01—Abstract
Summary
Summary of the 10-K filed February 1, 2016. Cited figures are marked; the original filing is the authoritative source.
Northrop Grumman Corporation (NOC) operates as a global security company with a primary focus on government and defense contracts.
In 2015, the company generated $23.5 billiona in sales, with a significant majority (83%) coming from the U.S. Government. The company's business is structured across four key segments: Aerospace Systems, Electronic Systems, Information Systems, and Technical Services. Financially, NOC reported operating income of $3.1 billion and net earnings of $2.0 billion for the year.
The company demonstrated a strong commitment to shareholder returns, repurchasing approximately $3.2 billionb in its own stock and increasing its quarterly dividend. Despite a slight decrease in overall sales compared to the prior year, driven by lower U.S. Government contract sales, the company maintained healthy profit margins and a robust backlog of $35.9 billion at year-end. Key risks highlighted include heavy reliance on U.S. Government spending and potential delays in appropriations.
02—Key points
Key Highlights
- In 2015, Northrop Grumman generated $23.5 billion in sales, with 83% derived from the U.S. Government.
- Operating income was $3.1 billion and net earnings were $2.0 billion for the year ended December 31, 2015.
- The company significantly increased its share repurchases, totaling $3.2 billion, and raised its quarterly dividend to $0.80 per share.
- Total backlog stood at $35.9 billion at the end of 2015, indicating a strong pipeline of future work.
- The company operates through four main segments: Aerospace Systems, Electronic Systems, Information Systems, and Technical Services.
- A notable risk factor is the significant dependence on U.S. Government spending and budget appropriations.
- Company-sponsored R&D expenses increased to $712 million in 2015, reflecting continued investment in future technologies.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Northrop Grumman Corp kept $0.08.
- Revenue$23.53B100.0%
- Cost of revenue−$10.33B43.9%
- Gross profit$13.19B56.1%
- Operating costs−$10.12B43.0%
- Operating income$3.08B13.1%
- Interest, other & tax−$1.09B4.6%
- Net income$1.99B8.5%
Where FY2015 revenue went
$23.53B- Cost of revenue: $10.33B, 44% of revenue
- Other operating costs: $9.40B, 40% of revenue
- Net income: $1.99B, 8.5% of revenue
- R&D: $712.0M, 3.0% of revenue
- Interest, other & tax: $1.09B, 4.6% of revenue
Kept 8.5% as net incomeNet income $1.99B · 8.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 1, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $23.53B$23.98B | −1.9% |
| Cost of Revenue | $10.33B$10.43B | −0.9% |
| Gross Profit | $13.19B$13.55B | −2.6% |
| R&D Expenses | $712.00M$569.00M | +25.1% |
| Operating Income | $3.08B$3.20B | −3.8% |
| Net Income | $1.99B$2.07B | −3.8% |
| EPS (Basic) | $10.51$9.91 | +6.1% |
| EPS (Diluted) | $10.39$9.75 | +6.6% |
| Shares Outstanding (Basic) | 189.40M208.80M | −9.3% |
| Shares Outstanding (Diluted) | 191.60M212.10M | −9.7% |
05—Questions
Frequently Asked Questions
What is Northrop Grumman's primary source of revenue?
Northrop Grumman's primary source of revenue is its contracts with the U.S. Government, which accounted for 83% of its sales in 2015. The company also serves international and other commercial customers.
How did Northrop Grumman perform financially in 2015?
In 2015, Northrop Grumman reported sales of $23.5 billion, operating income of $3.1 billion, and net earnings of $2.0 billion. The company also returned significant capital to shareholders through share repurchases and dividends.
What are the main business segments of Northrop Grumman?
Northrop Grumman is organized into four main business segments: Aerospace Systems, Electronic Systems, Information Systems, and Technical Services.
What are the key risks facing Northrop Grumman according to the filing?
The primary risks highlighted include a heavy reliance on the U.S. Government as a customer, potential delays or reductions in government appropriations, competition, and the impact of investigations, claims, and litigation. Cyber and security threats are also a significant concern.
06—Continue