FORM
|
10-Q
|
☒
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|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
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|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
80-0640649
|
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
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|
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|
2980 Fairview Park Drive
|
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Falls Church,
|
Virginia
|
|
22042
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock
|
NOC
|
New York Stock Exchange
|
|
|
Page
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|
Item 1.
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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 5.
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Item 6.
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||
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Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions, except per share amounts
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Sales
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product
|
$
|
6,482
|
|
|
$
|
5,880
|
|
|
$
|
12,658
|
|
|
$
|
11,608
|
|
Service
|
2,402
|
|
|
2,576
|
|
|
4,846
|
|
|
5,037
|
|
||||
Total sales
|
8,884
|
|
|
8,456
|
|
|
17,504
|
|
|
16,645
|
|
||||
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product
|
5,127
|
|
|
4,661
|
|
|
10,079
|
|
|
9,178
|
|
||||
Service
|
1,931
|
|
|
2,065
|
|
|
3,877
|
|
|
4,041
|
|
||||
General and administrative expenses
|
832
|
|
|
784
|
|
|
1,620
|
|
|
1,544
|
|
||||
Operating income
|
994
|
|
|
946
|
|
|
1,928
|
|
|
1,882
|
|
||||
Other (expense) income
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense
|
(154
|
)
|
|
(137
|
)
|
|
(279
|
)
|
|
(275
|
)
|
||||
FAS (non-service) pension benefit
|
303
|
|
|
200
|
|
|
605
|
|
|
400
|
|
||||
Other, net
|
60
|
|
|
19
|
|
|
2
|
|
|
55
|
|
||||
Earnings before income taxes
|
1,203
|
|
|
1,028
|
|
|
2,256
|
|
|
2,062
|
|
||||
Federal and foreign income tax expense
|
198
|
|
|
167
|
|
|
383
|
|
|
338
|
|
||||
Net earnings
|
$
|
1,005
|
|
|
$
|
861
|
|
|
$
|
1,873
|
|
|
$
|
1,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per share
|
$
|
6.02
|
|
|
$
|
5.07
|
|
|
$
|
11.20
|
|
|
$
|
10.15
|
|
Weighted-average common shares outstanding, in millions
|
166.9
|
|
|
169.7
|
|
|
167.3
|
|
|
169.9
|
|
||||
Diluted earnings per share
|
$
|
6.01
|
|
|
$
|
5.06
|
|
|
$
|
11.16
|
|
|
$
|
10.11
|
|
Weighted-average diluted shares outstanding, in millions
|
167.3
|
|
|
170.3
|
|
|
167.9
|
|
|
170.5
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings (from above)
|
$
|
1,005
|
|
|
$
|
861
|
|
|
$
|
1,873
|
|
|
$
|
1,724
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
||||||||
Change in unamortized prior service credit, net of tax
|
(11
|
)
|
|
(12
|
)
|
|
(21
|
)
|
|
(23
|
)
|
||||
Change in cumulative translation adjustment and other, net
|
10
|
|
|
(4
|
)
|
|
1
|
|
|
—
|
|
||||
Other comprehensive loss, net of tax
|
(1
|
)
|
|
(16
|
)
|
|
(20
|
)
|
|
(23
|
)
|
||||
Comprehensive income
|
$
|
1,004
|
|
|
$
|
845
|
|
|
$
|
1,853
|
|
|
$
|
1,701
|
|
$ in millions, except par value
|
June 30,
2020 |
|
December 31,
2019 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
4,178
|
|
|
$
|
2,245
|
|
Accounts receivable, net
|
1,989
|
|
|
1,326
|
|
||
Unbilled receivables, net
|
5,460
|
|
|
5,334
|
|
||
Inventoried costs, net
|
832
|
|
|
783
|
|
||
Prepaid expenses and other current assets
|
720
|
|
|
997
|
|
||
Total current assets
|
13,179
|
|
|
10,685
|
|
||
Property, plant and equipment, net of accumulated depreciation of $6,103 for 2020 and $5,850 for 2019
|
7,063
|
|
|
6,912
|
|
||
Operating lease right-of-use assets
|
1,528
|
|
|
1,511
|
|
||
Goodwill
|
18,707
|
|
|
18,708
|
|
||
Intangible assets, net
|
909
|
|
|
1,040
|
|
||
Deferred tax assets
|
346
|
|
|
508
|
|
||
Other non-current assets
|
1,743
|
|
|
1,725
|
|
||
Total assets
|
$
|
43,475
|
|
|
$
|
41,089
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Trade accounts payable
|
$
|
2,006
|
|
|
$
|
2,226
|
|
Accrued employee compensation
|
1,614
|
|
|
1,865
|
|
||
Advance payments and billings in excess of costs incurred
|
2,179
|
|
|
2,237
|
|
||
Other current liabilities
|
3,928
|
|
|
3,106
|
|
||
Total current liabilities
|
9,727
|
|
|
9,434
|
|
||
Long-term debt, net of current portion of $1,803 for 2020 and $1,109 for 2019
|
14,259
|
|
|
12,770
|
|
||
Pension and other postretirement benefit plan liabilities
|
6,582
|
|
|
6,979
|
|
||
Operating lease liabilities
|
1,333
|
|
|
1,308
|
|
||
Other non-current liabilities
|
1,862
|
|
|
1,779
|
|
||
Total liabilities
|
33,763
|
|
|
32,270
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 6)
|
|
|
|
||||
|
|
|
|
||||
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: 2020—166,708,207 and 2019—167,848,424
|
167
|
|
|
168
|
|
||
Paid-in capital
|
10
|
|
|
—
|
|
||
Retained earnings
|
9,652
|
|
|
8,748
|
|
||
Accumulated other comprehensive loss
|
(117
|
)
|
|
(97
|
)
|
||
Total shareholders’ equity
|
9,712
|
|
|
8,819
|
|
||
Total liabilities and shareholders’ equity
|
$
|
43,475
|
|
|
$
|
41,089
|
|
|
Six Months Ended June 30
|
||||||
$ in millions
|
2020
|
|
2019
|
||||
Operating activities
|
|
|
|
||||
Net earnings
|
$
|
1,873
|
|
|
$
|
1,724
|
|
Adjustments to reconcile to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
605
|
|
|
606
