Annual Report (Form 10-K), fiscal year 1993

Item 1. Business Grumman Corporation is a New York corporation organized in 1929 under the name Grumman Aircraft Engineering Corporation. The activities of Grumman Corporation and its subsidiaries (the "company" or "Grumman") are described in the following four industry segments: "Aerospace" - Includes the design and production of military aircraft, space systems and commercial aircraft components and subassemblies, as well as the modernization or conversion of previously completed aircraft. "Electronics Systems" - Includes the design, manufacture and integration of sophisticated electronics for aircraft, computerized test equipment and other defense related products, such as airborne surveillance systems. "Information and Other Services" - Includes electronic data processing services for affiliates and other customers as well as real estate and leasing services. It also includes technical services that help ready the space shuttle for flight, provide space station program support, service and maintain flight simulators and trainers and support Grumman aircraft. "Special Purpose Vehicles" - Includes fabrication of Long Life Vehicles for the U.S. Postal Service and aluminum truck bodies.
The sales and operating income (loss) and the identifiable assets attributable to each industry segment for the three years ended December 31, 1993 are set forth in Note 13 of the Notes to Consolidated Financial Statements in the company's 1993 Annual Report to Shareholders which is incorporated herein by reference.
Aerospace
Production contracts with the U.S. Government have included the "Tomcat" fighter, the A-6 "Intruder" attack aircraft, the EA-6B "Prowler" tactical jamming system, the E-2C "Hawkeye" early warning aircraft, and the C-2A "Greyhound" carrier on-board delivery system, of which, only the E-2C is currently in production. These aircraft systems incorporate advanced electronic detection, attack and countermeasures equipment, all-weather capability, short take-off and landing characteristics and, in the case of the fighter, a variable-sweep wing configuration. Upgraded radar packages and new power plants were incorporated into the. The company also furnishes spare parts, specialized support equipment, technical manuals and data and advisory services for its past and present aircraft and space systems, and engages in modernization and conversion programs of previously completed aircraft. - 1 -
Through 1992, the company's most important military aircraft program was theD Super "Tomcat" fighter which is capable of carrying Phoenix missiles, which are long range, self-guiding, high speed missiles manufactured by Hughes Aircraft. The highly maneuverable supersonic Tomcat, with advanced radar, can track twenty-four targets simultaneously, including the low-flying cruise missile, at distances of over 100 miles, and launch its complement of six Phoenix missiles to provide air superiority. (The F- 14 is the principal air superiority fighter plane presently in use by the U.S. Navy.) Sales on the program during the last three years amounted to 7% for 1993, 20% for 1992 and 23% for 1991. During 1992 and 1991 the company delivered 10 and 14's, respectively, to the U.S. Navy. The company began deliveries of the upgraded (F-14D) in 1990. The upgrade from theA to theD version was accomplished in two steps. Deliveries of the interim aircraft, theA+, began in 1987 and ended in 1990. This configuration of the Tomcat had the new engines, but none of the radar or avionics upgrades. The company delivered 37Ds between 1990 and 1992. The company produced 712's from 1973 to 1992.
In November 1991, the House and Senate Authorization Committee on the Fiscal Year 1992 Defense Budget announced that its recommendation would not include funding to continue theD(R) remanufacturing program. The last new was delivered in mid-1992 while the last remanufactured was delivered in 1993. In 1994 the company will deliver ten remanufacture upgrade kits.
In September 1993, the company received a contract worth $95 million to produce 15 modification kits for anA toB conversion. In December 1993, the U. S. Navy awarded the company a $57 million contract for the installation of those 15 kits onAs that have relatively low flight hours. The modification entails the installation of more powerful engines, structural enhancements to extend the service life of the airframe, and the installation of an updated radar warning receiver system to alert pilots when potentially hostile radar is tracking their aircraft. The 1995 budget request contains $171.7 million to give the Tomcat advanced strike attack capability.
The company was teamed with Boeing and Lockheed in competing for the A-X aircraft program, which was to be the Navy's replacement for Grumman's A-6 Intruder. Grumman, as prime, had been awarded a $30 million concept exploration contract. The Navy cancelled the A-X program during 1993 and the company subsequently announced that it could no longer support and maintain its high performance airframe design capability to the extent it has in the past.
