x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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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
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DELAWARE
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80-0640649
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Yes
x
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No
*
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Yes
x
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No
*
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Large accelerated filer
x
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Accelerated filer
*
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||||
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||||
Non-accelerated filer
*
(Do not check if a smaller reporting company)
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Smaller reporting company
*
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Yes
*
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No
x
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Page
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Item 1.
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6
.
Investigations, Claims and Litigation
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Three Months Ended June 30
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Six Months Ended June 30
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||||||||||||
$ in millions, except per share amounts
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Sales
|
|
|
|
|
|
|
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||||||||
Product
|
$
|
3,564
|
|
|
$
|
3,593
|
|
|
$
|
6,972
|
|
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$
|
7,014
|
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Service
|
2,475
|
|
|
2,701
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|
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4,915
|
|
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5,384
|
|
||||
Total sales
|
6,039
|
|
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6,294
|
|
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11,887
|
|
|
12,398
|
|
||||
Operating costs and expenses
|
|
|
|
|
|
|
|
||||||||
Product
|
2,668
|
|
|
2,703
|
|
|
5,201
|
|
|
5,334
|
|
||||
Service
|
1,961
|
|
|
2,203
|
|
|
3,889
|
|
|
4,359
|
|
||||
General and administrative expenses
|
590
|
|
|
582
|
|
|
1,132
|
|
|
1,140
|
|
||||
Operating income
|
820
|
|
|
806
|
|
|
1,665
|
|
|
1,565
|
|
||||
Other (expense) income
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(70
|
)
|
|
(60
|
)
|
|
(139
|
)
|
|
(113
|
)
|
||||
Other, net
|
6
|
|
|
(22
|
)
|
|
16
|
|
|
(16
|
)
|
||||
Earnings before income taxes
|
756
|
|
|
724
|
|
|
1,542
|
|
|
1,436
|
|
||||
Federal and foreign income tax expense
|
245
|
|
|
236
|
|
|
452
|
|
|
459
|
|
||||
Net earnings
|
$
|
511
|
|
|
$
|
488
|
|
|
$
|
1,090
|
|
|
$
|
977
|
|
|
|
|
|
|
|
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||||||||
Basic earnings per share
|
$
|
2.41
|
|
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$
|
2.09
|
|
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$
|
5.09
|
|
|
$
|
4.15
|
|
Weighted-average common shares outstanding, in millions
|
212.4
|
|
|
234.0
|
|
|
214.3
|
|
|
235.2
|
|
||||
Diluted earnings per share
|
$
|
2.37
|
|
|
$
|
2.05
|
|
|
$
|
5.01
|
|
|
$
|
4.08
|
|
Weighted-average diluted shares outstanding, in millions
|
215.2
|
|
|
237.5
|
|
|
217.7
|
|
|
239.2
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net earnings (from above)
|
$
|
511
|
|
|
$
|
488
|
|
|
$
|
1,090
|
|
|
$
|
977
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
||||||||
Change in unamortized benefit plan costs, net of tax
|
35
|
|
|
79
|
|
|
96
|
|
|
159
|
|
||||
Change in cumulative translation adjustment
|
—
|
|
|
9
|
|
|
2
|
|
|
(7
|
)
|
||||
Other comprehensive income, net of tax
|
35
|
|
|
88
|
|
|
98
|
|
|
152
|
|
||||
Comprehensive income
|
$
|
546
|
|
|
$
|
576
|
|
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$
|
1,188
|
|
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$
|
1,129
|
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$ in millions
|
June 30,
2014 |
|
December 31,
2013 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,476
|
|
|
$
|
5,150
|
|
Accounts receivable, net
|
3,280
|
|
|
2,685
|
|
||
Inventoried costs, net
|
741
|
|
|
698
|
|
||
Deferred tax assets
|
554
|
|
|
605
|
|
||
Prepaid expenses and other current assets
|
339
|
|
|
350
|
|
||
Total current assets
|
8,390
|
|
|
9,488
|
|
||
Property, plant and equipment, net of accumulated depreciation of $4,471 in 2014 and $4,337 in 2013
|
2,818
|
|
|
2,806
|
|
||
Goodwill
|
12,468
|
|
|
12,438
|
|
||
Non-current deferred tax assets
|
180
|
|
|
209
|
|
||
Other non-current assets
|
1,495
|
|
|
1,440
|
|
||
Total assets
|
$
|
25,351
|
|
|
$
|
26,381
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Trade accounts payable
|
$
|
1,178
|
|
|
$
|
1,229
|
|
Accrued employee compensation
