Northrop Grumman 2015 Annual Report Download

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ANNUAL REPORT

Table of contents

  • Page 1
    A N N U A L R E P O R T

  • Page 2
    ... cash DiviDenDs DeclareD (per common share) aDjusteD cash ProviDeD by oPerations ( $ in millions ) aDjusteD free cash flow from oPerations ( $ in millions ) These selected financial highlights include references to adjusted cash provided by operations and adjusted free cash flow from operations...

  • Page 3
    ...financial results, northrop grumman captured several important new business awards, both within the united states and internationally, as we continued to focus on our core capabilities-autonomous systems, cyber, c4isr, logistics and strike. the estimated value of contract awards recorded during 2015...

  • Page 4
    ... intelligence so that Payload they start products; secure, enterprise stay networked secure and support return services; secure. health it solutions; fraud prevention systems; and public safety systems. our systems help to project force and protect critical data. northroP grumman 2015 annual rePort...

  • Page 5
    ... stealth bomber and america's new long-range strike bomber; our mission systems on f/a-18 and f-35; and our litening advanced targeting systems, and ground laser target Designators, provide a powerful projection of force. of virtual projection of force. northroP grumman 2015 annual rePort Page 3

  • Page 6
    ...Information Systems sheila c. chestoN Corporate Vice President and General Counsel bOaRd Of diRectORs (as of december 31, 2015) wesley g. bush Chairman, Chief Executive Officer and President, Northrop Grumman Corporation williaM h. herNaNdeZ 2 3†Former Senior Vice President and Chief Financial...

  • Page 7
    ...x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-16411 NORTHROP...

  • Page 8
    ... Financial Position Consolidated Statements of Cash Flows Consolidated Statements of Changes in Shareholders' Equity Notes to Consolidated Financial Statements 1. Summary of Significant Accounting Policies 2. Earnings Per Share, Share Repurchases and Dividends on Common Stock 3. Segment Information...

  • Page 9
    ... Firm on Internal Control over Financial Reporting PTRT III PTRT III Directors, Executive Officers and Corporate Governance Directors, Executive Officers and Corporate Governance Executive Compensation Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 10
    ...of the financial information contained in this report. TEROSPTCE SYSTEMS Aerospace Systems, headquartered in Redondo Beach, California, is a leader in the design, development, integration and production of manned aircraft, unmanned systems, spacecraft, high-energy laser systems, microelectronics and...

  • Page 11
    ...the Common Mission Management System, providing high performance service based on ground control solutions enabling unmanned mission capabilities. Military Aircraft Systems - designs, develops, manufactures, and integrates airborne C4ISR, electronic warfare mission systems, and long range strike and...

  • Page 12
    ..., state, international and commercial customers. Products and services focus on the fields of command and control (C2), communications, cyber, air and missile defense, intelligence processing, civil security, health technology and government support systems. The segment consists of seven business...

  • Page 13
    ...civilian information technology (IT) solutions, civil financial operations, public safety systems, law enforcement and state programs. This business is a provider in global homeland security and public safety, federal law enforcement information sharing and analysis, and IT systems and services that...

  • Page 14
    ... financial statements in Part II, Item 8. No single program accounted for more than ten percent of total sales during any period presented. See Risk Factors in Part I, Item 1A. COMPETITIVE CONDITIONS We compete with many companies in the defense, intelligence and federal markets. BAE Systems...

  • Page 15
    ... a fixed hourly rate for each labor hour charged. See Note 1 to the consolidated financial statements in Part II, Item 8 and Risk Factors in Part I, Item 1A. The following table summarizes sales for the year ended December 31, 2015, recognized by contract type and customer: U.S. Government(1) $ $ 11...

  • Page 16
    ... our SEC filings on the investor relations page of our website. The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other information about SEC registrants, including Northrop Grumman Corporation. You may also obtain these materials at the SEC's Public...

  • Page 17
    ... for the security of our country, the defense industrial base, including Northrop Grumman, and the customers, employees, suppliers, investors, and communities that rely on companies in the defense industrial base. It is likely budget and program decisions made in this environment will have long-term...

