FALLS CHURCH, Va., April 29, 2015 /PRNewswire/ -- Northrop
Grumman Corporation (NYSE: NOC) reported first quarter 2015 net
earnings of $484 million, or
$2.41 per diluted share, compared to
$579 million, or $2.63 per diluted share in the first quarter of
2014. First quarter 2014 diluted earnings per share included a
$51 million, or $0.23 per share, tax benefit resulting from the
partial resolution of the Internal Revenue Service (IRS)
examination of the company's 2007-2009 tax returns. First quarter
2015 diluted earnings per share are based on 200.5 million weighted
average shares outstanding compared with 220.4 million shares in
2014. The company repurchased 5.3 million shares of its common
stock for $859 million in the first
quarter of 2015. As of March 31,
2015, the company had repurchased 47.5 million shares toward
its previously announced goal of retiring 60 million shares of its
common stock by the end of 2015, market conditions permitting.
"Our team is off to a strong start in 2015 with first quarter
results that include solid margin rates at all four of our
businesses. Strong operational performance, combined with our share
repurchases, resulted in another solid quarter. We continue to
execute a balanced cash deployment strategy that includes investing
in our business and returning cash to shareholders," said
Wes Bush, chairman, chief executive
officer and president.
Table 1 — Financial Highlights
|
First
Quarter
|
($ in millions,
except per share amounts)
|
2015
|
|
2014
|
Sales
|
$
|
5,957
|
|
$
|
5,848
|
Segment operating
income1
|
735
|
|
757
|
Segment operating
margin rate1
|
12.3%
|
|
12.9%
|
Operating
income
|
780
|
|
845
|
Operating margin
rate
|
13.1%
|
|
14.4%
|
Net
earnings
|
484
|
|
579
|
Diluted
EPS
|
2.41
|
|
2.63
|
Net cash used in
operating activities
|
(654)
|
|
(402)
|
Free cash
flow1
|
(771)
|
|
(462)
|
|
|
|
|
Pension-adjusted
Operating Highlights
|
|
|
|
Operating
income
|
780
|
|
845
|
Net FAS/CAS pension
adjustment1
|
(83)
|
|
(110)
|
Pension-adjusted
operating income1
|
$
|
697
|
|
$
|
735
|
Pension-adjusted
operating margin rate1
|
11.7%
|
|
12.6%
|
|
|
|
|
Pension-adjusted
Per Share Data
|
|
|
|
Diluted
EPS
|
$
|
2.41
|
|
$
|
2.63
|
After-tax net pension
adjustment per share1
|
(0.27)
|
|
(0.32)
|
Pension-adjusted
diluted EPS1
|
$
|
2.14
|
|
$
|
2.31
|
Weighted average
shares outstanding — Basic
|
197.7
|
|
216.3
|
Dilutive effect of
stock awards and options
|
2.8
|
|
4.1
|
Weighted average
shares outstanding — Diluted
|
200.5
|
|
220.4
|
|
1
Non-GAAP metric — see definitions at the
end of this press release.
|
|
First quarter 2015 operating income decreased $65 million, or 8 percent, to $780 million. The decline in operating income is
principally due to pension items, including a decline in net
FAS/CAS pension adjustment and higher corporate unallocated
expenses, as well as lower segment operating income. The increase
in unallocated corporate expenses is primarily due to higher
deferred state taxes resulting from the company's $500 million discretionary pension contribution
in the quarter.
Total backlog as of March 31,
2015, was $38.4 billion
compared with $38.2 billion as of
Dec. 31, 2014. First quarter 2015 new
awards totaled $6.1 billion, and
book-to-bill was 103 percent.