|
|
||
Stock-based compensation
|
36
|
|
|
55
|
|
||
Deferred income taxes
|
169
|
|
|
48
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(663
|
)
|
|
(384
|
)
|
||
Unbilled receivables, net
|
(126
|
)
|
|
(658
|
)
|
||
Inventoried costs, net
|
(49
|
)
|
|
(156
|
)
|
||
Prepaid expenses and other assets
|
(16
|
)
|
|
(48
|
)
|
||
Accounts payable and other liabilities
|
(374
|
)
|
|
(367
|
)
|
||
Income taxes payable, net
|
330
|
|
|
194
|
|
||
Retiree benefits
|
(473
|
)
|
|
(285
|
)
|
||
Other, net
|
32
|
|
|
(35
|
)
|
||
Net cash provided by operating activities
|
1,344
|
|
|
694
|
|
||
|
|
|
|
||||
Investing activities
|
|
|
|
||||
Capital expenditures
|
(541
|
)
|
|
(536
|
)
|
||
Other, net
|
2
|
|
|
1
|
|
||
Net cash used in investing activities
|
(539
|
)
|
|
(535
|
)
|
||
|
|
|
|
||||
Financing activities
|
|
|
|
||||
Net proceeds from issuance of long-term debt
|
2,239
|
|
|
—
|
|
||
Payments to credit facilities
|
(13
|
)
|
|
(20
|
)
|
||
Net borrowings on commercial paper
|
—
|
|
|
101
|
|
||
Common stock repurchases
|
(490
|
)
|
|
(231
|
)
|
||
Cash dividends paid
|
(469
|
)
|
|
(435
|
)
|
||
Payments of employee taxes withheld from share-based awards
|
(64
|
)
|
|
(63
|
)
|
||
Other, net
|
(75
|
)
|
|
(2
|
)
|
||
Net cash provided by (used in) financing activities
|
1,128
|
|
|
(650
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
1,933
|
|
|
(491
|
)
|
||
Cash and cash equivalents, beginning of year
|
2,245
|
|
|
1,579
|
|
||
Cash and cash equivalents, end of period
|
$
|
4,178
|
|
|
$
|
1,088
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions, except per share amounts
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Common stock
|
|
|
|
|
|
|
|
||||||||
Beginning of period
|
$
|
167
|
|
|
$
|
170
|
|
|
$
|
168
|
|
|
$
|
171
|
|
Common stock repurchased
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
||||
End of period
|
167
|
|
|
169
|
|
|
167
|
|
|
169
|
|
||||
Paid-in capital
|
|
|
|
|
|
|
|
||||||||
Beginning of period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Stock compensation
|
10
|
|
|
—
|
|
|
10
|
|
|
—
|
|
||||
End of period
|
10
|
|
|
—
|
|
|
10
|
|
|
—
|
|
||||
Retained earnings
|
|
|
|
|
|
|
|
||||||||
Beginning of period
|
9,011
|
|
|
8,628
|
|
|
8,748
|
|
|
8,068
|
|
||||
Common stock repurchased
|
(131
|
)
|
|
(172
|
)
|
|
(479
|
)
|
|
(234
|
)
|
||||
Net earnings
|
1,005
|
|
|
861
|
|
|
1,873
|
|
|
1,724
|
|
||||
Dividends declared
|
(242
|
)
|
|
(226
|
)
|
|
(465
|
)
|
|
(432
|
)
|
||||
Stock compensation
|
9
|
|
|
29
|
|
|
(36
|
)
|
|
(6
|
)
|
||||
Other
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
||||
End of period
|
9,652
|
|
|
9,120
|
|
|
9,652
|
|
|
9,120
|
|
||||
Accumulated other comprehensive loss
|
|
|
|
|
|
|
|
||||||||
Beginning of period
|
(116
|
)
|
|
(59
|
)
|
|
(97
|
)
|
|
(52
|
)
|
||||
Other comprehensive loss, net of tax
|
(1
|
)
|
|
(16
|
)
|
|
(20
|
)
|
|
(23
|
)
|
||||
End of period
|
(117
|
)
|
|
(75
|
)
|
|
(117
|
)
|
|
(75
|
)
|
||||
Total shareholders’ equity
|
$
|
9,712
|
|
|
$
|
9,214
|
|
|
$
|
9,712
|
|
|
$
|
9,214
|
|
Cash dividends declared per share
|
$
|
1.45
|
|
|
$
|
1.32
|
|
|
$
|
2.77
|
|
|
$
|
2.52
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions, except per share data
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenue
|
$
|
125
|
|
|
$
|
154
|
|
|
$
|
261
|
|
|
$
|
320
|
|
Operating income
|
112
|
|
|
158
|
|
|
236
|
|
|
296
|
|
||||
Net earnings(1)
|
88
|
|
|
125
|
|
|
186
|
|
|
234
|
|
||||
Diluted earnings per share(1)
|
0.53
|
|
|
0.73
|
|
|
1.11
|
|
|
1.37
|
|
(1)
|
Based on a 21 percent statutory tax rate.
|
$ in millions
|
June 30,
2020 |
December 31,
2019 |
||||
Unamortized prior service credit, net of tax expense of $10 for 2020 and $17 for 2019
|
$
|
30
|
|
$
|
51
|
|
Cumulative translation adjustment and other, net
|
(147
|
)
|
(148
|
)
|
||
Total accumulated other comprehensive loss
|
$
|
(117
|
)
|
$
|
(97
|
)
|
|
|
|
|
|
|
|
|
|
|
Shares Repurchased
(in millions) |
|||||||||
Repurchase Program
Authorization Date |
|
Amount
Authorized (in millions) |
|
Total
Shares Retired (in millions) |
|
Average
Price Per Share(1) |
|
Date Completed
|
|
Six Months Ended June 30
|
|||||||||
|
2020
|
|
2019
|
||||||||||||||||
September 16, 2015
|
|
$
|
4,000
|
|
|
15.4
|
|
|
$
|
260.33
|
|
|
March 2020
|
|
0.9
|
|
|
1.7
|
|
December 4, 2018
|
|
$
|
3,000
|
|
|
0.5
|
|
|
326.20
|
|
|
|
|
0.5
|
|
|
—
|
|
(1)
|
Includes commissions paid.
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Federal and foreign income tax expense
|
$
|
198
|
|
|
$
|
167
|
|
|
$
|
383
|
|
|
$
|
338
|
|
Effective income tax rate
|
16.5
|
%
|
|
16.2
|
%
|
|
17.0
|
%
|
|
16.4
|
%
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
$ in millions
|
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||||||||
Financial Assets (Liabilities)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Marketable securities
|
|
$
|
331
|
|
|
$
|
1
|
|
|
$
|
332
|
|
|
$
|
364
|
|
|
$
|
1
|
|
|
$
|
365
|
|
Marketable securities valued using NAV
|
|
|
|
|
|
16
|
|
|
|
|
|
|
17
|
|
||||||||||
Total marketable securities
|
|
331
|
|
|
1
|
|
|
348
|
|
|
364
|
|
|
1
|
|
|
382
|
|
||||||
Derivatives
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
•
|
$750 million of 4.40% senior notes due 2030 (the “2030 Notes”),
|
•
|
$500 million of 5.15% senior notes due 2040 (the “2040 Notes”) and
|
•
|
$1.0 billion of 5.25% senior notes due 2050 (the “2050 Notes”).