  • Page 18
    ... markets. Our international business may also be impacted by changes in foreign national policies and priorities, government budgets, and economic factors more generally, any of which could impact funding for programs or delay purchasing or payment decisions by customers. Global economic conditions...

  • Page 19
    ... of many of our contracts, the estimation of total revenues and costs at completion is complicated and subject to many variables. Incentives, awards or penalties related to performance on contracts are considered in estimating revenue and profit rates when there is sufficient information to assess...

  • Page 20
    ...U.S. Government CAS covered contracts. Future investment performance of plan assets and changes in assumptions associated with our pension and other post-retirement benefit plans could have a material adverse effect on our financial position, results of operations and/or cash flows. â-ª Our earnings...

  • Page 21
    ... some products and services, or may utilize small business contractors or determine to source work internally rather than hiring a contractor. We also are seeing an increasing number of bid protests from unsuccessful bidders on new program awards. Bid protests could result in contract modifications...

  • Page 22
    ...cases, modified, all with potentially significant financial costs to the company. In connection with these cost reduction initiatives, the U.S. Government is also pursuing alternatives to shift additional responsibility and performance risks to the contractor. We (again, including our subcontractors...

  • Page 23
    ... the markets in which we operate are characterized by rapidly changing technologies. The product, program and service needs of our customers change and evolve regularly. Our success in the competitive defense industry depends upon our ability to develop technologically advanced, innovative and cost...

  • Page 24
    ... develop and manufacture technologically advanced and innovative products and services, which are applied by our customers in a variety of environments. Problems and delays in development or delivery, or system failures, as a result of issues with respect to design, technology, intellectual property...

  • Page 25
    ... under U.S. law. If we are unable adequately to control or protect our intellectual property rights against claims by our customers or others, or otherwise procure necessary intellectual property, it could have an adverse effect on our financial position, results of operations and/or cash flows...

  • Page 26
    ..., VA. Locations outside the U.S. include France, Germany and Italy. Information Systems Huntsville, AL; McClellan, Redondo Beach, San Diego and San Jose, CA; Aurora and Colorado Springs, CO; Annapolis Junction, MD; Bellevue, NE; Beavercreek, OH; and Chantilly, Chester, Fairfax, Herndon, McLean and...

  • Page 27
    ...in thousands) Aerospace Systems Electronic Systems Information Systems Technical Services Corporate Total Owned 6,591 8,172 658 142 657 16,220 Leased 5,961 2,316 5,646 1,823 495 16,241 Total 14,482 10,488 6,304 1,966 1,152 34,392 We maintain our properties in good operating condition and believe...

  • Page 28
    ... consolidated reporting system for the New York Stock Exchange Composite Transactions. 2015 January to March April to June July to September October to December HOLDERS The approximate number of common stockholders was 25,444 as of January 28, 2016. DIVIDENDS Quarterly dividends per common share for...

  • Page 29
    ... Announced Plans or Programs 647,990 420,316 486,407 1,554,713 $ $ 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...

  • Page 30
    ...$150 $100 $50 $0 2010 2011 2012 2013 2014 2015 Period Ending Northrop Grumman Corporation S&P Aerospace & Defense Index S&P 500 Index (1) (2) (3) (4) (5) Assumes $100 invested at the close of business on December 31, 2010, in Northrop Grumman Corporation common stock, Standard & Poor's (S&P) 500...

  • Page 31
    ... long-term obligations(4) Financial Metrics Net cash provided by continuing operations Free cash flow from continuing operations(5) Other Information Company-sponsored research and development expenses Total backlog Square footage at year-end (in thousands) Number of employees at year-end (1) 2015...

  • Page 32
    ... I, Item 1A. Operating Performance Tssessment and Reporting We manage and assess our business based on our performance on contracts and programs (typically two or more closely-related contracts). We recognize sales from our portfolio of long-term contracts primarily using the cost-to-cost method of...

  • Page 33
    ... information regarding net FAS/CAS pension adjustment and unallocated corporate expenses, see Note 3 to the consolidated financial statements in Part II, Item 8. 2014 - Operating costs and expenses as a percentage of sales declined in 2014 as compared with 2013, which increased our operating margin...