Table 2 — Cash Flow Highlights
|
First
Quarter
|
($
millions)
|
2015
|
|
2014
|
Cash used in
operating activities before after-tax discretionary pension
contributions1
|
$
|
(329)
|
|
$
|
(402)
|
After-tax
discretionary pension pre-funding impact
|
(325)
|
|
—
|
Net cash used in
operating activities
|
(654)
|
|
(402)
|
Less:
|
|
|
|
Capital
expenditures
|
(117)
|
|
(60)
|
Free cash
flow1
|
$
|
(771)
|
|
$
|
(462)
|
After-tax
discretionary pension pre-funding impact
|
325
|
|
—
|
Free cash flow before
after-tax discretionary pension
contributions1
|
$
|
(446)
|
|
$
|
(462)
|
|
|
|
|
|
|
1 Non-GAAP
metric — see definitions at the end of this press
release.
|
|
For the first quarter of 2015, cash used in operating activities
before discretionary pension contributions totaled $329 million, an improvement from the prior year
period. During the first quarter of 2015 the company made a
$500 million discretionary
contribution to its pension plans, which reduced cash from
operations by $325 million on an
after-tax basis. Changes in cash and cash equivalents include the
following for cash from operations, investing and financing
activities through March 31,
2015:
Operations
- $654 million used in
operations
Investing
- $117 million used for
capital expenditures
Financing
- $825 million used for
repurchase of common stock
- $156 million used for
dividends
- $600 million net proceeds
from issuance of long-term debt
2015 Guidance
The company's 2015 financial guidance is
based on the spending levels provided for in the Bipartisan Budget
Act of 2013 and the Consolidated and Further Appropriations Act of
2015. The guidance assumes no disruption or cancellation of any of
our significant programs and no disruption or shutdown of
government operations resulting from a federal government debt
ceiling breach. Guidance for 2015 also assumes adequate
appropriations and funding for the company's programs in the first
quarter of the U.S. government's fiscal year 2016.
|
|
|
|
|
|
|
2015
Guidance
|
($ in millions,
except per share amounts)
|
Prior -
1/29/15
|
Current
|
|
|
|
|
|
|
|
Sales
|
23,400
|
—
|
23,800
|
23,400
|
—
|
23,800
|
|
|
|
|
|
|
|
Segment operating
margin %1
|
~12%
|
~12%
|
|
|
|
|
|
|
|
Net FAS/CAS pension
adjustment1
|
~290
|
~320
|
|
|
|
|
|
Operating margin
%
|
Mid-12%
|
Mid-12%
|
|
|
|
|
|
|
|
Diluted
EPS
|
9.20
|
—
|
9.50
|
9.40
|
—
|
9.60
|
|
|
|
|
|
|
|
Cash provided by
operating activities before after-tax discretionary pension
contributions1
|
2,400
|
—
|
2,700
|
2,400
|
—
|
2,700
|
|
|
|
|
|
|
|
Free cash
flow before after-tax discretionary pension
contributions1
|
1,700
|
—
|
2,000
|
1,700
|
—
|
2,000
|
|
|
|
|
|
|
|
1 Non-GAAP
metric - see definitions at the end of this press
release.
|
|
|
|
|
Updated 2015 financial guidance incorporates the impact of the
company's $500 million discretionary
pension contribution in the first quarter of 2015.