|
$ in millions
|
|
Accrued Costs(1)(2)
|
|
Reasonably Possible Future Costs in Excess of Accrued Costs(2)
|
|
Deferred Costs(3)
|
||||||
June 30, 2020
|
|
$
|
570
|
|
|
$
|
452
|
|
|
$
|
478
|
|
December 31, 2019
|
|
531
|
|
|
448
|
|
|
436
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||||||||||||||||||
|
Pension
Benefits |
|
OPB
|
|
Pension
Benefits |
|
OPB
|
||||||||||||||||||||||||
$ in millions
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||||||||||
Components of net periodic benefit cost (benefit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Service cost
|
$
|
102
|
|
|
$
|
92
|
|
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
204
|
|
|
$
|
184
|
|
|
$
|
9
|
|
|
$
|
8
|
|
Interest cost
|
306
|
|
|
340
|
|
|
16
|
|
|
20
|
|
|
613
|
|
|
680
|
|
|
33
|
|
|
40
|
|
||||||||
Expected return on plan assets
|
(594
|
)
|
|
(526
|
)
|
|
(25
|
)
|
|
(23
|
)
|
|
(1,188
|
)
|
|
(1,051
|
)
|
|
(51
|
)
|
|
(46
|
)
|
||||||||
Amortization of prior service credit
|
(15
|
)
|
|
(14
|
)
|
|
1
|
|
|
—
|
|
|
(30
|
)
|
|
(29
|
)
|
|
2
|
|
|
(1
|
)
|
||||||||
Net periodic benefit cost (benefit)
|
$
|
(201
|
)
|
|
$
|
(108
|
)
|
|
$
|
(3
|
)
|
|
$
|
1
|
|
|
$
|
(401
|
)
|
|
$
|
(216
|
)
|
|
$
|
(7
|
)
|
|
$
|
1
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Defined benefit pension plans
|
$
|
26
|
|
|
$
|
23
|
|
|
$
|
46
|
|
|
$
|
46
|
|
OPB plans
|
11
|
|
|
12
|
|
|
23
|
|
|
24
|
|
||||
Defined contribution plans
|
100
|
|
|
88
|
|
|
356
|
|
|
279
|
|
|
|
Six Months Ended June 30
|
||||||
in millions
|
|
2020
|
|
2019
|
||||
RSRs granted
|
|
0.1
|
|
|
0.1
|
|
||
RPSRs granted
|
|
0.2
|
|
|
0.2
|
|
||
Grant date aggregate fair value
|
|
$
|
91
|
|
|
$
|
92
|
|
|
|
Six Months Ended June 30
|
||||||
$ in millions
|
|
2020
|
|
2019
|
||||
Minimum aggregate payout amount
|
|
$
|
31
|
|
|
$
|
36
|
|
Maximum aggregate payout amount
|
|
175
|
|
|
203
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Sales
|
|
|
|
|
|
|
|
||||||||
Aeronautics Systems
|
$
|
2,925
|
|
|
$
|
2,721
|
|
|
$
|
5,768
|
|
|
$
|
5,539
|
|
Defense Systems
|
1,886
|
|
|
1,916
|
|
|
3,767
|
|
|
3,684
|
|
||||
Mission Systems
|
2,446
|
|
|
2,404
|
|
|
4,793
|
|
|
4,614
|
|
||||
Space Systems
|
2,048
|
|
|
1,788
|
|
|
3,996
|
|
|
3,589
|
|
||||
Intersegment eliminations
|
(421
|
)
|
|
(373
|
)
|
|
(820
|
)
|
|
(781
|
)
|
||||
Total sales
|
8,884
|
|
|
8,456
|
|
|
17,504
|
|
|
16,645
|
|
||||
Operating income
|
|
|
|
|
|
|
|
||||||||
Aeronautics Systems
|
310
|
|
|
299
|
|
|
573
|
|
|
610
|
|
||||
Defense Systems
|
217
|
|
|
212
|
|
|
415
|
|
|
416
|
|
||||
Mission Systems
|
347
|
|
|
338
|
|
|
700
|
|
|
661
|
|
||||
Space Systems
|
209
|
|
|
193
|
|
|
411
|
|
|
383
|
|
||||
Intersegment eliminations
|
(52
|
)
|
|
(49
|
)
|
|
(101
|
)
|
|
(99
|
)
|
||||
Total segment operating income
|
1,031
|
|
|
993
|
|
|
1,998
|
|
|
1,971
|
|
||||
Net FAS (service)/CAS pension adjustment
|
103
|
|
|
107
|
|
|
208
|
|
|
215
|
|
||||
Unallocated corporate expense
|
(140
|
)
|
|
(154
|
)
|
|
(278
|
)
|
|
(304
|
)
|
||||
Total operating income
|
$
|
994
|
|
|
$
|
946
|
|
|
$
|
1,928
|
|
|
$
|
1,882
|
|
Sales by Customer Type
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||||||||||
$ in millions
|
$
|
%(3)
|
|
$
|
%(3)
|
|
$
|
%(3)
|
|
$
|
%(3)
|
||||||||||||
Aeronautics Systems
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government(1)
|
$
|
2,477
|
|
85
|
%
|
|
$
|
2,238
|
|
82
|
%
|
|
$
|
4,838
|
|
84
|
%
|
|
$
|
4,572
|
|
82
|
%
|
International(2)
|
407
|
|
14
|
%
|
|
439
|
|
16
|
%
|
|
851
|
|
15
|
%
|
|
874
|
|
16
|
%
|
||||
Other customers
|
12
|
|
—
|
%
|
|
20
|
|
1
|
%
|
|
24
|
|
—
|
%
|
|
45
|
|
1
|
%
|
||||
Intersegment sales
|
29
|
|
1
|
%
|
|
24
|
|
1
|
%
|
|
55
|
|
1
|
%
|
|
48
|
|
1
|
%
|
||||
Aeronautics Systems sales
|
2,925
|
|
100
|
%
|
|
2,721
|
|
100
|
%
|
|
5,768
|
|
100
|
%
|
|
5,539
|
|
100
|
%
|
||||
Defense Systems
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government(1)
|
1,305
|
|
69
|
%
|
|
1,281
|
|
67
|
%
|
|
2,564
|
|
68
|
%
|
|
2,422
|
|
66
|
%
|
||||
International(2)
|
316
|
|
17
|
%
|
|
365
|
|
19
|
%
|
|
656
|
|
18
|
%
|
|
728
|
|
20
|
%
|
||||
Other customers
|
85
|
|
4
|
%
|
|
106
|
|
5
|
%
|
|
196
|
|
5
|
%
|
|
203
|
|
5
|
%
|
||||
Intersegment sales
|
180
|
|
10
|
%
|
|
164
|
|
9
|
%
|
|
351
|
|
9
|
%
|
|
331
|
|
9
|
%
|
||||
Defense Systems sales
|
1,886
|
|
100
|
%
|
|
1,916
|
|
100
|
%
|
|
3,767
|
|
100
|
%
|
|
3,684
|
|
100
|
%
|
||||
Mission Systems
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government(1)
|
1,776
|
|
73
|
%
|
|
1,746
|
|
73
|
%
|
|
3,447
|
|
72
|
%
|
|
3,359
|
|
73
|
%
|
||||
International(2)
|
468
|
|
19
|
%
|
|
465
|
|
19
|
%
|
|
951
|
|
20
|
%
|
|
841
|
|
18
|
%
|
||||
Other customers
|
18
|
|
1
|
%
|
|
29
|
|
1
|
%
|
|
35
|
|
1
|
%
|
|
53
|
|
1
|
%
|
||||
Intersegment sales
|
184
|
|
7
|
%
|
|
164
|
|
7
|
%
|
|
360
|
|
7
|
%
|
|
361
|
|
8
|
%
|
||||
Mission Systems sales
|
2,446
|
|
100
|
%
|
|
2,404
|
|
100
|
%
|
|
4,793
|
|
100
|
%
|
|
4,614
|
|
100
|
%
|
||||
Space Systems
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government(1)
|
1,911
|
|
93
|
%
|
|
1,679
|
|
94
|
%
|
|
3,714
|
|
93
|
%
|
|
3,348
|
|
93
|
%
|
||||
International(2)
|
70
|
|
4
|
%
|
|
32
|
|
2
|
%
|
|
138
|
|
3
|
%
|
|
75
|
|
2
|
%
|
||||
Other customers
|
39
|
|
2
|
%
|
|
56
|
|
3
|
%
|
|
90
|
|
3
|
%
|
|
125
|
|
4
|
%
|
||||
Intersegment sales
|
28
|
|
1
|
%
|
|
21
|
|
1
|
%
|
|
54
|
|
1
|
%
|
|
41
|
|
1
|
%
|
||||
Space Systems sales
|
2,048
|
|
100
|
%
|
|
1,788
|
|
100
|
%
|
|
3,996
|
|
100
|
%
|
|
3,589
|
|
100
|
%
|
||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government(1)
|
7,469
|
|
84
|
%
|
|
6,944
|
|
82
|
%
|
|
14,563
|
|
83
|
%
|
|
13,701
|
|
82
|
%
|
||||
International(2)
|
1,261
|
|
14
|
%
|
|
1,301
|
|
16
|
%
|
|
2,596
|
|
15
|
%
|
|
2,518
|
|
15
|
%
|
||||
Other customers
|
154
|
|
2
|
%
|
|
211
|
|
2
|
%
|
|
345
|
|
2
|
%
|
|
426
|
|
3
|
%
|
||||
Total Sales
|
$
|
8,884
|
|
100
|
%
|
|
$
|
8,456
|
|
100
|
%
|
|
$
|
17,504
|
|
100
|
%
|
|
$
|
16,645
|
|
100
|
%
|
(1)
|
Sales to the U.S. government include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is the U.S. government. Each of the company’s segments derives substantial revenue from the U.S. government.
