Document and Entity Information
Document and Entity Information Document - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 20, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NORTHROP GRUMMAN CORP /DE/ | |
Entity Central Index Key | 1,133,421 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 174,078,522 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Sales | ||||
Product | $ 4,135 | $ 3,721 | $ 11,885 | $ 10,759 |
Service | 2,392 | 2,434 | 7,284 | 7,352 |
Total sales | 6,527 | 6,155 | 19,169 | 18,111 |
Operating costs and expenses | ||||
Product | 3,153 | 2,760 | 8,982 | 7,992 |
Service | 1,863 | 1,907 | 5,646 | 5,819 |
General and administrative expenses | 666 | 662 | 2,009 | 1,938 |
Operating income | 845 | 826 | 2,532 | 2,362 |
Other (expense) income | ||||
Interest expense | (73) | (74) | (224) | (224) |
Other, net | 13 | 17 | 57 | 37 |
Earnings before income taxes | 785 | 769 | 2,365 | 2,175 |
Federal and foreign income tax expense | 140 | 167 | 528 | 500 |
Net earnings | $ 645 | $ 602 | $ 1,837 | $ 1,675 |
Basic earnings per share | ||||
Basic earnings per share | $ 3.70 | $ 3.38 | $ 10.53 | $ 9.32 |
Weighted-average common shares outstanding, in millions | 174.2 | 178.1 | 174.5 | 179.8 |
Diluted earnings per share | ||||
Diluted earnings per share | $ 3.68 | $ 3.35 | $ 10.46 | $ 9.23 |
Weighted-average diluted shares outstanding, in millions | 175.3 | 179.6 | 175.6 | 181.5 |
Net earnings (from above) | $ 645 | $ 602 | $ 1,837 | $ 1,675 |
Change in unamortized benefit plan costs, net of tax | 99 | 101 | 300 | 302 |
Change in cumulative translation adjustment | 0 | (6) | 0 | (19) |
Other, net | 0 | (1) | 3 | (1) |
Other comprehensive income, net of tax | 99 | 94 | 303 | 282 |
Comprehensive income | $ 744 | $ 696 | $ 2,140 | $ 1,957 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Financial Position (Unaudited) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and cash equivalents | $ 1,878 | $ 2,541 |
Accounts receivable, net | 4,414 | 3,299 |
Inventoried costs, net | 1,007 | 816 |
Prepaid expenses and other current assets | 300 | 200 |
Total current assets | 7,599 | 6,856 |
Property, plant and equipment, net of accumulated depreciation of $4,994 in 2017 and $4,831 in 2016 | 3,925 | 3,588 |
Goodwill | 12,456 | 12,450 |
Deferred tax assets | 1,200 | 1,462 |
Other non-current assets | 1,333 | 1,258 |
Total assets | 26,513 | 25,614 |
Liabilities | ||
Trade accounts payable | 1,507 | 1,554 |
Accrued employee compensation | 1,309 | 1,342 |
Advance payments and amounts in excess of costs incurred | 1,290 | 1,471 |
Other current liabilities | 2,194 | 1,263 |
Total current liabilities | 6,300 | 5,630 |
Long-term debt, net of current portion of $863 in 2017 and $12 in 2016 | 6,227 | 7,058 |
Pension and other post-retirement benefit plan liabilities | 6,579 | 6,818 |
Other non-current liabilities | 914 | 849 |
Total liabilities | 20,020 | 20,355 |
Commitments and contingencies | ||
Shareholders’ equity | ||
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, $1 par value; 800,000,000 shares authorized; issued and outstanding: 2017—174,077,667 and 2016—175,068,263 | 174 | 175 |
Paid-in capital | 16 | 0 |
Retained earnings | 11,546 | 10,630 |
Accumulated other comprehensive loss | (5,243) | (5,546) |
Total shareholders’ equity | 6,493 | 5,259 |
Total liabilities and shareholders’ equity | $ 26,513 | $ 25,614 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Financial Position (Unaudited) (Parentheticals) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ (4,994) | $ (4,831) |
Long-term Debt and Capital Lease Obligations, Current | $ 863 | $ 12 |
Preferred Stock, par value | $ 1 | $ 1 |
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value | $ 1 | $ 1 |
Common Stock, shares authorized | 800,000,000 | 800,000,000 |
Common Stock, shares issued | 174,077,667 | 175,068,263 |
Common Stock, shares outstanding | 174,077,667 | 175,068,263 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Operating Activities | ||
Net earnings | $ 1,837 | $ 1,675 |
Adjustments to reconcile to net cash provided by operating activities: | ||
Depreciation and amortization | 322 | 322 |
Stock-based compensation | 66 | 61 |
Deferred income taxes | 79 | (13) |
Changes in assets and liabilities: | ||
Accounts receivable, net | (1,115) | (830) |
Inventoried costs, net | (191) | 14 |
Prepaid expenses and other assets | (86) | (144) |
Accounts payable and other liabilities | (41) | (292) |
Income taxes payable | (58) | 218 |
Retiree benefits | 235 | 318 |
Other, net | (42) | (47) |
Net cash provided by operating activities | 1,006 | 1,282 |
Investing activities | ||
Capital expenditures | (650) | (608) |
Other, net | 21 | 3 |
Net cash used in investing activities | (629) | (605) |
Financing activities | ||
Common stock repurchases | (393) | (1,149) |
Payments of long-term debt | 0 | (107) |
Cash dividends paid | (515) | (482) |
Payments of employee taxes withheld from share-based awards | (91) | (152) |
Other, net | (41) | (3) |
Net cash used in financing activities | (1,040) | (1,893) |
Decrease in cash and cash equivalents | (663) | (1,216) |
Cash and cash equivalents, beginning of year | 2,541 | 2,319 |
Cash and cash equivalents, end of period | $ 1,878 | $ 1,103 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Millions | Total | Common stock | Paid-in capital | Retained earnings | Accumulated other comprehensive loss |
Beginning of year at Dec. 31, 2015 | $ 181 | $ 0 | $ 10,661 | $ (5,320) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock repurchased | (6) | (1,154) | |||
Net earnings | $ 1,675 | 1,675 | |||
Dividends declared | (472) | ||||
Stock compensation | 2 | 0 | (82) | ||
Other comprehensive income, net of tax | 282 | 282 | |||
End of period at Sep. 30, 2016 | $ 5,767 | 177 | 0 | 10,628 | (5,038) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Cash dividends declared per share | $ 2.60 | ||||
Beginning of year at Dec. 31, 2016 | $ 5,259 | 175 | 0 | 10,630 | (5,546) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Common stock repurchased | (2) | (371) | |||
Net earnings | 1,837 | 1,837 | |||
Dividends declared | (511) | ||||
Stock compensation | 1 | 16 | (39) | ||
Other comprehensive income, net of tax | 303 | 303 | |||
End of period at Sep. 30, 2017 | $ 6,493 | $ 174 | $ 16 | $ 11,546 | $ (5,243) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Cash dividends declared per share | $ 2.90 |
Basis of Presentation (Unaudite
Basis of Presentation (Unaudited) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Principles of Consolidation and Reporting These unaudited condensed consolidated financial statements include the accounts of Northrop Grumman Corporation and its subsidiaries (herein referred to as “Northrop Grumman,” the “company,” “we,” “us,” or “our”). Material intercompany accounts, transactions and profits are eliminated in consolidation. Investments in equity securities and joint ventures where the company has significant influence, but not control, are accounted for using the equity method. These unaudited condensed consolidated financial statements are prepared in accordance with the rules of the Securities and Exchange Commission (SEC) for interim reporting. These financial statements include adjustments of a normal recurring nature considered necessary by management for a fair presentation of the company’s unaudited condensed consolidated financial position, results of operations and cash flows. The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the information contained in the company’s Annual Report on Form 10-K for the year ended December 31, 2016 (2016 Annual Report on Form 10-K). The quarterly information is labeled using a calendar convention; that is, first quarter is consistently labeled as ending on March 31, second quarter as ending on June 30 and third quarter as ending on September 30. It is the company’s long-standing practice to establish actual interim closing dates using a “fiscal” calendar, in which we close our books on a Friday near these quarter-end dates 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. Accounting Estimates These unaudited condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “FAS”). The preparation thereof requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of sales and expenses during the reporting period. Estimates have been prepared using the most current and best available information; however, actual results could differ materially from those estimates. Revenue Recognition The majority of our sales are derived from long-term contracts with the U.S. Government for the production of goods, the provision of services, or a combination of both. In accounting for these contracts, we utilize either the cost-to-cost method or the units-of-delivery method of percentage-of-completion accounting, with cost-to-cost being the predominant method. The company estimates profit on contracts as the difference between total estimated sales and total estimated cost at completion and recognizes that profit either as costs are incurred (cost-to-cost) or as units are delivered (units-of-delivery). The company classifies sales as product or service depending upon the predominant attributes of the contract. Contract sales may include estimated amounts not contractually agreed to or yet funded by the customer, including cost or performance incentives (such as award and incentive fees), un-priced change orders, contract claims and requests for equitable adjustment (REAs). Further, as contracts are performed, change orders can be a regular occurrence and may be un-priced until negotiated with the customer. Un-priced change orders, contract claims (including change orders unapproved as to both scope and price) and REAs are included in estimated contract sales when management believes it is probable the un-priced change order, claim and/or REA will result in additional contract revenue and the amount can be reliably estimated considering the facts and circumstances known to us at the time. Amounts recognized related to claims and REAs as of September 30, 2017 were not material individually or in aggregate. Net Estimate-At-Completion (EAC) Adjustments - We recognize changes in estimated contract sales or costs and the resulting changes in contract operating margins using the cumulative catch-up method of accounting. This method recognizes, in current period operating margin, the cumulative effect of the changes on current and prior periods as net EAC adjustments; sales and operating margins in future periods of contract performance are recognized as if the revised estimates had been used