Sales of the A-6 "Intruder", EA-6B "Prowler" and E-2C "Hawkeye" as a percentage of the company's consolidated sales amounted to 24% for 1993, 20% for 1992 and 21% for 1991. Each of these programs has been in production for more than twenty years. The last production A-6 Intruder was delivered in January 1992. In September 1993, the U. S. Navy ordered the company to stop work immediately on all its A-6 re-wing and related programs. This cancellation followed the Pentagon's bottom-up review of the nation's defense needs.
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In 1993, six E-2C aircraft were delivered to the Navy. Two more aircraft will be delivered in 1994. The company is currently building the last E-2C at Calverton under the current Navy contract. However, in 1993 the Navy conducted a study to determine the cost effectiveness of restarting the production line in 1995 instead of updating older E-2Cs. The 1995 defense budget request includes $398 million for four new E-2s. The work would be performed in St. Augustine, Florida.
In 1993, four E-2C aircraft were delivered to foreign countries - three to Japan and one to Egypt. In 1994, the company will deliver four E-2s to the Republic of China under a $542 million contract awarded in 1993. E-2C aircraft are now in service with four foreign countries; in addition, France, Korea, Turkey, Bahrain and Thailand have expressed interest.
Under a U. S. Navy contract, the company has been developing the fifth generation of the EA-6B aircraft - the advanced capability (ADVCAP) Prowler. The 1995 defense budget request does not include the EA-6B ADVCAP remanufacture program due to budget constraints. The U. S. Navy issued a cancellation notice in February 1994 for the ADVCAP upgrade development program. ADVCAP is a three-part effort: the AP-1 Advanced Capability program; the Vehicle Enhancement Program (VEP), which is an improvement to the aerodynamic characteristics of the EA-6B aircraft and has been partially terminated; and the Avionics Improvement Program which has been terminated completely. The company will continue to perform some remaining work on the EA-6B ADVCAP program and will maintain the modification line to update older EA-6Bs at St. Augustine, Florida.
The company is teamed with Gruppo Agusta of Italy to compete for a program to replace the U. S. Air Force/U. S. Navy primary training aircraft called JPATS - the Joint Primary Aircraft Training System. Seven teams are competing for the work, with the Grumman Agusta team offering the S211A - a nimble, easy-to-fly jet. The request for proposal should be released early in 1994; a winner is to be selected in 1995.
The company is under contract to provide aircraft components and major subassemblies to other manufacturers. These contracts include the center wing section for the Boeing 767 jetliner, nacelles and thrust reversers for the Gulfstream IV and Fokker aircraft, transcowls for General Electric CF6- 80C2 engines, C-17 control surfaces, and composite spoilers and inboard flaps for the new Boeing 777 airliner.
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Electronics Systems
In 1985, the U.S. Air Force awarded Grumman a $657 million contract for development of the Joint Surveillance Target Attack Radar System, known as "Joint STARS". This developmental phase, worth approximately $1 billion, concluded in November 1993 with the delivery of the first two Joint STARS prototype E-8A aircraft to the Air Force. The Air Force will use the two E- 8A's for test purposes. In November 1990, the company received a $523 million follow-on contract for further full-scale development; this included the acquisition of a third Joint STARS aircraft, product improvement and logistics support. This follow-on contract, currently worth $684 million, is scheduled for completion in 1995. After a favorable review by the Defense Acquisition Board in May 1993 that approved five low rate initial production aircraft, the Air Force authorized full funding of $415 million for the initial two aircraft. The E-8C is the production configuration of Joint STARS and incorporates additional work stations and other system improvements. Joint STARS has strong potential for overseas sales, and the company is pursuing opportunities with NATO. According to present plans, a total of 19 production E-8C aircraft will be delivered to the Air Force beginning in 1995.
Flight tests of the Joint STARS aircraft began April 1, 1988 and continued through 1990. Early in January 1991, the two Joint STARS aircraft were pulled out of development six years early and deployed to the Persian Gulf to support the combined forces in Desert Shield/Storm. Over the course of 49 consecutive all night missions, the Joint STARS successfully pinpointed enemy convoys, trucks, tanks, and Scud launchers and relayed that information to allied air and ground forces.
