Northrop Grumman Reports Strong Fourth Quarter and 2013 Financial Results
For 2013, net earnings totaled
"Our team continues to deliver outstanding results. Although we are encouraged by progress toward a more normal budgeting process for our customers, we expect lower sales in 2014, particularly for our short cycle businesses. Despite this top line pressure, we expect other positive trends, particularly the benefit of our planned share repurchases, to support continued earnings per share growth in 2014. Our strategy remains the same. We are focused on superior program performance, effective cash deployment and portfolio alignment as the primary value creation drivers for our shareholders, customers and employees," said
Table 1 — Financial Highlights
Fourth Quarter |
Total Year |
|||||||||||
($ in millions, except per share amounts) |
2013 |
2012 |
2013 |
2012 |
||||||||
Sales |
$ |
6,157 |
$ |
6,476 |
$ |
24,661 |
$ |
25,218 |
||||
Segment operating income1 |
772 |
875 |
3,080 |
3,176 |
||||||||
Segment operating margin rate1 |
12.5% |
13.5% |
12.5% |
12.6% |
||||||||
Operating income |
768 |
824 |
3,123 |
3,130 |
||||||||
Operating margin rate |
12.5% |
12.7% |
12.7% |
12.4% |
||||||||
Net earnings |
478 |
533 |
1,952 |
1,978 |
||||||||
Diluted EPS |
2.12 |
2.14 |
8.35 |
7.81 |
||||||||
Cash provided by operations |
1,204 |
1,057 |
2,483 |
2,640 |
||||||||
Free cash flow1 |
1,018 |
922 |
2,119 |
2,309 |
||||||||
Pension-adjusted Operating Highlights |
||||||||||||
Operating income |
768 |
824 |
3,123 |
3,130 |
||||||||
Net FAS/CAS pension adjustment1 |
(43) |
(31) |
(168) |
(132) |
||||||||
Pension-adjusted operating income1 |
$ |
725 |
$ |
793 |
$ |
2,955 |
$ |
2,998 |
||||
Pension-adjusted operating margin rate1 |
11.8% |
12.2% |
12.0% |
11.9% |
||||||||
Pension-adjusted Per Share Data |
||||||||||||
Diluted EPS |
$ |
2.12 |
$ |
2.14 |
$ |
8.35 |
$ |
7.81 |
||||
After-tax net pension adjustment per share1 |
(0.12) |
(0.08) |
(0.47) |
(0.34) |
||||||||
Pension-adjusted diluted EPS1 |
$ |
2.00 |
$ |
2.06 |
$ |
7.88 |
$ |
7.47 |
||||
Weighted average shares outstanding — Basic |
220.5 |
243.4 |
229.6 |
248.6 |
||||||||
Dilutive effect of stock awards and stock options |
4.7 |
5.5 |
4.3 |
4.8 |
||||||||
Weighted average shares outstanding — Diluted |
225.2 |
248.9 |
233.9 |
253.4 |
1 Non-GAAP metric — see definitions at the end of this press release. |
Fourth quarter 2013 total operating income decreased
For 2013, operating income was
Total backlog as of
Table 2 — Cash Flow Highlights
Fourth Quarter |
Total Year |
|||||||||||||||
($ millions) |
2013 |
2012 |
2013 |
2012 |
||||||||||||
Cash provided by operating activities before discretionary pension contributions1 |
$ |
1,160 |
$ |
1,029 |
$ |
2,806 |
$ |
2,833 |
||||||||
After-tax discretionary pension pre-funding impact |
44 |
28 |
(323) |
(193) |
||||||||||||
Net cash provided by operating activities |
$ |
1,204 |
$ |
1,057 |
$ |
2,483 |
$ |
2,640 |
||||||||
Less: |
||||||||||||||||
Capital expenditures |
(186) |
(135) |
(364) |
(331) |
||||||||||||
Free cash flow1 |
$ |
1,018 |
$ |
922 |
$ |
2,119 |
$ |
2,309 |
||||||||
After-tax discretionary pension pre-funding impact |
(44) |
(28) |
323 |
193 |
||||||||||||
Free cash flow provided by operating activities before discretionary pension contributions1 |
$ |
974 |
$ |
894 |
$ |
2,442 |
$ |
2,502 |
1Non-GAAP metric — see definitions at the end of this press release. |
Fourth quarter 2013 cash provided by operating activities totaled
