| UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 |
||||
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
10/27/2004
Northrop Grumman Corporation
(Exact name of registrant as specified in its charter)
| DE | 1-16411 | 95-4840775 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 1840 Century Park East Los Angeles, CA |
90067 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code
(310) 553-6262
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On October 27, 2004, Northrop Grumman Corporation issued a press release announcing its financial results for the quarter ended September 30, 2004, under the heading “Northrop Grumman Reports Third Quarter 2004 Results; Announces Additional $1 Billion Share Repurchase Program.” The press release is furnished as Exhibit 99.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
| (c) | Exhibits |
| Furnished |
| Exhibit 99 - Press Release dated October 27, 2004 |
Signature(s)
Pursuant to the Requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| Northrop Grumman Corporation | ||||
| (Registrant) | ||||
| October 27, 2004 (Date) |
By: |
/s/ John H. Mullan | ||
| (Signature) | ||||
| John H. Mullan | ||||
| Corporate Vice President and Secretary | ||||
Exhibit Index
| Exhibit No. |
||
| Exhibit 99 | Furnished – Press Release dated October 27, 2004 |
Exhibit 99
| Contact: | Frank Moore (Media) (310) 201-3335 | |
| Gaston Kent (Investors) (310) 201-3423 |
Northrop Grumman Reports Third Quarter 2004 Results;
Announces Additional $1 Billion Share Repurchase Program
Earnings Per Share from Continuing Operations Increase to $0.80
Income from Continuing Operations Increases to $291 Million
Sales Increase 11 Percent to $7.4 Billion
Company Completes $700 Million Share Repurchase Program
New $1 Billion Share Repurchase Program Authorized
Provides Updated 2004 and 2005 Financial Guidance
LOS ANGELES – Oct. 27, 2004 — Northrop Grumman Corporation (NYSE: NOC) reported that third quarter 2004 income from continuing operations rose 46 percent to $291 million, or $0.80 per diluted share, from $200 million, or $0.54 per diluted share, for the same period of 2003. Third quarter 2004 and third quarter 2003 income from continuing operations reflects the reclassification of certain operations from discontinued to continuing operations. Sales for the third quarter of 2004 increased 11 percent to $7.4 billion from $6.7 billion for the same period of 2003.
“Strong performance at Mission Systems, Integrated Systems, Ships, and Space Technology led to another quarter of double-digit sales growth, which was accompanied by outstanding cash generation,” said Ronald D. Sugar, Northrop Grumman chairman, chief executive officer and president.
“We continue to view the future with confidence, and our board has authorized the repurchase of an additional $1 billion of our common stock. This new, larger share
Northrop Grumman Corporation • 1840 Century Park East • Los Angeles, CA 90067
www.northropgrumman.com
Northrop Grumman Reports Third Quarter 2004 Results;
Announces Additional $1 Billion Share Repurchase Program
buyback program, combined with a competitive dividend payout ratio, are major components of our strategy to deliver value to shareholders, while strengthening our credit profile and maintaining financial flexibility,” Sugar concluded.
Operating margin for the 2004 third quarter increased 37 percent to $538 million from $394 million for the same period of 2003, including the effect of lower pension expense and higher unallocated expenses than in the prior period.
Third quarter 2004 pension expense, as determined in accordance with accounting principles generally accepted in the United States, declined to $87 million from $143 million for the same period of 2003. Pension expense allocated to contracts pursuant to government Cost Accounting Standards (CAS) increased operating margin by $90 million in the third quarter of 2004 and $64 million for the same period of 2003.
Unallocated corporate expenses increased to $62 million in the third quarter of 2004 from $18 million for the same period of 2003. The increase in unallocated corporate expenses was primarily due to increases in legal costs, environmental remediation costs, and deferred state income taxes.
Net income for the 2004 third quarter increased to $278 million, or $0.76 per diluted share, from $184 million, or $0.50 per diluted share, for the same period of 2003.
Contract acquisitions increased to $4.7 billion in the third quarter of 2004 from $4.3 billion for the same period of 2003. Total backlog, which includes funded backlog and firm orders for which funding is not currently contractually obligated by the customer, increased to $58.4 billion at Sept. 30, 2004, from $58.2 billion at Dec. 31, 2003.