Table 3 — Business Results
Consolidated Sales &
Segment Operating Income1
|
First
Quarter
|
|
|
($
millions)
|
2015
|
|
2014
|
|
Change
|
Sales
|
|
|
|
|
|
Aerospace
Systems
|
$
|
2,498
|
|
$
|
2,420
|
|
3%
|
Electronic
Systems
|
1,681
|
|
1,644
|
|
2%
|
Information
Systems
|
1,574
|
|
1,577
|
|
—
|
Technical
Services
|
770
|
|
697
|
|
10%
|
Intersegment
eliminations
|
(566)
|
|
(490)
|
|
|
|
5,957
|
|
5,848
|
|
2%
|
Segment operating
income1
|
|
|
|
|
|
Aerospace
Systems
|
315
|
|
324
|
|
(3%)
|
Electronic
Systems
|
247
|
|
268
|
|
(8%)
|
Information
Systems
|
166
|
|
162
|
|
2%
|
Technical
Services
|
68
|
|
68
|
|
—
|
Intersegment
eliminations
|
(61)
|
|
(65)
|
|
|
Segment operating
income1
|
735
|
|
757
|
|
(3%)
|
Segment operating
margin rate1
|
12.3%
|
|
12.9%
|
|
(60)
bps
|
Reconciliation to
operating income
|
|
|
|
|
|
Net FAS/CAS pension
adjustment1
|
83
|
|
110
|
|
(25%)
|
Unallocated corporate
expenses
|
(38)
|
|
(22)
|
|
(73%)
|
Operating
income
|
780
|
|
845
|
|
(8%)
|
Operating margin
rate
|
13.1%
|
|
14.4%
|
|
(130)
bps
|
Interest
expense
|
(76)
|
|
(69)
|
|
(10%)
|
Other, net
|
—
|
|
10
|
|
(100%)
|
Earnings before
income taxes
|
704
|
|
786
|
|
(10%)
|
Federal and foreign
income tax expense
|
(220)
|
|
(207)
|
|
(6%)
|
Net
earnings
|
$
|
484
|
|
$
|
579
|
|
(16%)
|
|
|
|
|
|
|
|
|
1 Non-GAAP
metric — see definitions at the end of this press
release.
|
|
First quarter 2015 operating income reflects a $27 million decrease in net FAS/CAS pension
adjustment, a $22 million decrease in
segment operating income and a $16
million increase in unallocated corporate expenses. The
increase in unallocated corporate expenses is primarily due to
higher deferred state taxes resulting from the company's
$500 million discretionary pension
contribution in the quarter.
For the first quarter of 2015, federal and foreign income tax
expense increased to $220 million
from $207 million in 2014, and the
company's effective tax rate increased to 31.3 percent from 26.3
percent in 2014. First quarter 2014 tax expense included a
$51 million tax benefit resulting
from the partial resolution of IRS examination of the company's
2007-2009 tax returns.
Aerospace Systems ($ millions)
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
|
2015
|
|
2014
|
|
Change
|
Sales
|
$
|
2,498
|
|
$
|
2,420
|
|
3.2%
|
Operating
income
|
315
|
|
324
|
|
(2.8%)
|
Operating margin
rate
|
12.6%
|
|
13.4%
|
|
|
Aerospace Systems first quarter 2015 sales increased 3 percent
due to higher volume for unmanned and space programs, partially
offset by lower volume for manned military aircraft programs.
Higher unmanned sales reflect higher volume across a number of
programs including the NATO Alliance Ground Surveillance program,
and the increase in space programs reflects higher volume for
restricted activities. Lower military aircraft volume was
principally due to lower volume for the F/A-18 program.
Aerospace Systems first quarter 2015 operating income decreased
3 percent and operating margin rate decreased 80 basis points to
12.6 percent principally due to less favorable performance and
higher unallowable expenses than in the prior year period.
Electronic Systems ($ millions)
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
|
2015
|
|
2014
|
|
Change
|
Sales
|
$
|
1,681
|
|
$
|
1,644
|
|
2.3%
|
Operating
income
|
247
|
|
268
|
|
(7.8%)
|
Operating margin
rate
|
14.7%
|
|
16.3%
|
|
|
Electronic Systems first quarter 2015 sales increased 2 percent
primarily due to higher volume for space sensors, marine systems
and tactical sensors programs, partially offset by lower volume for
combat avionics programs.
Electronic Systems first quarter operating income decreased 8
percent, and operating margin rate decreased to 14.7 percent due to
business mix changes, which resulted in lower volume for mature
fixed price production programs and higher volume for cost-type
development programs, as well as less favorable performance,
primarily in land and self-protection systems.