For 2013, cash provided by operating activities totaled
Operations
$2.5 billion provided by operations
Investing
$364 million for capital expenditures
Financing
$2.4 billion for repurchases of common stock$2.8 billion net proceeds from issuance of long-term debt$877 million for redemption of long-term debt$545 million for dividends
2014 Guidance
($ in millions, except per share amounts) |
||||||
Sales |
23,500 |
— |
23,800 |
|||
Segment operating margin %1 |
High 11% |
|||||
Operating margin % |
High 12% |
|||||
Diluted EPS |
8.70 |
— |
9.00 |
|||
Cash provided by operations |
2,300 |
— |
2,600 |
|||
Free cash flow1 |
1,700 |
— |
2,000 |
|||
1 Non-GAAP metric - see definitions at the end of this press release. |
The company's 2014 financial guidance is based on the spending levels provided for in the Bipartisan Budget Act of 2013 and the Consolidated Appropriations Act of 2014. The guidance assumes no disruption or cancellation of any of our significant programs and no disruption or shutdown of government operations resulting from a federal government debt ceiling breach. Guidance for 2014 also assumes adequate appropriations for our programs in the first quarter of the U.S. government's fiscal year 2015.
Table 3 — Business Results
Consolidated Sales & Segment Operating Income1
Fourth Quarter |
Total Year |
|||||||||||||||
($ millions) |
2013 |
2012 |
Change |
2013 |
2012 |
Change |
||||||||||
Sales |
||||||||||||||||
Aerospace Systems |
$ |
2,432 |
$ |
2,604 |
(7%) |
$ |
10,014 |
$ |
9,977 |
— |
||||||
Electronic Systems |
1,883 |
1,775 |
6% |
7,149 |
6,950 |
3% |
||||||||||
Information Systems |
1,614 |
1,880 |
(14%) |
6,596 |
7,356 |
(10%) |
||||||||||
Technical Services |
691 |
738 |
(6%) |
2,843 |
3,019 |
(6%) |
||||||||||
Intersegment eliminations |
(463) |
(521) |
(1,941) |
(2,084) |
||||||||||||
6,157 |
6,476 |
(5%) |
24,661 |
25,218 |
(2%) |
|||||||||||
Segment operating income1 |
||||||||||||||||
Aerospace Systems |
279 |
359 |
(22%) |
1,215 |
1,218 |
— |
||||||||||
Electronic Systems |
335 |
328 |
2% |
1,226 |
1,187 |
3% |
||||||||||
Information Systems |
159 |
184 |
(14%) |
633 |
761 |
(17%) |
||||||||||
Technical Services |
61 |
62 |
(2%) |
262 |
268 |
(2%) |
||||||||||
Intersegment eliminations |
(62) |
(58) |
(256) |
(258) |
||||||||||||
Segment operating income1 |
772 |
875 |
(12%) |
3,080 |
3,176 |
(3%) |
||||||||||
Segment operating margin rate1 |
12.5% |
13.5% |
(100) bps |
12.5% |
12.6% |
(10) bps |
||||||||||
Reconciliation to operating income |
||||||||||||||||
Net FAS/CAS pension adjustment1 |
43 |
31 |
39% |
168 |
132 |
27% |
||||||||||
Unallocated corporate expenses |
(46) |
(79) |
42% |
(119) |
(168) |
29% |
||||||||||
Other |
(1) |
(3) |
67% |
(6) |
(10) |
40% |
||||||||||
Operating income |
768 |
824 |
(7%) |
3,123 |
3,130 |
— |
||||||||||
Operating margin rate |
12.5% |
12.7% |
(20) bps |
12.7% |
12.4% |
30 bps |
||||||||||
Interest expense |
(74) |
(54) |
(37%) |
(257) |
(212) |
(21%) |
||||||||||
Other, net |
13 |
17 |
(24%) |
(3) |
47 |
(106%) |
||||||||||
Earnings before income taxes |
707 |
787 |
(10%) |
2,863 |
2,965 |
(3%) |
||||||||||
Federal and foreign income tax expense |
(229) |
(254) |
10% |
(911) |
(987) |
8% |
||||||||||
Net earnings |
$ |
478 |
$ |
533 |
(10%) |
$ |
1,952 |
$ |
1,978 |
(1%) |
1Non-GAAP metric — see definitions at the end of this press release. |
For 2013, federal and foreign income tax expense totaled
Aerospace Systems ($ millions)
