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Northrop Grumman Reports Second Quarter 2005 Results |
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Earnings Per Share from Continuing Operations Increase 22 Percent to $1.00 Income from Continuing Operations Increases 23 Percent to $366 Million Sales Increase 7 Percent to $8 Billion Cash from Operations Increases 33 Percent to $813 Million 2005 Earnings Per Share Guidance Raised to $3.90 to $4.00 2006 Earnings Per Share Projected to Range between $4.10 to $4.30 LOS ANGELES, July 28, 2005 (PRIMEZONE) -- Northrop Grumman Corporation (NYSE:NOC) reported that second quarter 2005 income from continuing operations rose 23 percent to $366 million, or $1.00 per diluted share, from $298 million, or $0.82 per diluted share, for the same period of 2004. Sales for the second quarter of 2005 increased 7 percent to $8.0 billion from $7.4 billion for the same period of 2004. Previously reported second quarter 2004 sales increased $61 million as a result of the reclassification of certain operations from discontinued to continuing operations. "We executed across the board this quarter with higher sales from every segment and double-digit increases in operating margin from five of the six businesses," said Ronald D. Sugar, Northrop Grumman chairman, chief executive officer and president. "Cash from operations showed a healthy increase, reflecting the quality of our earnings growth." "Based on year-to-date results, we expect earnings per share growth of approximately 30 percent in 2005, reflecting our continuing focus on improving the performance of our businesses," Sugar continued. Operating margin for the 2005 second quarter increased $123 million, or 25 percent, to $616 million from $493 million for the same period of 2004, and included a $107 million, or 19 percent, increase in segment operating margin. Higher operating margin from the company's six business segments and lower net pension and unallocated expense contributed to the increase in operating margin. Second quarter 2005 pension expense, as determined in accordance with accounting principles generally accepted in the United States, increased to $103 million from $86 million for the same period of 2004. Pension expense allocated to contracts pursuant to government Cost Accounting Standards (CAS) increased operating margin by $105 million in the second quarter of 2005 and $77 million for the same period of 2004. Net interest expense for the 2005 second quarter declined to $69 million from $96 million for the same period of 2004. The $27 million decrease reflects lower debt than in the prior year period, as well as interest income recognized for a state tax refund related to research and development tax credits. The effective tax rate applied to income from continuing operations for the 2005 second quarter was 33.9 percent compared with 25.5 percent in the 2004 second quarter. In the 2004 second quarter the company recognized tax credits of $31 million related to research and development and export sales activities in prior years. Net income for the 2005 second quarter increased to $367 million, or $1.00 per diluted share, from $298 million, or $0.82 per diluted share, for the same period of 2004. Contract acquisitions were $5.6 billion in the second quarter of 2005 compared with $5.4 billion for the same period of 2004. Total backlog, which includes funded backlog and firm orders for which funding is not currently contractually obligated by the customer, was $57.1 billion at June 30, 2005, compared with $58.1 billion at Dec. 31, 2004. Cash Measurements and Debt Net cash provided by operating activities for the 2005 second quarter was $813 million, compared with $610 million for the second quarter of 2004. Capital spending in the second quarter totaled $149 million. Northrop Grumman's total debt was $5.2 billion at June 30, 2005, unchanged from Dec. 31, 2004. 2005 & 2006 Guidance The company continues to expect sales to increase to between $31 and $31.5 billion in 2005. For 2006, the company now expects sales to increase to approximately $32 billion. The company now expects 2005 earnings per diluted share from continuing operations to increase to $3.90 to $4.00 versus its prior guidance of $3.70 to $3.85. Guidance for 2005 includes a pre-tax gain of $59 million, or $0.11 per diluted share after-tax, from the July 2005 sale of 1.4 million shares of Endwave common stock. The gain will be included in 2005 third quarter results. The 2005 guidance also includes estimated pension expense as determined in accordance with accounting principles generally accepted in the United States of $415 million, and CAS pension expense of $395 million. The company's prior estimate of CAS pension expense was $375 million. For 2006, the company expects earnings per diluted share from continuing operations to increase to between $4.10 and $4.30, which includes an estimated pre-tax expense of $12 million, or $0.02 per diluted share, associated with the adoption of Statement of Financial Accounting Standards No. 123R, Share-Based Payment on January 1, 2006. On May 16, 2005, the company's board of directors approved accelerating the vesting of all outstanding unvested employee stock options (excluding elected officers), effective Sept. 30, 2005, as part of an ongoing