NORTHROP GRUMMAN CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2011

Summary

Northrop Grumman Corporation reported a slight decrease in sales for the first quarter of 2011 compared to the prior year, reaching $6.73 billion from $6.91 billion. Despite the revenue dip, the company saw an increase in operating income to $811 million from $679 million, driven by performance improvements in its Electronic Systems, Information Systems, and Technical Services segments. Diluted earnings per share from continuing operations improved to $1.67 from $1.34. A significant event during the quarter was the completion of the spin-off of its Shipbuilding segment, Huntington Ingalls Industries, Inc. (HII), which is now reported as discontinued operations. This transaction resulted in the company receiving a $1.429 billion cash contribution. The company also reduced its participation in the NSTec joint venture, leading to a $1.745 billion reduction in contract backlog. The company's overall backlog stands at $43.7 billion as of March 31, 2011.

Key Highlights

• 1Sales for Q1 2011 decreased by 2.6% to $6.734 billion from $6.914 billion in Q1 2010.
• 2Operating income increased by 19.6% to $811 million in Q1 2011, from $679 million in Q1 2010.
• 3Diluted earnings per share from continuing operations rose to $1.67 in Q1 2011, from $1.34 in Q1 2010.
• 4The company completed the spin-off of its Shipbuilding segment (Huntington Ingalls Industries, Inc.) in March 2011, reporting it as discontinued operations.
• 5Received a $1.429 billion cash contribution in connection with the HII spin-off.
• 6Total backlog decreased to $43.7 billion as of March 31, 2011, from $46.8 billion as of December 31, 2010, primarily due to reduced participation in the NSTec joint venture.
• 7Net cash provided by continuing operations improved significantly to $112 million in Q1 2011, compared to cash used of $452 million in Q1 2010.

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