since contract inception. If it is determined that a loss will result from the performance of a contract, the entire amount of the estimable future loss, including an allocation of general and administrative costs, is charged against income in the period the loss is identified. Each loss provision is first offset against costs included in unbilled accounts receivable or inventoried costs; remaining amounts are reflected in current liabilities. Significant EAC adjustments on a single contract could have a material effect on the company’s unaudited condensed consolidated financial position or results of operations. When such adjustments occur, we generally disclose the nature, underlying conditions and financial impact of the adjustments. During the three months ended September 30, 2017, we recorded a $56 million favorable EAC adjustment on a restricted program at Aerospace Systems largely related to performance incentives. The following table presents the effect of aggregate net EAC adjustments: Three Months Ended September 30 Nine Months Ended September 30 $ in millions, except per share data 2017 2016 2017 2016 Operating Income $ 102 $ 121 $ 315 $ 387 Net Earnings (1) 66 79 205 252 Diluted earnings per share (1) 0.38 0.44 1.17 1.39 (1) Based on statutory tax rates Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss are as follows: $ in millions September 30, December 31, Unamortized benefit plan costs, net of tax benefit of $3,257 in 2017 and $3,439 in 2016 $ (5,116 ) $ (5,416 ) Cumulative translation adjustment (132 ) (132 ) Net unrealized gain on marketable securities and cash flow hedges, net of tax 5 2 Total accumulated other comprehensive loss $ (5,243 ) $ (5,546 ) Unamortized benefit plan costs consist primarily of net after-tax actuarial losses totaling $5.2 billion and $5.6 billion as of September 30, 2017 and December 31, 2016 , respectively. Net actuarial gains or losses are re-determined annually or upon remeasurement events and principally arise from changes in the interest rate used to discount our benefit obligations and differences between expected and actual returns on plan assets. Reclassifications from accumulated other comprehensive loss to net earnings related to the amortization of benefit plan costs were $100 million and $299 million , net of taxes, for the three and nine months ended September 30, 2017 , respectively, and were $101 million and $302 million , net of taxes, for the three and nine months ended September 30, 2016 , respectively. The reclassifications represent the amortization of net actuarial losses and prior service credits, and are included in the computation of net periodic pension cost. See Note 9 for further information. Reclassifications from accumulated other comprehensive loss to net earnings, relating to cumulative translation adjustments, marketable securities and effective cash flow hedges were not material for the three and nine months ended September 30, 2017 and 2016 . Related Party Transactions For all periods presented, the company had no material related party transactions. Accounting Standards Updates On March 10, 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-07 Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . ASU 2017-07 requires employers that sponsor defined benefit pension and/or other post-retirement benefit plans to report the service cost component of net benefit cost in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Employers are required to present the other components of net benefit costs in the income statement separately from the service cost component and outside a subtotal of income from operations. Additionally, only the service cost component of net periodic pension cost will be eligible for asset capitalization. We expect adoption of ASU 2017-07 to result in a change in our net FAS/CAS pension adjustment within operating income, which will be offset by a corresponding change in Other, net to reflect the impact of presenting the interest cost, expected return on plan assets, and amortization of prior service credit and net actuarial loss components of net periodic benefit costs outside of operating income. In addition, interest on service cost and plan administrative expenses, which, in some cases, are currently included within service cost, will be presented in the interest cost and amortization of net actuarial loss components, respectively, in Other, net. We expect to adopt ASU 2017-07 on January 1, 2018 using the retrospective method and do not anticipate a material change to our 2017 net FAS/CAS pension adjustment or other, net when they are recast to reflect the standard. We also do not expect ASU 2017-07 to have a material impact on our consolidated statements of financial position and/or cash flows. On February 25, 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . ASU 2016-02 supersedes existing lease guidance, including Accounting Standards Codification (ASC) 840 - Leases . Among other things, ASU 2016-02 requires recognition of a right-of-use asset and liability for future lease payments for contracts that meet the definition of a lease and requires disclosure of certain information about leasing arrangements. ASU 2016-02 will be effective January 1, 2019, although early adoption is permitted, and it is to be applied using a modified retrospective approach. We expect to adopt the standard on January 1, 2019. We are reviewing our leases to determine the effect ASU 2016-02 will have on the company’s consolidated financial position, annual results of operations and/or cash flows. We currently expect the right-of-use assets and lease liabilities recognized upon adoption will each approximate our future minimum lease payments, as disclosed in our 2016 Annual Report on Form 10-K. We do not expect ASU 2016-02 to have a material impact on our annual results of operations and/or cash flows. On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers . ASU 2014-09 supersedes existing revenue recognition guidance, including ASC 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts, and outlines a single set of comprehensive principles for recognizing revenue under U.S. GAAP. Among other things, it requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time. On July 9, 2015, the FASB approved a one year deferral of the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017. ASU 2014-09 may be applied either retrospectively or through the use of a modified-retrospective method. We expect to adopt the standard on January 1, 2018 and apply it retrospectively to all periods presented. During 2016, we substantially completed our evaluation of ASU 2014-09, including the expected impact on our business processes, systems and controls, and potential differences in the timing and/or method of revenue recognition for our contracts. As a result of our evaluation, we identified changes to and are modifying certain of our accounting policies and practices. We also designed and implemented specific controls over our evaluation of the impact of ASU 2014-09, including our calculation of the cumulative effect of adopting ASU 2014-09. Although we do not expect significant changes to our accounting systems or controls upon adoption of ASU 2014-09, we have modified certain of our current controls to incorporate the revisions we have made to our accounting policies and practices. Based on our evaluation of ASU 2014-09, we currently do not expect it to have a material impact on our results of operations or cash flows in the periods after adoption. Under ASU 2014-09, revenue is recognized as control transfers to the customer. As such, revenue for our contracts will generally be recognized over time using the cost-to-cost method, which is consistent with the revenue recognition model we currently use for the majority of our contracts. For those contracts where we currently recognize revenue as units are delivered, in most cases the accounting for those contracts will change under ASU 2014-09 such that we will recognize revenue as costs are incurred. This change will generally result in an acceleration of revenue as compared with our current revenue recognition method for those contracts. In addition, for certain of our contracts, we expect the number of performance obligations to change under ASU 2014-09, which may alter the timing of revenue and margin recognition. ASU 2014-09 also requires expanded disclosure regarding the nature, timing, and uncertainty of revenue, cash flow and customer contract balances, including how and when we satisfy our performance obligations and the relationship between revenue recognized and changes in contract balances during a reporting period. We have evaluated these disclosure requirements and are incorporating the collection of relevant data into our quarterly processes. During the second quarter of 2017, we completed our assessment of the cumulative effect of adopting ASU 2014-09. Under the full retrospective method, we expect to recognize the cumulative effect of adoption as an increase in unbilled accounts receivable, a reduction in inventoried costs, an increase in advance payments and amounts in excess of costs incurred and a net increase in retained earnings as of January 1, 2016. During the second quarter of 2017, we also completed our assessment of the impact of adoption on our 2016 results. We currently expect adopting ASU 2014-09 to result in an increase in revenue of approximately $200 million and a decrease in operating income of approximately $70 million for the year ended December 31, 2016. These changes principally reflect the impact of converting contracts to the cost-to-cost method of accounting as well as changes in the number of performance obligations for certain of our contracts. The impact of adopting ASU 2014-09 on our 2016 results of operations may not be indicative of the impact in future years. We will continue our evaluation of ASU 2014-09 (including how it may impact new contracts we receive as well as new or emerging interpretations of the standard) through the date of adoption. Other accounting standards updates issued, but not effective until after September 30, 2017 , are not expected to have a material effect on the company’s unaudited condensed consolidated financial position, annual results of operations and/or cash flows. |
Business Acquisitions (Unaudite
