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Northrop Grumman Reports Sales Increase
Northern Grumman reported that sales increased 49 percent, earnings from continuing operations increased 17 percent, and segment operating margin increased 44 percent, for the 2003 first quarter compared with the first quarter of 2002. The company attributes results to its two new segments, Mission Systems and Space Technology; double-digit growth in sales and operating margins at three other segments, Electronic Systems, Ships and Information Technology; and a lower effective tax rate.
Northrop Grumman reported income from continuing operations of $174 million, or $0.91 per share, compared with $149 million, or $1.27 per share, for the same period of 2002. First quarter 2003 earnings per share are based on weighted average diluted shares outstanding of 184.3 million versus 112.8 million for the first quarter of 2002.
Information technology sales in the first quarter 2003 increased 18 percent to $1.1 billion compared with sales of $929 million for the same period of 2002, with strong growth in all business units. For the quarter, the segment generated operating margin of $62 million compared to $50 million reported in the first quarter of 2002, reflecting increased revenues and a higher operating margin rate on the Government Information Technology business.
During the 2003 first quarter the company recorded a $26 million tax credit for additional research tax credits covering the years 1981 through 1990. As a result, the company's overall effective tax rate for the quarter was 18 percent, which added $.14 per share to the company's 2003 first quarter earnings. The effective tax rate for the 2002 first quarter was 31 percent. Consistent with previous guidance, the effective tax rate for 2003 is expected to be approximately 28 percent.
Sales for the 2003 first quarter increased 49 percent to $5.9 billion from the $3.9 billion reported for the first quarter of 2002, due to the contributions from Mission Systems and Space Technology and 10 percent organic growth in the legacy Northrop Grumman segments. Northrop Grumman's segment operating margin for the first three months of 2003 increased 44 percent to $433 million from $300 million for the comparable 2002 period, due to the contributions from Mission Systems and Space Technology and 15 percent organic growth in the legacy Northrop Grumman segments. Total operating margin for the 2003 first quarter increased five percent to $328 million from $313 million in the same period a year ago, reflecting the increased segment operating margin, offset by the net pension adjustment.
Net income for the 2003 quarter was $253 million, or $1.34 per share, compared with a loss of $283 million, or $2.56 per share, in the 2002 quarter. Income from discontinued operations for the first quarter of 2003 was $80 million, and included the results of TRW Automotive, which was sold Feb. 28, 2003, and the company's Component Technologies businesses.
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