Fourth Quarter |
Total Year |
||||||||||||||
2013 |
2012 |
Change |
2013 |
2012 |
Change |
||||||||||
Sales |
$ |
2,432 |
$ |
2,604 |
(6.6%) |
$ |
10,014 |
$ |
9,977 |
0.4% |
|||||
Operating income |
279 |
359 |
(22.3%) |
1,215 |
1,218 |
(0.2%) |
|||||||||
Operating margin rate |
11.5% |
13.8% |
12.1% |
12.2% |
Aerospace Systems fourth quarter 2013 sales decreased 7 percent due to lower volume for unmanned and space programs. Unmanned volume was lower for several programs, primarily Global Hawk. The decrease in space primarily reflects lower volume for restricted programs, partially offset by higher volume for the James Webb Space Telescope.
For 2013, Aerospace Systems sales were slightly higher than the prior year due to higher volume for manned military aircraft programs, offset by lower volume for unmanned and space programs. Higher volume for the F-35, B-2 and E-2D programs contributed to the increase in manned military aircraft sales. The decline in unmanned is primarily due to lower volume for Global Hawk, partially offset by higher volume for NATO AGS. The decline in space programs includes lower volume for restricted work and higher volume for the James Webb Space Telescope and the Advanced EHF program.
Aerospace Systems fourth quarter 2013 operating income decreased 22 percent and operating margin rate decreased 230 basis points to 11.5 percent. Lower operating income and operating margin rate reflect lower sales as well as a
Fourth Quarter |
Total Year |
|||||||||||||||
2013 |
2012 |
Change |
2013 |
2012 |
Change |
|||||||||||
Sales |
$ |
1,883 |
$ |
1,775 |
6.1% |
$ |
7,149 |
$ |
6,950 |
2.9% |
||||||
Operating income |
335 |
328 |
2.1% |
1,226 |
1,187 |
3.3% |
||||||||||
Operating margin rate |
17.8% |
18.5% |
17.1% |
17.1% |
Information Systems ($ millions)
Fourth Quarter |
Total Year |
||||||||||||||
2013 |
2012 |
Change |
2013 |
2012 |
Change |
||||||||||
Sales |
$ |
1,614 |
$ |
1,880 |
(14.1%) |
$ |
6,596 |
$ |
7,356 |
(10.3%) |
|||||
Operating income |
159 |
184 |
(13.6%) |
633 |
761 |
(16.8%) |
|||||||||
Operating margin rate |
9.9% |
9.8% |
9.6% |
10.3% |
Information Systems fourth quarter 2013 sales declined 14 percent due to lower funding levels, including impacts from sequestration and the government shutdown, lower volume for programs impacted by in-theater force reductions, contract completions, and the transfer of intercompany efforts to the company's shared services organization.
For 2013, sales declined 10 percent. The transfer of intercompany efforts to the company's shared services organization accounted for
Information Systems fourth quarter 2013 operating income decreased 14 percent and operating margin rate increased 10 basis points to 9.9 percent. Fourth quarter 2013 operating income reflects lower sales, and the higher operating margin rate reflects improved performance. For 2013, operating income declined 17 percent, reflecting lower sales and a
Technical Services ($ millions)
Fourth Quarter |
Total Year |
||||||||||||||
2013 |
2012 |
Change |
2013 |
2012 |
Change |
||||||||||
Sales |
$ |
691 |
$ |
738 |
(6.4%) |
$ |
2,843 |
$ |
3,019 |
(5.8%) |
|||||
Operating income |
61 |
62 |
(1.6%) |
262 |
268 |
(2.2%) |
|||||||||
Operating margin rate |
8.8% |
8.4% |
9.2% |
8.9% |
Technical Services fourth quarter and 2013 sales both declined by 6 percent. The decline in both periods was due to lower volume for integrated logistics and modernization programs and lower volume for the ICBM program.
