Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Billions, except Share data, unless otherwise specified | Dec. 31, 2014 | Jan. 29, 2015 | Jun. 30, 2014 |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | NORTHROP GRUMMAN CORP /DE/ | ||
Entity Central Index Key | 1133421 | ||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Fiscal Year Focus | 2014 | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $24.90 | ||
Entity Common Stock, Shares Outstanding | 198,405,799 |
Consolidated_Statements_of_Ear
Consolidated Statements of Earnings and Comprehensive (Loss) Income (USD $) | 12 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Sales | |||
Product | $14,015 | $14,033 | $13,838 |
Service | 9,964 | 10,628 | 11,380 |
Total sales | 23,979 | 24,661 | 25,218 |
Operating costs and expenses | |||
Product | 10,431 | 10,623 | 10,415 |
Service | 7,947 | 8,659 | 9,223 |
General and administrative expenses | 2,405 | 2,256 | 2,450 |
Operating income | 3,196 | 3,123 | 3,130 |
Other (expense) income | |||
Interest expense | -282 | -257 | -212 |
Other, net | 23 | -3 | 47 |
Earnings before income taxes | 2,937 | 2,863 | 2,965 |
Federal and foreign income tax expense | 868 | 911 | 987 |
Net earnings | 2,069 | 1,952 | 1,978 |
Basic earnings per share (in dollars per share) | $9.91 | $8.50 | $7.96 |
Weighted-average common shares outstanding, in millions | 208.8 | 229.6 | 248.6 |
Diluted earnings per share (in dollars per share) | $9.75 | $8.35 | $7.81 |
Weighted-average diluted shares outstanding, in millions | 212.1 | 233.9 | 253.4 |
Net earnings (from above) | 2,069 | 1,952 | 1,978 |
Other comprehensive (loss) income | |||
Change in unamortized benefit plan costs, net of tax benefit (expense) of $1,423 in 2014, ($1,177) in 2013 and $860 in 2012 | -2,316 | 1,790 | -1,303 |
Change in cumulative translation adjustment | -59 | 14 | 8 |
Other Comprehensive Income (loss), other adjustment, net of tax | 3 | -1 | -2 |
Other comprehensive (loss) income, net of tax | -2,372 | 1,803 | -1,297 |
Comprehensive (loss) income | ($303) | $3,755 | $681 |
Consolidated_Statements_of_Ear1
Consolidated Statements of Earnings and Comprehensive Income (Parenthetical) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Statement [Abstract] | |||
Tax (expense) benefit on the change in unamortized benefit plan costs | $1,423 | ($1,177) | $860 |
Consolidated_Statements_of_Fin
Consolidated Statements of Financial Position (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Assets | ||
Cash and cash equivalents | $3,863 | $5,150 |
Accounts receivable, net | 2,806 | 2,685 |
Inventoried costs, net | 742 | 698 |
Deferred tax assets | 404 | 605 |
Prepaid expenses and other current assets | 369 | 350 |
Total current assets | 8,184 | 9,488 |
Property, plant and equipment, net of accumulated depreciation of $4,611 in 2014 and $4,337 in 2013 | 2,991 | 2,806 |
Goodwill | 12,466 | 12,438 |
Non-current deferred tax assets | 1,622 | 209 |
Other non-current assets | 1,309 | 1,440 |
Total assets | 26,572 | 26,381 |
Liabilities | ||
Trade accounts payable | 1,305 | 1,229 |
Accrued employee compensation | 1,441 | 1,446 |
Advance payments and amounts in excess of costs incurred | 1,713 | 1,722 |
Other current liabilities | 1,433 | 1,418 |
Total current liabilities | 5,892 | 5,815 |
Long-term debt, net of current portion of $3 in 2014 and $2 in 2013 | 5,925 | 5,928 |
Pension and other post-retirement benefit plan liabilities | 6,555 | 2,954 |
Other non-current liabilities | 965 | 1,064 |
Total liabilities | 19,337 | 15,761 |
Commitments and contingencies (Note 11) | ||
Shareholders’ equity | ||
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, $1 par value; 800,000,000 shares authorized; issued and outstanding: 2014—198,930,240 and 2013—217,599,230 | 199 | 218 |
Paid-in capital | 0 | 848 |
Retained earnings | 12,392 | 12,538 |
Accumulated other comprehensive loss | -5,356 | -2,984 |
Total shareholders’ equity | 7,235 | 10,620 |
Total liabilities and shareholders’ equity | $26,572 | $26,381 |
Consolidated_Statements_of_Fin1
Consolidated Statements of Financial Position (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $4,611 | $4,337 |
Long-term Debt, current portion | $3 | $2 |
Preferred Stock, par value | $1 | $1 |
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common stock, par value | $1 | $1 |
Common stock, shares authorized | 800,000,000 | 800,000,000 |
Common stock, shares issued | 198,930,240 | 217,599,230 |
Common stock, shares outstanding | 198,930,240 | 217,599,230 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Operating activities | |||
Net earnings | $2,069 | $1,952 | $1,978 |
Adjustments to reconcile to net cash provided by operating activities: | |||
Depreciation and amortization | 462 | 495 | 510 |
Stock-based compensation | 134 | 144 | 183 |
Excess tax benefits from stock-based compensation | -81 | -43 | -45 |
Deferred income taxes | 216 | 128 | 78 |
Changes in assets and liabilities: | |||
Accounts receivable, net | -105 | 171 | 90 |
Inventoried costs, net | -24 | 101 | 46 |
Prepaid expenses and other assets | 13 | -51 | -65 |
Accounts payable and other liabilities | -89 | -169 | 23 |
Income taxes payable | 84 | 2 | -75 |
Retiree benefits | -17 | -281 | -71 |
Other, net | -69 | 34 | -12 |
Net cash provided by operating activities | 2,593 | 2,483 | 2,640 |
Investing activities | |||
Capital expenditures | -561 | -364 | -331 |
Maturities of short-term investments | 0 | 0 | 250 |
Other investing activities, net | -84 | 18 | -3 |
Net cash used in investing activities | -645 | -346 | -84 |
Financing activities | |||
Common stock repurchases | -2,668 | -2,371 | -1,316 |
Cash dividends paid | -563 | -545 | -535 |
Net proceeds from issuance of long-term debt | 0 | 2,841 | 0 |
Payments of long-term debt | 0 | -877 | 0 |
Other financing activities, net | -4 | 103 | 155 |
Net cash used in financing activities | -3,235 | -849 | -1,696 |
(Decrease) increase in cash and cash equivalents | -1,287 | 1,288 | 860 |
Cash and cash equivalents, beginning of year | 5,150 | 3,862 | 3,002 |
Cash and cash equivalents, end of year | $3,863 | $5,150 | $3,862 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Shareholders' Equity (USD $) | Total | Common stock | Paid-in capital | Retained earnings | Accumulated other comprehensive loss |
In Millions, except Per Share data | |||||
Beginning of year at Dec. 31, 2011 | $254 | $3,873 | $9,699 | ($3,490) | |
Common stock repurchased | -21 | -1,310 | 0 | ||
Shares issued for employee stock awards and options | 6 | 359 | |||
Other | 2 | ||||
Net earnings | 1,978 | 1,978 | |||
Dividends declared | -539 | ||||
Other comprehensive (loss) income, net of tax | -1,297 | -1,297 | |||
Cash dividends declared per share | $2.15 | ||||
End of year at Dec. 31, 2012 | 9,514 | 239 | 2,924 | 11,138 | -4,787 |
Common stock repurchased | -27 | -2,345 | 0 | ||
Shares issued for employee stock awards and options | 6 | 274 | |||
Other | -5 | ||||
Net earnings | 1,952 | 1,952 | |||
Dividends declared | -552 | ||||
Other comprehensive (loss) income, net of tax | 1,803 | 1,803 | |||
Cash dividends declared per share | $2.38 | ||||
End of year at Dec. 31, 2013 | 10,620 | 218 | 848 | 12,538 | -2,984 |
Common stock repurchased | -21 | -999 | -1,637 | ||
Shares issued for employee stock awards and options | 2 | 139 | |||
Other | 12 | ||||
Net earnings | 2,069 | 2,069 | |||
Dividends declared | -578 | ||||
Other comprehensive (loss) income, net of tax | -2,372 | -2,372 | |||
Cash dividends declared per share | $2.71 | ||||
End of year at Dec. 31, 2014 | $7,235 | $199 | $0 | $12,392 | ($5,356) |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||
Nature of Operations | |||||||||||
Northrop Grumman Corporation (herein referred to as “Northrop Grumman,” the “company,” “we,” “us,” or “our”) is a leading global security company. We provide innovative products, systems and solutions in unmanned systems; cyber; command, control, communications and computers (C4), intelligence, surveillance, and reconnaissance (C4ISR); strike aircraft; and logistics and modernization to government and commercial customers worldwide through our four segments: Aerospace Systems, Electronic Systems, Information Systems and Technical Services. We participate in many high-priority defense and government services programs in the United States (U.S.) and abroad. We offer a broad portfolio of capabilities and technologies that enable us to deliver innovative systems and solutions for applications that range from undersea to outer space and into cyberspace. We conduct most of our business with the U.S. Government, principally the Department of Defense (DoD) and intelligence community. We also conduct business with foreign, state and local governments, and domestic and international commercial customers. | |||||||||||
Principles of Consolidation | |||||||||||
The consolidated financial statements include the accounts of Northrop Grumman and its subsidiaries. Material intercompany accounts, transactions and profits are eliminated in consolidation. Investments in equity securities and joint ventures where the company has significant influence, but not control, are accounted for using the equity method. | |||||||||||
Accounting Estimates | |||||||||||
The company’s financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). The preparation thereof requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared using the most current and best available information; however, actual results could differ materially from those estimates. | |||||||||||
Related Party Transactions | |||||||||||
For all periods presented, the company had no material related party transactions. | |||||||||||
Revenue Recognition | |||||||||||
The majority of our business results are derived from long-term contracts with the U.S. Government for the production of goods, the provision of services, or in some cases, a combination of both. In accounting for these contracts, we utilize either the cost-to-cost or the units-of-delivery method of percentage-of-completion accounting, with cost-to-cost being the predominant method. Generally, sales under cost-reimbursement contracts and construction-type contracts that provide for deliveries at lower volume rates per year or a small number of units are accounted for using the cost-to-cost method. Under this method, sales, including estimated profits, are recorded as costs are incurred. Generally, sales under contracts that provide for deliveries at higher volume rates per year or a large number of units are accounted for using the units-of-delivery method. Under this method, sales are recognized as units are delivered to the customer. The company estimates profit on contracts as the difference between total estimated sales and total estimated cost of a contract at completion and recognizes that profit either as costs are incurred (cost-to-cost) or as units are delivered (units-of-delivery). The company classifies sales as product or service depending upon the predominant attributes of the contract. | |||||||||||
Contract sales may include estimated amounts not contractually agreed to by the customer, including cost or performance incentives (such as award and incentive fees), un-priced change orders, claims and requests for equitable adjustment. Amounts pertaining to cost and/or performance incentives are included in estimated contract sales when they are reasonably estimable. Further, as contracts are performed, change orders can be a regular occurrence and may be un-priced until negotiated with the customer. Un-priced change orders are included in estimated contract sales when they are probable of recovery in an amount at least equal to the cost. Amounts representing claims (including change orders unapproved as to both scope and price) and requests for equitable adjustment are included in estimated contract sales when they are reliably estimable and realization is probable. As of December 31, 2014, the recognized amounts related to claims and requests for equitable adjustment are not material individually or in the aggregate. | |||||||||||
The company's U.S. Government contracts generally contain provisions that enable the customer to terminate a contract for default, or for the convenience of the government. If a contract is terminated for default, we may not be entitled to recover any of our costs on partially completed work and may be liable to the government for re-procurement costs of acquiring similar products or services from another contractor, and for certain other damages. Termination of a contract for the convenience of the government may occur when the government concludes it is in the best interests of the government that the contract be terminated. Under a termination for convenience, the contractor is typically entitled to be paid in accordance with the contract’s terms for costs incurred prior to the effective date of termination, plus a reasonable profit and settlement expenses. At December 31, 2014, the company does not have any contract terminations in process that we anticipate would have a material effect on our consolidated financial position, annual results of operations and/or cash flows. | |||||||||||
We recognize changes in estimated contract sales, costs or profits using the cumulative catch-up method of accounting. This method recognizes, in the current period, the cumulative effect of the changes on current and prior periods; sales and profit in future periods of contract performance are recognized as if the revised estimates had been used since contract inception. If it is determined that a loss will result from the performance of a contract, the entire amount of the estimable future loss is charged against income in the period the loss is identified. Loss provisions are first offset against any costs that are included in unbilled accounts receivable or inventoried costs, and any remaining amount is reflected in liabilities. | |||||||||||
Significant changes in estimates on a single contract could have a material effect on the company's consolidated financial position or annual results of operations. Where such changes occur, we generally disclose the nature, underlying conditions and financial impact of the change. Aggregate net changes in contract estimates recognized using the cumulative catch-up method of accounting increased operating margin by $664 million, $753 million and $985 million ($2.04, $2.09 and $2.53 per diluted share based on statutory tax rates) in 2014, 2013 and 2012, respectively. No discrete event or adjustments to an individual contract were material to the consolidated statements of earnings and comprehensive (loss) income for any of these periods. | |||||||||||
General and Administrative Expenses | |||||||||||
In accordance with industry practice and regulations that govern the cost accounting requirements for government contracts, most general and administrative expenses incurred at the segments and corporate office are considered allowable and allocable costs on government contracts. These costs are allocated to contracts in progress on a systematic basis and are included as a component of total estimated contract costs, including any provision for loss contracts. | |||||||||||
Research and Development | |||||||||||
Company-sponsored research and development activities primarily include independent research and development (IR&D) efforts related to government programs. Company-sponsored IR&D expenses are included in general and administrative expenses in the consolidated statements of earnings and comprehensive (loss) income and are generally allocated to government contracts. Company-sponsored IR&D expenses totaled $569 million, $507 million and $520 million, in 2014, 2013 and 2012, respectively. Expenses for research and development funded by the customer are charged directly to the related contracts. | |||||||||||
Environmental Costs | |||||||||||
Environmental liabilities are accrued when the company determines that, based on the facts and circumstances known to the company, it is probable the company will incur costs to address environmental impacts and the costs are reasonably estimable. When only a range of amounts is established and no amount within the range is more probable than another, the low end of the range is recorded. The company typically projects environmental costs for up to 30 years, records environmental liabilities on an undiscounted basis, and excludes legal costs or asset retirement obligations. At sites involving multiple parties, the company accrues environmental liabilities based upon our expected share of liability, taking into account the financial viability of other jointly liable parties. Environmental expenditures are capitalized or expensed, as appropriate. As a portion of environmental remediation costs is expected to be recoverable through overhead charges on government contracts, such amounts are deferred in inventoried costs (current portion) and other non-current assets. The portion of environmental expenditures not expected to be recoverable is expensed. | |||||||||||
Fair Value of Financial Instruments | |||||||||||
The company utilizes fair value measurement guidance prescribed by GAAP to value its financial instruments. The guidance includes a definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value and expands disclosures about the use of fair value measurements. | |||||||||||
The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. | |||||||||||
These two types of inputs create the following fair value hierarchy: | |||||||||||
Level 1 - Quoted prices for identical instruments in active markets. | |||||||||||
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. | |||||||||||
Level 3 - Significant inputs to the valuation model are unobservable. | |||||||||||
Marketable securities accounted for as trading and available-for-sale are recorded at fair value on a recurring basis. For available-for-sale securities, any changes in unrealized gains and losses are reported as a component of other comprehensive income. Changes in unrealized gains and losses on trading securities are included in other, net in the consolidated statements of earnings and comprehensive (loss) income. In addition, investments in held-to-maturity instruments with original maturities greater than three months are recorded at amortized cost. | |||||||||||
Derivative financial instruments are recognized as assets or liabilities in the financial statements and measured at fair value on a recurring basis. Changes in the fair value of derivative financial instruments that are designated as fair value hedges are recorded in net earnings, while the effective portion of the changes in the fair value of derivative financial instruments that are designated as cash flow hedges are recorded as a component of other comprehensive income. For derivative financial instruments not designated as hedging instruments, gains or losses resulting from changes in the fair value are reported in other, net in the consolidated statements of earnings and comprehensive (loss) income. | |||||||||||
The company may use derivative financial instruments to manage its exposure to interest rate risk for its fixed long-term debt portfolio and foreign currency exchange risk related to receipts from customers and payments to suppliers denominated in foreign currencies. The company does not use derivative financial instruments for trading or speculative purposes, nor does it use leveraged financial instruments. Credit risk related to derivative financial instruments is considered minimal and is managed through the use of multiple counterparties with high credit standards and periodic settlements of positions, as well as by entering into master netting agreements with most of our counterparties. | |||||||||||
Income Taxes | |||||||||||
Provisions for federal and foreign income taxes are calculated on reported earnings before income taxes based on current tax law and include the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Such provisions differ from the amounts currently payable because certain items of income and expense are recognized in different periods for financial reporting purposes than for income tax purposes. The company recognizes federal and foreign interest accrued related to unrecognized tax benefits in income tax expense. Federal penalties are recognized as a component of income tax expense. In accordance with industry practice and regulations that govern the cost accounting requirements for government contracts, state and local income and franchise taxes are considered allowable and allocable costs on government contracts and are therefore recorded in operating costs and expenses. The company recognizes state interest accrued related to unrecognized tax benefits in unallowable operating costs and expenses. | |||||||||||
Uncertain tax positions reflect the company’s expected treatment of tax positions taken in a filed tax return, or planned to be taken in a future tax return or claim, which have not been reflected in measuring income tax expense for financial reporting purposes. Until these positions are sustained by the taxing authorities or the statute of limitations concerning such issues lapses, the company does not recognize the tax benefits resulting from such positions and reports the tax effects as a liability for uncertain tax positions in its consolidated statements of financial position. | |||||||||||
Cash and Cash Equivalents | |||||||||||
Cash and cash equivalents are comprised of cash in banks and highly liquid instruments with original maturities of three months or less, primarily consisting of bank time deposits and investments in institutional money market funds. The company does not invest in high yield or high risk securities. Cash in bank accounts at times may exceed federally insured limits. | |||||||||||
Accounts Receivable and Inventoried Costs | |||||||||||
Accounts receivable include amounts billed and currently due from customers, as well as amounts currently due but unbilled (primarily related to costs incurred on contracts accounted for under the cost-to-cost method of percentage-of-completion accounting). Accounts receivable also include certain estimated contract change amounts, claims or requests for equitable adjustment in negotiation that are probable of recovery and amounts retained by the customer pending contract completion. | |||||||||||
Inventoried costs primarily relate to work in process on contracts accounted for under the units-of-delivery method of percentage-of-completion accounting. These costs represent accumulated contract costs less the portion of such costs allocated to delivered items. Product inventory primarily consists of raw materials and is stated at the lower of cost or market, generally using the average cost method. | |||||||||||
Accumulated contract costs in unbilled accounts receivable and inventoried costs include direct production costs, factory and engineering overhead, production tooling costs, and, for government contracts, allowable general and administrative expenses. According to the provisions of U.S. Government contracts, the customer asserts title to, or a security interest in, inventories related to such contracts as a result of contract advances, performance-based payments, and progress payments. In accordance with industry practice, unbilled accounts receivable and inventoried costs are classified as current assets and include amounts related to contracts having production cycles longer than one year. Payments received in excess of inventoried costs and unbilled accounts receivable amounts on a contract by contract basis are recorded as advance payments and amounts in excess of costs incurred in the consolidated statements of financial position. | |||||||||||
Property, Plant and Equipment | |||||||||||
Property, plant and equipment are depreciated over the estimated useful lives of individual assets. Most of these assets are depreciated using declining-balance methods, with the remainder using the straight-line method. Major classes of property, plant and equipment and their useful lives are as follows: | |||||||||||
December 31 | |||||||||||
Useful life in years, $ in millions | Useful Life | 2014 | 2013 | ||||||||
Land and land improvements | Up to 40(1) | $ | 373 | $ | 373 | ||||||
Buildings and improvements | Up to 45 | 1,589 | 1,450 | ||||||||
Machinery and other equipment | Up to 20 | 4,401 | 4,243 | ||||||||
Capitalized software costs | 5-Mar | 428 | 418 | ||||||||
Leasehold improvements | Length of Lease(1) | 811 | 659 | ||||||||
Property, plant and equipment, at cost | 7,602 | 7,143 | |||||||||
Accumulated depreciation | (4,611 | ) | (4,337 | ) | |||||||
Property, plant and equipment, net | $ | 2,991 | $ | 2,806 | |||||||
-1 | Land is not a depreciable asset. Leasehold improvements are depreciated over the shorter of the useful life of the asset or the length of the lease. | ||||||||||
Leases | |||||||||||
The company uses its incremental borrowing rate in the assessment of lease classification as capital or operating and defines the initial lease term to include renewal options determined to be reasonably assured. The majority of our leases are operating leases. | |||||||||||
Many of the company’s real property lease agreements contain incentives for tenant improvements, rent holidays, or rent escalation clauses. For tenant improvement incentives, the company records a deferred rent liability and amortizes the deferred rent over the term of the lease as a reduction to rent expense. For rent holidays and rent escalation clauses during the lease term, the company records rental expenses on a straight-line basis over the term of the lease. For purposes of recognizing lease incentives, the company uses the date of initial possession as the commencement date, which is generally when the company is given the right of access to the space and begins to make improvements in preparation of intended use. | |||||||||||
Goodwill and Other Purchased Intangible Assets | |||||||||||
The company tests for impairment of goodwill annually as of December 31, or when we believe a potential impairment exists. When performing the goodwill impairment test, the company uses a discounted cash flow approach corroborated by comparative market multiples, where appropriate, to determine the fair value of its businesses. Goodwill and other purchased intangible asset balances are included in the identifiable assets of their assigned business segment. The company charges goodwill impairment, as well as the amortization of other purchased intangible assets, against the respective segment’s operating income. Purchased intangible assets are amortized on a straight-line basis over their estimated useful lives. | |||||||||||
Cash Surrender Value of Life Insurance Policies | |||||||||||
The company maintains whole life insurance policies on a group of executives, which are recorded at their cash surrender value as determined by the insurance carrier. The company also has split-dollar life insurance policies on former officers and executives from acquired businesses, which are recorded at the lesser of their cash surrender value or premiums paid. These policies are utilized as a partial funding source for deferred compensation and other non-qualified employee retirement plans. As of December 31, 2014 and 2013, the carrying values associated with these policies are $290 million and $287 million, respectively, and are recorded in other non-current assets in the consolidated statements of financial position. | |||||||||||
Litigation, Commitments and Contingencies | |||||||||||
Amounts associated with litigation, commitments and contingencies are recorded as charges to earnings when management, after considering the facts and circumstances of each matter as then known to management, has determined it is probable a liability will be found to have been incurred and the amount of the loss can be reasonably estimated. When only a range of amounts is established and no amount within the range is more likely than another, the low end of the range is recorded. Legal fees are expensed as incurred. Due to the inherent uncertainties surrounding gain contingencies, we generally do not recognize potential gains until realized. | |||||||||||
Retirement Benefits | |||||||||||
The company sponsors various defined benefit pension plans and defined contribution retirement plans covering substantially all of its employees. The company also provides post-retirement benefits other than pensions, consisting principally of health care and life insurance benefits, to eligible retirees and qualifying dependents. In most cases, our defined contribution plans provide for a cash matching of employee contributions up to four percent of compensation. | |||||||||||
The liabilities, unamortized benefit plan costs and annual income or expense of the company’s defined benefit pension and other post-retirement benefit plans are determined using methodologies that involve several actuarial assumptions. Unamortized benefit plan costs consist primarily of accumulated net after-tax actuarial losses. | |||||||||||