|
Sales by Contract Type
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||||||||||
$ in millions
|
$
|
%(1)
|
|
$
|
%(1)
|
|
$
|
%(1)
|
|
$
|
%(1)
|
||||||||||||
Aeronautics Systems
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost-type
|
$
|
1,426
|
|
49
|
%
|
|
$
|
1,312
|
|
49
|
%
|
|
$
|
2,769
|
|
48
|
%
|
|
$
|
2,624
|
|
48
|
%
|
Fixed-price
|
1,470
|
|
51
|
%
|
|
1,385
|
|
51
|
%
|
|
2,944
|
|
52
|
%
|
|
2,867
|
|
52
|
%
|
||||
Intersegment sales
|
29
|
|
|
|
24
|
|
|
|
55
|
|
|
|
48
|
|
|
||||||||
Aeronautics Systems sales
|
2,925
|
|
|
|
2,721
|
|
|
|
5,768
|
|
|
|
5,539
|
|
|
||||||||
Defense Systems
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost-type
|
582
|
|
34
|
%
|
|
632
|
|
36
|
%
|
|
1,210
|
|
35
|
%
|
|
1,255
|
|
37
|
%
|
||||
Fixed-price
|
1,124
|
|
66
|
%
|
|
1,120
|
|
64
|
%
|
|
2,206
|
|
65
|
%
|
|
2,098
|
|
63
|
%
|
||||
Intersegment sales
|
180
|
|
|
|
164
|
|
|
|
351
|
|
|
|
331
|
|
|
||||||||
Defense Systems sales
|
1,886
|
|
|
|
1,916
|
|
|
|
3,767
|
|
|
|
3,684
|
|
|
||||||||
Mission Systems
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost-type
|
895
|
|
40
|
%
|
|
870
|
|
39
|
%
|
|
1,741
|
|
39
|
%
|
|
1,705
|
|
40
|
%
|
||||
Fixed-price
|
1,367
|
|
60
|
%
|
|
1,370
|
|
61
|
%
|
|
2,692
|
|
61
|
%
|
|
2,548
|
|
60
|
%
|
||||
Intersegment sales
|
184
|
|
|
|
164
|
|
|
|
360
|
|
|
|
361
|
|
|
||||||||
Mission Systems sales
|
2,446
|
|
|
|
2,404
|
|
|
|
4,793
|
|
|
|
4,614
|
|
|
||||||||
Space Systems
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost-type
|
1,468
|
|
73
|
%
|
|
1,298
|
|
73
|
%
|
|
2,866
|
|
73
|
%
|
|
2,604
|
|
73
|
%
|
||||
Fixed-price
|
552
|
|
27
|
%
|
|
469
|
|
27
|
%
|
|
1,076
|
|
27
|
%
|
|
944
|
|
27
|
%
|
||||
Intersegment sales
|
28
|
|
|
|
21
|
|
|
|
54
|
|
|
|
41
|
|
|
||||||||
Space Systems sales
|
2,048
|
|
|
|
1,788
|
|
|
|
3,996
|
|
|
|
3,589
|
|
|
||||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost-type
|
4,371
|
|
49
|
%
|
|
4,112
|
|
49
|
%
|
|
8,586
|
|
49
|
%
|
|
8,188
|
|
49
|
%
|
||||
Fixed-price
|
4,513
|
|
51
|
%
|
|
4,344
|
|
51
|
%
|
|
8,918
|
|
51
|
%
|
|
8,457
|
|
51
|
%
|
||||
Total Sales
|
$
|
8,884
|
|
|
|
$
|
8,456
|
|
|
|
$
|
17,504
|
|
|
|
$
|
16,645
|
|
|
(1)
|
Percentages calculated based on external customer sales.
