01—Abstract
Summary
Summary of the 10-K filed February 3, 2014. Cited figures are marked; the original filing is the authoritative source.
Northrop Grumman Corporation's 2013 10-K report highlights a year of stable performance, underscored by its primary reliance on U.S. government contracts, which constituted over 86%a of its revenue.
The company operates across four segments: Aerospace Systems, Electronic Systems, Information Systems, and Technical Services, delivering a wide range of defense and security solutions. Despite ongoing U.S. government budget pressures and sequestration, Northrop Grumman managed its operations effectively, with total sales slightly declining to $24.66 billionb from $25.22 billion in the prior year. Operating income remained strong at $3.12 billion.
The company continued its commitment to shareholder returns through dividends and share repurchases, authorized a new $4.0 billionc repurchase program, and maintained a healthy free cash flow from continuing operations of $2.12 billion. Key risk factors identified include heavy dependence on U.S. government funding, potential contract terminations, and regulatory compliance.
02—Key points
Key Highlights
- Significant reliance on U.S. Government contracts, accounting for over 86% of total revenue in 2013.
- Total sales slightly decreased to $24.66 billion in 2013 from $25.22 billion in 2012, reflecting ongoing U.S. defense budget pressures.
- Operating income remained robust at $3.12 billion for 2013, with an operating margin rate of 12.7%.
- The company initiated a new share repurchase program authorizing up to $4.0 billion of common stock.
- Free cash flow from continuing operations was $2.12 billion in 2013.
- Northrop Grumman operates through four main segments: Aerospace Systems, Electronic Systems, Information Systems, and Technical Services.
- The company is subject to significant risks related to U.S. government spending, program funding, and regulatory compliance.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Northrop Grumman Corp kept $0.08.
- Revenue$24.66B100.0%
- Cost of revenue−$10.62B43.1%
- Gross profit$14.04B56.9%
- Operating costs−$10.91B44.3%
- Operating income$3.12B12.7%
- Interest, other & tax−$1.17B4.7%
- Net income$1.95B7.9%
Where FY2013 revenue went
$24.66B- Cost of revenue: $10.62B, 43% of revenue
- Other operating costs: $10.41B, 42% of revenue
- Net income: $1.95B, 7.9% of revenue
- R&D: $507.0M, 2.1% of revenue
- Interest, other & tax: $1.17B, 4.7% of revenue
Kept 7.9% as net incomeNet income $1.95B · 7.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 3, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $24.66B$25.22B | −2.2% |
| Cost of Revenue | $10.62B$10.41B | +2.0% |
| Gross Profit | $14.04B$14.80B | −5.2% |
| R&D Expenses | $507.00M$520.00M | −2.5% |
| Operating Income | $3.12B$3.13B | −0.2% |
| Net Income | $1.95B$1.98B | −1.3% |
| EPS (Basic) | $8.50$7.96 | +6.8% |
| EPS (Diluted) | $8.35$7.81 | +6.9% |
| Shares Outstanding (Basic) | 229.60M248.60M | −7.6% |
| Shares Outstanding (Diluted) | 233.90M253.40M | −7.7% |
05—Questions
Frequently Asked Questions
What is Northrop Grumman's primary source of revenue?
Northrop Grumman's primary source of revenue is from the U.S. Government, which accounted for over 86% of its total revenue in 2013. This includes contracts with the Department of Defense and intelligence community.
How did the company's financial performance change in 2013 compared to 2012?
In 2013, Northrop Grumman saw a slight decrease in total sales to $24.66 billion from $25.22 billion in 2012. Operating income remained stable at $3.12 billion. The company also continued to return capital to shareholders, authorizing a significant new share repurchase program.
What are the main business segments of Northrop Grumman?
Northrop Grumman is organized into four operating segments: Aerospace Systems, Electronic Systems, Information Systems, and Technical Services.
What are the major risks facing Northrop Grumman as highlighted in the report?
Key risks include heavy dependence on U.S. government funding and potential changes in defense budgets, the ability to win and retain government contracts, and compliance with numerous government regulations. Sequestration and budget uncertainties are also significant concerns.
06—Continue