Reclassification of Discontinued Operations
On Oct. 17, 2002, the company announced its intention to sell the businesses comprising its Component Technologies reporting segment, and these businesses were classified as discontinued operations beginning in the third quarter of 2002. The remaining unsold operations are a manufacturer of complex printed circuit boards and assemblies, an electronic connector manufacturer, and a European-based marketing group. During the third quarter of 2004, the company suspended its efforts to sell these remaining businesses, and they have been reclassified to continuing operations and are reported under the segment entitled “Other.”
As a result of the reclassification, third quarter 2003 sales increased by $45 million, and third quarter 2003 income from continuing operations was reduced by $24 million, which included a $31 million pre-tax charge for the expected loss on sale of the reclassified businesses. The reclassification reduced third quarter 2003 diluted earnings per share from continuing operations to $0.54 from $0.61.
Northrop Grumman Reports Third Quarter 2004 Results;
Announces Additional $1 Billion Share Repurchase Program
Share Repurchase Program
On Oct. 5, 2004, the company completed the $700 million share repurchase program announced on Aug. 20, 2003. Under that authorization, the company repurchased approximately 14.4 million shares of common stock at an average price of $48.71, after giving effect to the 2-for-1 stock split effective June 21, 2004. On Oct. 26, 2004, the board of directors authorized the repurchase of an additional $1 billion of the company’s outstanding common stock, which is expected to be completed over 12 to 18 months, commencing in November 2004. 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.
2004 & 2005 Guidance
The company expects 2004 sales in excess of $29 billion versus previous guidance of approximately $29 billion, primarily due to the reclassification of previously discontinued businesses to continuing operations. The company now expects 2004 earnings per share from continuing operations of $2.95 to $3.00 versus previous guidance of $2.90 to $3.00. Net cash provided by operating activities is expected to be approximately $1.8 billion in 2004 versus previous guidance of approximately $1.7 billion.
For 2005, the company expects sales of approximately $31 billion. Earnings per share from continuing operations are expected to grow, on a percentage basis, in the mid- to high-teens over 2004. The estimated growth in 2005 earnings per share from continuing operations is before adoption of Proposed Statement of Financial Accounting Standards, Share-based Payments – an amendment of Statements No. 123 and 95, and assumes that pension expense, as determined in accordance with accounting principles generally accepted in the United States and pension expense allocated to contracts pursuant to government Cost Accounting Standards (CAS), are the same as estimates for 2004. For 2005, net cash provided by operations is expected to be in the range of $1.8 to $2 billion.
Segment Results
ELECTRONIC SYSTEMS
| ($ in millions) THIRD QUARTER |
||||||||
| 2004 |
2003 |
|||||||
| Sales |
$ | 1,558 | $ | 1,522 | ||||
| Operating Margin |
178 | 162 | ||||||
| % Operating margin to sales |
11.4 | % | 10.6 | % | ||||
Northrop Grumman Reports Third Quarter 2004 Results;
Announces Additional $1 Billion Share Repurchase Program
Electronic Systems third quarter 2004 sales increased 2 percent from the third quarter of 2003 due to higher sales in the Government Systems, Defense Other, Defensive Systems, and C4ISR & Naval Systems business areas. Government Systems revenue increased 43 percent due to higher sales of bio-detection systems. The sales increases in the Government Systems, Defense Other, Defensive Systems, and C4ISR & Naval Systems business areas were partially offset by lower sales in Aerospace Systems and Space Systems. Electronic Systems third quarter 2004 operating margin increased 10 percent from the third quarter of 2003 primarily due to performance improvements in the Defensive Systems business area.
SHIPS
| ($ in millions) THIRD QUARTER |
||||||||
| 2004 |
2003 |
|||||||
| Sales |
$ | 1,537 | $ | 1,354 | ||||
| Operating Margin |
96 | 83 | ||||||
| % Operating margin to sales |
6.2 | % | 6.1 | % | ||||
Ships third quarter 2004 sales, which include the financial results of the Newport News and Ship Systems sectors, increased 14 percent from the third quarter 2003, driven by higher sales in the Surface Combatants, Amphibious & Auxiliary, and Submarines business areas. Surface Combatants sales rose 25 percent, primarily due to higher DD(X) program revenue. Amphibious & Auxiliary revenue rose 27 percent due to higher revenue in the LPD and LHD programs, and Submarines sales rose 15 percent on higher revenue in the Virginia-class program. Ships third quarter 2004 operating margin increased 16 percent from the third quarter of 2003 due to higher sales.