Business Acquisitions (Unaudited) | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Business Combination Disclosure [Text Block] | PENDING ACQUISITION OF ORBITAL ATK On September 17, 2017, the company entered into a definitive merger agreement to acquire all of the outstanding shares of Orbital ATK, Inc. (Orbital ATK) for approximately $7.8 billion in cash, plus the assumption of approximately $1.4 billion in net debt (the “Orbital ATK Acquisition”). Under the terms of the merger agreement, Orbital ATK shareholders are to receive all-cash consideration of $134.50 per share. We expect to fund the Orbital ATK Acquisition with the proceeds from our recently completed debt financing and cash on hand. See Notes 8 and 11 for further information on our Orbital ATK Acquisition financing. The transaction is currently expected to close in the first half of 2018 and is subject to customary closing conditions, including regulatory and Orbital ATK shareholder approval. If the merger agreement is terminated under certain circumstances, Orbital ATK will be required to pay the company a termination fee of $275 million . Upon completion of the Orbital ATK Acquisition, we plan to establish Orbital ATK as a new, fourth business sector. |
Earnings Per Share, Share Repur
Earnings Per Share, Share Repurchases and Dividends on Common Stock (Unaudited) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
EARNINGS PER SHARE, SHARE REPURCHASES AND DIVIDENDS ON COMMON STOCK | EARNINGS PER SHARE, SHARE REPURCHASES AND DIVIDENDS ON COMMON STOCK Basic Earnings Per Share We calculate basic earnings per share by dividing net earnings by the weighted-average number of shares of common stock outstanding during each period. Diluted Earnings Per Share Diluted earnings per share include the dilutive effect of awards granted to employees under stock-based compensation plans. The dilutive effect of these securities totaled 1.1 million and 1.1 million shares for the three and nine months ended September 30, 2017 , respectively. The dilutive effect of these securities totaled 1.5 million and 1.7 million shares for the three and nine months ended September 30, 2016 , respectively. Share Repurchases On December 4, 2014, the company’s board of directors authorized a share repurchase program of up to $3.0 billion of the company’s common stock (the “2014 Repurchase Program”). Repurchases under the 2014 Repurchase Program commenced in March 2015 and were completed in March 2016. On September 16, 2015, the company’s board of directors authorized a new share repurchase program of up to $4.0 billion of the company’s common stock (the “2015 Repurchase Program”). Repurchases under the 2015 Repurchase Program commenced in March 2016 upon completion of the company’s 2014 Repurchase Program. As of September 30, 2017 , repurchases under the 2015 Repurchase Program totaled $1.7 billion ; $2.3 billion remained under this share repurchase authorization. By its terms, the 2015 Repurchase Program is set 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 upon repurchase and, in the periods presented, has not made any purchases of common stock other than in connection with these publicly announced repurchase programs. The table below summarizes the company’s share repurchases to date under the authorizations described above: Shares Repurchased Repurchase Program Amount Total Average (1) Date Completed Nine Months Ended September 30 2017 2016 December 4, 2014 $ 3,000 18.0 $ 166.70 March 2016 — 1.4 September 16, 2015 $ 4,000 7.4 $ 222.93 1.6 4.2 (1) Includes commissions paid. Dividends on Common Stock In May 2017, the company increased the quarterly common stock dividend 11 percent to $1.00 per share from the previous amount of $0.90 per share. In May 2016, the company increased the quarterly common stock dividend 13 percent to $0.90 per share from the previous amount of $0.80 per share. |
Segment Information (Unaudited)
Segment Information (Unaudited) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The company is aligned in three operating sectors, which also comprise our reportable segments: Aerospace Systems, Mission Systems and Technology Services. The following table presents sales and operating income by segment: Three Months Ended September 30 Nine Months Ended September 30 $ in millions 2017 2016 2017 2016 Sales Aerospace Systems $ 3,082 $ 2,782 $ 8,950 $ 7,956 Mission Systems 2,837 2,698 8,357 8,081 Technology Services 1,183 1,190 3,552 3,617 Intersegment eliminations (575 ) (515 ) (1,690 ) (1,543 ) Total sales 6,527 6,155 19,169 18,111 Operating income Aerospace Systems 334 311 961 909 Mission Systems 363 351 1,090 1,055 Technology Services 133 130 398 387 Intersegment eliminations (71 ) (61 ) (211 ) (188 ) Total segment operating income 759 731 2,238 2,163 Net FAS/CAS pension adjustment 172 91 445 234 Unallocated corporate expenses (85 ) 5 (148 ) (31 ) Other (1 ) (1 ) (3 ) (4 ) Total operating income $ 845 $ 826 $ 2,532 $ 2,362 Net FAS/CAS Pension Adjustment For financial statement purposes, we account for our employee pension plans in accordance with FAS. However, the cost of these plans is charged to our contracts in accordance with the Federal Acquisition Regulation (FAR) and the related U.S. Government Cost Accounting Standards (CAS). The net FAS/CAS pension adjustment reflects the difference between CAS pension expense included as cost in segment operating income and FAS expense included in total operating income. Unallocated Corporate Expenses Unallocated corporate expenses include the portion of corporate expenses not considered allowable or allocable under applicable CAS or the FAR, and therefore not allocated to the segments. Such costs consist of a portion of management and administration, legal, environmental, compensation, retiree benefits and corporate unallowable costs. |
Income Taxes (Unaudited)
Income Taxes (Unaudited) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Three Months Ended September 30 Nine Months Ended September 30 $ in millions 2017 2016 2017 2016 Federal and foreign income tax expense $ 140 $ 167 $ 528 $ 500 Effective income tax rate 17.8 % 21.7 % 22.3 % 23.0 % Current Quarter The company’s effective tax rate of 17.8 percent for the three months ended September 30, 2017 was lower as compared with the same period in 2016 principally due to a $45 million increase in research credits related to the current period and the filing of our 2016 tax return, and a $35 million benefit recognized for additional manufacturing deductions related to prior years. The prior year period included a $42 million benefit recognized in connection with the resolution of the Internal Revenue Service (IRS) examination of the company’s 2007-2011 tax returns. Year to Date The company’s effective tax rate of 22.3 percent for the nine months ended September 30, 2017 was lower as compared with the same period in 2016 primarily due to a $55 million increase in research credits largely related to our prior year tax returns and a $32 million benefit recognized for additional manufacturing deductions related to prior years. The effective tax rate for the nine months ended September 30, 2017 and 2016 each include separate $42 million benefits recognized in connection with the resolution of IRS examinations of the company’s prior year tax returns. We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. Our 2014-2015 federal tax returns are currently under IRS examination and our 2007-2011 federal tax returns are subject to examination due to the filing of refund claims for these years. The company believes it is reasonably possible that within the next twelve months we may resolve certain matters related to the years under examination, which may result in reductions of our unrecognized tax benefits up to $110 million and income tax expense up to $30 million . |
Fair Value of Financial Instrum
Fair Value of Financial Instruments (Unaudited) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The company holds a portfolio of marketable securities consisting of securities that are classified as either trading or available-for-sale to partially fund non-qualified employee benefit plans. These securities are included in other non-current assets in the unaudited condensed consolidated statements of financial position. The company's derivative portfolio consists primarily of foreign currency forward contracts. Where model-derived valuations are appropriate, the company utilizes the income approach to determine the fair value and uses the applicable London Interbank Offered Rate (LIBOR) swap rates. The following table presents the financial assets and liabilities we record at fair value on a recurring basis identified by the level of inputs used to determine fair value: September 30, 2017 December 31, 2016 $ in millions Level 1 Level 2 Total Level 1 Level 2 Total Financial Assets (Liabilities) Marketable securities Trading $ 333 $ 1 $ 334 $ 321 $ 2 $ 323 Available-for-sale 11 — 11 7 — 7 Derivatives — 4 4 — 8 8 The notional value of the company’s derivative portfolio at September 30, 2017 and December 31, 2016 , was $148 million and $147 million , respectively. The portion of the notional value designated as cash flow hedges at September 30, 2017 was $10 million . At December 31, 2016 , no portion of the notional value was designated as a cash flow hedge. The derivative fair values and related unrealized gains/losses at September 30, 2017 and December 31, 2016 , were not material. There were no transfers of financial instruments between the three levels of the fair value hierarchy during the nine months ended September 30, 2017 . The carrying value of cash and cash equivalents approximates fair value. Long-term Debt The estimated fair value of long-term debt was $7.8 billion and $7.6 billion as of September 30, 2017 and December 31, 2016 , respectively. We calculated the fair value of long-term debt using Level 2 inputs, based on interest rates available for debt with terms and maturities similar to the company’s existing debt arrangements. The carrying value of long-term debt was $7.1 billion as of September 30, 2017 and December 31, 2016 . The current portion of long-term debt is recorded in Other current liabilities in the unaudited condensed consolidated statements of financial position. |
Investigations, Claims and Liti
Investigations, Claims and Litigation (Unaudited) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Text Block Supplement [Abstract] | |