|
1,154
|
|
|
1,446
|
|
||
Advance payments and amounts in excess of costs incurred
|
1,588
|
|
|
1,722
|
|
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Other current liabilities
|
1,494
|
|
|
1,418
|
|
||
Total current liabilities
|
5,414
|
|
|
5,815
|
|
||
Long-term debt, net of current portion
|
5,927
|
|
|
5,928
|
|
||
Pension and other post-retirement benefit plan liabilities
|
2,820
|
|
|
2,954
|
|
||
Other non-current liabilities
|
922
|
|
|
1,064
|
|
||
Total liabilities
|
15,083
|
|
|
15,761
|
|
||
|
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|
||||
Commitments and contingencies (Note 7)
|
|
|
|
||||
|
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|
||||
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: 2014—209,127,586 and 2013—217,599,230
|
209
|
|
|
218
|
|
||
Paid-in capital
|
—
|
|
|
848
|
|
||
Retained earnings
|
12,945
|
|
|
12,538
|
|
||
Accumulated other comprehensive loss
|
(2,886
|
)
|
|
(2,984
|
)
|
||
Total shareholders’ equity
|
10,268
|
|
|
10,620
|
|
||
Total liabilities and shareholders’ equity
|
$
|
25,351
|
|
|
$
|
26,381
|
|
|
Six Months Ended June 30
|
||||||
$ in millions
|
2014
|
|
2013
|
||||
Operating activities
|
|
|
|
||||
Net earnings
|
$
|
1,090
|
|
|
$
|
977
|
|
Adjustments to reconcile to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
217
|
|
|
225
|
|
||
Stock-based compensation
|
51
|
|
|
71
|
|
||
Excess tax benefits from stock-based compensation
|
(74
|
)
|
|
(27
|
)
|
||
Deferred income taxes
|
21
|
|
|
33
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(577
|
)
|
|
(268
|
)
|
||
Inventoried costs, net
|
(33
|
)
|
|
62
|
|
||
Prepaid expenses and other assets
|
(23
|
)
|
|
6
|
|
||
Accounts payable and other liabilities
|
(588
|
)
|
|
(430
|
)
|
||
Income taxes payable
|
103
|
|
|
60
|
|
||
Retiree benefits
|
8
|
|
|
(397
|
)
|
||
Other, net
|
(25
|
)
|
|
17
|
|
||
Net cash provided by operating activities
|
$
|
170
|
|
|
$
|
329
|
|
|
|
|
|
||||
Investing activities
|
|
|
|
||||
Capital expenditures
|
(176
|
)
|
|
(88
|
)
|
||
Other investing activities, net
|
(72
|
)
|
|
6
|
|
||
Net cash used in investing activities
|
(248
|
)
|
|
(82
|
)
|
||
|
|
|
|
||||
Financing activities
|
|
|
|
||||
Common stock repurchases
|
(1,301
|
)
|
|
(921
|
)
|
||
Cash dividends paid
|
(280
|
)
|
|
(272
|
)
|
||
Net proceeds from issuance of long-term debt
|
—
|
|
|
2,841
|
|
||
Payments of long-term debt
|
—
|
|
|
(877
|
)
|
||
Other financing activities, net
|
(15
|
)
|
|
24
|
|
||
Net cash (used in) provided by financing activities
|
(1,596
|
)
|
|
795
|
|
||
(Decrease) increase in cash and cash equivalents
|
(1,674
|
)
|
|
1,042
|
|
||
Cash and cash equivalents, beginning of year
|
5,150
|
|
|
3,862
|
|
||
Cash and cash equivalents, end of period
|
$
|
3,476
|
|
|
$
|
4,904
|
|
|
Six Months Ended June 30
|
||||||
$ in millions, except per share amounts
|
2014
|
|
2013
|
||||
Common stock
|
|
|
|
||||
Beginning of year
|
$
|
218
|
|
|
$
|
239
|
|
Common stock repurchased
|
(11
|
)
|
|
(13
|
)
|
||
Shares issued for employee stock awards and options
|
2
|
|
|
5
|
|
||
End of period
|
209
|
|
|
231
|
|
||
Paid-in capital
|
|
|
|
||||
Beginning of year
|
848
|
|
|
2,924
|
|
||
Common stock repurchased
|
(896
|
)
|
|
(907
|
)
|
||
Stock compensation
|
37
|
|
|
112
|
|
||
Other
|
11
|
|
|
(5
|
)
|
||
End of period
|
—
|
|
|
2,124
|
|
||
Retained earnings
|
|
|
|
||||
Beginning of year
|
12,538
|
|
|
11,138
|
|
||
Common stock repurchased
|
(398
|
)
|
|
—
|
|
||
Net earnings
|
1,090
|
|
|
977
|
|
||
Dividends declared
|
(285
|
)
|
|
(277
|
)
|
||
End of period
|
12,945
|
|
|
11,838
|
|
||
Accumulated other comprehensive loss
|
|
|
|
||||
Beginning of year
|
(2,984
|
)
|
|
(4,787
|
)
|
||
Other comprehensive income, net of tax
|
98
|
|
|
152
|
|
||
End of period
|
(2,886
|
)
|
|
(4,635
|
)
|
||
Total shareholders’ equity
|
$
|
10,268
|
|
|
$
|
9,558
|
|
Cash dividends declared per share
|
$
|
1.31
|
|
|
$
|
1.16
|
|
$ in millions
|
June 30,
2014 |
|
December 31,
2013 |
||||
Unamortized benefit plan costs, net of tax benefit of $1,910 as of June 30, 2014 and $1,972 as of December 31, 2013
|
$
|
(2,904
|
)
|
|
$
|
(3,000
|
)
|
Cumulative translation adjustment
|
20
|
|
|
18
|
|
||
Net unrealized loss on marketable securities and cash flow hedges, net of tax benefit
|
(2
|
)
|
|
(2
|
)
|
||
Total accumulated other comprehensive loss
|
$
|
(2,886
|
)
|
|
$
|
(2,984
|
)
|
|
|
|
|
|
|
|
|
|
|
Shares Repurchased
(in millions) |
|||||||||
Repurchase Program Authorization Date
|
|
Amount
Authorized (in millions) |
|
Total Shares Retired (in millions)
|
|
Average
Price Per Share (2) |
|
Date Completed
|
|
Six Months Ended June 30
|
|||||||||
|
2014
|
|
2013
|
||||||||||||||||
June 16, 2010
|
|
$
|
5,350
|
|
|
83.7
|
|
|
$
|
63.86
|
|
|
September 2013
|
|
—
|
|
|
12.6
|
|
May 15, 2013
(1)
|
|
$
|
4,000
|
|
|
19.6
|
|
|
$
|
112.43
|
|
|
|
|
10.9
|
|
|
—
|
|
(1)
|
On May 15, 2013, the company's board of directors authorized a share repurchase program of up to
$4.0 billion
of the company’s common stock.
