Document_and_Entity_Informatio
Document and Entity Information Document | 3 Months Ended | |
Mar. 31, 2015 | Apr. 24, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NORTHROP GRUMMAN CORP /DE/ | |
Entity Central Index Key | 1133421 | |
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Fiscal Year Focus | 2015 | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Period Focus | Q1 | |
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 Common Stock, Shares Outstanding | 193,784,684 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited) (USD $) | 3 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Sales | ||
Product | $3,429 | $3,408 |
Service | 2,528 | 2,440 |
Total sales | 5,957 | 5,848 |
Operating costs and expenses | ||
Product | 2,542 | 2,533 |
Service | 2,000 | 1,928 |
General and administrative expenses | 635 | 542 |
Operating income | 780 | 845 |
Other (expense) income | ||
Interest expense | -76 | -69 |
Other, net | 0 | 10 |
Earnings before income taxes | 704 | 786 |
Federal and foreign income tax expense | 220 | 207 |
Net earnings | 484 | 579 |
Basic earnings per share | ||
Basic earnings per share | $2.45 | $2.68 |
Weighted-average common shares outstanding, in millions | 197.7 | 216.3 |
Diluted earnings per share | ||
Diluted earnings per share | $2.41 | $2.63 |
Weighted-average diluted shares outstanding, in millions | 200.5 | 220.4 |
Net earnings (from above) | 484 | 579 |
Change in unamortized benefit plan costs, net of tax | 96 | 61 |
Change in cumulative translation adjustment | -29 | 2 |
Other, net | -1 | 0 |
Other comprehensive income, net of tax | 66 | 63 |
Comprehensive income | $550 | $642 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Financial Position (Unaudited) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Assets | ||
Cash and cash equivalents | $2,646 | $3,863 |
Accounts receivable, net | 3,131 | 2,806 |
Inventoried costs, net | 818 | 742 |
Deferred tax assets | 371 | 404 |
Prepaid expenses and other current assets | 177 | 369 |
Total current assets | 7,143 | 8,184 |
Property, plant and equipment, net of accumulated depreciation of $4,648 in 2015 and $4,611 in 2014 | 2,989 | 2,991 |
Goodwill | 12,464 | 12,466 |
Non-current deferred tax assets | 1,393 | 1,622 |
Other non-current assets | 1,277 | 1,309 |
Total assets | 25,266 | 26,572 |
Liabilities | ||
Trade accounts payable | 1,248 | 1,305 |
Accrued employee compensation | 1,063 | 1,441 |
Advance payments and amounts in excess of costs incurred | 1,430 | 1,713 |
Other current liabilities | 1,543 | 1,433 |
Total current liabilities | 5,284 | 5,892 |
Long-term debt, net of current portion | 6,418 | 5,925 |
Pension and other post-retirement benefit plan liabilities | 5,962 | 6,555 |
Other non-current liabilities | 854 | 965 |
Total liabilities | 18,518 | 19,337 |
Commitments and contingencies | ||
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: 2015—195,111,898 and 2014—198,930,240 | 195 | 199 |
Paid-in capital | 0 | 0 |
Retained earnings | 11,843 | 12,392 |
Accumulated other comprehensive loss | -5,290 | -5,356 |
Total shareholders’ equity | 6,748 | 7,235 |
Total liabilities and shareholders’ equity | $25,266 | $26,572 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Financial Position (Unaudited) (Parentheticals) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Millions, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | ($4,648) | ($4,611) |
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 | 195,111,898 | 198,930,240 |
Common Stock, shares outstanding | 195,111,898 | 198,930,240 |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Operating Activities | ||
Net earnings | $484 | $579 |
Adjustments to reconcile to net cash used in operating activities: | ||
Depreciation and amortization | 99 | 109 |
Stock-based compensation | 24 | 22 |
Excess tax benefits from stock-based compensation | -105 | -68 |
Deferred income taxes | 204 | 40 |
Changes in assets and liabilities: | ||
Accounts receivable, net | -325 | -531 |
Inventoried costs, net | -76 | -66 |
Prepaid expenses and other assets | 16 | -6 |
Accounts payable and other liabilities | -889 | -755 |
Income taxes payable | 366 | 279 |
Retiree benefits | -440 | 14 |
Other, net | -12 | -19 |
Net cash used in operating activities | -654 | -402 |
Investing activities | ||
Capital expenditures | -117 | -60 |
Other investing activities, net | 2 | -72 |
Net cash used in investing activities | -115 | -132 |
Financing activities | ||
Common stock repurchases | -825 | -570 |
Net proceeds from issuance of long-term debt | 600 | 0 |
Cash dividends paid | -156 | -132 |
Other financing activities, net | -67 | -29 |
Net cash used in financing activities | -448 | -731 |
Decrease in cash and cash equivalents | -1,217 | -1,265 |
Cash and cash equivalents, beginning of year | 3,863 | 5,150 |
Cash and cash equivalents, end of period | $2,646 | $3,885 |
Condensed_Consolidated_Stateme4
Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (USD $) | Total | Common stock | Paid-in capital | Retained earnings | Accumulated other comprehensive loss |
In Millions, except Per Share data, unless otherwise specified | |||||
Beginning of year at Dec. 31, 2013 | $218 | $848 | $12,538 | ($2,984) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock repurchased | -5 | -560 | 0 | ||
Net earnings | 579 | 579 | |||
Dividends declared | -134 | ||||
Stock compensation | 2 | -7 | 0 | ||
Other | 11 | ||||
Other comprehensive income, net of tax | 63 | 63 | |||
Cash dividends declared per share | $0.61 | ||||
End of period at Mar. 31, 2014 | 10,569 | 215 | 292 | 12,983 | -2,921 |
Beginning of year at Dec. 31, 2014 | 7,235 | 199 | 0 | 12,392 | -5,356 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock repurchased | -5 | 0 | -854 | ||
Net earnings | 484 | 484 | |||
Dividends declared | -142 | ||||
Stock compensation | 1 | 0 | -37 | ||
Other | 0 | ||||