Information Systems ($ millions)
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
|
2015
|
|
2014
|
|
Change
|
Sales
|
$
|
1,574
|
|
$
|
1,577
|
|
(0.2%)
|
Operating
income
|
166
|
|
162
|
|
2.5%
|
Operating margin
rate
|
10.5%
|
|
10.3%
|
|
|
Information Systems first quarter 2015 sales were comparable to
the prior year period and include higher volume for intelligence,
surveillance and reconnaissance, integrated air and missile
defense, communications and cyber programs offset by lower volume
for command and control and civil programs.
Information Systems first quarter 2015 operating income
increased 2 percent, and operating margin rate increased 20 basis
points to 10.5 percent. Higher operating income and margin rate are
primarily due to improved performance resulting from risk
retirements associated with program completions.
Technical Services ($ millions)
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
|
2015
|
|
2014
|
|
Change
|
Sales
|
$
|
770
|
|
$
|
697
|
|
10.5%
|
Operating
income
|
68
|
|
68
|
|
—
|
Operating margin
rate
|
8.8%
|
|
9.8%
|
|
|
Technical Services first quarter 2015 sales increased 10 percent
principally due to growth in international programs and higher
intercompany sales, which more than offset lower volume for the
ICBM program.
Technical Services first quarter 2015 operating income was
unchanged from the prior year period. Operating margin rate
decreased to 8.8 percent principally due to lower income from an
unconsolidated joint venture than in the prior year period.
About Northrop Grumman
Northrop Grumman will webcast
its earnings conference call at noon Eastern
time on April 29, 2015. A live
audio broadcast of the conference call will be available on the
investor relations page of the company's website at
www.northropgrumman.com.
Northrop Grumman is a leading global security company providing
innovative systems, products and solutions in unmanned systems,
cyber, C4ISR, and logistics and modernization to government and
commercial customers worldwide. Please visit
www.northropgrumman.com for more information.
Forward-Looking Statements
This press release and the information we are incorporating by
reference contains statements, other than statements of historical
fact, that constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Words such as "expect," "intend," "may," "could," "plan,"
"project," "forecast," "believe," "estimate," "guidance,"
"outlook," "anticipate," "trends," "goals," and similar expressions
generally identify these forward-looking statements.
Forward-looking statements include, among other things,
statements relating to our future financial condition, results of
operations and cash flows. Forward-looking statements are based
upon assumptions, expectations, plans and projections that we
believe to be reasonable when made, but which may change over time.
These statements are not guarantees of future performance and
inherently involve a wide range of risks and uncertainties that are
difficult to predict. Specific risks that could cause actual
results to differ materially from those expressed or implied in
these forward-looking statements include, but are not limited to,
those identified and discussed more fully in the section entitled
"Risk Factors" in our Form 10-K for the year ended December 31, 2014. They include:
- our dependence on a single customer, the U.S.
Government
- delays or reductions in appropriations for our programs
and U.S. Government funding
- investigations, claims and/or litigation
- our international business
- the improper conduct of employees, agents, business
partners or joint ventures in which we participate
- the use of accounting estimates for our
contracts
- cyber and other security threats or
disruptions
- changes in actuarial assumptions associated with our
pension and other post-retirement benefit plans
- the performance and financial viability of our suppliers
and the availability and pricing of raw materials and
components
- competition within our markets
- changes in procurement and other laws and regulations
applicable to our industry
- natural and/or environmental disasters
- the adequacy of our insurance coverage, customer
indemnifications or other liability protections
- the products and services we provide related to nuclear
operations
- changes in business conditions that could impact recorded
goodwill or the value of other long-lived assets
- our ability to develop new products and technologies and
maintain technologies, facilities, equipment and a qualified
workforce
- our ability to meet performance obligations under our
contracts
- unforeseen environmental costs
- our ability to protect our intellectual property
rights
- changes in our tax provisions or exposure to additional
tax liabilities
- the spin-off of our former Shipbuilding
business
Additional information regarding these risks and other important
factors can be found in the section entitled "Risk Factors" in our
Form 10-K for the year ended December 31,
2014 and as disclosed in this report and from time to time
in our other filings with the SEC.
