Arabia business); select cyber, intelligence and missions support programs, which were part of the former Cyber and Intelligence Mission Solutions (CIMS) division of Mission Systems; and the former Space Technical Services business unit of Space Systems. Operating results include sales and operating income for the IT and mission support services business prior to the Divestiture date. Sales and pre-tax profit for the IT and mission support services business were $162 million and $20 million for the three months ended March 31, 2021, respectively. These financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP” or “FAS”) and in accordance with the rules of the Securities and Exchange Commission (SEC) for interim reporting. The financial statements include adjustments of a normal recurring nature considered necessary by management for a fair presentation of the company’s unaudited condensed consolidated financial position, results of operations and cash flows. The results reported in these financial statements are not necessarily indicative of results that may be expected for the entire year. These financial statements should be read in conjunction with the information contained in the company’s 2021 Annual Report on Form 10-K. During the second quarter of 2021, we changed the presentation of the retiree benefits components in the operating cash flow section of the unaudited condensed consolidated statement of cash flows. Prior period amounts have been conformed to current period presentation and this change does not impact previously reported cash provided by operating activities. The quarterly information is labeled using a calendar convention; that is, first quarter is consistently labeled as ending on March 31, second quarter as ending on June 30 and third quarter as ending on September 30. It is the company’s long-standing practice to establish actual interim closing dates using a “fiscal” calendar, in which we close our books on a Friday near these quarter-end dates in order to normalize the potentially disruptive effects of quarterly closings on business processes. This practice is only used at interim periods within a reporting year. Accounting Estimates Preparation of the financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of sales and expenses during the reporting period. Estimates have been prepared using the most current and best available information; however, actual results could differ materially from those estimates. Revenue Recognition Contract Estimates We recognize changes in estimated contract sales or costs and the resulting changes in contract profit on a cumulative basis. Cumulative estimate-at-completion (EAC) adjustments represent the cumulative effect of the changes on current and prior periods; sales and operating margins in future periods are recognized as if the revised estimates had been used since contract inception. If it is determined that a loss is expected to result on an individual performance obligation, the entire amount of the estimable future loss, including an allocation of general and administrative expense, is charged against income in the period the loss is identified. The following table presents the effect of aggregate net EAC adjustments:
(1)Based on a 21 percent statutory tax rate. EAC adjustments on a single performance obligation can have a significant effect on the company’s financial statements. When such adjustments occur, we generally disclose the nature, underlying conditions and financial impact of the adjustments. During the three months ended March 31, 2022, we recorded a $67 million favorable EAC adjustment on the engineering, manufacturing and development phase of the B-21 program at Aeronautics Systems largely related to performance incentives. No such adjustments were material to the financial statements during the three months ended March 31, 2021. Backlog Backlog represents the future sales we expect to recognize on firm orders received by the company and is equivalent to the company’s remaining performance obligations at the end of each period. It comprises both funded backlog (firm orders for which funding is authorized and appropriated) and unfunded backlog. Unexercised contract options and indefinite delivery indefinite quantity (IDIQ) contracts are not included in backlog until the time an option or IDIQ task order is exercised or awarded. Company backlog as of March 31, 2022 was $75.8 billion. Of our March 31, 2022 backlog, we expect to recognize approximately 40 percent as revenue over the next 12 months and 60 percent as revenue over the next 24 months, with the remainder to be recognized thereafter. Contract Assets and Liabilities For each of the company’s contracts, the timing of revenue recognition, customer billings, and cash collections results in a net contract asset or liability at the end of each reporting period. Contract assets are equivalent to and reflected as Unbilled receivables in the unaudited condensed consolidated statements of financial position and are primarily related to long-term contracts where revenue recognized under the cost-to-cost method exceeds amounts billed to customers. Contract liabilities are equivalent to and reflected as Advance payments and billings in excess of costs incurred in the unaudited condensed consolidated statements of financial position. The amount of revenue recognized for the three months ended March 31, 2022 and 2021 that was included in the contract liability balances at the beginning of each year was $1.4 billion and $1.1 billion, respectively. Disaggregation of Revenue See Note 9 for information regarding the company’s sales by customer type, contract type and geographic region for each of our segments. We believe those categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Property, Plant, and Equipment During the three months ended March 31, 2022, the company acquired $46 million of internal use software through long-term financing directly with the supplier. The software was recorded in PP&E as a non-cash investing activity and the related liability was recorded in long-term debt as a non-cash financing activity. During the three months ended March 31, 2022, the company received lease incentives for landlord funded leasehold improvements of $35 million related to a Space Systems real estate lease, which were recorded in PP&E and included in non-cash investing activities. Non-cash investing activities also include capital expenditures incurred but not yet paid of $56 million and $58 million as of March 31, 2022 and 2021, respectively. Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss, net of tax, are as follows:
Related Party Transactions For all periods presented, the company had no material related party transactions. Accounting Standards Updates Accounting standards updates adopted and/or issued, but not effective until after March 31, 2022, are not expected to have a material effect on the company’s unaudited condensed consolidated financial position, annual results of operations and/or cash flows.