Repurchases under this program commenced in September 2013 upon the completion of the company's 2010 repurchase program
. As of
June 30, 2014
, our repurchases under the program totaled
$2.2 billion
and
$1.8 billion
remained under this share repurchase authorization. The repurchase program is expected to expire when we have used all authorized funds for repurchase.
|
(2)
|
Includes commissions paid.
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Sales
|
|
|
|
|
|
|
|
||||||||
Aerospace Systems
|
$
|
2,502
|
|
|
$
|
2,613
|
|
|
$
|
4,922
|
|
|
$
|
5,098
|
|
Electronic Systems
|
1,744
|
|
|
1,771
|
|
|
3,388
|
|
|
3,492
|
|
||||
Information Systems
|
1,562
|
|
|
1,689
|
|
|
3,139
|
|
|
3,363
|
|
||||
Technical Services
|
732
|
|
|
722
|
|
|
1,429
|
|
|
1,439
|
|
||||
Intersegment eliminations
|
(501
|
)
|
|
(501
|
)
|
|
(991
|
)
|
|
(994
|
)
|
||||
Total sales
|
6,039
|
|
|
6,294
|
|
|
11,887
|
|
|
12,398
|
|
||||
Operating income
|
|
|
|
|
|
|
|
||||||||
Aerospace Systems
|
290
|
|
|
336
|
|
|
614
|
|
|
606
|
|
||||
Electronic Systems
|
291
|
|
|
322
|
|
|
559
|
|
|
618
|
|
||||
Information Systems
|
153
|
|
|
141
|
|
|
315
|
|
|
312
|
|
||||
Technical Services
|
68
|
|
|
69
|
|
|
136
|
|
|
134
|
|
||||
Intersegment eliminations
|
(60
|
)
|
|
(71
|
)
|
|
(125
|
)
|
|
(125
|
)
|
||||
Total segment operating income
|
742
|
|
|
797
|
|
|
1,499
|
|
|
1,545
|
|
||||
Reconciliation to total operating income:
|
|
|
|
|
|
|
|
||||||||
Net FAS/CAS pension adjustment
|
110
|
|
|
31
|
|
|
220
|
|
|
64
|
|
||||
Unallocated corporate expenses
|
(31
|
)
|
|
(21
|
)
|
|
(53
|
)
|
|
(40
|
)
|
||||
Other
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(4
|
)
|
||||
Total operating income
|
$
|
820
|
|
|
$
|
806
|
|
|
$
|
1,665
|
|
|
$
|
1,565
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Federal and foreign income tax expense
|
$
|
245
|
|
|
$
|
236
|
|
|
$
|
452
|
|
|
$
|
459
|
|
Effective income tax rate
|
32.4
|
%
|
|
32.6
|
%
|
|
29.3
|
%
|
|
32.0
|
%
|
|
June 30, 2014
|
|
December 31, 2013
|
||||||||||||
$ in millions
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
Financial Assets (Liabilities)
|
|
|
|
|
|
|
|
||||||||
Marketable securities
|
|
|
|
|
|
|
|
||||||||
Trading
|
$
|
322
|
|
|
$
|
322
|
|
|
$
|
308
|
|
|
$
|
308
|
|
Available-for-sale
|
3
|
|
|
3
|
|
|
2
|
|
|
2
|
|
||||
Derivatives
|
(3
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
(2
|
)
|
||||
Long-term debt, including current portion
|
$
|
(5,929
|
)
|
|
$
|
(6,651
|
)
|
|
$
|
(5,930
|
)
|
|
$
|
(6,227
|
)
|
|
Three Months Ended June 30
|
Six Months Ended June 30
|
||||||||||||||||||||||||||||
|
Pension
Benefits |
|
Medical and
Life Benefits |
Pension
Benefits |
|
Medical and
Life Benefits |
||||||||||||||||||||||||
$ in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Service cost
|
$
|
115
|
|
|
$
|
129
|
|
|
$
|
9
|
|
|
$
|
9
|
|
$
|
229
|
|
|
$
|
258
|
|
|
$
|
17
|
|
|
$
|
18
|
|
Interest cost
|
315
|
|
|
280
|
|
|
24
|
|
|
24
|
|
630
|
|
|
559
|
|
|
50
|
|
|
48
|
|
||||||||
Expected return on plan assets
|
(468
|
)
|
|
(452
|
)
|
|
(21
|
)
|
|
(19
|
)
|
(935
|
)
|
|
(905
|
)
|
|
(42
|
)
|
|
(38
|
)
|
||||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Prior service credit
|
(15
|
)
|
|
(15
|
)
|
|
(13
|
)
|
|
(13
|
)
|
(30
|
)
|
|
(29
|
)
|
|
(20
|
)
|
|
(25
|
)
|
||||||||
Net loss from previous years
|
82
|
|
|
152
|
|
|
4
|
|
|
8
|
|
164
|
|
|
304
|
|
|
6
|
|
|
15
|
|
||||||||
Net periodic benefit cost
|
$
|
29
|
|
|
$
|
94
|
|
|
$
|
3
|
|
|
$
|
9
|
|
$
|
58
|
|
|
$
|
187
|
|
|
$
|
11
|
|
|
$
|
18
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions, except per share amounts
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Sales
|
$
|
6,039
|
|
|
$
|
6,294
|
|
|
$
|