|
Sales by Geographic Region
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||||||||||
|
2020
|
2019
|
|
2020
|
|
2019
|
|||||||||||||||||
$ in millions
|
$
|
%(2)
|
|
$
|
%(2)
|
|
$
|
%(2)
|
|
$
|
%(2)
|
||||||||||||
Aeronautics Systems
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States
|
$
|
2,489
|
|
86
|
%
|
|
$
|
2,258
|
|
84
|
%
|
|
$
|
4,862
|
|
85
|
%
|
|
$
|
4,617
|
|
84
|
%
|
Asia/Pacific
|
202
|
|
7
|
%
|
|
215
|
|
8
|
%
|
|
409
|
|
7
|
%
|
|
448
|
|
8
|
%
|
||||
All other(1)
|
205
|
|
7
|
%
|
|
224
|
|
8
|
%
|
|
442
|
|
8
|
%
|
|
426
|
|
8
|
%
|
||||
Intersegment sales
|
29
|
|
|
|
24
|
|
|
|
55
|
|
|
|
48
|
|
|
||||||||
Aeronautics Systems sales
|
2,925
|
|
|
|
2,721
|
|
|
|
5,768
|
|
|
|
5,539
|
|
|
||||||||
Defense Systems
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States
|
1,390
|
|
82
|
%
|
|
1,387
|
|
79
|
%
|
|
2,760
|
|
81
|
%
|
|
2,625
|
|
78
|
%
|
||||
Asia/Pacific
|
107
|
|
6
|
%
|
|
125
|
|
7
|
%
|
|
189
|
|
5
|
%
|
|
213
|
|
6
|
%
|
||||
All other(1)
|
209
|
|
12
|
%
|
|
240
|
|
14
|
%
|
|
467
|
|
14
|
%
|
|
515
|
|
16
|
%
|
||||
Intersegment sales
|
180
|
|
|
|
164
|
|
|
|
351
|
|
|
|
331
|
|
|
||||||||
Defense Systems sales
|
1,886
|
|
|
|
1,916
|
|
|
|
3,767
|
|
|
|
3,684
|
|
|
||||||||
Mission Systems
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States
|
1,794
|
|
79
|
%
|
|
1,775
|
|
79
|
%
|
|
3,482
|
|
79
|
%
|
|
3,412
|
|
80
|
%
|
||||
Asia/Pacific
|
191
|
|
9
|
%
|
|
142
|
|
6
|
%
|
|
367
|
|
8
|
%
|
|
277
|
|
7
|
%
|
||||
All other(1)
|
277
|
|
12
|
%
|
|
323
|
|
15
|
%
|
|
584
|
|
13
|
%
|
|
564
|
|
13
|
%
|
||||
Intersegment sales
|
184
|
|
|
|
164
|
|
|
|
360
|
|
|
|
361
|
|
|
||||||||
Mission Systems sales
|
2,446
|
|
|
|
2,404
|
|
|
|
4,793
|
|
|
|
4,614
|
|
|
||||||||
Space Systems
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States
|
1,950
|
|
97
|
%
|
|
1,735
|
|
98
|
%
|
|
3,804
|
|
97
|
%
|
|
3,473
|
|
98
|
%
|
||||
Asia/Pacific
|
5
|
|
—
|
%
|
|
2
|
|
—
|
%
|
|
10
|
|
—
|
%
|
|
14
|
|
—
|
%
|
||||
All other(1)
|
65
|
|
3
|
%
|
|
30
|
|
2
|
%
|
|
128
|
|
3
|
%
|
|
61
|
|
2
|
%
|
||||
Intersegment sales
|
28
|
|
|
|
21
|
|
|
|
54
|
|
|
|
41
|
|
|
||||||||
Space Systems sales
|
2,048
|
|
|
|
1,788
|
|
|
|
3,996
|
|
|
|
3,589
|
|
|
||||||||
Total
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States
|
7,623
|
|
86
|
%
|
|
7,155
|
|
84
|
%
|
|
14,908
|
|
85
|
%
|
|
14,127
|
|
85
|
%
|
||||
Asia/Pacific
|
505
|
|
6
|
%
|
|
484
|
|
6
|
%
|
|
975
|
|
6
|
%
|
|
952
|
|
6
|
%
|
||||
All other(1)
|
756
|
|
8
|
%
|
|
817
|
|
10
|
%
|
|
1,621
|
|
9
|
%
|
|
1,566
|
|
9
|
%
|
||||
Total Sales
|
$
|
8,884
|
|
|
|
$
|
8,456
|
|
|
|
$
|
17,504
|
|
|
|
$
|
16,645
|
|
|
(1)
|
All other is principally comprised of Europe and the Middle East.
|
(2)
|
Percentages calculated based on external customer sales.
|
|
Three Months Ended June 30
|
|
%
|
|
Six Months Ended June 30
|
|
%
|
||||||||||||||
$ in millions, except per share amounts
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
||||||||||
Sales
|
$
|
8,884
|
|
|
$
|
8,456
|
|
|
5
|
%
|
|
$
|
17,504
|
|
|
$
|
16,645
|
|
|
5
|
%
|
Operating costs and expenses
|
7,890
|
|
|
7,510
|
|
|
5
|
%
|
|
15,576
|
|
|
14,763
|
|
|
6
|
%
|
||||
Operating costs and expenses as a % of sales
|
88.8
|
%
|
|
88.8
|
%
|
|
|
|
89.0
|
%
|
|
88.7
|
%
|
|
|
||||||
Operating income
|
994
|
|
|
946
|
|
|
5
|
%
|
|
1,928
|
|
|
1,882
|
|
|
2
|
%
|
||||
Operating margin rate
|
11.2
|
%
|
|
11.2
|
%
|
|
|
|
11.0
|
%
|
|
11.3
|
%
|
|
|
||||||
Federal and foreign income tax expense
|
198
|
|
|
167
|
|
|
19
|
%
|
|
383
|
|
|
338
|
|
|
13
|
%
|
||||
Effective income tax rate
|
16.5
|
%
|
|
16.2
|
%
|
|
|
|
17.0
|
%
|
|
16.4
|
%
|
|
|
||||||
Net earnings
|
1,005
|
|
|
861
|
|
|
17
|
%
|
|
1,873
|
|
|
1,724
|
|
|
9
|
%
|
||||
Diluted earnings per share
|
$
|
6.01
|
|
|
$
|
5.06
|
|
|
19
|
%
|
|
$
|
11.16
|
|
|
$
|
10.11
|
|
|
10
|
%
|
Aeronautics Systems
|
|
Defense Systems
|
|
Mission Systems
|
|
Space Systems
|
Autonomous Systems
|
|
Battle Management & Missile Systems
|
|
Airborne Sensors & Networks
|
|
Launch & Strategic Missiles
|
Manned Aircraft
|
|
Mission Readiness
|
|
Cyber & Intelligence Mission Solutions
|
|
Space
|
|
|
|
|
Maritime/Land Systems & Sensors
|
|
|
|
|
|
|
Navigation, Targeting & Survivability
|
|
|
|
Three Months Ended June 30
|
|
%
|
|
Six Months Ended June 30
|
|
%
|
||||||||||||||
$ in millions
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
||||||||||
Segment operating income
|
$
|
1,031
|
|
|
$
|
993
|
|
|
4
|
%
|
|
$
|
1,998
|
|
|
$
|
1,971
|
|
|
1
|
%
|
Segment operating margin rate
|
11.6
|
%
|
|
11.7
|
%
|
|
|
|
11.4
|
%
|
|
11.8
|
%
|
|
|
||||||
CAS pension expense
|
205
|
|
|
199
|
|
|
3
|
%
|
|
412
|
|
|
399
|
|
|
3
|
%
|
||||
Less: FAS (service) pension expense
|
(102
|
)
|
|
(92
|
)
|
|
11
|
%
|
|
(204
|
)
|
|
(184
|
)
|
|
11
|
%
|
||||
Net FAS (service)/CAS pension adjustment
|
103
|
|
|
107
|
|
|
(4
|
)%
|
|
208
|
|
|
215
|
|
|
(3
|
)%
|
||||
Intangible asset amortization and PP&E step-up depreciation
|
(77
|
)
|
|
(98
|
)
|
|
(21
|
)%
|
|
(159
|
)
|
|
(194
|
)
|
|
(18
|
)%
|
||||
Other unallocated corporate expense
|
(63
|
)
|
|
(56
|
)
|
|
13
|
%
|
|
(119
|
)
|
|
(110
|
)
|
|
8
|
%
|
||||
Unallocated corporate expense
|
(140
|
)
|
|
(154
|
)
|
|
(9
|
)%
|
|
(278
|
)
|
|
(304
|
)
|
|
(9
|
)%
|
||||
Operating income
|
$
|
994
|
|
|
$
|
946
|
|
|
5
|
%
|
|