Other comprehensive income, net of tax | 66 | 66 | |||
Cash dividends declared per share | $0.70 | ||||
End of period at Mar. 31, 2015 | $6,748 | $195 | $0 | $11,843 | ($5,290) |
Basis_of_Presentation_Unaudite
Basis of Presentation (Unaudited) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||
BASIS OF PRESENTATION | BASIS OF PRESENTATION | |||||||
Principles of Consolidation and Reporting | ||||||||
These unaudited condensed consolidated financial statements include the accounts of Northrop Grumman Corporation and subsidiaries (herein referred to as "Northrop Grumman," the "company," "we," "us," or "our"). 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. | ||||||||
The accompanying unaudited condensed consolidated financial statements are prepared in accordance with the rules of the Securities and Exchange Commission (SEC) for interim reporting purposes. These financial statements include adjustments of a normal recurring nature considered necessary by management for a fair presentation of the company's unaudited condensed consolidated financial position, results of operations and cash flows. | ||||||||
The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the information contained in the company’s 2014 Annual Report on Form 10-K. | ||||||||
The quarterly information is labeled using a calendar convention; that is, first quarter is consistently labeled as ending on March 31, second quarter as ending on June 30 and third quarter as ending on September 30. 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 these quarter-end dates 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. | ||||||||
Accounting Estimates | ||||||||
The accompanying unaudited condensed consolidated 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 sales 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 | ||||||||
The majority of our sales are derived from long-term contracts with the United States (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. 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. | ||||||||
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 unaudited condensed consolidated financial position or results of operations. Where such changes occur, we generally disclose the nature, underlying conditions and financial impact of the change. No discrete event or adjustments to an individual contract were material to the accompanying unaudited condensed consolidated financial statements. | ||||||||
The effect of aggregate net changes in contract estimates recognized using the cumulative catch-up method of accounting is as follows: | ||||||||
Three Months Ended March 31 | ||||||||
$ in millions, except per share data | 2015 | 2014 | ||||||
Operating Income | $ | 187 | $ | 197 | ||||
Net Earnings (1) | 122 | 128 | ||||||
Diluted earnings per share (1) | 0.61 | 0.58 | ||||||
(1) Based on statutory tax rates | ||||||||
As of March 31, 2015, the recognized amounts related to contract claims and requests for equitable adjustment are not material individually or in aggregate. In addition, as of March 31, 2015, the company does not have any contract terminations in process that we anticipate would have a material effect on our unaudited condensed consolidated financial position, or our annual results of operations and/or cash flows. | ||||||||
Related Party Transactions | ||||||||
For all periods presented, the company had no material related party transactions. | ||||||||
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; however, a delay in the effective date is currently being considered by the FASB, which we expect will result in at least a one year deferral. ASU 2014-09 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 cash flows. | ||||||||
Other accounting standards updates effective after March 31, 2015, are not expected to have a material effect on the company’s unaudited condensed consolidated financial position, annual results of operations and/or cash flows. | ||||||||
Shareholders' Equity | ||||||||
The company records the difference between the cost of shares repurchased and their par value as well as tax withholding in excess of related stock compensation expense as a reduction of paid-in capital to the extent available and then as a reduction of retained earnings. | ||||||||
Accumulated Other Comprehensive Loss | ||||||||
The components of accumulated other comprehensive loss are as follows: | ||||||||
$ in millions | March 31, | December 31, | ||||||
2015 | 2014 | |||||||
Unamortized benefit plan costs, net of tax benefit of $3,336 as of March 31, 2015 and $3,395 as of December 31, 2014 | $ | (5,220 | ) | $ | (5,316 | ) | ||
Cumulative translation adjustment | (70 | ) | (41 | ) | ||||
Net unrealized gain on marketable securities and cash flow hedges, net of tax | — | 1 | ||||||
Total accumulated other comprehensive loss | $ | (5,290 | ) | $ | (5,356 | ) | ||
Unamortized benefit plan costs consist primarily of net after-tax actuarial losses totaling $5.5 billion and $5.6 billion as of March 31, 2015 and December 31, 2014, respectively. Net actuarial gains or losses are re-determined annually or upon remeasurement events and principally arise from changes in the interest 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 $96 million and $38 million, net of taxes, for the three months ended March 31, 2015 and 2014, 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 8 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 three months ended March 31, 2015 and 2014, 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 (Unaudited) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Equity [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 2.8 million shares and 4.1 million shares for the three months ended March 31, 2015 and 2014, respectively. The weighted-average diluted shares outstanding would exclude stock options with exercise prices in excess of the average market price of the company's common stock during the period; however, we had no such stock options outstanding for the three months ended March 31, 2015 and 2014. | ||||||||||||||||||||
