Northrop Grumman Reports 2002 4Q Results

Northrop Grumman Corporation reported net income from continuing operations of $226 million for the 2002 fourth quarter, or $1.73 per share, on 126.5 million weighted average diluted shares outstanding, compared with adjusted net income from continuing operations of $195 million, or $1.93 per share, on weighted average diluted shares outstanding of 98.0 million in the fourth quarter of 2001. These results are adjusted to exclude amortization of goodwill in 2001 in accordance with SFAS No. 142 - Goodwill and Other Intangible Assets (see attached Schedule 4). As previously reported, the company issued approximately 70 million shares of common stock in conjunction with its Dec. 11, 2002, acquisition of TRW Inc. However, Northrop Grumman's 2002 fourth quarter and year-end income statements do not include TRW's post-acquisition results because they were not material. On an economic earnings basis, Northrop Grumman's 2002 fourth quarter earnings from continuing operations increased to $238 million, or $1.83 per share, compared with $156 million, or $1.53 per share, for the comparable period in 2001 (see attached Schedule 1 for reconciliation from GAAP to Financial Metrics). Fourth quarter 2002 sales increased 17 percent to $4.8 billion from $4.1 billion in the comparable 2001 period, primarily due to the inclusion of the full quarter results for Newport News, which was acquired on Nov. 29, 2001. The company generated net cash from operations of $748 million for the 2002 fourth quarter, a 20 percent increase compared with $625 million for the same period last year.

Northrop Grumman's operating margin for the 2002 fourth quarter increased 8 percent to $411 million from an adjusted $381 million in the prior year. The company reported fourth quarter 2002 pension income of $22 million compared with $88 million in the fourth quarter of 2001. "Our 2002 fourth quarter operating performance was outstanding, with all of our segments generating excellent cash from operations," said Kent Kresa, Northrop Grumman chairman and chief executive officer. "The results also include double digit increases in both net income and economic earnings. Together with the former TRW defense businesses, which completed one of their most impressive years ever, we are well positioned to benefit from increasing defense budgets and homeland security initiatives. The new Northrop Grumman enters 2003 with an unparalleled business portfolio tightly focused on defense-related programs, a $26 billion funded order backlog, and expected 2003 sales of $25 billion to $26 billion," Kresa concluded.