INVESTIGATIONS, CLAIMS AND LITIGATION | INVESTIGATIONS, CLAIMS AND LITIGATION 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 construction and delivery of flats sequencing systems (FSS) as part of the postal automation program. The FSS have been delivered. The company’s lawsuit is based on various theories of liability. The complaint seeks approximately $63 million for unpaid portions of the contract price, and approximately $115 million based on the company’s assertions that, through various acts and omissions over the life of the contract, the USPS adversely affected the cost and schedule of performance and materially altered the company’s obligations under the contract. The United States responded to the company’s complaint with an answer, denying most of the company’s claims, and counterclaims seeking approximately $410 million , less certain amounts outstanding under the contract. The principal counterclaim alleges that the company delayed its performance and caused damages to the USPS because USPS did not realize certain costs savings as early as it had expected. On April 2, 2013, the U.S. Department of Justice informed the company of a False Claims Act complaint relating to the FSS contract that was filed under seal by a relator in June 2011 in the U.S. 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 contract, alleged damage to the USPS in an amount of at least approximately $179 million annually, alleged that he was improperly discharged in retaliation, and sought an unspecified partial refund of the contract purchase price, penalties, attorney’s fees and other costs of suit. The relator later voluntarily dismissed his retaliation claim and reasserted it in a separate arbitration, which he also ultimately voluntarily dismissed. On September 5, 2014, the court granted the company’s motion for summary judgment and ordered the relator’s False Claims Act case be dismissed with prejudice. On December 19, 2014, the company filed a motion for partial summary judgment asking the court to dismiss the principal counterclaim referenced above. On June 29, 2015, the Court heard argument and denied that motion without prejudice to filing a later motion to dismiss. Although the ultimate outcome of these matters (“the FSS matters,” collectively), including any possible loss, cannot be predicted or reasonably estimated at this time, the company intends vigorously to pursue and defend the FSS matters. On August 8, 2013, the company received a court-appointed expert’s report in litigation pending in the Second Federal Court of the Federal District in Brazil brought by the Brazilian Post and Telegraph Corporation (ECT), a Brazilian state-owned entity, against Solystic SAS (Solystic), a French subsidiary of the company, and two of its consortium partners. In this suit, commenced on December 17, 2004, and relatively inactive for some period of time, ECT alleges the consortium breached its contract with ECT and seeks damages of approximately R$111 million (the equivalent of approximately $35 million as of September 30, 2017 ), plus interest, inflation adjustments and attorneys’ fees, as authorized by Brazilian law, which amounts could be significant over time. The original suit sought R$89 million (the equivalent of approximately $28 million as of September 30, 2017 ) in damages. In October 2013, ECT asserted an additional damage claim of R$22 million (the equivalent of approximately $7 million as of September 30, 2017 ). In its counterclaim, Solystic alleges ECT breached the contract by wrongfully refusing to accept the equipment Solystic had designed and built and seeks damages of approximately €31 million (the equivalent of approximately $37 million as of September 30, 2017 ), plus interest, inflation adjustments and attorneys’ fees, as authorized by Brazilian law. The Brazilian court retained an expert to consider certain issues pending before it. On August 8, 2013 and September 10, 2014, the company received reports from the expert, which contain some recommended findings relating to liability and the damages calculations put forth by ECT. Some of the expert’s recommended findings were favorable to the company and others were favorable to ECT. In November 2014, the parties submitted comments on the expert’s most recent report. On June 16, 2015, the court published a decision denying the parties’ request to present oral testimony. At some future point, the court is expected to issue a decision on the parties’ claims and counterclaims that could accept or reject, in whole or in part, the expert’s recommended findings. The company is a party to various investigations, lawsuits, claims and other legal proceedings, including government investigations and claims, that arise in the ordinary course of our business. The nature of legal proceedings is such that we cannot assure the outcome of any particular matter. However, based on information available to the company to date, and other than with respect to the FSS matters discussed separately above, the company does not believe that the outcome of any matter pending against the company is likely to have a material adverse effect on the company’s unaudited condensed consolidated financial position as of September 30, 2017 , or its annual results of operations and/or cash flows. |
Commitments and Contingencies (
Commitments and Contingencies (Unaudited) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES U.S. Government Cost Claims From time to time, the company is advised of claims by the U.S. Government concerning certain potential disallowed costs, plus, at times, penalties and interest. When such findings are presented, the company and the U.S. Government representatives engage in discussions to enable the company to evaluate the merits of these claims, as well as to assess the amounts being claimed. Where appropriate, provisions are made to reflect the company’s estimated exposure for such potential disallowed costs. Such provisions are reviewed periodically using the most recent information available. The company believes it has adequately reserved for disputed amounts that are probable and reasonably estimable, and the outcome of any such matters would not have a material adverse effect on its unaudited condensed consolidated financial position as of September 30, 2017 , or its annual results of operations and/or cash flows. Environmental Matters The table below summarizes management’s estimate of the range of reasonably possible future costs for environmental remediation, the amount accrued within that range, and the deferred costs expected to be recoverable through overhead charges on U.S. Government contracts as of September 30, 2017 and December 31, 2016 : $ in millions Range of Reasonably Possible Future Costs (1) Accrued Costs (2) Deferred Costs (3) September 30, 2017 $409 - $796 $ 416 $ 210 December 31, 2016 379 - 774 385 195 (1) Estimated remediation costs are not discounted to present value. The range of reasonably possible future costs does not take into consideration amounts expected to be recoverable through overhead charges on U.S. Government contracts. (2) As of September 30, 2017 , $144 million is recorded in other current liabilities and $272 million is recorded in other non-current liabilities. (3) As of September 30, 2017 , $75 million is deferred in inventoried costs and $135 million is deferred in other non-current assets. These amounts are evaluated for recoverability on a routine basis. Although management cannot predict whether new information gained as our environmental remediation projects progress, or as changes in facts and circumstances occur, will materially affect the estimated liability accrued, we do not anticipate future remediation expenditures associated with our currently identified projects will have a material adverse effect on the company’s unaudited condensed consolidated financial position as of September 30, 2017 , or its annual results of operations and/or cash flows. Financial Arrangements In the ordinary course of business, the company uses standby letters of credit and guarantees issued by commercial banks and surety bonds issued principally by insurance companies to guarantee the performance on certain obligations. At September 30, 2017 , there were $210 million of stand-by letters of credit and guarantees and $208 million of surety bonds outstanding. Indemnifications The company has provided indemnification for certain environmental, income tax and other potential liabilities in connection with certain of its divestitures. The settlement of these liabilities is not expected to have a material adverse effect on the company’s unaudited condensed consolidated financial position as of September 30, 2017 , or its annual results of operations and/or cash flows. Operating Leases Rental expense for operating leases for the three and nine months ended September 30, 2017 was $73 million and $227 million , respectively, and was $69 million and $228 million for the three and nine months ended September 30, 2016 , respectively. These amounts are net of immaterial amounts of sublease rental income. Credit Facilities In December 2016, a subsidiary of the company entered into a two-year credit facility, with two additional one-year option periods, in an aggregate principal amount of £120 million (the equivalent of approximately $162 million as of September 30, 2017 ) (the “2016 Credit Agreement”). The 2016 Credit Agreement is guaranteed by the company. At September 30, 2017 , there was £110 million (the equivalent of approximately $149 million as of September 30, 2017 ) outstanding under this facility, which bears interest at a rate of LIBOR plus 1.10 percent . All of the borrowings outstanding under this facility mature less than one year from the date of issuance, but may be renewed under the terms of the facility. Based on our intent and ability to refinance the obligations on a long-term basis, substantially all of the borrowings are classified as non-current. The company also maintains a five-year unsecured credit facility in an aggregate principal amount of $1.6 billion that matures in July 2020. At September 30, 2017 , there was no balance outstanding under this facility. At September 30, 2017 , the company was in compliance with all covenants under its credit agreements. Financing Commitment On September 17, 2017, we entered into a commitment letter (the “Commitment Letter”) with JPMorgan Chase Bank, N.A. (JPMorgan), pursuant to which, subject to the terms and conditions set forth therein, JPMorgan committed to provide a 364-day senior unsecured bridge loan facility in an aggregate principal amount of up to $8.5 billion (the “Bridge Facility”), to finance the Orbital ATK Acquisition and to pay related fees and expenses. Under the terms of the Commitment Letter, the Bridge Facility availability is subject to reduction in equivalent amounts upon an incurrence by the company of term loans and/or the issuance of notes prior to the consummation of the Orbital ATK Acquisition and certain other specified events. In consideration for JPMorgan’s commitment to provide the Bridge Facility, we paid to JPMorgan a non-refundable commitment fee of $29.8 million , which has been amortized from inception to the date permanent financing was established as described below. Subsequent Event In October 2017, the company issued $8.25 billion of unsecured senior notes. The company intends to use the net proceeds to finance the Orbital ATK Acquisition and to pay related fees and expenses. See Note 11 for further information. As a result of the issuance of the unsecured senior notes, the company terminated the Commitment Letter. |
