x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended June 30, 2009 | ||
or
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||
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE
(State or other jurisdiction of incorporation or organization) |
95-4840775
(I.R.S. Employer Identification No.) |
Yes x | No o |
Yes x | No o |
Large accelerated filer x | Accelerated filer o | |||||
Non-accelerated filer o | Smaller reporting company o | |||||
(Do not check if a smaller reporting company) |
Yes o | No x |
Page | ||||||||
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I-11 | |||||||
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I-12 | |||||||
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I-13 | |||||||
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I-20 | |||||||
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I-21 | |||||||
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I-23 | |||||||
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I-24 | |||||||
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I-27 | |||||||
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I-33 | |||||||
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I-33 | |||||||
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I-35 | |||||||
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I-35 | |||||||
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I-36 | |||||||
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I-36 | |||||||
I-40 | ||||||||
I-40 | ||||||||
II-42 | ||||||||
II-45 | ||||||||
II-45 | ||||||||
II-45 | ||||||||
II-45 | ||||||||
II-46 | ||||||||
II-47 | ||||||||
II-48 | ||||||||
EX-10.1 | ||||||||
EX-12.(A) | ||||||||
EX-15 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-32.2 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
i
Item 1. | Financial Statements |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30 | June 30 | |||||||||||||||
$ in millions, except per share amounts | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Sales and Service Revenues
|
||||||||||||||||
Product sales
|
$ | 5,420 | $ | 4,849 | $ | 9,990 | $ | 9,243 | ||||||||
Servic
e
revenues
|
3,537 | 3,779 | 7,287 | 7,109 | ||||||||||||
Total sales and service revenues
|
8,957 | 8,628 | 17,277 | 16,352 | ||||||||||||
Cost of Sales and Service Revenues
|
||||||||||||||||
Cost of product sales
|
4,345 | 3,793 | 7,980 | 7,522 | ||||||||||||
Cost of service revenues
|
3,185 | 3,232 | 6,466 | 6,025 | ||||||||||||
General and administrative expenses
|
774 | 797 | 1,523 | 1,535 | ||||||||||||
Operating income
|
653 | 806 | 1,308 | 1,270 | ||||||||||||
Other (expense) income
|
||||||||||||||||
Interest expense
|
(70 | ) | (72 | ) | (143 | ) | (149 | ) | ||||||||
Other, net
|
13 | 5 | 21 | 27 | ||||||||||||
Earnings from continuing operations before income taxes
|
596 | 739 | 1,186 | 1,148 | ||||||||||||
Federal and foreign income taxes
|
202 | 256 | 403 | 402 | ||||||||||||
Earnings from continuing operations
|
394 | 483 | 783 | 746 | ||||||||||||
Earnings from discontinued operations, net of tax
|
12 | 13 | ||||||||||||||
Net earnings
|
$ | 394 | $ | 495 | $ | 783 | $ | 759 | ||||||||
Basic Earnings Per Share
|
||||||||||||||||
Continuing operations
|
$ | 1.22 | $ | 1.42 | $ | 2.41 | $ | 2.20 | ||||||||
Discontinued operations
|
.04 | .04 | ||||||||||||||
Basic earnings per share
|
$ | 1.22 | $ | 1.46 | $ | 2.41 | $ | 2.24 | ||||||||
Weighted-average common shares outstanding, in millions
|
322.0 | 339.0 | 324.4 | 338.7 | ||||||||||||
Diluted Earnings Per Share
|
||||||||||||||||
Continuing operations
|
$ | 1.21 | $ | 1.40 | $ | 2.38 | $ | 2.15 | ||||||||
Discontinued operations
|
.04 | .04 | ||||||||||||||
Diluted earnings per share
|
$ | 1.21 | $ | 1.44 | $ | 2.38 | $ | 2.19 | ||||||||
Weighted-average diluted shares outstanding, in millions
|
325.8 | 344.1 | 328.9 | 346.7 | ||||||||||||
Net earnings (from above)
|
$ | 394 | $ | 495 | $ | 783 | $ | 759 | ||||||||
Other comprehensive income
|
||||||||||||||||
Change in cumulative translation adjustment
|
38 | 5 | 24 | 8 | ||||||||||||
Change in unrealized gain (loss) on marketable securities and
cash flow hedges, net of tax
|
28 | (1 | ) | 35 | (3 | ) | ||||||||||
Change in unamortized benefit plan costs, net of tax
|
53 | 4 | 106 | 8 | ||||||||||||
Other comprehensive income, net of tax
|
119 | 8 | 165 | 13 | ||||||||||||
Comprehensive income
|
$ | 513 | $ | 503 | $ | 948 | $ | 772 | ||||||||
I-1
June 30,
|
December 31,
|
|||||||
$ in millions | 2009 | 2008 | ||||||
Assets
|
||||||||
Cash and cash equivalents
|
$ | 1,056 | $ | 1,504 | ||||
Accounts receivable, net of progress payments
|
4,251 | 3,904 | ||||||
Inventoried costs, net of progress payments
|
1,099 | 1,003 | ||||||
Deferred tax assets