evaluation of the company's overall incentive compensation strategy. The amount associated with the decision to accelerate vesting is being charged over the new vesting period and is not significant. The estimated range for 2006 earnings per diluted share from continuing operations assumes that pension expense as determined in accordance with accounting principles generally accepted in the United States and CAS pension expense are the same as estimates for 2005. Actual 2006 pension expense is subject to variation and will depend on plan asset returns in 2005 and discount rate and expected rate of return assumptions. Net cash provided by operating activities in 2005 is expected to range between $2.2 and $2.5 billion, and net cash provided by operating activities in 2006 is expected to be approximately $2.5 billion. Share Repurchase Program On Oct. 26, 2004, the board of directors authorized a program to repurchase $1 billion of the company's outstanding common stock. Share repurchases will take place at management's discretion and under pre-established non-discretionary programs from time to time, depending on market conditions, in the open market, and in privately negotiated transactions. During the second quarter of 2005 the company repurchased 2.8 million common shares at an average price of $55.22 per share. As of June 30, 2005, under the current authorization, the company repurchased 14.6 million common shares at an average price of $54.56 per share. Through the end of the 2005 second quarter and since the inception of its share repurchases in August of 2003, the company has repurchased 29 million shares at an average price of $51.68. Segment Results Effective Jan. 1, 2005, certain business areas within the Electronic Systems, Ships and Space Technology segments were realigned and some business areas have been renamed. Where applicable, all prior period information has been reclassified to reflect these realignments, as shown in Schedule 5 of this press release.
ELECTRONIC SYSTEMS
($ in millions)
SECOND QUARTER
---------------------------------------
2005 2004
------------------- -------------------
Sales $1,765 $1,591
Operating Margin 198 138
% Operating margin to sales 11.2% 8.7%
Electronic Systems second quarter 2005 sales increased 11 percent from the second quarter of 2004 primarily due to increases in Aerospace Systems, Defensive & Navigation Systems, and Government Systems, partially offset by lower sales in Defense Other. Aerospace Systems revenue increased 26 percent due to higher airborne surveillance sales. Defensive & Navigation Systems revenue increased 15 percent primarily due to higher sales for the Large Aircraft Infrared Countermeasures and EA-18 programs. Government Systems revenue increased 25 percent due to higher sales of biohazard detection systems. Electronic Systems second quarter 2005 operating margin increased 43 percent from the second quarter of 2004. Second quarter 2004 operating margin included a $60 million pre-tax charge for the F-16 Block 60 fixed-price development program, which was partially offset by improved performance and contract close-outs for several other programs. The increase in second quarter 2005 operating margin also reflects higher volume and improved performance in Government Systems. On Jan.1, 2005, the manufacturer of complex printed circuit boards and assemblies and the electronic connector manufacturer previously reported under "Other" were realigned to the company's Electronic Systems segment. The impact to prior year results for Electronic Systems is not significant and prior year results have not been reclassified.
SHIPS
($ in millions)
SECOND QUARTER
-----------------------------------
2005 2004
----------------- -----------------
Sales $1,587 $1,557
Operating Margin 101 100
% Operating margin to sales 6.4% 6.4%
Ships second quarter 2005 sales, which include the financial results of the Newport News and Ship Systems sectors, increased 2 percent from the second quarter of 2004, primarily due to higher sales in Expeditionary Warfare, Submarines and Aircraft Carriers, which were partially offset by lower sales in Surface Combatants. Ships second quarter 2005 operating margin increased 1 percent from the second quarter of 2004. The increase includes favorable performance in Aircraft Carriers, which was offset by lower performance in Surface Combatants and Expeditionary Warfare.
INTEGRATED SYSTEMS
($ in millions)
SECOND QUARTER
-------------------------------------
2005 2004
------------------ ------------------
Sales $1,404 $1,133
Operating Margin 108 90
% Operating margin to sales 7.7% 7.9%
Integrated Systems second quarter 2005 sales increased 24 percent from the second quarter of 2004 due to higher sales in Air Combat Systems and Airborne Early Warning and Electronic Warfare Systems. Air Combat Systems revenue rose 22 percent primarily due to higher revenue from the Joint Unmanned Combat Air System program. Airborne Early Warning and Electronic Warfare Systems revenue increased 38 percent due to higher volume from the E-2 Advanced Hawkeye and EA-18G programs. Integrated Systems second quarter 2005 operating margin increased 20 percent from the second quarter of 2004. Operating margin in the 2004 second quarter was favorably impacted by a contract close-out for the Joint STARS program.