Share Repurchases | ||||||||||||||||||||
The table below summarizes the company’s share repurchases: | ||||||||||||||||||||
Shares Repurchased | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||
Repurchase Program Authorization Date | Amount | Total Shares Retired (in millions) | Average | Date Completed | Three Months Ended March 31 | |||||||||||||||
Authorized | Price | |||||||||||||||||||
(in millions) | Per Share(3) | 2015 | 2014 | |||||||||||||||||
May 15, 2013 (1) | $ | 4,000 | 32.8 | $ | 121.97 | Mar-15 | 2.7 | 4.8 | ||||||||||||
December 4, 2014(2) | $ | 3,000 | 2.6 | $ | 161.18 | 2.6 | — | |||||||||||||
-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. | |||||||||||||||||||
-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"). Repurchases under the 2014 Repurchase Program commenced in March 2015 upon the completion of the company's 2013 Repurchase Program. As of March 31, 2015, repurchases under the 2014 Repurchase Program totaled $0.4 billion; $2.6 billion remained under this share repurchase authorization. By its terms, the 2014 Repurchase Program 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. |
Segment_Information_Unaudited
Segment Information (Unaudited) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
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. | ||||||||
The following table presents sales and operating income by segment: | ||||||||
Three Months Ended March 31 | ||||||||
$ in millions | 2015 | 2014 | ||||||
Sales | ||||||||
Aerospace Systems | $ | 2,498 | $ | 2,420 | ||||
Electronic Systems | 1,681 | 1,644 | ||||||
Information Systems | 1,574 | 1,577 | ||||||
Technical Services | 770 | 697 | ||||||
Intersegment eliminations | (566 | ) | (490 | ) | ||||
Total sales | 5,957 | 5,848 | ||||||
Operating income | ||||||||
Aerospace Systems | 315 | 324 | ||||||
Electronic Systems | 247 | 268 | ||||||
Information Systems | 166 | 162 | ||||||
Technical Services | 68 | 68 | ||||||
Intersegment eliminations | (61 | ) | (65 | ) | ||||
Total segment operating income | 735 | 757 | ||||||
Reconciliation to total operating income: | ||||||||
Net FAS/CAS pension adjustment | 83 | 110 | ||||||
Unallocated corporate expenses | (38 | ) | (22 | ) | ||||
Total operating income | $ | 780 | $ | 845 | ||||
Net FAS/CAS Pension Adjustment | ||||||||
The net FAS (GAAP Financial Accounting Standards)/CAS (U.S. Government Cost Accounting Standards) 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. The decrease in net FAS/CAS pension adjustment is principally due to an increase in FAS expense, as a result of changes in our FAS discount rate and mortality assumptions as of December 31, 2014. The increase in FAS expense was partially offset by higher CAS expense resulting from updated mortality assumptions. | ||||||||
Unallocated Corporate Expenses | ||||||||
Unallocated corporate expenses include the portion of corporate expenses not considered allowable or allocable under applicable CAS regulations and the Federal Acquisition Regulation, 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. Unallocated corporate expenses increased for the three months ended March 31, 2015 due to higher deferred state taxes resulting from the company's $500 million discretionary pension contribution in the quarter. |
Income_Taxes_Unaudited
Income Taxes (Unaudited) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Income Tax Disclosure [Abstract] | ||||||||
INCOME TAXES | INCOME TAXES | |||||||
Three Months Ended March 31 | ||||||||
$ in millions | 2015 | 2014 | ||||||
Federal and foreign income tax expense | $ | 220 | $ | 207 | ||||
Effective income tax rate | 31.3 | % | 26.3 | % | ||||
The company's higher effective tax rate for the three months ended March 31, 2015, reflects the absence of a $51 million benefit for the partial resolution of the Internal Revenue Service (IRS) examination of our 2007-2009 tax returns recognized in the first quarter of 2014. The remaining matters related to our 2007 - 2009 tax returns and issues related to our 2010 - 2011 tax returns are currently before the IRS Office of Appeals. The company believes it is reasonably possible that within the next 12 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 of our unrecognized tax benefits up to $75 million and a reduction of our income tax expense up to $40 million. | ||||||||
The company files income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions. The IRS is conducting an examination of the company's tax returns for the years 2012 and 2013. Open tax years related to state and foreign jurisdictions remain subject to examination, but are not expected to have a material effect on the company’s unaudited condensed consolidated financial statements. |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments (Unaudited) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
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: | ||||||||||||||||
March 31, 2015 | December 31, 2014 | |||||||||||||||
$ in millions | Carrying | Fair | Carrying | Fair | ||||||||||||
Value | Value | Value | Value | |||||||||||||
Financial Assets (Liabilities) | ||||||||||||||||
Marketable securities | ||||||||||||||||
Trading | $ | 327 | $ | 327 | $ | 331 | $ | 331 | ||||||||
Available-for-sale | 4 | 4 | 5 | 5 | ||||||||||||
Derivatives | 6 | 6 | 1 | 1 | ||||||||||||
Long-term debt, including current portion | $ | (6,528 | ) | $ | (7,492 | ) | $ | (5,928 | ) | $ | (6,726 | ) | ||||
There were no transfers of financial instruments between the three levels of fair value hierarchy during the three months ended March 31, 2015. | ||||||||||||||||
