FALLS CHURCH, Va., July 29, 2015 /PRNewswire/ -- Northrop
Grumman Corporation (NYSE: NOC) reported second quarter 2015 net
earnings increased 4 percent to $531
million, or $2.74 per diluted
share, from $511 million, or
$2.37 per diluted share in the second
quarter of 2014. This quarter's results include a $38 million, or $0.20 per share, net tax benefit for additional
research credits. Second quarter 2015 diluted earnings per share
are based on 193.7 million weighted average shares outstanding
compared with 215.2 million shares in the prior year period. The
company repurchased 6.8 million shares of its common stock for
$1.1 billion in the second quarter of
2015. As of June 30, 2015, the
company had repurchased 54.3 million shares toward its previously
announced goal of retiring 60 million shares of its common stock by
the end of 2015, market conditions permitting.
"Our team continues to create value through strong operational
performance and effective cash deployment. Going forward we will
continue to focus on portfolio, performance and cash deployment as
value creation drivers for our shareholders, customers and
employees. Our portfolio affords us a unique and robust opportunity
set, and we are optimistic about our future," said Wes Bush, chairman, chief executive officer and
president.
Table 1 — Financial Highlights
|
Second
Quarter
|
|
Six
Months
|
($ in millions,
except per share amounts)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Sales
|
$
|
5,896
|
|
$
|
6,039
|
|
$
|
11,853
|
|
$
|
11,887
|
Segment operating
income1
|
742
|
|
742
|
|
1,477
|
|
1,499
|
Segment operating
margin rate1
|
12.6%
|
|
12.3%
|
|
12.5%
|
|
12.6%
|
Operating
income
|
813
|
|
820
|
|
1,593
|
|
1,665
|
Operating margin
rate
|
13.8%
|
|
13.6%
|
|
13.4%
|
|
14.0%
|
Net
earnings
|
531
|
|
511
|
|
1,015
|
|
1,090
|
Diluted
EPS
|
2.74
|
|
2.37
|
|
5.15
|
|
5.01
|
Net cash provided by
(used in) operating activities
|
626
|
|
572
|
|
(28)
|
|
170
|
Free cash
flow1
|
511
|
|
456
|
|
(260)
|
|
(6)
|
|
|
|
|
|
|
|
|
Pension-adjusted
Operating Highlights
|
|
|
|
|
|
|
|
Operating
income
|
813
|
|
820
|
|
1,593
|
|
1,665
|
Net FAS/CAS pension
adjustment1
|
(81)
|
|
(110)
|
|
(164)
|
|
(220)
|
Pension-adjusted
operating income1
|
$
|
732
|
|
$
|
710
|
|
$
|
1,429
|
|
$
|
1,445
|
Pension-adjusted
operating margin rate1
|
12.4%
|
|
11.8%
|
|
12.1%
|
|
12.2%
|
|
|
|
|
|
|
|
|
Pension-adjusted
Per Share Data
|
|
|
|
|
|
|
|
Diluted
EPS
|
$
|
2.74
|
|
$
|
2.37
|
|
$
|
5.15
|
|
$
|
5.01
|
After-tax net pension
adjustment per share1
|
(0.27)
|
|
(0.33)
|
|
(0.54)
|
|
(0.66)
|
Pension-adjusted
diluted EPS1
|
$
|
2.47
|
|
$
|
2.04
|
|
$
|
4.61
|
|
$
|
4.35
|
Weighted average
shares outstanding — Basic
|
191.8
|
|
212.4
|
|
194.8
|
|
214.3
|
Dilutive effect of
stock awards and options
|
1.9
|
|
2.8
|
|
2.3
|
|
3.4
|
Weighted average
shares outstanding — Diluted
|
193.7
|
|
215.2
|
|
197.1
|
|
217.7
|
|
|
|
|
|
|
|
|
|
|
|
|
1
Non-GAAP metric — see definitions at the
end of this press release.
|
Second quarter 2015 segment operating income was unchanged from
the prior year, and segment operating margin rate increased 30
basis points to 12.6 percent. Operating income declined 1 percent
and operating margin rate increased 20 basis points to 13.8
percent.