|
487 | 549 | ||||||
Prepaid expenses and other current assets
|
363 | 229 | ||||||
Total current assets
|
7,256 | 7,189 | ||||||
Property, plant, and equipment, net of accumulated depreciation
of $4,053 in 2009 and $3,803 in 2008
|
4,778 | 4,810 | ||||||
Goodwill
|
14,536 | 14,518 | ||||||
Other purchased intangibles, net of accumulated amortization of
$1,847 in 2009 and $1,795 in 2008
|
925 | 947 | ||||||
Pension and post-retirement plan assets
|
292 | 290 | ||||||
Long-term deferred tax assets
|
1,414 | 1,510 | ||||||
Miscellaneous other assets
|
947 | 933 | ||||||
Total assets
|
$ | 30,148 | $ | 30,197 | ||||
Liabilities
|
||||||||
Notes payable to banks
|
$ | 27 | $ | 24 | ||||
Current portion of long-term debt
|
493 | 477 | ||||||
Trade accounts payable
|
1,774 | 1,943 | ||||||
Accrued employees compensation
|
1,325 | 1,284 | ||||||
Advance payments and billings in excess of costs incurred
|
2,050 | 2,036 | ||||||
Other current liabilities
|
1,574 | 1,660 | ||||||
Total current liabilities
|
7,243 | 7,424 | ||||||
Long-term debt, net of current portion
|
3,348 | 3,443 | ||||||
Pension and post-retirement plan liabilities
|
5,816 | 5,823 | ||||||
Other long-term liabilities
|
1,552 | 1,587 | ||||||
Total liabilities
|
17,959 | 18,277 | ||||||
Commitments and Contingencies (Note 10)
|
||||||||
Shareholders Equity
|
||||||||
Common stock, $1 par value; 800,000,000 shares
authorized; issued and
|
||||||||
outstanding: 2009 319,156,206; 2008
327,012,663
|
319 | 327 | ||||||
Paid-in capital
|
9,243 | 9,645 | ||||||
Retained earnings
|
6,104 | 5,590 | ||||||
Accumulated other comprehensive loss
|
(3,477 | ) | (3,642 | ) | ||||
Total shareholders equity
|
12,189 | 11,920 | ||||||
Total liabilities and shareholders equity
|
$ | 30,148 | $ | 30,197 | ||||
I-2
Six Months Ended
|
||||||||
June 30 | ||||||||
$ in millions | 2009 | 2008 | ||||||
Operating Activities
|
||||||||
Sources of Cash Continuing Operations
|
||||||||
Cash received from customers
|
||||||||
Progress payments
|
$ | 3,560 | $ | 3,319 | ||||
Collections on billings
|
13,298 | 12,983 | ||||||
Other cash receipts
|
20 | 37 | ||||||
Total sources of cash continuing operations
|
16,878 | 16,339 | ||||||
Uses of Cash Continuing Operations
|
||||||||
Cash paid to suppliers and employees
|
(15,554 | ) | (14,855 | ) | ||||
Interest paid, net of interest received
|
(141 | ) | (153 | ) | ||||
Income taxes paid, net of refunds received
|
(467 | ) | (482 | ) | ||||
Excess tax benefits from stock-based compensation
|
(45 | ) | ||||||
Other cash payments
|
(58 | ) | (7 | ) | ||||
Total uses of cash continuing operations
|
(16,220 | ) | (15,542 | ) | ||||
Cash provided by continuing operations
|
658 | 797 | ||||||
Cash provided by discontinued operations
|
4 | |||||||
Net cash provided by operating activities
|
658 | 801 | ||||||
Investing Activities
|
||||||||
Proceeds from sale of business, net of cash divested
|
175 | |||||||
Payments for businesses purchased
|
(33 | ) | ||||||
Additions to property, plant, and equipment
|
(297 | ) | (277 | ) | ||||
Payments for outsourcing contract costs and related software
costs
|
(37 | ) | (77 | ) | ||||
Decrease in restricted cash
|
3 | 37 | ||||||
Other investing activities, net
|
2 | 10 | ||||||
Net cash used in investing activities
|
(362 | ) | (132 | ) | ||||
Financing Activities
|
||||||||
Net borrowings (payments) under lines of credit
|
3 | (3 | ) | |||||
Principal payments of long-term debt
|
(72 | ) | (109 | ) | ||||
Proceeds from exercises of stock options and issuances of common
stock
|
17 | 82 | ||||||
Dividends paid
|
(269 | ) | (261 | ) | ||||
Excess tax benefits from stock-based compensation
|
45 | |||||||
Common stock repurchases
|
(423 | ) | (805 | ) | ||||
Net cash used in financing activities
|
(744 | ) | (1,051 | ) | ||||
Decrease in cash and cash equivalents
|
(448 | ) | (382 | ) | ||||
Cash and cash equivalents, beginning of period
|
1,504 | 963 | ||||||
Cash and cash equivalents, end of period
|
$ | 1,056 | $ | 581 | ||||
I-3
Six Months Ended
|
||||||||
June 30 | ||||||||
$ in millions | 2009 | 2008 | ||||||
Reconciliation of Net Earnings to Net Cash Provided by
Operating Activities
|
||||||||
Net earnings
|
$ | 783 | $ | 759 | ||||
Adjustments to reconcile to net cash provided by operating
activities
|
||||||||
Depreciation
|
280 | 276 | ||||||
Amortization of assets
|
75 | 109 | ||||||
Stock-based compensation
|
55 | 83 | ||||||
Excess tax benefits from stock-based compensation
|
(45 | ) | ||||||
Pre-tax
gain
on sale of business
|
(58 | ) | ||||||
Decrease (increase) in
|
||||||||
Accounts receivable
|
(3,340 | ) | (3,691 | ) | ||||
Inventoried costs
|
(354 | ) | (304 | ) | ||||
Prepaid expenses and other current assets
|
(75 | ) | (40 | ) | ||||