You are urged to consider the limitations on, and risks
associated with, forward-looking statements and not unduly rely on
the accuracy of forward-looking statements. These forward-looking
statements speak only as of the date this report is first filed or,
in the case of any document incorporated by reference, the date of
that document. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
applicable law.
This release and the attachments also contain non-GAAP financial
measures. A reconciliation to the nearest GAAP measure and a
discussion of the company's use of these measures are included in
this release or the attachments.
SCHEDULE
1
|
NORTHROP GRUMMAN
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE
INCOME
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
March 31
|
$ in millions,
except per share amounts
|
2015
|
|
2014
|
Sales
|
|
|
|
Product
|
$
|
3,429
|
|
$
|
3,408
|
Service
|
2,528
|
|
2,440
|
Total
sales
|
5,957
|
|
5,848
|
Operating costs
and expenses
|
|
|
|
Product
|
2,542
|
|
2,533
|
Service
|
2,000
|
|
1,928
|
General and
administrative expenses
|
635
|
|
542
|
Operating
income
|
780
|
|
845
|
Other (expense)
income
|
|
|
|
Interest
expense
|
(76)
|
|
(69)
|
Other, net
|
—
|
|
10
|
Earnings before
income taxes
|
704
|
|
786
|
Federal and foreign
income tax expense
|
220
|
|
207
|
Net
earnings
|
$
|
484
|
|
$
|
579
|
|
|
|
|
Basic earnings per
share
|
$
|
2.45
|
|
$
|
2.68
|
Weighted-average
common shares outstanding, in millions
|
197.7
|
|
216.3
|
|
|
|
|
Diluted earnings
per share
|
$
|
2.41
|
|
$
|
2.63
|
Weighted-average
diluted shares outstanding, in millions
|
200.5
|
|
220.4
|
|
|
|
|
Net earnings (from
above)
|
$
|
484
|
|
$
|
579
|
Other comprehensive
income
|
|
|
|
Change in unamortized
benefit plan costs, net of tax
|
96
|
|
61
|
Change in cumulative
translation adjustment
|
(29)
|
|
2
|
Other, net
|
(1)
|
|
—
|
Other comprehensive
income, net of tax
|
66
|
|
63
|
Comprehensive
income
|
$
|
550
|
|
$
|
642
|
SCHEDULE
2
|
NORTHROP GRUMMAN
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
|
|
|
|
|
|
|
$ in
millions
|
March 31,
2015
|
|
December 31,
2014
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
2,646
|
|
$
|
3,863
|
Accounts receivable,
net
|
3,131
|
|
2,806
|
Inventoried costs,
net
|
818
|
|
742
|
Deferred tax
assets
|
371
|
|
404
|
Prepaid expenses and
other current assets
|
177
|
|
369
|
Total current
assets
|
7,143
|
|
8,184
|
Property, plant and
equipment, net of accumulated depreciation of $4,648 in 2015 and
$4,611 in 2014
|
2,989
|
|
2,991
|
Goodwill
|
12,464
|
|
12,466
|
Non-current deferred
tax assets
|
1,393
|
|
1,622
|
Other non-current
assets
|
1,277
|
|
1,309
|
Total
assets
|
$
|
25,266
|
|
$
|
26,572
|
|
|
|
|
Liabilities
|
|
|
|
Trade accounts
payable
|
$
|
1,248
|
|
$
|
1,305
|
Accrued employee
compensation
|
1,063
|
|
1,441
|
Advance payments and
amounts in excess of costs incurred
|
1,430
|
|
1,713
|
Other current
liabilities
|
1,543
|
|
1,433
|
Total current
liabilities
|
5,284
|
|
5,892
|
Long-term debt, net
of current portion
|
6,418
|
|
5,925
|
Pension and other
post-retirement benefit plan liabilities
|
5,962
|
|
6,555
|