In September 1991, the company and TRW Inc. teamed to compete for the U.S. Air Force's Follow-on Early Warning System (FEWS) - a space-based system that would provide tactical warning and assessment of missile launches. The company, which was to be the principal subcontractor to TRW, established a new subsidiary, Grumman Sensor Systems, Inc. for FEWS and other sensor applications. TRW has made significant investments in capital and equipment and holds a minority equity position in Grumman Sensor Systems, Inc. In July 1992, the TRW/Grumman team was awarded a $240 million demonstration/validation contract from the U. S. Air Force Space and Missile Systems Center for FEWS. In November 1993, the FEWS program received formal notification from the Air Force of a stop work order on the demonstration/validation contract. Following the cancellation of the FEWS program, the Air Force is moving forward to initiate a competitive Defense Support Program Follow-On program and cancel two or more DSP systems currently under contract. The program will be renamed ALARM (Alert, Locate and Report Missiles) with more than $1 billion in the Pentagon's 1995 thru 1999 budget.
The company designs and produces test equipment to support its own aircraft programs, non-company programs, and government-furnished equipment systems.
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A significant program in this segment is the Integrated Family of Test Equipment, or IFTE, the Army's next generation of automatic test equipment. IFTE is used to diagnose the electronics problems of equipment in the field, depot repair centers and in the factories of weapons systems manufacturers. IFTE is adaptable to the U. S. Army's wide range of systems, eliminating the need for a separate tester for each one. Currently there are 30 different Army systems dedicated to the use of IFTE. The total Army requirement for IFTE Base Shop Test Facilities (BSTF) is over 200. The Army continues to endorse IFTE for foreign applications on proven Army systems. In 1993, there were seven system fieldings in South Korea and stateside Army bases. IFTE deliveries continued on or ahead of schedule in 1993. Major hardware deliveries included four Commercial Equivalent Equipment (CEEs), nine base station test facilities and eight portable intelligent maintained aid units.
Under a $20 million contract, the company is upgrading eight U. S. Army Firefinder radar systems which locate hostile artillery units and direct counterfire against them. Upgrading Firefinder with digital electronics will increase the system's mobility, effective range, and threat response. The production phase is anticipated to begin in 1996 and there are major opportunities for foreign sales.
The company is manufacturing intercom systems for combat vehicles under the Vehicular Intercommunication System (VIS) contract awarded in 1992 by the U. S. Army Communications and Electronics Command. VIS will provide the Army's combat vehicles with a highly reliable, digital-voice intercom capable of handling six radios and 10 crew stations. VIS replaces a system that has been used on Army tanks and infantry fighting vehicles for almost 40 years. The basic contract is a 20-month program slated for completion in October 1994. Under this phase, 110 VIS sets will be delivered. The Army recently exercised its option and ordered another 800 VIS units. Another 1,117 units will be installed on vehicles purchased by the Saudi Arabian National Guard. Production of this order runs through 1998.
The company won a $118 million contract in October 1993 from the U. S. Air Force to produce an automated test system for the aircraft. The company will manufacture the testers and develop the system's software along with IBM, the principal subcontractor. The mobile, downsized system will test the avionics including armament, communications, displays, flight controls, navigation and radar. It replaces five different testers.
Information and Other Services
The company's data systems business designs, develops, operates and supports computer systems for scientific and management information. Its services include systems integration, systems service, technical and professional services, information conversion services and training; its customers and potential customers include agencies of federal, state and local governments including among others: the U.S. Navy and Marine Corps, the Air Force, NASA, the Defense Logistics Agency and the Internal Revenue Service. Approximately 58% of the data systems revenue in 1993 was derived from work performed for other Grumman units.
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In February 1993, the company's Data Systems Division was awarded the Service Center Recognition Image Processing System (SCRIPS) contract by the Internal Revenue Service. The company is developing an image-based, forms processing, character recognition system. In January 1994, two SCRIPS systems were installed at an IRS center in Cincinnati where they are currently undergoing testing. The current contract value is approximately $27 million including engineering change proposals. If the IRS exercises the options for 10 more SCRIPS systems, the total effort could amount to over $88 million. NASA named the company the winner of the Space Station Program Support contract in July 1987; in March 1992 a major modification to the contract was executed restructuring the contract consistent with the restructured Space Station Freedom. However, in September 1993 NASA ordered the company to cut its work force on the space station engineering and integration contract to 60 people by December 1993 due to work authorization and funding limitations on the program. NASA has scaled back and downsized the program significantly, and awarded the management job to Boeing.