MISSION SYSTEMS
($ in millions)
SECOND QUARTER
-------------------------------------
2005 2004
------------------ ------------------
Sales $1,320 $1,298
Operating Margin 99 86
% Operating margin to sales 7.5% 6.6%
Mission Systems second quarter 2005 sales increased 2 percent from the second quarter of 2004 due to higher sales in Missile Systems, which were partially offset by lower sales in Technical & Management Services. Missile Systems sales rose 9 percent due to higher revenue in the Kinetic Energy Interceptors and Intercontinental Ballistic Missile programs. Technical & Management Services sales declined 6 percent. Mission Systems second quarter 2005 operating margin increased 15 percent from the second quarter of 2004 primarily due to improved program performance in Missile Systems.
INFORMATION TECHNOLOGY
($ in millions)
SECOND QUARTER
---------------------------------
2005 2004
---------------- ----------------
Sales $1,331 $1,225
Operating Margin 89 73
% Operating margin to sales 6.7% 6.0%
Information Technology second quarter 2005 sales increased 9 percent from the second quarter of 2004 due to higher sales in Government Information Technology and Technical Services. Government Information Technology sales rose 14 percent due to higher volume in existing programs, new program awards, and the acquisition of Integic. Technology Services revenue increased 16 percent primarily due to higher revenue for existing programs. Information Technology second quarter 2005 operating margin increased 22 percent from the second quarter of 2004, primarily due to higher sales and improved program performance in Government Information Technology, partially offset by lower performance in Enterprise Information Technology.
SPACE TECHNOLOGY
($ in millions)
SECOND QUARTER
--------------------------------------
2005 2004
------------------ -------------------
Sales $875 $836
Operating Margin 69 61
% Operating margin to sales 7.9% 7.3%
Space Technology second quarter 2005 sales increased 5 percent from the second quarter of 2004, primarily due to higher sales in Civil Space and Intelligence, Surveillance & Reconnaissance, which were partially offset by lower revenue in Missile & Space Defense and Satellite Communications. Civil Space revenue increased 21 percent, due to higher volume from NASA and National Oceanic and Atmospheric Administration programs. Intelligence, Surveillance & Reconnaissance revenue rose 12 percent. Space Technology second quarter 2005 operating margin increased 13 percent from the second quarter of 2004 due to higher sales volume in Civil Space and Intelligence, Surveillance & Reconnaissance and improved program performance in Missile & Space Defense. Second Quarter 2005 Highlights
-- NASA selected a Northrop Grumman -- Boeing team to compete
for an award to design and build the space agency's planned
Crew Exploration Vehicle, a human space-transportation system
that will serve as the Space Shuttle's replacement.
-- NASA awarded Northrop Grumman a software assurance services
ID/IQ contract valued at up to $200 million over five years.
Northrop Grumman will provide the space agency the capability
to independently verify and validate mission-critical software
that will support the safety requirements and technology needs
of the agency.
-- Northrop Grumman was awarded a $3.2 billion multi-year contract
to continue production work on the F/A-18 Super Hornet. The
contract covers procurement of 210 shipsets at the rate of 42
during each of the fiscal years 2005-2009.
-- The second Virginia-class submarine, Texas (SSN 775), was
launched on Apr. 9, 2005.
-- Production began on the X-47B Joint Unmanned Combat Air
Systems aircraft, the world's first unmanned surveillance
attack aircraft capable of operating from both land bases and
aircraft carriers.
-- The Counter-MANPADS System Development and Demonstration
program being performed for the Department of Homeland Security
completed system design and began installing the system on an MD-
11 test aircraft. Flight tests will commence in August.
-- The U.S. Coast Guard's innovative, fast-response cutter reached
a systems requirement milestone that confirmed that the Coast
Guard's requirements have been sufficiently developed and can
proceed to design development.
-- The AN/APG-81 fire control radar for the F-35 Joint Strike
Fighter passed a key milestone in system integration testing by
detecting airborne targets at the company's integration
laboratory.
-- The 23rd and final satellite in the long-running Defense Support
Program (DSP) series was shipped to the U.S. Air Force's Cape
Canaveral Air Station for launch preparation. The upcoming
launch is a major milestone in a program that has produced many
technical innovations and provided the nation with a reliable
missile-warning system.