Because U.S. Government regulations require that the costs of pension and other post-retirement plans be charged to our contracts in accordance with the Federal Acquisition Regulation (FAR) and the related U.S. Government Cost Accounting Standards (CAS) that govern such plans, we calculate retiree benefit plan costs under both CAS and FAS (GAAP Financial Accounting Standards) methods. While both FAS and CAS recognize a normal service cost component in measuring periodic pension cost, there are differences in the way the remaining components of annual pension costs are calculated under each method. Measuring plan obligations under FAS and CAS includes different assumptions and models, such as in estimating earnings on plan assets and calculating interest expense. In addition, the periods over which gains/losses related to pension assets and actuarial changes are amortized are different under FAS and CAS. As a result, annual retiree benefit plan expense amounts for FAS are different from the amounts for CAS even though the ultimate cost of providing benefits is the same under either method. CAS retiree benefit plan costs are charged to contracts and are included in segment operating income, and the difference between CAS and FAS expense is recorded in operating income at the consolidated company level. | |||||||||||
Net actuarial gains or losses are amortized to expense on a plan-by-plan basis when they exceed the accounting corridor. The accounting corridor is a defined range within which amortization of net gains and losses is not required and is equal to 10 percent of the greater of plan assets or benefit obligations. Gains or losses outside of the corridor are subject to amortization over our average employee future service period of approximately nine years. Not all net periodic pension expense is recognized in net earnings in the year incurred because it is allocated as production costs and a portion remains in inventory at the end of a reporting period. The company’s funding policy for the qualified pension plans is to contribute, at a minimum, the statutorily required amount to an irrevocable trust. | |||||||||||
Stock Compensation | |||||||||||
The company’s stock compensation plans are classified as equity plans and compensation expense is recognized over the vesting period (generally three years), net of estimated forfeitures. The company issues stock awards in the form of restricted performance stock rights and restricted stock rights under its existing plans. The fair value of stock awards is determined based on the closing market price of the company’s common stock on the grant date. At each reporting date, the number of shares is adjusted to equal the number ultimately expected to vest. | |||||||||||
Accounting Standards Updates | |||||||||||
On May 28, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 supersedes existing revenue recognition guidance, including Accounting Standards Codification (ASC) No. 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts. ASU 2014-09 outlines a single set of comprehensive principles for recognizing revenue under U.S. GAAP. Among other things, it requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time. These concepts, as well as other aspects of ASU 2014-09, may change the method and/or timing of revenue recognition for certain of our contracts. ASU 2014-09 will be effective January 1, 2017, and may be applied either retrospectively or through the use of a modified-retrospective method. We are currently evaluating both methods of adoption as well as the effect ASU 2014-09 will have on the company’s consolidated financial position, annual results of operations and/or cash flows. | |||||||||||
Other accounting standards updates effective after December 31, 2014, are not expected to have a material effect on the company’s financial position, annual results of operations and/or cash flows. | |||||||||||
Reclassifications | |||||||||||
Our consolidated statements of cash flows for 2014 and 2013 reflect cash flows from operating activities presented solely on the indirect method. The company previously presented both the direct method and indirect method for our cash flows from operating activities. This change in reporting method had no effect on the amount of our net cash flows from operating activities. | |||||||||||
In the first quarter of 2014, we reclassified our cash awards incentive compensation accrual from other current liabilities to accrued employee compensation, which are both reported within current liabilities on the consolidated statement of financial position. The reclassification reduced other current liabilities and increased accrued employee compensation by $226 million and $277 million, as of December 31, 2014 and 2013, respectively. | |||||||||||
Shareholders' Equity | |||||||||||
The company records the difference between the cost of shares repurchased and their par value as a reduction of paid-in capital to the extent of its balance and then as a reduction of retained earnings. | |||||||||||
Accumulated Other Comprehensive Loss | |||||||||||
The components of accumulated other comprehensive loss are as follows: | |||||||||||
December 31 | |||||||||||
$ in millions | 2014 | 2013 | |||||||||
Unamortized benefit plan costs, net of tax benefit of $3,395 in 2014 and $1,972 in 2013 | $ | (5,316 | ) | $ | (3,000 | ) | |||||
Cumulative translation adjustment | (41 | ) | 18 | ||||||||
Net unrealized gain (loss) on marketable securities and cash flow hedges, net of tax | 1 | (2 | ) | ||||||||
Total accumulated other comprehensive loss | $ | (5,356 | ) | $ | (2,984 | ) | |||||
Unamortized benefit plan costs consist primarily of net after-tax actuarial losses totaling $5.6 billion and $3.3 billion as of December 31, 2014 and 2013, respectively. Net actuarial gains or losses are re-determined annually or upon remeasurement events and principally arise from changes in the rate used to discount our benefit obligations and differences between expected and actual returns on plan assets. | |||||||||||
Reclassifications from accumulated other comprehensive income to net earnings related to the amortization of benefit plan costs were $145 million, $319 million and $204 million, net of taxes, for the years ended December 31, 2014, 2013 and 2012, respectively. The reclassifications represent the amortization of net actuarial losses and prior service credits for the company's retirement benefit plans, and are included in the computation of net periodic pension cost (See Note 12 for further information). | |||||||||||
Reclassifications from accumulated other comprehensive income to net earnings, relating to cumulative translation adjustments, marketable securities and effective cash flow hedges for the years ended December 31, 2014, 2013 and 2012, respectively, were not material. Reclassifications for cumulative translation adjustments and marketable securities are recorded in other income, and reclassifications for effective cash flow hedges are recorded in operating income. |
Earnings_Per_Share_Share_Repur
Earnings Per Share, Share Repurchases and Dividends on Common Stock | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||
Earnings Per Share, Share Repurchases and Dividends on Common Stock | EARNINGS PER SHARE, SHARE REPURCHASES AND DIVIDENDS ON COMMON STOCK | ||||||||||||||||||||||
Basic Earnings Per Share | |||||||||||||||||||||||
We calculate basic earnings per share by dividing net earnings by the weighted-average number of shares of common stock outstanding during each period. | |||||||||||||||||||||||
Diluted Earnings Per Share | |||||||||||||||||||||||
Diluted earnings per share includes the dilutive effect of awards granted to employees under stock-based compensation plans. The dilutive effect of these securities totaled 3.3 million, 4.3 million and 4.8 million shares for the years ended December 31, 2014, 2013 and 2012, respectively. We had no anti-dilutive stock options outstanding for the years ended December 31, 2014 and 2013, respectively. The weighted-average diluted shares outstanding for the year ended December 31, 2012, excludes stock options to purchase 1.8 million shares because such options had exercise prices in excess of the average market price of the company’s common stock during the year. | |||||||||||||||||||||||
Share Repurchases | |||||||||||||||||||||||
The table below summarizes the company’s share repurchases: | |||||||||||||||||||||||
Repurchase Program Authorization Date | Amount | Total Shares Retired (in millions) | Average | Date Completed | Shares Repurchased | ||||||||||||||||||
Authorized | Price | (in millions) | |||||||||||||||||||||
(in millions) | Per Share(3) | Year Ended December 31 | |||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||
16-Jun-10 | $ | 5,350 | 83.7 | $ | 63.86 | Sep-13 | — | 18.6 | 20.9 | ||||||||||||||
May 15, 2013(1) | $ | 4,000 | 30.1 | $ | 118.3 | 21.4 | 8.7 | — | |||||||||||||||
December 4, 2014(2) | $ | 3,000 | — | $ | — | — | — | — | |||||||||||||||
21.4 | 27.3 | 20.9 | |||||||||||||||||||||
-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 ("2013 Repurchase Program"). Repurchases under the 2013 Repurchase Program commenced in September 2013. As of December 31, 2014, repurchases under the 2013 Repurchase Program totaled $3.6 billion; $447 million remained under this share repurchase authorization. By its terms, the 2013 Repurchase Program will expire when we have used all authorized funds for repurchases. | ||||||||||||||||||||||
-2 | On December 4, 2014, the company's board of directors authorized a new share repurchase program of up to an additional $3.0 billion of the company's common stock ("2014 Repurchase Program"). By its terms, repurchases under the 2014 Repurchase Program will commence upon completion of the 2013 Repurchase Program and will expire when we have used all authorized funds for repurchases. | ||||||||||||||||||||||
-3 | Includes commissions paid. | ||||||||||||||||||||||
Share repurchases take place from time to time, subject to market conditions and management's discretion, in the open market or in privately negotiated transactions. The company retires its common stock upon repurchase and has not made any purchases of common stock other than in connection with these publicly announced repurchase programs. | |||||||||||||||||||||||
Dividends on Common Stock | |||||||||||||||||||||||
In May 2014, the company increased the quarterly common stock dividend 15 percent to $0.70 per share from the previous amount of $0.61 per share. | |||||||||||||||||||||||
In May 2013, the company increased the quarterly common stock dividend 11 percent to $0.61 per share from the previous amount of $0.55 per share. | |||||||||||||||||||||||
In May 2012, the company increased the quarterly common stock dividend 10 percent to $0.55 per share from the previous amount of $0.50 per share. |
Segment_Information
Segment Information | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||
Segment Information | SEGMENT INFORMATION | ||||||||||||||||||||||||
The company is aligned into four segments: Aerospace Systems, Electronic Systems, Information Systems and Technical Services. The company, from time to time, acquires or disposes of businesses and realigns contracts, programs or business areas among and within our segments. Portfolio shaping and internal realignments are designed to more fully leverage existing capabilities and enhance development and delivery of products and services. | |||||||||||||||||||||||||
U.S. Government Sales | |||||||||||||||||||||||||
Sales to the U.S. Government include sales from contracts for which Northrop Grumman is the prime contractor, as well as those for which the company is 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 to the U.S. Government amounted to $20.1 billion, $21.3 billion and $22.3 billion, or 84 percent, 86 percent and 88 percent, of total sales for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||||||||||||||||||
International Sales | |||||||||||||||||||||||||
International sales (which include foreign military sales) amounted to $3.0 billion, $2.5 billion and $2.1 billion, or 13 percent, 10 percent and 8 percent, of total sales for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Substantially all of the company’s operating assets are located or maintained in the U.S. | |||||||||||||||||||||||||
Results of Operations By Segment | |||||||||||||||||||||||||
The following table presents sales and operating income by segment: | |||||||||||||||||||||||||
Year Ended December 31 | |||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Sales | |||||||||||||||||||||||||
Aerospace Systems | $ | 9,997 | $ | 10,014 | $ | 9,977 | |||||||||||||||||||
Electronic Systems | 6,951 | 7,149 | 6,950 | ||||||||||||||||||||||
Information Systems | 6,222 | 6,596 | 7,356 | ||||||||||||||||||||||
Technical Services | 2,799 | 2,843 | 3,019 | ||||||||||||||||||||||
Intersegment eliminations | (1,990 | ) | (1,941 | ) | (2,084 | ) | |||||||||||||||||||
Total sales | 23,979 | 24,661 | 25,218 | ||||||||||||||||||||||
Operating income | |||||||||||||||||||||||||
Aerospace Systems | 1,315 | 1,215 | 1,218 | ||||||||||||||||||||||
Electronic Systems | 1,148 | 1,226 | 1,187 | ||||||||||||||||||||||
Information Systems | 611 | 633 | 761 | ||||||||||||||||||||||
Technical Services | 261 | 262 | 268 | ||||||||||||||||||||||
Intersegment eliminations | (236 | ) | (256 | ) | (258 | ) | |||||||||||||||||||
Total segment operating income | 3,099 | 3,080 | 3,176 | ||||||||||||||||||||||
Reconciliation to operating income: | |||||||||||||||||||||||||
Net FAS/CAS pension adjustment | 269 | 168 | 132 | ||||||||||||||||||||||
Unallocated corporate expenses | (169 | ) | (119 | ) | (168 | ) | |||||||||||||||||||
Other | (3 | ) | (6 | ) | (10 | ) | |||||||||||||||||||
Total operating income | $ | 3,196 | $ | 3,123 | $ | 3,130 | |||||||||||||||||||
Net FAS/CAS Pension Adjustment | |||||||||||||||||||||||||
The net FAS/CAS pension adjustment reflects the difference between pension expense charged to contracts and included as cost in segment operating income and pension expense determined in accordance with GAAP. | |||||||||||||||||||||||||
2014 - The increase in net FAS/CAS pension adjustment is principally due to a reduction in FAS expense, largely due to the increase in our FAS discount rate assumptions as of December 31, 2013. The reduction in FAS expense was partially offset by lower CAS expense due to the passage of the Highway and Transportation Funding Act of 2014 (HATFA), which included provisions that reduce the amount of CAS expense charged to our contracts in 2014. | |||||||||||||||||||||||||
2013 - The increase in net FAS/CAS pension adjustment reflects an update for actual demographic experience as of January 1, 2013, which resulted in an increase to the company's 2013 CAS expense. | |||||||||||||||||||||||||
Unallocated Corporate Expenses | |||||||||||||||||||||||||
Unallocated corporate expenses include the portion of corporate expenses not considered allowable or allocable under applicable CAS regulations and the FAR, and are therefore not allocated to the segments. Such costs consist of a portion of management and administration, legal, environmental, compensation costs, retiree benefits, and certain unallowable costs such as lobbying activities, among others. | |||||||||||||||||||||||||
2014 - The increase in unallocated corporate expense for 2014, as compared to 2013, is primarily due to increases in year-over-year provisions for environmental matters. | |||||||||||||||||||||||||
2013 - The decrease in unallocated corporate expenses for 2013, as compared to 2012, is primarily due to lower year-over-year provisions for disallowed costs and litigation matters and the favorable settlement of overhead claims, partially offset by changes in deferred tax assets due to lower blended state income tax rates. | |||||||||||||||||||||||||
Intersegment Sales and Operating Income | |||||||||||||||||||||||||
Sales between segments are recorded at values that include hypothetical operating income for the performing segment based on that segment’s estimated operating margin rate for external sales. Such hypothetical operating income is eliminated in consolidation. Intersegment sales and operating income before eliminations were as follows: | |||||||||||||||||||||||||
Year Ended December 31 | |||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Sales | Operating | Sales | Operating | Sales | Operating | ||||||||||||||||||||
Income | Income | Income | |||||||||||||||||||||||
Intersegment sales and operating income | |||||||||||||||||||||||||
Aerospace Systems | $ | 176 | $ | 22 | $ | 149 | $ | 18 | $ | 171 | $ | 20 | |||||||||||||
Electronic Systems | 637 | 109 | 629 | 125 | 607 | 110 | |||||||||||||||||||
Information Systems | 537 | 57 | 504 | 63 | 682 | 78 | |||||||||||||||||||
Technical Services | 640 | 48 | 659 | 50 | 624 | 50 | |||||||||||||||||||
Total | $ | 1,990 | $ | 236 | $ | 1,941 | $ | 256 | $ | 2,084 | $ | 258 | |||||||||||||
Other Financial Information | |||||||||||||||||||||||||
The following tables represent assets, capital expenditures and depreciation and amortization by segment: | |||||||||||||||||||||||||
December 31 | |||||||||||||||||||||||||
$ in millions | 2014 | 2013 | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Aerospace Systems | $ | 6,844 | $ | 6,490 | |||||||||||||||||||||
Electronic Systems | 4,366 | 4,400 | |||||||||||||||||||||||
Information Systems | 6,725 | 6,887 | |||||||||||||||||||||||
Technical Services | 1,539 | 1,367 | |||||||||||||||||||||||
Segment assets | 19,474 | 19,144 | |||||||||||||||||||||||
Corporate assets (1) | 7,098 | 7,237 | |||||||||||||||||||||||
Total assets | $ | 26,572 | $ | 26,381 | |||||||||||||||||||||
-1 | Corporate assets principally consist of cash and cash equivalents and deferred tax assets. | ||||||||||||||||||||||||
Capital Expenditures | Depreciation and Amortization (1) | ||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||||||
Aerospace Systems | $ | 387 | $ | 198 | $ | 154 | $ | 206 | $ | 210 | $ | 196 | |||||||||||||
Electronic Systems | 82 | 76 | 84 | 119 | 134 | 139 | |||||||||||||||||||
Information Systems | 40 | 27 | 40 | 70 | 81 | 100 | |||||||||||||||||||
Technical Services | 1 | 3 | 3 | 7 | 4 | 4 | |||||||||||||||||||
Corporate | 51 | 60 | 50 | 60 | 66 | 71 | |||||||||||||||||||
Total | $ | 561 | $ | 364 | $ | 331 | $ | 462 | $ | 495 | $ | 510 | |||||||||||||
-1 | Depreciation and amortization expense includes amortization of purchased intangible assets, as well as amortization of deferred and other outsourcing costs. |
Accounts_Receivable_Net
Accounts Receivable, Net | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Receivables [Abstract] | |||||||||
Accounts Receivable, Net | ACCOUNTS RECEIVABLE, NET | ||||||||
Unbilled amounts represent sales for which billings have not been presented to customers by period-end. These amounts are usually billed and collected within one year. Substantially all accounts receivable at December 31, 2014, are expected to be collected in 2015. The company does not believe it has significant exposure to credit risk, as accounts receivable and the related unbilled amounts are primarily from contracts where the U.S. Government is the primary customer. | |||||||||
Accounts receivable consisted of the following: | |||||||||
December 31 | |||||||||
$ in millions | 2014 | 2013 | |||||||
Due from U.S. Government | |||||||||
Billed | $ | 536 | $ | 596 | |||||
Unbilled | 6,806 | 5,801 | |||||||
Progress and performance-based payments received | (5,150 | ) | (4,385 | ) | |||||
2,192 | 2,012 | ||||||||
Due from Other Customers(1) | |||||||||
Billed | 283 | 296 | |||||||
Unbilled | 3,461 | 2,830 | |||||||
Progress and performance-based payments received | (3,062 | ) | (2,384 | ) | |||||
682 | 742 | ||||||||
Total accounts receivable | 2,874 | 2,754 | |||||||
Allowance for doubtful accounts | (68 | ) | (69 | ) | |||||
Total accounts receivable, net | $ | 2,806 | $ | 2,685 | |||||
(1) Includes receivables due from the U.S. Government associated with foreign military sales. |
Inventoried_Costs_Net
Inventoried Costs, Net | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
Inventoried Costs, Net | INVENTORIED COSTS, NET | ||||||||
Inventoried costs consisted of the following: | |||||||||
December 31 | |||||||||
$ in millions | 2014 | 2013 | |||||||
Production costs of contracts in process | $ | 1,257 | $ | 1,342 | |||||
General and administrative expenses | 252 | 259 | |||||||
1,509 | 1,601 | ||||||||
Progress and performance-based payments received | (873 | ) | (1,005 | ) | |||||
636 | 596 | ||||||||
Product inventory | 106 | 102 | |||||||
Total inventoried costs, net | $ | 742 | $ | 698 | |||||
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||
Income Taxes | INCOME TAXES | ||||||||||||
Federal and foreign income tax expense consisted of the following: | |||||||||||||
Year Ended December 31 | |||||||||||||
$ in millions | 2014 | 2013 | 2012 | ||||||||||
Income Taxes | |||||||||||||
Currently payable | |||||||||||||
Federal income taxes | $ | 701 | $ | 803 | $ | 912 | |||||||
Foreign income taxes | 10 | 28 | 15 | ||||||||||
Total federal and foreign income taxes currently payable | 711 | 831 | 927 | ||||||||||
Deferred federal and foreign income taxes | 157 | 80 | 60 | ||||||||||
Total federal and foreign income taxes | $ | 868 | $ | 911 | $ | 987 | |||||||
Earnings from foreign operations before income taxes are not material for all periods presented. | |||||||||||||
Income tax expense differs from the amount computed by multiplying the statutory federal income tax rate times earnings before income taxes due to the following: | |||||||||||||
Year Ended December 31 | |||||||||||||
$ in millions | 2014 | 2013 | 2012 | ||||||||||
Income tax expense at statutory rate | $ | 1,028 | $ | 1,002 | $ | 1,038 | |||||||
Settlements with taxing authorities | (51 | ) | — | — | |||||||||
Manufacturing deduction | (48 | ) | (63 | ) | (42 | ) | |||||||
Research tax credit | (43 | ) | (37 | ) | — | ||||||||
Other, net | (18 | ) | 9 | (9 | ) | ||||||||
Total federal and foreign income taxes | $ | 868 | $ | 911 | $ | 987 | |||||||
2014 – The effective tax rate for 2014 was 29.6 percent, as compared with 31.8 percent in 2013. The company's lower effective tax rate for 2014 reflects a $51 million benefit for the partial resolution of its 2007-2009 Internal Revenue Service (IRS) examination. | |||||||||||||
2013 – The effective tax rate for 2013 was 31.8 percent, as compared with 33.3 percent in 2012. The company's lower effective tax rate for 2013 includes a $37 million benefit for the American Taxpayer Relief Act, enacted in January 2013, which reinstated research tax credits for 2012 and 2013, and a $21 million benefit for higher section 199 manufacturing deductions than in prior year. | |||||||||||||
Income tax payments, net of refunds received, were $727 million, $880 million and $1.1 billion for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||||||
Uncertain Tax Positions | |||||||||||||
The company files income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. In the first quarter of 2014, the U.S. Congressional Joint Committee on Taxation approved a partial resolution of the IRS examination of the company’s 2007-2009 tax returns. As a result, the company recorded a reduction of income tax expense of $51 million. The company also reduced its unrecognized tax benefits by $59 million and related accrued interest by $12 million. During the fourth quarter of 2014, the company filed appeals with the IRS for the unresolved 2007-2009 tax return matters and for unresolved 2010-2011 examination matters. | |||||||||||||
The company believes it is reasonably possible that during the next twelve months, we will resolve the remaining matters on our 2007-2011 tax returns. The combined resolution of these items, excluding interest, could result in a reduction in our unrecognized tax benefits up to $75 million and a reduction of our income tax expense up to $40 million. Open tax years related to state and foreign jurisdictions remain subject to examination, but are not considered material. | |||||||||||||
The change in unrecognized tax benefits during 2014, 2013 and 2012, excluding interest, is as follows: | |||||||||||||
December 31 | |||||||||||||
$ in millions | 2014 | 2013 | 2012 | ||||||||||
Unrecognized tax benefits at beginning of the year | $ | 241 | $ | 156 | $ | 118 | |||||||
Additions based on tax positions related to the current year | 62 | 56 | 12 | ||||||||||
Additions for tax positions of prior years | 9 | 44 | 28 | ||||||||||
Settlements with taxing authorities | (61 | ) | (1 | ) | (1 | ) | |||||||
Other, net | (41 | ) | (14 | ) | (1 | ) | |||||||
Net change in unrecognized tax benefits | (31 | ) | 85 | 38 | |||||||||
Unrecognized tax benefits at end of the year | $ | 210 | $ | 241 | $ | 156 | |||||||
These liabilities, along with $25 million of accrued interest and penalties, are included in other current and non-current liabilities in the consolidated statements of financial position. If the income tax benefits from these tax positions are ultimately realized, $145 million of federal and foreign tax benefits would reduce the company’s effective tax rate. | |||||||||||||
Net interest expense within the company's federal, foreign and state income tax provisions was not material for all years presented. | |||||||||||||
Deferred Income Taxes | |||||||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and tax purposes. Such amounts are classified in the consolidated statements of financial position as current or non-current assets or liabilities, based upon the classification of the related assets and liabilities. | |||||||||||||
The tax effects of significant temporary differences and carryforwards that gave rise to year-end deferred federal, state and foreign tax balances, as presented in the consolidated statements of financial position, are as follows: | |||||||||||||
December 31 | |||||||||||||
$ in millions | 2014 | 2013 | |||||||||||
Deferred Tax Assets | |||||||||||||
Retiree benefits | $ | 2,745 | $ | 1,308 | |||||||||
Accrued employee compensation | 311 | 333 | |||||||||||
Provisions for accrued liabilities | 392 | 313 | |||||||||||
Stock-based compensation | 91 | 109 | |||||||||||
Other | 104 | 144 | |||||||||||
Gross deferred tax assets | 3,643 | 2,207 | |||||||||||
Less valuation allowance | (53 | ) | (55 | ) | |||||||||
Net deferred tax assets | 3,590 | 2,152 | |||||||||||
Deferred Tax Liabilities | |||||||||||||
Goodwill | 787 | 806 | |||||||||||
Property, plant and equipment, net | 315 | 348 | |||||||||||
Contract accounting differences | 332 | 134 | |||||||||||
Other | 130 | 50 | |||||||||||
Gross deferred tax liabilities | 1,564 | 1,338 | |||||||||||
Total net deferred tax assets | $ | 2,026 | $ | 814 | |||||||||
Realization of deferred tax assets is primarily dependent on generating sufficient taxable income in future periods. The company believes it is more-likely-than-not all deferred tax assets will be realized, net of any valuation allowances currently established. | |||||||||||||
At December 31, 2014, the company has available unused net operating losses of $211 million that may be applied against future taxable income, primarily in the United Kingdom, that may be used indefinitely. A valuation allowance of $53 million has been recorded against certain deferred tax assets due to the uncertainty of the realization of these net operating losses and other deferred tax assets, principally in foreign jurisdictions. | |||||||||||||
Undistributed Foreign Earnings | |||||||||||||
As of December 31, 2014, the company has accumulated undistributed earnings generated by its foreign subsidiaries. No deferred tax liability has been recorded on these earnings since the company intends to permanently reinvest these earnings. Should these earnings be distributed in the form of dividends or otherwise, the distributions would be subject to U.S. federal income tax at the statutory rate of 35 percent, less foreign tax credits available to offset such distributions, if any. In addition, such distributions may be subject to withholding taxes in the various tax jurisdictions. |
Goodwill_and_Other_Purchased_I
Goodwill and Other Purchased Intangible Assets | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||
Goodwill and Other Purchased Intangible Assets | GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS | ||||||||||||||||||||
Goodwill | |||||||||||||||||||||
Goodwill and other purchased intangible assets are included in the identifiable assets of the segment to which the operations of the acquired entity have been assigned. Accumulated goodwill impairment losses at December 31, 2014 and 2013, totaled $570 million at the Aerospace Systems segment. | |||||||||||||||||||||
Changes in the carrying amounts of goodwill for the years ended December 31, 2014 and 2013, were as follows: | |||||||||||||||||||||
$ in millions | Aerospace | Electronic | Information | Technical | Total | ||||||||||||||||
Systems | Systems | Systems | Services | ||||||||||||||||||
