28 Jul 03. Northrop Grumman Corporation reported income from continuing operations of $207m, or $1.09 per share, compared with $181m, or $1.52 per share, for the same period of 2002. Second quarter 2003 earnings per share are based on weighted average diluted shares outstanding of 184.4 million versus 114.8 million for the second quarter of 2002. Sales for the 2003 second quarter increased to $6.6bn from $4.2bn for the same period of 2002.
Companywide, contract acquisitions increased 36 percent to $5.2bn in the 2003 second quarter from $3.8bn reported for the same period a year ago, primarily due to contributions from the Mission Systems and Space Technology segments. The company’s business backlog increased 19 percent to $25.9bn at June 30, 2003, from $21.7bn reported a year earlier. The 2003 second quarter results reflect contributions from the company’s two new operating segments, Mission Systems and Space Technology, and double-digit growth in sales and operating margin at its Electronic Systems, Information Technology and Integrated Systems segments. The results also include a $68m pre-tax charge on Ships’ commercial Polar Tanker
program.
The company expects 2003 sales to be $25-$26bn. The range of earnings from continuing operations is now projected to be $4.00-$4.25 per share, up from previous guidance of $3.80-$4.20 per share. Before the March 2003 $1.0bn B-2 tax payment, cash from operations for 2003 is expected to be between $1.1-$1.3bn. For 2004, sales are expected to be $28-$29bn, with solid double-digit earnings per share growth, assuming pension costs are the same as 2003. Cash from operations for 2004 is expected to total approximately $1.5bn.
Electronic Systems segment sales for the 2003 second quarter increased
16 percent to $1.5bn from $1.3bn in the second quarter of 2002. Operating margin for the 2003 second quarter increased 36 percent to $148m from $109m from the comparable 2002 period. Electronic Systems results reflect increased deliveries in Aerospace Electronic Systems on the F/A-22, Apache Longbow and F-16 programs and increased volume and improved performance on C4ISR&N programs.
Ships, which includes the financial results of the Newport News and Ship
Systems sectors, increased sales 19 percent to $1.4bn for the 2003 second quarter, compared with sales of $1.2bn for the 2002 second quarter. The sales growth reflects increased revenue on the DDX program, included in the Surface Combatant business area, and on the LPD program, included in the Amphibious and Auxiliary business area.
Information Technology sales in the 2003 second quarter increased
11 percent to $1.2bn compared with sales of $1.0bn for the same period of 2002, reflecting strong growth in all business areas. Operating margin for the quarter increased 63 percent to $67m compared with $41m reported in the 2002 second quarter, reflecting increased revenues and a higher operating margin rate on the Government Information Technology business. The 2002 second quarter results included a $16m loss provision on a contract relating to Oracle’s Enterprise Licensing Agreement with the State of California.
Integrated Systems sales increased 19 percent to $1.0bn in the second quarter of 2003 compared with $829m for the same 2002 period. Operating margin for the 2003 second quarter increased 23 percent to $123m from $100m in the same 2002 period. Integrated Systems results reflect increased F-35, E2C, and Global Hawk sales and operating margin, which were partially offset by lower Joint STARS volume.
Mission Systems reported 2003 second quarter sales of $1.1bn. Operating margin for the 2003 second quarter totalled $74m, led by its Command, Control & Intelligence Systems and Missile Systems business areas. Space Technology reported 2003 second quarter sales of $733m, led by its Intelligence, Surveillance & Reconnaissance and Civil Space business areas. Operating margin for the 2003 second quarter tota