Increase (decrease) in
|
||||||||
Progress payments
|
3,252 | 3,370 | ||||||
Accounts payable and accruals
|
(241 | ) | 215 | |||||
Deferred income taxes
|
61 | 121 | ||||||
Income taxes payable
|
(48 | ) | (84 | ) | ||||
Retiree benefits
|
171 | 46 | ||||||
Other non-cash transactions, net
|
39 | 40 | ||||||
Cash provided by continuing operations
|
658 | 797 | ||||||
Cash provided by discontinued operations
|
4 | |||||||
Net cash provided by operating activities
|
$ | 658 | $ | 801 | ||||
Non-Cash Investing and Financing Activities
|
||||||||
Sale of business
|
||||||||
Liabilities assumed by purchaser
|
$ | (18 | ) | |||||
Mandatorily redeemable convertible preferred stock converted
into common stock
|
$ | 350 | ||||||
I-4
Six Months Ended
|
||||||||
June 30 | ||||||||
$ in millions, except per share | 2009 | 2008 | ||||||
Common Stock
|
||||||||
At beginning of period
|
$ | 327 | $ | 338 | ||||
Common stock repurchased
|
(10 | ) | (10 | ) | ||||
Conversion of preferred stock
|
6 | |||||||
Employee stock awards and options
|
2 | 3 | ||||||
At end of period
|
319 | 337 | ||||||
Paid-in Capital
|
||||||||
At beginning of period
|
9,645 | 10,661 | ||||||
Common stock repurchased
|
(427 | ) | (795 | ) | ||||
Conversion of preferred stock
|
344 | |||||||
Employee stock awards and options
|
25 | 125 | ||||||
At end of period
|
9,243 | 10,335 | ||||||
Retained Earnings
|
||||||||
At beginning of period
|
5,590 | 7,387 | ||||||
Net earnings
|
783 | 759 | ||||||
Adoption of new accounting standards
|
(3 | ) | ||||||
Dividends declared
|
(269 | ) | (266 | ) | ||||
At end of period
|
6,104 | 7,877 | ||||||
Accumulated Other Comprehensive Loss
|
||||||||
At beginning of period
|
(3,642 | ) | (699 | ) | ||||
Other comprehensive income, net of tax
|
165 | 13 | ||||||
At end of period
|
(3,477 | ) | (686 | ) | ||||
Total shareholders equity
|
$ | 12,189 | $ | 17,863 | ||||
Cash dividends declared per share
|
$ | .83 | $ | .77 | ||||
I-5
1. | BASIS OF PRESENTATION |
June 30,
|
December 31,
|
|||||||
$ in millions | 2009 | 2008 | ||||||
Cumulative translation adjustment
|
$ | 34 | $ | 10 | ||||
Unrealized gain (loss) on marketable securities and cash flow
hedges, net of tax
|
||||||||
(expense) benefit of $(3) as of June 30, 2009 and $20 as of
December 31, 2008
|
3 | (32 | ) | |||||
Unamortized benefit plan costs, net of tax benefit of $2,286 as
of June 30, 2009 and $2,358 as of December 31, 2008
|
(3,514 | ) | (3,620 | ) | ||||
Total accumulated other comprehensive loss
|
$ | (3,477 | ) | $ | (3,642 | ) | ||
I-6
2. | NEW ACCOUNTING STANDARDS |
3. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
I-7
June 30, 2009 | December 31, 2008 | |||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
$ in millions | Amount | Value | Amount | Value | ||||||||||||
Cash surrender value of life insurance policies
|
$ | 224 | $ | 224 | $ | 240 | $ | 240 | ||||||||
Long-term debt
|
(3,841 | ) | (4,321 | ) | ( 3,920 | ) | (4,369 | ) | ||||||||
I-8
4. | COMMON STOCK DIVIDENDS AND CONVERSION OF PREFERRED STOCK |
5. | BUSINESS ACQUISITIONS AND DISPOSITIONS |
6. | SEGMENT INFORMATION |
I-9
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30 | June 30 | |||||||||||||||
$ in millions | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Sales and Service Revenues
|
||||||||||||||||
Aerospace Systems
|
$ | 2,673 | $ | 2,472 | $ | 5,129 | $ | 4,833 | ||||||||
Electronic Systems
|
1,967 | 1,665 | 3,755 | 3,210 | ||||||||||||
Information Systems
|
2,585 | 2,512 | 5,076 | 4,810 | ||||||||||||
Shipbuilding
|
1,524 | 1,688 | 2,899 | 2,952 | ||||||||||||
Technical Services
|
702 | 634 | 1,334 | 1,192 | ||||||||||||
Intersegment eliminations
|
(494 | ) | (343 | ) | (916 | ) | (645 | ) | ||||||||
Total sales and service revenues
|
$ | 8,957 | $ | 8,628 | $ | 17,277 | $ | 16,352 | ||||||||
I-10
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30 | June 30 | |||||||||||||||
$ in millions | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Operating Income
|
||||||||||||||||
Aerospace Systems
|
$ | 257 | $ | 236 | $ | 515 | $ | 488 | ||||||||
Electronic Systems
|
251 | 201 | 480 | 410 | ||||||||||||
Information Systems
|
204 | 207 | 427 | 419 | ||||||||||||
Shipbuilding
|
14 | 126 | 98 | (92 | ) | |||||||||||
Technical Services
|
43 | 42 | 80 | 71 | ||||||||||||
Intersegment eliminations
|
(50 | ) | (28 | ) | (90 | ) | (54 | ) | ||||||||
Total segment operating income
|
719 | 784 | 1,510 | 1,242 | ||||||||||||
Non-segment factors affecting operating income
|
||||||||||||||||
Unallocated income (expense)
|
21 | (43 | ) | (32 | ) | (75 | ) | |||||||||
Net pension adjustment
|
(76 | ) | 69 | (152 | ) | 128 | ||||||||||
Royalty income adjustment
|
(11 | ) | (4 | ) | (18 | ) | (25 | ) | ||||||||
Total operating income