Balance as of December 31, 2012 | $ | 3,758 | $ | 2,410 | $ | 5,287 | $ | 976 | $ | 12,431 | |||||||||||
Businesses acquired and other (1) | — | — | 7 | — | 7 | ||||||||||||||||
Balance as of December 31, 2013 | $ | 3,758 | $ | 2,410 | $ | 5,294 | $ | 976 | $ | 12,438 | |||||||||||
Businesses acquired and other (1) | — | — | (8 | ) | 36 | 28 | |||||||||||||||
Balance as of December 31, 2014 | $ | 3,758 | $ | 2,410 | $ | 5,286 | $ | 1,012 | $ | 12,466 | |||||||||||
-1 | Other consists primarily of adjustments for foreign currency translation. | ||||||||||||||||||||
Purchased Intangible Assets | |||||||||||||||||||||
Net contract, program, and other intangible assets comprise the following: | |||||||||||||||||||||
31-Dec | |||||||||||||||||||||
$ in millions | 2014 | 2013 | |||||||||||||||||||
Gross contract, program and other intangible assets | $ | 1,831 | $ | 1,812 | |||||||||||||||||
Less accumulated amortization | (1,730 | ) | (1,708 | ) | |||||||||||||||||
Net contract, program and other intangible assets | $ | 101 | $ | 104 | |||||||||||||||||
Amortization expense for 2014, 2013 and 2012, was $22 million, $26 million and $36 million, respectively. The company’s purchased intangible assets are being amortized on a straight-line basis over an aggregate weighted-average period of 21 years and are included in other non-current assets in the consolidated statements of financial position. As of December 31, 2014, the expected future amortization of purchased intangibles for each of the next five years is as follows: | |||||||||||||||||||||
$ in millions | |||||||||||||||||||||
Year Ending December 31 | |||||||||||||||||||||
2015 | $ | 22 | |||||||||||||||||||
2016 | 16 | ||||||||||||||||||||
2017 | 14 | ||||||||||||||||||||
2018 | 12 | ||||||||||||||||||||
2019 | 10 | ||||||||||||||||||||
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS | ||||||||||||||||
The following table presents comparative carrying value and fair value information for our financial assets and liabilities: | |||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||
$ in millions | Carrying | Fair | Carrying | Fair | |||||||||||||
Value | Value | Value | Value | ||||||||||||||
Financial Assets (Liabilities) | |||||||||||||||||
Marketable securities | |||||||||||||||||
Trading | $ | 331 | $ | 331 | $ | 308 | $ | 308 | |||||||||
Available-for-sale | 5 | 5 | 2 | 2 | |||||||||||||
Derivatives | 1 | 1 | (2 | ) | (2 | ) | |||||||||||
Long-term debt, including current portion | (5,928 | ) | (6,726 | ) | (5,930 | ) | (6,227 | ) | |||||||||
There were no transfers of financial instruments between the three levels of the fair value hierarchy during the years ended December 31, 2014 and 2013. | |||||||||||||||||
The carrying value of cash and cash equivalents approximates fair value. | |||||||||||||||||
Investments in Marketable Securities | |||||||||||||||||
The company holds a portfolio of marketable securities to partially fund non-qualified employee benefit plans consisting of securities that are classified as either trading or available-for-sale. These assets are recorded at fair value on a recurring basis and substantially all of these instruments are valued using Level 1 inputs, with an immaterial amount valued using Level 2 inputs. As of December 31, 2014 and 2013, marketable securities of $336 million and $310 million, respectively, were included in other non-current assets in the consolidated statements of financial position. | |||||||||||||||||
Derivative Financial Instruments and Hedging Activities | |||||||||||||||||
The company's derivative portfolio consists primarily of foreign currency forward contracts. The notional value of the company's derivative portfolio at December 31, 2014 and 2013, was $146 million and $161 million, respectively. The portion of the notional value designated as cash flow hedges at December 31, 2014 and 2013, was $34 million and $77 million, respectively. | |||||||||||||||||
Derivative financial instruments are recognized as assets or liabilities in the financial statements and measured at fair value on a recurring basis. Substantially all of these instruments are valued using Level 2 inputs. Where model-derived valuations are appropriate, the company utilizes the income approach to determine the fair value and uses the applicable London Interbank Offered Rate (LIBOR) swap rates. | |||||||||||||||||
Unrealized gains or losses on the effective portion of cash flow hedges are reclassified from other comprehensive income to operating income upon the recognition of the underlying hedged transaction. Hedge contracts not designated for hedge accounting and the ineffective portion of cash flow hedges are recorded in other income. The derivative fair values and related unrealized gains/losses at December 31, 2014 and 2013, were not material. | |||||||||||||||||
Long-Term Debt | |||||||||||||||||
The fair value of long-term debt is calculated using Level 2 inputs, based on interest rates available for debt with terms and maturities similar to the company’s existing debt arrangements. |
LongTerm_Debt
Long-Term Debt | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Debt Disclosure [Abstract] | |||||||||||
Long-Term Debt | LONG-TERM DEBT | ||||||||||
Credit Facility | |||||||||||
The company maintains an unsecured credit facility in an aggregate principal amount of $1.775 billion (the Credit Agreement). The Credit Agreement contains customary terms and conditions, including covenants restricting the company's ability to sell all or substantially all of its assets, merge or consolidate with another entity or undertake other fundamental changes and incur liens. The company also cannot permit the ratio of its debt to capitalization (as set forth in the Credit Agreement) to exceed 65 percent. At December 31, 2014, the company was in compliance with all covenants under the Credit Agreement and there was no balance outstanding under this facility. | |||||||||||
Issuance and Redemption | |||||||||||
During the second quarter of 2013, the company issued $2.85 billion of unsecured senior notes (the Notes). The company used a portion of the net proceeds to redeem $850 million of unsecured senior notes due in 2014 and 2015. | |||||||||||
Long-term debt consists of the following: | |||||||||||
$ in millions | December 31 | ||||||||||
2014 | 2013 | ||||||||||
Fixed-rate notes and debentures, maturing in | Interest rate | ||||||||||
2016 | 7.75% | 107 | 107 | ||||||||
2018 | 1.75% - 6.75% | 1,050 | 1,050 | ||||||||
2019 | 5.05% | 500 | 500 | ||||||||
2021 | 3.50% | 700 | 700 | ||||||||
2023 | 3.25% | 1,050 | 1,050 | ||||||||
2026 | 7.75% - 7.88% | 527 | 527 | ||||||||
2031 | 7.75% | 466 | 466 | ||||||||
2040 | 5.05% | 300 | 300 | ||||||||
2043 | 4.75% | 950 | 950 | ||||||||
Capital leases | Various | 33 | 35 | ||||||||
Other | Various | 245 | 245 | ||||||||
Total long-term debt | 5,928 | 5,930 | |||||||||
Less: current portion | 3 | 2 | |||||||||
Long-term debt, net of current portion | $ | 5,925 | $ | 5,928 | |||||||
Indentures underlying long-term debt issued by the company or its subsidiaries contain various restrictions with respect to the issuer, including one or more restrictions relating to limitations on liens, sale-leaseback arrangements and funded debt of subsidiaries. The majority of these fixed rate notes and debentures are subject to redemption at the company’s discretion at any time prior to maturity in whole or in part at the principal amount plus any make-whole premium and accrued and unpaid interest. Interest on these fixed rate notes and debentures are payable semi-annually in arrears. | |||||||||||
Total interest payments, net of interest received, were $281 million, $234 million, and $200 million for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||||||||
Maturities of long-term debt as of December 31, 2014, are as follows: | |||||||||||
$ in millions | |||||||||||
Year Ending December 31 | |||||||||||
2015 | $ | 3 | |||||||||
2016 | 110 | ||||||||||
2017 | 3 | ||||||||||
2018 | 1,053 | ||||||||||
2019 | 504 | ||||||||||
Thereafter | 4,252 | ||||||||||
Total principal payments | 5,925 | ||||||||||
Unamortized premium on long-term debt, net of discount | 3 | ||||||||||
Total long-term debt | $ | 5,928 | |||||||||
The premium on long-term debt primarily represents non-cash fair market value adjustments resulting from acquisitions, which are amortized over the life of the related debt. |
Investigations_Claims_and_Liti
Investigations, Claims and Litigation | 12 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
Investigations, Claims and Litigation | INVESTIGATIONS, CLAIMS AND LITIGATION |
Litigation | |
On May 4, 2012, the company commenced an action, Northrop Grumman Systems Corp. v. United States, in the U.S. Court of Federal Claims. This lawsuit relates to an approximately $875 million firm fixed price contract awarded to the company in 2007 by the U.S. Postal Service (USPS) for the construction and delivery of flats sequencing systems (FSS) as part of the postal automation program. The FSS have been delivered. The company's lawsuit is based on various theories of liability. The complaint seeks approximately $63 million for unpaid portions of the contract price, and approximately $115 million based on the company's assertions that, through various acts and omissions over the life of the contract, the USPS adversely affected the cost and schedule of performance and materially altered the company's obligations under the contract. The United States responded to the company's complaint with an answer, denying most of the company's claims, and counterclaims, seeking approximately $410 million, less certain amounts outstanding under the contract. The principal counterclaim alleges that the company delayed its performance and caused damages to the USPS because USPS did not realize certain costs savings as early as it had expected. On April 2, 2013, the U.S. Department of Justice informed the company of a False Claims Act complaint relating to the FSS contract that was filed under seal by a relator in June 2011, in the U.S. District Court for the Eastern District of Virginia. On June 3, 2013, the United States filed a Notice informing the Court that the United States had decided not to intervene in this case. The relator alleged that the company violated the False Claims Act in a number of ways with respect to the FSS contract, alleged damage to the USPS in an amount of at least approximately $179 million annually, alleged that he was improperly discharged in retaliation, and sought an unspecified partial refund of the contract purchase price, penalties, attorney's fees and other costs of suit. The relator later voluntarily dismissed his retaliation claim and reasserted it in a separate arbitration, which he also ultimately voluntarily dismissed. On September 5, 2014, the court granted the company's motion for summary judgment and ordered the relator's False Claims Act case be dismissed with prejudice. On December 19, 2014, the company filed a motion for partial summary judgment asking the court to dismiss the principal counterclaim referenced above. Although the ultimate outcome of these matters ("the FSS matters," collectively), including any possible loss, cannot be predicted or estimated at this time, the company intends vigorously to pursue and defend the FSS matters. | |
On August 8, 2013, the company received a court-appointed expert's report in litigation pending in the Second Federal Court of the Federal District in Brazil brought by the Brazilian Post and Telegraph Corporation (ECT) a Brazilian state-owned entity, against Solystic SAS (Solystic), a French subsidiary of the company, and two of its consortium partners. In this suit, commenced on December 17, 2004, and relatively inactive for some period of time, ECT alleges the consortium breached its contract with ECT and seeks damages of approximately R$111 million (the equivalent of approximately $42 million as of December 31, 2014), plus interest, inflation adjustments and attorneys’ fees, as authorized by Brazilian law, which amounts could be significant over time. The original suit sought R$89 million (the equivalent of approximately $34 million as of December 31, 2014) in damages. In October 2013, ECT asserted an additional damage claim of R$22 million (the equivalent of approximately $8 million as of December 31, 2014). In its counterclaim, Solystic alleges ECT breached the contract by wrongfully refusing to accept the equipment Solystic had designed and built and seeks damages of approximately €31 million (the equivalent of approximately $38 million as of December 31, 2014), plus interest, inflation adjustments and attorneys’ fees, as authorized by Brazilian law. The Brazilian court retained an expert to consider certain issues pending before it. On August 8, 2013 and September 10, 2014, the company received reports from the expert, which contain some recommended findings relating to liability and the damages calculations put forth by ECT. Some of the expert's recommended findings were favorable to the company and others were favorable to ECT. In November 2014, the parties submitted comments on the expert's most recent report. At yet to be specified future dates, the court is expected to hear testimony from witnesses and to issue a decision on the parties' claims and counterclaims that could accept or reject, in whole or in part, the expert’s recommended findings. | |
The company is one of several defendants in litigation brought by the Orange County Water District in Orange County Superior Court in California on December 17, 2004, for alleged contribution to volatile organic chemical contamination of the County's shallow groundwater. The lawsuit includes counts against the defendants for violation of the Orange County Water District Act, the California Super Fund Act, negligence, nuisance, trespass and declaratory relief. Among other things, the lawsuit seeks unspecified damages for the cost of remediation, payment of attorney fees and costs, and punitive damages. Trial on the statutory claims (those based on the Orange County Water District Act, the California Super Fund Act and declaratory relief) concluded on September 25, 2012. On October 29, 2013, the court issued its decision in favor of the defendants on the statutory claims. On May 9, 2014, the court granted defendants' dispositive motions on the remaining tort causes of action. Notice of entry of judgment was filed on July 1, 2014. The Orange County Water District filed a notice of appeal on August 28, 2014. Pursuant to the court's rules, Orange County Water District's opening brief will be due in early March, unless the court directs otherwise. | |
The company is a party to various investigations, lawsuits, claims and other legal proceedings, including government investigations and claims, that arise in the ordinary course of our business. The nature of legal proceedings is such that we cannot assure the outcome of any particular matter. However, based on information available to the company to date, and other than with respect to the FSS matters discussed separately above, the company does not believe that the outcome of any matter pending against the company is likely to have a material adverse effect on the company's consolidated financial position as of December 31, 2014, or its annual results of operations or cash flows. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES | |||
Guarantees of Subsidiary Performance Obligations | ||||
From time to time in the ordinary course of business, the company guarantees obligations of its subsidiaries under certain contracts. Generally, the company is liable under such an arrangement only if its subsidiary is unable to perform under its contract. Historically, the company has not incurred any substantial liabilities resulting from these guarantees. | ||||
In addition, the company’s subsidiaries may enter into joint ventures, teaming and other business arrangements (collectively, Business Arrangements) to support the company’s products and services in domestic and international markets. The company generally strives to limit its exposure under these arrangements to its subsidiary’s investment in the Business Arrangements or to the extent of such subsidiary’s obligations under the applicable contract. In some cases, however, the company may be required to guarantee performance by the Business Arrangements and, in such cases, the company generally strives to obtain cross-indemnification from the other members of the Business Arrangements. | ||||
At December 31, 2014, the company is not aware of any existing event of default that would require it to satisfy any of these guarantees. | ||||
U.S. Government Cost Claims | ||||
From time to time, the company is advised of claims by the U.S. Government concerning certain potential disallowed costs, plus, at times, penalties and interest. When such findings are presented, the company and the U.S. Government representatives engage in discussions to enable the company to evaluate the merits of these claims, as well as to assess the amounts being claimed. Where appropriate, provisions are made to reflect the company’s estimated exposure for matters raised by the U.S. Government. Such provisions are reviewed periodically using the most recent information available. The company believes it has adequately reserved for disputed amounts that are probable and estimable, and the outcome of any such matters would not have a material adverse effect on its consolidated financial position as of December 31, 2014, or its annual results of operations and/or cash flows. | ||||
Environmental Matters | ||||
As of December 31, 2014, management estimates that the range of reasonably possible future costs for environmental remediation is between $363 million and $809 million, before considering the amount recoverable through overhead charges on U.S. Government contracts. At December 31, 2014, the amount within that range accrued for probable environmental remediation costs was $381 million, of which $142 million is recorded in other current liabilities and $239 million is recorded in other non-current liabilities. A portion of the environmental remediation costs is expected to be recoverable through overhead charges on U.S. Government contracts and, accordingly, such amounts are deferred in inventoried costs and other non-current assets. As of December 31, 2014, $75 million is deferred in inventoried costs and $118 million is deferred in other non-current assets. These amounts are evaluated for recoverability on a routine basis. Although management cannot predict whether new information gained as our environmental remediation projects progress, or as changes in facts and circumstances occur, will materially affect the estimated liability accrued, we do not anticipate future remediation expenditures associated with our currently identified projects will have a material adverse effect on the company's consolidated financial position as of December 31, 2014, or its annual results of operations and/or cash flows. | ||||
Financial Arrangements | ||||
In the ordinary course of business, the company uses standby letters of credit and guarantees issued by commercial banks, and surety bonds issued principally by insurance companies to guarantee the performance on certain obligations. At December 31, 2014, there were $295 million of stand-by letters of credit and guarantees, and $163 million of surety bonds outstanding. | ||||
Indemnifications | ||||
The company has retained certain environmental, income tax and other potential liabilities in connection with certain of its divestitures. The settlement of these liabilities is not expected to have a material adverse effect on the company’s consolidated financial position as of December 31, 2014, or its annual results of operations and/or cash flows. | ||||
Operating Leases | ||||
Rental expense for operating leases was $304 million in 2014, $298 million in 2013, and $347 million in 2012. These amounts are net of immaterial amounts of sublease rental income. Minimum rental commitments under long-term non-cancelable operating leases as of December 31, 2014, are payable as follows: | ||||
$ in millions | ||||
Year Ending December 31 | ||||
2015 | $ | 267 | ||
2016 | 214 | |||
2017 | 140 | |||
2018 | 84 | |||
2019 | 57 | |||
Thereafter | 78 | |||
Total minimum lease payments | $ | 840 | ||
Retirement_Benefits
Retirement Benefits | 12 Months Ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
Retirement Benefits | RETIREMENT BENEFITS | ||||||||||||||||||||||||||||||||
Plan Descriptions | |||||||||||||||||||||||||||||||||
Defined Benefit Pension Plans – The company sponsors several defined benefit pension plans in the U.S. covering the majority of its employees. Pension benefits for most employees are based on the employee’s years of service, age and compensation. It is the policy of the company to fund at least the minimum amount required for all qualified plans, using actuarial cost methods and assumptions acceptable under U.S. Government regulations, by making payments into benefit trusts separate from the company. | |||||||||||||||||||||||||||||||||
Defined Contribution Plans – The company also sponsors 401(k) defined contribution plans in which most employees are eligible to participate, including certain employees covered under collective bargaining agreements. Company contributions for most plans are based on a cash matching of employee contributions up to four percent of compensation. In addition to the 401(k) defined contribution benefit, certain employees hired after June 30, 2008, are eligible to participate in a defined contribution program in lieu of a defined benefit pension plan. The company’s contributions to these defined contribution plans for the years ended December 31, 2014, 2013 and 2012, were $282 million, $285 million and $293 million, respectively. | |||||||||||||||||||||||||||||||||
Non-U.S. Benefit Plans – The company sponsors several benefit plans for non-U.S. employees. These plans are designed to provide benefits appropriate to local practice and in accordance with local regulations. Some of these plans are funded using benefit trusts that are separate from the company. | |||||||||||||||||||||||||||||||||
Medical and Life Benefits – The company provides a portion of the costs for certain health care and life insurance benefits for a substantial number of its active and retired employees. Certain covered employees achieve eligibility to participate in these plans upon retirement from active service if they meet specified age and years of service requirements. Qualifying dependents are also eligible for plan benefits in certain circumstances. The company reserves the right to amend or terminate the plans at any time. The company has capped the amount of its contributions to substantially all of its remaining post retirement medical and life benefit plans. | |||||||||||||||||||||||||||||||||
In addition to a company and employee cost-sharing feature, the plans also have provisions for deductibles, co-payments, coinsurance percentages, out-of-pocket limits, conformance to a schedule of reasonable fees, the use of managed care providers and coordination of benefits with other plans. The plans also provide for a Medicare carve-out. Subsequent to January 1, 2005 (or earlier at some segments), newly hired employees are not eligible for subsidized post retirement medical and life benefits. | |||||||||||||||||||||||||||||||||
In the first quarter of 2014, we communicated an amendment to most of our Medicare-eligible retirees, that beginning in the third quarter of 2014, in lieu of the benefits previously provided under the plans, the company will provide subsidies to reimburse retirees for a portion of the cost of individual Medicare-supplemental coverage purchased directly by the retiree through a private insurance exchange. The amendment did not affect Pre-Medicare retirees. We expect that the cost of retiree medical coverage in 2015 will be comparable to 2014. | |||||||||||||||||||||||||||||||||
Summary Plan Results | |||||||||||||||||||||||||||||||||
The cost to the company of its retirement benefit plans is shown in the following table: | |||||||||||||||||||||||||||||||||
Year Ended December 31 | |||||||||||||||||||||||||||||||||
Pension Benefits | Medical and | ||||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||||||||||||||
Components of net periodic benefit cost | |||||||||||||||||||||||||||||||||
Service cost | $ | 457 | $ | 516 | $ | 522 | $ | 34 | $ | 36 | $ | 34 | |||||||||||||||||||||
Interest cost | 1,260 | 1,117 | 1,184 | 99 | 96 | 109 | |||||||||||||||||||||||||||
Expected return on plan assets | (1,871 | ) | (1,809 | ) | (1,708 | ) | (83 | ) | (75 | ) | (68 | ) | |||||||||||||||||||||
Amortization of: | |||||||||||||||||||||||||||||||||
Prior service credit | (59 | ) | (58 | ) | (58 | ) | (45 | ) | (51 | ) | (51 | ) | |||||||||||||||||||||
Net loss from previous years | 327 | 608 | 427 | 13 | 30 | 21 | |||||||||||||||||||||||||||
Other | 1 | — | 7 | — | — | — | |||||||||||||||||||||||||||
Net periodic benefit cost | $ | 115 | $ | 374 | $ | 374 | $ | 18 | $ | 36 | $ | 45 | |||||||||||||||||||||
The table below summarizes the components of changes in unamortized benefit plan costs for the years ended December 31, 2014, 2013 and 2012: | |||||||||||||||||||||||||||||||||
$ in millions | Pension Benefits | Medical and | Total | ||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
Changes in unamortized benefit plan costs | |||||||||||||||||||||||||||||||||
Change in net actuarial loss | $ | 2,353 | $ | 151 | $ | 2,504 | |||||||||||||||||||||||||||
Change in prior service cost | (2 | ) | — | (2 | ) | ||||||||||||||||||||||||||||
Amortization of: | |||||||||||||||||||||||||||||||||
Prior service credit | 58 | 51 | 109 | ||||||||||||||||||||||||||||||
Net loss from previous years | (427 | ) | (21 | ) | (448 | ) | |||||||||||||||||||||||||||
Tax benefit related to above items | (788 | ) | (72 | ) | (860 | ) | |||||||||||||||||||||||||||
Change in unamortized benefit plan costs – 2012 | $ | 1,194 | $ | 109 | $ | 1,303 | |||||||||||||||||||||||||||
Change in net actuarial loss | $ | (2,158 | ) | $ | (280 | ) | $ | (2,438 | ) | ||||||||||||||||||||||||
Amortization of: | |||||||||||||||||||||||||||||||||
Prior service credit | 58 | 51 | 109 | ||||||||||||||||||||||||||||||
Net loss from previous years | (608 | ) | (30 | ) | (638 | ) | |||||||||||||||||||||||||||
Tax expense related to above items | 1,075 | 102 | 1,177 | ||||||||||||||||||||||||||||||
Change in unamortized benefit plan costs – 2013 | $ | (1,633 | ) | $ | (157 | ) | $ | (1,790 | ) | ||||||||||||||||||||||||
Change in net actuarial loss | $ | 3,833 | $ | 234 | $ | 4,067 | |||||||||||||||||||||||||||
Change in prior service cost | — | (92 | ) | (92 | ) | ||||||||||||||||||||||||||||
Amortization of: | |||||||||||||||||||||||||||||||||
Prior service credit | 59 | 45 | 104 | ||||||||||||||||||||||||||||||
Net loss from previous years | (327 | ) | (13 | ) | (340 | ) | |||||||||||||||||||||||||||
Tax benefit related to above items | (1,357 | ) | (66 | ) | (1,423 | ) | |||||||||||||||||||||||||||
Change in unamortized benefit plan costs – 2014 | $ | 2,208 | $ | 108 | $ | 2,316 | |||||||||||||||||||||||||||
Pension Benefits | Medical and | ||||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||||
Amounts recorded in accumulated other comprehensive loss | |||||||||||||||||||||||||||||||||
Net actuarial loss | $ | (8,797 | ) | $ | (5,291 | ) | $ | (372 | ) | $ | (151 | ) | |||||||||||||||||||||
Prior service credit | 364 | 423 | 94 | 47 | |||||||||||||||||||||||||||||
Income tax benefits related to above items | 3,285 | 1,928 | 110 | 44 | |||||||||||||||||||||||||||||
Unamortized benefit plan costs | $ | (5,148 | ) | $ | (2,940 | ) | $ | (168 | ) | $ | (60 | ) | |||||||||||||||||||||
The following tables set forth the funded status and amounts recognized in the consolidated statements of financial position for the company’s defined benefit pension and retiree health care and life insurance benefit plans. Pension benefits data includes the qualified plans, foreign plans and domestic unfunded non-qualified plans for benefits provided to directors, officers and certain employees. The company uses a December 31 measurement date for its plans. | |||||||||||||||||||||||||||||||||
Pension Benefits | Medical and | ||||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||||
Change in projected benefit obligation | |||||||||||||||||||||||||||||||||
Projected benefit obligation at beginning of year | $ | 25,972 | $ | 27,746 | $ | 2,224 | $ | 2,448 | |||||||||||||||||||||||||
Service cost | 457 | 516 | 34 | 36 | |||||||||||||||||||||||||||||
Interest cost | 1,260 | 1,117 | 99 | 96 | |||||||||||||||||||||||||||||
Participant contributions | 19 | 12 | 50 | 77 | |||||||||||||||||||||||||||||
Plan amendments | — | — | (92 | ) | — | ||||||||||||||||||||||||||||
Actuarial (gain) loss | 4,273 | (2,063 | ) | 258 | (219 | ) | |||||||||||||||||||||||||||
Benefits paid | (1,409 | ) | (1,365 | ) | (186 | ) | (227 | ) | |||||||||||||||||||||||||