-- Northrop Grumman successfully demonstrated, ahead of schedule,
two key battle management capabilities for the new Kinetic Energy
Interceptors missile-defense program.
-- The LPD-17 San Antonio successfully completed acceptance trials,
which is the last significant milestone before delivery to the
Navy.
-- The company achieved its nineteenth CMMI(r) Level 5 rating, the
highest possible rating for benchmarking commercial and defense
industry practices for management and engineering.
-- Philip A. Teel was elected president, Northrop Grumman Ship
Systems, effective July 1, 2005.
About Northrop Grumman Northrop Grumman Corporation is a global defense company headquartered in Los Angeles, Calif. Northrop Grumman provides technologically advanced, innovative products, services and solutions in systems integration, defense electronics, information technology, advanced aircraft, shipbuilding and space technology. With more than 125,000 employees, and operations in all 50 states and 25 countries, Northrop Grumman serves U.S. and international military, government and commercial customers. Northrop Grumman will webcast its earnings conference call at 12 p.m. ET on July 28, 2005. A live audio broadcast of the conference call along with a supplemental presentation will be available on the investor relations page of the company's Web site at http://www.northropgrumman.com. Note: Certain statements and assumptions in this release contain or are based on "forward-looking" information (that Northrop Grumman believes to be within the definition in the Private Securities Litigation Reform Act of 1995) and involve risks and uncertainties, and include, among others, statements in the future tense, and all statements accompanied by terms such as "project," "expect," "estimate," "assume," "believe," "guidance" or variations thereof. This information reflects the company's best estimates when made, but the company expressly disclaims any duty to update this information if new data becomes available or estimates change after the date of this release. Such "forward-looking" information includes, among other things, financial guidance regarding sales, segment operating margin, pension expense, employer contributions under pension plans and medical and life benefits plans, and cash flow, and is subject to numerous assumptions and uncertainties, many of which are outside Northrop Grumman's control. These include Northrop Grumman's assumptions with respect to future revenues, expected program performance and cash flows, returns on pension plan assets and variability of pension actuarial and related assumptions, the outcome of litigation and appeals, environmental remediation, divestitures of businesses, successful reduction of debt, successful negotiation of contracts with labor unions, effective tax rates and timing and amounts of tax payments, and anticipated costs of capital investments, among other things. Northrop Grumman's operations are subject to various additional risks and uncertainties resulting from its position as a supplier, either directly or as subcontractor or team member, to the U.S. Government and its agencies as well as to foreign governments and agencies; actual outcomes are dependent upon various factors, including, without limitation, Northrop Grumman's successful performance of internal plans; government customers' budgetary constraints; customer changes in short-range and long-range plans; domestic and international competition in both the defense and commercial areas; product performance; continued development and acceptance of new products and, in connection with any fixed price development programs, controlling cost growth in meeting production specifications and delivery rates; performance issues with key suppliers and subcontractors; government import and export policies; acquisition or termination of government contracts; the outcome of political and legal processes; natural disasters and terrorist acts; legal, financial, and governmental risks related to international transactions and global needs for military aircraft, military and civilian electronic systems and support, information technology, naval vessels, space systems and related technologies, as well as other economic, political and technological risks and uncertainties and other risk factors set out in Northrop Grumman's filings from time to time with the Securities and Exchange Commission, including, without limitation, Northrop Grumman reports on Form 10-K and Form 10-Q.
NORTHROP GRUMMAN CORPORATION SCHEDULE 1
FINANCIAL HIGHLIGHTS
($ in millions, except per share)
(unaudited)
SECOND QUARTER FIRST SIX MONTHS
--------------------- ---------------------
2005 2004 (4) 2005 2004 (4)
--------- --------- --------- ---------
OPERATING RESULTS HIGHLIGHTS
Total contract
acquisitions (1) $ 5,556 $ 5,409 $ 13,397 $ 13,895
Total sales 7,962 7,435 15,415 14,599
Total operating
margin 616 493 1,211 931
Income from
continuing
operations 366 298 764 530
Net income 367 298 776 534
Diluted earnings
per share from
continuing
operations 1.00 .82 2.09 1.46
Diluted earnings
per share 1.00 .82 2.12 1.47
Net cash provided
by operating
activities 813 610 1,076 873
---------------------------------------------------------------------
JUNE 30, DEC 31,
2005 2004 (4)
--------- ---------
BALANCE SHEET HIGHLIGHTS
Cash and cash
equivalents $ 1,215 $ 1,230
Accounts receivable,
net 3,542 3,492
Inventoried costs, net 1,185 1,049
Property, plant, and
equipment, net 4,204 4,210
Total debt 5,160 5,158
Net debt (2) 3,945 3,928
Mandatorily redeemable
preferred stock 350 350
Shareholders' equity 16,858 16,700
Total assets 33,446 33,295
Net debt to
capitalization
ratio (3) 18% 18%
---------------------------------------------------------------------
(1) Contract acquisitions represent orders received during the
period for which funding has been contractually obligated by
the customer.