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Earnings Per Share, Share Repurchases and Dividends on Common Stock (Unaudited) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE, SHARE REPURCHASES AND DIVIDENDS ON COMMON STOCK | EARNINGS PER SHARE, SHARE REPURCHASES AND DIVIDENDS ON COMMON STOCK Basic Earnings Per Share We calculate basic earnings per share by dividing net earnings by the weighted-average number of shares of common stock outstanding during each period. Diluted Earnings Per Share Diluted earnings per share include the dilutive effect of awards granted to employees under stock-based compensation plans. The dilutive effect of these securities totaled 0.6 million shares and 0.4 million shares for the three months ended March 31, 2022 and 2021, respectively. Share Repurchases On December 4, 2018, the company’s board of directors authorized a share repurchase program of up to $3.0 billion of the company’s common stock (the “2018 Repurchase Program”). Repurchases under the 2018 Repurchase Program commenced in March 2020 and were completed in October 2021. On January 25, 2021, the company’s board of directors authorized a share repurchase program of up to an additional $3.0 billion in share repurchases of the company’s common stock (the “2021 Repurchase Program”). Repurchases under the 2021 Repurchase Program commenced in October 2021 upon the completion of the 2018 Repurchase Program. As of March 31, 2022, repurchases under the 2021 Repurchase Program totaled $1.2 billion; $1.8 billion remained under this share repurchase authorization. By its terms, the 2021 Repurchase Program is set to expire when we have used all authorized funds for repurchases. On January 24, 2022, the company’s board of directors authorized a new share repurchase program of up to an additional $2.0 billion in share repurchases of the company’s common stock (the “2022 Repurchase Program”). By its terms, repurchases under the 2022 Repurchase Program will commence upon completion of the 2021 Repurchase Program and will expire when we have used all authorized funds for repurchases. As of March 31, 2022, the company’s total outstanding share repurchase authorization totaled $3.8 billion. During the first quarter of 2021, the company entered into an accelerated share repurchase (ASR) agreement with Goldman Sachs & Co. LLC (Goldman Sachs) to repurchase $2.0 billion of the company’s common stock as part of the 2018 Repurchase Program. Under the agreement, we made a payment of $2.0 billion to Goldman Sachs and received an initial delivery of 5.9 million shares valued at $1.7 billion that were immediately canceled by the company. The remaining balance of $300 million was settled on June 1, 2021 with a final delivery of 0.2 million shares from Goldman Sachs. The final average purchase price was $327.29 per share. During the fourth quarter of 2021, the company entered into an ASR agreement with Goldman Sachs to repurchase $500 million of the company’s common stock as part of the 2021 Repurchase Program. Under the agreement, we made a payment of $500 million to Goldman Sachs and received an initial delivery of 1.2 million shares valued at $425 million that were immediately canceled by the company. The remaining balance of $75 million was settled on February 1, 2022 with a final delivery of 0.1 million shares from Goldman Sachs. The final average purchase price was $374.79 per share. Share repurchases take place from time to time, subject to market conditions and management’s discretion, in the open market or in privately negotiated transactions. The company retires its common stock upon repurchase and, in the periods presented, has not made any purchases of common stock other than in connection with these publicly announced repurchase programs. The table below summarizes the company’s share repurchases to date under the authorizations described above:
(1)Includes commissions paid. Dividends on Common Stock In May 2021, the company increased the quarterly common stock dividend 8 percent to $1.57 per share from the previous amount of $1.45 per share.
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Income Taxes (Unaudited) |
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES
income (FDII). The company’s first quarter 2021 ETR included benefits of $52 million for research credits and $11 million for FDII. The company has recorded unrecognized tax benefits related to our methods of accounting associated with the timing of revenue recognition and related costs and the 2017 Tax Cuts and Jobs Act, which includes related final revenue recognition regulations issued in December 2020 under IRC Section 451(b) and procedural guidance issued in August 2021. As of March 31, 2022, we have approximately $1.7 billion in unrecognized tax benefits, including $428 million related to our position on IRC Section 451(b). If these matters, including our position on IRC Section 451(b), are unfavorably resolved, there could be a material impact on our future cash flows. It is reasonably possible that within the next 12 months our unrecognized tax benefits related to these matters may increase by approximately $120 million. Our current unrecognized tax benefits, which are included in Other current liabilities in the unaudited condensed consolidated statements of financial position, were $623 million and $590 million as of March 31, 2022 and December 31, 2021, respectively, with the remainder of our unrecognized tax benefits included within Other non-current liabilities. We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. The Northrop Grumman 2017-2018 federal tax returns are currently under Internal Revenue Service (IRS) examination. The company’s 2014-2016 federal income tax returns and refund claims related to its 2007-2016 federal tax returns are currently under review by the IRS Appeals Office. In addition, legacy Orbital ATK (OATK) federal tax returns for the years ended March 31, 2014 and 2015, the nine-month transition period ended December 31, 2015 and calendar years 2016-2017 are currently under review by the IRS Appeals Office. It is reasonably possible that within the next twelve months, unrecognized tax benefits claimed in legacy OATK’s 2014 to 2017 tax years may decline by up to $110 million through administrative resolution with IRS Appeals.