Technical Services fourth quarter and 2013 operating income both declined by 2 percent, principally due to lower sales, partially offset by improved performance. Fourth quarter operating margin rate increased 40 basis points to 8.8 percent, and 2013 operating margin rate increased 30 basis points to 9.2 percent. The increase in operating margin rate is primarily due to improved performance across several programs.
About
This release and the attachments contain statements, other than statements of historical fact, that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expect," "intend," "may," "could," "plan," "project," "forecast," "believe," "estimate," "outlook," "anticipate," "trends," "guidance," "goal," and similar expressions generally identify these forward-looking statements. Forward-looking statements in this release and the attachments include, among other things, statements relating to our future financial condition and operating results. Forward-looking statements are based upon assumptions, expectations, plans and projections that we believe to be reasonable when made, but which may change over time. These statements are not guarantees of future performance and inherently involve a wide range of risks and uncertainties that are difficult to predict.
Specific risks that could cause actual results to differ materially from those expressed or implied in these forward-looking statements include, but are not limited to, risks related to: the assumptions on which our guidance is based; our dependence on
You are urged to consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on forward-looking statements. These forward-looking statements speak only as of the date of this release, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. This release and the attachments also contain non-GAAP financial measures. A reconciliation to the nearest GAAP measure and a discussion of the company's use of these measures are included in this release or the attachments.
SCHEDULE 1 |
||||||||||
NORTHROP GRUMMAN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (Unaudited) |
||||||||||
Year Ended December 31 |
||||||||||
$ in millions, except per share amounts |
2013 |
2012 |
2011 |
|||||||
Sales |
||||||||||
Product |
$ |
14,033 |
$ |
13,838 |
$ |
15,073 |
||||
Service |
10,628 |
11,380 |
11,339 |
|||||||
Total sales |
24,661 |
25,218 |
26,412 |
|||||||
Operating costs and expenses |
||||||||||
Product |
10,623 |
10,415 |
11,491 |
|||||||
Service |
8,659 |
9,223 |
9,295 |
|||||||
General and administrative expenses |
2,256 |
2,450 |
2,350 |
|||||||
Operating income |
3,123 |
3,130 |
3,276 |
|||||||
Other (expense) income |
||||||||||
Interest expense |
(257) |
(212) |
(221) |
|||||||
Other, net |
(3) |
47 |
28 |
|||||||
Earnings from continuing operations before income taxes |
2,863 |
2,965 |
3,083 |
|||||||
Federal and foreign income tax expense |
911 |
987 |
997 |
|||||||
Earnings from continuing operations |
1,952 |
1,978 |
2,086 |
|||||||
Earnings from discontinued operations, net of tax |
— |
— |
32 |
|||||||
Net earnings |
$ |
1,952 |
$ |
1,978 |
$ |
2,118 |
||||
Basic earnings per share |
||||||||||
Continuing operations |
$ |
8.50 |
$ |
7.96 |
$ |
7.54 |
||||
Discontinued operations |
— |
— |
0.11 |
|||||||
Basic earnings per share |
$ |
8.50 |
$ |
7.96 |
$ |
7.65 |
||||
Weighted-average common shares outstanding, in millions |
229.6 |
248.6 |
276.8 |
|||||||
Diluted earnings per share |
||||||||||
Continuing operations |
$ |
8.35 |
$ |
7.81 |
$ |
7.41 |
||||
Discontinued operations |
— |
— |
0.11 |
|||||||
Diluted earnings per share |
$ |
8.35 |
$ |
7.81 |
$ |
7.52 |
||||
Weighted-average diluted shares outstanding, in millions |
233.9 |
253.4 |
281.6 |
|||||||
Net earnings (from above) |
$ |
1,952 |
$ |
1,978 |
$ |
2,118 |
||||
Other comprehensive income |
||||||||||
Change in unamortized benefit plan costs, |