(2) Total debt less cash and cash equivalents.
(3) Net debt divided by the sum of shareholders' equity and total
debt.
(4) Certain prior year amounts have been reclassified to conform to
the 2005 presentation.
NORTHROP GRUMMAN CORPORATION SCHEDULE 2
OPERATING RESULTS
($ in millions, except per share)
(unaudited)
SECOND QUARTER FIRST SIX MONTHS
-------------------- --------------------
2005 2004 (1) 2005 2004 (1)
-------- -------- -------- --------
Sales
Electronic
Systems $ 1,765 $ 1,591 $ 3,308 $ 3,129
Ships 1,587 1,557 3,101 3,001
Integrated
Systems 1,404 1,133 2,703 2,280
Mission Systems 1,320 1,298 2,625 2,481
Information
Technology 1,331 1,225 2,560 2,455
Space Technology 875 836 1,738 1,642
Other 11 61 22 120
Intersegment
Eliminations (331) (266) (642) (509)
-------- -------- -------- --------
$ 7,962 $ 7,435 $ 15,415 $ 14,599
======== ======== ======== ========
Operating margin
Electronic
Systems $ 198 $ 138 $ 359 $ 296
Ships 101 100 205 186
Integrated
Systems 108 90 244 206
Mission Systems 99 86 190 162
Information
Technology 89 73 174 144
Space Technology 69 61 131 112
Other (5) 4 (6) 6
-------- -------- -------- --------
Total segment
operating
margin (2) 659 552 1,297 1,112
Reconciliation to
operating margin
Unallocated
expenses (42) (47) (69) (154)
Pension expense (103) (86) (206) (177)
Reversal of CAS
pension expense
included above 105 77 197 157
Reversal of
royalty income
included above (3) (3) (8) (7)
-------- -------- -------- --------
Operating margin 616 493 1,211 931
Interest income 25 16 39 32
Interest expense (94) (112) (189) (225)
Other, net 7 3 89 13
-------- -------- -------- --------
Income from
continuing
operations
before income
taxes 554 400 1,150 751
Federal and
foreign income
taxes 188 102 386 221
-------- -------- -------- --------
Income from
continuing
operations 366 298 764 530
Income from
discontinued
operations, net
of tax 1
Gain from
disposal of
discontinued
operations, net
of tax 1 12 3
-------- -------- -------- --------
Net income $ 367 $ 298 $ 776 $ 534
======== ======== ======== ========
Weighted average
diluted shares
outstanding, in
millions 365.2 363.5 365.7 364.3
Diluted earnings
per share
Continuing
operations $ 1.00 $ .82 $ 2.09 $ 1.46
Disposal of
discontinued
operations .03 .01
-------- -------- -------- --------
Diluted earnings
per share $ 1.00 $ .82 $ 2.12 $ 1.47
======== ======== ======== ========
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(1) Certain prior year amounts have been reclassified to conform to
the 2005 presentation.
(2) Non-GAAP measure. Management uses segment operating margin as an
internal measure of financial performance for the individual
business segments. Pension expense is included in determining
segment operating margin to the extent that the cost is
currently recognized under U.S. Government Cost Accounting
Standards (CAS). In order to reconcile from segment operating
margin to total company operating margin, these amounts are
reported under the caption "Reversal of CAS pension expense
included above." Total pension expense or income determined in
accordance with accounting principles generally accepted in the
United States is reported separately as a reconciling item
under the caption "Pension expense." The reconciling item
captioned "Unallocated expenses" includes the portion of
corporate, legal, environmental, other retiree benefits, stock
compensation, and other expenses not allocated to the segments.