Total backlog as of June 30, 2015,
was $37.0 billion compared with
$38.2 billion as of December 31, 2014. Second quarter 2015 new awards
totaled $4.6 billion, and new awards
for the first six months totaled $10.7
billion.
Table 2 — Cash Flow Highlights
|
Second
Quarter
|
|
Six
Months
|
($
millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Cash provided by
operating activities before after-tax discretionary pension
contributions1
|
$
|
626
|
|
$
|
572
|
|
$
|
297
|
|
$
|
170
|
After-tax
discretionary pension pre-funding impact
|
—
|
|
—
|
|
(325)
|
|
—
|
Net cash provided by
(used in) operating activities
|
$
|
626
|
|
$
|
572
|
|
$
|
(28)
|
|
$
|
170
|
Less:
|
|
|
|
|
|
|
|
Capital
expenditures
|
(115)
|
|
(116)
|
|
(232)
|
|
(176)
|
Free cash
flow1
|
$
|
511
|
|
$
|
456
|
|
$
|
(260)
|
|
$
|
(6)
|
After-tax
discretionary pension pre-funding impact
|
—
|
|
—
|
|
325
|
|
—
|
Free cash flow before
after-tax discretionary pension
contributions1
|
$
|
511
|
|
$
|
456
|
|
$
|
65
|
|
$
|
(6)
|
|
1
Non-GAAP metric — see definitions at the
end of this press release.
|
Second quarter 2015 cash provided by operating activities before
after-tax discretionary pension contributions increased to
$626 million from $572 million in the prior year period.
Changes in cash and cash equivalents include the following for
cash from operating, investing and financing activities through
June 30, 2015:
Operating
- $28 million used in
operations after $500 million
discretionary pension contribution
Investing
- $232 million used for
capital expenditures
Financing
- $1.9 billion used for
repurchase of common stock
- $600 million net proceeds
from issuance of long-term debt
- $309 million used for
dividends
2015 Guidance
The company's 2015 financial guidance is based on the spending
levels provided for in the Bipartisan Budget Act of 2013 and the
Consolidated and Further Appropriations Act of 2015. The guidance
assumes no disruption or cancellation of any of our significant
programs and no disruption or shutdown of government operations
resulting from a federal government debt ceiling breach. Guidance
for 2015 also assumes adequate appropriations and funding for the
company's programs in the first quarter of the U.S. government's
fiscal year 2016.
2015
Guidance
|
($ in millions,
except per share amounts)
|
Prior -
4/29/15
|
Current
|
|
|
|
|
|
|
|
Sales
|
23,400
|
—
|
23,800
|
23,400
|
—
|
23,800
|
|
|
|
|
|
|
|
Segment operating
margin %1
|
~12%
|
~12%
|
|
|
|
|
|
|
|
Net FAS/CAS pension
adjustment1
|
~320
|
~320
|
|
|
|
|
|
Operating margin
%
|
Mid-12%
|
Mid-12%
|
|
|
|
|
|
|
|
Effective tax rate
%
|
~32.5%
|
~32%
|
|
|
|
|
|
|
|
Diluted
EPS
|
9.40
|
—
|
9.60
|
9.55
|
—
|
9.70
|
|
|
|
|
|
|
|
Cash provided by
operating activities before after-tax discretionary pension
contributions1
|
2,400
|
—
|
2,700
|
2,600
|
—
|
2,800
|
|
|
|
|
|
|
|
Free cash
flow before after-tax discretionary pension
contributions1
|
1,700
|
—
|
2,000
|
1,900
|
—
|
2,100
|
|
|
|
|
|
|
|
1 Non-GAAP
metric - see definitions at the end of this press
release.
|
|
|
|
Updated 2015 financial guidance incorporates the impact of the
company's $500 million discretionary
pension contribution in the first quarter of 2015. In addition, the
company now expects an effective tax rate of approximately 32
percent for 2015. Guidance for 2015 operating margin rate,
effective tax rate and cash metrics incorporates year-to-date
results, as well as the effects of an anticipated change in tax
methods that is expected to improve the company's cash from
operations while increasing its unallocated corporate expense and
effective tax rate in the second half of 2015.