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 March 31, 2015 and December 31, 2014, marketable securities of $331 million and $336 million, respectively, were included in other non-current assets in the unaudited condensed 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 March 31, 2015 and December 31, 2014, was $140 million and $146 million, respectively. The portion of notional value designated as cash flow hedges at March 31, 2015 and December 31, 2014, was $24 million and $34 million, respectively. | ||||||||||||||||
Derivative financial instruments are recognized as assets or liabilities in the unaudited condensed consolidated 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 March 31, 2015 and December 31, 2014, 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. | ||||||||||||||||
Debt Issuance | ||||||||||||||||
In February 2015, the company issued $600 million of unsecured senior notes due April 15, 2045 with a fixed interest rate of 3.85 percent (the Notes). Interest on the Notes is payable semi-annually in arrears. The Notes are subject to redemption at the company's discretion at any time, or from time to time, prior to maturity in whole or in part at the greater of the principal amount of the Notes or an applicable "make-whole" amount, plus accrued and unpaid interest. We are using the net proceeds from this offering for general corporate purposes, including the funding of a $500 million voluntary contribution to our pension plans in the first quarter of 2015 and debt repayment. |
Investigations_Claims_and_Liti
Investigations, Claims and Litigation (Unaudited) | 3 Months Ended |
Mar. 31, 2015 | |
Disclosure Text Block Supplement [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 $34 million as of March 31, 2015), 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 $27 million as of March 31, 2015) in damages. In October 2013, ECT asserted an additional damage claim of R$22 million (the equivalent of approximately $7 million as of March 31, 2015). 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 $34 million as of March 31, 2015), 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. The Orange County Water District's opening brief is due on June 8, 2015. | |
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 unaudited condensed consolidated financial position as of March 31, 2015, or its annual results of operations or cash flows. |
Commitments_and_Contingencies_
Commitments and Contingencies (Unaudited) | 3 Months Ended |
Mar. 31, 2015 | |
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 March 31, 2015, 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 unaudited condensed consolidated financial position as of March 31, 2015, or its annual results of operations and/or cash flows. | |
Environmental Matters | |
The estimated cost to complete remediation at certain current or formerly owned or leased sites has been accrued where the company believes, 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. As of March 31, 2015, management estimates the range of reasonably possible future costs for environmental remediation is between $362 million and $795 million, before considering the amount recoverable through overhead charges on U.S. Government contracts. At March 31, 2015, the amount within that range accrued for probable environmental remediation costs was $377 million, of which $148 million is recorded in other current liabilities and $229 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 March 31, 2015, $74 million is deferred in inventoried costs and $119 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 unaudited condensed consolidated financial position as of March 31, 2015, 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 March 31, 2015, there were $270 million of stand-by letters of credit and guarantees and $160 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 unaudited condensed consolidated financial position as of March 31, 2015, or its annual results of operations and/or cash flows. | |
Operating Leases | |
Rental expense for operating leases was $81 million and $72 million for the three months ended March 31, 2015 and 2014, respectively. These amounts are net of immaterial amounts of sublease rental income. |
Retirement_Benefits_Unaudited
Retirement Benefits (Unaudited) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||
RETIREMENT BENEFITS | RETIREMENT BENEFITS | |||||||||||||||
The cost to the company of its retirement plans is shown in the following table: | ||||||||||||||||
Three Months Ended March 31 | ||||||||||||||||
Pension | Medical and | |||||||||||||||
Benefits | Life Benefits | |||||||||||||||
$ in millions | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Components of net periodic benefit cost | ||||||||||||||||
Service cost | $ | 121 | $ | 114 | $ | 9 | $ | 8 | ||||||||
Interest cost | 306 | 315 | 24 | 26 | ||||||||||||
Expected return on plan assets | (494 | ) | (467 | ) | (22 | ) | (21 | ) | ||||||||
Amortization of: | ||||||||||||||||
Prior service credit | (15 | ) | (15 | ) | (7 | ) | (7 | ) | ||||||||
Net loss from previous years | 171 | 82 | 6 | 2 | ||||||||||||
Net periodic benefit cost | $ | 89 | $ | 29 | $ | 10 | $ | 8 | ||||||||
Employer Contributions | ||||||||||||||||
The company sponsors defined benefit pension and post-retirement plans, as well as defined contribution plans. We fund our defined benefit pension plans annually in a manner consistent with the Employee Retirement Income Security Act of 1974, as amended by the Pension Protection Act of 2006. Additionally, in the first quarter of 2015, we made a voluntary pension contribution of $500 million. | ||||||||||||||||
Contributions made by the company to its retirement plans are as follows: | ||||||||||||||||
Three Months Ended March 31 | ||||||||||||||||
$ in millions | 2015 | 2014 | ||||||||||||||
Defined benefit pension plans | $ | 525 | $ | 21 | ||||||||||||
Post-retirement benefit plans | 6 | 7 | ||||||||||||||
Defined contribution plans | 85 | 73 | ||||||||||||||