The company is a subcontractor, under Lockheed's Shuttle Processing Contract with NASA for management and support to the Space Shuttle launch processing operation, in such areas as instrumentation, measurement and calibration. The current contract, which began in October 1983, was extended to September 1995. There is one remaining three year option period which ends in September 1998. The company is a prime contractor on the Information Systems Contract which was awarded in October 1992. This is a five year contract which extends through December 1997 and which is valued at approximately $340 million. This contract requires contractor support for all institutional computing capability at Johnson Space Center, Houston, Texas.
Special Purpose Vehicles
In 1986, the company was awarded a $1.1 billion contract to build 99,150 Long Life Vehicles (LLV) for the U.S. Postal Service over a six year period; deliveries commenced in April 1987 and totaled 7,581 units for 1987, 18,844 in 1988, 18,950 in 1989, 19,100 in 1990, 19,608 in 1991 and 15,067 in 1992. In September 1991, the company negotiated an agreement for a follow-on contract with the U.S. Postal Service worth over $586 million to produce an additional 43,505 Long Life Vehicles of which 4,723 and 19,881 were delivered in 1992 and 1993, respectively. The combination of the original contract and the follow-on contract will result in unit deliveries to the U. S. Postal Service totaling 142,655 at the conclusion of the program.
The Postal Service notified the company in September 1993 that it would not exercise contract options which could have extended production into 1996. As a result, the last 18,901 units of the 142,655 LLV units will be delivered by the end of 1994.
The company also manufactures aluminum truck bodies which are mounted on purchased chassis and sold as delivery vans.
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Company Restructure
In January 1994, the company announced a plan to compete more effectively in the changing defense market by consolidating its facilities and restructuring its operations. Five major Long Island, New York, facilities will be closed over the next two years, and the current 15 million square feet of nationwide manufacturing, office and warehouse space will be reduced by 4.5 million square feet. Overall, the company expects to reduce operating costs by nearly $600 million over the next three years. As a result, the company took a one-time charge of $85 million ($55 million after federal income taxes or $1.60 a share) in the fourth quarter of 1993. The restructuring charge provides for equipment and inventory write-offs of approximately $60 million and plant closing costs of approximately $25 million.
Competition and Customers
The aerospace industry is dominated by large companies, and sizable contracts are awarded by winning new design competitions against formidable opposition. Many of the company's competitors are considerably larger in terms of sales, number of employees and financial resources. Since most defense products are tailored to specific military use, the Department of Defense, as the sole customer, occupies the superior bargaining position, and there is not the usual give and take of a commercial negotiation.
Initial procurements of military programs are the result of open competition, with the award of the prime contract made to the prospective contractor offering the best overall proposal on the basis of price and other factors. Follow-on buys of military programs in the past were usually made from the current prime contractor, but as of late the customer has increasingly resorted to competitive bids.
The company's new strategic direction will emphasize expanding in electronic systems and surveillance integration capabilities in lieu of our traditional role as a prime airframe producer. Along with this, is our continued commitment to supporting the company's existing aircraft and winning the new J-PATS training program. The principal competition in these areas come from both traditional aircraft producers such as Northrop Corporation, Lockheed Aircraft Corporation and McDonnell Douglas Corporation and some new competitors in E-Systems, Martin Marietta Corporation and G. M. Hughes Electronics Corporation.
Total sales to the U.S. Government and its agencies (including sales to foreign governments through foreign military sales contracts with U.S. Government agencies) for the years ended December 31, 1993, 1992 and 1991 amounted to $2.8 billion, $3.2 billion and $3.6 billion, respectively. As a consequence of its concentration upon the U.S. Government's defense programs, the company's sales and income may be materially affected by any change in emphasis on such programs, or in any substantial change in government spending thereon.
All U.S. Government contracts provide that they may be terminated in whole or in part for the convenience of the government. Upon any such termination, the company would be entitled to reimbursement in accordance with the formula set forth in the applicable government procurement
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regulations. Where the government has exercised this extraordinary right, which has occurred infrequently, the company has in the past recovered its costs together with an appropriate share of the profit or fee on the work done. For a summary of policies used by the company in accounting for inventories and sales under U.S. Government contracts, see Note 1 of the Notes to Consolidated Financial Statements in the company's 1993 Annual Report to Shareholders which has been incorporated herein by reference.