Table 3 — Business Results
Consolidated Sales &
Segment Operating Income1
|
Second
Quarter
|
|
|
|
Six
Months
|
|
|
($
millions)
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace
Systems
|
$
|
2,512
|
|
$
|
2,502
|
|
—
|
|
$
|
5,010
|
|
$
|
4,922
|
|
2%
|
Electronic
Systems
|
1,683
|
|
1,744
|
|
(3%)
|
|
3,364
|
|
3,388
|
|
(1%)
|
Information
Systems
|
1,485
|
|
1,562
|
|
(5%)
|
|
3,059
|
|
3,139
|
|
(3%)
|
Technical
Services
|
720
|
|
732
|
|
(2%)
|
|
1,490
|
|
1,429
|
|
4%
|
Intersegment
eliminations
|
(504)
|
|
(501)
|
|
|
|
(1,070)
|
|
(991)
|
|
|
|
5,896
|
|
6,039
|
|
(2%)
|
|
11,853
|
|
11,887
|
|
—
|
Segment operating
income1
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace
Systems
|
322
|
|
290
|
|
11%
|
|
637
|
|
614
|
|
4%
|
Electronic
Systems
|
265
|
|
291
|
|
(9%)
|
|
512
|
|
559
|
|
(8%)
|
Information
Systems
|
150
|
|
153
|
|
(2%)
|
|
316
|
|
315
|
|
—
|
Technical
Services
|
67
|
|
68
|
|
(1%)
|
|
135
|
|
136
|
|
(1%)
|
Intersegment
eliminations
|
(62)
|
|
(60)
|
|
|
|
(123)
|
|
(125)
|
|
|
Segment operating
income1
|
742
|
|
742
|
|
—
|
|
1,477
|
|
1,499
|
|
(1%)
|
Segment operating
margin rate1
|
12.6%
|
|
12.3%
|
|
30
bps
|
|
12.5%
|
|
12.6%
|
|
(10)
bps
|
Reconciliation to
operating income
|
|
|
|
|
|
|
|
|
|
|
|
Net FAS/CAS pension
adjustment1
|
81
|
|
110
|
|
(26%)
|
|
164
|
|
220
|
|
(25%)
|
Unallocated corporate
expenses
|
(9)
|
|
(31)
|
|
71%
|
|
(47)
|
|
(53)
|
|
11%
|
Other
|
(1)
|
|
(1)
|
|
—
|
|
(1)
|
|
(1)
|
|
—
|
Operating
income
|
813
|
|
820
|
|
(1%)
|
|
1,593
|
|
1,665
|
|
(4%)
|
Operating margin
rate
|
13.8%
|
|
13.6%
|
|
20
bps
|
|
13.4%
|
|
14.0%
|
|
(60)
bps
|
Interest
expense
|
(75)
|
|
(70)
|
|
(7%)
|
|
(151)
|
|
(139)
|
|
(9%)
|
Other, net
|
(2)
|
|
6
|
|
(133%)
|
|
(2)
|
|
16
|
|
(113%)
|
Earnings before
income taxes
|
736
|
|
756
|
|
(3%)
|
|
1,440
|
|
1,542
|
|
(7%)
|
Federal and foreign
income tax expense
|
(205)
|
|
(245)
|
|
16%
|
|
(425)
|
|
(452)
|
|
6%
|
Net
earnings
|
$
|
531
|
|
$
|
511
|
|
4%
|
|
$
|
1,015
|
|
$
|
1,090
|
|
(7%)
|
|
1
|
Non-GAAP metric — see
definitions at the end of this press release.
|
Second quarter 2015 operating income decreased 1 percent and
includes a $29 million decrease in
net FAS/CAS pension adjustment and a $22
million decrease in unallocated corporate expenses. The
decrease in unallocated corporate expenses is principally due to a
reduction in reserves for overhead costs.