Stock_Compensation_Plans_and_O
Stock Compensation Plans and Other Compensation Arrangements (Unaudited) | 3 Months Ended |
Mar. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK COMPENSATION PLANS AND OTHER COMPENSATION ARRANGEMENTS | STOCK COMPENSATION PLANS AND OTHER COMPENSATION ARRANGEMENTS |
Stock Awards | |
In February 2015, the company granted certain employees 0.2 million restricted stock rights (RSRs) and 0.4 million restricted performance stocks rights (RPSRs) under the company's long-term incentive stock plan, with a grant date aggregate fair value of $87 million. 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, 2017. | |
Cash Awards | |
In February 2015, the company granted certain employees cash units (CUs) and cash performance units (CPUs) with a minimum aggregate payout amount of $34 million and a maximum aggregate payout amount of $190 million. 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, 2017. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | Principles of Consolidation and Reporting |
These unaudited condensed consolidated financial statements include the accounts of Northrop Grumman Corporation and subsidiaries (herein referred to as "Northrop Grumman," the "company," "we," "us," or "our"). 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. | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements are prepared in accordance with the rules of the Securities and Exchange Commission (SEC) for interim reporting purposes. These financial statements include adjustments of a normal recurring nature considered necessary by management for a fair presentation of the company's unaudited condensed consolidated financial position, results of operations and cash flows. |
The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the information contained in the company’s 2014 Annual Report on Form 10-K. | |
Fiscal Period Policy | The quarterly information is labeled using a calendar convention; that is, first quarter is consistently labeled as ending on March 31, second quarter as ending on June 30 and third quarter as ending on September 30. 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 these quarter-end dates 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. |
Accounting Estimates | Accounting Estimates |
The accompanying unaudited condensed consolidated 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 sales 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 | The majority of our sales are derived from long-term contracts with the United States (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. 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. |
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 unaudited condensed consolidated financial position or results of operations. Where such changes occur, we generally disclose the nature, underlying conditions and financial impact of the change. | |
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; however, a delay in the effective date is currently being considered by the FASB, which we expect will result in at least a one year deferral. ASU 2014-09 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 cash flows. |
Other accounting standards updates effective after | |
Stockholders' Equity | The company records the difference between the cost of shares repurchased and their par value as well as tax withholding in excess of related stock compensation expense as a reduction of paid-in capital to the extent available and then as a reduction of retained earnings. |
Pension and Other Postretirement Plans | Net actuarial gains or losses are re-determined annually or upon remeasurement events and principally arise from changes in the interest rate used to discount our benefit obligations and differences between expected and actual returns on plan assets. |
We fund our defined benefit pension plans annually in a manner consistent with the Employee Retirement Income Security Act of 1974, as amended by the Pension Protection Act of 2006. | |
Comprehensive Income | 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. | |
Investments in Marketable Securities | 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. | |
Derivative Financial Instruments and Hedging Activities | 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 March 31, 2015 and December 31, 2014, were not material. |
Derivative financial instruments are recognized as assets or liabilities in the unaudited condensed consolidated 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. | |
Fair Value of Long-term Debt | 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. | |
Guarantees of Subsidiary Performance Obligations | 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. | |
U.S. Government Cost Claims | 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. | |
Environmental Matters | Environmental Matters |
The estimated cost to complete remediation at certain current or formerly owned or leased sites has been accrued where the company believes, 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. | |
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. | |
These amounts are evaluated for recoverability on a routine basis. |
Basis_of_Presentation_Unaudite1
Basis of Presentation (Unaudited) (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||
Schedule of Change in Accounting Estimate [Table Text Block] | The effect of aggregate net changes in contract estimates recognized using the cumulative catch-up method of accounting is as follows: | |||||||
Three Months Ended March 31 | ||||||||
$ in millions, except per share data | 2015 | 2014 | ||||||
Operating Income | $ | 187 | $ | 197 | ||||
Net Earnings (1) | 122 | 128 | ||||||
Diluted earnings per share (1) | 0.61 | 0.58 | ||||||
(1) Based on statutory tax rates | ||||||||
Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss are as follows: | |||||||