INFORMATION TECHNOLOGY
| ($ in millions) THIRD QUARTER |
||||||||
| 2004 |
2003 |
|||||||
| Sales |
$ | 1,261 | $ | 1,164 | ||||
| Operating Margin |
80 | 72 | ||||||
| % Operating margin to sales |
6.3 | % | 6.2 | % | ||||
Information Technology third quarter 2004 sales increased 8 percent from the third quarter of 2003 due to higher revenue in the Government Information Technology business area. Government Information Technology revenue increased 17 percent, primarily due to new business awards and organic sales growth in existing programs. Information Technology third quarter 2004 operating margin increased 11 percent from the third quarter of 2003 primarily due to higher revenue in the Government Information Technology business area.
Northrop Grumman Reports Third Quarter 2004 Results;
Announces Additional $1 Billion Share Repurchase Program
MISSION SYSTEMS
| ($ in millions) THIRD QUARTER |
||||||||
| 2004 |
2003 |
|||||||
| Sales |
$ | 1,266 | $ | 1,045 | ||||
| Operating Margin |
82 | 67 | ||||||
| % Operating margin to sales |
6.5 | % | 6.4 | % | ||||
Mission Systems third quarter 2004 sales increased 21 percent from the third quarter of 2003 due to revenue increases in the Command, Control & Intelligence Systems and Missile Systems business areas. Command, Control & Intelligence Systems revenue increased 30 percent, in part due to higher revenue from the Tactical Automated Security Systems II program. Missile Systems revenue increased 18 percent due to revenue from the Kinetic Energy
Interceptors program. Mission Systems third quarter 2004 operating margin increased 22 percent from the third quarter of 2003 due to higher sales volume in the Command, Control & Intelligence Systems and Missile Systems business areas.
INTEGRATED SYSTEMS
| ($ in millions) THIRD QUARTER |
||||||||
| 2004 |
2003 |
|||||||
| Sales |
$ | 1,164 | $ | 984 | ||||
| Operating Margin |
105 | 93 | ||||||
| % Operating margin to sales |
9.0 | % | 9.5 | % | ||||
Integrated Systems third quarter 2004 sales increased 18 percent from the third quarter of 2003 due to higher sales across all of its business areas. Airborne Early Warning/Electronic Warfare Systems revenue increased 53 percent due to higher volume from the E-2 Advanced Hawkeye and EA-6B programs. Air Combat Systems revenue rose 8 percent due to higher revenue from the F-35 program. Airborne Ground Surveillance/Battle Management Systems revenue rose 16 percent due to higher revenue from the E-10A program. Integrated Systems third quarter 2004 operating margin increased 13 percent from the third quarter of 2003 due to higher sales volume, and the change in operating margin rate was due to a greater proportion of lower margin development revenue.
SPACE TECHNOLOGY
| ($ in millions) THIRD QUARTER |
||||||||
| 2004 |
2003 |
|||||||
| Sales |
$ | 823 | $ | 742 | ||||
| Operating Margin |
57 | 53 | ||||||
| % Operating margin to sales |
6.9 | % | 7.1 | % | ||||
Northrop Grumman Reports Third Quarter 2004 Results;
Announces Additional $1 Billion Share Repurchase Program
Space Technology third quarter 2004 sales increased 11 percent from the third quarter of 2003 due to higher revenue in the Software Defined Radios, Intelligence, Surveillance & Reconnaissance, Satellite Communications, and Civil Space business areas. Software Defined Radios revenue increased 22 percent, due to higher volume from major aircraft programs. Intelligence, Surveillance & Reconnaissance revenue rose 21 percent. Satellite Communications revenue increased 8 percent due to increased volume on transformational communications programs. Civil Space revenue increased 5 percent due to higher revenue on NASA space science programs. Space Technology third quarter 2004 operating margin increased 8 percent as compared with the third quarter of 2003 due to higher sales volume.