$
|
1,928
|
|
|
$
|
1,882
|
|
|
2
|
%
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Favorable EAC adjustments
|
$
|
241
|
|
|
$
|
283
|
|
|
$
|
517
|
|
|
$
|
518
|
|
Unfavorable EAC adjustments
|
(129
|
)
|
|
(125
|
)
|
|
(281
|
)
|
|
(222
|
)
|
||||
Net EAC adjustments
|
$
|
112
|
|
|
$
|
158
|
|
|
$
|
236
|
|
|
$
|
296
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
$ in millions
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Aeronautics Systems
|
$
|
22
|
|
|
$
|
59
|
|
|
$
|
34
|
|
|
$
|
110
|
|
Defense Systems
|
39
|
|
|
38
|
|
|
61
|
|
|
70
|
|
||||
Mission Systems
|
59
|
|
|
52
|
|
|
138
|
|
|
87
|
|
||||
Space Systems
|
(7
|
)
|
|
16
|
|
|
5
|
|
|
37
|
|
||||
Eliminations
|
(1
|
)
|
|
(7
|
)
|
|
(2
|
)
|
|
(8
|
)
|
||||
Net EAC adjustments
|
$
|
112
|
|
|
$
|
158
|
|
|
$
|
236
|
|
|
$
|
296
|
|
AERONAUTICS SYSTEMS
|
Three Months Ended June 30
|
|
%
|
|
Six Months Ended June 30
|
|
%
|
||||||||||||||
$ in millions
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
||||||||||
Sales
|
$
|
2,925
|
|
|
$
|
2,721
|
|
|
7
|
%
|
|
$
|
5,768
|
|
|
$
|
5,539
|
|
|
4
|
%
|
Operating income
|
310
|
|
|
299
|
|
|
4
|
%
|
|
573
|
|
|
610
|
|
|
(6
|
)%
|
||||
Operating margin rate
|
10.6
|
%
|
|
11.0
|
%
|
|
|
|
9.9
|
%
|
|
11.0
|
%
|
|
|
DEFENSE SYSTEMS
|
Three Months Ended June 30
|
|
%
|
|
Six Months Ended June 30
|
|
%
|
||||||||||||||
$ in millions
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
||||||||||
Sales
|
$
|
1,886
|
|
|
$
|
1,916
|
|
|
(2
|
)%
|
|
$
|
3,767
|
|
|
$
|
3,684
|
|
|
2
|
%
|
Operating income
|
217
|
|
|
212
|
|
|
2
|
%
|
|
415
|
|
|
416
|
|
|
—
|
%
|
||||
Operating margin rate
|
11.5
|
%
|
|
11.1
|
%
|
|
|
|
11.0
|
%
|
|
11.3
|
%
|
|
|
MISSION SYSTEMS
|
Three Months Ended June 30
|
|
%
|
|
Six Months Ended June 30
|
|
%
|
||||||||||||||
$ in millions
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
||||||||||
Sales
|
$
|
2,446
|
|
|
$
|
2,404
|
|
|
2
|
%
|
|
$
|
4,793
|
|
|
$
|
4,614
|
|
|
4
|
%
|
Operating income
|
347
|
|
|
338
|
|
|
3
|
%
|
|
700
|
|
|
661
|
|
|
6
|
%
|
||||
Operating margin rate
|
14.2
|
%
|
|
14.1
|
%
|
|
|
|
14.6
|
%
|
|
14.3
|
%
|
|
|
SPACE SYSTEMS
|
Three Months Ended June 30
|
|
%
|
|
Six Months Ended June 30
|
|
%
|
||||||||||||||
$ in millions
|
2020
|
|
2019
|
|
Change
|
|
2020
|
|
2019
|
|
Change
|
||||||||||
Sales
|
$
|
2,048
|
|
|
$
|
1,788
|
|
|
15
|
%
|
|
$
|
3,996
|
|
|
$
|
3,589
|
|
|
11
|
%
|
Operating income
|
209
|
|
|
193
|
|
|
8
|
%
|
|
411
|
|
|
383
|
|
|
7
|
%
|
||||
Operating margin rate
|
10.2
|
%
|
|
10.8
|
%
|
|
|
|
10.3
|
%
|
|
10.7
|
%
|
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||||||||||||
$ in millions
|
2020
|
2019
|
|
2020
|
2019
|
||||||||||||||||||||
Segment Information:
|
Sales
|
Operating Costs and Expenses
|
Sales
|
Operating Costs and Expenses
|
|
Sales
|
Operating Costs and Expenses
|
Sales
|
Operating Costs and Expenses
|
||||||||||||||||
Aeronautics Systems
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product
|
$
|
2,512
|
|
$
|
2,247
|
|
$
|
2,301
|
|
$
|
2,068
|
|
|
$
|
4,921
|
|
$
|
4,446
|
|
$
|
4,706
|
|
$
|
4,210
|
|
Service
|
384
|
|
342
|
|
396
|
|
333
|
|
|
792
|
|
700
|
|
785
|
|
676
|
|
||||||||
Intersegment eliminations
|
29
|
|
26
|
|
24
|
|
21
|
|
|
55
|
|
49
|
|
48
|
|
43
|
|
||||||||
Total Aeronautics Systems
|
2,925
|
|
2,615
|
|
2,721
|
|
2,422
|
|
|
5,768
|
|
5,195
|
|
5,539
|
|
4,929
|
|
||||||||
Defense Systems
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product
|
753
|
|
676
|
|
697
|
|
626
|
|
|
1,523
|
|
1,380
|
|
1,318
|
|
1,183
|
|
||||||||
Service
|
953
|
|
831
|
|
1,055
|
|
931
|
|
|
1,893
|
|
1,657
|
|
2,035
|
|
1,789
|
|
||||||||
Intersegment eliminations
|
180
|
|
162
|
|
164
|
|
147
|
|
|
351
|
|
315
|
|
331
|
|
296
|
|
||||||||
Total Defense Systems
|
1,886
|
|
1,669
|
|
1,916
|
|
1,704
|
|
|
3,767
|
|
3,352
|
|
3,684
|
|
3,268
|
|
||||||||
Mission Systems
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product
|
1,646
|
|
1,388
|
|
1,574
|
|
1,332
|
|
|
3,154
|
|
2,662
|
|
2,956
|
|
2,492
|
|
||||||||
Service
|
616
|
|
554
|
|
666
|
|
598
|
|
|
1,279
|
|
1,124
|
|
1,297
|
|
1,156
|
|
||||||||
Intersegment eliminations
|
184
|
|
157
|
|
164
|
|
136
|
|
|
360
|
|
307
|
|
361
|
|
305
|
|
||||||||
Total Mission Systems
|
2,446
|
|
2,099
|
|
2,404
|
|
2,066
|
|
|
4,793
|
|
4,093
|
|
4,614
|
|
3,953
|
|
||||||||
Space Systems
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Product
|
1,571
|
|
1,402
|
|
1,308
|
|
1,163
|
|
|
3,060
|
|
2,727
|
|
2,628
|
|
2,330
|
|
||||||||
Service
|
449
|
|
413
|
|
459
|
|
412
|
|
|
882
|
|
810
|
|
920
|
|
838
|
|
||||||||
Intersegment eliminations
|
28
|
|
24
|
|
21
|
|
20
|
|
|
54
|
|
48
|
|
41
|
|
38
|
|
||||||||
Total Space Systems
|
2,048
|
|
1,839
|
|
1,788
|
|
1,595
|
|
|
3,996
|
|
3,585
|
|
3,589
|
|
3,206
|
|
||||||||
Segment Totals
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total Product
|
$
|
6,482
|
|
$
|
5,713
|
|
$
|
5,880
|
|
$
|
5,189
|
|
|
$
|
12,658
|
|
$
|
11,215
|
|
$
|
11,608
|
|
$
|
10,215
|
|
Total Service
|
2,402
|
|
2,140
|
|
2,576
|
|
2,274
|
|
|
4,846
|
|
4,291
|
|
5,037
|
|
4,459
|
|
||||||||
Total Segment(1)
|
$
|
8,884
|
|
$
|
7,853
|
|
$
|
8,456
|
|
$
|
7,463
|
|
|
$
|
17,504
|
|
$
|
15,506
|
|
$
|
16,645
|
|
$
|
14,674
|
|
(1)
|
A reconciliation of segment operating income to total operating income is included in “Segment Operating Results.”
