01—Abstract
Summary
Summary of the 10-K filed February 10, 2009. Cited figures are marked; the original filing is the authoritative source.
Northrop Grumman Corporation (NOC) reported significant financial events and operational performance in its 2008 10-K filing.
Despite a reported net loss of $1.26 billiona, driven largely by a substantial $3.1 billion non-cash goodwill impairment charge related to market conditions affecting its Shipbuilding and Space Technology segments, the company achieved record sales of $33.9 billion, a 6% increase year-over-year. Cash from operations also reached a record $3.2 billion. The company maintained a strong backlog of $78.1 billion, boosted by record contract awards of $48.3 billion.
Key financial actions included significant share repurchases totaling $1.6 billionb, and an increase in the quarterly common stock dividend from $0.37 to $0.40 per share. The company also completed the conversion and redemption of its Series B Convertible Preferred Stock, issuing approximately 6.4 million shares of common stock. Looking ahead, Northrop Grumman anticipates sales of approximately $34.5 billion in 2009, though it acknowledges economic uncertainties and potential impacts on future defense spending.
02—Key points
Key Highlights
- Record sales of $33.9 billion, a 6% increase year-over-year.
- Significant $3.1 billion non-cash goodwill impairment charge impacting Shipbuilding and Space Technology segments.
- Record cash from operations of $3.2 billion.
- Strong total backlog of $78.1 billion, driven by record contract awards of $48.3 billion.
- Repurchased $1.6 billion of common stock.
- Increased quarterly common stock dividend from $0.37 to $0.40 per share.
- Completed redemption of 3.5 million shares of mandatorily redeemable convertible preferred stock.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2008, Northrop Grumman Corp lost $0.04.
- Revenue$32.31B100.0%
- Cost of revenue−$15.49B47.9%
- Gross profit$16.82B52.1%
- Operating costs−$17.09B52.9%
- Operating income−$263.0M0.8%
- Interest, other & tax−$999.0M3.1%
- Net income−$1.26B3.9%
04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 10, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $32.31B$30.34B | +6.5% |
| Cost of Revenue | $15.49B$14.34B | +8.0% |
| Gross Profit | $16.82B$16.00B | +5.1% |
| R&D Expenses | $564.00M— | — |
| Operating Income | -$263.00M$2.92B | −109.0% |
| Net Income | -$1.26B$1.79B | −170.5% |
| EPS (Basic) | $-3.77$5.24 | −171.9% |
| EPS (Diluted) | $-3.77$5.12 | −173.6% |
| Shares Outstanding (Basic) | 334.50M341.70M | −2.1% |
| Shares Outstanding (Diluted) | 334.50M354.30M | −5.6% |
05—Questions
Frequently Asked Questions
What led to the significant net loss in 2008?
The company reported a net loss of $1.26 billion primarily due to a $3.1 billion non-cash goodwill impairment charge. This charge was recognized in the Shipbuilding and Space Technology segments, largely influenced by adverse equity market conditions and a decline in the company's stock price at the time of the impairment test.
How did the company's sales and backlog perform in 2008?
Northrop Grumman achieved record sales of $33.9 billion, representing a 6% increase from the previous year. The company's total backlog also reached a record $78.1 billion, bolstered by strong contract awards totaling $48.3 billion, indicating a healthy pipeline of future business.
What actions did the company take regarding shareholder returns and capital structure?
The company repurchased $1.6 billion of its common stock during 2008. Additionally, it increased its quarterly common stock dividend from $0.37 to $0.40 per share. A notable event in the capital structure was the conversion and redemption of its 3.5 million shares of mandatorily redeemable convertible preferred stock, which resulted in the issuance of approximately 6.4 million shares of common stock.
What is the company's outlook for 2009?
Northrop Grumman anticipates 2009 sales to be around $34.5 billion. While the company's business is primarily with the U.S. Government under long-term contracts, providing good visibility, management acknowledges the current economic uncertainties and the potential for adverse impacts on future defense spending levels.
06—Continue