11,887
|
|
|
$
|
12,398
|
|
Operating costs and expenses
|
5,219
|
|
|
5,488
|
|
|
10,222
|
|
|
10,833
|
|
||||
Operating income
|
820
|
|
|
806
|
|
|
1,665
|
|
|
1,565
|
|
||||
Operating margin rate
|
13.6
|
%
|
|
12.8
|
%
|
|
14.0
|
%
|
|
12.6
|
%
|
||||
Federal and foreign income tax expense
|
245
|
|
|
236
|
|
|
452
|
|
|
459
|
|
||||
Effective income tax rate
|
32.4
|
%
|
|
32.6
|
%
|
|
29.3
|
%
|
|
32.0
|
%
|
||||
Diluted earnings per share
|
2.37
|
|
|
2.05
|
|
|
5.01
|
|
|
4.08
|
|
||||
Net cash provided by operating activities
|
$
|
572
|
|
|
$
|
328
|
|
|
$
|
170
|
|
|
$
|
329
|
|
$ in millions
|
Three Month Variance
|
|
Six Month Variance
|
||||||||||
Aerospace Systems
|
$
|
(111
|
)
|
|
(4
|
%)
|
|
$
|
(176
|
)
|
|
(3
|
%)
|
Electronic Systems
|
(27
|
)
|
|
(2
|
%)
|
|
(104
|
)
|
|
(3
|
%)
|
||
Information Systems
|
(127
|
)
|
|
(8
|
%)
|
|
(224
|
)
|
|
(7
|
%)
|
||
Technical Services
|
10
|
|
|
1
|
%
|
|
(10
|
)
|
|
(1
|
%)
|
||
Intersegment sales elimination
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||
Total sales variance
|
$
|
(255
|
)
|
|
(4
|
%)
|
|
$
|
(511
|
)
|
|
(4
|
%)
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Product costs
|
$
|
2,668
|
|
|
$
|
2,703
|
|
|
$
|
5,201
|
|
|
$
|
5,334
|
|
Service costs
|
1,961
|
|
|
2,203
|
|
|
3,889
|
|
|
4,359
|
|
||||
General and administrative expenses
|
590
|
|
|
582
|
|
|
1,132
|
|
|
1,140
|
|
||||
Operating costs and expenses
|
$
|
5,219
|
|
|
|
$5,488
|
|
|
$
|
10,222
|
|
|
$
|
10,833
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Favorable adjustments
|
$
|
226
|
|
|
$
|
324
|
|
|
$
|
482
|
|
|
$
|
547
|
|
Unfavorable adjustments
|
(61
|
)
|
|
(77
|
)
|
|
(120
|
)
|
|
(126
|
)
|
||||
Net favorable adjustments
|
$
|
165
|
|
|
$
|
247
|
|
|
$
|
362
|
|
|
$
|
421
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Aerospace Systems
|
$
|
70
|
|
|
$
|
128
|
|
|
$
|
195
|
|
|
$
|
205
|
|
Electronic Systems
|
77
|
|
|
112
|
|
|
134
|
|
|
192
|
|
||||
Information Systems
|
16
|
|
|
8
|
|
|
34
|
|
|
17
|
|
||||
Technical Services
|
8
|
|
|
12
|
|
|
21
|
|
|
24
|
|
||||
Eliminations
|
(6
|
)
|
|
(13
|
)
|
|
(22
|
)
|
|
(17
|
)
|
||||
Net favorable adjustments
|
$
|
165
|
|
|
$
|
247
|
|
|
$
|
362
|
|
|
$
|
421
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Segment operating income
|
$
|
742
|
|
|
$
|
797
|
|
|
$
|
1,499
|
|
|
$
|
1,545
|
|
Segment operating margin rate
|
12.3
|
%
|
|
12.7
|
%
|
|
12.6
|
%
|
|
12.5
|
%
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Segment operating income
|
$
|
742
|
|
|
$
|
797
|
|
|
$
|
1,499
|
|
|
$
|
1,545
|
|
CAS pension expense
|
139
|
|
|
125
|
|
|
278
|
|
|
251
|
|
||||
Less: FAS pension expense
|
(29
|
)
|
|
(94
|
)
|
|
(58
|
)
|
|
(187
|
)
|
||||
Net FAS/CAS pension adjustment
|
110
|
|
|
31
|
|
|
220
|
|
|
64
|
|
||||
Unallocated corporate expenses
|
(31
|
)
|
|
(21
|
)
|
|
(53
|
)
|
|
(40
|
)
|
||||
Other
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(4
|
)
|
||||
Total operating income
|
$
|
820
|
|
|
$
|
806
|
|
|
$
|
1,665
|
|
|
$
|
1,565
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Sales
|
$
|
2,502
|
|
|
$
|
2,613
|
|
|
$
|
4,922
|
|
|
$
|
5,098
|
|
Operating income
|
290
|
|
|
336
|
|
|
614
|
|
|
606
|
|
||||
Operating margin rate
|
11.6
|
%
|
|
12.9
|
%
|
|
12.5
|
%
|
|
11.9
|
%
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Sales
|
$
|
1,744
|
|
|
$
|
1,771
|
|
|
$
|
3,388
|
|
|
$
|
3,492
|
|
Operating income
|
291
|
|
|
322
|
|
|
559
|
|
|
618
|
|
||||
Operating margin rate
|
16.7
|
%
|
|
18.2
|
%
|
|
16.5
|
%
|
|
17.7
|
%
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Sales
|
$
|
1,562
|
|
|
$
|
1,689
|
|
|
$
|
3,139
|
|
|
$
|
3,363
|
|
Operating income
|
153
|
|
|
141
|
|
|
315
|
|
|
312
|
|
||||