For the second quarter of 2015, federal and foreign income tax
expense declined to $205 million from
$245 million in 2014, and the
company's effective tax rate decreased to 27.9 percent from 32.4
percent in 2014. This quarter's lower effective tax rate reflects a
$38 million net benefit for
additional research credits claimed on prior year returns.
Aerospace Systems ($ millions)
|
Second
Quarter
|
|
|
|
Six
Months
|
|
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Sales
|
$
|
2,512
|
|
$
|
2,502
|
|
0.4%
|
|
$
|
5,010
|
|
$
|
4,922
|
|
1.8%
|
Operating
income
|
322
|
|
290
|
|
11.0%
|
|
637
|
|
614
|
|
3.7%
|
Operating margin
rate
|
12.8%
|
|
11.6%
|
|
|
|
12.7%
|
|
12.5%
|
|
|
Aerospace Systems second quarter 2015 sales were slightly higher
than the prior year period due to higher volume for unmanned and
space programs, partially offset by lower volume across a number of
other programs, primarily the F/A-18 in manned military aircraft.
Higher unmanned sales reflect higher volume across a number of
programs, including Global Hawk. The increase in space programs
reflects higher volume for restricted activities.
Aerospace Systems second quarter 2015 operating income increased
11 percent and operating margin rate increased 120 basis points to
12.8 percent principally due to risk retirements on a restricted
program.
Electronic Systems ($ millions)
|
Second
Quarter
|
|
|
|
Six
Months
|
|
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Sales
|
$
|
1,683
|
|
$
|
1,744
|
|
(3.5%)
|
|
$
|
3,364
|
|
$
|
3,388
|
|
(0.7%)
|
Operating
income
|
265
|
|
291
|
|
(8.9%)
|
|
512
|
|
559
|
|
(8.4%)
|
Operating margin
rate
|
15.7%
|
|
16.7%
|
|
|
|
15.2%
|
|
16.5%
|
|
|
Electronic Systems second quarter 2015 sales decreased 3
percent, primarily due to lower volume for land and self-protection
systems and airborne tactical sensor programs, partially offset by
higher volume for navigation and maritime systems and combat
avionics programs.
Electronic Systems second quarter operating income decreased 9
percent, and operating margin rate decreased to 15.7 percent due to
business mix changes, which resulted in lower volume for mature
fixed price production programs and higher volume for cost-type
development programs, as well as less favorable performance for
land and self-protection systems.
Information Systems ($ millions)
|
Second
Quarter
|
|
|
|
Six
Months
|
|
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Sales
|
$
|
1,485
|
|
$
|
1,562
|
|
(4.9%)
|
|
$
|
3,059
|
|
$
|
3,139
|
|
(2.5%)
|
Operating
income
|
150
|
|
153
|
|
(2.0%)
|
|
316
|
|
315
|
|
0.3%
|
Operating margin
rate
|
10.1%
|
|
9.8%
|
|
|
|
10.3%
|
|
10.0%
|
|
|
Information Systems second quarter 2015 sales decreased 5
percent, primarily due to declines in command and control programs,
including lower volume for the Consolidated Afloat Network and
Enterprise Solutions program, the impact of in-theater force
reductions, and completion of the Ground Combat Vehicle
program.
Information Systems second quarter 2015 operating income
decreased 2 percent, and operating margin rate increased 30 basis
points to 10.1 percent. The increase in operating margin rate was
primarily due to program completions and improved performance
across the portfolio.
