01—Abstract
Summary
Summary of the 10-K filed February 8, 2012. Cited figures are marked; the original filing is the authoritative source.
Northrop Grumman Corporation reported revenues of $26.4 billiona for the fiscal year ended December 31, 2011.
The company experienced a revenue decrease of 6% compared to the prior year, primarily driven by lower sales volumes in its Aerospace Systems and Electronic Systems segments, as well as the deconsolidation of its National Security Technologies (NSTec) joint venture. A significant event during the year was the spin-off of its Shipbuilding business (Huntington Ingalls Industries, Inc.), which is now reported as discontinued operations. Despite the revenue decline, operating income saw an increase of 15.8% to $3.3 billionb, attributed to improved program performance and cost management initiatives across its segments.
The company ended the year with a strong backlog of $39.5 billionc, though this was impacted by a $3 billion adjustment to backlog measurement criteria. Northrop Grumman continues to be heavily reliant on U.S. government contracts, which accounted for over 90% of its revenue. Looking ahead, the company anticipates continued scrutiny on defense spending due to U.S. government deficit reduction efforts.
However, Northrop Grumman believes its portfolio is well-aligned with the Department of Defense's future capability requirements, particularly in areas like intelligence, surveillance, reconnaissance (ISR), cyber warfare, and advanced electronics. The company also repurchased approximately $2.3 billiond of its common stock and increased its quarterly dividend, demonstrating a commitment to returning value to shareholders.
02—Key points
Key Highlights
- Total revenue for the fiscal year ended December 31, 2011, was $26.4 billion, a decrease of 6% from the prior year.
- Operating income increased by 15.8% to $3.3 billion, driven by improved program performance and cost management.
- The company completed the spin-off of its Shipbuilding business (Huntington Ingalls Industries, Inc.), with results now reported under discontinued operations.
- Total backlog stood at $39.5 billion at year-end, adjusted by $3 billion for revised measurement criteria.
- Over 90% of the company's revenue was derived from U.S. Government contracts.
- Northrop Grumman repurchased approximately $2.3 billion of its common stock and increased its quarterly dividend.
- The company anticipates potential impacts from U.S. government defense spending reductions but believes its portfolio is well-positioned for future defense priorities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Northrop Grumman Corp kept $0.08.
- Revenue$26.41B100.0%
- Cost of revenue−$11.49B43.5%
- Gross profit$14.92B56.5%
- Operating costs−$11.64B44.1%
- Operating income$3.28B12.4%
- Interest, other & tax−$1.16B4.4%
- Net income$2.12B8.0%
Where FY2011 revenue went
$26.41B- Cost of revenue: $11.49B, 44% of revenue
- Other operating costs: $11.10B, 42% of revenue
- Net income: $2.12B, 8.0% of revenue
- R&D: $543.0M, 2.1% of revenue
- Interest, other & tax: $1.16B, 4.4% of revenue
Kept 8.0% as net incomeNet income $2.12B · 8.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 8, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $26.41B$28.14B | −6.2% |
| Cost of Revenue | $11.49B$12.56B | −8.5% |
| Gross Profit | $14.92B$15.59B | −4.3% |
| R&D Expenses | $543.00M$580.00M | −6.4% |
| Operating Income | $3.28B$2.83B | +15.9% |
| Net Income | $2.12B$2.05B | +3.2% |
| EPS (Basic) | $7.65$6.91 | +10.7% |
| EPS (Diluted) | $7.52$6.82 | +10.3% |
| Shares Outstanding (Basic) | 276.80M296.90M | −6.8% |
| Shares Outstanding (Diluted) | 281.60M301.10M | −6.5% |
05—Questions
Frequently Asked Questions
What was Northrop Grumman's financial performance in 2011?
In fiscal year 2011, Northrop Grumman reported total revenues of $26.4 billion, a decrease of 6% from 2010. However, operating income increased by 15.8% to $3.3 billion, reflecting improved operational efficiency and program performance. The company also generated strong cash flow from operations.
What were the significant strategic events for Northrop Grumman in 2011?
The most significant strategic event was the spin-off of its Shipbuilding business, Huntington Ingalls Industries, Inc., which is now reported as discontinued operations. Additionally, the company reduced its participation in the National Security Technologies (NSTec) joint venture, impacting revenues and backlog.
How does the company manage its dependence on U.S. government contracts?
Northrop Grumman's business is heavily reliant on U.S. government contracts, accounting for over 90% of its revenue. The company actively manages this dependence by focusing on areas aligned with evolving U.S. defense priorities, such as intelligence, surveillance, reconnaissance (ISR), cyber warfare, and advanced technologies, while also seeking international and commercial opportunities.
What is the company's outlook regarding defense spending and its impact?
Northrop Grumman acknowledges the potential impact of U.S. government deficit reduction measures on defense spending. However, the company believes its portfolio of technologically advanced products and services is well-positioned to meet critical future U.S. national security needs, particularly in areas receiving increased investment like modernization, ISR, and cybersecurity.
06—Continue