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Fair Value of Financial Instruments (Unaudited) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The company holds a portfolio of marketable securities to partially fund non-qualified employee benefit plans. A portion of these securities are held in common/collective trust funds and are measured at fair value using net asset value (NAV) per share as a practical expedient; and therefore are not required to be categorized in the fair value hierarchy table below. Marketable securities are included in Other non-current assets in the unaudited condensed consolidated statements of financial position. The company’s derivative portfolio consists primarily of foreign currency forward contracts. Where model-derived valuations are appropriate, the company utilizes the income approach to determine the fair value using internal models based on observable market inputs. The following table presents the financial assets and liabilities the company records at fair value on a recurring basis identified by the level of inputs used to determine fair value:
The notional value of the company’s foreign currency forward contracts at March 31, 2022 and December 31, 2021 was $126 million and $120 million, respectively. At March 31, 2022 and December 31, 2021, no portion of the notional value was designated as a cash flow hedge. The derivative fair values and related unrealized gains/losses at March 31, 2022 and December 31, 2021 were not material. There were no transfers of financial instruments into or out of Level 3 of the fair value hierarchy during the three months ended March 31, 2022. The carrying value of cash and cash equivalents and commercial paper approximates fair value. Long-term Debt The estimated fair value of long-term debt was $13.8 billion and $15.1 billion as of March 31, 2022 and December 31, 2021, respectively. We calculated the fair value of long-term debt using Level 2 inputs, based on interest rates available for debt with terms and maturities similar to the company’s existing debt arrangements. The current portion of long-term debt is recorded in Other current liabilities in the unaudited condensed consolidated statements of financial position. On September 2, 2021, the company completed an exchange offer to eligible holders of the outstanding notes of our direct wholly owned subsidiary, Northrop Grumman Systems Corporation (“NGSC”) maturing through 2036. An aggregate principal amount of $422 million of the NGSC notes was exchanged for $422 million of Northrop Grumman Corporation notes with the same interest rates and maturity dates as the NGSC notes exchanged. Because the debt instruments are not substantially different, the exchange was treated as a debt modification for accounting purposes with no gain or loss recognized. Repayments of Senior Notes In March 2021, the company repaid $700 million of 3.50 percent unsecured notes upon maturity. In March 2021, the company redeemed $1.5 billion of 2.55 percent unsecured notes due October 2022. The company recorded a pre-tax charge of $54 million principally related to the premium paid on the redemption, which was recorded in Other, net in the unaudited condensed consolidated statements of earnings and comprehensive income.
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Investigations, Claims and Litigation (Unaudited) |
3 Months Ended |
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Mar. 31, 2022 | |
Disclosure Text Block Supplement [Abstract] | |
INVESTIGATIONS, CLAIMS AND LITIGATION | INVESTIGATIONS, CLAIMS AND LITIGATION On May 4, 2012, the company commenced an action, Northrop Grumman Systems Corp. v. United States, in the U.S. Court of Federal Claims. This lawsuit relates to an approximately $875 million firm fixed-price contract awarded to the company in 2007 by the U.S. Postal Service (USPS) for the construction and delivery of flats sequencing systems (FSS) as part of the postal automation program. The FSS were delivered. The company’s lawsuit seeks approximately $63 million for unpaid portions of the contract price, and approximately $115 million based on the company’s assertions that, through various acts and omissions over the life of the contract, the USPS adversely affected the cost and schedule of performance and materially altered the company’s obligations under the contract. The United States responded to the company’s complaint with an answer, denying most of the company’s claims, and counterclaims seeking approximately $410 million, less certain amounts outstanding under the contract. In the course of the litigation, the United States subsequently amended its counterclaim, reducing it to seek approximately $193 million. The principal counterclaim alleges that the company delayed its performance and caused damages to the USPS because USPS did not realize certain costs savings as early as it had expected. On February 3, 2020, after extensive discovery and motions practice, the parties commenced what was expected to be a seven-week trial. After COVID-19-related interruptions, trial concluded on March 5, 2021. On October 12, 2021, the parties completed post-trial briefing, and on December 8, 2021 the court held a post-trial oral argument. Although the ultimate outcome of this matter cannot be predicted or reasonably estimated at this time, the company intends to continue vigorously to pursue and defend the matter. The company is engaged in remediation activities relating to environmental conditions allegedly resulting from historic operations at the former United States Navy and Grumman facilities in Bethpage, New York. For over 20 years, the company has worked closely with the United States Navy, the United States Environmental Protection Agency, the New York State Department of Environmental Conservation (NYSDEC), the New York State Department of Health and other federal, state and local governmental authorities, to address legacy environmental conditions in Bethpage. In December 2019, the State of New York issued an Amended Record of Decision seeking to impose additional remedial requirements beyond measures the company previously had been taking; the State also communicated that it was assessing potential natural resource damages. In December 2020, the parties reached a tentative agreement regarding the steps the company will take to implement the State’s Amended Record of Decision and to resolve certain potential other claims, including for natural resource damages. On September 22, 2021, the State of New York issued for public comment a new consent decree reflecting the agreement. On December 7, 2021, the public comment period closed. We understand that the State will soon seek court approval of the consent decree. Subject to court approval, we have also reached agreements with the Department of Defense and the Bethpage Water District to resolve claims involving these parties. We are in discussions with the South Farmingdale Water District to explore whether we can also resolve their claims at this stage. We have incurred, and expect to continue to incur, as included in Note 6, substantial remediation costs related to the legacy Bethpage environmental conditions. It is also possible that applicable remediation, allocation and allowability standards and other requirements to which we are subject may continue to change, and our costs may increase materially. In addition to disputes and legal proceedings related to environmental conditions at the site (including remediation, allocation and allowability), we are a party to various, and may become a party to additional disputes and legal proceedings with individual and class action plaintiffs alleging personal injury and property damage, with insurance carriers and with other parties. We cannot at this time predict or reasonably estimate the potential cumulative outcomes or ranges of possible