Technical Services ($ millions)
|
Second
Quarter
|
|
|
|
Six
Months
|
|
|
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|
Change
|
Sales
|
$
|
720
|
|
$
|
732
|
|
(1.6%)
|
|
$
|
1,490
|
|
$
|
1,429
|
|
4.3%
|
Operating
income
|
67
|
|
68
|
|
(1.5%)
|
|
135
|
|
136
|
|
(0.7%)
|
Operating margin
rate
|
9.3%
|
|
9.3%
|
|
|
|
9.1%
|
|
9.5%
|
|
|
Technical Services second quarter 2015 sales decreased 2 percent
principally due to lower volume for the ICBM program and completion
of the Combined Tactical Training Range program, partially offset
by higher volume for international programs.
Technical Services second quarter 2015 operating income and
margin rate were comparable to the prior year period.
About Northrop Grumman
Northrop Grumman will webcast its earnings conference call at
noon Eastern time on July 29, 2015. A live audio broadcast of the
conference call will be available on the investor relations page of
the company's website at www.northropgrumman.com.
Northrop Grumman is a leading global security company providing
innovative systems, products and solutions in unmanned systems,
cyber, C4ISR, and logistics and modernization to government and
commercial customers worldwide. Please visit
www.northropgrumman.com for more information.
Forward-Looking Statements
This press release and the information we are incorporating by
reference contains statements, other than statements of historical
fact, that constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Words such as "expect," "intend," "may," "could," "plan,"
"project," "forecast," "believe," "estimate," "guidance,"
"outlook," "anticipate," "trends," "goals," and similar expressions
generally identify these forward-looking statements.
Forward-looking statements include, among other things,
statements relating to our future financial condition, results of
operations and cash flows. Forward-looking statements are based
upon assumptions, expectations, plans and projections that we
believe to be reasonable when made, but which may change over time.
These statements are not guarantees of future performance and
inherently involve a wide range of risks and uncertainties that are
difficult to predict. Specific risks that could cause actual
results to differ materially from those expressed or implied in
these forward-looking statements include, but are not limited to,
those identified and discussed more fully in the section entitled
"Risk Factors" in our Form 10-K for the year ended December 31, 2014. They include:
- our dependence on a single customer, the U.S.
Government
- delays or reductions in appropriations for our programs
and U.S. Government funding
- investigations, claims and/or litigation
- our international business
- the improper conduct of employees, agents, business
partners or joint ventures in which we participate
- the use of accounting estimates for our
contracts
- cyber and other security threats or
disruptions
- changes in actuarial assumptions associated with our
pension and other post-retirement benefit plans
- the performance and financial viability of our suppliers
and the availability and pricing of raw materials and
components
- competition within our markets
- changes in procurement and other laws and regulations
applicable to our industry
- natural and/or environmental disasters
- the adequacy of our insurance coverage, customer
indemnifications or other liability protections
- the products and services we provide related to nuclear
operations
- changes in business conditions that could impact recorded
goodwill or the value of other long-lived assets
- our ability to develop new products and technologies and
maintain technologies, facilities, equipment and a qualified
workforce
- our ability to meet performance obligations under our
contracts
- unforeseen environmental costs
- our ability to protect our intellectual property
rights
- changes in our tax provisions or exposure to additional
tax liabilities
- the spin-off of our former Shipbuilding
business
Additional information regarding these risks and other important
factors can be found in the section entitled "Risk Factors" in our
Form 10-K for the year ended December 31,
2014 and as disclosed in this report and from time to time
in our other filings with the SEC.
You are urged to consider the limitations on, and risks
associated with, forward-looking statements and not unduly rely on
the accuracy of forward-looking statements. These forward-looking
statements speak only as of the date this report is first filed or,
in the case of any document incorporated by reference, the date of
that document. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
applicable law.
This release and the attachments also contain non-GAAP financial
measures. A reconciliation to the nearest GAAP measure and a
discussion of the company's use of these measures are included in
this release or the attachments.
