10-KPeriod: FY2007

NORTHROP GRUMMAN CORP /DE/ Annual Report, Year Ended Dec 31, 2007

Filed February 20, 2008For Securities:NOC

Summary

Northrop Grumman Corporation (NOC) reported robust performance in its 2007 fiscal year, with sales reaching a record $32 billion, marking a 6% increase over the previous year. This growth was driven by strong performance in its Information & Services segment, particularly within Information Technology and Technical Services, and improved sales in the Electronics and Ships segments. The company's operating margin saw a significant 22% increase, reflecting improved operational efficiency and favorable contract performance across its diverse business segments. Key financial highlights include a record $2.9 billion in cash from operations, driven by strong net income and effective working capital management. The company also continued its commitment to shareholder value by repurchasing $1.2 billion in common stock and maintaining a healthy backlog of $64.1 billion, indicating continued demand for its technologically advanced defense and security solutions. Looking ahead, Northrop Grumman anticipates further sales growth in 2008, supported by its strong backlog and strategic focus on high-priority defense programs, despite a projected slower growth rate in the overall U.S. defense budget.

Financial Highlights

30 data points
Beta

Revenue

$30.34B

52.7% Gross Margin

Net Income

$1.79B

5.9% Net Margin

EPS (Diluted)

$5.12

Cash & Equivalents

$963.00M

Free Cash Flow

$2.21B

Financial Statements
Beta
Revenue$30.34B
Cost of Revenue$14.34B
Gross Profit$16.00B
Operating Income$2.92B
Net Income$1.79B
EPS (Basic)$5.24
EPS (Diluted)$5.12
Shares Outstanding (Basic)341.70M
Shares Outstanding (Diluted)354.30M

Key Highlights

  • 1Achieved record sales of $32 billion in 2007, a 6% increase year-over-year.
  • 2Reported a 22% increase in operating margin, indicating improved profitability.
  • 3Generated a record $2.9 billion in cash from operations.
  • 4Repurchased $1.2 billion of common stock, demonstrating commitment to shareholder returns.
  • 5Maintained a substantial backlog of $64.1 billion, signaling strong future revenue potential.
  • 6Experienced revenue growth in Information & Services (11%) and Electronics/Ships segments, offsetting a planned decrease in Aerospace.
  • 7Acquired Essex Corporation for approximately $590 million to enhance signal processing and optoelectronic capabilities.

Frequently Asked Questions

Northrop Grumman's revenue growth in 2007 was primarily driven by strong performance in its Information & Services segment, particularly within the Information Technology and Technical Services businesses. Additionally, the Electronics and Ships segments saw improved sales, contributing to the overall 6% increase in total revenues to a record $32 billion.

The company generated a record $2.9 billion in cash from operations in 2007. Its capital allocation priorities included strategic business acquisitions, such as the acquisition of Essex Corporation for $590 million, returning cash to shareholders through $1.2 billion in share repurchases and dividend payments, and investing in research and development and capital expenditures to support future growth.

Despite a projected slower growth rate in the U.S. defense budget, Northrop Grumman anticipates continued revenue growth in 2008, projecting sales of approximately $33 billion. This optimism is supported by a backlog of $64 billion and the company's focus on technologically advanced products and services critical to national defense, particularly in areas like intelligence, surveillance, and cybersecurity.

The company's primary risk is its heavy dependence on the U.S. Government as a single customer, making it susceptible to federal budget processes and political changes. Other significant risks include the complexity and technological challenges of its contracts, potential contract cost growth, reliance on estimates, navigating domestic and international regulations, and disruptions from suppliers or workforce issues.