|
$ | 653 | $ | 806 | $ | 1,308 | $ | 1,270 | ||||||||
7. | EARNINGS PER SHARE |
I-11
Shares Repurchased
|
||||||||||||||||||||
(in millions)
|
||||||||||||||||||||
Total Shares
|
Six Months Ended
|
|||||||||||||||||||
Amount Authorized
|
Average Price Per
|
Retired
|
June 30, | |||||||||||||||||
Authorization Date | (in millions) | Share | (in millions) | 2009 | 2008 | |||||||||||||||
December 19, 2007
|
$ | 2,500 | $ | 63.44 | 31.4 | 10.0 | 10.3 |
8. | GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS |
Purchase
|
||||||||||||||||||||
Balance as of
|
Accounting
|
Balance as of
|
||||||||||||||||||
$ in millions | December 31, 2008 | Transfers | Acquired | Adjustments | June 30, 2009 | |||||||||||||||
Aerospace Systems
|
$ | 3,748 | $ | 41 | $ | 5 | $ | 7 | $ | 3,801 | ||||||||||
Electronic Systems
|
2,428 | (26 | ) | 2,402 | ||||||||||||||||
Information Systems
|
6,399 | (138 | ) | 6 | 6,267 | |||||||||||||||
Shipbuilding
|
1,141 | 1,141 | ||||||||||||||||||
Technical Services
|
802 | 123 | 925 | |||||||||||||||||
Total
|
$ | 14,518 | $ | - | $ | 5 | $ | 13 | $ | 14,536 | ||||||||||
I-12
June 30, 2009 | December 31, 2008 | |||||||||||||||||||||||
Gross
|
Net
|
Gross
|
Net
|
|||||||||||||||||||||
Carrying
|
Accumulated
|
Carrying
|
Carrying
|
Accumulated
|
Carrying
|
|||||||||||||||||||
$ in millions | Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||||||
Contract and program intangibles
|
$ | 2,672 | $ | (1,770 | ) | $ | 902 | $ | 2,642 | $ | (1,720 | ) | $ | 922 | ||||||||||
Other purchased intangibles
|
100 | (77 | ) | 23 | 100 | (75 | ) | 25 | ||||||||||||||||
Total
|
$ | 2,772 | $ | (1,847 | ) | $ | 925 | $ | 2,742 | $ | (1,795 | ) | $ | 947 | ||||||||||
$ in millions | ||||
Year ending December 31
|
||||
2009 (July 1 - December 31)
|
$ | 51 | ||
2010
|
93 | |||
2011
|
56 | |||
2012
|
55 | |||
2013
|
45 | |||
2014
|
36 | |||
9. | LITIGATION |
I-13
I-14
10. | COMMITMENTS AND CONTINGENCIES |
I-15
I-16
I-17
11. | RETIREMENT BENEFITS |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||
Pension
|
Medical and
|
Pension
|
Medical and
|
|||||||||||||||||||||||||||||
Benefits | Life Benefits | Benefits | Life Benefits | |||||||||||||||||||||||||||||
$ in millions | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||||
Components of Net Periodic Benefit Cost
|
||||||||||||||||||||||||||||||||
Service cost
|
$ | 164 | $ | 180 | $ | 12 | $ | 13 | $ | 329 | $ | 361 | $ | 24 | $ | 27 | ||||||||||||||||
Interest cost
|
337 | 334 | 41 | 42 | 674 | 668 | 82 | 83 | ||||||||||||||||||||||||
Expected return on plan assets
|
(389 | ) | (474 | ) | (12 | ) | (16 | ) | (778 | ) | (949 | ) | (24 | ) | (32 | ) | ||||||||||||||||
Amortization of:
|
||||||||||||||||||||||||||||||||
Prior service cost (credit)
|
12 | 10 | (15 | ) | (16 | ) | 24 | 20 | (30 | ) | (32 | ) | ||||||||||||||||||||
Net loss from previous years
|
85 | 7 | 7 | 6 | 170 | 13 | 14 | 11 | ||||||||||||||||||||||||
Net periodic benefit cost
|
$ | 209 | $ | 57 | $ | 33 | $ | 29 | $ | 419 | $ | 113 | $ | 66 | $ | 57 | ||||||||||||||||
Defined contribution plans cost
|
$ | 78 | $ | 75 | $ | 160 | $ | 150 | ||||||||||||||||||||||||
12. | STOCK COMPENSATION PLANS |
I-18
2009 | 2008 | |||||||
Dividend yield
|
3.3 | % | 1.8 | % | ||||
Volatility rate
|
25 | % | 20 | % | ||||
Risk-free interest rate
|
1.7 | % | 2.8 | % | ||||
Expected option life (years)
|
6 | 6 |
Shares
|
Weighted-
|
Weighted-Average
|
Aggregate
|
|||||||||||||
Under Option
|
Average
|
Remaining
|
Intrinsic Value
|
|||||||||||||
(in thousands) | Exercise Price | Contractual Term | ($ in millions) | |||||||||||||
Outstanding at January 1, 2009
|
13,481 | $ | 54 | 4.2 years | $ | 18 | ||||||||||
Granted
|
2,711 | 45 | ||||||||||||||
Exercised
|
(443 | ) | 43 | |||||||||||||
Cancelled and forfeited
|
(298 | ) | 54 | |||||||||||||
Outstanding at June 30, 2009
|
15,451 | $ | 53 | 4.3 years | $ | 19 | ||||||||||
Vested and expected to vest in the
|
||||||||||||||||
future at June 30, 2009
|
15,254 | $ | 53 | 4.1 years | $ | 19 | ||||||||||
Exercisable at June 30, 2009
|
11,551 | $ | 52 | 3.4 years | $ | 17 | ||||||||||
Available for grant at June 30, 2009
|
8,734 | |||||||||||||||
I-19
Stock
|
Weighted-Average
|
Weighted-Average
|
||||||||||
Awards
|
Grant Date
|
Remaining
|
||||||||||
(in thousands) | Fair Value | Contractual Term | ||||||||||
Outstanding at January 1, 2009
|
3,276 | $ | 75 | 1.4 years | ||||||||
Granted (including performance adjustment on shares vested)
|
2,354 | 45 | ||||||||||
Vested
|
(185 | ) | 66 | |||||||||
Forfeited
|
(173 | ) | 71 | |||||||||
Outstanding at June 30, 2009
|
5,272 | $ | 62 | 1.7 years | ||||||||
Available for grant at June 30, 2009
|
2,251 | |||||||||||
13. | INCOME TAXES |
I-20
I-37
I-38
I-39
I-40
Item 2.