liability of these aggregate Bethpage matters. In June 2018, the FTC issued a Decision and Order enabling the company’s acquisition of OATK to proceed and providing generally for the company to continue to make solid rocket motors available to competing missile primes on a non-discriminatory basis. The company has taken and continues to take robust actions to help ensure compliance with the terms of the Order. Similarly, the Compliance Officer, appointed under the Order, and the FTC have taken and continue to take various actions to oversee compliance. In October 2019, the company received a civil investigative demand from the FTC requesting certain information relating to a potential issue regarding the company’s compliance with the Order in connection with a then pending missile competition. The company promptly provided information in response to the request. The company has resumed discussions with staff at the FTC regarding our response and their views on compliance issues. We cannot predict the outcome of those discussions, but we do not believe they are likely to have a material adverse effect on the company’s unaudited condensed consolidated financial position as of March 31, 2022, or its annual results of operations and/or cash flows. We believe the company has been and continues to be in compliance with the Order. The company is a party to various other investigations, lawsuits, arbitration, claims, enforcement actions and other legal proceedings, including government investigations and claims, that arise in the ordinary course of our business. The nature of legal proceedings is such that we cannot assure the outcome of any particular matter. However, based on information available to the company to date, the company does not believe that the outcome of any of these other matters pending against the company is likely to have a material adverse effect on the company’s unaudited condensed consolidated financial position as of March 31, 2022, or its annual results of operations and/or cash flows.
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Commitments and Contingencies (Unaudited) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES U.S. Government Cost Claims and Contingencies From time to time, the company is advised of claims by the U.S. government concerning certain potential disallowed costs, plus, at times, penalties and interest. When such findings are presented, the company and U.S. government representatives engage in discussions to enable the company to evaluate the merits of these claims, as well as to assess the amounts being claimed. Where appropriate, provisions are made to reflect the company’s estimated exposure for such potential disallowed costs. Such provisions are reviewed periodically using the most recent information available. The company believes it has adequately reserved for disputed amounts that are probable and reasonably estimable, and that the outcome of any such matters would not have a material adverse effect on its unaudited condensed consolidated financial position as of March 31, 2022, or its annual results of operations and/or cash flows. The U.S. government has raised questions about an interest rate assumption used by the company to determine our CAS pension expense. On June 1, 2020, the government provided written notice that the assumptions the company used during the period 2013-2019 were potentially noncompliant with CAS. We submitted a formal response on July 31, 2020, which we believe demonstrates the appropriateness of the assumptions used. On November 24, 2020, the government replied to the company’s response, disagreeing with our position and requesting additional input, which we provided on February 22, 2021 and further discussed with the government. We continue to exchange correspondence and engage with the government on this matter. The sensitivity to changes in interest rate assumptions makes it reasonably possible the outcome of this matter could have a material adverse effect on our financial position, results of operations and/or cash flows, although we are not currently able to estimate a range of any potential loss. Environmental Matters The table below summarizes the amount accrued for environmental remediation costs, management’s estimate of the amount of reasonably possible future costs in excess of accrued costs and the deferred costs expected to be recoverable through overhead charges on U.S. government contracts as of March 31, 2022 and December 31, 2021:
(1) As of March 31, 2022, $181 million is recorded in Other current liabilities and $401 million is recorded in Other non-current liabilities. (2) Estimated remediation costs are not discounted to present value. The reasonably possible future costs in excess of accrued costs do not take into consideration amounts expected to be recoverable through overhead charges on U.S. government contracts. (3) As of March 31, 2022, $156 million is deferred in Prepaid expenses and other current assets and $338 million is deferred in Other non-current assets. These amounts are evaluated for recoverability on a routine basis. Although management cannot predict whether new information gained as our environmental remediation projects progress, or as changes in facts and circumstances occur, will materially affect the estimated liability accrued, except with respect to Bethpage, we do not anticipate that future remediation expenditures associated with our currently identified projects will have a material adverse effect on the company’s unaudited condensed consolidated financial position as of March 31, 2022, or its annual results of operations and/or cash flows. With respect to Bethpage, as discussed in Note 5, in December 2019, the State of New York issued an Amended Record of Decision, seeking to impose additional remedial requirements beyond those the company previously had been taking; the State also communicated that it was assessing potential natural resource damages. In December 2020, the parties reached a tentative agreement regarding the steps the company will take to implement the State’s Amended Record of Decision and to resolve certain potential other claims, including for natural resource damages. On September 22, 2021, the State of New York issued for public comment a new consent decree reflecting the agreement. On December 7, 2021, the public comment period closed. We understand that the State will soon seek court approval of the consent decree. As discussed in Note 5, the applicable remediation standards and other requirements to which we are subject may continue to change, our costs may increase materially, and those costs may not be fully recoverable. Financial Arrangements In the ordinary course of business, the company uses standby letters of credit and guarantees issued by commercial banks and surety bonds issued principally by insurance companies to guarantee the performance on certain obligations. At March 31, 2022, there were $382 million of stand-by letters of credit and guarantees and $71 million of surety bonds outstanding. Commercial Paper The company maintains a commercial paper program that serves as a source of short-term financing with capacity to issue unsecured commercial paper notes up to $2.0 billion. At March 31, 2022, there were no commercial paper borrowings outstanding. Credit Facilities The company maintains a five-year senior unsecured credit facility in an aggregate principal amount of $2.0 billion (the “2018 Credit Agreement”) that matures in August 2024 and is intended to support the company’s commercial paper program and other general corporate purposes. Commercial paper borrowings reduce the amount available for borrowing under the 2018 Credit Agreement. At March 31, 2022, there was no balance outstanding under this facility. At March 31, 2022, the company was in compliance with all covenants under its credit agreements.