Operating margin rate
|
9.8
|
%
|
|
8.3
|
%
|
|
10.0
|
%
|
|
9.3
|
%
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Sales
|
$
|
732
|
|
|
$
|
722
|
|
|
$
|
1,429
|
|
|
$
|
1,439
|
|
Operating income
|
68
|
|
|
69
|
|
|
136
|
|
|
134
|
|
||||
Operating margin rate
|
9.3
|
%
|
|
9.6
|
%
|
|
9.5
|
%
|
|
9.3
|
%
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||||||||||||
$ in millions
|
2014
|
2013
|
|
2014
|
2013
|
||||||||||||||||||||
Segment Information:
|
Sales
|
Operating Costs and Expenses
|
Sales
|
Operating Costs and Expenses
|
|
Sales
|
Operating Costs and Expenses
|
Sales
|
Operating Costs and Expenses
|
||||||||||||||||
Aerospace Systems
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product
|
$
|
2,008
|
|
$
|
1,768
|
|
$
|
2,172
|
|
$
|
1,894
|
|
|
$
|
3,981
|
|
$
|
3,476
|
|
$
|
4,337
|
|
$
|
3,830
|
|
Service
|
494
|
|
444
|
|
441
|
|
383
|
|
|
941
|
|
832
|
|
761
|
|
662
|
|
||||||||
Electronic Systems
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product
|
1,429
|
|
1,192
|
|
1,367
|
|
1,121
|
|
|
2,750
|
|
2,297
|
|
2,686
|
|
2,216
|
|
||||||||
Service
|
315
|
|
261
|
|
404
|
|
328
|
|
|
638
|
|
532
|
|
806
|
|
658
|
|
||||||||
Information Systems
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product
|
341
|
|
324
|
|
254
|
|
229
|
|
|
660
|
|
621
|
|
409
|
|
372
|
|
||||||||
Service
|
1,221
|
|
1,085
|
|
1,435
|
|
1,319
|
|
|
2,479
|
|
2,203
|
|
2,954
|
|
2,679
|
|
||||||||
Technical Services
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product
|
42
|
|
41
|
|
45
|
|
38
|
|
|
98
|
|
91
|
|
105
|
|
92
|
|
||||||||
Service
|
690
|
|
623
|
|
677
|
|
615
|
|
|
1,331
|
|
1,202
|
|
1,334
|
|
1,213
|
|
||||||||
Segment Totals
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total Product
|
$
|
3,820
|
|
$
|
3,325
|
|
$
|
3,838
|
|
$
|
3,282
|
|
|
$
|
7,489
|
|
$
|
6,485
|
|
$
|
7,537
|
|
$
|
6,510
|
|
Total Service
|
2,720
|
|
2,413
|
|
2,957
|
|
2,645
|
|
|
5,389
|
|
4,769
|
|
5,855
|
|
5,212
|
|
||||||||
Intersegment eliminations
|
(501
|
)
|
(441
|
)
|
(501
|
)
|
(430
|
)
|
|
(991
|
)
|
(866
|
)
|
(994
|
)
|
(869
|
)
|
||||||||
Total segment
(1)
|
$
|
6,039
|
|
$
|
5,297
|
|
$
|
6,294
|
|
$
|
5,497
|
|
|
$
|
11,887
|
|
$
|
10,388
|
|
$
|
12,398
|
|
$
|
10,853
|
|
|
June 30,
2014 |
|
December 31,
2013 |
||||||||||||
$ in millions
|
Funded
|
|
Unfunded
|
|
Total
Backlog |
|
Total
Backlog |
||||||||
Aerospace Systems
|
$
|
9,783
|
|
|
$
|
6,880
|
|
|
$
|
16,663
|
|
|
$
|
18,321
|
|
Electronic Systems
|
6,924
|
|
|
2,704
|
|
|
9,628
|
|
|
9,037
|
|
||||
Information Systems
|
3,154
|
|
|
3,510
|
|
|
6,664
|
|
|
6,864
|
|
||||
Technical Services
|
2,315
|
|
|
285
|
|
|
2,600
|
|
|
2,811
|
|
||||
Total backlog
|
$
|
22,176
|
|
|
$
|
13,379
|
|
|
$
|
35,555
|
|
|
$
|
37,033
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net earnings
|
$
|
511
|
|
|
$
|
488
|
|
|
$
|
1,090
|
|
|
$
|
977
|
|
Non-cash items
(1)
|
112
|
|
|
154
|
|
|
215
|
|
|
302
|
|
||||
Retiree benefit funding (in excess of) less than expense
|
(6
|
)
|
|
(468
|
)
|
|
8
|
|
|
(397
|
)
|
||||
Trade working capital change and other
|
(45
|
)
|
|
154
|
|
|
(1,143
|
)
|
|
(553
|
)
|
||||
Net cash provided by operating activities
|
$
|
572
|
|
|
$
|
328
|
|
|
$
|
170
|
|
|
$
|
329
|
|
(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
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net cash provided by operating activities
|
$
|
572
|
|
|
$
|
328
|
|
|
$
|
170
|
|
|
$
|
329
|
|
Less: capital expenditures
|
(116
|
)
|
|
(48
|
)
|
|
(176
|
)
|
|
(88
|
)
|
||||
Free cash flow provided by (used in) operations
|
$
|
456
|
|
|
$
|
280
|
|
|
$
|
(6
|
)
|
|
$
|
241
|
|
