UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of report (Date of earliest event reported)
May 9, 2012
Huntington Ingalls Industries, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 1-34910 | 90-0607005 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
4101 Washington Avenue, Newport News, VA |
23607 | |
(Address of Principal Executive Offices) | (Zip Code) |
(757) 380-2000
Registrants telephone number, including area code
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
On May 9, 2012, Huntington Ingalls Industries, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2012. A copy of the press release is furnished as Exhibit 99.1 hereto. Also furnished as Exhibit 99.2 is the Corporations earnings presentation for its first quarter 2012 earnings release conference call.
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit No. |
Description | |
99.1 | Press Release dated May 9, 2012. | |
99.2 | Earnings Presentation dated May 9, 2012. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
HUNTINGTON INGALLS INDUSTRIES, INC. | ||||||||
Date: May 9, 2012 |
By: | /s/ BARBARA A. NILAND | ||||||
Barbara A. Niland | ||||||||
Corporate Vice President, Business Management and Chief Financial Officer |
Exhibit 99.1
![]() |
Contacts:
Jerri Fuller Dickseski (Media) jerri.dickseski@hii-co.com 757-380-2341
Andy Green (Investors) andy.green@hii-co.com 757-688-5572 |
Huntington Ingalls Industries Reports First Quarter Results; Continues Segment Operating Margin Improvement
| Sales were $1.57 billion for the first quarter 2012 |
| Segment operating margin improved to 6.4 percent from 5.0 percent in Q1 2011 |
| Total operating margin was 5.1 percent, up from 5.0 percent in the same period last year |
| Diluted earnings per share was $0.67 |
| Cash and cash equivalents at the end of the quarter was $551 million |
NEWPORT NEWS, Va. (May 9, 2012) Huntington Ingalls Industries (NYSE: HII) reported first quarter 2012 sales of $1.57 billion, down 6.9 percent from the same period last year, and segment operating margin of 6.4 percent, up from 5.0 percent for the same period last year. Total operating margin was 5.1 percent, up 0.1 percent from the first quarter of last year, and first quarter diluted earnings per share was $0.67, compared with $0.92 in the same period of 2011. Cash used in operating activities in the first quarter of 2012 was $329 million, an improvement of $35 million over the same period last year. New business awards for the 2012 first quarter were approximately $0.8 billion, bringing total backlog to $15.5 billion as of March 31, 2012.
The end of the first quarter marked our one-year anniversary as an independent, publicly-traded company, and we are on track to deliver the performance targets we laid out at the time of the spin, said Mike Petters, HIIs president and chief executive officer. The first quarter was highlighted by our steady performance at Newport News and continued progress toward margin expansion at Ingalls, coupled with new business opportunities outside of shipbuilding such as the start-up of nuclear maintenance services support at Kesselring.
Huntington Ingalls Industries
4101 Washington Ave. Newport News, VA 23607
www.huntingtoningalls.com
First Quarter Highlights
Three Months Ended March 31, |
||||||||||||||||
(In millions, except per share amounts) |
2012 | 2011 | $ Change | % Change | ||||||||||||
Sales |
$ | 1,568 | $ | 1,684 | $ | (116 | ) | (6.9 | )% | |||||||
Total segment operating income1 |
101 | 84 | 17 | 20.2 | % | |||||||||||
Segment operating margin % 1 |
6.4 | % | 5.0 | % | 145 bps | |||||||||||
Total operating income |
80 | 85 | (5 | ) | (5.9 | )% | ||||||||||
Operating margin % |
5.1 | % | 5.0 | % | 5 bps | |||||||||||
Net earnings |
33 | 45 | (12 | ) | (26.7 | )% | ||||||||||
Diluted earnings per share |
$ | 0.67 | $ | 0.92 | $ | (0.25 | ) | (27.1 | )% | |||||||
Weighted average diluted shares outstanding |
49.5 | 48.8 |
1 | Non-GAAP metric. See Exhibit B for reconciliation. |
First quarter consolidated sales decreased $116 million from the same period in 2011, driven by lower sales volume following the delivery of NSC-3 USCGC Stratton and LPD-22 San Diego in 2011 and lower sales volume on the CVN-71 USS Theodore Roosevelt refueling and complex overhaul (RCOH) and the SSN-774 Virginia-class submarine construction program, partially offset by higher sales on the advance construction contract for CVN-79 John F. Kennedy and the advance planning contract for the CVN-72 USS Abraham Lincoln RCOH.