Backlog
The backlog of potential sales under U.S. Government and commercial contracts includes those contracts that have been negotiated, whether funded or unfunded. No material portion of the company's backlog is considered to be seasonal. Fluctuations in the backlog may occur from quarter to quarter depending upon contract execution and funding dates. Approximately $3.4 billion of the backlog at December 31, 1993 represents deliveries to be made after 1994.
Backlog as of December 31, 1993 1992 (In Millions)
Aerospace $ 3,674 $ 4,585
Electronics Systems 1,320 886
Information & Other Services 764 1,575
Special Purpose Vehicles 278 515
Total Backlog $ 6,036 $ 7,561
The backlog at December 31, 1993 includes $2.8 billion of authorized but unfunded amounts as well as negotiated and priced options which have not yet been exercised.
Raw Materials and Suppliers
All raw materials and many items of equipment and components used in the production of the company's products are purchased from outside sources. From the standpoint of aggregate cost, the most important manufactured items purchased from outside sources are electronic components and subsystems for airborne applications. While the company does not usually produce these electronic items in its capacity as systems-manager, it manages their design, testing and evaluation, and integrates these elements into a working system. The company's business is dependent upon the ability of its subcontractors to meet performance specifications, quality standards and delivery schedules. Their failure in any of these areas could have an adverse effect upon the company's business.
Although certain priorities under U.S. Government contracts are available, it has become necessary to enter early orders for materials with long lead time requirements. The company cannot predict what the impact of any further extension of lead time requirements or of shortages or delays in delivery by suppliers may be on its business or financial requirements.
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Environmental Matters
Compliance with current provisions of Federal, State and local authorities regulating the discharge of materials into the environment is not expected to have a material effect on the company's capital expenditures, earnings and competitive position. (See Item 3. Legal Proceedings).
Commitments for Capital Expenditures
Outstanding commitments for capital expenditures at December 31, 1993 were $23.4 million. Funds are generally committed to acquire equipment to support and develop advanced technologies and to improve manufacturing and computing capabilities. Capital expenditures are expected to be financed from internally generated funds in the foreseeable future.
Employees
As of December 31, 1993, approximately 17,900 persons were employed by the company. The company is predominantly non-union, although approximately 300 employees in a second-tier subsidiary are covered by union contracts with expiration dates in 1995 and 1997. The company believes its employee relations are satisfactory.
Patents
While the company owns a number of patents and has licenses under patents owned by others, it does not believe that its business would be materially affected by the expiration of any patent or termination of any patent license agreement.
The company holds no material franchises or concessions.
Research and Development
Research and development costs associated with government programs up to a negotiated ceiling are charged to inventory and are recorded in cost of sales when products are delivered or services performed. Costs in excess of ceiling and expenditures for commercial projects are charged against income in the year incurred. Total expenditures for research and development, bid and proposal efforts were $122.5, $132.8 and $127.5 million in 1993, 1992 and 1991, respectively.
Export Sales
Export sales by geographic area for the three years ended December 31, 1993 are set forth in Note 13 (Segment Information) of the Notes to Consolidated Financial Statements in the company's 1993 Annual Report to Shareholders which has been incorporated herein by reference.
In 1993 export sales generated $36.1 million of operating income and had identifiable assets, primarily including inventories and receivables, of $52.4 million at December 31, 1993.
Subsequent Events
On March 6, 1994, the Boards of Directors of Grumman Corporation (the "company") and Martin Marietta Corporation ("Martin") approved the execution of an Agreement and Plan of Merger (the "Merger Agreement"), by and among the company, Martin, and MMC Acquisition Corp., a wholly-owned subsidiary of Martin ("MMC"). The Merger Agreement, which was subsequently executed by the company, Martin and MMC, provides for the commencement of a cash tender offer, by MMC, for the purchase of all outstanding shares of Common Stock (including the associated Rights) of the company, at $55.00 net per share. The Merger Agreement further provides, among other things, that subject to the terms and conditions thereof, as soon as practicable after the consummation of the tender offer, and the approval and adoption of the Merger Agreement by the shareholders of the company, MMC will be merged into and with the company, with the company being the corporation surviving the merger.