Other | (47 | ) | 9 | 11 | 13 | ||||||||||||||||||||||||||||
Projected benefit obligation at end of year | $ | 30,525 | $ | 25,972 | $ | 2,398 | $ | 2,224 | |||||||||||||||||||||||||
Pension Benefits | Medical and | ||||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||||
Change in plan assets | |||||||||||||||||||||||||||||||||
Fair value of plan assets at beginning of year | $ | 24,098 | $ | 22,962 | $ | 1,175 | $1,062 | ||||||||||||||||||||||||||
Net gain on plan assets | 2,298 | 1,907 | 108 | 137 | |||||||||||||||||||||||||||||
Employer contributions | 78 | 579 | 57 | 114 | |||||||||||||||||||||||||||||
Participant contributions | 19 | 12 | 50 | 77 | |||||||||||||||||||||||||||||
Benefits paid | (1,409 | ) | (1,365 | ) | (186 | ) | (227 | ) | |||||||||||||||||||||||||
Other | (21 | ) | 3 | 12 | 12 | ||||||||||||||||||||||||||||
Fair value of plan assets at end of year | 25,063 | 24,098 | 1,216 | 1,175 | |||||||||||||||||||||||||||||
Funded status | $ | (5,462 | ) | $ | (1,874 | ) | $ | (1,182 | ) | $ | (1,049 | ) | |||||||||||||||||||||
Amounts recognized in the Consolidated Statements of Financial Position | |||||||||||||||||||||||||||||||||
Non-current assets | $ | 3 | $ | 117 | $ | 80 | $ | 72 | |||||||||||||||||||||||||
Current liability | (133 | ) | (122 | ) | (39 | ) | (36 | ) | |||||||||||||||||||||||||
Non-current liability | (5,332 | ) | (1,869 | ) | (1,223 | ) | (1,085 | ) | |||||||||||||||||||||||||
The following table shows those amounts expected to be recognized in net periodic benefit cost in 2015: | |||||||||||||||||||||||||||||||||
$ in millions | Pension Benefits | Medical and | |||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
Amounts expected to be recognized in 2015 net periodic benefit cost | |||||||||||||||||||||||||||||||||
Net actuarial loss | $ | 682 | $ | 27 | |||||||||||||||||||||||||||||
Prior service credit | (60 | ) | (28 | ) | |||||||||||||||||||||||||||||
The accumulated benefit obligation for all defined benefit pension plans was $30.3 billion and $25.7 billion at December 31, 2014 and 2013, respectively. | |||||||||||||||||||||||||||||||||
Amounts for pension plans with accumulated benefit obligations in excess of fair value of plan assets are as follows: | |||||||||||||||||||||||||||||||||
December 31 | |||||||||||||||||||||||||||||||||
$ in millions | 2014 | 2013 | |||||||||||||||||||||||||||||||
Projected benefit obligation | $ | 30,405 | $ | 24,129 | |||||||||||||||||||||||||||||
Accumulated benefit obligation | 30,172 | 23,830 | |||||||||||||||||||||||||||||||
Fair value of plan assets | 24,940 | 22,138 | |||||||||||||||||||||||||||||||
Plan Assumptions | |||||||||||||||||||||||||||||||||
On a weighted-average basis, the following assumptions were used to determine benefit obligations and net periodic benefit cost: | |||||||||||||||||||||||||||||||||
Pension Benefits | Medical and | ||||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||||||||
Assumptions used to determine benefit obligation at December 31 | |||||||||||||||||||||||||||||||||
Discount rate | 4.12 | % | 4.99 | % | 4.04 | % | 4.9 | % | |||||||||||||||||||||||||
Initial cash balance crediting rate assumed for the next year | 2.75 | % | 3.9 | % | |||||||||||||||||||||||||||||
Rate to which the cash balance crediting rate is assumed to increase (the ultimate rate) | 3.5 | % | 4.7 | % | |||||||||||||||||||||||||||||
Year that the cash balance crediting rate reaches the ultimate rate | 2020 | 2019 | |||||||||||||||||||||||||||||||
Rate of compensation increase | 3 | % | 3 | % | |||||||||||||||||||||||||||||
Initial health care cost trend rate assumed for the next year | 6.5 | % | 6.5 | % | |||||||||||||||||||||||||||||
Rate to which the health care cost trend rate is assumed to decline (the ultimate trend rate) | 5 | % | 5 | % | |||||||||||||||||||||||||||||
Year that the health care cost trend rate reaches the ultimate trend rate | 2019 | 2017 | |||||||||||||||||||||||||||||||
Assumptions used to determine benefit cost for the year ended December 31 | |||||||||||||||||||||||||||||||||
Discount rate | 4.99 | % | 4.12 | % | 4.9 | % | 4.02 | % | |||||||||||||||||||||||||
Initial cash balance crediting rate assumed for the next year | 3.9 | % | 3 | % | |||||||||||||||||||||||||||||
Rate to which the cash balance crediting rate is assumed to increase (the ultimate rate) | 4.7 | % | 4.25 | % | |||||||||||||||||||||||||||||
Year that the cash balance crediting rate reaches the ultimate rate | 2019 | 2018 | |||||||||||||||||||||||||||||||
Expected long-term return on plan assets | 8 | % | 8 | % | 7.45 | % | 7.33 | % | |||||||||||||||||||||||||
Rate of compensation increase | 3 | % | 2.75 | % | |||||||||||||||||||||||||||||
Initial health care cost trend rate assumed for the next year | 6.5 | % | 7 | % | |||||||||||||||||||||||||||||
Rate to which the health care cost trend rate is assumed to decline (the ultimate trend rate) | 5 | % | 5 | % | |||||||||||||||||||||||||||||
Year that the health care cost trend rate reaches the ultimate trend rate | 2017 | 2017 | |||||||||||||||||||||||||||||||
Plan Assets and Investment Policy | |||||||||||||||||||||||||||||||||
Plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification and investment return over the long term. The investment goal is to exceed the assumed rate of return over the long term within reasonable and prudent levels of risk. Through consultation with our investment management team and outside investment advisers, management develops expected long-term returns for each of the plans’ strategic asset classes. In addition to our historical investment performance, we consider several factors, including current market data such as yields/price-earnings ratios, historical market returns over long periods and periodic surveys of investment managers’ expectations. Using policy target allocation percentages and the asset class expected returns, a weighted-average expected return is calculated. Liability studies are conducted on a regular basis to provide guidance in setting investment goals with an objective to balance risk. Risk targets are established and monitored against acceptable ranges. | |||||||||||||||||||||||||||||||||
Our investment policies and procedures are designed to ensure the plans’ investments are in compliance with ERISA (Employee Retirement Income Security Act). Guidelines are established defining permitted investments within each asset class. Derivatives are used for transitioning assets, asset class rebalancing, managing currency risk and for management of fixed income and alternative investments. | |||||||||||||||||||||||||||||||||
For the majority of the plans’ assets, the investment policies require that the asset allocation be maintained within the following ranges as of December 31, 2014: | |||||||||||||||||||||||||||||||||
Asset Allocation Ranges | |||||||||||||||||||||||||||||||||
Domestic equities | 13% - 33% | ||||||||||||||||||||||||||||||||
International equities | 7% - 27% | ||||||||||||||||||||||||||||||||
Fixed income securities | 30% - 50% | ||||||||||||||||||||||||||||||||
Alternative investments | 10% - 30% | ||||||||||||||||||||||||||||||||
The table below provides the fair values of the company’s pension and VEBA trust plan assets at December 31, 2014, and 2013, by asset category. The table also identifies the level of inputs used to determine the fair value of assets in each category (see Note 1 for definition of levels). The significant amount of Level 2 investments in the table results from including in this category investments in pooled funds that contain investments with values based on quoted market prices, but for which the funds are not valued on a quoted market basis, and fixed income securities valued using model-based pricing services. | |||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||
Asset category | |||||||||||||||||||||||||||||||||
Cash and cash equivalents (1) | $38 | $32 | $1,737 | $1,467 | $1,775 | $1,499 | |||||||||||||||||||||||||||
Domestic equities | 4,729 | 4,163 | 147 | 287 | $ | 2 | $2 | 4,878 | 4,452 | ||||||||||||||||||||||||
International equities | 2,675 | 2,473 | 2,062 | 1,741 | 4,737 | 4,214 | |||||||||||||||||||||||||||
Fixed income securities | |||||||||||||||||||||||||||||||||
U.S. Treasuries | 957 | 1,602 | 957 | 1,602 | |||||||||||||||||||||||||||||
U.S. Government Agency | 909 | 974 | 909 | 974 | |||||||||||||||||||||||||||||
Non-U.S. Government | 440 | 422 | 440 | 422 | |||||||||||||||||||||||||||||
Corporate debt | 5,710 | 4,744 | 5,710 | 4,744 | |||||||||||||||||||||||||||||
Asset backed | 604 | 545 | 4 | 4 | 608 | 549 | |||||||||||||||||||||||||||
High yield debt | 586 | 922 | — | 1 | 586 | 923 | |||||||||||||||||||||||||||
Bank loans | 228 | 185 | 228 | 185 | |||||||||||||||||||||||||||||
Alternative Investments | |||||||||||||||||||||||||||||||||
Hedge funds | 632 | 821 | 632 | 821 | |||||||||||||||||||||||||||||
Private equities | 2,030 | 2,075 | 2,030 | 2,075 | |||||||||||||||||||||||||||||
Real estate | 2,759 | 2,767 | 2,759 | 2,767 | |||||||||||||||||||||||||||||
Other | 32 | 26 | (2 | ) | 20 | 30 | 46 | ||||||||||||||||||||||||||
Fair value of plan assets at the end of the year | $7,474 | $6,694 | $13,378 | $12,909 | $5,427 | $5,670 | $26,279 | $25,273 | |||||||||||||||||||||||||
-1 | Cash and cash equivalents are predominantly held in money market funds. | ||||||||||||||||||||||||||||||||
The changes in the fair value of the pension and VEBA plan trust assets measured using Level 3 significant unobservable inputs during 2014 and 2013, are as follows: | |||||||||||||||||||||||||||||||||
$ in millions | Hedge funds and High-yield debt | Private equities | Real Estate | Other | Total | ||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | 786 | $ | 1,980 | $ | 2,256 | $ | 6 | $ | 5,028 | |||||||||||||||||||||||
Actual return on plan assets: | |||||||||||||||||||||||||||||||||
Unrealized (losses) gains, net | (16 | ) | 112 | 262 | — | 358 | |||||||||||||||||||||||||||
Realized gains, net | 43 | — | — | — | 43 | ||||||||||||||||||||||||||||
Purchases | 200 | 666 | 763 | — | 1,629 | ||||||||||||||||||||||||||||
Sales | (191 | ) | (683 | ) | (514 | ) | — | (1,388 | ) | ||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 822 | $ | 2,075 | $ | 2,767 | $ | 6 | $ | 5,670 | |||||||||||||||||||||||
Actual return on plan assets: | |||||||||||||||||||||||||||||||||
Unrealized gains (losses), net | (46 | ) | (60 | ) | 173 | — | 67 | ||||||||||||||||||||||||||
Realized gains (losses), net | 89 | 10 | 71 | — | 170 | ||||||||||||||||||||||||||||
Purchases | 21 | 431 | 61 | — | 513 | ||||||||||||||||||||||||||||
Sales | (254 | ) | (426 | ) | (313 | ) | — | (993 | ) | ||||||||||||||||||||||||
Balance as of December 31, 2014 | $ | 632 | $ | 2,030 | $ | 2,759 | $ | 6 | $ | 5,427 | |||||||||||||||||||||||
Generally, investments are valued based on information in financial publications of general circulation, statistical and valuation services, records of security exchanges, appraisal by qualified persons, transactions and bona fide offers. Domestic and international equities consist primarily of common stocks and institutional common trust funds. Investments in common and preferred shares are valued at the last reported sales price of the stock on the last business day of the reporting period. Units in common trust funds and hedge funds are valued based on the redemption price of units owned by the trusts at year-end. Fair value for real estate and private equity partnerships is primarily based on valuation methodologies that include third party appraisals, comparable transactions, discounted cash flow valuation models and public market data. | |||||||||||||||||||||||||||||||||
Non-government fixed income securities are invested across various industry sectors and credit quality ratings. Generally, investment guidelines are written to limit securities, for example, to no more than 5 percent of each trust account, and to exclude the purchase of securities issued by the company. The number of real estate and private equity partnerships is 164 and the unfunded commitments are $833 million and $899 million as of December 31, 2014 and 2013, respectively. For alternative investments that cannot be redeemed, such as limited partnerships, the typical investment term is ten years. For alternative investments that permit redemptions, such redemptions are generally made quarterly and require a 90-day notice. The company is generally unable to determine the final redemption date and amount until the request is processed by the investment fund and therefore categorizes such alternative investments as Level 3 assets. | |||||||||||||||||||||||||||||||||
For the years ended December 31, 2014 and 2013, the defined benefit pension and VEBA trusts did not hold any Northrop Grumman common stock. | |||||||||||||||||||||||||||||||||
Benefit Payments | |||||||||||||||||||||||||||||||||
The following table reflects estimated future benefit payments for the next ten years, based upon the same assumptions used to measure the benefit obligation, and includes expected future employee service, as of December 31, 2014: | |||||||||||||||||||||||||||||||||
$ in millions | Pension Plans | Medical and | |||||||||||||||||||||||||||||||
Life Plans | |||||||||||||||||||||||||||||||||
Year Ending December 31 | |||||||||||||||||||||||||||||||||
2015 | $ | 1,395 | $ | 154 | |||||||||||||||||||||||||||||
2016 | 1,452 | 158 | |||||||||||||||||||||||||||||||
2017 | 1,506 | 161 | |||||||||||||||||||||||||||||||
2018 | 1,565 | 164 | |||||||||||||||||||||||||||||||
2019 | 1,623 | 166 | |||||||||||||||||||||||||||||||
2020 through 2024 | 8,975 | 828 | |||||||||||||||||||||||||||||||
In 2015, the company expects to contribute the required minimum funding level of approximately $77 million to its pension plans and approximately $68 million to its other post-retirement benefit plans. The company also expects to make additional voluntary pension contributions of approximately $500 million in 2015. |
Stock_Compensation_Plans_and_O
Stock Compensation Plans and Other Compensation Arrangements | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||
Stock Compensation Plans and Other Compensation Arrangements | STOCK COMPENSATION PLANS AND OTHER COMPENSATION ARRANGEMENTS | |||||||||||
Stock Compensation Plans | ||||||||||||
At December 31, 2014, Northrop Grumman had stock-based compensation awards outstanding under the following plans: the 2001 Long-Term Incentive Stock Plan (2001 Plan) and the 2011 Long-Term Incentive Stock Plan (2011 Plan), both applicable to employees, and the 1993 Stock Plan for Non-Employee Directors (1993 SPND) and the 1995 Stock Plan for Non-Employee Directors (1995 SPND), as amended. All of these plans were approved by the company’s shareholders. The company has historically issued new shares to satisfy award grants. | ||||||||||||
Employee Plans – In 2011, the shareholders of the company approved the company’s 2011 Plan, which replaced the expired 2001 Plan. The 2011 Plan permits grants to key employees of three general types of stock incentive awards: stock options, stock appreciation rights (SARs) and stock awards. Outstanding stock options granted after January 1, 2008, vest in equal increments over three years from the grant date, and grants outstanding expire seven years after the grant date. No SARs have been granted under either plan. Stock awards in the form of restricted performance stock rights (RPSR) and restricted stock rights (RSR) are granted to key employees without payment to the company. The 2011 Plan also provides equity-based award grants to non-employee directors. | ||||||||||||
Under the 2011 Plan, the company is authorized to issue or transfer shares of common stock pursuant to the types of awards mentioned above. The 2011 Plan authorized 39.1 million new shares plus 6.9 million shares from the 2001 Plan that were previously authorized and available to be issued at the date the 2001 Plan expired. Under the terms of the 2011 Plan, in the event that outstanding awards under the 2001 Plan expire or terminate without being exercised or paid, as the case may be, such shares (the Forfeited Shares) will become available for award under the 2011 Plan. | ||||||||||||
Recipients of RPSRs earn shares of stock, based on achievement of financial objectives determined by the board of directors in accordance with the plan. Depending on actual performance against these objectives, recipients earn between 0 and 200 percent of the original grant, as well as dividend equivalents on the ultimate number of shares issued. RPSRs and RSRs issued under either plan generally vest after three years. Termination of employment can result in forfeiture of some or all of the benefits extended. Shares issued under the 2011 Plan, other than for stock options, SARs and the Forfeited Shares, are counted against the 2011 Plan’s aggregate share limit as 4.5 shares for every one share actually issued in connection with the award; any shares issued for stock options, SARs and the Forfeited Shares are counted against the 2011 Plan's aggregate share limit on a one-for-one basis. | ||||||||||||
As of December 31, 2014, 25 million shares are available for grant under the 2011 Plan. | ||||||||||||
Non-Employee Director Plans – Under the 2011 Plan, each non-employee director must defer a portion of their compensation into a stock unit account (Automatic Stock Units). The Automatic Stock Units accrued under the 2011 Plan and the 1993 SPND are paid out in the form of common stock at the conclusion of the director's board service, or earlier, as specified by the director, if he or she has five or more years of service. In addition, each director may elect to defer payment of all or a portion of his or her remaining cash retainer or committee retainer fees into a stock unit account (Elective Stock Units) or in alternative investment options. The Elective Stock Units are paid at the conclusion of board service or earlier as specified by the director, regardless of years of service. Directors are credited with dividend equivalents in connection with the Automatic and Elective Stock Units until shares of common stock related to such stock units are issued. Since all directors are eligible to receive awards under the 2011 Plan, shares from this plan are available for future director awards following the same share counting limits as described for the employee plans. Awards under the 2011 Plan are made pursuant to the Northrop Grumman Corporation Equity Grant Program for Non-Employee Directors under the 2011 Plan, which sets forth the terms and conditions for the awards of stock units as described above. | ||||||||||||
Compensation Expense | ||||||||||||
Stock-based compensation expense and the related tax benefits for the years ended December 31, 2014, 2013 and 2012, are as follows: | ||||||||||||
Year Ended December 31 | ||||||||||||
$ in millions | 2014 | 2013 | 2012 | |||||||||
Stock-based compensation expense: | ||||||||||||
Stock options | $ | — | $ | 4 | $ | 10 | ||||||
Stock awards | 134 | 140 | 173 | |||||||||
Total stock-based compensation expense | 134 | 144 | 183 | |||||||||
Tax benefits from the exercise of stock options | 29 | 25 | 26 | |||||||||
Tax benefits from the issuance of stock awards | 52 | 16 | 19 | |||||||||
Total tax benefits recognized for stock-based compensation | $ | 81 | $ | 41 | $ | 45 | ||||||
At December 31, 2014, there was $89 million of unrecognized compensation expense related to unvested stock awards granted under the company’s stock-based compensation plans. These amounts are expected to be charged to expense over a weighted-average period of 1.3 years. | ||||||||||||
Stock Options | ||||||||||||
There were no stock options issued in 2014 or 2013. As of December 31, 2014 and 2013, there were 0.3 million and 1.7 million stock options outstanding, respectively. There were 1.4 million stock options exercised during the year ended December 31, 2014. All stock options outstanding were fully vested and exercisable at December 31, 2014. | ||||||||||||
The total intrinsic value of exercised stock options for the years ended December 31, 2014, 2013 and 2012, was $94 million, $118 million and $97 million, respectively. The total intrinsic value for options outstanding for the years ended December 31, 2014, 2013 and 2012, was $28 million, $101 million and $66 million, respectively. Intrinsic value is measured using the fair market value at the date of exercise (for options exercised), or at December 31, 2014 (for options outstanding), less the applicable exercise price. | ||||||||||||
Stock Awards | ||||||||||||
Compensation expense for stock awards is measured at the grant date based on the fair value of the award and is recognized over the vesting period (generally three years). The fair value of stock awards and performance stock awards is determined based on the closing market price of the company’s common stock on the grant date. The fair value of market-based stock awards is determined at the grant date using a Monte Carlo simulation model. For purposes of measuring compensation expense for performance awards, the number of shares ultimately expected to vest is estimated at each reporting date based on management’s expectations regarding the relevant performance criteria. | ||||||||||||
Stock award activity for the years ended December 31, 2014, 2013 and 2012, is presented in the table below. Vested awards do not include any adjustments to reflect the final performance measure for issued shares. | ||||||||||||
Stock | Weighted- | Weighted- | ||||||||||
Awards | Average | Average | ||||||||||
(in thousands) | Grant Date | Remaining | ||||||||||
Fair Value | Contractual | |||||||||||
Term (in years) | ||||||||||||
Outstanding at January 1, 2012 | 3,622 | $ | 58 | 1.6 | ||||||||
Granted | 1,860 | 60 | ||||||||||
Vested | (1,800 | ) | 55 | |||||||||
Forfeited | (204 | ) | 59 | |||||||||
Outstanding at December 31, 2012 | 3,478 | $ | 61 | 1.6 | ||||||||
Granted | 1,577 | 64 | ||||||||||
Vested | (1,323 | ) | 60 | |||||||||
Forfeited | (312 | ) | 62 | |||||||||
Outstanding at December 31, 2013 | 3,420 | $ | 61 | 1.5 | ||||||||
Granted | 763 | 118 | ||||||||||
Vested | (1,217 | ) | 58 | |||||||||
Forfeited | (158 | ) | 70 | |||||||||
Outstanding at December 31, 2014 | 2,808 | $ | 77 | 1.1 | ||||||||
The company issued 2.6 million, 3.4 million and 2.8 million shares to employees in settlement of fully vested stock awards, which had total fair values at issuance of $305 million, $226 million and $172 million and grant date fair values of $80 million, $105 million and $75 million during the years ended December 31, 2014, 2013 and 2012, respectively. The differences between the fair values at issuance and the grant date fair values reflect the effects of the performance adjustments and changes in the fair market value of the company’s common stock. | ||||||||||||
In 2014, the company granted certain employees 0.2 million RSRs and 0.6 million RPSRs under the company's long-term incentive stock plan, with a grant date aggregate fair value of $90 million. The majority of stock awards were granted in February 2014. The RSRs will typically vest on the third anniversary of the grant date, while the RPSRs will vest and pay out based on the achievement of financial metrics for the three-year period ending December 31, 2016. | ||||||||||||
In 2015, the company expects to issue to employees approximately 2.6 million shares of common stock with a grant date fair value of $107 million, principally related to the 2012 RPSR awards that vested as of December 31, 2014. The ultimate amount of shares to be paid out is subject to approval by the Compensation Committee of the Board of Directors and may vary from this estimate. | ||||||||||||
Cash Awards | ||||||||||||
In 2014, the company granted certain employees cash units (CUs) and cash performance units (CPUs) with a minimum aggregate payout amount of $32 million and a maximum aggregate payout amount of $179 million. The majority of cash awards were granted in February 2014. The CUs will vest and settle in cash on the third anniversary of the grant date, while the CPUs will vest and settle in cash based on the achievement of financial metrics for the three-year period ending December 31, 2016. At December 31, 2014, there was $122 million of unrecognized compensation expense related to cash awards. |
Unaudited_Selected_Quarterly_D
Unaudited Selected Quarterly Data | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||
Unaudited Selected Quarterly Data | UNAUDITED SELECTED QUARTERLY DATA | ||||||||||||||||
Unaudited quarterly financial results are set forth in the following tables. It is the company’s long-standing practice to establish actual interim closing dates using a “fiscal” calendar in which we close our books on a Friday near each quarter-end date, in order to normalize the potentially disruptive effects of quarterly closings on business processes. This practice is only used at interim periods within a reporting year. | |||||||||||||||||
2014 | |||||||||||||||||
In millions, except per share amounts | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | |||||||||||||
Sales | $ | 5,848 | $ | 6,039 | $ | 5,984 | $ | 6,108 | |||||||||
Operating income | 845 | 820 | 769 | 762 | |||||||||||||
Net earnings | 579 | 511 | 473 | 506 | |||||||||||||
Basic earnings per share | 2.68 | 2.41 | 2.29 | 2.52 | |||||||||||||
Diluted earnings per share | 2.63 | 2.37 | 2.26 | 2.48 | |||||||||||||
Weighted-average common shares outstanding | 216.3 | 212.4 | 206.2 | 200.8 | |||||||||||||
Weighted-average diluted shares outstanding | 220.4 | 215.2 | 209.2 | 204.2 | |||||||||||||
Significant 2014 Fourth Quarter Events – In the fourth quarter of 2014, the company repurchased 4.5 million shares of common stock for $599 million. | |||||||||||||||||
2013 | |||||||||||||||||
In millions, except per share amounts | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | |||||||||||||
Sales | $ | 6,104 | $ | 6,294 | $ | 6,106 | $ | 6,157 | |||||||||
Operating income | 759 | 806 | 790 | 768 | |||||||||||||
Net earnings | 489 | 488 | 497 | 478 | |||||||||||||
Basic earnings per share | 2.07 | 2.09 | 2.18 | 2.17 | |||||||||||||
Diluted earnings per share | 2.03 | 2.05 | 2.14 | 2.12 | |||||||||||||
Weighted-average common shares outstanding | 236.4 | 234 | 228.2 | 220.5 | |||||||||||||
Weighted-average diluted shares outstanding | 241 | 237.5 | 232.6 | 225.2 | |||||||||||||
Significant 2013 Fourth Quarter Events – In the fourth quarter of 2013, the company repurchased 6.6 million shares of common stock for $699 million. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||
Principles of Consolidation | Principles of Consolidation | ||||||||||
The consolidated financial statements include the accounts of Northrop Grumman and its subsidiaries. Material intercompany accounts, transactions and profits are eliminated in consolidation. Investments in equity securities and joint ventures where the company has significant influence, but not control, are accounted for using the equity method. | |||||||||||
Sales between segments are recorded at values that include hypothetical operating income for the performing segment based on that segment’s estimated operating margin rate for external sales. Such hypothetical operating income is eliminated in consolidation | |||||||||||
Accounting Estimates | Accounting Estimates | ||||||||||
The company’s financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). The preparation thereof requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared using the most current and best available information; however, actual results could differ materially from those estimates. | |||||||||||
Revenue Recognition | Revenue Recognition | ||||||||||
The majority of our business results are derived from long-term contracts with the U.S. Government for the production of goods, the provision of services, or in some cases, a combination of both. In accounting for these contracts, we utilize either the cost-to-cost or the units-of-delivery method of percentage-of-completion accounting, with cost-to-cost being the predominant method. Generally, sales under cost-reimbursement contracts and construction-type contracts that provide for deliveries at lower volume rates per year or a small number of units are accounted for using the cost-to-cost method. Under this method, sales, including estimated profits, are recorded as costs are incurred. Generally, sales under contracts that provide for deliveries at higher volume rates per year or a large number of units are accounted for using the units-of-delivery method. Under this method, sales are recognized as units are delivered to the customer. The company estimates profit on contracts as the difference between total estimated sales and total estimated cost of a contract at completion and recognizes that profit either as costs are incurred (cost-to-cost) or as units are delivered (units-of-delivery). The company classifies sales as product or service depending upon the predominant attributes of the contract. | |||||||||||