Debt and Cash Measurements
Northrop Grumman’s total debt was $5.8 billion at Sept. 30, 2004, compared with $5.9 billion at Dec. 31, 2003. Interest expense for the third quarter of 2004 declined to $110 million from $118 million in the third quarter of 2003 primarily due to a reduction in fixed-rate debt acquired with the acquisition of TRW Inc. On Oct. 15, 2004, the Company redeemed all of its outstanding $250 million 9.375 percent debentures due in 2024. Net cash provided by operating activities for the 2004 third quarter increased to $739 million from $400 million in the third quarter of 2003.
About Northrop Grumman
Northrop Grumman Corporation is a global defense company headquartered in Los Angeles, Calif. Northrop Grumman provides a broad array of technologically advanced, innovative products, services and solutions in systems integration, defense electronics, information technology, advanced aircraft, shipbuilding, and space technology. The company has 125,000 employees and operates in all 50 states and 25 countries and serves U.S. and international military, government and commercial customers.
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,” “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 report.
Such “forward-looking” information includes, among other things, projected deliveries, expected funding for various programs, future effective income tax rates, 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 the assumption of the successful completion of the sale of the TRW Automotive note, future revenues, expected program performance and cash flows, returns on pension plan assets and variability of pension
Northrop Grumman Reports Third Quarter 2004 Results;
Announces Additional $1 Billion Share Repurchase Program
actuarial and related assumptions, the outcome of litigation and appeals, environmental remediation, divestitures of businesses, successful reduction of debt, effective tax rates and timing and amounts of tax payments, the results of any appeal process with the Internal Revenue Service, 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 will webcast its security analyst conference call at 12 p.m. ET on October 27, 2004. 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.
# # #
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LEARN MORE ABOUT US: Northrop Grumman news releases, product information, photos and video clips are available on the Internet at: http://www.northropgrumman.com
SCHEDULE 1
NORTHROP GRUMMAN CORPORATION
FINANCIAL HIGHLIGHTS
($ in millions, except per share)
(unaudited)
| THIRD QUARTER |
FIRST NINE MONTHS | |||||||||||||
| 2004 |
2003 (4) |
2004 |
2003 (4) | |||||||||||
| OPERATING RESULTS HIGHLIGHTS |
||||||||||||||
| Total contract acquisitions (1) |
$ | 4,700 | $ | 4,336 | $ | 18,595 | $ | 16,752 | ||||||
| Total sales |
7,408 | 6,664 | 22,007 | 19,247 | ||||||||||
| Total operating margin |
538 | 394 | 1,469 | 1,106 | ||||||||||
| Income from continuing operations |
291 | 200 | 821 | 575 | ||||||||||
| Net income |
278 | 184 | 812 | 642 | ||||||||||
| Diluted earnings per share from continuing operations |
.80 | .54 | 2.25 | 1.53 | ||||||||||
| Diluted earnings per share |