|
|
|
June 30, 2020
|
|
December 31, 2019
|
|
|
|||||||||||||
$ in millions
|
|
Funded
|
|
Unfunded
|
|
Total
Backlog |
|
Total
Backlog
|
|
% Change in 2020
|
|||||||||
Aeronautics Systems
|
|
$
|
12,163
|
|
|
$
|
12,556
|
|
|
$
|
24,719
|
|
|
$
|
26,021
|
|
|
(5
|
)%
|
Defense Systems
|
|
6,245
|
|
|
1,728
|
|
|
7,973
|
|
|
8,481
|
|
|
(6
|
)%
|
||||
Mission Systems
|
|
9,548
|
|
|
3,997
|
|
|
13,545
|
|
|
14,226
|
|
|
(5
|
)%
|
||||
Space Systems
|
|
5,908
|
|
|
17,903
|
|
|
23,811
|
|
|
16,112
|
|
|
48
|
%
|
||||
Total backlog
|
|
$
|
33,864
|
|
|
$
|
36,184
|
|
|
$
|
70,048
|
|
|
$
|
64,840
|
|
|
8
|
%
|
|
Six Months Ended June 30
|
|
%
|
|||||||
$ in millions
|
2020
|
|
2019
|
|
Change
|
|||||
Net earnings
|
$
|
1,873
|
|
|
$
|
1,724
|
|
|
9
|
%
|
Non-cash items(1)
|
810
|
|
|
709
|
|
|
14
|
%
|
||
Changes in assets and liabilities:
|
|
|
|
|
|
|||||
Trade working capital
|
(898
|
)
|
|
(1,419
|
)
|
|
(37
|
)%
|
||
Retiree benefits
|
(473
|
)
|
|
(285
|
)
|
|
66
|
%
|
||
Other, net
|
32
|
|
|
(35
|
)
|
|
(191
|
)%
|
||
Net cash provided by operating activities
|
$
|
1,344
|
|
|
$
|
694
|
|
|
94
|
%
|
(1)
|
Includes depreciation and amortization, non-cash lease expense, stock based compensation expense and deferred income taxes.
|
|
Six Months Ended June 30
|
|
%
|
|||||||
$ in millions
|
2020
|
|
2019
|
|
Change
|
|||||
Net cash provided by operating activities
|
$
|
1,344
|
|
|
$
|
694
|
|
|
94
|
%
|
Less: capital expenditures
|
(541
|
)
|
|
(536
|
)
|
|
1
|
%
|
||
Free cash flow
|
$
|
803
|
|
|
$
|
158
|
|
|
408
|
%
|
•
|
the impact of the COVID-19 outbreak or future epidemics on our business, including the potential for worker absenteeism, facility closures, work slowdowns or stoppages, supply chain disruptions, program delays, our ability to recover costs under contracts, changing government funding and acquisition priorities and processes, changing government payment rules and practices, and potential impacts on access to capital, the markets and the fair value of our assets;
|
•
|
our dependence on the U.S. government for a substantial portion of our business
|
•
|
significant delays or reductions in appropriations for our programs, and U.S. government funding and program support more broadly
|
•
|
investigations, claims, disputes, enforcement actions, litigation and/or other legal proceedings
|
•
|
the use of estimates when accounting for our contracts and the effect of contract cost growth and/or changes in estimated contract revenues and costs
|
•
|
our exposure to additional risks as a result of our international business, including risks related to geopolitical and economic factors, suppliers, laws and regulations
|
•
|
the improper conduct of employees, agents, subcontractors, suppliers, business partners or joint ventures in which we participate and the impact on our reputation and our ability to do business
|
•
|
cyber and other security threats or disruptions faced by us, our customers or our suppliers and other partners
|
•
|
the performance and financial viability of our subcontractors and suppliers and the availability and pricing of raw materials and components
|
•
|
changes in procurement and other laws, regulations, contract terms and practices applicable to our industry, findings by the U.S. government as to our compliance with such requirements, and changes in our customers’ business practices globally
|
•
|
increased competition within our markets and bid protests
|
•
|
the ability to maintain a qualified workforce with the required security clearances and requisite skills
|
•
|
our ability to meet performance obligations under our contracts, including obligations that require innovative design capabilities, are technologically complex, require certain manufacturing expertise or are dependent on factors not wholly within our control
|
•
|
environmental matters, including unforeseen environmental costs and government and third party claims
|
•
|
natural disasters
|
•
|
health epidemics, pandemics and similar outbreaks, including the global COVID-19 pandemic
|
•
|
the adequacy and availability of our insurance coverage, customer indemnifications or other liability protections
|
•
|
products and services we provide related to hazardous and high risk operations, including the production and use of such products, which subject us to various environmental, regulatory, financial, reputational and other risks
|
•
|
the future investment performance of plan assets, changes in actuarial assumptions associated with our pension and other postretirement benefit plans and legislative or other regulatory actions impacting our pension and postretirement benefit obligations
|
•
|
our ability appropriately to exploit and/or protect intellectual property rights
|
•
|
our ability to develop new products and technologies and maintain technologies, facilities, and equipment to win new competitions and meet the needs of our customers
|
•
|
unanticipated changes in our tax provisions or exposure to additional tax liabilities
|
•
|
changes in business conditions that could impact business investments and/or recorded goodwill or the value of other long-lived assets
|
Period
|
Number
of Shares Purchased |
|
Average Price
Paid per Share(1) |
|
Number
of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
Approximate
Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs ($ in millions) |
|||||||
March 28, 2020 - April 24, 2020
|
397,447
|
|
|
$
|
329.41
|
|
|
397,447
|
|
|
|
$
|
2,849
|
|
April 25, 2020 - May 22, 2020
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2,849
|
|
||
May 23, 2020 - June 26, 2020
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2,849
|
|
||
Total
|
397,447
|
|
|
$
|
329.41
|
|
|
397,447
|
|
|
|
$
|
2,849
|
|
(1)
|
Includes commissions paid.