Other non-current
liabilities
|
854
|
|
965
|
Total
liabilities
|
18,518
|
|
19,337
|
|
|
|
|
Shareholders'
equity
|
|
|
|
Preferred stock, $1
par value; 10,000,000 shares authorized; no shares issued and
outstanding
|
—
|
|
—
|
Common stock, $1 par
value; 800,000,000 shares authorized; issued and outstanding:
2015—195,111,898 and 2014—198,930,240
|
195
|
|
199
|
Paid-in
capital
|
—
|
|
—
|
Retained
earnings
|
11,843
|
|
12,392
|
Accumulated other
comprehensive loss
|
(5,290)
|
|
(5,356)
|
Total shareholders'
equity
|
6,748
|
|
7,235
|
Total liabilities
and shareholders' equity
|
$
|
25,266
|
|
$
|
26,572
|
SCHEDULE
3
|
NORTHROP GRUMMAN
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
March 31
|
$ in
millions
|
2015
|
|
2014
|
Operating
activities
|
|
|
|
Net
earnings
|
$
|
484
|
|
$
|
579
|
Adjustments to
reconcile to net cash used in operating activities:
|
|
|
|
Depreciation and
amortization
|
99
|
|
109
|
Stock-based
compensation
|
24
|
|
22
|
Excess tax benefits
from stock-based compensation
|
(105)
|
|
(68)
|
Deferred income
taxes
|
204
|
|
40
|
Changes in assets and
liabilities:
|
|
|
|
Accounts receivable,
net
|
(325)
|
|
(531)
|
Inventoried costs,
net
|
(76)
|
|
(66)
|
Prepaid expenses and
other assets
|
16
|
|
(6)
|
Accounts payable and
other liabilities
|
(889)
|
|
(755)
|
Income taxes
payable
|
366
|
|
279
|
Retiree
benefits
|
(440)
|
|
14
|
Other, net
|
(12)
|
|
(19)
|
Net cash used in
operating activities
|
$
|
(654)
|
|
$
|
(402)
|
|
|
|
|
Investing
activities
|
|
|
|
Capital
expenditures
|
(117)
|
|
(60)
|
Other investing
activities, net
|
2
|
|
(72)
|
Net cash used in
investing activities
|
(115)
|
|
(132)
|
|
|
|
|
Financing
activities
|
|
|
|
Common stock
repurchases
|
(825)
|
|
(570)
|
Net proceeds from
issuance of long-term debt
|
600
|
|
—
|
Cash dividends
paid
|
(156)
|
|
(132)
|
Other financing
activities, net
|
(67)
|
|
(29)
|
Net cash used in
financing activities
|
(448)
|
|
(731)
|
Decrease in cash and
cash equivalents
|
(1,217)
|
|
(1,265)
|
Cash and cash
equivalents, beginning of year
|
3,863
|
|
5,150
|
Cash and cash
equivalents, end of period
|
$
|
2,646
|
|
$
|
3,885
|
SCHEDULE
4
|
NORTHROP GRUMMAN
CORPORATION
TOTAL BACKLOG AND
CONTRACT AWARDS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2015
|
|
December 31,
2014
|
$ in
millions
|
|
FUNDED
1
|
|
UNFUNDED
2
|
|
TOTAL
BACKLOG
|
|
TOTAL
BACKLOG
|
Aerospace
Systems
|
|
$
|
10,584
|
|
$
|
8,801
|
|
$
|
19,385
|
|
$
|
20,063
|
Electronic
Systems
|
|
7,666
|
|
2,343
|
|
10,009
|
|
9,715
|
Information
Systems
|
|
3,118
|
|
2,842
|
|
5,960
|
|
6,115
|
Technical
Services
|
|
2,639
|
|
360
|
|
2,999
|
|
2,306
|
Total
|
|
$
|
24,007
|
|
$
|
14,346
|
|
$
|
38,353
|
|
$
|
38,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Funded backlog
represents firm orders for which funding is authorized and
appropriated.
|
|
|
2
|
Unfunded backlog
represents firm orders for which as of the reporting date, funding
is not authorized and appropriated. Unfunded backlog excludes
unexercised contract options and indefinite delivery, indefinite
quantity (IDIQ) contracts until the time the option or IDIQ task
order is exercised or awarded.