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Retirement Benefits (Unaudited) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RETIREMENT BENEFITS | RETIREMENT BENEFITS The cost to the company of its pension and other postretirement benefit (OPB) plans is shown in the following table:
Employer Contributions The company sponsors defined benefit pension and OPB plans, as well as defined contribution plans. We fund our defined benefit pension plans annually in a manner consistent with the Employee Retirement Income Security Act of 1974, as amended by the Pension Protection Act of 2006. Contributions made by the company to its retirement plans are as follows:
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Stock Compensation Plans and Other Compensation Arrangements (Unaudited) |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK COMPENSATION PLANS AND OTHER COMPENSATION ARRANGEMENTS | STOCK COMPENSATION PLANS AND OTHER COMPENSATION ARRANGEMENTS Stock Awards The following table presents the number of restricted stock rights (RSRs) and restricted performance stock rights (RPSRs) granted to employees under the company’s long-term incentive stock plan and the grant date aggregate fair value of those stock awards for the periods presented:
RSRs typically vest on the third anniversary of the grant date, while RPSRs generally vest and pay out based on the achievement of certain performance metrics over a -year period. Cash Awards The following table presents the minimum and maximum aggregate payout amounts related to cash units (CUs) and cash performance units (CPUs) granted to employees in the periods presented:
CUs typically vest and settle in cash on the third anniversary of the grant date, while CPUs generally vest and pay out in cash based on the achievement of certain performance metrics over a -year period.
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Segment Information (Unaudited) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION The following table presents sales and operating income by segment:
FAS/CAS Operating Adjustment For financial statement purposes, we account for our employee pension plans in accordance with FAS. However, the cost of these plans is charged to our contracts in accordance with applicable Federal Acquisition Regulation (FAR) and U.S. Government Cost Accounting Standards (CAS) requirements. The FAS/CAS operating adjustment reflects the difference between CAS pension expense included as cost in segment operating income and the service cost component of FAS expense included in total operating income. Unallocated Corporate (Expense) Income Unallocated corporate (expense) income includes the portion of corporate costs not considered allowable or allocable under the applicable FAR and CAS requirements, and therefore not allocated to the segments, such as changes in deferred state income taxes and a portion of management and administration, legal, environmental, compensation, retiree benefits, advertising and other corporate unallowable costs. Unallocated corporate (expense) income also includes costs not considered part of management’s evaluation of segment operating performance, such as amortization of purchased intangible assets and the additional depreciation expense related to the step-up in fair value of property, plant and equipment acquired through business combinations, as well as certain compensation and other costs. During the first quarter of 2021, the $2.0 billion pre-tax gain on the sale of our IT services business and $192 million of unallowable state taxes and transaction costs associated with the divestiture were recorded in Unallocated corporate (expense) income. Disaggregation of Revenue
(1) Sales to the U.S. government include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is the U.S. government. Each of the company’s segments derives substantial revenue from the U.S. government. (2) International sales include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is an international customer. These sales include foreign military sales contracted through the U.S. government. (3) Percentages calculated based on total segment sales.
(1)Percentages calculated based on external customer sales.
(1)All other is principally comprised of the Middle East. (2)Percentages calculated based on external customer sales.