$ in millions | March 31, | December 31, | ||||||
2015 | 2014 | |||||||
Unamortized benefit plan costs, net of tax benefit of $3,336 as of March 31, 2015 and $3,395 as of December 31, 2014 | $ | (5,220 | ) | $ | (5,316 | ) | ||
Cumulative translation adjustment | (70 | ) | (41 | ) | ||||
Net unrealized gain on marketable securities and cash flow hedges, net of tax | — | 1 | ||||||
Total accumulated other comprehensive loss | $ | (5,290 | ) | $ | (5,356 | ) |
Earnings_Per_Share_Share_Repur1
Earnings Per Share, Share Repurchases and Dividends on Common Stock (Unaudited) (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||
Share Repurchases | The table below summarizes the company’s share repurchases: | |||||||||||||||||||
Shares Repurchased | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||
Repurchase Program Authorization Date | Amount | Total Shares Retired (in millions) | Average | Date Completed | Three Months Ended March 31 | |||||||||||||||
Authorized | Price | |||||||||||||||||||
(in millions) | Per Share(3) | 2015 | 2014 | |||||||||||||||||
May 15, 2013 (1) | $ | 4,000 | 32.8 | $ | 121.97 | Mar-15 | 2.7 | 4.8 | ||||||||||||
December 4, 2014(2) | $ | 3,000 | 2.6 | $ | 161.18 | 2.6 | — | |||||||||||||
-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. | |||||||||||||||||||
-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"). Repurchases under the 2014 Repurchase Program commenced in March 2015 upon the completion of the company's 2013 Repurchase Program. As of March 31, 2015, repurchases under the 2014 Repurchase Program totaled $0.4 billion; $2.6 billion remained under this share repurchase authorization. By its terms, the 2014 Repurchase Program will expire when we have used all authorized funds for repurchases. | |||||||||||||||||||
-3 | Includes commissions paid. |
Segment_Information_Unaudited_
Segment Information (Unaudited) (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Segment Reporting [Abstract] | ||||||||
Sales and operating income by segment | The following table presents sales and operating income by segment: | |||||||
Three Months Ended March 31 | ||||||||
$ in millions | 2015 | 2014 | ||||||
Sales | ||||||||
Aerospace Systems | $ | 2,498 | $ | 2,420 | ||||
Electronic Systems | 1,681 | 1,644 | ||||||
Information Systems | 1,574 | 1,577 | ||||||
Technical Services | 770 | 697 | ||||||
Intersegment eliminations | (566 | ) | (490 | ) | ||||
Total sales | 5,957 | 5,848 | ||||||
Operating income | ||||||||
Aerospace Systems | 315 | 324 | ||||||
Electronic Systems | 247 | 268 | ||||||
Information Systems | 166 | 162 | ||||||
Technical Services | 68 | 68 | ||||||
Intersegment eliminations | (61 | ) | (65 | ) | ||||
Total segment operating income | 735 | 757 | ||||||
Reconciliation to total operating income: | ||||||||
Net FAS/CAS pension adjustment | 83 | 110 | ||||||
Unallocated corporate expenses | (38 | ) | (22 | ) | ||||
Total operating income | $ | 780 | $ | 845 | ||||
Income_Taxes_Unaudited_Tables
Income Taxes (Unaudited) (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Income Tax Disclosure [Abstract] | ||||||||
Schedule of Income Tax Expense and Effective Income Tax Rates | ||||||||
Three Months Ended March 31 | ||||||||
$ in millions | 2015 | 2014 | ||||||
Federal and foreign income tax expense | $ | 220 | $ | 207 | ||||
Effective income tax rate | 31.3 | % | 26.3 | % |
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Unaudited) (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||
Fair value information of assets and liabilities measured at fair value on a recurring basis | The following table presents comparative carrying value and fair value information for our financial assets and liabilities: | |||||||||||||||
March 31, 2015 | December 31, 2014 | |||||||||||||||
$ in millions | Carrying | Fair | Carrying | Fair | ||||||||||||
Value | Value | Value | Value | |||||||||||||
Financial Assets (Liabilities) | ||||||||||||||||
Marketable securities | ||||||||||||||||
Trading | $ | 327 | $ | 327 | $ | 331 | $ | 331 | ||||||||
Available-for-sale | 4 | 4 | 5 | 5 | ||||||||||||
Derivatives | 6 | 6 | 1 | 1 | ||||||||||||
Long-term debt, including current portion | $ | (6,528 | ) | $ | (7,492 | ) | $ | (5,928 | ) | $ | (6,726 | ) |
Retirement_Benefits_Unaudited_
Retirement Benefits (Unaudited) (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||
Components of net periodic benefit cost | The cost to the company of its retirement plans is shown in the following table: | |||||||||||||||
Three Months Ended March 31 | ||||||||||||||||
Pension | Medical and | |||||||||||||||
Benefits | Life Benefits | |||||||||||||||
$ in millions | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Components of net periodic benefit cost | ||||||||||||||||
Service cost | $ | 121 | $ | 114 | $ | 9 | $ | 8 | ||||||||
Interest cost | 306 | 315 | 24 | 26 | ||||||||||||
Expected return on plan assets | (494 | ) | (467 | ) | (22 | ) | (21 | ) | ||||||||
Amortization of: | ||||||||||||||||
Prior service credit | (15 | ) | (15 | ) | (7 | ) | (7 | ) | ||||||||
Net loss from previous years | 171 | 82 | 6 | 2 | ||||||||||||
Net periodic benefit cost | $ | 89 | $ | 29 | $ | 10 | $ | 8 | ||||||||
Employer contributions to retirement plans | Contributions made by the company to its retirement plans are as follows: | |||||||||||||||
Three Months Ended March 31 | ||||||||||||||||
$ in millions | 2015 | 2014 | ||||||||||||||
Defined benefit pension plans | $ | 525 | $ | 21 | ||||||||||||
Post-retirement benefit plans | 6 | 7 | ||||||||||||||
Defined contribution plans | 85 | 73 | ||||||||||||||
Basis_of_Presentation_Unaudite2
Basis of Presentation (Unaudited) (Details 1) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Accumulated Other Comprehensive Loss | |||
Unamortized benefit plan costs, net of tax benefit of $3,336 as of March 31, 2015 and $3,395 as of December 31, 2014 | ($5,220) | ($5,316) | |