Retirement Benefits (Unaudited)
Retirement Benefits (Unaudited) | 9 Months Ended |
Sep. 30, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
RETIREMENT BENEFITS | RETIREMENT BENEFITS The cost to the company of its retirement plans is shown in the following table: Three Months Ended September 30 Nine Months Ended September 30 Pension Medical and Pension Medical and $ in millions 2017 2016 2017 2016 2017 2016 2017 2016 Components of net periodic benefit cost Service cost $ 94 $ 112 $ 6 $ 8 $ 322 $ 335 $ 19 $ 23 Interest cost 308 321 21 24 925 963 63 71 Expected return on plan assets (471 ) (464 ) (22 ) (21 ) (1,414 ) (1,390 ) (67 ) (64 ) Amortization of: Prior service credit (14 ) (15 ) (4 ) (6 ) (43 ) (45 ) (15 ) (17 ) Net loss from previous years 178 179 1 3 534 536 6 11 Net periodic benefit cost $ 95 $ 133 $ 2 $ 8 $ 324 $ 399 $ 6 $ 24 Employer Contributions The company sponsors defined benefit pension and post-retirement plans, as well as defined contribution plans. We fund our defined benefit pension plans annually in a manner consistent with the Employee Retirement Income Security Act of 1974, as amended by the Pension Protection Act of 2006, including making voluntary contributions from time to time. Contributions made by the company to its retirement plans are as follows: Three Months Ended September 30 Nine Months Ended September 30 $ in millions 2017 2016 2017 2016 Defined benefit pension plans $ 20 $ 14 $ 71 $ 61 Medical and life benefit plans 11 17 35 46 Defined contribution plans 91 83 267 241 |
Stock Compensation Plans and Ot
Stock Compensation Plans and Other Compensation Arrangements (Unaudited) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK COMPENSATION PLANS AND OTHER COMPENSATION ARRANGEMENTS | STOCK COMPENSATION PLANS AND OTHER COMPENSATION ARRANGEMENTS Stock Awards The following table presents the number of restricted stock rights (RSRs) and restricted performance stock rights (RPSRs) granted 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: Nine Months Ended September 30 in millions 2017 2016 RSRs granted 0.1 0.2 RPSRs granted 0.3 0.3 Grant date aggregate fair value $ 92 $ 88 RSRs typically vest on the third anniversary of the grant date, while RPSRs generally vest and pay out based on the achievement of financial metrics over a three -year period. Cash Awards The following table presents the minimum and maximum aggregate payout amounts related to cash units (CUs) and cash performance units (CPUs) granted to employees in the periods presented: Nine Months Ended September 30 $ in millions 2017 2016 Minimum aggregate payout amount $ 36 $ 35 Maximum aggregate payout amount 199 194 CUs typically vest and settle in cash on the third anniversary of the grant date, while CPUs generally vest and pay out in cash based on the achievement of financial metrics over a three -year period. |
Subsequent Events (Unaudited)
Subsequent Events (Unaudited) | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENT Unsecured Senior Notes In October 2017, the company issued $8.25 billion of unsecured senior notes to finance the Orbital ATK Acquisition and to pay related fees and expenses as follows: • $1.0 billion of 2.08 percent Senior Notes due 2020 (the “2020 Notes”), • $1.5 billion of 2.55 percent Senior Notes due 2022 (the “2022 Notes”), • $1.5 billion of 2.93 percent Senior Notes due 2025 (the “2025 Notes”), • $2.0 billion of 3.25 percent Senior Notes due 2028 (the “2028 Notes”) and • $2.25 billion of 4.03 percent Senior Notes due 2047 (the “2047 Notes”). We refer to the 2020 Notes, the 2022 Notes, the 2025 Notes, the 2028 Notes and the 2047 Notes, together, as the “notes.” Interest on the notes is payable semi-annually in arrears. The notes are generally subject to redemption, in whole or in part, at the company's discretion at any time, or from time to time, prior to maturity at a redemption price equal to the greater of 100% of the principal amount of the notes to be redeemed or an applicable “make-whole” amount, plus accrued and unpaid interest. If the Orbital ATK Acquisition is not consummated on or prior to December 17, 2018, or if the merger agreement relating to the Orbital ATK Acquisition is terminated prior to such date, then, in either case, the company will be required to redeem all of the outstanding 2020 Notes, 2022 Notes, 2025 Notes and 2047 Notes in a special mandatory redemption at a redemption price equal to 101% of the aggregate principal amount of such notes, plus accrued and unpaid interest. The proceeds of the offering of such notes will not be deposited into an escrow account pending any special mandatory redemption of such notes. The 2028 Notes are not subject to a special mandatory redemption. If the Orbital ATK Acquisition is not consummated, the company expects to use the net proceeds from the offering of the 2028 Notes for general corporate purposes, including debt repayment, share repurchases, pension plan funding, acquisitions and working capital. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | These unaudited condensed consolidated financial statements include the accounts of Northrop Grumman Corporation and its subsidiaries (herein referred to as “Northrop Grumman,” the “company,” “we,” “us,” or “our”). Material intercompany accounts, transactions and profits are eliminated in consolidation. Investments in equity securities and joint ventures where the company has significant influence, but not control, are accounted for using the equity method. |
Basis of Presentation | These unaudited condensed consolidated financial statements are prepared in accordance with the rules of the Securities and Exchange Commission (SEC) for interim reporting. These financial statements include adjustments of a normal recurring nature considered necessary by management for a fair presentation of the company’s unaudited condensed consolidated financial position, results of operations and cash flows. The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the information contained in the company’s Annual Report on Form 10-K for the year ended December 31, 2016 (2016 Annual Report on Form 10-K). |
Fiscal Period Policy | The quarterly information is labeled using a calendar convention; that is, first quarter is consistently labeled as ending on March 31, second quarter as ending on June 30 and third quarter as ending on September 30. It is the company’s long-standing practice to establish actual interim closing dates using a “fiscal” calendar, in which we close our books on a Friday near these quarter-end dates 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. |
Accounting Estimates | These unaudited condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “FAS”). The preparation thereof requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of sales and expenses during the reporting period. Estimates have been prepared using the most current and best available information; however, actual results could differ materially from those estimates. |
Revenue Recognition | The majority of our sales are derived from long-term contracts with the U.S. Government for the production of goods, the provision of services, or a combination of both. In accounting for these contracts, we utilize either the cost-to-cost method or the units-of-delivery method of percentage-of-completion accounting, with cost-to-cost being the predominant method. The company estimates profit on contracts as the difference between total estimated sales and total estimated cost at completion and recognizes that profit either as costs are incurred (cost-to-cost) or as units are delivered (units-of-delivery). The company classifies sales as product or service depending upon the predominant attributes of the contract. Contract sales may include estimated amounts not contractually agreed to or yet funded by the customer, including cost or performance incentives (such as award and incentive fees), un-priced change orders, contract claims and requests for equitable adjustment (REAs). Further, as contracts are performed, change orders can be a regular occurrence and may be un-priced until negotiated with the customer. Un-priced change orders, contract claims (including change orders unapproved as to both scope and price) and REAs are included in estimated contract sales when management believes it is probable the un-priced change order, claim and/or REA will result in additional contract revenue and the amount can be reliably estimated considering the facts and circumstances known to us at the time. Net Estimate-At-Completion (EAC) Adjustments - We recognize changes in estimated contract sales or costs and the resulting changes in contract operating margins using the cumulative catch-up method of accounting. This method recognizes, in current period operating margin, the cumulative effect of the changes on current and prior periods as net EAC adjustments; sales and operating margins in future periods of contract performance are recognized as if the revised estimates had been used since contract inception. If it is determined that a loss will result from the performance of a contract, the entire amount of the estimable future loss, including an allocation of general and administrative costs, is charged against income in the period the loss is identified. Each loss provision is first offset against costs included in unbilled accounts receivable or inventoried costs; remaining amounts are reflected in current liabilities. Significant EAC adjustments on a single contract could have a material effect on the company’s unaudited condensed consolidated financial position or results of operations. When such adjustments occur, we generally disclose the nature, underlying conditions and financial impact of the adjustments. |