Contract sales may include estimated amounts not contractually agreed to by the customer, including cost or performance incentives (such as award and incentive fees), un-priced change orders, claims and requests for equitable adjustment. Amounts pertaining to cost and/or performance incentives are included in estimated contract sales when they are reasonably estimable. Further, as contracts are performed, change orders can be a regular occurrence and may be un-priced until negotiated with the customer. Un-priced change orders are included in estimated contract sales when they are probable of recovery in an amount at least equal to the cost. Amounts representing claims (including change orders unapproved as to both scope and price) and requests for equitable adjustment are included in estimated contract sales when they are reliably estimable and realization is probable. | |||||||||||
We recognize changes in estimated contract sales, costs or profits using the cumulative catch-up method of accounting. This method recognizes, in the current period, the cumulative effect of the changes on current and prior periods; sales and profit in future periods of contract performance are recognized as if the revised estimates had been used since contract inception. If it is determined that a loss will result from the performance of a contract, the entire amount of the estimable future loss is charged against income in the period the loss is identified. Loss provisions are first offset against any costs that are included in unbilled accounts receivable or inventoried costs, and any remaining amount is reflected in liabilities. | |||||||||||
Significant changes in estimates on a single contract could have a material effect on the company's consolidated financial position or annual results of operations. Where such changes occur, we generally disclose the nature, underlying conditions and financial impact of the change. | |||||||||||
The company's U.S. Government contracts generally contain provisions that enable the customer to terminate a contract for default, or for the convenience of the government. If a contract is terminated for default, we may not be entitled to recover any of our costs on partially completed work and may be liable to the government for re-procurement costs of acquiring similar products or services from another contractor, and for certain other damages. Termination of a contract for the convenience of the government may occur when the government concludes it is in the best interests of the government that the contract be terminated. Under a termination for convenience, the contractor is typically entitled to be paid in accordance with the contract’s terms for costs incurred prior to the effective date of termination, plus a reasonable profit and settlement expenses. | |||||||||||
General and Administrative Expenses | General and Administrative Expenses | ||||||||||
In accordance with industry practice and regulations that govern the cost accounting requirements for government contracts, most general and administrative expenses incurred at the segments and corporate office are considered allowable and allocable costs on government contracts. These costs are allocated to contracts in progress on a systematic basis and are included as a component of total estimated contract costs, including any provision for loss contracts. | |||||||||||
Research and Development | Research and Development | ||||||||||
Company-sponsored research and development activities primarily include independent research and development (IR&D) efforts related to government programs. Company-sponsored IR&D expenses are included in general and administrative expenses in the consolidated statements of earnings and comprehensive (loss) income and are generally allocated to government contracts. | |||||||||||
Expenses for research and development funded by the customer are charged directly to the related contracts. | |||||||||||
Environmental costs | Environmental Costs | ||||||||||
Environmental liabilities are accrued when the company determines that, based on the facts and circumstances known to the company, it is probable the company will incur costs to address environmental impacts and the costs are reasonably estimable. When only a range of amounts is established and no amount within the range is more probable than another, the low end of the range is recorded. The company typically projects environmental costs for up to 30 years, records environmental liabilities on an undiscounted basis, and excludes legal costs or asset retirement obligations. At sites involving multiple parties, the company accrues environmental liabilities based upon our expected share of liability, taking into account the financial viability of other jointly liable parties. Environmental expenditures are capitalized or expensed, as appropriate. As a portion of environmental remediation costs is expected to be recoverable through overhead charges on government contracts, such amounts are deferred in inventoried costs (current portion) and other non-current assets. The portion of environmental expenditures not expected to be recoverable is expensed. | |||||||||||
These amounts are evaluated for recoverability on a routine basis. | |||||||||||
A portion of the environmental remediation costs is expected to be recoverable through overhead charges on U.S. Government contracts and, accordingly, such amounts are deferred in inventoried costs and other non-current assets. | |||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||||||||
The company utilizes fair value measurement guidance prescribed by GAAP to value its financial instruments. The guidance includes a definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value and expands disclosures about the use of fair value measurements. | |||||||||||
The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. | |||||||||||
These two types of inputs create the following fair value hierarchy: | |||||||||||
Level 1 - Quoted prices for identical instruments in active markets. | |||||||||||
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. | |||||||||||
Level 3 - Significant inputs to the valuation model are unobservable. | |||||||||||
The fair value of long-term debt is calculated using Level 2 inputs, based on interest rates available for debt with terms and maturities similar to the company’s existing debt arrangements. | |||||||||||
Marketable Securities | Marketable securities accounted for as trading and available-for-sale are recorded at fair value on a recurring basis. For available-for-sale securities, any changes in unrealized gains and losses are reported as a component of other comprehensive income. Changes in unrealized gains and losses on trading securities are included in other, net in the consolidated statements of earnings and comprehensive (loss) income. In addition, investments in held-to-maturity instruments with original maturities greater than three months are recorded at amortized cost. | ||||||||||
The company holds a portfolio of marketable securities to partially fund non-qualified employee benefit plans consisting of securities that are classified as either trading or available-for-sale. These assets are recorded at fair value on a recurring basis and substantially all of these instruments are valued using Level 1 inputs, with an immaterial amount valued using Level 2 inputs. | |||||||||||
Derivative Financial Instruments | Derivative financial instruments are recognized as assets or liabilities in the financial statements and measured at fair value on a recurring basis. Changes in the fair value of derivative financial instruments that are designated as fair value hedges are recorded in net earnings, while the effective portion of the changes in the fair value of derivative financial instruments that are designated as cash flow hedges are recorded as a component of other comprehensive income. For derivative financial instruments not designated as hedging instruments, gains or losses resulting from changes in the fair value are reported in other, net in the consolidated statements of earnings and comprehensive (loss) income. | ||||||||||
The company may use derivative financial instruments to manage its exposure to interest rate risk for its fixed long-term debt portfolio and foreign currency exchange risk related to receipts from customers and payments to suppliers denominated in foreign currencies. The company does not use derivative financial instruments for trading or speculative purposes, nor does it use leveraged financial instruments. Credit risk related to derivative financial instruments is considered minimal and is managed through the use of multiple counterparties with high credit standards and periodic settlements of positions, as well as by entering into master netting agreements with most of our counterparties. | |||||||||||
Substantially all of these instruments are valued using Level 2 inputs. Where model-derived valuations are appropriate, the company utilizes the income approach to determine the fair value and uses the applicable London Interbank Offered Rate (LIBOR) swap rates. | |||||||||||
Unrealized gains or losses on the effective portion of cash flow hedges are reclassified from other comprehensive income to operating income upon the recognition of the underlying hedged transaction. Hedge contracts not designated for hedge accounting and the ineffective portion of cash flow hedges are recorded in other income. | |||||||||||
Income Taxes | Income Taxes | ||||||||||
Provisions for federal and foreign income taxes are calculated on reported earnings before income taxes based on current tax law and include the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Such provisions differ from the amounts currently payable because certain items of income and expense are recognized in different periods for financial reporting purposes than for income tax purposes. The company recognizes federal and foreign interest accrued related to unrecognized tax benefits in income tax expense. Federal penalties are recognized as a component of income tax expense. In accordance with industry practice and regulations that govern the cost accounting requirements for government contracts, state and local income and franchise taxes are considered allowable and allocable costs on government contracts and are therefore recorded in operating costs and expenses. The company recognizes state interest accrued related to unrecognized tax benefits in unallowable operating costs and expenses. | |||||||||||
Uncertain tax positions reflect the company’s expected treatment of tax positions taken in a filed tax return, or planned to be taken in a future tax return or claim, which have not been reflected in measuring income tax expense for financial reporting purposes. Until these positions are sustained by the taxing authorities or the statute of limitations concerning such issues lapses, the company does not recognize the tax benefits resulting from such positions and reports the tax effects as a liability for uncertain tax positions in its consolidated statements of financial position. | |||||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and tax purposes. Such amounts are classified in the consolidated statements of financial position as current or non-current assets or liabilities, based upon the classification of the related assets and liabilities. | |||||||||||
Cash and cash equivalents | Cash and Cash Equivalents | ||||||||||
Cash and cash equivalents are comprised of cash in banks and highly liquid instruments with original maturities of three months or less, primarily consisting of bank time deposits and investments in institutional money market funds. The company does not invest in high yield or high risk securities. Cash in bank accounts at times may exceed federally insured limits. | |||||||||||
Accounts Receivable | Accounts Receivable and Inventoried Costs | ||||||||||
Accounts receivable include amounts billed and currently due from customers, as well as amounts currently due but unbilled (primarily related to costs incurred on contracts accounted for under the cost-to-cost method of percentage-of-completion accounting). Accounts receivable also include certain estimated contract change amounts, claims or requests for equitable adjustment in negotiation that are probable of recovery and amounts retained by the customer pending contract completion. | |||||||||||
Accumulated contract costs in unbilled accounts receivable and inventoried costs include direct production costs, factory and engineering overhead, production tooling costs, and, for government contracts, allowable general and administrative expenses. According to the provisions of U.S. Government contracts, the customer asserts title to, or a security interest in, inventories related to such contracts as a result of contract advances, performance-based payments, and progress payments. In accordance with industry practice, unbilled accounts receivable and inventoried costs are classified as current assets and include amounts related to contracts having production cycles longer than one year. Payments received in excess of inventoried costs and unbilled accounts receivable amounts on a contract by contract basis are recorded as advance payments and amounts in excess of costs incurred in the consolidated statements of financial position. | |||||||||||
Inventoried Costs | Inventoried costs primarily relate to work in process on contracts accounted for under the units-of-delivery method of percentage-of-completion accounting. These costs represent accumulated contract costs less the portion of such costs allocated to delivered items. Product inventory primarily consists of raw materials and is stated at the lower of cost or market, generally using the average cost method. | ||||||||||
Property, Plant and Equipment | Property, Plant and Equipment | ||||||||||
Property, plant and equipment are depreciated over the estimated useful lives of individual assets. Most of these assets are depreciated using declining-balance methods, with the remainder using the straight-line method. Major classes of property, plant and equipment and their useful lives are as follows: | |||||||||||
December 31 | |||||||||||
Useful life in years, $ in millions | Useful Life | 2014 | 2013 | ||||||||
Land and land improvements | Up to 40(1) | $ | 373 | $ | 373 | ||||||
Buildings and improvements | Up to 45 | 1,589 | 1,450 | ||||||||
Machinery and other equipment | Up to 20 | 4,401 | 4,243 | ||||||||
Capitalized software costs | 5-Mar | 428 | 418 | ||||||||
Leasehold improvements | Length of Lease(1) | 811 | 659 | ||||||||
Property, plant and equipment, at cost | 7,602 | 7,143 | |||||||||
Accumulated depreciation | (4,611 | ) | (4,337 | ) | |||||||
Property, plant and equipment, net | $ | 2,991 | $ | 2,806 | |||||||
-1 | Land is not a depreciable asset. Leasehold improvements are depreciated over the shorter of the useful life of the asset or the length of the lease. | ||||||||||
Leases | Leases | ||||||||||
The company uses its incremental borrowing rate in the assessment of lease classification as capital or operating and defines the initial lease term to include renewal options determined to be reasonably assured. The majority of our leases are operating leases. | |||||||||||
Many of the company’s real property lease agreements contain incentives for tenant improvements, rent holidays, or rent escalation clauses. For tenant improvement incentives, the company records a deferred rent liability and amortizes the deferred rent over the term of the lease as a reduction to rent expense. For rent holidays and rent escalation clauses during the lease term, the company records rental expenses on a straight-line basis over the term of the lease. For purposes of recognizing lease incentives, the company uses the date of initial possession as the commencement date, which is generally when the company is given the right of access to the space and begins to make improvements in preparation of intended use. | |||||||||||
Goodwill and Other Purchased Intangible Assets | Goodwill and Other Purchased Intangible Assets | ||||||||||
The company tests for impairment of goodwill annually as of December 31, or when we believe a potential impairment exists. When performing the goodwill impairment test, the company uses a discounted cash flow approach corroborated by comparative market multiples, where appropriate, to determine the fair value of its businesses. Goodwill and other purchased intangible asset balances are included in the identifiable assets of their assigned business segment. The company charges goodwill impairment, as well as the amortization of other purchased intangible assets, against the respective segment’s operating income. Purchased intangible assets are amortized on a straight-line basis over their estimated useful lives. | |||||||||||
The company’s purchased intangible assets are being amortized on a straight-line basis over an aggregate weighted-average period of 21 years and are included in other non-current assets in the consolidated statements of financial position. | |||||||||||
Goodwill and other purchased intangible assets are included in the identifiable assets of the segment to which the operations of the acquired entity have been assigned. | |||||||||||
Cash Surrender Value of Life Insurance Policies | Cash Surrender Value of Life Insurance Policies | ||||||||||
The company maintains whole life insurance policies on a group of executives, which are recorded at their cash surrender value as determined by the insurance carrier. The company also has split-dollar life insurance policies on former officers and executives from acquired businesses, which are recorded at the lesser of their cash surrender value or premiums paid. These policies are utilized as a partial funding source for deferred compensation and other non-qualified employee retirement plans. | |||||||||||
Litigation, Commitments, and Contingencies | Litigation, Commitments and Contingencies | ||||||||||
Amounts associated with litigation, commitments and contingencies are recorded as charges to earnings when management, after considering the facts and circumstances of each matter as then known to management, has determined it is probable a liability will be found to have been incurred and the amount of the loss can be reasonably estimated. When only a range of amounts is established and no amount within the range is more likely than another, the low end of the range is recorded. Legal fees are expensed as incurred. Due to the inherent uncertainties surrounding gain contingencies, we generally do not recognize potential gains until realized. | |||||||||||
From time to time, the company is advised of claims by the U.S. Government concerning certain potential disallowed costs, plus, at times, penalties and interest. When such findings are presented, the company and the U.S. Government representatives engage in discussions to enable the company to evaluate the merits of these claims, as well as to assess the amounts being claimed. Where appropriate, provisions are made to reflect the company’s estimated exposure for matters raised by the U.S. Government. Such provisions are reviewed periodically using the most recent information available. | |||||||||||
Retirement Benefits | Net actuarial gains or losses are re-determined annually or upon remeasurement events and principally arise from changes in the rate used to discount our benefit obligations and differences between expected and actual returns on plan assets. | ||||||||||
Retirement Benefits | |||||||||||
The company sponsors various defined benefit pension plans and defined contribution retirement plans covering substantially all of its employees. The company also provides post-retirement benefits other than pensions, consisting principally of health care and life insurance benefits, to eligible retirees and qualifying dependents. In most cases, our defined contribution plans provide for a cash matching of employee contributions up to four percent of compensation. | |||||||||||
The liabilities, unamortized benefit plan costs and annual income or expense of the company’s defined benefit pension and other post-retirement benefit plans are determined using methodologies that involve several actuarial assumptions. Unamortized benefit plan costs consist primarily of accumulated net after-tax actuarial losses. | |||||||||||
Because U.S. Government regulations require that the costs of pension and other post-retirement plans be charged to our contracts in accordance with the Federal Acquisition Regulation (FAR) and the related U.S. Government Cost Accounting Standards (CAS) that govern such plans, we calculate retiree benefit plan costs under both CAS and FAS (GAAP Financial Accounting Standards) methods. While both FAS and CAS recognize a normal service cost component in measuring periodic pension cost, there are differences in the way the remaining components of annual pension costs are calculated under each method. Measuring plan obligations under FAS and CAS includes different assumptions and models, such as in estimating earnings on plan assets and calculating interest expense. In addition, the periods over which gains/losses related to pension assets and actuarial changes are amortized are different under FAS and CAS. As a result, annual retiree benefit plan expense amounts for FAS are different from the amounts for CAS even though the ultimate cost of providing benefits is the same under either method. CAS retiree benefit plan costs are charged to contracts and are included in segment operating income, and the difference between CAS and FAS expense is recorded in operating income at the consolidated company level. | |||||||||||
Net actuarial gains or losses are amortized to expense on a plan-by-plan basis when they exceed the accounting corridor. The accounting corridor is a defined range within which amortization of net gains and losses is not required and is equal to 10 percent of the greater of plan assets or benefit obligations. Gains or losses outside of the corridor are subject to amortization over our average employee future service period of approximately nine years. Not all net periodic pension expense is recognized in net earnings in the year incurred because it is allocated as production costs and a portion remains in inventory at the end of a reporting period. The company’s funding policy for the qualified pension plans is to contribute, at a minimum, the statutorily required amount to an irrevocable trust. | |||||||||||
Plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification and investment return over the long term. The investment goal is to exceed the assumed rate of return over the long term within reasonable and prudent levels of risk. Through consultation with our investment management team and outside investment advisers, management develops expected long-term returns for each of the plans’ strategic asset classes. In addition to our historical investment performance, we consider several factors, including current market data such as yields/price-earnings ratios, historical market returns over long periods and periodic surveys of investment managers’ expectations. Using policy target allocation percentages and the asset class expected returns, a weighted-average expected return is calculated. Liability studies are conducted on a regular basis to provide guidance in setting investment goals with an objective to balance risk. Risk targets are established and monitored against acceptable ranges. | |||||||||||
Our investment policies and procedures are designed to ensure the plans’ investments are in compliance with ERISA (Employee Retirement Income Security Act). Guidelines are established defining permitted investments within each asset class. Derivatives are used for transitioning assets, asset class rebalancing, managing currency risk and for management of fixed income and alternative investments. | |||||||||||
For the majority of the plans’ assets, the investment policies require that the asset allocation be maintained within the following ranges as of December 31, 2014: | |||||||||||
Asset Allocation Ranges | |||||||||||
Domestic equities | 13% - 33% | ||||||||||
International equities | 7% - 27% | ||||||||||
Fixed income securities | 30% - 50% | ||||||||||
Alternative investments | 10% - 30% | ||||||||||
Generally, investments are valued based on information in financial publications of general circulation, statistical and valuation services, records of security exchanges, appraisal by qualified persons, transactions and bona fide offers. Domestic and international equities consist primarily of common stocks and institutional common trust funds. Investments in common and preferred shares are valued at the last reported sales price of the stock on the last business day of the reporting period. Units in common trust funds and hedge funds are valued based on the redemption price of units owned by the trusts at year-end. Fair value for real estate and private equity partnerships is primarily based on valuation methodologies that include third party appraisals, comparable transactions, discounted cash flow valuation models and public market data. | |||||||||||
Non-government fixed income securities are invested across various industry sectors and credit quality ratings. Generally, investment guidelines are written to limit securities, for example, to no more than 5 percent of each trust account, and to exclude the purchase of securities issued by the company. | |||||||||||
For alternative investments that permit redemptions, such redemptions are generally made quarterly and require a 90-day notice. The company is generally unable to determine the final redemption date and amount until the request is processed by the investment fund and therefore categorizes such alternative investments as Level 3 assets. | |||||||||||
Stock Compensation | Stock Compensation | ||||||||||
The company’s stock compensation plans are classified as equity plans and compensation expense is recognized over the vesting period (generally three years), net of estimated forfeitures. The company issues stock awards in the form of restricted performance stock rights and restricted stock rights under its existing plans. The fair value of stock awards is determined based on the closing market price of the company’s common stock on the grant date. At each reporting date, the number of shares is adjusted to equal the number ultimately expected to vest. | |||||||||||
Compensation expense for stock awards is measured at the grant date based on the fair value of the award and is recognized over the vesting period (generally three years). The fair value of stock awards and performance stock awards is determined based on the closing market price of the company’s common stock on the grant date. The fair value of market-based stock awards is determined at the grant date using a Monte Carlo simulation model. For purposes of measuring compensation expense for performance awards, the number of shares ultimately expected to vest is estimated at each reporting date based on management’s expectations regarding the relevant performance criteria. | |||||||||||
Description of New Accounting Pronouncements Not yet Adopted | On May 28, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 supersedes existing revenue recognition guidance, including Accounting Standards Codification (ASC) No. 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts. ASU 2014-09 outlines a single set of comprehensive principles for recognizing revenue under U.S. GAAP. Among other things, it requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time. These concepts, as well as other aspects of ASU 2014-09, may change the method and/or timing of revenue recognition for certain of our contracts. ASU 2014-09 will be effective January 1, 2017, and may be applied either retrospectively or through the use of a modified-retrospective method. We are currently evaluating both methods of adoption as well as the effect ASU 2014-09 will have on the company’s consolidated financial position, annual results of operations and/or cash flows. | ||||||||||
Reclassifications | Our consolidated statements of cash flows for 2014 and 2013 reflect cash flows from operating activities presented solely on the indirect method. The company previously presented both the direct method and indirect method for our cash flows from operating activities. This change in reporting method had no effect on the amount of our net cash flows from operating activities. | ||||||||||
In the first quarter of 2014, we reclassified our cash awards incentive compensation accrual from other current liabilities to accrued employee compensation, which are both reported within current liabilities on the consolidated statement of financial position. | |||||||||||
Stockholders' Equity | The company records the difference between the cost of shares repurchased and their par value as a reduction of paid-in capital to the extent of its balance and then as a reduction of retained earnings. | ||||||||||
