Company: NOC
Filing Date: 2025-04-22
Form Type: 10-Q
Source: 0001133421-25-000023
Chunk: 17

Company: NORTHROP GRUMMAN CORP /DE/
Filing Date: 2025-04-22
Form: 10-Q
Item: Part I, Item 1
Chunk 17
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 have not yet been exercised. As of March 31, 2025, the remaining loss accrual on the B-21 program totaled $1.7 billion, which is included in Other current liabilities.Net EAC AdjustmentsThe following table presents the effect of aggregate net EAC adjustments: Three Months Ended March 31$ in millions, except per share data20252024Revenue$38 $74 Operating income(100)94 Net earnings(1)(79)74 Diluted earnings per share(1)(0.55)0.50 (1)Based on a 21 percent federal statutory tax rate.EAC adjustments on a single performance obligation can have a significant effect on the company’s financial statements. When such adjustments occur, we generally disclose the nature, underlying conditions and financial impact of the adjustments. During the first quarter of 2025, the company recorded a $226 million unfavorable EAC adjustment on the first and second LRIP lots of the B-21 program at Aeronautics Systems, as described above. No EAC adjustments on a single performance obligation had a significant impact on the financial statements during the three months ended March 31, 2024.BacklogBacklog represents the future sales we expect to recognize on firm orders received by the company and is equivalent to the company’s remaining performance obligations at the end of each period. It comprises both funded backlog (firm orders for which funding is authorized and appropriated) and unfunded backlog. Unexercised contract options and indefinite delivery indefinite quantity (IDIQ) contracts are not included in backlog until the time an option or IDIQ task order is exercised or awarded. Backlog is converted into sales as costs are incurred or deliveries are made. Company backlog as of March 31, 2025 was $92.8 billion. Of our March 31, 2025 backlog, we expect to recognize approximately 40 percent as revenue over the next 12 months and 65 percent as revenue over the next 24 months, with the remainder to be recognized thereafter.Contract Assets and LiabilitiesFor each of the company’s contracts, the timing of revenue recognition, customer billings, and cash collections results in a net contract asset or liability at the end of each reporting period. Contract assets are equivalent to and reflected as Unbilled receivables in the unaudited condensed consolidated statements of financial position and are primarily related to long-term contracts where revenue recognized under the cost-to-cost method exceeds amounts billed to customers. Contract liabilities