NORTHROP RESULTS IN LINE WITH EXPECTATIONS
23 Jul 09. Northrop Grumman Corporation (NYSE: NOC) reported that second quarter 2009 earnings from continuing operations totalled $394m, or $1.21 per diluted share, compared with $483m, or $1.40 per diluted share, in the second quarter of 2008. Second quarter 2009 net pension adjustment (FAS/CAS) reduced earnings from continuing operations by $49m, or $0.15 per diluted share, compared with an increase to earnings from continuing operations of $45m, or $0.13 per diluted share, in the second quarter of 2008. Second quarter 2009 earnings included a net $64m pre-tax gain, or $0.13 per diluted share, for legal matters, as well as a $105m pre-tax charge, or $0.21 per diluted share, for cost increases in the estimates to complete several ships under construction at the company’s Gulf Coast shipyards.
Sales for the 2009 second quarter increased 4 percent to $8.96bn from $8.63bn in the 2008 second quarter. Second quarter 2009 sales were reduced by $100m due to the estimate to complete adjustments in Shipbuilding. In the 2009 second quarter, $830m of cash was provided by operations, compared with $607m of cash provided by operations in the prior year period.
“Overall, our portfolio continues to perform well. This quarter’s financial results reflect higher pension costs and the aggressive actions we are taking to drive improvement in our Gulf Coast shipbuilding programs. Our year-to-date performance is on-track and we are confirming our 2009 guidance for sales, EPS and cash generation,” said Ronald D. Sugar, chairman and chief executive officer.
($ in ms except
per share amounts) Second Quarter Six Months
2009 2008 2009 2008
Sales $ 8,957 $ 8,628 $ 17,277 $ 16,352
Segment operating income(1) $ 719 $ 784 $ 1,510 $ 1,242
as a % of sales 8.0% 9.1% 8.7% 7.6%
Operating income $ 653 $ 806 $ 1,308 $ 1,270
as a % of sales 7.3% 9.3% 7.6% 7.8%
Diluted EPS from continuing
operations $ 1.21 $ 1.40 $ 2.38 $ 2.15
Average diluted shares
outstanding, in ms 325.8 344.1 328.9 346.7
Cash provided by operations $ 830 $ 607 $ 658 $ 801
Free cash flow(2) $ 676 $ 431 $ 324 $ 447
(1) Segment operating income is a non-GAAP measure used as an
internal measure of financial performance for the five
sectors and is reconciled to operating income in the “Business
Results” table presented later in this press release.
(2) Free cash flow is a non-GAAP measure defined as cash from
operations less capital expenditures and outsourcing contract
& related software costs. Management uses free cash flow as
an internal measure of financial performance. Free cash flow
is reconciled to cash from operations in the “Cash Flow
Highlights” table presented later in this press release.
Operating income for the 2009 second quarter totalled $653m compared with $806m in the prior year period. The change reflects a $145 m increase in net pension expense and a $112m decrease in Shipbui