Description of New Accounting Pronouncements Not yet Adopted | On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers . ASU 2014-09 supersedes existing revenue recognition guidance, including ASC 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts, and outlines a single set of comprehensive principles for recognizing revenue under U.S. GAAP. Among other things, it requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time. On July 9, 2015, the FASB approved a one year deferral of the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017. ASU 2014-09 may be applied either retrospectively or through the use of a modified-retrospective method. We expect to adopt the standard on January 1, 2018 and apply it retrospectively to all periods presented. During 2016, we substantially completed our evaluation of ASU 2014-09, including the expected impact on our business processes, systems and controls, and potential differences in the timing and/or method of revenue recognition for our contracts. As a result of our evaluation, we identified changes to and are modifying certain of our accounting policies and practices. We also designed and implemented specific controls over our evaluation of the impact of ASU 2014-09, including our calculation of the cumulative effect of adopting ASU 2014-09. Although we do not expect significant changes to our accounting systems or controls upon adoption of ASU 2014-09, we have modified certain of our current controls to incorporate the revisions we have made to our accounting policies and practices. Based on our evaluation of ASU 2014-09, we currently do not expect it to have a material impact on our results of operations or cash flows in the periods after adoption. Under ASU 2014-09, revenue is recognized as control transfers to the customer. As such, revenue for our contracts will generally be recognized over time using the cost-to-cost method, which is consistent with the revenue recognition model we currently use for the majority of our contracts. For those contracts where we currently recognize revenue as units are delivered, in most cases the accounting for those contracts will change under ASU 2014-09 such that we will recognize revenue as costs are incurred. This change will generally result in an acceleration of revenue as compared with our current revenue recognition method for those contracts. In addition, for certain of our contracts, we expect the number of performance obligations to change under ASU 2014-09, which may alter the timing of revenue and margin recognition. ASU 2014-09 also requires expanded disclosure regarding the nature, timing, and uncertainty of revenue, cash flow and customer contract balances, including how and when we satisfy our performance obligations and the relationship between revenue recognized and changes in contract balances during a reporting period. We have evaluated these disclosure requirements and are incorporating the collection of relevant data into our quarterly processes. During the second quarter of 2017, we completed our assessment of the cumulative effect of adopting ASU 2014-09. Under the full retrospective method, we expect to recognize the cumulative effect of adoption as an increase in unbilled accounts receivable, a reduction in inventoried costs, an increase in advance payments and amounts in excess of costs incurred and a net increase in retained earnings as of January 1, 2016. During the second quarter of 2017, we also completed our assessment of the impact of adoption on our 2016 results. We currently expect adopting ASU 2014-09 to result in an increase in revenue of approximately $200 million and a decrease in operating income of approximately $70 million for the year ended December 31, 2016. These changes principally reflect the impact of converting contracts to the cost-to-cost method of accounting as well as changes in the number of performance obligations for certain of our contracts. The impact of adopting ASU 2014-09 on our 2016 results of operations may not be indicative of the impact in future years. We will continue our evaluation of ASU 2014-09 (including how it may impact new contracts we receive as well as new or emerging interpretations of the standard) through the date of adoption. We expect adoption of ASU 2017-07 to result in a change in our net FAS/CAS pension adjustment within operating income, which will be offset by a corresponding change in Other, net to reflect the impact of presenting the interest cost, expected return on plan assets, and amortization of prior service credit and net actuarial loss components of net periodic benefit costs outside of operating income. In addition, interest on service cost and plan administrative expenses, which, in some cases, are currently included within service cost, will be presented in the interest cost and amortization of net actuarial loss components, respectively, in Other, net. We expect to adopt ASU 2017-07 on January 1, 2018 using the retrospective method and do not anticipate a material change to our 2017 net FAS/CAS pension adjustment or other, net when they are recast to reflect the standard. On February 25, 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . ASU 2016-02 supersedes existing lease guidance, including Accounting Standards Codification (ASC) 840 - Leases . Among other things, ASU 2016-02 requires recognition of a right-of-use asset and liability for future lease payments for contracts that meet the definition of a lease and requires disclosure of certain information about leasing arrangements. ASU 2016-02 will be effective January 1, 2019, although early adoption is permitted, and it is to be applied using a modified retrospective approach. We expect to adopt the standard on January 1, 2019. We are reviewing our leases to determine the effect ASU 2016-02 will have on the company’s consolidated financial position, annual results of operations and/or cash flows. We currently expect the right-of-use assets and lease liabilities recognized upon adoption will each approximate our future minimum lease payments, as disclosed in our 2016 Annual Report on Form 10-K. We do not expect ASU 2016-02 to have a material impact on our annual results of operations and/or cash flows. On March 10, 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-07 Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . ASU 2017-07 requires employers that sponsor defined benefit pension and/or other post-retirement benefit plans to report the service cost component of net benefit cost in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Employers are required to present the other components of net benefit costs in the income statement separately from the service cost component and outside a subtotal of income from operations. Additionally, only the service cost component of net periodic pension cost will be eligible for asset capitalization. |
Pension and Other Postretirement Plans | Net actuarial gains or losses are re-determined annually or upon remeasurement events and principally arise from changes in the interest rate used to discount our benefit obligations and differences between expected and actual returns on plan assets. We fund our defined benefit pension plans annually in a manner consistent with the Employee Retirement Income Security Act of 1974, as amended by the Pension Protection Act of 2006 |
Earnings Per Share | We calculate basic earnings per share by dividing net earnings by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share include the dilutive effect of awards granted to employees under stock-based compensation plans. |
Investments in Marketable Securities | The company holds a portfolio of marketable securities consisting of securities that are classified as either trading or available-for-sale to partially fund non-qualified employee benefit plans |
Derivative Financial Instruments and Hedging Activities | Where model-derived valuations are appropriate, the company utilizes the income approach to determine the fair value and uses the applicable London Interbank Offered Rate (LIBOR) swap rates. |
Fair Value of Long-term Debt | We calculated the fair value of long-term debt using Level 2 inputs, based on interest rates available for debt with terms and maturities similar to the company’s existing debt arrangements. |
U.S. Government Cost Claims | From time to time, the company is advised of claims by the U.S. Government concerning certain potential disallowed costs, plus, at times, penalties and interest. When such findings are presented, the company and the U.S. Government representatives engage in discussions to enable the company to evaluate the merits of these claims, as well as to assess the amounts being claimed. Where appropriate, provisions are made to reflect the company’s estimated exposure for such potential disallowed costs. Such provisions are reviewed periodically using the most recent information available. |
Environmental Matters | These amounts are evaluated for recoverability on a routine basis. |
Basis of Presentation (Unaudi19
Basis of Presentation (Unaudited) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Change in Accounting Estimate [Table Text Block] | The following table presents the effect of aggregate net EAC adjustments: Three Months Ended September 30 Nine Months Ended September 30 $ in millions, except per share data 2017 2016 2017 2016 Operating Income $ 102 $ 121 $ 315 $ 387 Net Earnings (1) 66 79 205 252 Diluted earnings per share (1) 0.38 0.44 1.17 1.39 (1) Based on statutory tax rates |
Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss are as follows: $ in millions September 30, December 31, Unamortized benefit plan costs, net of tax benefit of $3,257 in 2017 and $3,439 in 2016 $ (5,116 ) $ (5,416 ) Cumulative translation adjustment (132 ) (132 ) Net unrealized gain on marketable securities and cash flow hedges, net of tax 5 2 Total accumulated other comprehensive loss $ (5,243 ) $ (5,546 ) |
Earnings Per Share, Share Rep20
Earnings Per Share, Share Repurchases and Dividends on Common Stock (Unaudited) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Share Repurchases | The table below summarizes the company’s share repurchases to date under the authorizations described above: Shares Repurchased Repurchase Program Amount Total Average (1) Date Completed Nine Months Ended September 30 2017 2016 December 4, 2014 $ 3,000 18.0 $ 166.70 March 2016 — 1.4 September 16, 2015 $ 4,000 7.4 $ 222.93 1.6 4.2 (1) Includes commissions paid. |
Segment Information (Unaudite21