|
|
2017
|
|
2018
|
|
2019
|
|
2019
|
|
2020
|
|||||||||||||||||||
|
Total
|
|
Total
|
|
Total
|
|
Three Months Ended
|
|||||||||||||||||||||
$ in millions
|
Year
|
|
Year
|
|
Year
|
|
Mar 31
|
Jun 30
|
Sep 30
|
Dec 31
|
|
Mar 31
|
||||||||||||||||
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Aeronautics Systems
|
$
|
848
|
|
|
$
|
1,107
|
|
|
$
|
1,170
|
|
|
$
|
308
|
|
$
|
295
|
|
$
|
265
|
|
$
|
302
|
|
|
$
|
259
|
|
Defense Systems
|
534
|
|
|
690
|
|
|
781
|
|
|
202
|
|
209
|
|
199
|
|
171
|
|
|
196
|
|
||||||||
Mission Systems
|
1,157
|
|
|
1,215
|
|
|
1,382
|
|
|
319
|
|
332
|
|
346
|
|
385
|
|
|
348
|
|
||||||||
Space Systems
|
578
|
|
|
635
|
|
|
781
|
|
|
188
|
|
191
|
|
187
|
|
215
|
|
|
199
|
|
||||||||
Intersegment eliminations
|
(214
|
)
|
|
(200
|
)
|
|
(205
|
)
|
|
(50
|
)
|
(49
|
)
|
(57
|
)
|
(49
|
)
|
|
(49
|
)
|
||||||||
Total segment operating income
|
2,903
|
|
|
3,447
|
|
|
3,909
|
|
|
967
|
|
978
|
|
940
|
|
1,024
|
|
|
953
|
|
||||||||
Net FAS (service)/CAS pension adjustment
|
638
|
|
|
613
|
|
|
465
|
|
|
108
|
|
107
|
|
131
|
|
119
|
|
|
105
|
|
||||||||
Unallocated corporate expense
|
(323
|
)
|
|
(280
|
)
|
|
(405
|
)
|
|
(139
|
)
|
(139
|
)
|
(120
|
)
|
(7
|
)
|
|
(124
|
)
|
||||||||
Total operating income
|
$
|
3,218
|
|
|
$
|
3,780
|
|
|
$
|
3,969
|
|
|
$
|
936
|
|
$
|
946
|
|
$
|
951
|
|
$
|
1,136
|
|
|
$
|
934
|
|
|
2017
|
|
2018
|
|
2019
|
|
2019
|
|
2020
|
|||||||||||||||||||
|
Total
|
|
Total
|
|
Total
|
|
Three Months Ended
|
|||||||||||||||||||||
$ in millions
|
Year
|
|
Year
|
|
Year
|
|
Mar 31
|
Jun 30
|
Sep 30
|
Dec 31
|
|
Mar 31
|
||||||||||||||||
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Aeronautics Systems
|
$
|
859
|
|
|
$
|
1,128
|
|
|
$
|
1,188
|
|
|
$
|
311
|
|
$
|
299
|
|
$
|
269
|
|
$
|
309
|
|
|
$
|
263
|
|
Defense Systems
|
539
|
|
|
697
|
|
|
793
|
|
|
204
|
|
212
|
|
201
|
|
176
|
|
|
198
|
|
||||||||
Mission Systems
|
1,179
|
|
|
1,245
|
|
|
1,408
|
|
|
323
|
|
338
|
|
351
|
|
396
|
|
|
353
|
|
||||||||
Space Systems
|
582
|
|
|
644
|
|
|
794
|
|
|
190
|
|
193
|
|
191
|
|
220
|
|
|
202
|
|
||||||||
Intersegment eliminations
|
(214
|
)
|
|
(200
|
)
|
|
(205
|
)
|
|
(50
|
)
|
(49
|
)
|
(57
|
)
|
(49
|
)
|
|
(49
|
)
|
||||||||
Total segment operating income
|
2,945
|
|
|
3,514
|
|
|
3,978
|
|
|
978
|
|
993
|
|
955
|
|
1,052
|
|
|
967
|
|
||||||||
Net FAS (service)/CAS pension adjustment
|
638
|
|
|
613
|
|
|
465
|
|
|
108
|
|
107
|
|
131
|
|
119
|
|
|
105
|
|
||||||||
Unallocated corporate expense
|
(365
|
)
|
|
(347
|
)
|
|
(474
|
)
|
|
(150
|
)
|
(154
|
)
|
(135
|
)
|
(35
|
)
|
|
(138
|
)
|
||||||||
Total operating income
|
$
|
3,218
|
|
|
$
|
3,780
|
|
|
$
|
3,969
|
|
|
$
|
936
|
|
$
|
946
|
|
$
|
951
|
|
$
|
1,136
|
|
|
$
|
934
|
|
2.1
|
|
|
|
2.2
|
|
|
|
2.3
|
|
|
|
2.4
|
|
|
|
+*10.1
|
|
|
|
*15
|
|
|
|
*31.1
|
|
|
|
*31.2
|
|
|
|
**32.1
|
|
|
|
**32.2
|
|
|
|
*101
|
Northrop Grumman Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in XBRL (Extensible Business Reporting Language): (i) the Cover Page, (ii) Condensed Consolidated Statements of Earnings and Comprehensive Income, (iii) Condensed Consolidated Statements of Financial Position, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Changes in Shareholders’ Equity, and (vi) Notes to Condensed Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
*104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
+
|
Management contract or compensatory plan or arrangement
|
|
|
*
|
Filed with this report
|
|
|
**
|
Furnished with this report
|
NORTHROP GRUMMAN CORPORATION
(Registrant)
|
||
|
|
|
By:
|
|
/s/ Michael A. Hardesty
|
|
|
Michael A. Hardesty
Corporate Vice President, Controller and
Chief Accounting Officer
(Principal Accounting Officer)
|
Retainer:
|
Retainer fees are paid quarterly, at the end of each quarter. Fees are as follows:
|
Annual cash retainer:
|
$130,000
|
Additional retainer for Lead Independent Director:
|
$35,000
|
Additional retainer for Audit Committee:
|
$10,000
|
Additional retainer for Audit Committee chair:
|
$20,000
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Additional retainer for Comp Committee chair:
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$20,000
|
Additional retainer for Gov Committee chair:
|
$20,000
|
Additional retainer for Policy Committee chair:
|
$20,000
|
Equity Grant:
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Directors are awarded an annual equity grant of $160,000 in deferred stock units (“Automatic Stock Units”), awarded annually on the day of the Company’s Annual Meeting of Shareholders. The Automatic Stock Units will vest on the one year anniversary of the grant date. Directors may elect to have all or any portion of their Automatic Stock Units paid on (A) the earlier of (i) the beginning of a specified calendar year after the vesting date or (ii) their separation from service as a member of the Board or (B) the vesting date.
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Deferral of Cash Retainer:
|
Directors may elect to defer payment of all or a portion of their cash retainer fees and any other committee retainer fees into a deferred stock unit account (“Elective Stock Units”). Elective Stock Units are awarded on a calendar quarterly basis. Directors may elect to have all or a portion of their Elective Stock Units paid on the earlier of (i) the beginning of a specified calendar year or (ii) their separation from service as a member of the Board.
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Elective Deferral Program:
|
Directors may elect to defer to a later year all or a portion of their annual cash retainer and any other fees payable for their Board service into alternative investment options similar to the options available under Northrop Grumman’s Savings Excess Plan.
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Stock Ownership:
|
All directors are required to own Company stock in an amount equal to five times the annual cash retainer, with such ownership to be achieved within five years of the later of (i) May 18, 2011 or (ii) the director’s election to the Board. Deferred stock units and Company stock owned outright by the director will count towards this requirement.
|
Expenses:
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Transportation
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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/ Kathy J. Warden
|
Kathy J. Warden
|
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/ David F. Keffer
|
David F. Keffer
|
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/ Kathy J. Warden
|
Kathy J. Warden
|
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/ David F. Keffer
|
David F. Keffer
|
Corporate Vice President and Chief Financial Officer
|