Pension and medical expenses associated with our retirement benefit plans may fluctuate significantly depending upon changes in actuarial assumptions, future investment performance of plan assets, future health care costs and legislative or other regulatory actions.
|
Period
|
Number
of Shares
Purchased
(1)
|
|
Average
Price
Paid per
Share
(2)
|
|
Numbers
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)
|
|||||||
April
|
1,493,539
|
|
|
$
|
120.35
|
|
|
1,493,539
|
|
|
|
$
|
2,361
|
|
May
|
2,197,126
|
|
|
120.24
|
|
|
2,197,126
|
|
|
|
2,096
|
|
||
June
|
2,443,707
|
|
|
121.64
|
|
|
2,443,707
|
|
|
|
1,799
|
|
||
Ending balance
|
6,134,372
|
|
|
$
|
120.82
|
|
|
6,134,372
|
|
|
|
$
|
1,799
|
|
(1)
|
On May 15, 2013, the company's board of directors authorized a share repurchase program of up to
$4.0 billion
of the company’s common stock.
Repurchases under this program commenced in September 2013 upon the completion of the company's 2010 repurchase program
. As of
June 30, 2014
, our repurchases under the program totaled
$2.2 billion
and
$1.8 billion
remained under this share repurchase authorization. This repurchase program is expected to expire when we have used all authorized funds for repurchase.
|
(2)
|
Includes commissions paid.
|
2.1
|
Agreement and Plan of Merger among Titan II, Inc. (formerly Northrop Grumman Corporation), Northrop Grumman Corporation (formerly New P, Inc.) and Titan Merger Sub Inc., dated March 29, 2011 (incorporated by reference to Exhibit 10.1 to Form 8-K filed April 4, 2011)
|
|
|
2.2
|
Separation and Distribution Agreement dated as of March 29, 2011, among Titan II, Inc. (formerly Northrop Grumman Corporation), Northrop Grumman Corporation (formerly New P, Inc.), Huntington Ingalls Industries, Inc., Northrop Grumman Shipbuilding, Inc. and Northrop Grumman Systems Corporation (incorporated by reference to Exhibit 10.2 to Form 8-K filed April 4, 2011)
|
|
|
+*10.1
|
Non-Employee Director Compensation Term Sheet, effective as of May 21, 2014
|
|
|
+*10.2
|
Amended and Restated Grant Certificate Specifying the Terms and Conditions Applicable to 2014 Restricted Stock Rights Granted Under the 2011 Long-Term Incentive Stock Plan
|
|
|
+*10.3
|
Amended and Restated Grant Certificate Specifying the Terms and Conditions Applicable to 2014 Restricted Performance Stock Rights Granted Under the 2011 Long-Term Incentive Stock Plan
|
|
|
*12(a)
|
Computation of Ratio of Earnings to Fixed Charges
|
|
|
*15
|
Letter from Independent Registered Public Accounting Firm
|
|
|
*31.1
|
Rule 13a-14(a)/15d-14(a) Certification of Wesley G. Bush (Section 302 of the Sarbanes-Oxley Act of 2002)
|
|
|
*31.2
|
Rule 13a-14(a)/15d-14(a) Certification of James F. Palmer (Section 302 of the Sarbanes-Oxley Act of 2002)
|
|
|
**32.1
|
Certification of Wesley G. Bush 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, 2014, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings and Comprehensive Income, (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
|
+
|
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)
|
Retainer:
|
Retainer fees are paid quarterly, at the end of each quarter. Fees are as follows:
|
Annual cash retainer:
|
$120,000
|
Additional retainer for Lead Independent Director:
|
$25,000
|
Additional retainer for Audit Committee:
|
$10,000
|
Additional retainer for Audit Committee chair:
|
$20,000
|
Additional retainer for Compensation Committee chair:
|
$15,000
|
Additional retainer for Governance Committee chair:
|
$15,000
|
Additional retainer for Policy Committee chair:
|
$7,500
|
Equity Grant:
|
Directors are awarded an annual retainer of $135,000 in deferred stock units, awarded quarterly. The deferred stock units will be paid at the conclusion of board service, or earlier, as specified by the director, if he has five or more years of service.