On March 8, 1994, Martin and MMC commenced the tender offer by filing their Schedule 14D-1, Tender Offer Statement pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934 (the "Exchange Act"), with the Securities and Exchange Commission (the "Commission"). Pursuant to the Offer to Purchase contained within such Schedule 14D-1, the tender offer will expire at 12:00 Midnight, New York City time, on Monday April 4, 1994, unless the offer is extended. The tender offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the tender offer, shares of Common Stock (including the associated Rights) of the company representing not less than 2/3 of the total number of shares outstanding on a fully diluted basis.
Also on March 8, 1994, the company filed its Schedule 14D-9, Solicitation/Recommendation Statement pursuant to Section 14(d)(4) of the Exchange Act, with the Commission. Such Schedule 14D-9, as amended, is incorporated herein by reference.
On March 10, 1994, Northrop Corporation ("Northrop") announced that it would, on March 14, 1994, commence a cash tender offer for all shares of Common Stock of the company, at $60 per share. Northrop also stated that its Board of Directors had authorized it to enter into a tender offer/merger agreement with the company on substantially identical terms as those agreed upon by the company and Martin.
On March 14, 1994, Northrop and Northrop Acquisition Inc. ("NAI"), a wholly-owned subsidiary of Northrop, filed a Schedule 14D-1 with the Commission, commencing a cash tender offer by NAI for the purchase of all outstanding shares of Common Stock (including the associated Rights) of the company, at $60.00 net per share. Pursuant to the Offer to Purchase contained within such Schedule 14D-1, the tender offer will expire at 12:00 Midnight, New York City time, on April 8, 1994, unless the offer is extended. The tender offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the tender offer, shares of Common Stock of the company representing not less than 2/3 of the total number of shares outstanding on a fully diluted basis.
Item 2.



Item 2. Properties
The company's principal properties are located at Bethpage and Calverton, Long Island, New York. These properties include operating facilities and airfields. The company's executive offices are located in Bethpage. The company also owns and leases facilities at a number of other locations.
The following table sets forth information by business segment, as to the company's principal operating properties as of December 31, 1993, with an indication of the areas involved and the character of the company's interest therein:
Company Leased Government Owned (1) From Others Owned Floor Land Floor Land Floor Land Area Area Area Area Area Area (2) (Acres) (2) (Acres) (2) (Acres)
Aerospace
Long Island area - N.Y. 4,208 517 469 2,678 3,053 Georgia 507 162 60 Florida 474 57 857 742 Maryland 384 79 6 Various other states 277 35 452 26 34
Electronics Systems
Long Island area - N.Y. 356 86 124 Florida 565 49 Louisiana 1,234 167 Various other states 107 18 149
Information & Other Services
Long Island area - N.Y. 840 234 232 4 Florida 183 33 2 Virginia 364 Texas 218 15 Various other states 62 37 332 98
Special Purpose Vehicles
Long Island area - N.Y. 13 Pennsylvania 286 45 57 3 Michigan 340 119 Various other states 400 110 2
(1) Including buildings constructed by Grumman upon land held under long-term leases.
(2) Square feet rounded to nearest thousand.
The government-owned property at Calverton, Long Island, New York which includes a plant, airfield and hangars, is leased under a rental agreement with the United States Government. The aggregate rental paid by the company for calendar year 1993 was $4,608,000.
The government-owned plants at Bethpage and a substantial amount of government-owned machinery and equipment, located principally at Bethpage and Calverton, are furnished rent-free under a Facilities Management Contract for use in the performance of government contracts. These facilities may also be used in the performance of non-government work subject to government approval and the payment of rent. The Facilities Management Contract is subject to termination at the government's convenience.
The company's facilities are well maintained, in good operating condition and suitable for the purposes for which they are utilized. In general, due to the current economic environment in the defense industry resulting from reduced budgets, the company has excess production and administrative facilities. The company is aggressively taking appropriate action to eliminate this condition by reducing leased facilities and marketing and/or developing its excess owned land and buildings.
In connection with the consolidation of its facilities, the company anticipates reducing its total floor space approximately 30 percent by 1997.
Item 3.

Item 3. Legal Proceedings
There are pending litigations related to matters which are in the ordinary course of the company's business activities. See Note 12 (Commitments and Contingencies) of the Notes to Consolidated Financial Statements, which has been incorporated herein by reference from the company's 1993 Annual Report to Shareholders.
