28 Jan 03. Northrop Grumman Corporation (NYSE: NOC) today reported net income from continuing operations of $226m for the 2002 fourth quarter, or $1.73 per share, on 126.5m weighted average diluted shares outstanding, (2001: (ADJUSTED shares outstanding of 98.0m)$195m, or $1.93 per share). These results are adjusted to exclude amortization of goodwill in 2001 in accordance with SFAS No. 142 – Goodwill and Other Intangible Assets.
As previously reported, the company issued approximately 70m shares of common stock in conjunction with its Dec. 11, 2002, acquisition of TRW Inc. However, Northrop Grumman’s 2002 fourth quarter and year-end income statements do not include TRW’s post-acquisition results because they were not material.
On an economic earnings basis, Northrop Grumman’s 2002 fourth quarter earnings from continuing operations increased to $238m, or $1.83 per share, (2001: $156m, or $1.53).
Fourth quarter 2002 sales increased 17 percent to $4.8bn (2001: $4.1bn), due to the inclusion of the full quarter results for Newport News, which was acquired on Nov. 29, 2001. The company generated net cash from operations of $748m for the 2002 fourth quarter, a 20 percent increase, (2001: $625m).
Northrop Grumman’s operating margin for the 2002 fourth quarter increased 8 percent to $411m, (2001: (adjusted)$381m in the prior year. The company reported fourth quarter 2002 pension income of $22m, (2001: $88m).
“Our 2002 fourth quarter operating performance was outstanding, with all
of our segments generating excellent cash from operations,” said Kent Kresa, Northrop Grumman chairman and chief executive officer. “The results also include double digit increases in both net income and economic earnings. Together with the former TRW defense businesses, which completed one of their most impressive years ever, we are well positioned to benefit from increasing defense budgets and homeland security initiatives. The new Northrop Grumman enters 2003 with an unparalleled business portfolio tightly focused on defense-related programs, a $26bn funded order backlog, and expected 2003 sales of $25bn to $26bn,” Kresa concluded.
Ronald D. Sugar, president and chief operating officer of Northrop Grumman said, “Not only are we starting 2003 with a record backlog, but we are coming off record sales and cash generation in 2002. Strategically and competitively, we are positioned correctly to maximize the opportunities before us. Right now, we are committed to three principal objectives and we are pleased that we are making progress on all three fronts. First, we are moving to close the sale of TRW’s automotive business. Second, we are moving quickly to integrate TRW’s defense operations. Third, we are focusing on the
operational performance of every business sector so that we continue to
deliver the highest quality products and services and build value for our shareholders.”
For the year ended Dec. 31, 2002, income from continuing operations and
before the cumulative effect of an accounting change totalled $697m, (2001: (adjusted) $642m). Net income for the year was $64m and includes a previously reported $432m charge for the cumulative effect of an accounting change on Jan. 1, 2002, to recognize the impairment of goodwill in the company’s Component Technologies reporting units, along with the expected loss from the sale of certain of these discontinued operations that totalled $201m for the year. Earnings per share from continuing operations for 2002 totalled $5.72 compared with an adjusted $7.32 in 2001 on a significant decrease in pension income from $335m to $90m and an increase in weighted average diluted shares outstanding from 85.3m to 117.4m.
For the year ended Dec. 31, 2002, the company reported economic earnings from continuing operations of $745m, a 48 percent increase, (2001: $504m). On a per share basis, 2002 economic earnings from continuing operations were $6.13 compared with $5.70 for