  • Page 34
    ...net cash provided by operating activities. SEGMENT OPERTTING RESULTS Basis of Presentation At December 31, 2015, the company was aligned in four segments: Aerospace Systems, Electronic Systems, Information Systems and Technical Services. For a more complete description of each segment's products and...

  • Page 35
    ...Net EAC adjustments by segment are presented in the table below: Year Ended December 31 $ in millions Aerospace Systems Electronic Systems Information Systems Technical Services Eliminations Net EAC adjustments $ 2015 358 140 57 39 (14) 580 $ 2014 372 207 73 44 (32) 664 $ 2013 394 312 49 43 (45) 753...

  • Page 36
    ...pension expense Net FAS/CAS pension adjustment Unallocated corporate expenses Other Total operating income Terospace Systems Year Ended December 31 $ in millions Sales Operating income Operating margin rate $ 2015 10,004 $ 1,220 12.2% 2014 9,997 $ 1,315 13.2% 2013 10,014 1,215 12.1% % Change in 2015...

  • Page 37
    ... margin rate for 2015 decreased primarily due to business mix changes, which resulted in lower volume for mature fixed price production programs and higher volume for cost-type development programs, and less favorable performance on AISR&T and L&SPS programs. 2014 - Electronic Systems sales for 2014...

  • Page 38
    ... service sales and operating costs and expenses by segment: Year Ended December 31 $ in millions Segment Information: Terospace Systems Product Service Electronic Systems Product Service Information Systems Product Service Technical Services Product Service Segment Totals Total Product Total Service...

  • Page 39
    ...committed by the customer. Backlog is converted into sales as costs are incurred or deliveries are made. Backlog consisted of the following at December 31, 2015 and 2014: 2015 $ in millions Aerospace Systems Electronic Systems Information Systems Technical Services Total backlog $ Funded 8,218 7,323...

  • Page 40
    ... principally due to a $500 million voluntary pre-tax pension contribution made in April 2013, partially offset by changes in trade working capital during 2014. As of December 31, 2015, the amount of cash, cash equivalents and marketable securities held outside of the U.S. by foreign subsidiaries was...

  • Page 41
    ... a useful measure for investors to consider as it represents cash flow the company has available after capital spending to invest for future growth, strengthen the balance sheet and/or return to shareholders through dividends and share repurchases. Free cash flow is a key factor in our planning for...

  • Page 42
    ... post-retirement benefit plans, as set forth by the Employee Retirement Income Security Act, as amended (ERISA). For further information about future minimum contributions for these plans, see Note 12 to the consolidated financial statements in Part II, Item 8. Further details regarding long-term...

  • Page 43
    ... financial position and annual results of operations are the discount rate, cash balance crediting rate, expected long-term rate of return on plan assets, estimated fair market value of plan assets, and mortality rate of those covered by our pension and other post-retirement benefit plans. Discount...

  • Page 44
    ... 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...

  • Page 45
    ... our operating plans. This income valuation method requires management to project sales, operating expenses, working capital, capital spending and cash flows for the reporting units over a multi-year period, as well as to determine the weighted-average cost of capital (WACC) used as a discount rate...

  • Page 46
    NORTHROP GRUMMTN CORPORTTION OTHER MTTTERS Off-Balance Sheet Trrangements As of December 31, 2015, we had no significant off-balance sheet arrangements other than operating leases. For a description of our operating leases, see Note 11 to the consolidated financial statements in Part II, Item 8. -...

  • Page 47
    ... long-term debt prior to maturity. FOREIGN CURRENCY RISK We are exposed to foreign currency risk with respect to our international operations. We enter into foreign currency forward contracts to manage a portion of the exchange rate risk related to receipts from customers and payments to suppliers...

  • Page 48
    ...Data REPORT OF INDEPENDENT REGISTERED PUBLIC TCCOUNTING FIRM To the Board of Directors and Shareholders of Northrop Grumman Corporation Falls Church, Virginia We have audited the accompanying consolidated statements of financial position of Northrop Grumman Corporation and subsidiaries (the "Company...