Accumulated Other Comprehensive Loss | The reclassifications represent the amortization of net actuarial losses and prior service credits for the company's retirement benefit plans, and are included in the computation of net periodic pension cost (See Note 12 for further information). | ||||||||||
Reclassifications for cumulative translation adjustments and marketable securities are recorded in other income, and reclassifications for effective cash flow hedges are recorded in operating income. | |||||||||||
Earnings Per Share | We calculate basic earnings per share by dividing net earnings by the weighted-average number of shares of common stock outstanding during each period. | ||||||||||
Diluted earnings per share includes the dilutive effect of awards granted to employees under stock-based compensation plans. | |||||||||||
Long-Term Debt | The premium on long-term debt primarily represents non-cash fair market value adjustments resulting from acquisitions, which are amortized over the life of the related debt. | ||||||||||
Fiscal Month Accounting Convention | It is the company’s long-standing practice to establish actual interim closing dates using a “fiscal” calendar in which we close our books on a Friday near each quarter-end date, in order to normalize the potentially disruptive effects of quarterly closings on business processes. This practice is only used at interim periods within a reporting year. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||
Property, Plant and Equipment | Major classes of property, plant and equipment and their useful lives are as follows: | ||||||||||
December 31 | |||||||||||
Useful life in years, $ in millions | Useful Life | 2014 | 2013 | ||||||||
Land and land improvements | Up to 40(1) | $ | 373 | $ | 373 | ||||||
Buildings and improvements | Up to 45 | 1,589 | 1,450 | ||||||||
Machinery and other equipment | Up to 20 | 4,401 | 4,243 | ||||||||
Capitalized software costs | 5-Mar | 428 | 418 | ||||||||
Leasehold improvements | Length of Lease(1) | 811 | 659 | ||||||||
Property, plant and equipment, at cost | 7,602 | 7,143 | |||||||||
Accumulated depreciation | (4,611 | ) | (4,337 | ) | |||||||
Property, plant and equipment, net | $ | 2,991 | $ | 2,806 | |||||||
-1 | Land is not a depreciable asset. Leasehold improvements are depreciated over the shorter of the useful life of the asset or the length of the lease. | ||||||||||
Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss are as follows: | ||||||||||
December 31 | |||||||||||
$ in millions | 2014 | 2013 | |||||||||
Unamortized benefit plan costs, net of tax benefit of $3,395 in 2014 and $1,972 in 2013 | $ | (5,316 | ) | $ | (3,000 | ) | |||||
Cumulative translation adjustment | (41 | ) | 18 | ||||||||
Net unrealized gain (loss) on marketable securities and cash flow hedges, net of tax | 1 | (2 | ) | ||||||||
Total accumulated other comprehensive loss | $ | (5,356 | ) | $ | (2,984 | ) |
Earnings_Per_Share_Share_Repur1
Earnings Per Share, Share Repurchases and Dividends on Common Stock (Tables) | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||
Share Repurchases | The table below summarizes the company’s share repurchases: | ||||||||||||||||||||||
Repurchase Program Authorization Date | Amount | Total Shares Retired (in millions) | Average | Date Completed | Shares Repurchased | ||||||||||||||||||
Authorized | Price | (in millions) | |||||||||||||||||||||
(in millions) | Per Share(3) | Year Ended December 31 | |||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||
16-Jun-10 | $ | 5,350 | 83.7 | $ | 63.86 | Sep-13 | — | 18.6 | 20.9 | ||||||||||||||
May 15, 2013(1) | $ | 4,000 | 30.1 | $ | 118.3 | 21.4 | 8.7 | — | |||||||||||||||
December 4, 2014(2) | $ | 3,000 | — | $ | — | — | — | — | |||||||||||||||
21.4 | 27.3 | 20.9 | |||||||||||||||||||||
-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 ("2013 Repurchase Program"). Repurchases under the 2013 Repurchase Program commenced in September 2013. As of December 31, 2014, repurchases under the 2013 Repurchase Program totaled $3.6 billion; $447 million remained under this share repurchase authorization. By its terms, the 2013 Repurchase Program will expire when we have used all authorized funds for repurchases. | ||||||||||||||||||||||
-2 | On December 4, 2014, the company's board of directors authorized a new share repurchase program of up to an additional $3.0 billion of the company's common stock ("2014 Repurchase Program"). By its terms, repurchases under the 2014 Repurchase Program will commence upon completion of the 2013 Repurchase Program and will expire when we have used all authorized funds for repurchases. | ||||||||||||||||||||||
-3 | Includes commissions paid. | ||||||||||||||||||||||
Share repurchases take place from time to time, subject to market conditions and management's discretion, in the open market or in privately negotiated transactions. The company retires its common stock upon repurchase and has not made any purchases of common stock other than in connection with these publicly announced repurchase programs. |
Segment_Information_Tables
Segment Information (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||
Sales and operating income by segment | The following table presents sales and operating income by segment: | ||||||||||||||||||||||||
Year Ended December 31 | |||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Sales | |||||||||||||||||||||||||
Aerospace Systems | $ | 9,997 | $ | 10,014 | $ | 9,977 | |||||||||||||||||||
Electronic Systems | 6,951 | 7,149 | 6,950 | ||||||||||||||||||||||
Information Systems | 6,222 | 6,596 | 7,356 | ||||||||||||||||||||||
Technical Services | 2,799 | 2,843 | 3,019 | ||||||||||||||||||||||
Intersegment eliminations | (1,990 | ) | (1,941 | ) | (2,084 | ) | |||||||||||||||||||
Total sales | 23,979 | 24,661 | 25,218 | ||||||||||||||||||||||
Operating income | |||||||||||||||||||||||||
Aerospace Systems | 1,315 | 1,215 | 1,218 | ||||||||||||||||||||||
Electronic Systems | 1,148 | 1,226 | 1,187 | ||||||||||||||||||||||
Information Systems | 611 | 633 | 761 | ||||||||||||||||||||||
Technical Services | 261 | 262 | 268 | ||||||||||||||||||||||
Intersegment eliminations | (236 | ) | (256 | ) | (258 | ) | |||||||||||||||||||
Total segment operating income | 3,099 | 3,080 | 3,176 | ||||||||||||||||||||||
Reconciliation to operating income: | |||||||||||||||||||||||||
Net FAS/CAS pension adjustment | 269 | 168 | 132 | ||||||||||||||||||||||
Unallocated corporate expenses | (169 | ) | (119 | ) | (168 | ) | |||||||||||||||||||
Other | (3 | ) | (6 | ) | (10 | ) | |||||||||||||||||||
Total operating income | $ | 3,196 | $ | 3,123 | $ | 3,130 | |||||||||||||||||||
Intersegment sales and operating income | Intersegment sales and operating income before eliminations were as follows: | ||||||||||||||||||||||||
Year Ended December 31 | |||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Sales | Operating | Sales | Operating | Sales | Operating | ||||||||||||||||||||
Income | Income | Income | |||||||||||||||||||||||
Intersegment sales and operating income | |||||||||||||||||||||||||
Aerospace Systems | $ | 176 | $ | 22 | $ | 149 | $ | 18 | $ | 171 | $ | 20 | |||||||||||||
Electronic Systems | 637 | 109 | 629 | 125 | 607 | 110 | |||||||||||||||||||
Information Systems | 537 | 57 | 504 | 63 | 682 | 78 | |||||||||||||||||||
Technical Services | 640 | 48 | 659 | 50 | 624 | 50 | |||||||||||||||||||
Total | $ | 1,990 | $ | 236 | $ | 1,941 | $ | 256 | $ | 2,084 | $ | 258 | |||||||||||||
Total assets by segment | |||||||||||||||||||||||||
December 31 | |||||||||||||||||||||||||
$ in millions | 2014 | 2013 | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Aerospace Systems | $ | 6,844 | $ | 6,490 | |||||||||||||||||||||
Electronic Systems | 4,366 | 4,400 | |||||||||||||||||||||||
Information Systems | 6,725 | 6,887 | |||||||||||||||||||||||
Technical Services | 1,539 | 1,367 | |||||||||||||||||||||||
Segment assets | 19,474 | 19,144 | |||||||||||||||||||||||
Corporate assets (1) | 7,098 | 7,237 | |||||||||||||||||||||||
Total assets | $ | 26,572 | $ | 26,381 | |||||||||||||||||||||
-1 | Corporate assets principally consist of cash and cash equivalents and deferred tax assets. | ||||||||||||||||||||||||
Additional information by segment | |||||||||||||||||||||||||
Capital Expenditures | Depreciation and Amortization (1) | ||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||||||
Aerospace Systems | $ | 387 | $ | 198 | $ | 154 | $ | 206 | $ | 210 | $ | 196 | |||||||||||||
Electronic Systems | 82 | 76 | 84 | 119 | 134 | 139 | |||||||||||||||||||
Information Systems | 40 | 27 | 40 | 70 | 81 | 100 | |||||||||||||||||||
Technical Services | 1 | 3 | 3 | 7 | 4 | 4 | |||||||||||||||||||
Corporate | 51 | 60 | 50 | 60 | 66 | 71 | |||||||||||||||||||
Total | $ | 561 | $ | 364 | $ | 331 | $ | 462 | $ | 495 | $ | 510 | |||||||||||||
-1 | Depreciation and amortization expense includes amortization of purchased intangible assets, as well as amortization of deferred and other outsourcing costs. |
Accounts_Receivable_Net_Tables
Accounts Receivable, Net (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Receivables [Abstract] | |||||||||
Accounts receivable | Accounts receivable consisted of the following: | ||||||||
December 31 | |||||||||
$ in millions | 2014 | 2013 | |||||||
Due from U.S. Government | |||||||||
Billed | $ | 536 | $ | 596 | |||||
Unbilled | 6,806 | 5,801 | |||||||
Progress and performance-based payments received | (5,150 | ) | (4,385 | ) | |||||
2,192 | 2,012 | ||||||||
Due from Other Customers(1) | |||||||||
Billed | 283 | 296 | |||||||
Unbilled | 3,461 | 2,830 | |||||||
Progress and performance-based payments received | (3,062 | ) | (2,384 | ) | |||||
682 | 742 | ||||||||
Total accounts receivable | 2,874 | 2,754 | |||||||
Allowance for doubtful accounts | (68 | ) | (69 | ) | |||||
Total accounts receivable, net | $ | 2,806 | $ | 2,685 | |||||
(1) Includes receivables due from the U.S. Government associated with foreign military sales. |
Inventoried_Costs_Net_Tables
Inventoried Costs, Net (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
Inventoried Costs | Inventoried costs consisted of the following: | ||||||||
December 31 | |||||||||
$ in millions | 2014 | 2013 | |||||||
Production costs of contracts in process | $ | 1,257 | $ | 1,342 | |||||
General and administrative expenses | 252 | 259 | |||||||
1,509 | 1,601 | ||||||||
Progress and performance-based payments received | (873 | ) | (1,005 | ) | |||||
636 | 596 | ||||||||
Product inventory | 106 | 102 | |||||||
Total inventoried costs, net | $ | 742 | $ | 698 | |||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||
Income tax expense | Federal and foreign income tax expense consisted of the following: | ||||||||||||
Year Ended December 31 | |||||||||||||
$ in millions | 2014 | 2013 | 2012 | ||||||||||
Income Taxes | |||||||||||||
Currently payable | |||||||||||||
Federal income taxes | $ | 701 | $ | 803 | $ | 912 | |||||||
Foreign income taxes | 10 | 28 | 15 | ||||||||||
Total federal and foreign income taxes currently payable | 711 | 831 | 927 | ||||||||||
Deferred federal and foreign income taxes | 157 | 80 | 60 | ||||||||||
Total federal and foreign income taxes | $ | 868 | $ | 911 | $ | 987 | |||||||
Income tax reconciliation | Income tax expense differs from the amount computed by multiplying the statutory federal income tax rate times earnings before income taxes due to the following: | ||||||||||||
Year Ended December 31 | |||||||||||||
$ in millions | 2014 | 2013 | 2012 | ||||||||||
Income tax expense at statutory rate | $ | 1,028 | $ | 1,002 | $ | 1,038 | |||||||
Settlements with taxing authorities | (51 | ) | — | — | |||||||||
Manufacturing deduction | (48 | ) | (63 | ) | (42 | ) | |||||||
Research tax credit | (43 | ) | (37 | ) | — | ||||||||
Other, net | (18 | ) | 9 | (9 | ) | ||||||||
Total federal and foreign income taxes | $ | 868 | $ | 911 | $ | 987 | |||||||
Unrecognized tax benefit rollforward | The change in unrecognized tax benefits during 2014, 2013 and 2012, excluding interest, is as follows: | ||||||||||||
December 31 | |||||||||||||
$ in millions | 2014 | 2013 | 2012 | ||||||||||
Unrecognized tax benefits at beginning of the year | $ | 241 | $ | 156 | $ | 118 | |||||||
Additions based on tax positions related to the current year | 62 | 56 | 12 | ||||||||||
Additions for tax positions of prior years | 9 | 44 | 28 | ||||||||||
Settlements with taxing authorities | (61 | ) | (1 | ) | (1 | ) | |||||||
Other, net | (41 | ) | (14 | ) | (1 | ) | |||||||
Net change in unrecognized tax benefits | (31 | ) | 85 | 38 | |||||||||
Unrecognized tax benefits at end of the year | $ | 210 | $ | 241 | $ | 156 | |||||||
Components of deferred tax assets and liabilities | The tax effects of significant temporary differences and carryforwards that gave rise to year-end deferred federal, state and foreign tax balances, as presented in the consolidated statements of financial position, are as follows: | ||||||||||||
December 31 | |||||||||||||
$ in millions | 2014 | 2013 | |||||||||||
Deferred Tax Assets | |||||||||||||
Retiree benefits | $ | 2,745 | $ | 1,308 | |||||||||
Accrued employee compensation | 311 | 333 | |||||||||||
Provisions for accrued liabilities | 392 | 313 | |||||||||||
Stock-based compensation | 91 | 109 | |||||||||||
Other | 104 | 144 | |||||||||||
Gross deferred tax assets | 3,643 | 2,207 | |||||||||||
Less valuation allowance | (53 | ) | (55 | ) | |||||||||
Net deferred tax assets | 3,590 | 2,152 | |||||||||||
Deferred Tax Liabilities | |||||||||||||
Goodwill | 787 | 806 | |||||||||||
Property, plant and equipment, net | 315 | 348 | |||||||||||
Contract accounting differences | 332 | 134 | |||||||||||
Other | 130 | 50 | |||||||||||
Gross deferred tax liabilities | 1,564 | 1,338 | |||||||||||
Total net deferred tax assets | $ | 2,026 | $ | 814 | |||||||||
Goodwill_and_Other_Purchased_I1
Goodwill and Other Purchased Intangible Assets (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||
Goodwill | Changes in the carrying amounts of goodwill for the years ended December 31, 2014 and 2013, were as follows: | ||||||||||||||||||||
$ in millions | Aerospace | Electronic | Information | Technical | Total | ||||||||||||||||
Systems | Systems | Systems | Services | ||||||||||||||||||
Balance as of December 31, 2012 | $ | 3,758 | $ | 2,410 | $ | 5,287 | $ | 976 | $ | 12,431 | |||||||||||
Businesses acquired and other (1) | — | — | 7 | — | 7 | ||||||||||||||||
Balance as of December 31, 2013 | $ | 3,758 | $ | 2,410 | $ | 5,294 | $ | 976 | $ | 12,438 | |||||||||||
Businesses acquired and other (1) | — | — | (8 | ) | 36 | 28 | |||||||||||||||
Balance as of December 31, 2014 | $ | 3,758 | $ | 2,410 | $ | 5,286 | $ | 1,012 | $ | 12,466 | |||||||||||
-1 | Other consists primarily of adjustments for foreign currency translation. | ||||||||||||||||||||
Schedule of Purchased Intangible Assets | Net contract, program, and other intangible assets comprise the following: | ||||||||||||||||||||
31-Dec | |||||||||||||||||||||
$ in millions | 2014 | 2013 | |||||||||||||||||||
Gross contract, program and other intangible assets | $ | 1,831 | $ | 1,812 | |||||||||||||||||
Less accumulated amortization | (1,730 | ) | (1,708 | ) | |||||||||||||||||
Net contract, program and other intangible assets | $ | 101 | $ | 104 | |||||||||||||||||
Expected Future Amortization of Purchased Intangibles | As of December 31, 2014, the expected future amortization of purchased intangibles for each of the next five years is as follows: | ||||||||||||||||||||
$ in millions | |||||||||||||||||||||
Year Ending December 31 | |||||||||||||||||||||
2015 | $ | 22 | |||||||||||||||||||
2016 | 16 | ||||||||||||||||||||
2017 | 14 | ||||||||||||||||||||
2018 | 12 | ||||||||||||||||||||
2019 | 10 | ||||||||||||||||||||
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Fair value of assets and liabilities measured on a recurring basis | The following table presents comparative carrying value and fair value information for our financial assets and liabilities: | ||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||
$ in millions | Carrying | Fair | Carrying | Fair | |||||||||||||
Value | Value | Value | Value | ||||||||||||||
Financial Assets (Liabilities) | |||||||||||||||||
Marketable securities | |||||||||||||||||
Trading | $ | 331 | $ | 331 | $ | 308 | $ | 308 | |||||||||
Available-for-sale | 5 | 5 | 2 | 2 | |||||||||||||
Derivatives | 1 | 1 | (2 | ) | (2 | ) | |||||||||||
Long-term debt, including current portion | (5,928 | ) | (6,726 | ) | (5,930 | ) | (6,227 | ) |
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Debt Disclosure [Abstract] | |||||||||||
Long-term debt | Long-term debt consists of the following: | ||||||||||
$ in millions | December 31 | ||||||||||
2014 | 2013 | ||||||||||
Fixed-rate notes and debentures, maturing in | Interest rate | ||||||||||
2016 | 7.75% | 107 | 107 | ||||||||
2018 | 1.75% - 6.75% | 1,050 | 1,050 | ||||||||
2019 | 5.05% | 500 | 500 | ||||||||
2021 | 3.50% | 700 | 700 | ||||||||
2023 | 3.25% | 1,050 | 1,050 | ||||||||
2026 | 7.75% - 7.88% | 527 | 527 | ||||||||
2031 | 7.75% | 466 | 466 | ||||||||
2040 | 5.05% | 300 | 300 | ||||||||
2043 | 4.75% | 950 | 950 | ||||||||
Capital leases | Various | 33 | 35 | ||||||||
Other | Various | 245 | 245 | ||||||||
Total long-term debt | 5,928 | 5,930 | |||||||||
Less: current portion | 3 | 2 | |||||||||
Long-term debt, net of current portion | $ | 5,925 | $ | 5,928 | |||||||
Long-term debt maturities | Maturities of long-term debt as of December 31, 2014, are as follows: | ||||||||||
$ in millions | |||||||||||
Year Ending December 31 | |||||||||||
2015 | $ | 3 | |||||||||
2016 | 110 | ||||||||||
2017 | 3 | ||||||||||
2018 | 1,053 | ||||||||||
2019 | 504 | ||||||||||
Thereafter | 4,252 | ||||||||||
Total principal payments | 5,925 | ||||||||||
Unamortized premium on long-term debt, net of discount | 3 | ||||||||||
Total long-term debt | $ | 5,928 | |||||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Schedule of Future Minimum Rental Payments for Operating Leases | Minimum rental commitments under long-term non-cancelable operating leases as of December 31, 2014, are payable as follows: | |||
$ in millions | ||||
Year Ending December 31 | ||||
2015 | $ | 267 | ||
2016 | 214 | |||
2017 | 140 | |||
2018 | 84 | |||
2019 | 57 | |||
Thereafter | 78 | |||
Total minimum lease payments | $ | 840 | ||
Retirement_Benefits_Tables
Retirement Benefits (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
Components of net periodic benefit cost | The cost to the company of its retirement benefit plans is shown in the following table: | ||||||||||||||||||||||||||||||||
Year Ended December 31 | |||||||||||||||||||||||||||||||||
Pension Benefits | Medical and | ||||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||||||||||||||
Components of net periodic benefit cost | |||||||||||||||||||||||||||||||||
Service cost | $ | 457 | $ | 516 | $ | 522 | $ | 34 | $ | 36 | $ | 34 | |||||||||||||||||||||
Interest cost | 1,260 | 1,117 | 1,184 | 99 | 96 | 109 | |||||||||||||||||||||||||||
Expected return on plan assets | (1,871 | ) | (1,809 | ) | (1,708 | ) | (83 | ) | (75 | ) | (68 | ) | |||||||||||||||||||||
Amortization of: | |||||||||||||||||||||||||||||||||
Prior service credit | (59 | ) | (58 | ) | (58 | ) | (45 | ) | (51 | ) | (51 | ) | |||||||||||||||||||||
Net loss from previous years | 327 | 608 | 427 | 13 | 30 | 21 | |||||||||||||||||||||||||||
Other | 1 | — | 7 | — | — | — | |||||||||||||||||||||||||||
Net periodic benefit cost | $ | 115 | $ | 374 | $ | 374 | $ | 18 | $ | 36 | $ | 45 | |||||||||||||||||||||
Changes in unamortized benefit plan costs | The table below summarizes the components of changes in unamortized benefit plan costs for the years ended December 31, 2014, 2013 and 2012: | ||||||||||||||||||||||||||||||||
$ in millions | Pension Benefits | Medical and | Total | ||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
Changes in unamortized benefit plan costs | |||||||||||||||||||||||||||||||||
Change in net actuarial loss | $ | 2,353 | $ | 151 | $ | 2,504 | |||||||||||||||||||||||||||
Change in prior service cost | (2 | ) | — | (2 | ) | ||||||||||||||||||||||||||||
Amortization of: | |||||||||||||||||||||||||||||||||
Prior service credit | 58 | 51 | 109 | ||||||||||||||||||||||||||||||
Net loss from previous years | (427 | ) | (21 | ) | (448 | ) | |||||||||||||||||||||||||||
Tax benefit related to above items | (788 | ) | (72 | ) | (860 | ) | |||||||||||||||||||||||||||
Change in unamortized benefit plan costs – 2012 | $ | 1,194 | $ | 109 | $ | 1,303 | |||||||||||||||||||||||||||
Change in net actuarial loss | $ | (2,158 | ) | $ | (280 | ) | $ | (2,438 | ) | ||||||||||||||||||||||||
Amortization of: | |||||||||||||||||||||||||||||||||
Prior service credit | 58 | 51 | 109 | ||||||||||||||||||||||||||||||
Net loss from previous years | (608 | ) | (30 | ) | (638 | ) | |||||||||||||||||||||||||||
Tax expense related to above items | 1,075 | 102 | 1,177 | ||||||||||||||||||||||||||||||
Change in unamortized benefit plan costs – 2013 | $ | (1,633 | ) | $ | (157 | ) | $ | (1,790 | ) | ||||||||||||||||||||||||
Change in net actuarial loss | $ | 3,833 | $ | 234 | $ | 4,067 | |||||||||||||||||||||||||||
Change in prior service cost | — | (92 | ) | (92 | ) | ||||||||||||||||||||||||||||
Amortization of: | |||||||||||||||||||||||||||||||||
Prior service credit | 59 | 45 | 104 | ||||||||||||||||||||||||||||||
Net loss from previous years | (327 | ) | (13 | ) | (340 | ) | |||||||||||||||||||||||||||
Tax benefit related to above items | (1,357 | ) | (66 | ) | (1,423 | ) | |||||||||||||||||||||||||||
Change in unamortized benefit plan costs – 2014 | $ | 2,208 | $ | 108 | $ | 2,316 | |||||||||||||||||||||||||||
Amounts recorded in accumulated other comprehensive loss | |||||||||||||||||||||||||||||||||
Pension Benefits | Medical and | ||||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||||
Amounts recorded in accumulated other comprehensive loss | |||||||||||||||||||||||||||||||||
Net actuarial loss | $ | (8,797 | ) | $ | (5,291 | ) | $ | (372 | ) | $ | (151 | ) | |||||||||||||||||||||
Prior service credit | 364 | 423 | 94 | 47 | |||||||||||||||||||||||||||||
Income tax benefits related to above items | 3,285 | 1,928 | 110 | 44 | |||||||||||||||||||||||||||||
Unamortized benefit plan costs | $ | (5,148 | ) | $ | (2,940 | ) | $ | (168 | ) | $ | (60 | ) | |||||||||||||||||||||
Change in projected benefit obligation | |||||||||||||||||||||||||||||||||
Pension Benefits | Medical and | ||||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||||
Change in projected benefit obligation | |||||||||||||||||||||||||||||||||
Projected benefit obligation at beginning of year | $ | 25,972 | $ | 27,746 | $ | 2,224 | $ | 2,448 | |||||||||||||||||||||||||
Service cost | 457 | 516 | 34 | 36 | |||||||||||||||||||||||||||||
Interest cost | 1,260 | 1,117 | 99 | 96 | |||||||||||||||||||||||||||||
Participant contributions | 19 | 12 | 50 | 77 | |||||||||||||||||||||||||||||
Plan amendments | — | — | (92 | ) | — | ||||||||||||||||||||||||||||
Actuarial (gain) loss | 4,273 | (2,063 | ) | 258 | (219 | ) | |||||||||||||||||||||||||||
Benefits paid | (1,409 | ) | (1,365 | ) | (186 | ) | (227 | ) | |||||||||||||||||||||||||
Other | (47 | ) | 9 | 11 | 13 | ||||||||||||||||||||||||||||
Projected benefit obligation at end of year | $ | 30,525 | $ | 25,972 | $ | 2,398 | $ | 2,224 | |||||||||||||||||||||||||
Change in plan assets and amounts recognized in the consolidated statements of financial position | |||||||||||||||||||||||||||||||||
Pension Benefits | Medical and | ||||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||||
Change in plan assets | |||||||||||||||||||||||||||||||||
Fair value of plan assets at beginning of year | $ | 24,098 | $ | 22,962 | $ | 1,175 | $1,062 | ||||||||||||||||||||||||||
Net gain on plan assets | 2,298 | 1,907 | 108 | 137 | |||||||||||||||||||||||||||||
Employer contributions | 78 | 579 | 57 | 114 | |||||||||||||||||||||||||||||
Participant contributions | 19 | 12 | 50 | 77 | |||||||||||||||||||||||||||||
Benefits paid | (1,409 | ) | (1,365 | ) | (186 | ) | (227 | ) | |||||||||||||||||||||||||
Other | (21 | ) | 3 | 12 | 12 | ||||||||||||||||||||||||||||
Fair value of plan assets at end of year | 25,063 | 24,098 | 1,216 | 1,175 | |||||||||||||||||||||||||||||
Funded status | $ | (5,462 | ) | $ | (1,874 | ) | $ | (1,182 | ) | $ | (1,049 | ) | |||||||||||||||||||||
Amounts recognized in the Consolidated Statements of Financial Position | |||||||||||||||||||||||||||||||||
Non-current assets | $ | 3 | $ | 117 | $ | 80 | $ | 72 | |||||||||||||||||||||||||
Current liability | (133 | ) | (122 | ) | (39 | ) | (36 | ) | |||||||||||||||||||||||||
Non-current liability | (5,332 | ) | (1,869 | ) | (1,223 | ) | (1,085 | ) | |||||||||||||||||||||||||
Amounts expected to be Recognized in 2013 Net Periodic Benefit Cost | The following table shows those amounts expected to be recognized in net periodic benefit cost in 2015: | ||||||||||||||||||||||||||||||||
$ in millions | Pension Benefits | Medical and | |||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
Amounts expected to be recognized in 2015 net periodic benefit cost | |||||||||||||||||||||||||||||||||
Net actuarial loss | $ | 682 | $ | 27 | |||||||||||||||||||||||||||||
Prior service credit | (60 | ) | (28 | ) | |||||||||||||||||||||||||||||
Pension plans with accumulated benefit obligations in excess of fair value of plan assets | Amounts for pension plans with accumulated benefit obligations in excess of fair value of plan assets are as follows: | ||||||||||||||||||||||||||||||||
December 31 | |||||||||||||||||||||||||||||||||
$ in millions | 2014 | 2013 | |||||||||||||||||||||||||||||||
Projected benefit obligation | $ | 30,405 | $ | 24,129 | |||||||||||||||||||||||||||||
Accumulated benefit obligation | 30,172 | 23,830 | |||||||||||||||||||||||||||||||
Fair value of plan assets | 24,940 | 22,138 | |||||||||||||||||||||||||||||||
Weighted-average plan assumptions | On a weighted-average basis, the following assumptions were used to determine benefit obligations and net periodic benefit cost: | ||||||||||||||||||||||||||||||||
Pension Benefits | Medical and | ||||||||||||||||||||||||||||||||
Life Benefits | |||||||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||||||||
Assumptions used to determine benefit obligation at December 31 | |||||||||||||||||||||||||||||||||
Discount rate | 4.12 | % | 4.99 | % | 4.04 | % | 4.9 | % | |||||||||||||||||||||||||
Initial cash balance crediting rate assumed for the next year | 2.75 | % | 3.9 | % | |||||||||||||||||||||||||||||
Rate to which the cash balance crediting rate is assumed to increase (the ultimate rate) | 3.5 | % | 4.7 | % | |||||||||||||||||||||||||||||
Year that the cash balance crediting rate reaches the ultimate rate | 2020 | 2019 | |||||||||||||||||||||||||||||||
Rate of compensation increase | 3 | % | 3 | % | |||||||||||||||||||||||||||||
Initial health care cost trend rate assumed for the next year | 6.5 | % | 6.5 | % | |||||||||||||||||||||||||||||
Rate to which the health care cost trend rate is assumed to decline (the ultimate trend rate) | 5 | % | 5 | % | |||||||||||||||||||||||||||||
Year that the health care cost trend rate reaches the ultimate trend rate | 2019 | 2017 | |||||||||||||||||||||||||||||||
Assumptions used to determine benefit cost for the year ended December 31 | |||||||||||||||||||||||||||||||||
Discount rate | 4.99 | % | 4.12 | % | 4.9 | % | 4.02 | % | |||||||||||||||||||||||||
Initial cash balance crediting rate assumed for the next year | 3.9 | % | 3 | % | |||||||||||||||||||||||||||||
Rate to which the cash balance crediting rate is assumed to increase (the ultimate rate) | 4.7 | % | 4.25 | % | |||||||||||||||||||||||||||||
Year that the cash balance crediting rate reaches the ultimate rate | 2019 | 2018 | |||||||||||||||||||||||||||||||
Expected long-term return on plan assets | 8 | % | 8 | % | 7.45 | % | 7.33 | % | |||||||||||||||||||||||||
Rate of compensation increase | 3 | % | 2.75 | % | |||||||||||||||||||||||||||||
Initial health care cost trend rate assumed for the next year | 6.5 | % | 7 | % | |||||||||||||||||||||||||||||
Rate to which the health care cost trend rate is assumed to decline (the ultimate trend rate) | 5 | % | 5 | % | |||||||||||||||||||||||||||||
Year that the health care cost trend rate reaches the ultimate trend rate | 2017 | 2017 | |||||||||||||||||||||||||||||||
Plan asset allocation | |||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||
$ in millions | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||
Asset category | |||||||||||||||||||||||||||||||||
Cash and cash equivalents (1) | $38 | $32 | $1,737 | $1,467 | $1,775 | $1,499 | |||||||||||||||||||||||||||
Domestic equities | 4,729 | 4,163 | 147 | 287 | $ | 2 | $2 | 4,878 | 4,452 | ||||||||||||||||||||||||
International equities | 2,675 | 2,473 | 2,062 | 1,741 | 4,737 | 4,214 | |||||||||||||||||||||||||||
Fixed income securities | |||||||||||||||||||||||||||||||||
U.S. Treasuries | 957 | 1,602 | 957 | 1,602 | |||||||||||||||||||||||||||||
U.S. Government Agency | 909 | 974 | 909 | 974 | |||||||||||||||||||||||||||||