Cumulative translation adjustment | -70 | -41 | |
Net unrealized gain on marketable securities and cash flow hedges, net of tax | 0 | 1 | |
Total accumulated other comprehensive loss | -5,290 | -5,356 | |
Unamortized benefit plan costs - Tax Benefit (expense) | 3,336 | 3,395 | |
Unamortized benefit plan costs, net actuarial losses, after-tax | 5,500 | 5,600 | |
Unamortized benefit plan costs, reclassified from other comprehensive income to net earnings | $96 | $38 |
Basis_of_Presentation_Unaudite3
Basis of Presentation (Unaudited) Basis of Presentation (Unaudited) (Details 2) (USD $) | 3 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Change in Accounting Estimate [Line Items] | ||
Operating Income | $780 | $845 |
Net earnings | 484 | 579 |
Diluted earnings per share | $2.41 | $2.63 |
Contracts Accounted for under Percentage of Completion [Member] | ||
Change in Accounting Estimate [Line Items] | ||
Operating Income | 187 | 197 |
Net earnings | $122 | $128 |
Diluted earnings per share | $0.61 | $0.58 |
Earnings_Per_Share_Share_Repur2
Earnings Per Share, Share Repurchases and Dividends on Common Stock #1 (Unaudited) (Details) (USD $) | 3 Months Ended | 22 Months Ended | 4 Months Ended | |||
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2015 | 15-May-13 | Dec. 04, 2014 |
May 2013 Share Repurchase Program Original Authorization | ||||||
Share Repurchase [Line Items] | ||||||
Amount Authorized | $4,000 | |||||
Total Shares Retired | 32.8 | |||||
Average Cost Per Share | $121.97 | |||||
Shares Repurchased | 2.7 | 4.8 | ||||
December 2014 Share Repurchase Original Authorization [Domain] | ||||||
Share Repurchase [Line Items] | ||||||
Amount Authorized | 3,000 | |||||
Total Shares Retired | 2.6 | |||||
Average Cost Per Share | $161.18 | |||||
Shares Repurchased | 2.6 | 0 | ||||
Share Repurchases - Notes to Table | ||||||
Shares repurchased amount | 400 | 400 | 400 | |||
Amount remaining under authorization for share repurchases | 2,600 | $2,600 | $2,600 |
Earnings_Per_Share_Share_Repur3
Earnings Per Share, Share Repurchases and Dividends on Common Stock #2 (Unaudited) (Details) (USD $) | 1 Months Ended | 3 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | 31-May-14 | 31-May-13 | Mar. 31, 2015 | Mar. 31, 2014 |
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Dilutive effect of of stock awards and options granted to employees under stock-based compensation plans | 2.8 | 4.1 | ||
Anti-dilutive stock options excluded from computation of earnings per share | 0 | 0 | ||
Common stock dividends per share, declared (in dollars per share) | $0.70 | $0.61 | $0.70 | $0.61 |
Increase in quarterly common stock dividend (percent) | 15.00% |
Segment_Information_Unaudited_1
Segment Information (Unaudited) (Details 1) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
segment | ||
Segment Reporting Information [Line Items] | ||
Number of reportable segments | 4 | |
Sales | $5,957 | $5,848 |
Operating income | 780 | 845 |
Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Operating income | 735 | 757 |
Operating Segments [Member] | Aerospace Systems [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | 2,498 | 2,420 |
Operating income | 315 | 324 |
Operating Segments [Member] | Electronic Systems [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | 1,681 | 1,644 |
Operating income | 247 | 268 |
Operating Segments [Member] | Information Systems [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | 1,574 | 1,577 |
Operating income | 166 | 162 |
Operating Segments [Member] | Technical Services [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | 770 | 697 |
Operating income | 68 | 68 |
Intersegment Eliminations [Member] | ||
Segment Reporting Information [Line Items] | ||
Sales | 566 | 490 |
Operating income | 61 | 65 |
Net FAS/CAS pension adjustment Income (Expense) [Member] | ||
Segment Reporting Information [Line Items] | ||
Operating income | 83 | 110 |
Corporate, Non-Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Operating income | ($38) | ($22) |
Segment_Information_Unaudited_2
Segment Information (Unaudited) Segment Information (Unaudited) (Details 2) (Pension Plan [Member], USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Contributions by Employer | $525 | $21 |
Voluntary Contributions [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Contributions by Employer | $500 |
Income_Taxes_Unaudited_Details
Income Taxes (Unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2016 |
Income Tax Contingency [Line Items] | |||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | ($75) | ||
Income Tax Expense (Benefit) | 220 | 207 | |
Effective income tax rate | 31.30% | 26.30% | |
Tax Adjustments, Settlements, and Unusual Provisions | 51 | ||
Maximum | Scenario, Forecast [Member] | |||
Income Tax Contingency [Line Items] | |||
Tax Adjustments, Settlements, and Unusual Provisions | ($40) |
Fair_Value_of_Financial_Instru2
Fair Value of Financial Instruments #1 (Unaudited) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Carrying Value | ||
Marketable Securities | ||
Trading securities | $327 | $331 |
Available-for-sale securities | 4 | 5 |
Derivatives | 6 | 1 |
Long-term debt, including current portion | -6,528 | -5,928 |
Fair Value | ||
Marketable Securities | ||
Trading securities | 327 | 331 |
Available-for-sale securities | 4 | 5 |
Derivatives | 6 | 1 |
Long-term debt, including current portion | ($7,492) | ($6,726) |
Fair_Value_of_Financial_Instru3
Fair Value of Financial Instruments #2 (Unaudited) (Details) (USD $) | 1 Months Ended | ||
In Millions, unless otherwise specified | Feb. 28, 2015 | Mar. 31, 2015 | Dec. 31, 2014 |
Investments in Marketable Securities [Abstract] | |||
Marketable Securities, Noncurrent | $331 | $336 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Derivative, Notional Amount | 140 | 146 | |