1,790 |
(1,303) |
(1,249) |
|||||||
Change in cumulative translation adjustment |
14 |
8 |
(4) |
|||||||
Change in unrealized loss on marketable securities |
(1) |
(2) |
(4) |
|||||||
Other comprehensive income (loss), net of tax |
1,803 |
(1,297) |
(1,257) |
|||||||
Comprehensive income |
$ |
3,755 |
$ |
681 |
$ |
861 |
SCHEDULE 2 |
||||||
NORTHROP GRUMMAN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) |
||||||
December 31 |
||||||
$ in millions |
2013 |
2012 |
||||
Assets |
||||||
Cash and cash equivalents |
$ |
5,150 |
$ |
3,862 |
||
Accounts receivable, net |
2,685 |
2,858 |
||||
Inventoried costs, net |
698 |
798 |
||||
Deferred tax assets |
605 |
574 |
||||
Prepaid expenses and other current assets |
350 |
300 |
||||
Total current assets |
9,488 |
8,392 |
||||
Property, plant and equipment, net of accumulated depreciation of $4,337 in 2013 and $4,146 in 2012 |
2,806 |
2,887 |
||||
Goodwill |
12,438 |
12,431 |
||||
Non-current deferred tax assets |
209 |
1,542 |
||||
Other non-current assets |
1,440 |
1,291 |
||||
Total assets |
$ |
26,381 |
$ |
26,543 |
||
Liabilities |
||||||
Trade accounts payable |
$ |
1,229 |
$ |
1,392 |
||
Accrued employee compensation |
1,169 |
1,173 |
||||
Advance payments and amounts in excess of costs incurred |
1,722 |
1,759 |
||||
Other current liabilities |
1,695 |
1,732 |
||||
Total current liabilities |
5,815 |
6,056 |
||||
Long-term debt, net of current portion of $2 in 2013 and $5 in 2012 |
5,928 |
3,930 |
||||
Pension and other post-retirement benefit plan liabilities |
2,954 |
6,085 |
||||
Other non-current liabilities |
1,064 |
958 |
||||
Total liabilities |
15,761 |
17,029 |
||||
Shareholders' equity |
||||||
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued and outstanding |
— |
— |
||||
Common stock, $1 par value; 800,000,000 shares authorized; issued and outstanding: 2013—217,599,230 and 2012—239,209,812 |
218 |
239 |
||||
Paid-in capital |
848 |
2,924 |
||||
Retained earnings |
12,538 |
11,138 |
||||
Accumulated other comprehensive loss |
(2,984) |
(4,787) |
||||
Total shareholders' equity |
10,620 |
9,514 |
||||
Total liabilities and shareholders' equity |
$ |
26,381 |
$ |
26,543 |
SCHEDULE 3 |
||||||||||||
NORTHROP GRUMMAN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
||||||||||||
Year Ended December 31 |
||||||||||||
$ in millions |
2013 |
2012 |
2011 |
|||||||||
Operating activities |
||||||||||||
Sources of cash—continuing operations |
||||||||||||
Cash received from customers |
$ |
24,631 |
$ |
25,364 |
$ |
26,431 |
||||||
Other cash receipts |
99 |
99 |
149 |
|||||||||
Total sources of cash—continuing operations |
24,730 |
25,463 |
26,580 |
|||||||||
Uses of cash—continuing operations |
||||||||||||
Cash paid to suppliers and employees |
(20,473) |
(21,074) |
(22,059) |
|||||||||
Pension contributions |
(579) |
(367) |
(1,084) |
|||||||||
Interest paid, net of interest received |
(234) |
(200) |
(227) |
|||||||||
Income taxes paid, net of refunds received |
(880) |
(1,119) |
(810) |
|||||||||
Other cash payments |
(81) |
(63) |
(53) |
|||||||||
Total uses of cash—continuing operations |
(22,247) |
(22,823) |
(24,233) |
|||||||||
Cash provided by continuing operations |
2,483 |
2,640 |
2,347 |
|||||||||
Cash used in discontinued operations |
— |
— |
(232) |
|||||||||
Net cash provided by operating activities |
2,483 |
2,640 |
2,115 |
|||||||||
Investing activities |
||||||||||||
Continuing operations |
||||||||||||
Capital expenditures |
(364) |
(331) |
(492) |
|||||||||
Maturities of short-term investments |
— |
250 |
200 |
|||||||||
Contribution received from the spin-off of shipbuilding business |
— |
— |
1,429 |
|||||||||
Purchases of short-term investments |
— |
— |
(450) |
|||||||||
Other investing activities, net |
18 |
(3) |
56 |
|||||||||
Cash (used in) provided by investing activities from continuing operations |