NORTHROP GRUMMAN CORPORATION SCHEDULE 3
ADDITIONAL SEGMENT INFORMATION
($ in millions)
(unaudited)
CONTRACT FUNDED
ACQUISITIONS(1) BACKLOG(2)
----------------------------------- ------------------
SECOND QUARTER FIRST SIX MONTHS JUNE 30,
----------------- ----------------- -----------------
2005 2004 (3) 2005 2004 (4) 2005 2004 (3)
-------- -------- -------- -------- -------- --------
Electronic
Systems $ 1,393 $ 1,489 $ 3,065 $ 3,261 $ 6,535 $ 6,600
Ships 321 592 1,487 2,110 7,551 8,858
Integrated
Systems 667 820 2,606 2,588 4,594 4,606
Mission
Systems 1,157 990 2,412 2,326 2,954 2,750
Information
Technology 1,505 1,207 2,811 2,401 2,819 2,265
Space
Technology 737 552 1,610 1,685 1,621 1,601
Other 14 64 27 130 33 73
Intersegment
Eliminations (238) (305) (621) (606) (563) (529)
-------- -------- -------- -------- -------- --------
Total $ 5,556 $ 5,409 $ 13,397 $ 13,895 $ 25,544 $ 26,224
======== ======== ======== ======== ======== ========
TOTAL BACKLOG, JUNE 30, 2005
--------------------------------------
TOTAL
FUNDED UNFUNDED(4) BACKLOG
---------- ---------- ----------
Electronic
Systems $ 6,535 $ 1,725 $ 8,260
Ships 7,551 3,350 10,901
Integrated
Systems 4,594 8,767 13,361
Mission
Systems 2,954 7,585 10,539
Information
Technology 2,819 3,184 6,003
Space
Technology 1,621 6,956 8,577
Other 33 -- 33
Intersegment
Eliminations (563) -- (563)
---------- ---------- ----------
Total $ 25,544 $ 31,567 $ 57,111
========== ========== ==========
(1) Contract acquisitions represent orders received during the
period for which funding has been contractually obligated by
the customer.
(2) Funded backlog represents unfilled orders for which funding has
been contractually obligated by the customer.
(3) Certain prior year amounts have been reclassified to conform to
the 2005 presentation.
(4) Unfunded backlog represents firm orders for which funding is not
currently contractually obligated by the customer.
Unfunded backlog excludes unexercised contract options and
unfunded Indefinite Delivery Indefinite Quantity (IDIQ).
---------------------------------------------------------------------
AMORTIZATION OF PURCHASED INTANGIBLES
SECOND QUARTER FIRST SIX MONTHS
------------------------ -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Electronic
Systems $ 20 $ 22 $ 41 $ 43
Ships 11 11 20 21
Integrated
Systems 3 3 7 7
Mission
Systems 8 8 16 16
Information
Technology 5 4 7 9
Space
Technology 8 9 17 17
---------- ---------- ---------- ----------
Total $ 55 $ 57 $ 108 $ 113
========== ========== ========== ==========
NORTHROP GRUMMAN CORPORATION SCHEDULE 4
SALES BY BUSINESS AREA WITHIN SEGMENTS
($ in millions)
(unaudited)
SECOND QUARTER FIRST SIX MONTHS
-------------------- --------------------
2005 2004 (1) 2005 2004 (1)
-------- -------- -------- --------
Electronic Systems
Defensive &
Navigation
Systems $ 534 $ 465 $ 1,008 $ 905
Aerospace Systems 464 367 864 770
Naval & Marine
Systems 225 205 412 410
Government
Systems 225 180 399 308
C4ISR & Space
Systems 159 167 320 328
Defense Other 158 207 305 408
-------- -------- -------- --------
1,765 1,591 3,308 3,129
-------- -------- -------- --------
Ships
Aircraft
Carriers 491 475 927 915
Surface
Combatants 407 486 852 948
Expeditionary
Warfare 416 346 798 652
Submarines 198 178 380 340
Coast Guard and
Coastal Defense 42 30 82 46
Services 28 24 55 54
Commercial and
Other 13 40 34 81
Intrasegment
Eliminations (8) (22) (27) (35)
-------- -------- -------- --------
1,587 1,557 3,101 3,001
-------- -------- -------- --------
Integrated
Systems
Air Combat
Systems 818 670 1,604 1,382
Airborne
Early Warning/
Electronic
Warfare Systems 439 318 812 598
Airborne
Ground
Surveillance/
Battle
Management
Systems 148 147 291 303
Intrasegment
Eliminations (1) (2) (4) (3)