  • Page 49
    ... INCOME (LOSS) Year Ended December 31 $ in millions, except per share amounts Sales Product Service Total sales Operating costs and expenses Product Service General and administrative expenses Operating income Other (expense) income Interest expense Other, net Earnings before income taxes...

  • Page 50
    ... Trade accounts payable Accrued employee compensation Advance payments and amounts in excess of costs incurred Other current liabilities Total current liabilities Long-term debt, net of current portion of $110 in 2015 and $3 in 2014 Pension and other post-retirement benefit plan liabilities...

  • Page 51
    ...OF CTSH FLOWS Year Ended December 31 $ in millions Operating activities Net earnings Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization Stock-based compensation Excess tax benefits from stock-based compensation Deferred income taxes Changes in assets...

  • Page 52
    ...Common stock repurchased Shares issued for employee stock awards and options End of year Paid-in capital Beginning of year Common stock repurchased Stock compensation Other End of year Retained earnings Beginning of year Common stock repurchased Net earnings Dividends declared Stock compensation End...

  • Page 53
    ...the U.S. Government, principally the Department of Defense (DoD) and intelligence community. We also conduct business with foreign, state and local governments and commercial customers. Principles of Consolidation The consolidated financial statements include the accounts of Northrop Grumman and its...

  • Page 54
    ...Earnings(1) Diluted earnings per share(1) (1) 2015 $ 580 377 1.97 $ 2014 664 432 2.04 $ 2013 753 489 2.09 Based on statutory tax rates Sales by Customer Category - The following table presents sales by customer category: Year Ended December 31 2015 $ in millions U.S. Government(2) International...

  • Page 55
    ... statements of earnings and comprehensive income (loss). The company may use derivative financial instruments to manage its exposure to interest rate risk for its long-term fixed-rate debt portfolio and foreign currency exchange risk related to receipts from customers and payments to suppliers...

  • Page 56
    ... 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...

  • Page 57
    ... 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 nonqualified employee retirement plans. As of December 31, 2015 and 2014...

  • Page 58
    ... 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...

  • Page 59
    ... 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, 2015, 2014 and 2013, respectively...

  • Page 60
    ...the 2014 Repurchase Program and to expire when we have used all authorized funds for repurchases. 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...

  • Page 61
    ... Total sales Operating income Aerospace Systems Electronic Systems Information Systems Technical Services Intersegment eliminations Total segment operating income Reconciliation to operating income: Net FAS/CAS pension adjustment Unallocated corporate expenses Other Total operating income $ $ 2015...

  • Page 62
    ...The following table presents intersegment sales and operating income before eliminations: Year Ended December 31 $ in millions Sales Intersegment sales and operating income Aerospace Systems Electronic Systems Information Systems Technical Services Total $ 232 544 592 684 2,052 2015 Operating Income...

  • Page 63
    ...31 $ in millions Production costs of contracts in process General and administrative expenses Progress and performance-based payments received Product inventory Total inventoried costs, net 6. INCOME TTXES Federal and foreign income tax expense consisted of the following: Year Ended December 31 $ in...

  • Page 64
    ... of our income tax expense up to $45 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 2015, 2014 and 2013, excluding interest, is as follows: December 31 $ in millions...

  • Page 65
    ... 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 Deferred Tax Tssets Retiree benefits Accrued employee compensation Provisions for accrued liabilities Inventory Stock-based...

  • Page 66
    ... ended December 31, 2015 and 2014, were as follows: Aerospace Systems $ $ $ 3,758 - 3,758 - 3,758 $ $ $ Electronic Systems 2,410 - 2,410 - 2,410 $ $ $ Information Systems 5,294 (8) 5,286 (2) 5,284 $ $ $ Technical Services 976 36 1,012 (4) 1,008 $ $ $ $ in millions Balance as of December 31, 2013...

  • Page 67
    ...for-sale to partially fund nonqualified employee benefit plans. 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, 2015 and 2014, marketable...

  • Page 68
    ... 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...

  • Page 69
    ... 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...

  • Page 70
    ..., the company generally strives to obtain crossindemnification from the other members of the Business Arrangements. At December 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...

  • Page 71
    ... post retirement medical and life benefit plans. In addition to a company and employee cost-sharing feature, the health 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...