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
I-22
Table of Contents
n
LHD 8 delivered to the
U.S. Navy.
n
New York
(LPD 21) completed builders sea
trials.
n
USS Carl Vinson
(CVN 70) completed initial sea
trials.
n
The Department of Justice microelectronics claim and the
companys claim against the U.S. Government for the
termination of the TSSAM program were jointly settled at no cost
to the
company.
n
Backlog reduced by $5.1 billion due to termination for
convenience of the Kinetic Energy Interceptor
program see
page 33.
n
Quarterly common stock dividend increased from $.40 per share to
$.43 per
share.
n
Voluntary pension pre-funding contributions totaled
$214 million.
n
The company repurchased 10 million common shares for
$437 million.
n
The company streamlined its organizational structure from seven
to five operating
segments.
n
The company realigned certain logistics, services, and technical
support programs and assets from Information Systems and
Electronic Systems to Technical
Services.
I-23
Table of Contents
Three Months Ended
Six Months Ended
June 30
June 30
$ in millions, except per
share
2009
2008
2009
2008
$
8,957
$
8,628
$
17,277
$
16,352
7,530
7,025
14,446
13,547
774
797
1,523
1,535
653
806
1,308
1,270
(70
)
(72
)
(143
)
(149
)
13
5
21
27
202
256
403
402
1.21
1.40
2.38
2.15
830
607
658
801
Three Months Ended
Six Months Ended
June 30
June 30
$ in millions
2009
2008
2009
2008
$
5,420
$
4,849
$
9,990
$
9,243
3,537
3,779
7,287
7,109
$
8,957
$
8,628
$
17,277
$
16,352
Three Months Ended
Six Months Ended
June 30
June 30
$ in millions
2009
2008
2009
2008
$
4,345
$
3,793
$
7,980
$
7,522
80.2
%
78.2
%
79.9
%
81.4
%
3,185
3,232
6,466
6,025
90.0
%
85.5
%
88.7
%
84.8
%
774
797
1,523
1,535
8.6
%
9.2
%
8.8
%
9.4
%
$
8,304
$
7,822
$
15,969
$
15,082
I-24
Table of Contents
Three Months Ended
Six Months Ended
June 30
June 30
$ in millions
2009
2008
2009
2008
$
719
$
784
$
1,510
$
1,242
21
(43
)
(32
)
(75
)
(76
)
69
(152
)
128
(11
)
(4
)
(18
)
(25
)
$
653
$
806
$
1,308
$
1,270
I-25
Table of Contents
I-26
Table of Contents
Three Months Ended
Six Months Ended
June 30
June 30
$ in millions
2009
2008
2009
2008
$
2,673
$
2,472
$
5,129
$
4,833
1,967
1,665
3,755
3,210
2,585
2,512
5,076
4,810
1,524
1,688
2,899
2,952
702
634
1,334
1,192
(494
)
(343
)
(916
)
(645
)
$
8,957
$
8,628
$
17,277
$
16,352
$
257
$
236
$
515
$
488
251
201
480
410
204
207
427
419
14
126
98
(92
)
43
42
80
71
(50
)
(28
)
(90
)
(54
)
$
719
$
784
$
1,510
$
1,242
I-27
Table of Contents
Three Months Ended
Six Months Ended
June 30
June 30
$ in millions
2009
2008
2009
2008
$
2,673
$
2,472
$
5,129
$
4,833
257
236
515
488
9.6
%
9.5
%
10.0
%
10.1
%
I-28
Table of Contents
Three Months Ended
Six Months Ended
June 30
June 30
$ in millions
2009
2008
2009
2008
$
1,967
$
1,665
$
3,755
$
3,210
251
201
480
410
12.8
%
12.1
%
12.8
%
12.8
%
I-29
Table of Contents
Three Months Ended
Six Months Ended
June 30
June 30
$ in millions
2009
2008
2009
2008
$
2,585
$
2,512
$
5,076
$
4,810
204
207
427
419
7.9
%
8.2
%
8.4
%
8.7
%
I-30
Table of Contents
Three Months Ended June 30
Six Months Ended June 30
$ in millions
2009
2008
2009
2008
$
1,524
$
1,688
$
2,899
$
2,952
14
126
98
(92
)
0.9
%
7.5
%
3.4
%
3.1
%
I-31
Table of Contents
Three Months Ended June 30
Six Months Ended June 30
$ in millions
2009
2008
2009
2008
$
702
$
634
$
1,334
$
1,192
43
42
80
71
6.1
%
6.6
%
6.0
%
6.0
%
I-32
Table of Contents
June 30, 2009
December 31, 2008
Total
Total
$ in millions
Funded
Unfunded
Backlog
Funded
Unfunded
Backlog
$
8,408
$
16,340
$
24,748
$
7,648
$
22,883
$
30,531
7,962
2,809
10,771
8,391
2,124
10,515
4,934
4,677
9,611
5,310
4,672
9,982
12,587
8,426
21,013
14,205
8,148
22,353
1,836
2,383
4,219
1,840
2,831
4,671
$
35,727
$
34,635
$
70,362
$
37,394
$
40,658
$
78,052
I-33
Table of Contents
Three Months Ended June 30
Six Months Ended June 30
$ in millions
2009
2008
2009
2008
$
394
$
495
$
783
$
759
216
317
471
541
176
15
171
46
223
27
(719
)
(407
)
(179
)
(196
)
(48
)
(84
)
(58
)
(58
)
7
4
$
830
$
607
$
658
$
801
(1)
Includes depreciation and amortization, stock-based compensation
expense, and deferred income taxes.