|
1.
|
Vesting; Issuance of Shares
.
|
2.
|
Early Termination of Award; Termination of Employment
.
|
3.
|
Non-Transferability and Other Restrictions
.
|
5.
|
Compliance with Laws; No Stockholder Rights Prior to Issuance
.
|
6.
|
Adjustments; Change in Control
.
|
7.
|
Tax Matters
.
|
9.
|
Committee Authority
.
|
10.
|
Plan; Amendment
.
|
11.
|
Required Holding Period
.
|
12.
|
Definitions
.
|
(i)
|
The Grantee’s conviction for committing an act of fraud, embezzlement, theft, or other act constituting a felony (other than traffic related offenses, as a result of vicarious liability, or as a result of good faith actions as an officer of the Company); or
|
(ii)
|
The willful engaging by the Grantee in misconduct that is significantly injurious to the Company. However, no act, or failure to act, on the Grantee’s part shall be considered “willful” unless done, or omitted to be done, by the Grantee not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company.
|
(ii)
|
a termination of employment by the Company or a subsidiary as part of a reduction in force and, at the time of such termination, the Grantee has attained age 53 with at least 10 years of service.
|
(iii)
|
a termination of employment by the Company or a subsidiary as part of a reduction in force and, at the time of such termination, the sum of the Grantee’s age and years of service is at least 75.
|
(i)
|
A material and substantial reduction in the nature or status of the Grantee’s authorities or responsibilities (when such authorities and/or responsibilities are viewed in the aggregate) from their level in effect on the day immediately prior to the start of the Protected Period, other than (A) an inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by the Grantee, and/or (B) changes in the nature or status of the Grantee’s authorities or responsibilities that, in the aggregate, would generally be viewed by a nationally-recognized executive placement firm as resulting in the Grantee having not materially and substantially fewer authorities and responsibilities (taking into consideration the Company’s industry) when compared to the authorities and responsibilities applicable to the position held by the Grantee immediately prior to the start of the Protected Period. The Company may retain a nationally-recognized executive placement firm for purposes of making the determination required by the preceding sentence and the written opinion of the firm thus selected shall be conclusive as to this issue.
|
(ii)
|
A material reduction by the Company in the Grantee’s annualized rate of base salary as in effect at the start of the Protected Period, or as the same shall be increased from time to time.
|
(iii)
|
A material reduction in the aggregate value of the Grantee’s level of participation in any of the Company’s short and/or long-term incentive compensation plans (excluding stock-based incentive compensation plans), employee benefit or retirement plans, or policies, practices, or arrangements in which the Grantee participates immediately prior to the start of the Protected Period; provided, however, that a reduction in the aggregate value shall not be deemed to be “Good Reason” if the reduced value remains substantially consistent with the average level of other employees who have positions commensurate with the position held by the Grantee immediately prior to the start of the Protected Period.
|
(iv)
|
A material reduction in the Grantee’s aggregate level of participation in the Company’s stock-based incentive compensation plans from the level in effect immediately prior to the start of the Protected Period; provided, however, that a reduction in the aggregate level of participation shall not be deemed to be “Good Reason” if the reduced level of participation remains substantially consistent with the average level of participation of other employees who have positions commensurate with the position held by the Grantee immediately prior to the start of the Protected Period.
|
(v)
|
The Grantee is informed by the Company that his or her principal place of employment for the Company will be relocated to a location that is greater than fifty (50) miles away from the Grantee’s principal place of employment for the Company at the start of the corresponding Protected Period; provided that, if the Company communicates an intended effective date for such relocation, in no event shall Good Reason exist
|
(i)
|
If the Change in Control is triggered by a tender offer for shares of the Company’s stock or by the offeror’s acquisition of shares pursuant to such a tender offer, the Protected Period shall commence on the date of the initial tender offer and shall continue through and including the date of the Change in Control; provided that in no case will the Protected Period commence earlier than the date that is six (6) months prior to the Change in Control.
|
(ii)
|
If the Change in Control is triggered by a merger, consolidation, or reorganization of the Company with or involving any other corporation, the Protected Period shall commence on the date that serious and substantial discussions first take place to effect the merger, consolidation, or reorganization and shall continue through and
|
(iii)
|
In the case of any Change in Control not described in clause (i) or (ii) above, the Protected Period shall commence on the date that is six (6) months prior to the Change in Control and shall continue through and including the date of the Change in Control.
|
1.
|
Vesting; Payment of RPSRs
.
|
2.
|
Early Termination of Award; Termination of Employment
.
|
5.
|
Compliance with Laws; No Stockholder Rights Prior to Issuance
.
|
7.
|
Tax Matters
.
|
9.
|
Committee Authority
.
|
10.