Segment Information (Unaudited) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Sales and operating income by segment | The following table presents sales and operating income by segment: Three Months Ended September 30 Nine Months Ended September 30 $ in millions 2017 2016 2017 2016 Sales Aerospace Systems $ 3,082 $ 2,782 $ 8,950 $ 7,956 Mission Systems 2,837 2,698 8,357 8,081 Technology Services 1,183 1,190 3,552 3,617 Intersegment eliminations (575 ) (515 ) (1,690 ) (1,543 ) Total sales 6,527 6,155 19,169 18,111 Operating income Aerospace Systems 334 311 961 909 Mission Systems 363 351 1,090 1,055 Technology Services 133 130 398 387 Intersegment eliminations (71 ) (61 ) (211 ) (188 ) Total segment operating income 759 731 2,238 2,163 Net FAS/CAS pension adjustment 172 91 445 234 Unallocated corporate expenses (85 ) 5 (148 ) (31 ) Other (1 ) (1 ) (3 ) (4 ) Total operating income $ 845 $ 826 $ 2,532 $ 2,362 |
Income Taxes (Unaudited) (Table
Income Taxes (Unaudited) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense and Effective Income Tax Rates | Three Months Ended September 30 Nine Months Ended September 30 $ in millions 2017 2016 2017 2016 Federal and foreign income tax expense $ 140 $ 167 $ 528 $ 500 Effective income tax rate 17.8 % 21.7 % 22.3 % 23.0 % |
Fair Value of Financial Instr23
Fair Value of Financial Instruments (Unaudited) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value information of assets and liabilities measured at fair value on a recurring basis | The following table presents the financial assets and liabilities we record at fair value on a recurring basis identified by the level of inputs used to determine fair value: September 30, 2017 December 31, 2016 $ in millions Level 1 Level 2 Total Level 1 Level 2 Total Financial Assets (Liabilities) Marketable securities Trading $ 333 $ 1 $ 334 $ 321 $ 2 $ 323 Available-for-sale 11 — 11 7 — 7 Derivatives — 4 4 — 8 8 |
Commitments and Contingencies24
Commitments and Contingencies (Unaudited) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Environmental Remediation Range of Future Costs [Line Items] | |
Environmental Remediation [Table Text Block] | The table below summarizes management’s estimate of the range of reasonably possible future costs for environmental remediation, the amount accrued within that range, and the deferred costs expected to be recoverable through overhead charges on U.S. Government contracts as of September 30, 2017 and December 31, 2016 : $ in millions Range of Reasonably Possible Future Costs (1) Accrued Costs (2) Deferred Costs (3) September 30, 2017 $409 - $796 $ 416 $ 210 December 31, 2016 379 - 774 385 195 (1) Estimated remediation costs are not discounted to present value. The range of reasonably possible future costs does not take into consideration amounts expected to be recoverable through overhead charges on U.S. Government contracts. (2) As of September 30, 2017 , $144 million is recorded in other current liabilities and $272 million is recorded in other non-current liabilities. (3) As of September 30, 2017 , $75 million is deferred in inventoried costs and $135 million is deferred in other non-current assets. These amounts are evaluated for recoverability on a routine basis. |
Retirement Benefits (Unaudite25
Retirement Benefits (Unaudited) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
Components of net periodic benefit cost | The cost to the company of its retirement plans is shown in the following table: Three Months Ended September 30 Nine Months Ended September 30 Pension Medical and Pension Medical and $ in millions 2017 2016 2017 2016 2017 2016 2017 2016 Components of net periodic benefit cost Service cost $ 94 $ 112 $ 6 $ 8 $ 322 $ 335 $ 19 $ 23 Interest cost 308 321 21 24 925 963 63 71 Expected return on plan assets (471 ) (464 ) (22 ) (21 ) (1,414 ) (1,390 ) (67 ) (64 ) Amortization of: Prior service credit (14 ) (15 ) (4 ) (6 ) (43 ) (45 ) (15 ) (17 ) Net loss from previous years 178 179 1 3 534 536 6 11 Net periodic benefit cost $ 95 $ 133 $ 2 $ 8 $ 324 $ 399 $ 6 $ 24 |
Employer contributions to retirement plans | Contributions made by the company to its retirement plans are as follows: Three Months Ended September 30 Nine Months Ended September 30 $ in millions 2017 2016 2017 2016 Defined benefit pension plans $ 20 $ 14 $ 71 $ 61 Medical and life benefit plans 11 17 35 46 Defined contribution plans 91 83 267 241 |
Stock Compensation Plans and 26
Stock Compensation Plans and Other Compensation Arrangements (Unaudited) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Nonvested Restricted Stock Shares Activity [Table Text Block] | The following table presents the number of restricted stock rights (RSRs) and restricted performance stock rights (RPSRs) granted 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: Nine Months Ended September 30 in millions 2017 2016 RSRs granted 0.1 0.2 RPSRs granted 0.3 0.3 Grant date aggregate fair value $ 92 $ 88 |
Cash Units and Cash Performance Units Aggregate Payout Amount [Table Text Block] | The following table presents the minimum and maximum aggregate payout amounts related to cash units (CUs) and cash performance units (CPUs) granted to employees in the periods presented: Nine Months Ended September 30 $ in millions 2017 2016 Minimum aggregate payout amount $ 36 $ 35 Maximum aggregate payout amount 199 194 |
Basis of Presentation (Unaudi27
Basis of Presentation (Unaudited) (Details 1) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Accumulated Other Comprehensive Loss | |||||
Unamortized benefit plan costs, net of tax benefit of $3,257 in 2017 and $3,439 in 2016 | $ (5,116) | $ (5,116) | $ (5,416) | ||
Cumulative translation adjustment | (132) | (132) | (132) | ||
Net unrealized gain on marketable securities and cash flow hedges, net of tax | 5 | 5 | 2 | ||
Total accumulated other comprehensive loss | (5,243) | (5,243) | (5,546) | ||
Unamortized benefit plan costs - Tax Benefit (expense) | 3,257 | 3,257 | 3,439 | ||
Unamortized benefit plan costs, net actuarial losses, after-tax | 5,200 | 5,200 | 5,600 | ||
Unamortized benefit plan costs, reclassified from other comprehensive income to net earnings | $ 100 | $ 101 | $ 299 | $ 302 | |
Sales [Member] | Accounting Standards Update 2014-09 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | 200 | ||||
Operating Income (Loss) [Member] | Accounting Standards Update 2014-09 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 70 |
Basis of Presentation (Unaudi28
Basis of Presentation (Unaudited) (Details 2) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Change in Accounting Estimate [Line Items] | ||||
Operating Income (Loss) | $ 845 | $ 826 | $ 2,532 | $ 2,362 |
Net earnings | $ 645 | $ 602 | $ 1,837 | $ 1,675 |
Diluted earnings per share | $ 3.68 | $ 3.35 | $ 10.46 | $ 9.23 |
Contracts Accounted for under Percentage of Completion [Member] | ||||
Change in Accounting Estimate [Line Items] | ||||
Operating Income (Loss) | $ 102 | $ 121 | $ 315 | $ 387 |
Net earnings | $ 66 | $ 79 | $ 205 | $ 252 |
Diluted earnings per share | $ 0.38 | $ 0.44 | $ 1.17 | $ 1.39 |
Aerospace Systems [Member] | Contracts Accounted for under Percentage of Completion [Member] | ||||
Change in Accounting Estimate [Line Items] | ||||
Operating Income (Loss) | $ 56 |
Business Acquisitions (Unaudi29
Business Acquisitions (Unaudited) (Details) $ / shares in Units, $ in Millions | Sep. 30, 2017USD ($)$ / shares |
Business Combinations [Abstract] | |
Payments to Acquire Businesses, Gross | $ 7,800 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Long-term Debt | $ 1,400 |
Business Acquisition, Share Price | $ / shares | $ 134.50 |
Termination Fee | $ 275 |
Earnings Per Share, Share Rep30
Earnings Per Share, Share Repurchases and Dividends on Common Stock (Unaudited) (Details 1) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 9 Months Ended | 12 Months Ended | 18 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2017 | Sep. 16, 2015 | Dec. 04, 2014 | |
December 2014 Share Repurchase Program Original Authorization | ||||||
Share Repurchase [Line Items] | ||||||
Amount Authorized | $ 3,000 | |||||
Shares Retired | 18 | |||||
Average Cost Per Share | $ 166.70 | |||||
Shares Repurchased | 0 | 1.4 | ||||
September 2015 Share Repurchase Program Original Authorization | ||||||
Share Repurchase [Line Items] | ||||||
Amount Authorized | $ 4,000 | |||||
Shares Retired | 7.4 | |||||
Average Cost Per Share | $ 222.93 | |||||
Shares Repurchased | 1.6 | 4.2 | ||||
Share Repurchases - Notes to Table | ||||||
Shares repurchased amount | $ 1,700 | |||||
Amount remaining under authorization for share repurchases | $ 2,300 | $ 2,300 |
Earnings Per Share, Share Rep31
Earnings Per Share, Share Repurchases and Dividends on Common Stock (Unaudited) (Details 2) - $ / shares shares in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
May 31, 2017 | May 31, 2016 | May 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share, Basic and Diluted [Abstract] | |||||||
Dilutive effect of of stock awards and options granted to employees under stock-based compensation plans | 1.1 | 1.5 | 1.1 | 1.7 | |||
Common stock dividends per share, declared (in dollars per share) | $ 1 | $ 0.90 | $ 0.80 | $ 2.90 | $ 2.60 | ||
Increase in quarterly common stock dividend (percent) | 11.00% | 13.00% |
Segment Information (Unaudite32
Segment Information (Unaudited) (Details 1) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)segment | Sep. 30, 2016USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments | segment | 3 | |||
Sales | $ 6,527 | $ 6,155 | $ 19,169 | $ 18,111 |
Operating income | 845 | 826 | 2,532 | 2,362 |
Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Operating income | 759 | 731 | 2,238 | 2,163 |
Operating Segments [Member] | Aerospace Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 3,082 | 2,782 | 8,950 | 7,956 |
Operating income | 334 | 311 | 961 | 909 |
Operating Segments [Member] | Mission Systems [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 2,837 | 2,698 | 8,357 | 8,081 |
Operating income | 363 | 351 | 1,090 | 1,055 |
Operating Segments [Member] | Technology Services [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 1,183 | 1,190 | 3,552 | 3,617 |
Operating income | 133 | 130 | 398 | 387 |
Intersegment Eliminations [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Sales | 575 | 515 | 1,690 | 1,543 |
Operating income | 71 | 61 | 211 | 188 |
Net FAS/CAS pension adjustment Income (Expense) [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Operating income | 172 | 91 | 445 | 234 |
Corporate, Non-Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Operating income | (85) | 5 | (148) | (31) |
Segment Reconciling Items [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Operating income | $ (1) | $ (1) | $ (3) | $ (4) |
Income Taxes (Unaudited) (Detai
Income Taxes (Unaudited) (Details 1) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2018 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||||