Non-U.S. Government | 440 | 422 | 440 | 422 | |||||||||||||||||||||||||||||
Corporate debt | 5,710 | 4,744 | 5,710 | 4,744 | |||||||||||||||||||||||||||||
Asset backed | 604 | 545 | 4 | 4 | 608 | 549 | |||||||||||||||||||||||||||
High yield debt | 586 | 922 | — | 1 | 586 | 923 | |||||||||||||||||||||||||||
Bank loans | 228 | 185 | 228 | 185 | |||||||||||||||||||||||||||||
Alternative Investments | |||||||||||||||||||||||||||||||||
Hedge funds | 632 | 821 | 632 | 821 | |||||||||||||||||||||||||||||
Private equities | 2,030 | 2,075 | 2,030 | 2,075 | |||||||||||||||||||||||||||||
Real estate | 2,759 | 2,767 | 2,759 | 2,767 | |||||||||||||||||||||||||||||
Other | 32 | 26 | (2 | ) | 20 | 30 | 46 | ||||||||||||||||||||||||||
Fair value of plan assets at the end of the year | $7,474 | $6,694 | $13,378 | $12,909 | $5,427 | $5,670 | $26,279 | $25,273 | |||||||||||||||||||||||||
-1 | Cash and cash equivalents are predominantly held in money market funds. | ||||||||||||||||||||||||||||||||
For the majority of the plans’ assets, the investment policies require that the asset allocation be maintained within the following ranges as of December 31, 2014: | |||||||||||||||||||||||||||||||||
Asset Allocation Ranges | |||||||||||||||||||||||||||||||||
Domestic equities | 13% - 33% | ||||||||||||||||||||||||||||||||
International equities | 7% - 27% | ||||||||||||||||||||||||||||||||
Fixed income securities | 30% - 50% | ||||||||||||||||||||||||||||||||
Alternative investments | 10% - 30% | ||||||||||||||||||||||||||||||||
Changes in fair value of plan assets, significant unobservable inputs | The changes in the fair value of the pension and VEBA plan trust assets measured using Level 3 significant unobservable inputs during 2014 and 2013, are as follows: | ||||||||||||||||||||||||||||||||
$ in millions | Hedge funds and High-yield debt | Private equities | Real Estate | Other | Total | ||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | 786 | $ | 1,980 | $ | 2,256 | $ | 6 | $ | 5,028 | |||||||||||||||||||||||
Actual return on plan assets: | |||||||||||||||||||||||||||||||||
Unrealized (losses) gains, net | (16 | ) | 112 | 262 | — | 358 | |||||||||||||||||||||||||||
Realized gains, net | 43 | — | — | — | 43 | ||||||||||||||||||||||||||||
Purchases | 200 | 666 | 763 | — | 1,629 | ||||||||||||||||||||||||||||
Sales | (191 | ) | (683 | ) | (514 | ) | — | (1,388 | ) | ||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 822 | $ | 2,075 | $ | 2,767 | $ | 6 | $ | 5,670 | |||||||||||||||||||||||
Actual return on plan assets: | |||||||||||||||||||||||||||||||||
Unrealized gains (losses), net | (46 | ) | (60 | ) | 173 | — | 67 | ||||||||||||||||||||||||||
Realized gains (losses), net | 89 | 10 | 71 | — | 170 | ||||||||||||||||||||||||||||
Purchases | 21 | 431 | 61 | — | 513 | ||||||||||||||||||||||||||||
Sales | (254 | ) | (426 | ) | (313 | ) | — | (993 | ) | ||||||||||||||||||||||||
Balance as of December 31, 2014 | $ | 632 | $ | 2,030 | $ | 2,759 | $ | 6 | $ | 5,427 | |||||||||||||||||||||||
Estimated benefit payments | The following table reflects estimated future benefit payments for the next ten years, based upon the same assumptions used to measure the benefit obligation, and includes expected future employee service, as of December 31, 2014: | ||||||||||||||||||||||||||||||||
$ in millions | Pension Plans | Medical and | |||||||||||||||||||||||||||||||
Life Plans | |||||||||||||||||||||||||||||||||
Year Ending December 31 | |||||||||||||||||||||||||||||||||
2015 | $ | 1,395 | $ | 154 | |||||||||||||||||||||||||||||
2016 | 1,452 | 158 | |||||||||||||||||||||||||||||||
2017 | 1,506 | 161 | |||||||||||||||||||||||||||||||
2018 | 1,565 | 164 | |||||||||||||||||||||||||||||||
2019 | 1,623 | 166 | |||||||||||||||||||||||||||||||
2020 through 2024 | 8,975 | 828 | |||||||||||||||||||||||||||||||
Stock_Compensation_Plans_and_O1
Stock Compensation Plans and Other Compensation Arrangements (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||
Allocation of Stock-based Compensation Expense by Plan | Stock-based compensation expense and the related tax benefits for the years ended December 31, 2014, 2013 and 2012, are as follows: | |||||||||||
Year Ended December 31 | ||||||||||||
$ in millions | 2014 | 2013 | 2012 | |||||||||
Stock-based compensation expense: | ||||||||||||
Stock options | $ | — | $ | 4 | $ | 10 | ||||||
Stock awards | 134 | 140 | 173 | |||||||||
Total stock-based compensation expense | 134 | 144 | 183 | |||||||||
Tax benefits from the exercise of stock options | 29 | 25 | 26 | |||||||||
Tax benefits from the issuance of stock awards | 52 | 16 | 19 | |||||||||
Total tax benefits recognized for stock-based compensation | $ | 81 | $ | 41 | $ | 45 | ||||||
Stock Award Rollforward Activity | ||||||||||||
Stock | Weighted- | Weighted- | ||||||||||
Awards | Average | Average | ||||||||||
(in thousands) | Grant Date | Remaining | ||||||||||
Fair Value | Contractual | |||||||||||
Term (in years) | ||||||||||||
Outstanding at January 1, 2012 | 3,622 | $ | 58 | 1.6 | ||||||||
Granted | 1,860 | 60 | ||||||||||
Vested | (1,800 | ) | 55 | |||||||||
Forfeited | (204 | ) | 59 | |||||||||
Outstanding at December 31, 2012 | 3,478 | $ | 61 | 1.6 | ||||||||
Granted | 1,577 | 64 | ||||||||||
Vested | (1,323 | ) | 60 | |||||||||
Forfeited | (312 | ) | 62 | |||||||||
Outstanding at December 31, 2013 | 3,420 | $ | 61 | 1.5 | ||||||||
Granted | 763 | 118 | ||||||||||
Vested | (1,217 | ) | 58 | |||||||||
Forfeited | (158 | ) | 70 | |||||||||
Outstanding at December 31, 2014 | 2,808 | $ | 77 | 1.1 | ||||||||
Unaudited_Selected_Quarterly_D1
Unaudited Selected Quarterly Data (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||
Schedule of Unaudited Selected Quarterly Data | |||||||||||||||||
2013 | |||||||||||||||||
In millions, except per share amounts | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | |||||||||||||
Sales | $ | 6,104 | $ | 6,294 | $ | 6,106 | $ | 6,157 | |||||||||
Operating income | 759 | 806 | 790 | 768 | |||||||||||||
Net earnings | 489 | 488 | 497 | 478 | |||||||||||||
Basic earnings per share | 2.07 | 2.09 | 2.18 | 2.17 | |||||||||||||
Diluted earnings per share | 2.03 | 2.05 | 2.14 | 2.12 | |||||||||||||
Weighted-average common shares outstanding | 236.4 | 234 | 228.2 | 220.5 | |||||||||||||
Weighted-average diluted shares outstanding | 241 | 237.5 | 232.6 | 225.2 | |||||||||||||
2014 | |||||||||||||||||
In millions, except per share amounts | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | |||||||||||||
Sales | $ | 5,848 | $ | 6,039 | $ | 5,984 | $ | 6,108 | |||||||||
Operating income | 845 | 820 | 769 | 762 | |||||||||||||
Net earnings | 579 | 511 | 473 | 506 | |||||||||||||
Basic earnings per share | 2.68 | 2.41 | 2.29 | 2.52 | |||||||||||||
Diluted earnings per share | 2.63 | 2.37 | 2.26 | 2.48 | |||||||||||||
Weighted-average common shares outstanding | 216.3 | 212.4 | 206.2 | 200.8 | |||||||||||||
Weighted-average diluted shares outstanding | 220.4 | 215.2 | 209.2 | 204.2 | |||||||||||||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details 1) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
segment | |||
Summary of Significant Accounting Policies (Amounts in paragraphs) | |||
Number of reportable segments | 4 | ||
Research and development expenses | $569 | $507 | $520 |
Cash surrender value of life insurance | 290 | 287 | |
Percentage threshold net actuarial gains losses subject to amortization | 10.00% | ||
Average future service period of employees | 9 years | ||
Stock plans, vesting period | 3 years | ||
Current period impact of reclassification | 226 | ||
Prior period reclassification adjustment | $277 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 2) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Property, Plant and Equipment | ||
Property, plant and equipment, at cost | 7,602 | $7,143 |
Accumulated depreciation | -4,611 | -4,337 |
Property, plant, and equipment, net | 2,991 | 2,806 |
Land and land improvements | ||
Property, Plant and Equipment | ||
Property, plant and equipment, at cost | 373 | 373 |
Buildings and improvements | ||
Property, Plant and Equipment | ||
Property, plant and equipment, at cost | 1,589 | 1,450 |
Machinery and other equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, at cost | 4,401 | 4,243 |
Capitalized software costs | ||
Property, Plant and Equipment | ||
Property, plant and equipment, at cost | 428 | 418 |
Leasehold improvements | ||
Property, Plant and Equipment | ||
Property, plant and equipment, at cost | 811 | $659 |
Minimum | Capitalized software costs | ||
Property, Plant and Equipment | ||
Property, plant and equipment, estimated useful life | 3 years | |
Maximum | Land and land improvements | ||
Property, Plant and Equipment | ||
Property, plant and equipment, estimated useful life | 40 years | |
Maximum | Buildings and improvements | ||
Property, Plant and Equipment | ||
Property, plant and equipment, estimated useful life | 45 years | |
Maximum | Machinery and other equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, estimated useful life | 20 years | |
Maximum | Capitalized software costs | ||
Property, Plant and Equipment | ||
Property, plant and equipment, estimated useful life | 5 years |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accumulated Other Comprehensive Loss | |||
Unamortized benefit plan costs, net of tax benefit of $3,395 in 2014 and $1,972 in 2013 | ($5,316) | ($3,000) | |
Cumulative translation adjustment | -41 | 18 | |
Net unrealized gain (loss) on marketable securities and cash flow hedges, net of tax | 1 | -2 | |
Total accumulated other comprehensive loss | -5,356 | -2,984 | |
Unamortized benefit plan costs - Tax Benefit | 3,395 | 1,972 | |
Unamortized benefit plan, actuarial loss, net of tax | 5,600 | 3,300 | |
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, Net of Tax | $145 | $319 | $204 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Details 4) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Change in Accounting Estimate [Line Items] | |||||||||||
Operating Income (Loss) | $762 | $769 | $820 | $845 | $768 | $790 | $806 | $759 | $3,196 | $3,123 | $3,130 |
Earnings Per Share, Diluted | $2.48 | $2.26 | $2.37 | $2.63 | $2.12 | $2.14 | $2.05 | $2.03 | $9.75 | $8.35 | $7.81 |
Contracts Accounted for under Percentage of Completion [Member] | |||||||||||
Change in Accounting Estimate [Line Items] | |||||||||||
Operating Income (Loss) | $664 | $753 | $985 | ||||||||
Earnings Per Share, Diluted | $2.04 | $2.09 | $2.53 |
Earnings_Per_Share_Share_Repur2
Earnings Per Share, Share Repurchases and Dividends on Common Stock (Details) (USD $) | 12 Months Ended | 39 Months Ended | 20 Months Ended | 1 Months Ended | |||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Jun. 16, 2010 | 15-May-13 | Dec. 04, 2014 |
Stock Repurchase [Line Items] | |||||||||
Shares repurchased | 21.4 | 27.3 | 20.9 | ||||||
June 2010 Share Repurchase Program Original Authorization | |||||||||
Stock Repurchase [Line Items] | |||||||||
Amount Authorized | $5,350 | ||||||||
Total shares retired | 83.7 | ||||||||
Treasury Stock Acquired, Average Cost Per Share | $63.86 | ||||||||
Shares repurchased | 0 | 18.6 | 20.9 | ||||||
May 2013 Share Repurchase Program Original Authorization | |||||||||
Stock Repurchase [Line Items] | |||||||||
Amount Authorized | 4,000 | ||||||||
Total shares retired | 30.1 | ||||||||
Treasury Stock Acquired, Average Cost Per Share | $118.30 | ||||||||
Shares repurchased | 21.4 | 8.7 | 0 | ||||||
Share Repurchases-Notes to the Table | |||||||||
Amount repurchased | 3,600 | 3,600 | 3,600 | ||||||
Amount remaining under authorization for share repurchases | 447 | 447 | 447 | ||||||
December 2014 Share Repurchase Original Authorization | |||||||||
Stock Repurchase [Line Items] | |||||||||
Amount Authorized | $3,000 | ||||||||
Total shares retired | 0 | ||||||||
Treasury Stock Acquired, Average Cost Per Share | $0 | ||||||||
Shares repurchased | 0 | 0 | 0 |
Earnings_Per_Share_Share_Repur3
Earnings Per Share, Share Repurchases and Dividends on Common Stock (Details 2) (USD $) | 1 Months Ended | 12 Months Ended | |||||
In Millions, except Per Share data, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 | 31-May-11 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Earnings Per Share, Basic and Diluted [Abstract] | |||||||
Antidilutive stock options | 0 | 0 | 1.8 | ||||
Dilutive effect of stock options and other stock awards granted | 3.3 | 4.3 | 4.8 | ||||
Increase (Decrease) in Stock Dividend, Percentage | 15.00% | 11.00% | 10.00% | ||||
Common stock dividend (in dollars per share) | $0.70 | $0.61 | $0.55 | $0.50 | $2.71 | $2.38 | $2.15 |
Segment_Information_Details_1
Segment Information (Details 1) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
segment | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Number of reportable segments | 4 | ||||||||||
Total sales | $6,108 | $5,984 | $6,039 | $5,848 | $6,157 | $6,106 | $6,294 | $6,104 | $23,979 | $24,661 | $25,218 |
Operating income | 762 | 769 | 820 | 845 | 768 | 790 | 806 | 759 | 3,196 | 3,123 | 3,130 |
Operating Segments | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Operating income | 3,099 | 3,080 | 3,176 | ||||||||
Operating Segments | Aerospace Systems | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Total sales | 9,997 | 10,014 | 9,977 | ||||||||
Operating income | 1,315 | 1,215 | 1,218 | ||||||||
Operating Segments | Electronic Systems | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Total sales | 6,951 | 7,149 | 6,950 | ||||||||
Operating income | 1,148 | 1,226 | 1,187 | ||||||||
Operating Segments | Information Systems | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Total sales | 6,222 | 6,596 | 7,356 | ||||||||
Operating income | 611 | 633 | 761 | ||||||||
Operating Segments | Technical Services | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Total sales | 2,799 | 2,843 | 3,019 | ||||||||
Operating income | 261 | 262 | 268 | ||||||||
Intersegment Eliminations [Member] | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Total sales | 1,990 | 1,941 | 2,084 | ||||||||
Operating income | 236 | 256 | 258 | ||||||||
Intersegment Eliminations [Member] | Aerospace Systems | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Total sales | 176 | 149 | 171 | ||||||||
Operating income | 22 | 18 | 20 | ||||||||
Intersegment Eliminations [Member] | Electronic Systems | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Total sales | 637 | 629 | 607 | ||||||||
Operating income | 109 | 125 | 110 | ||||||||
Intersegment Eliminations [Member] | Information Systems | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Total sales | 537 | 504 | 682 | ||||||||
Operating income | 57 | 63 | 78 | ||||||||
Intersegment Eliminations [Member] | Technical Services | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Total sales | 640 | 659 | 624 | ||||||||
Operating income | 48 | 50 | 50 | ||||||||
Net FAS/CAS pension adjustment Income (Expense) [Member] | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Operating income | 269 | 168 | 132 | ||||||||
Corporate, Non-Segment [Member] | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Operating income | -169 | -119 | -168 | ||||||||
Segment Reconciling Items [Member] | |||||||||||
Sales and Service Revenues by Segment (Table Amounts) [Abstract] | |||||||||||
Operating income | ($3) | ($6) | ($10) |
Segment_Information_Details_2
Segment Information (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Intersegment sales and operating income (Table Amounts) [Abstract] | |||||||||||
Total sales | $6,108 | $5,984 | $6,039 | $5,848 | $6,157 | $6,106 | $6,294 | $6,104 | $23,979 | $24,661 | $25,218 |
Operating Income (Loss) | 762 | 769 | 820 | 845 | 768 | 790 | 806 | 759 | 3,196 | 3,123 | 3,130 |
Intersegment Eliminations [Member] | |||||||||||
Intersegment sales and operating income (Table Amounts) [Abstract] | |||||||||||
Total sales | 1,990 | 1,941 | 2,084 | ||||||||
Operating Income (Loss) | 236 | 256 | 258 | ||||||||
Intersegment Eliminations [Member] | Aerospace Systems | |||||||||||
Intersegment sales and operating income (Table Amounts) [Abstract] | |||||||||||
Total sales | 176 | 149 | 171 | ||||||||
Operating Income (Loss) | 22 | 18 | 20 | ||||||||
Intersegment Eliminations [Member] | Electronic Systems | |||||||||||
Intersegment sales and operating income (Table Amounts) [Abstract] | |||||||||||
Total sales | 637 | 629 | 607 | ||||||||
Operating Income (Loss) | 109 | 125 | 110 | ||||||||
Intersegment Eliminations [Member] | Information Systems | |||||||||||
Intersegment sales and operating income (Table Amounts) [Abstract] | |||||||||||
Total sales | 537 | 504 | 682 | ||||||||
Operating Income (Loss) | 57 | 63 | 78 | ||||||||
Intersegment Eliminations [Member] | Technical Services | |||||||||||
Intersegment sales and operating income (Table Amounts) [Abstract] | |||||||||||
Total sales | 640 | 659 | 624 | ||||||||
Operating Income (Loss) | $48 | $50 | $50 |
Segment_Information_Details_3
Segment Information (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Total assets by segment (Table Amounts) [Abstract] | ||
Total assets | $26,572 | $26,381 |
Aerospace Systems | ||
Total assets by segment (Table Amounts) [Abstract] | ||
Total assets | 6,844 | 6,490 |
Electronic Systems | ||
Total assets by segment (Table Amounts) [Abstract] | ||
Total assets | 4,366 | 4,400 |
Information Systems | ||
Total assets by segment (Table Amounts) [Abstract] | ||
Total assets | 6,725 | 6,887 |
Technical Services | ||
Total assets by segment (Table Amounts) [Abstract] | ||
Total assets | 1,539 | 1,367 |
Total segment | ||
Total assets by segment (Table Amounts) [Abstract] | ||
Total assets | 19,474 | 19,144 |
Corporate | ||
Total assets by segment (Table Amounts) [Abstract] | ||
Total assets | $7,098 | $7,237 |
Segment_Information_Details_4
Segment Information (Details 4) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Additional information by Segment (Table Amounts) [Abstract] | |||
Capital Expenditures | $561 | $364 | $331 |
Depreciation and Amortization | 462 | 495 | 510 |
Aerospace Systems | |||
Additional information by Segment (Table Amounts) [Abstract] | |||
Capital Expenditures | 387 | 198 | 154 |
Depreciation and Amortization | 206 | 210 | 196 |
Electronic Systems | |||
Additional information by Segment (Table Amounts) [Abstract] | |||
Capital Expenditures | 82 | 76 | 84 |
Depreciation and Amortization | 119 | 134 | 139 |
Information Systems | |||
Additional information by Segment (Table Amounts) [Abstract] | |||
Capital Expenditures | 40 | 27 | 40 |
Depreciation and Amortization | 70 | 81 | 100 |
Technical Services | |||
Additional information by Segment (Table Amounts) [Abstract] | |||
Capital Expenditures | 1 | 3 | 3 |
Depreciation and Amortization | 7 | 4 | 4 |
Corporate | |||
Additional information by Segment (Table Amounts) [Abstract] | |||
Capital Expenditures | 51 | 60 | 50 |
Depreciation and Amortization | $60 | $66 | $71 |
Segment_Information_Details_5
Segment Information (Details 5) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Segment Reporting Information [Line Items] | |||||||||||
Sales | $6,108 | $5,984 | $6,039 | $5,848 | $6,157 | $6,106 | $6,294 | $6,104 | $23,979 | $24,661 | $25,218 |
U.S. Government | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales | 20,100 | 21,300 | 22,300 | ||||||||
Percentage of total sales | 84.00% | 86.00% | 88.00% | ||||||||
International Customer | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Sales | $3,000 | $2,500 | $2,100 | ||||||||
Percentage of total sales | 13.00% | 10.00% | 8.00% |
Accounts_Receivable_Net_Detail
Accounts Receivable, Net (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Accounts Receivable, Net [Abstract] | ||
Total accounts receivable | $2,874 | $2,754 |
Allowance for doubtful accounts | -68 | -69 |
Total accounts receivable, net | 2,806 | 2,685 |
U.S. Government Sales | ||
Accounts Receivable, Net [Abstract] | ||
Billed | 536 | 596 |
Unbilled | 6,806 | 5,801 |
Progress and performance-based payments received | -5,150 | -4,385 |
Total accounts receivable | 2,192 | 2,012 |
Other Customers | ||
Accounts Receivable, Net [Abstract] | ||
Billed | 283 | 296 |
Unbilled | 3,461 | 2,830 |
Progress and performance-based payments received | -3,062 | -2,384 |
Total accounts receivable | $682 | $742 |
Inventoried_Costs_Net_Details
Inventoried Costs, Net (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ||
Production costs of contracts in process | $1,257 | $1,342 |
General and administrative expenses | 252 | 259 |
Inventoried costs | 1,509 | 1,601 |
Progress and performance-based payments received | -873 | -1,005 |
Inventoried costs, net of progress payments | 636 | 596 |
Product inventory | 106 | 102 |
Total inventoried costs, net | $742 | $698 |
Income_Taxes_Details_1
Income Taxes (Details 1) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Currently payable | |||
Federal income taxes | $701 | $803 | $912 |
Foreign income taxes | 10 | 28 | 15 |
Total federal and foreign income taxes currently payable | 711 | 831 | 927 |
Deferred federal and foreign income taxes | 157 | 80 | 60 |
Total federal and foreign income taxes | $868 | $911 | $987 |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Abstract] | |||
Effective income tax rate | 29.60% | 31.80% | 33.30% |
Income taxes paid, net | $727 | $880 | $1,100 |
Section 199 manufacturing deductions, increase from prior year | 21 | ||
Income Tax Reconciliation (Table Amounts) [Abstract] | |||
Income tax expense at statutory rate | 1,028 | 1,002 | 1,038 |
Settlements with taxing authorities | -51 | 0 | 0 |
Manufacturing deduction | -48 | -63 | -42 |
Research tax credit | -43 | -37 | 0 |
Other, net | -18 | 9 | -9 |
Total federal and foreign income taxes | $868 | $911 | $987 |
Income_Taxes_Details_3
Income Taxes (Details 3) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Unrecognized Tax Benefits Rollforward (Table Amounts) [Abstract] | |||
Unrecognized tax benefits at beginning of the year | $241 | $156 | $118 |
Additions based on tax positions related to the current year | 62 | 56 | 12 |
Additions for tax positions of prior years | 9 | 44 | 28 |
Settlements with taxing authorities | -61 | -1 | -1 |
Other, net | -41 | -14 | -1 |
Net change in unrecognized tax benefits | -31 | 85 | 38 |
Unrecognized tax benefits at end of the year | $210 | $241 | $156 |
Income_Taxes_Details_4
Income Taxes (Details 4) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Deferred Tax Assets (Table Amounts) | ||
Retiree benefits | $2,745 | $1,308 |
Accrued employee compensation | 311 | 333 |
Provisions for accrued liabilities | 392 | 313 |
Stock-based compensation | 91 | 109 |
Other | 104 | 144 |
Gross deferred tax assets | 3,643 | 2,207 |
Less valuation allowance | -53 | -55 |
Net deferred tax assets | 3,590 | 2,152 |
Deferred Tax Liabilities (Table Amounts) | ||
Goodwill | 787 | 806 |
Property, plant and equipment, net | 315 | 348 |
Contract accounting differences | 332 | 134 |
Other | 130 | 50 |
Gross deferred tax liabilities | 1,564 | 1,338 |
Total net deferred tax assets | $2,026 | $814 |
Income_Taxes_Details_5
Income Taxes (Details 5) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2015 |
Income Tax Contingency [Line Items] | ||||
Unrecognized Tax Benefits, Decrease Resulting from Settlements with Taxing Authorities | $61 | $1 | $1 | |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | 75 | |||
Estimated value of uncertain tax positions - accrued interest and penalties | 25 | |||
Federal and foreign income tax benefits that would impact the rate | 145 | |||
Operating Loss Carryforwards | 211 | |||
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||
Federal income tax statutory rate | 35.00% | |||
Deferred Tax Assets, Gross [Abstract] | ||||
Valuation allowance against tax assets | 53 | 55 | ||
Maximum | Forecast | ||||
Income Tax Contingency [Line Items] | ||||
Tax Adjustments, Settlements, and Unusual Provisions | -40 | |||
Partial resolution of IRS examination of the company's 2007-2009 tax returns [Member] | ||||
Income Tax Contingency [Line Items] | ||||
Tax Adjustments, Settlements, and Unusual Provisions | -51 | |||
Unrecognized Tax Benefits, Decrease Resulting from Settlements with Taxing Authorities | 59 | |||
Unrecognized Tax Benefits, Interest on Income Taxes Accrued | ($12) |
Goodwill_and_Other_Purchased_I2
Goodwill and Other Purchased Intangible Assets (Details 1) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Goodwill (Table Amounts) | ||
Beginning balance | $12,438 | $12,431 |
Businesses acquired and other | 28 | 7 |
Ending balance | 12,466 | 12,438 |
Aerospace Systems | ||
Goodwill (Table Amounts) | ||
Beginning balance | 3,758 | 3,758 |
Businesses acquired and other | 0 | 0 |
Ending balance | 3,758 | 3,758 |
Electronic Systems | ||
Goodwill (Table Amounts) | ||
Beginning balance | 2,410 | 2,410 |
Businesses acquired and other | 0 | 0 |
Ending balance | 2,410 | 2,410 |
Information Systems | ||
Goodwill (Table Amounts) | ||
Beginning balance | 5,294 | 5,287 |
Businesses acquired and other | -8 | 7 |
Ending balance | 5,286 | 5,294 |
Technical Services | ||
Goodwill (Table Amounts) | ||
Beginning balance | 976 | 976 |
Businesses acquired and other | 36 | 0 |
Ending balance | $1,012 | $976 |
Goodwill_and_Other_Purchased_I3
Goodwill and Other Purchased Intangible Assets (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Gross contract, program and other intangible assets | $1,831 | $1,812 |
Less accumulated amortization | -1,730 | -1,708 |
Net contract, program and other intangible assets | $101 | $104 |
Goodwill_and_Other_Purchased_I4
Goodwill and Other Purchased Intangible Assets (Details 3) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | |
2015 | $22 |
2016 | 16 |
2017 | 14 |
2018 | 12 |
2019 | $10 |
Goodwill_and_Other_Purchased_I5
Goodwill and Other Purchased Intangible Assets (Details 4) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Goodwill [Line Items] | |||
Amortization of Intangible Assets | $22 | $26 | $36 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 21 years | ||
Aerospace Systems [Member] | |||
Goodwill [Line Items] | |||
Goodwill, Impaired, Accumulated Impairment Loss | $570 |
Fair_Value_of_Financial_Instru2
Fair Value of Financial Instruments (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Carrying Value | ||
Financial Assets (Liabilities) | ||
Trading securities | $331 | $308 |
Available-for-sale securities | 5 | 2 |
Derivatives | 1 | -2 |
Long-term debt, including current portion | -5,928 | -5,930 |
Fair Value | ||
Financial Assets (Liabilities) | ||
Trading securities | 331 | 308 |
Available-for-sale securities | 5 | 2 |
Derivatives | 1 | -2 |
Long-term debt, including current portion | ($6,726) | ($6,227) |
Fair_Value_of_Financial_Instru3
Fair Value of Financial Instruments (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Marketable Securities | ||
Marketable Securities, Noncurrent | $336 | $310 |
Derivative Instruments and Hedging Activities | ||
Derivatives, notional amount | 146 | 161 |
Cash Flow Hedges | ||
Derivative Instruments and Hedging Activities | ||
Derivatives, notional amount | $34 | $77 |
LongTerm_Debt_Details_1
Long-Term Debt (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Long-term debt | $5,928 | |
Capital leases | 33 | 35 |
Other long-term debt | 245 | 245 |
Debt and Capital Lease Obligations | 5,928 | 5,930 |
Less: current portion | 3 | 2 |
Long-term debt, net of current portion | 5,925 | 5,928 |
2016 | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Debt Instrument, Interest Rate, Stated Percentage | 7.75% | |
Long-term debt | 107 | 107 |
2018 | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Long-term debt | 1,050 | 1,050 |
2019 | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.05% | |
Long-term debt | 500 | 500 |
2021 | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Debt Instrument, Interest Rate, Stated Percentage | 3.50% | |
Long-term debt | 700 | 700 |
2023 | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Debt Instrument, Interest Rate, Stated Percentage | 3.25% | |
Long-term debt | 1,050 | 1,050 |
2026 | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Long-term debt | 527 | 527 |
2031 | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Debt Instrument, Interest Rate, Stated Percentage | 7.75% | |
Long-term debt | 466 | 466 |
2040 | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.05% | |
Long-term debt | 300 | 300 |
2043 | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.75% | |
Long-term debt | $950 | $950 |
Minimum | 2018 | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Debt Instrument, Interest Rate, Stated Percentage | 1.75% | |
Minimum | 2026 | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Debt Instrument, Interest Rate, Stated Percentage | 7.75% | |
Maximum | 2018 | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Debt Instrument, Interest Rate, Stated Percentage | 6.75% | |
Maximum | 2026 | ||
Long-Term Debt (Table Amounts) [Abstract] | ||
Debt Instrument, Interest Rate, Stated Percentage | 7.88% |
LongTerm_Debt_Details_2
Long-Term Debt (Details 2) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Maturities of Long-term Debt [Abstract] | |