.76 | .50 | 2.23 | 1.71 | ||||||||||
| Net cash provided by operating activities |
739 | 400 | 1,612 | 25 | ||||||||||
| SEP 30, 2004 |
DEC 31, 2003 (4) |
|||||||||||||
| BALANCE SHEET HIGHLIGHTS |
||||||||||||||
| Cash and cash equivalents |
$ | 850 | $ | 342 | ||||||||||
| Accounts receivable, net |
3,394 | 3,226 | ||||||||||||
| Inventoried costs, net |
1,287 | 1,167 | ||||||||||||
| Property, plant, and equipment, net |
4,052 | 4,047 | ||||||||||||
| Total debt |
5,774 | 5,891 | ||||||||||||
| Net debt (2) |
4,924 | 5,549 | ||||||||||||
| Mandatorily redeemable preferred stock |
350 | 350 | ||||||||||||
| Shareholders’ equity |
16,059 | 15,785 | ||||||||||||
| Total assets |
33,529 | 33,022 | ||||||||||||
| Net debt to capitalization ratio (3) |
23 | % | 26 | % | ||||||||||
| (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 2004 presentation. |
SCHEDULE 2
NORTHROP GRUMMAN CORPORATION
OPERATING RESULTS
($ in millions, except per share)
(unaudited)
| THIRD QUARTER |
FIRST NINE MONTHS |
|||||||||||||||
| 2004 |
2003(1) |
2004 |
2003(1) |
|||||||||||||
| Sales |
||||||||||||||||
| Electronic Systems |
$ | 1,558 | $ | 1,522 | $ | 4,687 | $ | 4,372 | ||||||||
| Ships |
1,537 | 1,354 | 4,538 | 3,917 | ||||||||||||
| Information Technology |
1,261 | 1,164 | 3,716 | 3,378 | ||||||||||||
| Mission Systems |
1,266 | 1,045 | 3,747 | 3,068 | ||||||||||||
| Integrated Systems |
1,164 | 984 | 3,444 | 2,813 | ||||||||||||
| Space Technology |
823 | 742 | 2,465 | 2,123 | ||||||||||||
| Other |
58 | 46 | 178 | 136 | ||||||||||||
| Intersegment Eliminations |
(259 | ) | (193 | ) | (768 | ) | (560 | ) | ||||||||
| $ | 7,408 | $ | 6,664 | $ | 22,007 | $ | 19,247 | |||||||||
| Operating margin |
||||||||||||||||
| Electronic Systems |
$ | 178 | $ | 162 | $ | 474 | $ | 431 | ||||||||
| Ships |
96 | 83 | 282 | 181 | ||||||||||||
| Information Technology |
80 | 72 | 224 | 195 | ||||||||||||
| Mission Systems |
82 | 67 | 244 | 201 | ||||||||||||
| Integrated Systems |
105 | 93 | 311 | 305 | ||||||||||||
| Space Technology |
57 | 53 | 169 | 140 | ||||||||||||
| Other |
1 | (36 | ) | 6 | (43 | ) | ||||||||||
| Total segment operating margin |
599 | 494 | 1,710 | 1,410 | ||||||||||||
| Reconciliation to operating margin (2) |
||||||||||||||||
| Unallocated expenses |
(62 | ) | (18 | ) | (216 | ) | (70 | ) | ||||||||
| Pension expense |
(87 | ) | (143 | ) | (263 | ) | (423 | ) | ||||||||
| Reversal of CAS pension expense included above |
90 | 64 | 247 | 201 | ||||||||||||
| Reversal of royalty income included above |
(2 | ) | (3 | ) | (9 | ) | (12 | ) | ||||||||
| Operating margin |
538 | 394 | 1,469 | 1,106 | ||||||||||||
| Interest income |
20 | 16 | 52 | 45 | ||||||||||||
| Interest expense |
(110 | ) | (118 | ) | (335 | ) | (381 | ) | ||||||||
| Other, net |
(6 | ) | (4 | ) | 7 | 22 | ||||||||||
| Income from continuing operations before income taxes |
442 | 288 | 1,193 | 792 | ||||||||||||
| Federal and foreign income taxes |
151 | 88 | 372 | 217 | ||||||||||||
| Income from continuing operations |
291 | 200 | 821 | 575 | ||||||||||||
| (Loss) income from discontinued operations, net of tax |
(42 | ) | 1 | 46 | ||||||||||||
| (Loss) gain from disposal of discontinued operations, net of tax |