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Summary of Significant Accounting Policies (Policies) |
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Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | These unaudited condensed consolidated financial statements (the “financial statements”) include the accounts of Northrop Grumman Corporation and its subsidiaries and joint ventures or other investments for which we consolidate the financial results (herein referred to as “Northrop Grumman,” the “company,” “we,” “us,” or “our”). Intercompany accounts, transactions and profits are eliminated in consolidation. Investments in equity securities and joint ventures where the company has significant influence, but not control, are accounted for using the equity method. |
Basis of Presentation | Effective January 30, 2021 (the “Divestiture date”), we completed the sale of our IT and mission support services business (the “IT services divestiture”) for $3.4 billion in cash and recorded a pre-tax gain on sale of $2.0 billion. The IT and mission support services business was comprised of the majority of the former Information Solutions and Services (IS&S) division of Defense Systems (excluding the Vinnell Arabia business); select cyber, intelligence and missions support programs, which were part of the former Cyber and Intelligence Mission Solutions (CIMS) division of Mission Systems; and the former Space Technical Services business unit of Space Systems. Operating results include sales and operating income for the IT and mission support services business prior to the Divestiture date. Sales and pre-tax profit for the IT and mission support services business were $162 million and $20 million for the three months ended March 31, 2021, respectively. These financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP” or “FAS”) and in accordance with the rules of the Securities and Exchange Commission (SEC) for interim reporting. The financial statements include adjustments of a normal recurring nature considered necessary by management for a fair presentation of the company’s unaudited condensed consolidated financial position, results of operations and cash flows. The results reported in these financial statements are not necessarily indicative of results that may be expected for the entire year. These financial statements should be read in conjunction with the information contained in the company’s 2021 Annual Report on Form 10-K. During the second quarter of 2021, we changed the presentation of the retiree benefits components in the operating cash flow section of the unaudited condensed consolidated statement of cash flows. Prior period amounts have been conformed to current period presentation and this change does not impact previously reported cash provided by operating activities.
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Fiscal Period Policy | The quarterly information is labeled using a calendar convention; that is, first quarter is consistently labeled as ending on March 31, second quarter as ending on June 30 and third quarter as ending on September 30. It is the company’s long-standing practice to establish actual interim closing dates using a “fiscal” calendar, in which we close our books on a Friday near these quarter-end dates in order to normalize the potentially disruptive effects of quarterly closings on business processes. This practice is only used at interim periods within a reporting year. |
Accounting Estimates | Preparation of the financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of sales and expenses during the reporting period. Estimates have been prepared using the most current and best available information; however, actual results could differ materially from those estimates. |
Revenue from Contract with Customer | Contract Estimates We recognize changes in estimated contract sales or costs and the resulting changes in contract profit on a cumulative basis. Cumulative estimate-at-completion (EAC) adjustments represent the cumulative effect of the changes on current and prior periods; sales and operating margins in future periods are recognized as if the revised estimates had been used since contract inception. If it is determined that a loss is expected to result on an individual performance obligation, the entire amount of the estimable future loss, including an allocation of general and administrative expense, is charged against income in the period the loss is identified. Contract Assets and LiabilitiesFor each of the company’s contracts, the timing of revenue recognition, customer billings, and cash collections results in a net contract asset or liability at the end of each reporting period. Contract assets are equivalent to and reflected as Unbilled receivables in the unaudited condensed consolidated statements of financial position and are primarily related to long-term contracts where revenue recognized under the cost-to-cost method exceeds amounts billed to customers. Contract liabilities are equivalent to and reflected as Advance payments and billings in excess of costs incurred in the unaudited condensed consolidated statements of financial position.
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Earnings Per Share | We calculate basic earnings per share by dividing net earnings by the weighted-average number of shares of common stock outstanding during each period.Diluted earnings per share include the dilutive effect of awards granted to employees under stock-based compensation plans. |
Investments in Marketable Securities | The company holds a portfolio of marketable securities to partially fund non-qualified employee benefit plans. A portion of these securities are held in common/collective trust funds and are measured at fair value using net asset value (NAV) per share as a practical expedient; and therefore are not required to be categorized in the fair value hierarchy table |
Derivative Financial Instruments and Hedging Activities | Where model-derived valuations are appropriate, the company utilizes the income approach to determine the fair value using internal models based on observable market inputs. |
Fair Value of Long-term Debt | We calculated the fair value of long-term debt using Level 2 inputs, based on interest rates available for debt with terms and maturities similar to the company’s existing debt arrangements. |
U.S. Government Cost Claims | From time to time, the company is advised of claims by the U.S. government concerning certain potential disallowed costs, plus, at times, penalties and interest. When such findings are presented, the company and U.S. government representatives engage in discussions to enable the company to evaluate the merits of these claims, as well as to assess the amounts being claimed. Where appropriate, provisions are made to reflect the company’s estimated exposure for such potential disallowed costs. Such provisions are reviewed periodically using the most recent information available. |
Pension and Other Postretirement Plans | We fund our defined benefit pension plans annually in a manner consistent with the Employee Retirement Income Security Act of 1974, as amended by the Pension Protection Act of 2006 |
New Accounting Pronouncements, Policy | Accounting standards updates adopted and/or issued, but not effective until after March 31, 2022, are not expected to have a material effect on the company’s unaudited condensed consolidated financial position, annual results of operations and/or cash flows. |
Basis of Presentation (Unaudited) (Tables) |
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Change in Accounting Estimate [Table Text Block] | The following table presents the effect of aggregate net EAC adjustments:
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Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss, net of tax, are as follows:
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Earnings Per Share, Share Repurchases and Dividends on Common Stock (Unaudited) (Tables) |
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Repurchases | The table below summarizes the company’s share repurchases to date under the authorizations described above:
(1)Includes commissions paid.