SCHEDULE
1
|
NORTHROP GRUMMAN
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE
INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30
|
|
Six Months Ended
June 30
|
$ in millions,
except per share amounts
|
2015
|
2014
|
|
2015
|
2014
|
Sales
|
|
|
|
|
|
Product
|
$
|
3,509
|
$
|
3,564
|
|
$
|
6,938
|
$
|
6,972
|
Service
|
2,387
|
2,475
|
|
4,915
|
4,915
|
Total
sales
|
5,896
|
6,039
|
|
11,853
|
11,887
|
Operating costs
and expenses
|
|
|
|
|
|
Product
|
2,568
|
2,668
|
|
5,110
|
5,201
|
Service
|
1,874
|
1,961
|
|
3,874
|
3,889
|
General and
administrative expenses
|
641
|
590
|
|
1,276
|
1,132
|
Operating
income
|
813
|
820
|
|
1,593
|
1,665
|
Other (expense)
income
|
|
|
|
|
|
Interest
expense
|
(75)
|
(70)
|
|
(151)
|
(139)
|
Other, net
|
(2)
|
6
|
|
(2)
|
16
|
Earnings before
income taxes
|
736
|
756
|
|
1,440
|
1,542
|
Federal and foreign
income tax expense
|
205
|
245
|
|
425
|
452
|
Net
earnings
|
$
|
531
|
$
|
511
|
|
$
|
1,015
|
$
|
1,090
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
2.77
|
$
|
2.41
|
|
$
|
5.21
|
$
|
5.09
|
Weighted-average
common shares outstanding, in millions
|
191.8
|
212.4
|
|
194.8
|
214.3
|
|
|
|
|
|
|
Diluted earnings
per share
|
$
|
2.74
|
$
|
2.37
|
|
$
|
5.15
|
$
|
5.01
|
Weighted-average
diluted shares outstanding, in millions
|
193.7
|
215.2
|
|
197.1
|
217.7
|
|
|
|
|
|
|
Net earnings (from
above)
|
$
|
531
|
$
|
511
|
|
$
|
1,015
|
$
|
1,090
|
Other comprehensive
income
|
|
|
|
|
|
Change in unamortized
benefit plan costs, net of tax
|
96
|
35
|
|
192
|
96
|
Change in cumulative
translation adjustment
|
13
|
—
|
|
(16)
|
2
|
Other, net
|
—
|
—
|
|
(1)
|
—
|
Other comprehensive
income, net of tax
|
109
|
35
|
|
175
|
98
|
Comprehensive
income
|
$
|
640
|
$
|
546
|
|
$
|
1,190
|
$
|
1,188
|
SCHEDULE
2
|
NORTHROP GRUMMAN
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
|
|
|
|
|
|
|
$ in
millions
|
June 30,
2015
|
|
December 31,
2014
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
1,907
|
|
$
|
3,863
|
Accounts receivable,
net
|
3,151
|
|
2,806
|
Inventoried costs,
net
|
856
|
|
742
|
Deferred tax
assets
|
386
|
|
404
|
Prepaid expenses and
other current assets
|
160
|
|
369
|
Total current
assets
|
6,460
|
|
8,184
|
Property, plant and
equipment, net of accumulated depreciation of $4,728 in 2015 and
$4,611 in 2014
|
3,005
|
|
2,991
|
Goodwill
|
12,464
|
|
12,466
|
Non-current deferred
tax assets
|
1,383
|
|
1,622
|
Other non-current
assets
|
1,240
|
|
1,309
|
Total
assets
|
$
|
24,552
|
|
$
|
26,572
|
|
|
|
|
Liabilities
|
|
|
|
Trade accounts
payable
|
$
|
1,246
|
|
$
|
1,305
|
Accrued employee
compensation
|
1,097
|
|
1,441
|
Advance payments and
amounts in excess of costs incurred
|
1,370
|
|
1,713
|
Other current
liabilities
|
1,441
|
|
1,433
|
Total current
liabilities
|
5,154
|
|
5,892
|
Long-term debt, net
of current portion
|
6,417
|
|
5,925
|
Pension and other
post-retirement benefit plan liabilities
|
5,871
|
|
6,555
|
Other non-current
liabilities
|
939
|
|
965
|
Total
liabilities
|
18,381
|
|