  • Page 72
    ... a private insurance exchange. The amendment did not affect Pre-Medicare retirees. We expect that the cost of retiree medical coverage in 2016 will be comparable to 2015. Summary Plan Results The cost to the company of its retirement benefit plans is shown in the following table: Year Ended December...

  • Page 73
    ... in the consolidated statements of financial position for the company's retirement benefit plans. Pension benefits data includes the qualified plans, foreign plans and U.S. unfunded non-qualified plans for benefits provided to directors, officers and certain employees. The company uses a December 31...

  • Page 74
    ... in 2016 net periodic benefit cost Net actuarial loss Prior service credit $ Pension Benefits 714 (60) $ Medical and Life Benefits 16 (22) $ Total 730 (82) The accumulated benefit obligation for all defined benefit pension plans was $29.0 billion and $30.3 billion at December 31, 2015 and 2014...

  • Page 75
    ... 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...

  • Page 76
    ... Investments Hedge funds Private equities Real estate Other(3) Fair value of plan assets at the end of the year (1) (2) U.S. Level 2 2014 $ 38 4,729 2,675 2015 $ 1,471 593 2,551 530 717 309 4,919 392 1,719 261 2014 $ 1,737 147 2,062 957 909 440 5,710 604 586 228 2015 Level 3 2014 2015 Total 2014...

  • Page 77
    ... between the three levels of the fair value hierarchy during the years ended December 31, 2015 and 2014. Generally, investments are valued based on information in financial publications of general circulation, statistical and valuation services, records of security exchanges, appraisal by qualified...

  • Page 78
    ...-retirement benefit plans. During the year ended December 31, 2015, the company made a voluntary pension contribution of $500 million. 13. STOCK COMPENSTTION PLTNS TND OTHER COMPENSTTION TRRTNGEMENTS Stock Compensation Plans At December 31, 2015, Northrop Grumman had stock-based compensation awards...

  • Page 79
    ...service as a member of the Board. Stock units awarded under the Amended Director Program will be paid out in an equivalent number of shares of Northrop Grumman common stock. Compensation Expense Stock-based compensation expense and the related tax benefits for the years ended December 31, 2015, 2014...

  • Page 80
    ... to employees under the company's long-term incentive stock plan and the grant date aggregate fair value of those stock awards for the periods presented: Year Ended December 31 in millions RSRs granted RPSRs granted Grant date aggregate fair value 2015 0.2 0.4 89 $ 2014 0.2 0.6 90 $ 2013 0.5 1.1 101...

  • Page 81
    ...-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. 2015 In millions, except per share amounts Sales Operating income Net earnings Basic earnings per share Diluted...

  • Page 82
    ..., controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit is accumulated and communicated to management, including the principal executive officer and the principal financial officer, as appropriate to allow timely decisions...

  • Page 83
    ...firm of Deloitte & Touche LLP in accordance with the standards of the Public Company Accounting Oversight Board (United States). /s/ Wesley G. Bush Chairman, Chief Executive Officer and President /s/ Kenneth L. Bedingfield Corporate Vice President and Chief Financial Officer February 1, 2016 -74-

  • Page 84
    ... REGISTERED PUBLIC TCCOUNTING FIRM To the Board of Directors and Shareholders of Northrop Grumman Corporation Falls Church, Virginia We have audited the internal control over financial reporting of Northrop Grumman Corporation and subsidiaries (the "Company") as of December 31, 2015, based...

  • Page 85
    ... Executive Officers and Corporate Governance DIRECTORS Information about our Directors will be incorporated herein by reference to the Proxy Statement for the 2016 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year...

  • Page 86
    ... and Chief Financial Officer (2005-2006) Vice President and General Manager, Advanced Concepts and Technologies Division, Electronic Systems Sector (2010-2014); Vice President of Engineering, Manufacturing and Logistics, Electronic Systems Sector (2010) Vice President of Washington Operations, GE...

  • Page 87
    ..., Technology Services Sector Corporate Vice President and Chief Human Resources Officer Corporate Vice President and Chief Global Business Development Officer Corporate Vice President and President, Aerospace Systems Sector Corporate Vice President and President, Mission Systems Sector Since 2013...