Income Tax Expense (Benefit) | $ 140 | $ 167 | $ 528 | $ 500 | |
Effective income tax rate | 17.80% | 21.70% | 22.30% | 23.00% | |
Effective Income Tax Rate Reconciliation, Tax Settlement, Amount | $ (42) | $ (42) | $ (42) | ||
Effective Income Tax Rate Reconciliation, Tax Credit, Research, Amount | $ 45 | 55 | |||
Effective Income Tax Rate Reconciliation, Deduction, Qualified Production Activity, Amount | 35 | 32 | |||
Income Tax Contingency [Line Items] | |||||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | $ 110 | $ 110 | |||
Maximum | Scenario, Forecast [Member] | |||||
Income Tax Contingency [Line Items] | |||||
Tax Adjustments, Settlements, and Unusual Provisions | $ (30) |
Fair Value of Financial Instr34
Fair Value of Financial Instruments (Unaudited) (Details 1) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | $ 333 | $ 321 |
Available-for-sale securities | 11 | 7 |
Derivative Assets (Liabilities), at Fair Value, Net | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 1 | 2 |
Available-for-sale securities | 0 | 0 |
Derivative Assets (Liabilities), at Fair Value, Net | 4 | 8 |
Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Trading securities | 334 | 323 |
Available-for-sale securities | 11 | 7 |
Derivative Assets (Liabilities), at Fair Value, Net | $ 4 | $ 8 |
Fair Value of Financial Instr35
Fair Value of Financial Instruments (Unaudited) (Details 2) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt and Capital Lease Obligations | $ 7,100 | $ 7,100 |
Long-term Debt, Fair Value | 7,800 | 7,600 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative, Notional Amount | 148 | 147 |
Cash Flow Hedging [Member] | ||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative, Notional Amount | $ 10 | $ 0 |
Investigations, Claims and Li36
Investigations, Claims and Litigation (Unaudited) (Details) € in Millions, BRL in Millions, $ in Millions | 2 Months Ended | 12 Months Ended | 46 Months Ended | 48 Months Ended | 50 Months Ended | ||||
Sep. 30, 2013Defendant | Dec. 31, 2007USD ($) | Mar. 31, 2017USD ($) | Sep. 30, 2017EUR (€) | Sep. 30, 2017USD ($) | Sep. 30, 2017BRL | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) | May 04, 2012USD ($) | |
Loss Contingencies | |||||||||
Receivables, unpaid long-term contracts | $ 4,414 | $ 4,414 | $ 3,299 | ||||||
Solystic Matter [Member] | |||||||||
Loss Contingencies | |||||||||
Loss Contingency, Damages Sought, Value | BRL 111 | 35 | |||||||
Counterclaim | € 31 | 37 | |||||||
Unpaid Portions of Contract Price and Direct Costs Incurred [Member] | United States Postal Service | |||||||||
Loss Contingencies | |||||||||
Receivables, unpaid long-term contracts | $ 63 | ||||||||
Acts and Omissions with Adverse Affects on Performance and Obligations [Member] | United States Postal Service | |||||||||
Loss Contingencies | |||||||||
Gain contingency, unrecorded amount | $ 115 | ||||||||
United States Postal Service | |||||||||
Loss Contingencies | |||||||||
Contract award | $ 875 | ||||||||
United States Postal Service | False Claims Act | Threatened Litigation | |||||||||
Loss Contingencies | |||||||||
Loss Contingency, Damages Sought, Value | $ 179 | ||||||||
Solystic Matter [Member] | Solystic Matter [Member] | |||||||||
Loss Contingencies | |||||||||
Loss Contingency, Number of Additional Defendants | Defendant | 2 | ||||||||
Initial Claim [Member] | Solystic Matter [Member] | |||||||||
Loss Contingencies | |||||||||
Loss Contingency, Damages Sought, Value | 89 | 28 | |||||||
Incremental claim [Member] | Solystic Matter [Member] | |||||||||
Loss Contingencies | |||||||||
Loss Contingency, Damages Sought, Value | BRL 22 | 7 | |||||||
Maximum | United States Postal Service | |||||||||
Loss Contingencies | |||||||||
Loss Contingency, Estimate of Possible Loss | $ 410 | $ 410 |
Commitments and Contingencies37
Commitments and Contingencies (Unaudited) (Details 1) £ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017GBP (£) | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) | |
Site Contingency [Line Items] | |||||||
Accrual for Environmental Remediation Costs | $ 416,000,000 | $ 385,000,000 | |||||
Recorded Third-Party Environmental Recoveries, Amount | 210,000,000 | 195,000,000 | |||||
Financial Arrangements | |||||||
Standby Unused Letters Of Credit and bank guarantees | 210,000,000 | ||||||
Surety Bond Outstanding | 208,000,000 | ||||||
Operating leases | |||||||
Rental expense for operating leases, net of immaterial amounts of sublease rental income | $ 73,000,000 | $ 69,000,000 | $ 227,000,000 | $ 228,000,000 | |||
Line of Credit Facility [Line Items] | |||||||
Debt Instrument, Covenant Compliance | the company was in compliance with all covenants under its credit agreements. | ||||||
Bridge Loan [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of Credit Facility, Maximum Borrowing Capacity | 8,500,000,000 | ||||||
Debt Issuance Costs, Gross | 29,800,000 | ||||||
Two Year Term [Member] [Domain] | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of Credit Outstanding | £ 110 | 149,000,000 | |||||
Line of Credit Facility, Maximum Borrowing Capacity | £ 120 | 162,000,000 | |||||
Five Year Term [Member] [Domain] | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of Credit Outstanding | 0 | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | 1,600,000,000 | ||||||
Other Current Liabilities [Member] | |||||||
Site Contingency [Line Items] | |||||||
Accrual for Environmental Remediation Costs | 144,000,000 | ||||||
Other Noncurrent Liabilities [Member] | |||||||
Site Contingency [Line Items] | |||||||
Accrual for Environmental Remediation Costs | 272,000,000 | ||||||
Inventoried Costs [Member] | |||||||
Site Contingency [Line Items] | |||||||
Recorded Third-Party Environmental Recoveries, Amount | 75,000,000 | ||||||
Other Noncurrent Assets [Member] | |||||||
Site Contingency [Line Items] | |||||||
Recorded Third-Party Environmental Recoveries, Amount | 135,000,000 | ||||||
London Interbank Offered Rate (LIBOR) [Member] | Two Year Term [Member] [Domain] | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of Credit Facility, Interest Rate Description | 1.10% | ||||||
Environmental Issue [Member] | Maximum | |||||||
Site Contingency [Line Items] | |||||||
Loss Contingency, Estimate of Possible Loss | 796,000,000 | 774,000,000 | |||||
Environmental Issue [Member] | Minimum | |||||||
Site Contingency [Line Items] | |||||||
Loss Contingency, Estimate of Possible Loss | $ 409,000,000 | $ 379,000,000 |
Commitments and Contingencies38
Commitments and Contingencies (Unaudited) (Details 2) $ in Millions | Oct. 13, 2017USD ($) |
Subsequent Event [Member] | Senior Notes [Member] | October 2017 Notes [Domain] | |
Subsequent Event [Line Items] | |
Debt Instrument, Face Amount | $ 8,250 |
Retirement Benefits (Unaudite39
Retirement Benefits (Unaudited) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract] | ||||
Defined contribution plan, employer contributions | $ 91 | $ 83 | $ 267 | $ 241 |
Pension Benefits | ||||
Components of Net Periodic Benefit Cost | ||||
Service cost | 94 | 112 | 322 | 335 |
Interest cost | 308 | 321 | 925 | 963 |
Expected return on plan assets | (471) | (464) | (1,414) | (1,390) |
Prior service credit | (14) | (15) | (43) | (45) |
Net loss from previous years | 178 | 179 | 534 | 536 |
Net periodic benefit cost | 95 | 133 | 324 | 399 |
Defined Benefit Plan, Actual Contributions in Current Fiscal Year [Abstract] | ||||
Defined benefit plan, contributions by Employer | 20 | 14 | 71 | 61 |
Medical and Life Benefits | ||||
Components of Net Periodic Benefit Cost | ||||
Service cost | 6 | 8 | 19 | 23 |
Interest cost | 21 | 24 | 63 | 71 |
Expected return on plan assets | (22) | (21) | (67) | (64) |
Prior service credit | (4) | (6) | (15) | (17) |
Net loss from previous years | 1 | 3 | 6 | 11 |
Net periodic benefit cost | 2 | 8 | 6 | 24 |
Defined Benefit Plan, Actual Contributions in Current Fiscal Year [Abstract] | ||||
Defined benefit plan, contributions by Employer | $ 11 | $ 17 | $ 35 | $ 46 |
Stock Compensation Plans and 40
Stock Compensation Plans and Other Compensation Arrangements (Unaudited) (Details) - USD ($) shares in Millions, $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted Stock Rights and Restricted Performance Stock Rights Grant Date Aggregate Fair Value | $ 92 | $ 88 |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares granted | 0.1 | 0.2 |
Vesting period | 3 years | |
Performance Shares [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares granted | 0.3 | 0.3 |
Vesting period | 3 years | |
Cash Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Cash Performance Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Cash Units and Cash Performance Units | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Deferred Compensation Cash-based Arrangements, Liability, Current and Noncurrent | $ 36 | $ 35 |
Cash Units and Cash Performance Units | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Deferred Compensation Cash-based Arrangements, Liability, Current and Noncurrent | $ 199 | $ 194 |
Subsequent Events (Unaudited) (
Subsequent Events (Unaudited) (Details) - Subsequent Event [Member] - USD ($) $ in Millions | Oct. 13, 2017 | Dec. 17, 2018 |
Senior Notes [Member] | October 2017 Notes [Domain] | ||
Subsequent Event [Line Items] | ||
Debt Instrument, Face Amount | $ 8,250 | |
Senior Notes [Member] | 2020 Maturity [Domain] | ||
Subsequent Event [Line Items] | ||
Debt Instrument, Face Amount | $ 1,000 | |
Debt Instrument, Interest Rate, Stated Percentage | 2.08% | |
Senior Notes [Member] | 2022 Maturity [Domain] | ||
Subsequent Event [Line Items] | ||
Debt Instrument, Face Amount | $ 1,500 | |
Debt Instrument, Interest Rate, Stated Percentage | 2.55% | |
Senior Notes [Member] | 2025 Maturity [Domain] | ||
Subsequent Event [Line Items] | ||
Debt Instrument, Face Amount | $ 1,500 | |
Debt Instrument, Interest Rate, Stated Percentage | 2.93% | |
Senior Notes [Member] | 2028 Maturity [Domain] | ||
Subsequent Event [Line Items] | ||
Debt Instrument, Face Amount | $ 2,000 | |
Debt Instrument, Interest Rate, Stated Percentage | 3.25% | |
Senior Notes [Member] | 2047 Maturity [Domain] | ||
Subsequent Event [Line Items] | ||
Debt Instrument, Face Amount | $ 2,250 | |
Debt Instrument, Interest Rate, Stated Percentage | 4.03% | |
General Redemption [Domain] | ||
Subsequent Event [Line Items] | ||
Debt Instrument, Redemption Price, Percentage | 100.00% | |
Mandatory Redemption [Domain] | ||
Subsequent Event [Line Items] | ||
Debt Instrument, Redemption Price, Percentage | 101.00% |