|
|
|
|
|
New Awards
— Total backlog as of March 31, 2015, includes $6.1 billion
of estimated contract awards in the three months ended March 31,
2015.
|
|
Non-GAAP Financial Measures Disclosure: Today's press
release contains non-GAAP (accounting principles generally accepted
in the United States of America)
financial measures, as defined by SEC (Securities and Exchange
Commission) Regulation G and indicated by a footnote in the text of
the release. While the company believes that these non-GAAP
financial measures may be useful in evaluating our financial
information, they should be considered as supplemental in nature
and not as a substitute for financial information prepared in
accordance with GAAP. Definitions are provided for the non-GAAP
measures and reconciliations are provided in the body of the
release. References to a "Table" in the definitions below relate to
tables in the body of this press release. Other companies may
define these measures differently or may utilize different non-GAAP
measures.
Pension-adjusted diluted EPS: Diluted EPS excluding the
after-tax net pension adjustment per share, as defined below. These
per share amounts are provided for consistency and comparability of
operating results. Management uses pension-adjusted diluted EPS, as
reconciled in Table 1, as an internal measure of financial
performance.
Cash used in operating activities before after-tax
discretionary pension contributions: Cash used in operating
activities before the after-tax impact of discretionary pension
contributions. Cash used in operating activities before
discretionary pension contributions has been provided for
consistency and comparability of 2015 and 2014 financial
performance and is reconciled in Table 2.
Free cash flow: Cash used in operating activities less
capital expenditures. We use free cash flow as a key factor in our
planning for, and consideration of, strategic acquisitions, stock
repurchases and the payment of dividends. This measure should not
be considered in isolation, as a measure of residual cash flow
available for discretionary purposes, or as an alternative to
operating results presented in accordance with GAAP. Free cash flow
is reconciled in Table 2.
Free cash flow before after-tax discretionary pension
contributions: Free cash flow before the after-tax impact of
discretionary pension contributions. We use free cash flow before
discretionary pension contributions as a key factor in our planning
for, and consideration of, strategic acquisitions, stock
repurchases and the payment of dividends. This measure should not
be considered in isolation, as a measure of residual cash flow
available for discretionary purposes, or as an alternative to
operating results presented in accordance with GAAP. Free cash flow
before discretionary pension contributions is reconciled in Table
2.
Net FAS/CAS pension adjustment: The difference between
pension expense charged to contracts and included as cost in
segment operating income in accordance with Government Cost
Accounting Standards (CAS) and pension expense determined in
accordance with GAAP. Net FAS/CAS pension adjustment is presented
in Table 1.
After-tax net pension adjustment per share: The per share
impact of the net FAS/CAS pension adjustment as defined above,
after tax at the statutory rate of 35 percent, provided for
consistency and comparability of 2015 and 2014 financial
performance as presented in Table 1.
Pension-adjusted operating income: Operating income
before net FAS/CAS pension adjustment as reconciled in Table 1.
Management uses pension-adjusted operating income as an internal
measure of financial performance.
Pension-adjusted operating margin rate: Pension-adjusted
operating income as defined above, divided by sales. Management
uses pension-adjusted operating margin rate, as reconciled in Table
1, as an internal measure of financial performance.
Segment operating income: Total earnings from our four
segments including allocated pension expense recognized under CAS.
Reconciling items to operating income include the net FAS/CAS
pension adjustment, as defined above, as well as certain
corporate-level expenses, which are not considered allowable or
allocable under applicable CAS or FAR. Management uses segment
operating income, as reconciled in Table 3, as an internal measure
of financial performance.
Segment operating margin rate: Segment operating income
as defined above, divided by sales. Management uses segment
operating margin rate, as reconciled in Table 3, as an internal
measure of financial performance.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/northrop-grumman-reports-first-quarter-2015-financial-results-300073866.html
SOURCE Northrop Grumman Corporation