STRONG SALES GROWTH AT NORTHROP GRUMMAN
22 Apr 09. Northrop Grumman Corporation (NYSE:NOC) reported that first quarter 2009 earnings from continuing operations increased 48 percent to $389m, or $1.17 per diluted share, compared with $263m, or $0.76 per diluted share, in the first quarter of 2008. First quarter 2008 earnings were reduced by a pre-tax charge of $326m, or $0.61 per diluted share, in the company’s Shipbuilding sector.
Sales for the 2009 first quarter increased 8 percent to $8.3bn from $7.7bn in the 2008 first quarter. First quarter 2008 sales were reduced by $134m due to the $326m charge in the Shipbuilding sector. In the 2009 first quarter, $172m of cash was used in operations, including discretionary pension pre-funding of $214m, compared with $194m of cash provided by operations in the prior year period.
“We’re pleased with our first quarter financial results, and we’re confident that our products and capabilities continue to be extremely well aligned with current and emerging national security priorities,” said Ronald D. Sugar, chairman and chief executive officer.
($ in millions except per share amounts) 2009 2008
Sales $ 8,320 $ 7,724
Segment operating income(1) $ 791 $ 458
as a % of sales 9.5% 5.9%
Operating income $ 655 $ 464
as a % of sales 7.9% 6.0%
Diluted EPS from continuing operations $ 1.17 $ 0.76
Average diluted shares outstanding,
in ms 332.1 349.3
Cash (used in) provided by operations $ (172) $ 194
Free cash flow(2) $ (352) $ 16
(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 first quarter increased 41 percent to $655m from $464m in the 2008 first quarter due to higher segment operating income, which was partially offset by a $135m change in net pension adjustment and a $21m increase in unallocated expense. The first quarter 2009 net pension adjustment is an expense of $76m compared to income of $59m in the first quarter of 2008. The increase in unallocated expenses is principally due to higher post-retirement benefit plan and litigation costs. As a percent of sales, operating income increased to 7.9 percent from 6 percent in the prior year period.
The higher segment operating income reflects higher sales and operating income for all five operating sectors. As a percent of sales, segment operating income increased to 9.5 percent from 5.9 percent in the prior year period. Segment operating income and margin rate for the 2008 first quarter were reduced by a $326m charge in the Shipbuilding sector.
Federal and foreign income taxes for the 2009 first quarter increased to $201m from $146m in the first quarter of 2008. The effective tax rate applied to earnings from continuing operations for the 2009 first q