Three Months Ended June 30
Six Months Ended June 30
$ in millions
2009
2008
2009
2008
$
830
$
607
$
658
$
801
(135
)
(134
)
(297
)
(277
)
(19
)
(42
)
(37
)
(77
)
$
676
$
431
$
324
$
447
I-34
Table of Contents
n
impact of domestic and global economic uncertainties on
financial markets, access to capital, value of goodwill or other
assets;
n
changes in government funding, including with respect to the
2010 budget of the
U.S. Government;
n
changes in statutes and regulations impacting the companys
eligibility to perform work that might give rise to
organizational conflicts of
interest;
n
future
revenues;
n
expected program performance and cash
flows;
n
compliance with regulatory, technical, operational, and quality
requirements;
n
returns or losses on pension plan assets and variability of
pension actuarial and related assumptions and regulatory
requirements;
n
the outcome of litigation, claims, appeals, bid protests, and
investigations;
n
hurricane-related insurance recoveries;
n
environmental remediation;
n
acquisitions and divestitures of businesses;
n
performance issues with, and financial viability of, joint
ventures, and other business arrangements;
n
performance issues with, and financial viability of, key
suppliers and subcontractors;
n
product performance and the successful execution of internal
plans;
I-35
Table of Contents
n
successful negotiation of contracts with labor unions;
n
the availability and retention of skilled labor;
n
allowability and allocability of costs under
U.S. Government contracts;
n
effective tax rates and timing and amounts of tax payments;
n
the results of any audit or appeal process with the Internal
Revenue Service; and
n
anticipated costs of capital investments.
Program Name
Program Description
African Contingency
Operations Training
Assistance (ACOTA)
Provide peacekeeping training to militaries in African nations
via the Department of State. The program is designed to improve
the ability of African governments to respond quickly to crises
by providing selected militaries with the training and equipment
required to execute humanitarian or peace support operations.
Air Mobility Tanker
Program to replace the U.S. Air Force aerial refueling tanker
fleet.
Airborne and
Maritime/Fixed Stations
Joint Tactical Radio
Systems (AMF JTRS)
AMF JTRS will develop a communications capability that includes
two software-defined, multifunction radio form factors for use
by the U.S. Department of Defense and potential use by the U.S.
Department of Homeland Security. Northrop Grumman has the
responsibility for leading the Joint Tactical Radio (JTR)
integrated product team and co-development of the JTR small
airborne (JTR-SA) hardware and software. The company will also
provide common JTR software for two JTR form factors, wideband
power amplifiers, and the use of Northrop Grummans
Advanced Communications Test Center in San Diego as the
integration and test site for the JTR-SA radio, waveforms and
ancillaries.
Airborne Laser (ABL)
Design and develop the systems Chemical Oxygen Iodine
Laser (COIL) and the Beacon Illuminator Laser (BILL) for Missile
Defense Agencys Airborne Laser, providing a capability to
destroy boost-phase missiles at very long range.
I-36
Table of Contents
Program Name
Program Description
Battlefield Airborne
Communications Node
(BACN)
Install the BACN system in three Bombardier BD-700 Global
Express aircraft for immediate fielding and install the BACN
system into two Global Hawk Block 20 unmanned aerial
vehicles.
Battle Command Training
Operates the computer-based simulations, models and automated
tools used for the collection and analysis of information used
by U.S. Army Battle Command Training Program.
B-2 Stealth Bomber
Maintain strategic, long-range multi-role bomber with
war-fighting capability that combines long range, large payload,
all-aspect stealth, and near-precision weapons in one aircraft.
Broad Area Maritime
Surveillance (BAMS)
Unmanned Aircraft System
A maritime derivative of the Global Hawk that provides
persistent maritime Intelligence, Surveillance, and
Reconnaissance (ISR) data collection and dissemination
capability to the Maritime Patrol and Reconnaissance Force.
Counter Narco Terrorism
Programs and Operations
(CNTPO)
Counter Narco Terrorism Programs and Operations provide support
to the U.S. Government, coalition partners, and host nations in
Technology Development and Application Support; Training;
Operations and Logistics Support; and Professional and Executive
Support. The program provides equipment and services to
research, develop, upgrade, install, fabricate, test, deploy,
operate, train, maintain, and support new and existing federal
Government platforms, systems, subsystems, items, and
host-nation support initiatives.
Deepwater Modernization
Program
Multi-year program to modernize and replace the Coast
Guards aging ships and aircraft, and improve command and
control and logistics systems. The company has design and
production responsibility for surface ships.
DDG 51
Build Aegis guided missile destroyer, equipped for conducting
anti-air, anti-submarine, anti-surface and strike operations.
E-2
Hawkeye
The U.S. Navys airborne battle management command and
control mission system platform providing airborne early warning
detection, identification, tracking, targeting, and
communication capabilities. The company is developing the next
generation capability including radar, mission computer,
vehicle, and other system enhancements, to support the U.S Naval
Battle Groups and Joint Forces, called the E-2D. Recently the
USN approved Milestone C for Low Rate Initial Production.
Table of Contents
Program Name
Program Description
EA-6B
The EA-6B (Prowler) primary mission is to jam enemy radar and
communications, thereby preventing them from directing hostile
surface-to-air missiles at assets the Prowler protects. When
equipped with the improved ALQ-218 receiver and the next
generation ICAP III (Increased Capability) Airborne Electronic
Attack (AEA) suite the Prowler is able to provide rapid
detection, precise classification, and highly accurate
geolocation of electronic emissions and counter modern,
frequency-hopping radars. A derivative/variant of the EA-6B
ICAP III mission system is also being incorporated into the
F/A-18 platform and designated the EA-18G.
F-35 Development (Joint
Strike Fighter)
Design, integration, and/or development of the center fuselage
and weapons bay, communications, navigations, identification
subsystem, systems engineering, and mission systems software as
well as provide ground and flight test support, modeling,
simulation activities, and training courseware.