19,337
|
|
|
|
|
Shareholders'
equity
|
|
|
|
Preferred stock, $1
par value; 10,000,000 shares authorized; no shares issued and
outstanding
|
—
|
|
—
|
Common stock, $1 par
value; 800,000,000 shares authorized; issued and outstanding:
2015—188,381,212 and 2014—198,930,240
|
188
|
|
199
|
Paid-in
capital
|
—
|
|
—
|
Retained
earnings
|
11,164
|
|
12,392
|
Accumulated other
comprehensive loss
|
(5,181)
|
|
(5,356)
|
Total shareholders'
equity
|
6,171
|
|
7,235
|
Total liabilities
and shareholders' equity
|
$
|
24,552
|
|
$
|
26,572
|
SCHEDULE
3
|
NORTHROP GRUMMAN
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
Six Months
Ended June 30
|
$ in
millions
|
2015
|
2014
|
Operating
activities
|
|
|
Net
earnings
|
$
|
1,015
|
$
|
1,090
|
Adjustments to
reconcile to net cash (used in) provided by operating
activities:
|
|
|
Depreciation and
amortization
|
216
|
217
|
Stock-based
compensation
|
47
|
51
|
Excess tax benefits
from stock-based compensation
|
(106)
|
(74)
|
Deferred income
taxes
|
139
|
21
|
Changes in assets and
liabilities:
|
|
|
Accounts receivable,
net
|
(344)
|
(577)
|
Inventoried costs,
net
|
(117)
|
(33)
|
Prepaid expenses and
other assets
|
48
|
(23)
|
Accounts payable and
other liabilities
|
(870)
|
(588)
|
Income taxes
payable
|
314
|
103
|
Retiree
benefits
|
(378)
|
8
|
Other, net
|
8
|
(25)
|
Net cash (used in)
provided by operating activities
|
$
|
(28)
|
$
|
170
|
|
|
|
Investing
activities
|
|
|
Capital
expenditures
|
(232)
|
(176)
|
Other investing
activities, net
|
(2)
|
(72)
|
Net cash used in
investing activities
|
(234)
|
(248)
|
|
|
|
Financing
activities
|
|
|
Common stock
repurchases
|
(1,916)
|
(1,301)
|
Net proceeds from
issuance of long-term debt
|
600
|
—
|
Cash dividends
paid
|
(309)
|
(280)
|
Other financing
activities, net
|
(69)
|
(15)
|
Net cash used in
financing activities
|
(1,694)
|
(1,596)
|
Decrease in cash and
cash equivalents
|
(1,956)
|
(1,674)
|
Cash and cash
equivalents, beginning of year
|
3,863
|
5,150
|
Cash and cash
equivalents, end of period
|
$
|
1,907
|
$
|
3,476
|
SCHEDULE
4
|
NORTHROP GRUMMAN
CORPORATION
TOTAL BACKLOG AND
CONTRACT AWARDS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2015
|
|
December 31,
2014
|
$ in
millions
|
|
FUNDED
1
|
|
UNFUNDED
2
|
|
TOTAL
BACKLOG
|
|
TOTAL
BACKLOG
|
Aerospace
Systems
|
|
$
|
9,975
|
|
$
|
9,005
|
|
$
|
18,980
|
|
$
|
20,063
|
Electronic
Systems
|
|
7,349
|
|
2,207
|
|
9,556
|
|
9,715
|
Information
Systems
|
|
2,787
|
|
3,026
|
|
5,813
|
|
6,115
|
Technical
Services
|
|
2,492
|
|
179
|
|
2,671
|
|
2,306
|
Total
|
|
$
|
22,603
|
|
$
|
14,417
|
|
$
|
37,020
|
|
$
|
38,199
|
|
1
|
Funded backlog
represents firm orders for which funding is authorized and
appropriated.
|
2
|
Unfunded backlog
represents firm orders for which as of the reporting date, funding
is not authorized and appropriated. Unfunded backlog excludes
unexercised contract options and indefinite delivery, indefinite
quantity (IDIQ) contracts until the time the option or IDIQ task
order is exercised or awarded.