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Income Taxes (Unaudited) (Tables) |
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Tax Expense and Effective Income Tax Rates |
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Fair Value of Financial Instruments (Unaudited) (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value information of assets and liabilities measured at fair value on a recurring basis | The following table presents the financial assets and liabilities the company records at fair value on a recurring basis identified by the level of inputs used to determine fair value:
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Commitments and Contingencies (Unaudited) (Tables) |
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Environmental Remediation Range of Future Costs [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Remediation [Table Text Block] | The table below summarizes the amount accrued for environmental remediation costs, management’s estimate of the amount of reasonably possible future costs in excess of accrued costs and the deferred costs expected to be recoverable through overhead charges on U.S. government contracts as of March 31, 2022 and December 31, 2021:
(1) As of March 31, 2022, $181 million is recorded in Other current liabilities and $401 million is recorded in Other non-current liabilities. (2) Estimated remediation costs are not discounted to present value. The reasonably possible future costs in excess of accrued costs do not take into consideration amounts expected to be recoverable through overhead charges on U.S. government contracts. (3) As of March 31, 2022, $156 million is deferred in Prepaid expenses and other current assets and $338 million is deferred in Other non-current assets. These amounts are evaluated for recoverability on a routine basis.
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Retirement Benefits (Unaudited) (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net periodic benefit cost | The cost to the company of its pension and other postretirement benefit (OPB) plans is shown in the following table:
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Employer contributions to retirement plans | Contributions made by the company to its retirement plans are as follows:
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Stock Compensation Plans and Other Compensation Arrangements (Unaudited) (Tables) |
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonvested Restricted Stock Shares Activity [Table Text Block] | The following table presents the number of restricted stock rights (RSRs) and restricted performance stock rights (RPSRs) granted to employees under the company’s long-term incentive stock plan and the grant date aggregate fair value of those stock awards for the periods presented:
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Cash Units and Cash Performance Units Aggregate Payout Amount [Table Text Block] | The following table presents the minimum and maximum aggregate payout amounts related to cash units (CUs) and cash performance units (CPUs) granted to employees in the periods presented:
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Segment Information (Unaudited) (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales and operating income by segment | The following table presents sales and operating income by segment:
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Revenue by Major Customers by Reporting Segments |
(1) Sales to the U.S. government include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is the U.S. government. Each of the company’s segments derives substantial revenue from the U.S. government. (2) International sales include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is an international customer. These sales include foreign military sales contracted through the U.S. government. (3) Percentages calculated based on total segment sales.
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Revenue from External Customers by Contract Type |
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Revenue from External Customers by Geographic Areas |
(1)All other is principally comprised of the Middle East. (2)Percentages calculated based on external customer sales.
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Basis of Presentation (Unaudited) Sale of our IT and mission support services business (Details 1) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2021 |
Jan. 30, 2021 |
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Accounting Policies [Abstract] | ||
Sale of our IT and mission support services business | $ 3,400 | |
Pre-tax gain on sale of business | $ 2,000 | |
Pretax profit of the IT and mission support services business | 20 | |
Sales for the IT and mission support services business | $ 162 |
Basis of Presentation (Unaudited) Contract Estimates (Details 2) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
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Mar. 31, 2022 |
Mar. 31, 2021 |
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Change in Accounting Estimate [Line Items] | ||
Revenue | $ 209 | $ 202 |
Operating income | 897 | 2,822 |
Net earnings | $ 955 | $ 2,195 |
Diluted earnings per share | $ 6.10 | $ 13.43 |
Contracts Accounted for under Percentage of Completion [Member] | ||
Change in Accounting Estimate [Line Items] | ||
Operating income | $ 173 | $ 190 |
Net earnings | $ 137 | $ 150 |
Diluted earnings per share | $ 0.87 | $ 0.92 |
Basis of Presentation (Unaudited) EAC Change (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2022 |
Mar. 31, 2021 |
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Change in Accounting Estimate [Line Items] | ||
Operating income | $ 897 | $ 2,822 |
Contracts Accounted for under Percentage of Completion [Member] | ||
Change in Accounting Estimate [Line Items] | ||
Operating income | 173 | $ 190 |
Restricted Program [Member] | Contracts Accounted for under Percentage of Completion [Member] | Aeronautics Systems [Member] | ||