(13 | ) | 26 | (10 | ) | 21 | ||||||||||
| Net income |
$ | 278 | $ | 184 | $ | 812 | $ | 642 | ||||||||
| Diluted earnings per share |
||||||||||||||||
| Continuing operations |
$ | .80 | $ | .54 | $ | 2.25 | $ | 1.53 | ||||||||
| Discontinued operations |
(.11 | ) | .12 | |||||||||||||
| Disposal of discontinued operations |
(.04 | ) | .07 | (.02 | ) | .06 | ||||||||||
| Diluted earnings per share |
$ | .76 | $ | .50 | $ | 2.23 | $ | 1.71 | ||||||||
| (1) | Certain prior year amounts have been reclassified to conform to the 2004 presentation. |
| (2) | Pension expense is included in determining the segments’ 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. |
SCHEDULE 3
NORTHROP GRUMMAN CORPORATION
ADDITIONAL SEGMENT INFORMATION
($ in millions)
(unaudited)
| CONTRACT ACQUISITIONS(1) |
FUNDED BACKLOG(2) |
|||||||||||||||||||||||
| THIRD QUARTER |
FIRST NINE MONTHS |
SEPTEMBER 30, |
||||||||||||||||||||||
| 2004 |
2003 (4) |
2004 |
2003 (4) |
2004 |
2003 (4) |
|||||||||||||||||||
| Electronic Systems |
$ | 1,288 | $ | 1,175 | $ | 4,549 | $ | 4,095 | $ | 6,330 | $ | 6,212 | ||||||||||||
| Ships |
614 | 629 | 2,724 | 2,261 | 7,935 | 8,705 | ||||||||||||||||||
| Information Technology |
1,156 | 1,110 | 3,557 | 3,366 | 2,160 | 2,098 | ||||||||||||||||||
| Mission Systems |
987 | 995 | 3,313 | 3,100 | 2,471 | 2,232 | ||||||||||||||||||
| Integrated Systems |
420 | 320 | 3,008 | 2,878 | 3,862 | 3,830 | ||||||||||||||||||
| Space Technology |
411 | 314 | 2,096 | 1,724 | 1,189 | 909 | ||||||||||||||||||
| Other |
47 | 47 | 178 | 132 | 62 | 62 | ||||||||||||||||||
| Intersegment Eliminations |
(223 | ) | (254 | ) | (830 | ) | (804 | ) | (493 | ) | (425 | ) | ||||||||||||
| Total |
$ | 4,700 | $ | 4,336 | $ | 18,595 | $ | 16,752 | $ | 23,516 | $ | 23,623 | ||||||||||||
| TOTAL BACKLOG, SEPTEMBER 30, 2004 |
|||||||||||
| FUNDED |
UNFUNDED(3) |
TOTAL BACKLOG |
|||||||||
| Electronic Systems |
$ | 6,330 | $ | 2,461 | $ | 8,791 | |||||
| Ships |
7,935 | 4,995 | 12,930 | ||||||||
| Information Technology |
2,160 | 3,414 | 5,574 | ||||||||
| Mission Systems |
2,471 | 7,845 | 10,316 | ||||||||
| Integrated Systems |
3,862 | 7,344 | 11,206 | ||||||||
| Space Technology |
1,189 | 8,846 | 10,035 | ||||||||
| Other |
62 | 62 | |||||||||
| Intersegment Eliminations |
(493 | ) | (493 | ) | |||||||
| Total |
$ | 23,516 | $ | 34,905 | $ | 58,421 | |||||
| (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) | 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) orders. |
| (4) | Certain prior year amounts have been reclassified to conform to the 2004 presentation. |
AMORTIZATION OF PURCHASED INTANGIBLES
| THIRD QUARTER |
FIRST NINE MONTHS | |||||||||||
| 2004 |
2003 |
2004 |
2003 | |||||||||
| Electronic Systems |
$ | 21 | $ | 21 | $ | 64 | $ | 64 | ||||
| Ships |
10 | 10 | 31 | 31 | ||||||||
| Information Technology |
5 | 5 | 14 | 15 | ||||||||
| Mission Systems |
9 | 9 | 25 | 25 | ||||||||
| Integrated Systems |
4 | 4 | 11 | 11 | ||||||||
| Space Technology |
8 | 8 | 25 | 25 | ||||||||
| $ | 57 | $ | 57 | $ | 170 | $ | 171 | |||||
SCHEDULE 4
NORTHROP GRUMMAN CORPORATION
SALES BY BUSINESS AREA WITHIN SEGMENTS
($ in millions)
(unaudited)
| THIRD QUARTER |