|
|
|
|
New Awards
— Total backlog as of June 30, 2015, includes $4.6 billion
and $10.7 billion of estimated contract awards in the three and six
months ended June 30, 2015, respectively.
|
Non-GAAP Financial Measures Disclosure: Today's press
release contains non-GAAP (accounting principles generally accepted
in the United States of America)
financial measures, as defined by SEC (Securities and Exchange
Commission) Regulation G and indicated by a footnote in the text of
the release. While the company believes that these non-GAAP
financial measures may be useful in evaluating our financial
information, they should be considered as supplemental in nature
and not as a substitute for financial information prepared in
accordance with GAAP. Definitions are provided for the non-GAAP
measures and reconciliations are provided in the body of the
release. References to a "Table" in the definitions below relate to
tables in the body of this press release. Other companies may
define these measures differently or may utilize different non-GAAP
measures.
Pension-adjusted diluted EPS: Diluted EPS excluding the
after-tax net pension adjustment per share, as defined below. These
per share amounts are provided for consistency and comparability of
operating results. Management uses pension-adjusted diluted EPS, as
reconciled in Table 1, as an internal measure of financial
performance.
Cash provided by operating activities before after-tax
discretionary pension contributions: Cash provided by operating
activities before the after-tax impact of discretionary pension
contributions. Cash provided by operating activities before
discretionary pension contributions has been provided for
consistency and comparability of financial performance and is
reconciled in Table 2.
Free cash flow: Cash used in operating activities less
capital expenditures. We use free cash flow as a key factor in our
planning for, and consideration of, strategic acquisitions, stock
repurchases and the payment of dividends. This measure should not
be considered in isolation, as a measure of residual cash flow
available for discretionary purposes, or as an alternative to
operating results presented in accordance with GAAP. Free cash flow
is reconciled in Table 2.
Free cash flow before after-tax discretionary pension
contributions: Free cash flow before the after-tax impact of
discretionary pension contributions. We use free cash flow before
discretionary pension contributions as a key factor in our planning
for, and consideration of, strategic acquisitions, stock
repurchases and the payment of dividends. This measure should not
be considered in isolation, as a measure of residual cash flow
available for discretionary purposes, or as an alternative to
operating results presented in accordance with GAAP. Free cash flow
before discretionary pension contributions is reconciled in Table
2.
Net FAS/CAS pension adjustment: The difference between
pension expense charged to contracts and included as cost in
segment operating income in accordance with U.S. Government Cost
Accounting Standards (CAS) and pension expense determined in
accordance with FAS (GAAP Financial Accounting Standards. Net
FAS/CAS pension adjustment is presented in Table 1.
After-tax net pension adjustment per share: The per share
impact of the net FAS/CAS pension adjustment as defined above,
after tax at the statutory rate of 35 percent, provided for
consistency and comparability of financial performance as presented
in Table 1.
Pension-adjusted operating income: Operating income
before net FAS/CAS pension adjustment as reconciled in Table 1.
Management uses pension-adjusted operating income as an internal
measure of financial performance.
Pension-adjusted operating margin rate: Pension-adjusted
operating income as defined above, divided by sales. Management
uses pension-adjusted operating margin rate, as reconciled in Table
1, as an internal measure of financial performance.
Segment operating income: Total earnings from our four
segments including allocated pension expense recognized under CAS.
Reconciling items to operating income include the net FAS/CAS
pension adjustment, as defined above, as well as certain
corporate-level expenses, which are not considered allowable or
allocable under applicable CAS or FAR. Management uses segment
operating income, as reconciled in Table 3, as an internal measure
of financial performance.
Segment operating margin rate: Segment operating income
as defined above, divided by sales. Management uses segment
operating margin rate, as reconciled in Table 3, as an internal
measure of financial performance.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/northrop-grumman-reports-second-quarter-2015-financial-results-300120148.html
SOURCE Northrop Grumman Corporation