F/A-18
Produce the center and aft fuselage sections, twin vertical
stabilizers, and integrate all associated subsystems for the
F/A-18 Hornet strike fighters.
Gerald R. Ford-
class Aircraft Carrier
Design and construction for the new class of Aircraft Carriers.
Global Hawk
High-Altitude
Long-Endurance (HALE)
Systems
Provide the Global Hawk HALE unmanned aerial system for use in
the global war on terror and has a central role in Intelligence,
Reconnaissance, and Surveillance supporting operations in
Afghanistan and Iraq.
Global Linguists Solutions (GLS)
Provide interpretation, translation and linguist services in
support of Operation Iraqi Freedom.
Guardrail Common Sensor
System-Improved
Sole source IDIQ contract which will encompass efforts for the
upgrade and modernization of the current field Guardrail systems.
Hunter CLS
Operate, maintain, train and sustain the multi-mission Hunter
Unmanned Aerial System in addition to deploying Hunter support
teams.
Intercontinental Ballistic Missile (ICBM)
Maintain readiness of the nations ICBM weapon system.
Integrated Base Defense
Security System (IBDSS)
Integrated Based Defense Security System contract is an IDIQ
acquisition vehicle to provide the USAF and other DoD customers
with integrated base defense security solutions, utilizing
comprehensive and integrated technology to satisfy a wide array
of security concerns both CONUS and OCONUS.
Joint Base Operations Support (JBOSC)
Provides all infrastructure support needed for launch and base
operations at the NASA Spaceport.
Table of Contents
Program Name
Program Description
Joint Surveillance
Target Attack Radar
System (Joint STARS)
Joint STARS detects, locates, classifies, tracks and targets
hostile ground movements, communicating real-time information
through secure data links with U.S. Air Force and Army command
posts.
Joint Warfighting Center Support (JWFC)
Provide non-personal general and technical support to the
USJFCOM Joint Force Trainer / Joint Warfighting Center to ensure
the successful worldwide execution of the Joint Training and
Transformation missions.
Kinetic Energy Interceptor (KEI)
Develop mobile missile-defense system with the unique capability
to destroy a hostile missile during its boost, ascent or
midcourse phase of flight.
Large Aircraft Infrared
Counter-measures
Indefinite Delivery and
Indefinite Quantity (LAIRCM IDIQ)
Infrared countermeasures systems for C-17 and C-130 aircraft.
The IDIQ contract will further allow for the purchase of LAIRCM
hardware for foreign military sales and other government
agencies.
LHA
Detail design and construct amphibious assault ships for use as
an integral part of joint, interagency, and multinational
maritime forces.
LHD
The multipurpose amphibious assault ship LHD is the centerpiece
of an Expeditionary Strike Group (ESG). In wartime, these ships
deploy very large numbers of troops and equipment to assault
enemy-held beaches. Like LPD, only larger, in times of peace,
these ships have ample space for non-combatant evacuations and
other humanitarian missions. The program of record is 8 ships of
which Makin Island (LHD 8) is the last.
LPD
The LPD 17 San Antonio Class is the newest addition to the
U.S. Navys 21st Century amphibious assault force. The
684-foot-long, 105-foot-wide ships have a crew of 360 and are
used to transport and land 700 to 800 Marines, their equipment,
and supplies by embarked air cushion or conventional landing
craft and assault vehicles, augmented by helicopters or other
rotary wing aircraft. The ships will support amphibious assault,
special operations, or expeditionary warfare & humanitarian
missions.
MESA Wedgetail
Joint program with Boeing to supply MESA radar antenna for
AEW&C aircraft.
New York City Wireless (NYCWiN)
Provide New York Citys broadband public-safety wireless
network.
National Polar-orbiting
Operational
Environmental Satellite
System (NPOESS)
Design, develop, integrate, test, and operate an integrated
system comprised of two satellites with mission sensors and
associated ground elements for providing global and regional
weather and environmental data.
Table of Contents
Program Name
Program Description
Space Based Infrared System (SBIRS)
Space-based surveillance systems for missile warning, missile
defense, battlespace characterization and technical
intelligence. SBIRS will meet United Stated infrared space
surveillance needs through the next 2-3 decades.
Trailer Mounted Support
System (TMSS)
Trailer Mounted Support System is a key part of the Armys
SICPS Program providing workspace, power distribution, lighting,
environmental conditioning (heating and cooling) tables and a
common grounding system for commanders and staff at all echelons.
Unmanned Combat Air
System Carrier
Demonstration (UCAS-D)
A development / demonstration contract that will design, build
and test two demonstration vehicles that will conduct a carrier
demonstration. The technology demonstrations are to show carrier
control area operations, catapult launch, and an arrested
landing of a low observable unmanned aerial vehicle.
USS Carl Vinson
Refueling and complex overhaul of the nuclear-powered aircraft
carrier
USS Carl Vinson
(CVN 70).
Virginia-class Submarines
Construct the newest attack submarine in conjunction with
Electric Boat.
Item 3.
Quantitative
and Qualitative Disclosures about Market Risk
Item 4.
Controls
and Procedures
Table of Contents
I-41
Table of Contents
Item 1.
Legal
Proceedings
II-43
Table of Contents
II-44
Table of Contents
Item 1A.
Risk
Factors
Item 2.
Unregistered
Sales of Equity Securities and Use of Proceeds
Total Numbers of
Shares Purchased as
Approximate Dollar Value
Total Number
Part of Publicly
of Shares that May Yet
of Shares
Average Price
Announced Plans or
Be Purchased Under the
Period
Purchased
(1)
Paid per
Share
(2)
Programs
Plans or Programs
April 1 through April 30, 2009
1,925,172
$
45.94
1,925,172
$
692
million
May 1 through May 31, 2009
1,889,900
48.78
1,889,900
600
million
June 1 through June 30, 2009
1,936,600
47.41
1,936,600
508
million
Total
5,751,672
$
47.37
5,751,672
$
508
million
(1)
(1)
On December 19, 2007, the companys board of directors
authorized a share repurchase program of up to $2.5 billion
of its outstanding common stock. As of June 30, 2009, the
company has $508 million remaining on this authorization
for share repurchases.