-------- -------- -------- --------
1,404 1,133 2,703 2,280
-------- -------- -------- --------
Mission Systems
Command,
Control &
Intelligence
Systems 789 791 1,579 1,514
Missile Systems 369 337 722 622
Technical &
Management
Services 173 185 341 373
Intrasegment
Eliminations (11) (15) (17) (28)
-------- -------- -------- --------
1,320 1,298 2,625 2,481
-------- -------- -------- --------
Information
Technology
Government
Information
Technology 844 740 1,600 1,493
Commercial
Information
Technology 177 157 350 332
Technology
Services 178 154 348 313
Enterprise
Information
Technology 162 202 329 378
Intrasegment
Eliminations (30) (28) (67) (61)
-------- -------- -------- --------
1,331 1,225 2,560 2,455
-------- -------- -------- --------
Space
Technology
Intelligence,
Surveillance
& Reconnaissance 295 263 585 500
Civil Space 198 163 411 318
Software
Defined Radios 136 142 271 285
Missile & Space
Defense 110 128 232 247
Satellite
Communications 117 131 214 269
Technology 34 32 62 59
Intrasegment
Eliminations (15) (23) (37) (36)
-------- -------- -------- --------
875 836 1,738 1,642
-------- -------- -------- --------
Other 11 61 22 120
Intersegment
Eliminations (331) (266) (642) (509)
-------- -------- -------- --------
Total Sales $ 7,962 $ 7,435 $ 15,415 $ 14,599
======== ======== ======== ========
(1) Certain prior year amounts have been reclassified to
conform to the 2005 presentation.
SCHEDULE 5
NORTHROP GRUMMAN CORPORATION
SEGMENT SALES RESULTS -- AFTER REALIGNMENT
($ in millions)
(unaudited)
Electronic Systems
Pro-Forma Sales
-- After
Realignment 2004
--------------- ------------------------------------------
Three Months Ended
---------------------------------- Total
Mar 31 Jun 30 Sep 30 Dec 31 Year
---------------------------------- ------
Defensive &
Navigation
Systems $ 440 $ 465 $ 433 $ 497 $1,835
Aerospace Systems 403 367 417 422 1,609
Naval & Marine
Systems 205 205 207 240 857
Government
Systems 128 180 158 223 689
C4ISR & Space
Systems 161 167 155 169 652
Defense Other 201 207 188 179 775
---------------------------------- ------
Total Sales $1,538 $1,591 $1,558 $1,730 $6,417
================================== ======
Ships
Pro-Forma Sales
-- After
Realignment 2004
--------------- ------------------------------------------
Three Months Ended
---------------------------------- Total
Mar 31 Jun 30 Sep 30 Dec 31 Year
---------------------------------- ------
Surface
Combatants $ 462 $ 486 $ 486 $ 487 $1,921
Aircraft
Carriers 440 475 466 520 1,901
Expeditionary
Warfare 306 346 344 440 1,436
Submarines 162 178 180 210 730
Coast Guard and
Coastal Defense 16 30 29 39 114
Services 30 24 19 26 99
Commercial and
Other 41 40 38 23 142
Intrasegment
Eliminations (13) (22) (25) (31) (91)
---------------------------------- ------
Total Sales $1,444 $1,557 $ 1,537 $1,714 $6,252
================================== ======
Space Technology
Pro-Forma Sales
-- After
Realignment 2004
--------------- ------------------------------------------
Three Months Ended
---------------------------------- Total
Mar 31 Jun 30 Sep 30 Dec 31 Year
---------------------------------- ------
Intelligence,
Surveillance &
Reconnaissance $ 237 $ 263 $ 281 $ 260 $1,041
Civil Space 155 163 152 168 638
Software Defined
Radios 143 142 138 123 546
Missile & Space
Defense 119 128 121 119 487
Satellite
Communications 138 131 127 113 509
Technology 27 32 15 26 100
Intrasegment
Eliminations (13) (23) (11) (5) (52)
---------------------------------- ------
Total Sales $ 806 $ 836 $ 823 $ 804 $3,269
================================== ======
CONTACTS: Dan McClain (Media)
Northrop Grumman Corporation
(310) 201-3335
Gaston Kent (Investors)
Northrop Grumman Corporation
(310) 201-3423
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