2014 | $3 |
2015 | 110 |
2016 | 3 |
2017 | 1,053 |
2018 | 504 |
Thereafter | 4,252 |
Total principal payments | 5,925 |
Unamortized premium on long-term debt, net of discount | 3 |
Total long-term debt | $5,928 |
LongTerm_Debt_Details_3
Long-Term Debt (Details 3) (Five Year Term [Member], Revolving Credit Facility [Member], USD $) | 17 Months Ended | |
Dec. 31, 2014 | Aug. 31, 2013 | |
Five Year Term [Member] | Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $1,775,000,000 | |
Credit Facility, Covenant Terms, Maximum Debt to Capitalization Ratio | 65.00% | |
Line of Credit Facility, Amount Outstanding | $0 |
LongTerm_Debt_Details_4
Long-Term Debt (Details 4) (USD $) | 12 Months Ended | 1 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | 31-May-13 |
Debt Instrument [Line Items] | ||||
Interest paid, net of interest received | $281 | $234 | $200 | |
Payments of long-term debt | 0 | 877 | 0 | |
Senior Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Face Amount | 2,850 | |||
2014 and 2015 Maturity [Member] | Senior Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Payments of long-term debt | $850 |
Investigations_Claims_and_Liti1
Investigations, Claims and Litigation Investigations, Claims and Litigation (Details) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2007 | Dec. 31, 2014 | 4-May-12 | 4-May-12 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Aug. 08, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 |
In Millions, unless otherwise specified | USD ($) | USD ($) | United States Postal Service [Member] | United States Postal Service [Member] | United States Postal Service [Member] | United States Postal Service [Member] | Solystic Matter [Member] | Solystic Matter [Member] | United States Postal Service [Member] | Solystic Matter [Member] | Solystic Matter [Member] | Solystic Matter [Member] | Initial Claim [Member] | Initial Claim [Member] | Incremental claim [Member] | Incremental claim [Member] |
USD ($) | USD ($) | Unpaid Portions of Contract Price and Direct Costs Incurred [Member] | Acts and Omissions with Adverse Affects on Performance and Obligations [Member] | USD ($) | EUR (€) | False Claims Act [Member] | Defendant | USD ($) | BRL | Solystic Matter [Member] | Solystic Matter [Member] | Solystic Matter [Member] | Solystic Matter [Member] | |||
USD ($) | USD ($) | Threatened Litigation [Member] | USD ($) | BRL | USD ($) | BRL | ||||||||||
USD ($) | ||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||
Contract award | $875 | |||||||||||||||
Receivables, unpaid long-term contracts | 2,806 | 2,685 | 63 | |||||||||||||
Gain Contingency, Unrecorded Amount | 115 | 38 | 31 | |||||||||||||
Claims asserted, range of possible loss, maximum | 410 | |||||||||||||||
Loss Contingency, Estimate of Possible Loss | $179 | $42 | 111 | $34 | 89 | $8 | 22 | |||||||||
Loss Contingency, Number of Defendants | 2 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details 1) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Environmental Commitments and Contingencies (Amounts in Paragraphs) | |
Amounts accrued for probable environmental remediation costs | $381 |
Financial Arrangements (Amounts in Paragraph) | |
Unused standby letters of credit and bank guarantees | 295 |
Surety Bond Outstanding | 163 |
Other Current Liabilities [Member] | |
Environmental Commitments and Contingencies (Amounts in Paragraphs) | |
Amounts accrued for probable environmental remediation costs | 142 |
Other Noncurrent Liabilities [Member] | |
Environmental Commitments and Contingencies (Amounts in Paragraphs) | |
Amounts accrued for probable environmental remediation costs | 239 |
Inventory for Long Term Contracts or Programs, Gross [Member] | |
Environmental Commitments and Contingencies (Amounts in Paragraphs) | |
Amounts accrued for probable environmental remediation costs | 75 |
Other Noncurrent Assets [Member] | |
Environmental Commitments and Contingencies (Amounts in Paragraphs) | |
Amounts accrued for probable environmental remediation costs | 118 |
Environmental Issue [Member] | |
Environmental Commitments and Contingencies (Amounts in Paragraphs) | |
Low-end of the range of reasonably possible future costs for environmental remediation sites | 363 |
High-end of the range of reasonably possible future costs for environmental remediation sites | $809 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense for operating leases | $304 | $298 | $347 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |||
2015 | 267 | ||
2016 | 214 | ||
2017 | 140 | ||
2018 | 84 | ||
2019 | 57 | ||
Thereafter | 78 | ||
Total Minimum Lease Payments | $840 |
Retirement_Benefits_Details_1
Retirement Benefits (Details 1) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Pension Benefits | |||
Components of Net Periodic Benefit Cost (Table Amounts) [Abstract] | |||
Service cost | $457 | $516 | $522 |
Interest cost | 1,260 | 1,117 | 1,184 |
Expected return on plan assets | -1,871 | -1,809 | -1,708 |
Amortization of: | |||
Prior service credit | -59 | -58 | -58 |
Net loss from previous years | 327 | 608 | 427 |
Other | 1 | 0 | 7 |
Net periodic benefit cost | 115 | 374 | 374 |
Medical and Life Benefits | |||
Components of Net Periodic Benefit Cost (Table Amounts) [Abstract] | |||
Service cost | 34 | 36 | 34 |
Interest cost | 99 | 96 | 109 |
Expected return on plan assets | -83 | -75 | -68 |
Amortization of: | |||
Prior service credit | -45 | -51 | -51 |
Net loss from previous years | 13 | 30 | 21 |
Other | 0 | 0 | 0 |
Net periodic benefit cost | $18 | $36 | $45 |
Retirement_Benefits_Details_2
Retirement Benefits (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Changes in Unamortized Benefit plan Costs (Table Amounts) [Abstract] | |||
Change in net actuarial loss | $4,067 | ($2,438) | $2,504 |
Change in prior service cost | -92 | -2 | |
Amortization of: | |||
Prior service credit | 104 | 109 | 109 |
Net loss from previous years | -340 | -638 | -448 |
Tax expense (benefit) related to above items | -1,423 | 1,177 | -860 |
Change in unamortized benefit plan costs | 2,316 | -1,790 | 1,303 |
Pension Benefits | |||
Changes in Unamortized Benefit plan Costs (Table Amounts) [Abstract] | |||
Change in net actuarial loss | 3,833 | -2,158 | 2,353 |
Change in prior service cost | 0 | -2 | |
Amortization of: | |||
Prior service credit | 59 | 58 | 58 |
Net loss from previous years | -327 | -608 | -427 |
Tax expense (benefit) related to above items | -1,357 | 1,075 | -788 |
Change in unamortized benefit plan costs | 2,208 | -1,633 | 1,194 |
Medical and Life Benefits | |||
Changes in Unamortized Benefit plan Costs (Table Amounts) [Abstract] | |||
Change in net actuarial loss | 234 | -280 | 151 |
Change in prior service cost | -92 | 0 | |
Amortization of: | |||
Prior service credit | 45 | 51 | 51 |
Net loss from previous years | -13 | -30 | -21 |
Tax expense (benefit) related to above items | -66 | 102 | -72 |
Change in unamortized benefit plan costs | $108 | ($157) | $109 |
Retirement_Benefits_Details_3
Retirement Benefits (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Amounts recorded in accumulated other comprehensive loss (Table Amounts) | ||
Unamortized benefit plan costs | ($5,316) | ($3,000) |
Pension Benefits | ||
Amounts recorded in accumulated other comprehensive loss (Table Amounts) | ||
Net actuarial loss | 8,797 | 5,291 |
Prior service credit | 364 | 423 |
Income tax benefits related to above items | -3,285 | -1,928 |
Unamortized benefit plan costs | -5,148 | -2,940 |
Medical and Life Benefits | ||
Amounts recorded in accumulated other comprehensive loss (Table Amounts) | ||
Net actuarial loss | 372 | 151 |
Prior service credit | 94 | 47 |
Income tax benefits related to above items | -110 | -44 |
Unamortized benefit plan costs | ($168) | ($60) |
Retirement_Benefits_Details_4
Retirement Benefits (Details 4) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Change in plan assets | |||
Fair value of plan assets at end of year | $26,279 | $25,273 | |
Amounts Recognized on the Balance Sheet | |||
Non-current liability | -6,555 | -2,954 | |
Pension Benefits | |||
Change in projected benefit obligation | |||
Projected benefit obligation at beginning of year | 25,972 | 27,746 | |
Service cost | 457 | 516 | 522 |
Interest cost | 1,260 | 1,117 | 1,184 |
Plan participants’ contributions | 19 | 12 | |
Plan amendments | 0 | 0 | |
Actuarial (gain) loss | 4,273 | -2,063 | |
Benefits paid | -1,409 | -1,365 | |
Other | -47 | 9 | |
Projected benefit obligation at end of year | 30,525 | 25,972 | 27,746 |
Change in plan assets | |||
Fair value of plan assets at beginning of year | 24,098 | 22,962 | |
Net gain on plan assets | 2,298 | 1,907 | |
Employer contributions | 78 | 579 | |
Plan participants’ contributions | 19 | 12 | |
Benefits paid | -1,409 | -1,365 | |
Other | -21 | 3 | |
Fair value of plan assets at end of year | 25,063 | 24,098 | 22,962 |
Funded status | -5,462 | -1,874 | |
Amounts Recognized on the Balance Sheet | |||
Non-current assets | 3 | 117 | |
Current liability | -133 | -122 | |
Non-current liability | -5,332 | -1,869 | |
Medical and Life Benefits | |||
Change in projected benefit obligation | |||
Projected benefit obligation at beginning of year | 2,224 | 2,448 | |
Service cost | 34 | 36 | 34 |
Interest cost | 99 | 96 | 109 |
Plan participants’ contributions | 50 | 77 | |
Plan amendments | -92 | 0 | |
Actuarial (gain) loss | 258 | -219 | |
Benefits paid | -186 | -227 | |
Other | 11 | 13 | |
Projected benefit obligation at end of year | 2,398 | 2,224 | 2,448 |
Change in plan assets | |||
Fair value of plan assets at beginning of year | 1,175 | 1,062 | |
Net gain on plan assets | 108 | 137 | |
Employer contributions | 57 | 114 | |
Plan participants’ contributions | 50 | 77 | |
Benefits paid | -186 | -227 | |
Other | 12 | 12 | |
Fair value of plan assets at end of year | 1,216 | 1,175 | 1,062 |
Funded status | -1,182 | -1,049 | |
Amounts Recognized on the Balance Sheet | |||
Non-current assets | 80 | 72 | |
Current liability | -39 | -36 | |
Non-current liability | ($1,223) | ($1,085) |
Retirement_Benefits_Details_5
Retirement Benefits (Details 5) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
Pension Benefits | |
Amounts expected to be recognized in 2014 net periodic benefit cost (Table Amounts) | |
Net actuarial loss | $682 |
Prior service credit | -60 |
Medical and Life Benefits | |
Amounts expected to be recognized in 2014 net periodic benefit cost (Table Amounts) | |
Net actuarial loss | 27 |
Prior service credit | ($28) |
Retirement_Benefits_Details_6
Retirement Benefits (Details 6) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Pension plans with accumulated benefit obligations in excess of fair value of plan assets (Table Amounts) [Abstract] | ||
Projected benefit obligation | $30,405 | $24,129 |
Accumulated benefit obligation | 30,172 | 23,830 |
Fair value of plan assets | $24,940 | $22,138 |
Retirement_Benefits_Details_7
Retirement Benefits (Details 7) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Pension Benefits | ||
Assumptions Used to Determine Benefit Obligation | ||
Discount rate | 4.12% | 4.99% |
Initial cash balance crediting rate assumed for the next year | 2.75% | 3.90% |
Rate to which the cash balance crediting rate is assumed to increase (the ultimate rate) | 3.50% | 4.70% |
Year that the cash balance crediting rate reaches the ultimate rate | 2020 | 2019 |
Rate of compensation increase | 3.00% | 3.00% |
Assumptions Used to Determine Benefit Cost | ||
Discount rate | 4.99% | 4.12% |
Initial cash balance crediting rate assumed for the next year | 3.90% | 3.00% |
Rate to which the cash balance crediting rate is assumed to increase (the ultimate rate) | 4.70% | 4.25% |
Year that the cash balance crediting rate reaches the ultimate rate | 2019 | 2018 |
Expected long-term return on plan assets | 8.00% | 8.00% |
Rate of compensation increase | 3.00% | 2.75% |
Medical and Life Benefits | ||
Assumptions Used to Determine Benefit Obligation | ||
Discount rate | 4.04% | 4.90% |
Assumptions Used to Determine Benefit Cost | ||
Discount rate | 4.90% | 4.02% |
Expected long-term return on plan assets | 7.45% | 7.33% |
Benefit Obligation | ||
Defined Benefit Plan Disclosure (Table Amounts) | ||
Initial health care cost trend rate assumed for the next year | 6.50% | 6.50% |
Rate to which the health care cost trend rate is assumed to decline (the ultimate trend rate) | 5.00% | 5.00% |
Year that the health care cost trend rate reaches the ultimate trend rate | 2019 | 2017 |
Post-retirement Benefit Cost | ||
Defined Benefit Plan Disclosure (Table Amounts) | ||
Initial health care cost trend rate assumed for the next year | 6.50% | 7.00% |
Rate to which the health care cost trend rate is assumed to decline (the ultimate trend rate) | 5.00% | 5.00% |
Year that the health care cost trend rate reaches the ultimate trend rate | 2017 | 2017 |
Retirement_Benefits_Details_8
Retirement Benefits (Details 8) | 12 Months Ended |
Dec. 31, 2014 | |
Domestic Equity Securities | |
Plan Asset Allocation Ranges (Table Amounts) [Abstract] | |
Asset allocation ranges, minimum | 13.00% |
Asset allocation ranges, maximum | 33.00% |
International equities | |
Plan Asset Allocation Ranges (Table Amounts) [Abstract] | |
Asset allocation ranges, minimum | 7.00% |
Asset allocation ranges, maximum | 27.00% |
Fixed Income Securities | |
Plan Asset Allocation Ranges (Table Amounts) [Abstract] | |
Asset allocation ranges, minimum | 30.00% |
Asset allocation ranges, maximum | 50.00% |
Alternative Investments | |
Plan Asset Allocation Ranges (Table Amounts) [Abstract] | |
Asset allocation ranges, minimum | 10.00% |
Asset allocation ranges, maximum | 30.00% |
Retirement_Benefits_Details_9
Retirement Benefits (Details 9) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | $26,279 | $25,273 | |
Cash & cash equivalents | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 1,775 | 1,499 | |
Domestic equities | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 4,878 | 4,452 | |
International equities | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 4,737 | 4,214 | |
U.S. Treasuries | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 957 | 1,602 | |
U.S. Government Agency | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 909 | 974 | |
Non-U.S. Government | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 440 | 422 | |
Corporate debt | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 5,710 | 4,744 | |
Asset backed | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 608 | 549 | |
High yield debt | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 586 | 923 | |
Bank loans | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 228 | 185 | |
Hedge funds | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 632 | 821 | |
Private equities | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 2,030 | 2,075 | |
Real estate | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 2,759 | 2,767 | |
Other | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 30 | 46 | |
Level 1 | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 7,474 | 6,694 | |
Level 1 | Cash & cash equivalents | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 38 | 32 | |
Level 1 | Domestic equities | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 4,729 | 4,163 | |
Level 1 | International equities | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 2,675 | 2,473 | |
Level 1 | Other | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 32 | 26 | |
Level 2 | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 13,378 | 12,909 | |
Level 2 | Cash & cash equivalents | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 1,737 | 1,467 | |
Level 2 | Domestic equities | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 147 | 287 | |
Level 2 | International equities | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 2,062 | 1,741 | |
Level 2 | U.S. Treasuries | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 957 | 1,602 | |
Level 2 | U.S. Government Agency | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 909 | 974 | |
Level 2 | Non-U.S. Government | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 440 | 422 | |
Level 2 | Corporate debt | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 5,710 | 4,744 | |
Level 2 | Asset backed | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 604 | 545 | |
Level 2 | High yield debt | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 586 | 922 | |
Level 2 | Bank loans | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 228 | 185 | |
Level 2 | Other | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | -2 | 20 | |
Level 3 | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 5,427 | 5,670 | 5,028 |
Level 3 | Domestic equities | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 2 | 2 | |
Level 3 | Asset backed | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 4 | 4 | |
Level 3 | High yield debt | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 0 | 1 | |
Level 3 | Hedge funds | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 632 | 821 | |
Level 3 | Private equities | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | 2,030 | 2,075 | 1,980 |
Level 3 | Real estate | |||
Plan Assets by Fair Value Measurement Input (Table Amounts) [Abstract] | |||
Fair value of plan assets at end of year | $2,759 | $2,767 | $2,256 |
Retirement_Benefits_Details_10
Retirement Benefits (Details 10) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Actual return on plan assets: | ||
Fair value of plan assets at end of year | $26,279 | $25,273 |
Level 3 | ||
Changes in Fair Value of Plan Assets, Significant Unobservable Inputs (Table Amounts) [Abstract] | ||
Fair value of plan assets at beginning of year | 5,670 | 5,028 |
Actual return on plan assets: | ||
Unrealized (losses) gains, net | 67 | 358 |
Realized gains, net | 170 | 43 |
Purchases | 513 | 1,629 |
Sales | -993 | -1,388 |
Fair value of plan assets at end of year | 5,427 | 5,670 |
High yield debt and Hedge funds | Level 3 | ||
Changes in Fair Value of Plan Assets, Significant Unobservable Inputs (Table Amounts) [Abstract] | ||
Fair value of plan assets at beginning of year | 822 | 786 |
Actual return on plan assets: | ||
Unrealized (losses) gains, net | -46 | -16 |
Realized gains, net | 89 | 43 |
Purchases | 21 | 200 |
Sales | -254 | -191 |
Fair value of plan assets at end of year | 632 | 822 |
Private equities | ||
Actual return on plan assets: | ||
Fair value of plan assets at end of year | 2,030 | 2,075 |
Private equities | Level 3 | ||
Changes in Fair Value of Plan Assets, Significant Unobservable Inputs (Table Amounts) [Abstract] | ||
Fair value of plan assets at beginning of year | 2,075 | 1,980 |
Actual return on plan assets: | ||
Unrealized (losses) gains, net | -60 | 112 |
Realized gains, net | 10 | 0 |
Purchases | 431 | 666 |
Sales | -426 | -683 |
Fair value of plan assets at end of year | 2,030 | 2,075 |
Real estate | ||
Actual return on plan assets: | ||
Fair value of plan assets at end of year | 2,759 | 2,767 |
Real estate | Level 3 | ||
Changes in Fair Value of Plan Assets, Significant Unobservable Inputs (Table Amounts) [Abstract] | ||
Fair value of plan assets at beginning of year | 2,767 | 2,256 |
Actual return on plan assets: | ||
Unrealized (losses) gains, net | 173 | 262 |
Realized gains, net | 71 | 0 |
Purchases | 61 | 763 |
Sales | -313 | -514 |
Fair value of plan assets at end of year | 2,759 | 2,767 |
Other Investments | Level 3 | ||
Changes in Fair Value of Plan Assets, Significant Unobservable Inputs (Table Amounts) [Abstract] | ||
Fair value of plan assets at beginning of year | 6 | 6 |
Actual return on plan assets: | ||
Unrealized (losses) gains, net | 0 | 0 |
Realized gains, net | 0 | 0 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Fair value of plan assets at end of year | $6 | $6 |
Retirement_Benefits_Details_11
Retirement Benefits (Details 11) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Pension Benefits | |
Estimated Benefit Payments (Table Amounts) [Abstract] | |
2015 | $1,395 |
2016 | 1,452 |
2017 | 1,506 |
2018 | 1,565 |
2019 | 1,623 |
2020 through 2024 | 8,975 |
Medical and Life Benefits | |
Estimated Benefit Payments (Table Amounts) [Abstract] | |
2015 | 154 |
2016 | 158 |
2017 | 161 |
2018 | 164 |
2019 | 166 |
2020 through 2024 | $828 |
Retirement_Benefits_Details_12
Retirement Benefits (Details 12) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
partnership | |||
Defined Contribution Plans Disclosure (Amounts in paragraphs) | |||
Maximum percentage of employee compensation eligible for cash matching of employee contributions | 4.00% | ||
Defined Contribution Plan, Employer Discretionary Contribution Amount | $282 | $285 | $293 |
Pension and post-retirement benefits disclosures (Amounts in paragraphs) | |||
Accumulated benefit obligation for all defined benefit pension plans | 30,300 | 25,700 | |
Information About Plan Assets (Amounts in paragraphs) [Abstract] | |||
Maximum percentage of funds permitted to be invested in trust accounts | 5.00% | ||
Number of real estate and private equity partnerships | 164 | ||
Entities that calculate net asset value per share, unfunded commitments | 833 | 899 | |
Average investment term, alternative investments | 10 years | ||
Entities that calculate net asset value per share, investment redemption frequency | quarterly | ||
Notice period for alternative investments redemptions, days | 90 days | ||
OPEB contributions | |||
Defined Contribution Plans Disclosure (Amounts in paragraphs) | |||
Expected 2015 employer contributions | 68 | ||
Pension employer required minimum contributions | |||
Defined Contribution Plans Disclosure (Amounts in paragraphs) | |||
Expected 2015 employer contributions | 77 | ||
Voluntary Contributions | |||
Defined Contribution Plans Disclosure (Amounts in paragraphs) | |||
Expected 2015 employer contributions | $500 |
Stock_Compensation_Plans_and_O2
Stock Compensation Plans and Other Compensation Arrangements (Detail 1) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Share-based Compensation by Share-based Payment Award | |||
Stock-based compensation expense | $134 | $144 | $183 |
Tax benefits from stock-based compensation expense | 81 | 41 | 45 |
Stock options | |||
Share-based Compensation by Share-based Payment Award | |||
Stock-based compensation expense | 0 | 4 | 10 |
Stock awards | |||
Share-based Compensation by Share-based Payment Award | |||
Stock-based compensation expense | 134 | 140 | 173 |
Stock options, exercised | |||
Share-based Compensation by Share-based Payment Award | |||
Tax benefits from stock-based compensation expense | 29 | 25 | 26 |
Stock awards, issued | |||
Share-based Compensation by Share-based Payment Award | |||
Tax benefits from stock-based compensation expense | $52 | $16 | $19 |
Stock_Compensation_Plans_and_O3
Stock Compensation Plans and Other Compensation Arrangements (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Stock Option Activity | |||
Shares under option - exercised | -1.4 | ||
Shares under option - outstanding at period end | 0.3 | 1.7 | |
Stock Options, Vested and Expected to Vest at Period End | |||
Total intrinsic value of stock options exercised | $94 | $118 | $97 |
Aggregate intrinsic value - outstanding at period end | $28 | $101 | $66 |
Stock_Compensation_Plans_and_O4
Stock Compensation Plans and Other Compensation Arrangements (Detail 3) (USD $) | 12 Months Ended | |||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Share-based Compensation by Share-based Payment Award | ||||
Stock awards, outstanding, weighted average remaining contractual terms | 1 year 1 month | 1 year 6 months | 1 year 7 months | 1 year 7 months |
Stock Award Activity (Table) | ||||
Stock awards - outstanding at period start | 3,420 | 3,478 | 3,622 | |
Stock awards - granted | 763 | 1,577 | 1,860 | |
Stock awards - vested | -1,217 | -1,323 | -1,800 | |
Stock awards - forfeited | -158 | -312 | -204 | |
Stock awards - outstanding at period end | 2,808 | 3,420 | 3,478 | 3,622 |
Stock Awards, Weighted Average Grant Date Fair Value [Table] | ||||
Weighted-average grant date fair value - outstanding at period start | $61 | $61 | $58 | |
Weighted-average grant date fair value - granted | $118 | $64 | $60 | |
Weighted-average grant date fair value - vested | $58 | $60 | $55 | |
Weighted-average grant date fair value - forfeited | $70 | $62 | $59 | |
Weighted-average grant date fair value - outstanding at period end | $77 | $61 | $61 | $58 |
Stock_Compensation_Plans_and_O5
Stock Compensation Plans and Other Compensation Arrangements (Details 4) (USD $) | 12 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2015 |
Share-based Compensation by Share-based Payment Award | ||||
Unrecognized compensation expense, non-vested awards | $89 | |||
Weighted-average period for unrecognized compensation expense to be charged to expense | 1 year 3 months | |||
Stock plans, vesting period | 3 years | |||
Stock issued, settlement of fully vested stock awards, shares | 2,600,000 | 3,400,000 | 2,800,000 | |
Stock issued, settlement of fully vested stock awards, fair value at issuance | 305 | 226 | 172 | |
Stock issued, settlement of fully vested stock awards, fair value grant date | 80 | 105 | 75 | |
Stock awards - granted | 763,000 | 1,577,000 | 1,860,000 | |
2011 Long-Term Incentive Stock Plan | ||||
Share-based Compensation by Share-based Payment Award | ||||
Number of shares authorized | 39,100,000 | |||
Share limit for every one share issued in connection with awards | 4.5 | |||
Available for future grant | 25,000,000 | |||
2001 Long-Term Incentive Stock Plan Rolled into 2011 Plan [Member] | ||||
Share-based Compensation by Share-based Payment Award | ||||
Number of shares authorized | 6,900,000 | |||
Minimum | ||||
Share-based Compensation by Share-based Payment Award | ||||
Required service period under 2011 Plan and 1993 SPND (years) | 5 years | |||
Minimum | Grants During 2010 and After [Member] | ||||
Share-based Compensation by Share-based Payment Award | ||||
Share Based Compensation Arrangement By Share Based Payment Award Award Grants Percentage Financial Metric Met Exceeded | 0.00% | |||
Maximum | Grants During 2010 and After [Member] | ||||
Share-based Compensation by Share-based Payment Award | ||||
Share Based Compensation Arrangement By Share Based Payment Award Award Grants Percentage Financial Metric Met Exceeded | 200.00% | |||
Employee Stock Option [Member] | ||||
Share-based Compensation by Share-based Payment Award | ||||
Stock options, issued | 0 | 0 | ||
Restricted Performance Stock Rights | ||||
Share-based Compensation by Share-based Payment Award | ||||
Stock awards - granted | 600,000 | |||
Cash Units and Cash Performance Units [Member] | ||||
Share-based Compensation by Share-based Payment Award | ||||
Unrecognized compensation expense, non-vested awards | 122 | |||
Cash Units and Cash Performance Units [Member] | Minimum | ||||
Share-based Compensation by Share-based Payment Award | ||||
Unrecognized compensation expense, non-vested awards | 32 | |||
Cash Units and Cash Performance Units [Member] | Maximum | ||||
Share-based Compensation by Share-based Payment Award | ||||
Unrecognized compensation expense, non-vested awards | 179 | |||
Restricted Stock Units (RSUs) [Member] | ||||
Share-based Compensation by Share-based Payment Award | ||||
Stock awards - granted | 200,000 | |||
Stock Option Plan Granted After 2008 | ||||
Share-based Compensation by Share-based Payment Award | ||||
Stock plans, vesting period | 3 years | |||
Award expiration period | 7 years | |||
Restricted Stock Rights and Restricted Performance Stock Rights | ||||
Share-based Compensation by Share-based Payment Award | ||||
Unrecognized compensation expense, non-vested awards | 90 | |||
Forecast | ||||
Share-based Compensation by Share-based Payment Award | ||||
Unrecognized compensation expense, non-vested awards | $107 | |||
Stock awards - granted | 2,600,000 |
Unaudited_Selected_Quarterly_D2
Unaudited Selected Quarterly Data (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Unaudited Selected Quarterly Data (Table Amounts) [Abstract] | |||||||||||
Sales | $6,108 | $5,984 | $6,039 | $5,848 | $6,157 | $6,106 | $6,294 | $6,104 | $23,979 | $24,661 | $25,218 |
Operating income | 762 | 769 | 820 | 845 | 768 | 790 | 806 | 759 | 3,196 | 3,123 | 3,130 |
Net earnings | 506 | 473 | 511 | 579 | 478 | 497 | 488 | 489 | 2,069 | 1,952 | 1,978 |
Basic earnings per share (in dollars per share) | $2.52 | $2.29 | $2.41 | $2.68 | $2.17 | $2.18 | $2.09 | $2.07 | $9.91 | $8.50 | $7.96 |
Diluted earnings per share (in dollars per share) | $2.48 | $2.26 | $2.37 | $2.63 | $2.12 | $2.14 | $2.05 | $2.03 | $9.75 | $8.35 | $7.81 |
Weighted-average common shares outstanding | 200.8 | 206.2 | 212.4 | 216.3 | 220.5 | 228.2 | 234 | 236.4 | 208.8 | 229.6 | 248.6 |
Weighted-average diluted shares outstanding | 204.2 | 209.2 | 215.2 | 220.4 | 225.2 | 232.6 | 237.5 | 241 | 212.1 | 233.9 | 253.4 |
Unaudited Selected Quarterly Data (Amounts in Paragraphs) | |||||||||||
Number of common shares repurchased | 4.5 | 6.6 | |||||||||
Amount paid for common stock repurchased | $599 | $699 |