UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
|
|
| o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
|
For the Quarter Ended |
|
|
|
Commission file number |
|
|
|
|
| ||||
| NORTHROP GRUMMAN CORPORATION | ||||||
| (Exact name of registrant as specified in its charter) | ||||||
|
|
|
| ||||
| DELAWARE |
|
95-4840775 | ||||
| (State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification Number) | ||||
|
|
|
| ||||
|
|
|
| ||||
| 1840 Century Park East, Los Angeles, California 90067 | ||||||
| www.northropgrumman.com | ||||||
| (Address of principal executive offices and internet site) | ||||||
|
| ||||||
| (310) 553-6262 | ||||||
|
| ||||||
| Securities Registered pursuant to Section 12(g) of the Act: | ||||||
|
|
|
| ||||
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| Yes |
x |
No |
o |
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of stock, as of the latest practicable date.
As of November 8, 2002
| Common stock outstanding |
|
113,139,190 shares |
| Preferred stock outstanding |
|
3,500,000 shares |
|
|
|
|
Northrop Grumman Corporation and Subsidiaries
Part I. Financial Information
Item 1: Financial Statements
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
| $ in millions |
|
(Unaudited) |
|
December 31, |
| ||
| |
|
|
|
|
| ||
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
462 |
|
$ |
464 |
|
| Accounts receivable, net of progress payments of $18,978 in 2002 and $15,064 in 2001 |
|
|
2,325 |
|
|
2,643 |
|
| Inventoried costs, net of progress payments of $1,055 in 2002 and $896 in 2001 |
|
|
1,107 |
|
|
1,098 |
|
| Deferred income taxes |
|
|
103 |
|
|
36 |
|
| Prepaid expenses and other current assets |
|
|
140 |
|
|
125 |
|
| Assets of businesses held for sale |
|
|
550 |
|
|
1,207 |
|
|
|
|
|
|
|
|
|
|
| Total current assets |
|
|
4,687 |
|
|
5,573 |
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment |
|
|
4,187 |
|
|
3,732 |
|
| Accumulated depreciation |
|
|
(1,363 |
) |
|
(1,148 |
) |
|
|
|
|
|
|
|
|
|
| Net property, plant and equipment |
|
|
2,824 |
|
|
2,584 |
|
|
|
|
|
|
|
|
|
|
| Goodwill, net of accumulated amortization of $730 and $730 in 2002 and 2001, respectively |
|
|
8,056 |
|
|
7,903 |
|
| Other purchased intangibles, net of accumulated amortization of $719 and $596 in 2002 and 2001, respectively |
|
|
1,561 |
|
|
1,072 |
|
| Prepaid retiree benefits cost and intangible pension asset |
|
|
3,225 |
|
|
3,075 |
|
| Benefit trust funds |
|
|
266 |
|
|
433 |
|
| Miscellaneous other assets, including deferred income taxes of $16 in 2002 and $2 in 2001 |
|
|
187 |
|
|
178 |
|
|
|
|
|
|
|
|
|
|
| Total other assets |
|
|
13,295 |
|
|
12,661 |
|
|
|
|
|
|
|
|
|
|
| Total Assets |
|
$ |
20,806 |
|
$ |
20,818 |
|
|
|
|
|
|
|
|
|
|
I-2
Northrop Grumman Corporation and Subsidiaries
| $ in millions |
|
(Unaudited) |
|
December 31, |
| |||
| |
|
|
|
|
| |||
| Liabilities and Shareholders’ Equity: |
|
|
|
|
|
|
| |
| Notes payable to banks |
|
$ |
45 |
|
$ |
30 |
| |
| Current portion of long-term debt |
|
|
101 |
|
|
420 |
| |
| Trade accounts payable |
|
|
804 |
|
|
982 |
| |
| Accrued employees’ compensation |
|
|
741 |
|
|
827 |
| |
| Advances on contracts |
|
|
878 |
|
|
842 |
| |
| Contract loss provisions |
|
|
329 |
|
|
481 |
| |
| Income taxes payable and current deferred income taxes |
|
|
786 |
|
|
472 |
| |
| Other current liabilities |
|
|
868 |
|
|
908 |
| |
| Liabilities of businesses held for sale |
|
|
131 |
|
|
138 |
| |
|
|
|
|
|
|
|
|
| |
| Total current liabilities |
|
|
4,683 |
|
|
5,100 |
| |
|
|
|
|
|
|
|
|
| |
| Long-term debt |
|
|
4,885 |
|
|
5,038 |
| |
| Accrued retiree benefits |
|
|
2,244 |
|
|
1,927 |
| |
| Deferred income taxes |
|
|
757 |
|
|
669 |
| |
| Other long-term liabilities |
|
|
368 |
|
|
221 |
| |
| Minority interest |
|
|
19 |
|
|
122 |
| |
| Mandatorily redeemable preferred stock |
|
|
350 |
|
|
350 |
| |
| Paid-in capital |
|
|
|
|
|
|
| |
|
|
Preferred stock, 10,000,000 shares authorized; 3,500,000 shares issued and outstanding, reported above |
|
|
|
|
|
|
|
|
|
Common stock, 800,000,000 shares authorized; issued and outstanding: 2002—113,163,878; 2001—108,556,081 |
|
|
4,870 |
|
|
4,451 |
|
| Retained earnings |
|
|
2,697 |
|
|
3,011 |
| |
| Unearned compensation |
|
|
(13 |
) |
|
(18 |
) | |
| Accumulated other comprehensive loss |
|
|
(54 |
) |
|
(53 |
) | |
|
|
|
|
|
|
|
|
| |
| Total shareholders’ equity |
|
|
7,500 |
|
|
7,391 |
| |
|
|
|
|
|
|
|
|
| |
| Total Liabilities and Shareholders’ Equity |
|
$ |
20,806 |
|
$ |
20,818 |
| |
|
|
|
|
|
|
|
|
| |
The accompanying notes are an integral part of these consolidated condensed financial statements.