Change in Accounting Estimate [Line Items] | ||
Operating income | $ 67 |
Basis of Presentation (Unaudited) Backlog and Contract Assets and Liabilities (Details 3) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Change in Contract with Customer, Liability [Abstract] | ||
Contract with Customer, Liability, Revenue Recognized | $ 1,400 | $ 1,100 |
Revenue from Contract with Customer [Abstract] | ||
Revenue, Remaining Performance Obligation, Amount | $ 75,800 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Explanation | Of our March 31, 2022 backlog, we expect to recognize approximately 40 percent as revenue over the next 12 months and 60 percent as revenue over the next 24 months, with the remainder to be recognized thereafter. |
Basis of Presentation (Unaudited) Property Plant and Equipment (Details 4) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Property, Plant and Equipment [Abstract] | ||
Capital Expenditures Incurred but Not yet Paid | $ 56 | $ 58 |
Non-cash Investing Activities from Landlord Funded Leasehold Activities | 35 | |
Non-cash Investing Activities from long-term financing directly with the supplier | $ 46 |
Basis of Presentation (Unaudited) Accumulated Other Comprehensive Income (Loss) (Details 5) - USD ($) $ in Millions |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Unamortized prior service credit | $ 1 | $ 2 |
Cumulative translation adjustment and other, net | (147) | (145) |
Total accumulated other comprehensive loss | $ (146) | $ (143) |
Earnings Per Share, Share Repurchases and Dividends on Common Stock (Unaudited) Earnings Per Share and Dividends (Details 1) - $ / shares shares in Millions |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
May 31, 2021 |
May 31, 2020 |
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 0.6 | 0.4 | ||
Common stock dividends per share, declared (in dollars per share) | $ 1.57 | $ 1.45 | $ 1.57 | $ 1.45 |
Increase in quarterly common stock dividend (percent) | 8.00% |
Income Taxes (Unaudited) Effective Income Tax Rate Reconciliation (Details 1) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Income Tax Disclosure [Abstract] | ||
Federal and foreign income tax expense | $ 189 | $ 821 |
Effective income tax rate | 16.50% | 27.20% |
Effective Income Tax Rate Reconciliation, Tax Credit, Research, Amount | $ 41 | $ 52 |
Income Tax Reconciliation Deductions FDII | $ 15 | $ 11 |
Income Taxes (Unaudited) Unrecognized Tax Benefit (Details 2) - USD ($) $ in Millions |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Increase in Unrecognized Tax Benefits is Reasonably Possible | $ 120 | |
Decrease in Unrecognized Tax Benefits is Reasonably Possible | 110 | |
Unrecognized Tax Benefit Related to Methods of Accounting | 1,700 | |
Unrecognized Tax Benefits Related to Methods of Accounting - 451(b) | 428 | |
Current unrecognized tax benefits | $ 623 | $ 590 |
Amounts in Paragraphs - Fair Value of Financial Instruments (Unaudited) (Details 2) - USD ($) $ in Millions |
Mar. 31, 2022 |
Dec. 31, 2021 |
Sep. 02, 2021 |
---|---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Foreign Currency Derivative Instruments Not Designated as Hedging Instruments, Asset at Fair Value | $ 126 | $ 120 | |
Foreign Currency Cash Flow Hedge Derivative at Fair Value, Net | $ 0 | $ 0 | |
Principal Amount - NGSC Notes | $ 422 | ||
Principal Amount - Northrop Grumman Corporation Notes | $ 422 |
Fair Value of Financial Instruments (Unaudited) Long-term Debt (Details 3) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2022 |
Dec. 31, 2021 |
Mar. 01, 2021 |
|
Debt Instruments [Abstract] | ||||
Long-term Debt, Fair Value | $ 13,800 | $ 15,100 | ||
2021 Note, Face Amount | $ 700 | |||
2021 Note, Interest Rate, Stated Percentage | 3.50% | |||
2022 Note, Face Amount | $ 1,500 | |||
2022 Note, Interest Rate, Stated Percentage | 2.55% | |||
Redemption Premium | $ 54 |
Investigations, Claims and Litigation (Unaudited) (Details) - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2007 |
Mar. 31, 2022 |
Feb. 16, 2018 |
May 04, 2012 |
|
United States Postal Service | ||||
Loss Contingencies | ||||
Contract award | $ 875 | |||
False Claims Act | Threatened Litigation | United States Postal Service | ||||
Loss Contingencies | ||||
CounterclaimForDamagesSought | $ 193 | |||
Unpaid Portions of Contract Price and Direct Costs Incurred [Member] | United States Postal Service | ||||
Loss Contingencies | ||||
Unbilled Receivables, net | $ 63 | |||
Acts and Omissions with Adverse Affects on Performance and Obligations [Member] | United States Postal Service | ||||
Loss Contingencies | ||||
Gain contingency, unrecorded amount | $ 115 | |||
Maximum | United States Postal Service | ||||
Loss Contingencies | ||||
Loss Contingency, Estimate of Possible Loss | $ 410 |
Retirement Benefits (Unaudited) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Components of Net Periodic Benefit Cost | ||
Net periodic benefit cost (benefit) | $ (298) | $ (272) |
Defined contribution plan, employer contributions | 199 | 266 |
Pension Benefits | ||
Components of Net Periodic Benefit Cost | ||
Service cost | 92 | 104 |
Interest cost | 284 | 263 |
Expected return on plan assets | (660) | (628) |
Amortization of prior service credit | 0 | 2 |
Net periodic benefit cost (benefit) | (284) | (263) |
Defined benefit plan, contributions by Employer | 26 | 27 |
OPB | ||
Components of Net Periodic Benefit Cost | ||
Service cost | 2 | 4 |
Interest cost | 12 | 13 |
Expected return on plan assets | 28 | 26 |
Amortization of prior service credit | 0 | 0 |
Net periodic benefit cost (benefit) | (14) | (9) |
Defined benefit plan, contributions by Employer | $ 10 | $ 11 |
Segment Information (Unaudited) Unallocated Corporate Income (Details 5) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2021
USD ($)
| |
Segment Reporting [Abstract] | |
Pre-tax gain on sale of business | $ 2,000 |
Unallowable State Taxes and Transactions Costs from Divestiture | $ 192 |
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