Northrop Grumman 2013 Annual Report Download - page 3

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NORTHROP GRUMMAN 2013 ANNUAL REPORT
DEAR FELLOW SHAREHOLDERS
“We are proud to have achieved strong 2013
results. Our attention remains keenly focused
on driving performance for our shareholders,
customers and employees.”
Northrop Grumman achieved strong financial performance in
2013, reflecting the results of superior program performance,
affordability initiatives, innovation, and portfolio decisions
across our four businesses. Financial highlights in 2013 included:
increased earnings per share from continuing operations by
7 percent to $8.35 per diluted share; a record pension-adjusted
operating margin rate of 12 percent; and free cash flow of $2.4
billion before discretionary pension contributions. Through share
repurchases and dividends, we returned $2.9 billion in cash to our
shareholders, or approximately 140 percent of 2013 reported
free cash ow.
Since the end of 2009,
sales have declined about
11 percent, due in part to
portfolio reshaping.
During that same period,
our focus on performance has generated a 17 percent increase in
absolute segment operating income and more than a 30 percent
improvement in segment operating margin rate. As a result, in
combination with effective cash deployment, earnings per share
from continuing operations have grown by a compound annual
growth rate of 17 percent. This improvement was primarily driven
by superior program performance and portfolio shaping, while we
also significantly reduced our cost structure.
In 2013, we expanded our business with U.S. allies around the globe,
increasing our international sales by approximately 20 percent to
$2.5 billion; slightly more than 10 percent of total revenue.
For both U.S. and global markets, our strategy remains focused on
four key business areas where we believe our customers will invest
most aggressively for the future – unmanned systems, C4ISR, cyber
and logistics and modernization – as well as manned strike aircraft.
We are cognizant of our responsibility to the communities in
which we work and live. In 2013, Northrop Grumman and the
Northrop Grumman Foundation contributed a total of $38.1
million to philanthropic
efforts, supporting science,
technology, engineering and
math programs and assisting
veterans, service members
and their families. As we continue to expand our global presence,
our philanthropic commitment will become increasingly global.
I encourage you to take a few minutes to read our 2013 Corporate
Responsibility report.
We are proud to have achieved strong 2013 results while
demonstrating the highest levels of ethics and integrity. Our
attention remains keenly focused on driving performance for our
shareholders, customers and employees. We thank you for your
continued investment in Northrop Grumman.
WES BUSH
Chairman, CEO and President
March 14, 2014
PAG E 1