I-3
Northrop Grumman Corporation and Subsidiaries
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
Three months ended |
|
Nine months ended |
| ||||||||||||
|
|
|
|
|
|
| ||||||||||||
| $ in millions, except per share |
|
2002 |
|
2001 |
|
2002 |
|
2001 |
| ||||||||
| |
|
|
|
|
|
|
|
|
| ||||||||
| Product sales and service revenues |
|
$ |
4,214 |
|
$ |
3,410 |
|
$ |
12,376 |
|
$ |
8,867 |
| ||||
| Cost of product sales and service revenues |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
Operating costs |
|
|
3,440 |
|
|
2,911 |
|
|
10,157 |
|
|
7,314 |
| |||
|
|
Administrative and general expenses |
|
|
461 |
|
|
259 |
|
|
1,239 |
|
|
844 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
| Operating margin |
|
|
313 |
|
|
240 |
|
|
980 |
|
|
709 |
| ||||
| Interest expense |
|
|
(106 |
) |
|
(108 |
) |
|
(320 |
) |
|
(269 |
) | ||||
| Other, net |
|
|
(9 |
) |
|
14 |
|
|
15 |
|
|
63 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Income from continuing operations before income taxes and cumulative effect of accounting change |
|
|
198 |
|
|
146 |
|
|
675 |
|
|
503 |
| ||||
| Federal and foreign income taxes |
|
|
57 |
|
|
54 |
|
|
204 |
|
|
185 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Income from continuing operations before cumulative effect of accounting change |
|
|
141 |
|
|
92 |
|
|
471 |
|
|
318 |
| ||||
| Loss from discontinued operations, net of tax |
|
|
(178 |
) |
|
(13 |
) |
|
(177 |
) |
|
(22 |
) | ||||
| Loss on disposal of discontinued operations, net of tax |
|
|
(22 |
) |
|
|
|
|
(22 |
) |
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Income (loss) before cumulative effect of accounting change |
|
|
(59 |
) |
|
79 |
|
|
272 |
|
|
296 |
| ||||
| Cumulative effect of accounting change |
|
|
|
|
|
|
|
|
(432 |
) |
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Net income (loss) |
|
$ |
(59 |
) |
$ |
79 |
|
$ |
(160 |
) |
$ |
296 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Weighted average common shares outstanding, in millions |
|
|
113.07 |
|
|
85.43 |
|
|
112.45 |
|
|
80.34 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Basic earnings (loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
Continuing operations |
|
$ |
1.19 |
|
$ |
1.00 |
|
$ |
4.03 |
|
$ |
3.81 |
| |||
|
|
Discontinued operations |
|
|
(1.57 |
) |
|
(.15 |
) |
|
(1.58 |
) |
|
(.28 |
) | |||
|
|
Disposal of discontinued operations |
|
|
(.20 |
) |
|
|
|
|
(.20 |
) |
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
Before cumulative effect of accounting change |
|
|
(.58 |
) |
|
.85 |
|
|
2.25 |
|
|
3.53 |
| |||
|
|
Cumulative effect of accounting change |
|
|
|
|
|
|
|
|
(3.83 |
) |
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
Basic earnings (loss) per common share |
|
$ |
(.58 |
) |
$ |
.85 |
|
$ |
(1.58 |
) |
$ |
3.53 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
| Diluted earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
Continuing operations |
|
$ |
1.17 |
|
$ |
1.00 |
|
$ |
3.96 |
|
$ |
3.77 |
| |||
|
|
Discontinued operations |
|
|
(1.54 |
) |
|
(.16 |
) |
|
(1.55 |
) |
|
(.27 |
) | |||
|
|
Disposal of discontinued operations |
|
|
(.19 |
) |
|
|
|
|
(.19 |
) |
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
Before cumulative effect of accounting change |
|
|
(.56 |
) |
|
.84 |
|
|
2.22 |
|
|
3.50 |
| |||
|
|
Cumulative effect of accounting change |
|
|
|
|
|
|
|
|
(3.78 |
) |
|
|
||||