(346) |
(84) |
743 |
|||||||||
Cash used in investing activities from discontinued operations |
— |
— |
(63) |
|||||||||
Net cash (used in) provided by investing activities |
(346) |
(84) |
680 |
|||||||||
Financing activities |
||||||||||||
Net proceeds from issuance of long-term debt |
2,841 |
— |
— |
|||||||||
Common stock repurchases |
(2,371) |
(1,316) |
(2,295) |
|||||||||
Payments of long-term debt |
(877) |
— |
(768) |
|||||||||
Cash dividends paid |
(545) |
(535) |
(543) |
|||||||||
Proceeds from exercises of stock options |
184 |
188 |
101 |
|||||||||
Other financing activities, net |
(81) |
(33) |
11 |
|||||||||
Net cash used in financing activities |
(849) |
(1,696) |
(3,494) |
|||||||||
Increase (decrease) in cash and cash equivalents |
1,288 |
860 |
(699) |
|||||||||
Cash and cash equivalents, beginning of year |
3,862 |
3,002 |
3,701 |
|||||||||
Cash and cash equivalents, end of year |
$ |
5,150 |
$ |
3,862 |
$ |
3,002 |
SCHEDULE 4 |
|||||||||
NORTHROP GRUMMAN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
|||||||||
Year Ended December 31 |
|||||||||
$ in millions |
2013 |
2012 |
2011 |
||||||
Reconciliation of net earnings to net cash provided by operating activities |
|||||||||
Net earnings |
$ |
1,952 |
$ |
1,978 |
$ |
2,118 |
|||
Net earnings from discontinued operations |
— |
— |
(32) |
||||||
Adjustments to reconcile to net cash provided by operating activities: |
|||||||||
Depreciation and amortization |
495 |
510 |
544 |
||||||
Stock-based compensation |
144 |
183 |
140 |
||||||
Excess tax benefits from stock-based compensation |
(43) |
(45) |
(17) |
||||||
Deferred income taxes |
128 |
78 |
441 |
||||||
(Increase) decrease in assets: |
|||||||||
Accounts receivable, net |
171 |
90 |
350 |
||||||
Inventoried costs, net |
101 |
46 |
(2) |
||||||
Prepaid expenses and other assets |
(51) |
(65) |
16 |
||||||
Increase (decrease) in liabilities: |
|||||||||
Accounts payable and accruals |
(169) |
23 |
(341) |
||||||
Income taxes payable |
2 |
(75) |
(32) |
||||||
Retiree benefits |
(281) |
(71) |
(904) |
||||||
Other, net |
34 |
(12) |
66 |
||||||
Cash provided by continuing operations |
2,483 |
2,640 |
2,347 |
||||||
Cash used in discontinued operations |
— |
— |
(232) |
||||||
Net cash provided by operating activities |
$ |
2,483 |
$ |
2,640 |
$ |
2,115 |
SCHEDULE 5 |
|||||||||||||
NORTHROP GRUMMAN CORPORATION TOTAL BACKLOG AND CONTRACT AWARDS (Unaudited) |
|||||||||||||
December 31, 2013 |
December 31, 2012 |
||||||||||||
$ in millions |
FUNDED (1) |
UNFUNDED (2) |
TOTAL BACKLOG |
TOTAL BACKLOG |
|||||||||
Aerospace Systems |
$ |
10,061 |
$ |
8,260 |
$ |
18,321 |
$ |
19,594 |
|||||
Electronic Systems |
6,992 |
2,045 |
9,037 |
9,471 |
|||||||||
Information Systems(3) |
3,285 |
3,579 |
6,864 |
8,541 |
|||||||||
Technical Services |
2,206 |
605 |
2,811 |
3,203 |
|||||||||
Total |
$ |
22,544 |
$ |
14,489 |
$ |
37,033 |
$ |
40,809 |
(1)Funded backlog represents firm orders for which funding is authorized and appropriated. |
|||||||||||||||||
(2)Unfunded backlog represents firm orders for which as of the reporting date, funding is not authorized and appropriated. Unfunded backlog excludes unexercised contract options and indefinite delivery, indefinite quantity (IDIQ) contracts until the time the option or IDIQ task order is exercised or awarded. |
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(3)Information Systems backlog as of December 31, 2013 includes $1.0 billion of adjustments recognized in the six months ended June 30, 2013, primarily to reduce unfunded backlog for expired periods of performance on active contracts, including task orders on IDIQ contracts. |
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New Awards — The estimated values of contract awards included in backlog during the three months and twelve months ended