Share repurchases take place at managements discretion or
under pre-established, non-discretionary programs from time to
time, depending on market conditions, in the open market, and in
privately negotiated transactions. The company retires its
common stock upon repurchase and has not made any purchases of
common stock other than in connection with these publicly
announced repurchase programs.
(2)
Includes commissions paid.
Item 3.
Defaults
upon Senior Securities
Item 4.
Submission
of Matters to a Vote of Security Holders
a)
Annual Meeting
b)
Election of Directors
II-45
Table of Contents
Thomas B. Fargo
Victor H. Fazio
Donald E. Felsinger
Stephen E. Frank
Bruce S. Gordon
Madeleine Kleiner
Karl J. Krapek
Richard B. Myers
Aulana L. Peters
Kevin W. Sharer
Ronald D. Sugar
c)
The matters voted upon at the meeting and the results of each
vote are as follows:
Votes For
Votes Against
Votes Abstaining
270,636,112
20,460,675
1,417,192
284,813,151
6,269,311
1,431,517
275,003,640
15,909,987
1,600,353
282,941,385
7,992,455
1,580,140
270,523,266
20,442,951
1,547,763
282,587,859
8,436,484
1,489,637
282,599,131
8,286,127
1,628,722
280,713,679
10,034,312
1,765,989
283,244,575
7,891,405
1,378,000
269,917,998
21,140,709
1,455,273
278,577,445
12,489,635
1,446,899
283,539,697
7,898,381
1,075,902
Votes
Votes
Votes
Broker
For
Against
Abstaining
Non-Votes
288,545,389
3,091,876
876,715
0
11,103,870
216,574,763
39,807,247
25,028,100
106,833,126
148,049,646
12,599,474
25,031,734
141,028,186
124,669,859
1,787,835
25,028,100
Item 5.
Other
Information
II-46
Table of Contents
Item 6.
Exhibits
*10
.1
Northrop Grumman Corporation 1993 Stock Plan for Non-Employee
Directors (As Amended and Restated January 1, 2010)
*12
(a)
Computation of Ratios of Earnings to Fixed Charges
*15
Letter from Independent Registered Public Accounting Firm
*31
.1
Rule 13a-15(e)/15d-15(e) Certification of Ronald D. Sugar
(Section 302 of the Sarbanes-Oxley Act of 2002)
*31
.2
Rule 13a-15(e)/15d-15(e) Certification of James F. Palmer
(Section 302 of the Sarbanes-Oxley Act of 2002)
**32
.1
Certification of Ronald D. Sugar pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
**32
.2
Certification of James F. Palmer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
**101
Northrop Grumman Corporation Quarterly Report on Form 10-Q for
the quarter ended June 30, 2009, formatted in XBRL (eXtensible
Business Reporting Language); (i) the Condensed Consolidated
Statements of Operations, (ii) Condensed Consolidated Statements
of Financial Position, (iii) Condensed Consolidated Statements
of Cash Flows, (iv) Condensed Consolidated Statements of Changes
in Shareholders Equity, and (v) Notes to Condensed
Consolidated Financial Statements, tagged as blocks of text
*
Filed with this Report
**
Furnished with this Report
II-47
Table of Contents
(Registrant)
By:
II-48
1
2
3
4
5
6
Six Months Ended
|
|||||||||||||||||||||||||||||||||||
Year Ended December 31 | June 30 | ||||||||||||||||||||||||||||||||||
$ in millions | 2008 (1) | 2007 | 2006 | 2005 | 2004 | 2009 | 2008 | ||||||||||||||||||||||||||||
Earnings:
|
|||||||||||||||||||||||||||||||||||
(Loss) earnings from continuing operations before income taxes
|
$ | (368 | ) | $ | 2,698 | $ | 2,316 | $ | 2,092 | $ | 1,596 | $ | 1,186 | $ | 1,148 | ||||||||||||||||||||
Fixed Charges:
|
|||||||||||||||||||||||||||||||||||
Interest expense, including amortization of debt premium
|
295 | 336 | 347 | 388 | 431 | 143 | 149 | ||||||||||||||||||||||||||||
Portion of rental expenses on operating leases deemed to be
representative of the interest factor:
|
195 | 195 | 183 | 170 | 151 | 95 | 100 | ||||||||||||||||||||||||||||
Earnings from continuing operations before income taxes and
fixed charges
|
122 | 3,229 | 2,846 | 2,650 | 2,178 | 1,424 | 1,397 | ||||||||||||||||||||||||||||
Fixed Charges:
|
490 | 531 | 530 | 558 | 582 | 238 | 249 | ||||||||||||||||||||||||||||
Ratio of earnings to fixed
charges
(1)
|
-- | 6.1 | 5.4 | 4.7 | 3.7 | 6.0 | 5.6 | ||||||||||||||||||||||||||||
(1) | For the year ended December 31, 2008, the companys earnings were insufficient to cover fixed charges by $368 million. This loss was entirely due to the non-cash goodwill impairment charge of $3.1 billion recorded during the fourth quarter at Shipbuilding and Aerospace Systems. |
I, | Ronald D. Sugar, certify that: |
1. | I have reviewed this report on Form 10-Q of Northrop Grumman Corporation (company); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the companys most recent fiscal quarter (the companys fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. | The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting. |
I, | James F. Palmer, certify that: |
1. | I have reviewed this report on Form 10-Q of Northrop Grumman Corporation (company); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. | The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the companys most recent fiscal quarter (the companys fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. | The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting. |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company. |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company. |