Currently, there are five waste disposal sites where the company has been named either as a potentially responsible party or an owner/operator of the site by a cognizant governmental agency for the cleanup of hazardous materials previously placed there either directly or through an agent and where the cost of remediation or settlement could reasonably exceed $100,000 in amount. In addition, the company on its own initiative undertook an investigation and potential remediation of another second-tier subsidiary's facility; the company has voluntarily submitted this remediation plan to the cognizant state agency for its review and approval. Environmental costs incurred are generally allowable under terms of existing U. S. Government procurement regulations and are reflected in the prices of the company's products and services. However, it is unknown at this time what the ultimate financial impact of these environmental matters on the company will be but it is not expected to have a material adverse effect on the company's financial position.
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In another matter, Registrant's second-tier subsidiary, Grumman St. Augustine Corporation, was the named defendant in a civil action filed in the Federal District Court for the Middle District of Florida in 1991 by the United States of America, at the request of the United States Environmental Protection Agency, and subsequently entered into a Consent Decree which resulted in final dismissal of the suit on May 15, 1993. The Consent Decree was subsequently declared final on July 20, 1993.
As a Government contractor, the company is, from time to time, subject to U.S. Government investigations of business practices and cost classifications from which legal and/or administrative proceedings could result. Under current government procurement regulations, a contractor can be fined as well as be suspended or debarred from eligibility to receive further Government contracts based upon the results of such investigations. However, the company is not aware of any Government investigation, the outcome of which would have a material adverse effect on the company's financial position.
Four putative class actions have been filed in Supreme Court of the State of New York, County of Nassau, on behalf of the company's shareholders, alleging causes of action arising out of the proposed acquisition of the company by Martin Marietta Corporation ("Martin") (see Item 1, "Subsequent Events"). The four actions are described in the company's Schedule 14D-9, as amended, filed with the Securities and Exchange Commission in connection with such proposed acquisition and incorporated herein by reference. Further developments in connection with such actions will be described, as appropriate, in subsequent amendments to such Schedule 14D-9.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the company's Shareholders during the fourth quarter of the year ended December 31, 1993.
Item 4a. Executive Officers of the Registrant, as of March 1, 1994
The name, age, offices and positions held for the last five years of the company's executive officers are as follows:
Age at Name, Offices and Positions March 1, 1994
Renso L. Caporali--Chairman of the Board and Chief 60 Executive Officer since July 1990; President's title included during the period July 1990 through January 1991; Vice Chairman-Corporate Technology, August 1988 through June 1990.
Robert J. Myers--President and Chief Operating Officer 59 since January 1991; President-Grumman Data Systems Division 1986-1990.
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Age at Name, Offices and Positions March 1, 1994
J. Robert Anderson--Vice Chairman and Chief Financial 57 Officer since July 1991; Vice Chairman, Chief Financial Officer and Chief Administrative Officer-Bridgestone/Firestone, Inc., 1989-1991; Senior Vice President and Chief Financial Officer-Firestone Tire & Rubber Company, 1983-1989.
Jacob J. Bussolini, Jr.--Senior Vice President-Strategic 58 and Technology Planning since January 1993; Vice President- Strategic Planning 1991-1992; Vice President-Business Operations, 1990-1991; Vice President-Business Operations with the Corporate Services Division, 1985-1990.
Steven Dely--Senior Vice President-Executive Staff and 50 Corporate Secretary since January 1993; Vice President- Executive Staff, 1991-1992; Vice President and Assistant to the President and Chairman of the Board, 1986-1991.
Thomas J. Kane, Jr.--Senior Vice President-Business 60 Development since January 1991; Senior Vice President- Business Development of Grumman Aircraft Systems Division,1988-1990.
Richard G. Anderson--Vice President and Chief 59 Technical Officer since October 1990; Vice President- Technology Development, 1988-1990.
Edward Balinsky--Vice President-Mergers and 64 Acquisitions since July 1989; President of Grumman Credit Corporation, 1983-1989.
Nat P. Busi--Vice President and Controller since July 64 1978.
* Joseph A. DiGiacomo--Vice President-Finance of the 59 Grumman Data Systems Division since April 1991; Vice President-Controller, 1987-1991 of the Grumman Data Systems Division.
Howard J. Dunn, Jr.--Vice President-Audit and Ethics 63 since February 1991; Vice President-Audit, 1979-1991.
Robert E. Foster--Vice President--Human Resources 62 since January 1993; Director of Human Resources with Corporate Operations, 1987-1993.