FIRST NINE MONTHS |
|||||||||||||||
| 2004 |
2003 (1) |
2004 |
2003 (1) |
|||||||||||||
| Electronic Systems |
||||||||||||||||
| Aerospace Systems |
$ | 409 | $ | 450 | $ | 1,163 | $ | 1,235 | ||||||||
| C4ISR & Naval Systems |
322 | 316 | 981 | 922 | ||||||||||||
| Defensive Systems |
257 | 238 | 779 | 644 | ||||||||||||
| Navigation Systems |
176 | 173 | 559 | 538 | ||||||||||||
| Government Systems |
152 | 106 | 453 | 295 | ||||||||||||
| Space Systems |
106 | 128 | 333 | 376 | ||||||||||||
| Defense Other |
136 | 111 | 419 | 362 | ||||||||||||
| 1,558 | 1,522 | 4,687 | 4,372 | |||||||||||||
| Ships |
||||||||||||||||
| Surface Combatants |
508 | 405 | 1,489 | 1,097 | ||||||||||||
| Aircraft Carriers |
466 | 462 | 1,381 | 1,460 | ||||||||||||
| Amphibious & Auxiliary |
344 | 271 | 996 | 739 | ||||||||||||
| Submarines |
180 | 157 | 520 | 449 | ||||||||||||
| Commercial & International |
34 | 37 | 106 | 92 | ||||||||||||
| Services & Other |
30 | 34 | 106 | 109 | ||||||||||||
| Intrasegment Eliminations |
(25 | ) | (12 | ) | (60 | ) | (29 | ) | ||||||||
| 1,537 | 1,354 | 4,538 | 3,917 | |||||||||||||
| Information Technology |
||||||||||||||||
| Government Information Technology |
750 | 639 | 2,243 | 1,917 | ||||||||||||
| Enterprise Information Technology |
220 | 225 | 598 | 587 | ||||||||||||
| Commercial Information Technology |
160 | 171 | 492 | 497 | ||||||||||||
| Technology Services |
163 | 156 | 476 | 461 | ||||||||||||
| Intrasegment Eliminations |
(32 | ) | (27 | ) | (93 | ) | (84 | ) | ||||||||
| 1,261 | 1,164 | 3,716 | 3,378 | |||||||||||||
| Mission Systems |
||||||||||||||||
| Command, Control & Intelligence Systems |
792 | 607 | 2,306 | 1,794 | ||||||||||||
| Missile Systems |
319 | 271 | 941 | 785 | ||||||||||||
| Technical & Management Services |
172 | 179 | 545 | 521 | ||||||||||||
| Intrasegment Eliminations |
(17 | ) | (12 | ) | (45 | ) | (32 | ) | ||||||||
| 1,266 | 1,045 | 3,747 | 3,068 | |||||||||||||
| Integrated Systems |
||||||||||||||||
| Air Combat Systems |
706 | 654 | 2,088 | 1,789 | ||||||||||||
| Airborne Early Warning/Electronic Warfare Systems |
309 | 202 | 907 | 629 | ||||||||||||
| Airborne Ground Surveillance/Battle Management Systems |
149 | 128 | 452 | 397 | ||||||||||||
| Intrasegment Eliminations |
(3 | ) | (2 | ) | ||||||||||||
| 1,164 | 984 | 3,444 | 2,813 | |||||||||||||
| Space Technology |
||||||||||||||||
| Intelligence, Surveillance & Reconnaissance |
281 | 232 | 781 | 657 | ||||||||||||
| Civil Space |
152 | 145 | 471 | 391 | ||||||||||||
| Software Defined Radios |
138 | 113 | 423 | 301 | ||||||||||||
| Satellite Communications |
121 | 112 | 379 | 362 | ||||||||||||
| Missile & Space Defense |
93 | 103 | 294 | 298 | ||||||||||||
| Technology |
49 | 50 | 164 | 150 | ||||||||||||
| Intrasegment Eliminations |
(11 | ) | (13 | ) | (47 | ) | (36 | ) | ||||||||
| 823 | 742 | 2,465 | 2,123 | |||||||||||||
| Other |
58 | 46 | 178 | 136 | ||||||||||||
| Intersegment Eliminations |
(259 | ) | (193 | ) | (768 | ) | (560 | ) | ||||||||
| Total Sales |
$ | 7,408 | $ | 6,664 | $ | 22,007 | $ | 19,247 | ||||||||
| (1) | Certain prior year amounts have been reclassified to conform to the 2004 presentation. |