|
Plan; Amendment
.
|
11.
|
Required Holding Period
.
|
12.
|
Definitions
.
|
(i)
|
The Grantee’s conviction for committing an act of fraud, embezzlement, theft, or other act constituting a felony (other than traffic related offenses, as a result of vicarious liability, or as a result of good faith actions as an officer of the Company); or
|
(ii)
|
The willful engaging by the Grantee in misconduct that is significantly injurious to the Company. However, no act, or failure to act, on the Grantee’s part shall be considered “willful” unless done, or omitted to be done, by the Grantee
|
(i)
|
A material and substantial reduction in the nature or status of the Grantee’s authorities or
|
(ii)
|
A material reduction by the Company in the Grantee’s annualized rate of base salary as in effect on the first to occur of the start of the Performance Period or the start of the Protected Period, or as the same shall be increased from time to time.
|
(iii)
|
A material reduction in the aggregate value of the Grantee’s level of participation in any of the Company’s short and/or long-term incentive compensation plans (excluding stock-based incentive compensation plans), employee benefit or retirement plans, or policies, practices, or arrangements in which the Grantee participates
|
(iv)
|
A material reduction in the Grantee’s aggregate level of participation in the Company’s stock-based incentive compensation plans from the level in effect immediately prior to the start of the Protected Period; provided, however, that a reduction in the aggregate level of participation shall not be deemed to be “Good Reason” if the reduced level of participation remains substantially consistent with the average level of participation of other employees who have positions commensurate with the position held by the Grantee immediately prior to the start of the Protected Period.
|
(v)
|
The Grantee is informed by the Company that his or her principal place of employment for the Company will be relocated to a location that is greater than fifty (50) miles away from the Grantee’s principal place of employment for the Company at the start of the corresponding Protected Period; provided that, if the Company communicates an intended effective date for such relocation, in no event shall Good Reason exist pursuant to this clause (v) more than ninety (90) days before such intended effective date.
|
(i)
|
If the Change in Control is triggered by a tender offer for shares of the Company’s stock or by the offeror’s acquisition of shares pursuant to such a tender offer, the Protected Period shall commence on the date of the initial tender offer and shall continue through and including the date of the Change in Control; provided that in no case will the Protected Period commence earlier than the date that is six (6) months prior to the Change in Control.
|
(ii)
|
If the Change in Control is triggered by a merger, consolidation, or reorganization of the Company with or involving any other corporation, the Protected Period shall commence on the date that serious and substantial discussions first take place to effect the merger, consolidation, or reorganization and shall continue through and including the date of the Change in Control; provided that in no case will the Protected Period commence earlier than the date that is six (6) months prior to the Change in Control.
|
(iii)
|
In the case of any Change in Control not described in clause (i) or (ii) above, the Protected Period shall commence on the date that is six (6) months prior to the Change in Control and shall continue through and include the date of the Change in Control.
|
$ in millions
|
Six Months Ended June 30
|
|
Year Ended December 31
|
||||||||||||||||||||
Earnings:
|
2014
|
|
2013
|
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||||||
Earnings from continuing operations before income taxes
|
$
|
1,542
|
|
|
$
|
1,436
|
|
|
$
|
2,863
|
|
$
|
2,965
|
|
$
|
3,083
|
|
$
|
2,366
|
|
$
|
2,070
|
|
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense, including amortization of debt premium
|
139
|
|
|
113
|
|
|
257
|
|
212
|
|
221
|
|
269
|
|
269
|
|
|||||||
Portion of rental expenses on operating leases deemed to be representative of the interest factor
|
48
|
|
|
49
|
|
|
99
|
|
116
|
|
140
|
|
149
|
|
167
|
|
|||||||
Earnings from continuing operations before income taxes and fixed charges
|
$
|
1,729
|
|
|
$
|
1,598
|
|
|
$
|
3,219
|
|
$
|
3,293
|
|
$
|
3,444
|
|
$
|
2,784
|
|
$
|
2,506
|
|
Fixed Charges:
|
$
|
187
|
|
|
$
|
162
|
|
|
$
|
356
|
|
$
|
328
|
|
$
|
361
|
|
$
|
418
|
|
$
|
436
|
|
Ratio of earnings to fixed charges
|
9.2
|
|
|
9.9
|
|
|
9.0
|
|
10.0
|
|
9.5
|
|
6.7
|
|
5.7
|
|
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 company's 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 company's 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 company's internal control over financial reporting that occurred during the company's most recent fiscal quarter (the company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
|
5.
|
The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's 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 company's 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 company's internal control over financial reporting.
|
/s/ Wesley G. Bush
|
Wesley G. Bush
|
Chairman, Chief Executive Officer and President
|
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 company's 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 company's 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 company's internal control over financial reporting that occurred during the company's most recent fiscal quarter (the company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
|
5.
|
The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's 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 company's 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 company's internal control over financial reporting.
|
/s/ James F. Palmer
|
James F. Palmer
|
Corporate Vice President and Chief Financial Officer
|
(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.
|
/s/ Wesley G. Bush
|
Wesley G. Bush
|
Chairman, Chief Executive Officer and President
|
(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.
|
/s/ James F. Palmer
|
James F. Palmer
|
Corporate Vice President and Chief Financial Officer
|