Thomas L. Genovese--Vice President and General 58 Counsel since January 1981.
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Age at Name, Offices and Positions March 1, 1994
Robert P. Harwood--Vice President-Public Affairs 49 since January 1991; Director of Investor and Public Relations, 1986-1990.
Michael C. Kerby--Vice President, Washington 57 Operations since April 1991; Vice Commander-In-Chief, Pacific Air Forces, (USAF), Hickam AFB, Hawaii, 1988-1991.
Thomas J. McKee--Vice President-Government Relations, 45 Washington Operations since June 1991; Vice President, Development, Washington Operations, 1988-1991.
William D. Rizzardi--Vice President-Information 51 Resource Management since September 1991; Vice President-Intercorporate Computer Services with the Grumman Data Systems Division, 1987-1991.
*Frank J. Rizzo--Vice President and Controller of 60 Grumman Allied Group since 1991; Controller of Allied Division, 1986-1991.
*Leonard Rothenberg--President of the Grumman Allied 53 Group since January 1991; President of the Allied Division, 1988-1991.
*Gerald H. Sandler--President of the Grumman Data 59 Systems and Services Group since January 1991; Senior Vice President of the Data Systems Division, 1985-1990.
Robert Simon--Vice President-Corporate Procurement 61 since January 1991; Vice President-Corporate Procurement with the Corporate Services Division, 1985-1990.
*Michael N. Solomita--Vice President and Controller- 59 Aerospace and Electronics Group since January 1993; Vice President-Finance of the Aircraft Systems Division, 1990-1992; Assistant Treasurer-Accounting of the Grumman Aerospace Corporation, 1983-1990.
Fred L. Thompson--Vice President-Total Quality since 51 October 1993; Director-Total Quality for Monsanto Chemical Company, 1987-1993.
*Albert Verderosa--President-Aerospace & Electronics 61 Group since January 1993; President-Space & Electronics Group, 1991-1992; President of the Grumman Melbourne Systems Division, 1985-1991.
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Age at Name, Offices and Positions March 1, 1994
William Wachino, Jr.--Treasurer since February 1991; 52 Assistant Treasurer, 1978-1991.
*Joseph Wilson, Jr.--Senior Vice President-Aerospace & 53 Electronics Group since January 1993; Senior Vice President-Business and Financial Management of the Grumman Aircraft Systems Division, 1991-1992; Vice President-Business and Financial Management of the Aircraft Systems Division, 1990-1991; Corporate Director-Business Management, 1989-1990; Corporate Director- Contracts, 1985-1989.
*Officers of operating units who are deemed to be executives of the registrant in accordance with Section 16 of the 1934 Securities Exchange Act.
There are no family relationships, as defined, between any of the above officers. No officer of the company was selected as an officer pursuant to any arrangement or understanding between him and any other person. The executive officers serve for one-year terms and stand for election annually at the Board of Directors' meeting which follows (usually on the same day) the Annual Meeting of Shareholders.
PART II
The following table indexes all of the Part II items to those pages which have been incorporated herein by reference from the Registrant's 1993 Annual Report to Shareholders. Page Numbers- Part II Registrant's 1993 Item Annual Report to No. Description Shareholders
5 Market for the Registrant's Common Stock and Related Stockholder Matters 32 & 53
6 Selected Financial Data 50 - 51
7 Management's Discussion and Analysis of Financial Condition and Results of Operations 27 - 30
8 Financial Statements and Supplementary Data 31 - 48
9 Disagreements on Accounting and Financial Disclosure - not applicable -
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PART III
Item 10. Directors and Executive Officers of the Registrant
See Item 4a of Part I for the required information regarding the Registrant's executive officers.
The information required by Item 10 concerning the Registrant's directors is contained in Annex I to Registrant's Schedule 14D-9 filed March 8, 1994, as amended, and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by Item 11 is contained in the section entitled "Compensation Committee Report on Executive Compensation" in Annex I to Registrant's Schedule 14D-9 filed March 8, 1994, as amended, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by Item 12 is contained in the sections entitled "Security Ownership of Management" and "Security Ownership of Record Owners" in Annex I to Registrant's Schedule 14D-9 filed March 8, 1994, as amended, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
NOT APPLICABLE
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Consolidated Financial Statements
The following consolidated financial statements of Grumman Corporation and its subsidiaries are included in Part II, Item 8