  • Page 88
    ... after the end of the company's fiscal year. For a description of securities authorized under our equity compensation plans, see Note 13 to the consolidated financial statements in Part II, Item 8. Item 13. Certain Relationships and Related Transactions, and Director Independence The information as...

  • Page 89
    ... ended March 31, 2011, filed April 27, 2011) Second Supplemental Indenture dated as of March 30, 2011 by and among Northrop Grumman Systems Corporation, The Bank of New York Mellon (successor trustee to JPMorgan Chase Bank and The Chase Manhattan Bank, N.A.), Titan Holdings II, L.P., and Northrop...

  • Page 90
    ... year ended December 31, 2002, filed March 24, 2003) Third Supplemental Indenture dated as of March 30, 2011 by and among Northrop Grumman Systems Corporation (successorin-interest to Litton Industries, Inc.), The Bank of New York Mellon (formerly known as The Bank of New York) as trustee, Titan II...

  • Page 91
    ... for the year ended December 31, 2009, filed February 9, 2010) Tenth Supplemental Indenture dated as of March 30, 2011, by and among Northrop Grumman Systems Corporation (successorin-interest to Northrop Grumman Space & Mission Systems Corp. and TRW, Inc.), The Bank of New York Mellon, as successor...

  • Page 92
    ... due 2040 (incorporated by reference to Exhibit 4(a) to Form 8K filed November 8, 2010) Third Supplemental Indenture dated as of March 30, 2011, by and among Titan II, Inc. (formerly known as Northrop Grumman Corporation), The Bank of New York Mellon, as successor trustee to JPMorgan Chase Bank, and...

  • Page 93
    ... Northrop Grumman Corporation Proxy Statement on Schedule 14A for the 2015 Annual Meeting of Shareholders filed April 6, 2015, File No. 001-16411) (i) Northrop Grumman Corporation Equity Grant Program for Non-Employee Directors under the Northrop Grumman 2011 Long-Term Incentive Stock Plan, Amended...

  • Page 94
    ... by reference to Exhibit 10(j)(ii) to Form 10-K for the year ended December 31, 2011, filed February 7, 2012) (ii) Northrop Grumman Corporation Equity Grant Program for Non-Employee Directors under the Northrop Grumman 2011 Long-Term Incentive Stock Plan, Amended and Restated Effective January...

  • Page 95
    ... the year ended December 31, 2013, filed February 3, 2014) Northrop Grumman Electronic Systems Executive Pension Plan (Amended and Restated Effective as of January 1, 2016) Severance Plan for Elected and Appointed Officers of Northrop Grumman Corporation (Amended and Restated Effective July 20, 2012...

  • Page 96
    ...filed July 29, 2008) Executive Dental Insurance Policy Group Numbers 5134 and 5135 (incorporated by reference to Exhibit 10(m) to Form 10-K for the year ended December 31, 1995, filed February 22, 1996), as amended by action of the Compensation Committee of the Board of Directors of Northrop Grumman...

  • Page 97
    ...Act of 2002 Northrop Grumman Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2015, formatted in XBRL (Extensible Business Reporting Language); (i) the Consolidated Statements of Earnings and Comprehensive Income (Loss), (ii) Consolidated Statements of Financial Position...

  • Page 98
    ...of February 2016. NORTHROP GRUMMAN CORPORATION By: /s/ Michael T. Hardesty Michael A. Hardesty Corporate Vice President, Controller, and Chief Accounting Officer (Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on behalf...

  • Page 99
    ... After-tax discretionary pension pre-funding impact Free cash flow before after-tax discretionary pension contributions $ $ 2015 2,487 (325) 2,162 (471) 1,691 325 2,016 $ $ 2014 2,593 - 2,593 (561) 2,032 - 2,032 $ $ 2013 2,806 (323) 2,483 (364) 2,119 323 2,442 northroP grumman 2015 annual rePort

  • Page 100
    ... proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, registered shareholders may log on to www.computershare.com/investor stocK listiNg Northrop Grumman Corporation common stock is listed on the New York Stock Exchange...

  • Page 101

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