Non-GAAP Financial Measures Disclosure: Today's press release contains non-GAAP (accounting principles generally accepted in
Pension-adjusted diluted EPS: Diluted EPS excluding the after-tax net pension adjustment per share, as defined below. These per share amounts are provided for consistency and comparability of operating results. Management uses pension-adjusted diluted EPS, as reconciled in Table 1, as an internal measure of financial performance.
Cash provided by operating activities before discretionary pension contributions: Cash provided by operating activities before the after-tax impact of discretionary pension contributions. Cash provided by operating activities before discretionary pension contributions has been provided for consistency and comparability of 2013 and 2012 financial performance and is reconciled in Table 2.
Free cash flow: Cash provided by operating activities less capital expenditures (including outsourcing contract & related software costs). We use free cash flow as a key factor in our planning for, and consideration of, strategic acquisitions, stock repurchases and the payment of dividends. This measure should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating results presented in accordance with GAAP. Free cash flow is reconciled in Table 2.
Free cash flow provided by operating activities before discretionary pension contributions: Free cash flow provided by operating activities before the after-tax impact of discretionary pension contributions. We use free cash flow provided by operating activities before discretionary pension contributions as a key factor in our planning for, and consideration of, strategic acquisitions, stock repurchases and the payment of dividends. This measure should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating results presented in accordance with GAAP. Free cash flow provided by operating activities before discretionary pension contributions is reconciled in Table 2.
Net FAS/CAS pension adjustment: Pension expense determined in accordance with GAAP less pension expense allocated to the operating segments under U.S. Government Cost Accounting Standards (CAS). Net FAS/CAS pension adjustment is presented in Table 1.
After-tax net pension adjustment per share: The per share impact of the net FAS/CAS pension adjustment as defined above, after tax at the statutory rate of 35%, provided for consistency and comparability of 2013 and 2012 financial performance as presented in Table 1.
Pension-adjusted operating income: Operating income before net FAS/CAS pension adjustment as reconciled in Table 1. Management uses pension-adjusted operating income as an internal measure of financial performance.
Pension-adjusted operating margin rate: Pension-adjusted operating income as defined above, divided by sales. Management uses pension-adjusted operating margin rate, as reconciled in Table 1, as an internal measure of financial performance.
Segment operating income: Total earnings from our four segments including allocated pension expense recognized under CAS. Reconciling items to operating income are unallocated corporate expenses, including unallowable or unallocable portions of management and administration, legal, environmental, certain compensation and retiree benefits, and other expenses; net FAS/CAS pension adjustment; and reversal of royalty income included in segment operating income. Management uses segment operating income, as reconciled in Table 3, as an internal measure of financial performance of our individual operating segments.
Segment operating margin rate: Segment operating income as defined above, divided by sales. Management uses segment operating margin rate, as reconciled in Table 3, as an internal measure of financial performance.
SOURCE
Randy Belote (Media), 703-280-2720, randy.belote@ngc.com or Steve Movius (Investors), 703-280-4575, steve.movius@ngc.com