Senior Notes [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Debt Instrument, Face Amount | 600 | ||
Thirty Year Term [Member] | Senior Notes [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 3.85% | ||
Thirty Year Term [Member] | April 45 Maturity [Domain] | Senior Notes [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Debt Instrument, Maturity Date | 15-Apr-45 | ||
Cash Flow Hedging [Member] | |||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Derivative, Notional Amount | $24 | $34 |
Fair_Value_of_Financial_Instru4
Fair Value of Financial Instruments (Unaudited) Fair Value of Financial Instruments #3 (Unaudited) (Details) (Pension Plan [Member], USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Contributions by Employer | $525 | $21 |
Voluntary Contributions [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Contributions by Employer | $500 |
Investigations_Claims_and_Liti1
Investigations, Claims and Litigation (Unaudited) (Details) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | 4-May-12 | Mar. 31, 2015 | Mar. 31, 2015 | 4-May-12 | Dec. 31, 2007 | Mar. 31, 2015 | Aug. 08, 2013 | Mar. 31, 2015 | Mar. 31, 2015 | Mar. 31, 2015 | Mar. 31, 2015 | Mar. 31, 2015 | Mar. 31, 2015 |
In Millions, unless otherwise specified | USD ($) | USD ($) | United States Postal Service | Unpaid Portions of Contract Price and Direct Costs Incurred [Member] | Solystic Matter [Member] | Solystic Matter [Member] | Acts and Omissions with Adverse Affects on Performance and Obligations [Member] | United States Postal Service | United States Postal Service | Solystic Matter [Member] | Solystic Matter [Member] | Solystic Matter [Member] | Initial Claim [Member] | Initial Claim [Member] | Incremental claim [Member] | Incremental claim [Member] |
USD ($) | United States Postal Service | USD ($) | EUR (€) | United States Postal Service | USD ($) | False Claims Act | Defendant | USD ($) | BRL | Solystic Matter [Member] | Solystic Matter [Member] | Solystic Matter [Member] | Solystic Matter [Member] | |||
USD ($) | USD ($) | Threatened Litigation | USD ($) | BRL | USD ($) | BRL | ||||||||||
USD ($) | ||||||||||||||||
Loss Contingencies | ||||||||||||||||
Contract award | $875 | |||||||||||||||
Receivables, unpaid long-term contracts | 3,131 | 2,806 | 63 | |||||||||||||
Gain contingency, unrecorded amount | 34 | 31 | 115 | |||||||||||||
Claims asserted, range of possible loss, maximum | 795 | 410 | ||||||||||||||
Loss contingency, estimate of possible loss | $179 | $34 | 111 | $27 | 89 | $7 | 22 | |||||||||
Loss Contingency, Number of Additional Defendants | 2 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Unaudited) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Site Contingency [Line Items] | ||
Low-end of the range of reasonably possible future costs for environmental remediation sites | $362 | |
High-end of the range of reasonably possible future costs for environmental remediation sites | 795 | |
Accrual for Environmental Remediation Costs | 377 | |
Financial Arrangements | ||
Standby Unused Letters Of Credit and bank guarantees | 270 | |
Surety Bond Outstanding | 160 | |
Operating leases | ||
Rental expense for operating leases, net of immaterial amounts of sublease rental income | 81 | 72 |
Other Current Liabilities [Member] | ||
Site Contingency [Line Items] | ||
Accrual for Environmental Remediation Costs | 148 | |
Other Noncurrent Liabilities [Member] | ||
Site Contingency [Line Items] | ||
Accrual for Environmental Remediation Costs | 229 | |
Inventoried Costs [Member] | ||
Site Contingency [Line Items] | ||
Accrual for Environmental Remediation Costs | 74 | |
Other Noncurrent Assets [Member] | ||
Site Contingency [Line Items] | ||
Accrual for Environmental Remediation Costs | $119 |
Retirement_Benefits_Unaudited_1
Retirement Benefits (Unaudited) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract] | ||
Defined contribution plan, employer contributions | $85 | $73 |
Pension Benefits | ||
Components of Net Periodic Benefit Cost | ||
Service cost | 121 | 114 |
Interest cost | 306 | 315 |
Expected return on plan assets | -494 | -467 |
Amortization of: | ||
Prior service credit | -15 | -15 |
Net loss from previous years | 171 | 82 |
Net periodic benefit cost | 89 | 29 |
Employer Contributions | ||
Defined benefit plan, employer contributions | 525 | 21 |
Pension Benefits | Voluntary Contributions [Member] | ||
Employer Contributions | ||
Defined benefit plan, employer contributions | 500 | |
Medical and Life Benefits | ||
Components of Net Periodic Benefit Cost | ||
Service cost | 9 | 8 |
Interest cost | 24 | 26 |
Expected return on plan assets | -22 | -21 |
Amortization of: | ||
Prior service credit | -7 | -7 |
Net loss from previous years | 6 | 2 |
Net periodic benefit cost | 10 | 8 |
Employer Contributions | ||
Defined benefit plan, employer contributions | $6 | $7 |
Stock_Compensation_Plans_and_O1
Stock Compensation Plans and Other Compensation Arrangements (Unaudited) (Details) (USD $) | 1 Months Ended | 3 Months Ended |
In Millions, unless otherwise specified | Feb. 28, 2015 | Mar. 31, 2015 |
Restricted Stock Rights | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares granted | 0.2 | |
Vesting period | 3 years | |
Restricted Performance Stock Rights | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares granted | 0.4 | |
Vesting period | 3 years | |
Restricted Stock Rights and Restricted Performance Stock Rights | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense related to unvested awards | 87 | |
Cash Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Cash Performance Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Cash Units and Cash Performance Units | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense related to unvested awards | 34 | |
Cash Units and Cash Performance Units | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense related to unvested awards | 190 |