Segment operating income in the quarter was $101 million, up $17 million from the same 2011 period. The increase was primarily due to performance improvements on the SSN-774 Virginia-class submarine construction program and the absence of unfavorable performance adjustments realized in the first quarter of 2011 on the LPD program and CVN-78 Gerald R. Ford. Total operating income was $80 million, down from $85 million in the same period last year. Total operating margin was 5.1 percent for the quarter, up 0.1 percent from the first quarter of 2011. The decrease in operating income was primarily driven by higher FAS/CAS adjustment in 2012.
Awards
The value of new contract awards during the three months ended March 31, 2012 was approximately $0.8 billion. Significant new awards during this period included contracts for advance procurement for construction of LPD-27 (unnamed) and NSC-6 (unnamed), as well as advance planning efforts for the CVN-72 USS Abraham Lincoln RCOH.
Huntington Ingalls Industries
4101 Washington Ave. Newport News, VA 23607
www.huntingtoningalls.com
Page 2 of 10
Operating Segment Results
Ingalls Shipbuilding
Three Months Ended March 31, |
||||||||||||||||
($ in millions) |
2012 | 2011 | $ Change | % Change | ||||||||||||
Sales |
$ | 692 | $ | 761 | $ | (69 | ) | (9.1 | )% | |||||||
Operating income |
20 | 17 | 3 | 17.6 | % | |||||||||||
Operating margin % |
2.9 | % | 2.2 | % | 66 bps |
Ingalls revenues for the first quarter decreased $69 million from the same period in 2011, driven by lower sales in the National Security Cutter (NSC) and Amphibious Assault Ships programs. The decrease in the NSC program sales was primarily the result of the delivery of NSC-3 USCGC Stratton in 2011. The decrease in Amphibious Assault Ships sales was primarily due to lower sales volume on the LPD program following the delivery of LPD-22 San Diego in 2011.
Ingalls operating income for the first quarter was $20 million compared with $17 million in the same period in 2011. The increase was primarily the result of the absence of unfavorable performance adjustments realized in 2011 on LPD-22 San Diego. Ingalls operating margin was 2.9 percent for the quarter, up from 2.2 percent in the same quarter of 2011.
Key Ingalls program milestones for the quarter:
| LPD-22 San Diego sailed away from Pascagoula en route to her commissioning site in San Diego |
| Awarded $70 million additional advance procurement work for LPD-27 (unnamed) |
| Awarded $76 million advance procurement contract for NSC-6 (unnamed) |
Huntington Ingalls Industries
4101 Washington Ave. Newport News, VA 23607
www.huntingtoningalls.com
Page 3 of 10
Newport News Shipbuilding
Three Months Ended March 31, |
||||||||||||||||
($ in millions) |
2012 | 2011 | $ Change | % Change | ||||||||||||
Sales |
$ | 895 | $ | 940 | $ | (45 | ) | (4.8 | )% | |||||||
Operating income |
81 | 67 | 14 | 20.9 | % | |||||||||||
Operating margin % |
9.1 | % | 7.1 | % | 192 bps |
Newport News revenues for the first quarter decreased $45 million, or 4.8 percent, from the first quarter 2011, primarily driven by lower sales volume on the CVN-71 USS Theodore Roosevelt RCOH and the SSN-774 Virginia-class submarine construction program, partially offset by higher sales volume on the advance construction contract for CVN-79 John F. Kennedy and the advance planning contract for the CVN-72 USS Abraham Lincoln RCOH.
Newport News operating income for the first quarter was $81 million compared with $67 million in the same period in 2011. The increase was due primarily to the impact of performance improvements on the SSN-774 Virginia-class submarine construction program in 2012, and the absence of unfavorable performance adjustments realized on CVN-78 Gerald R. Ford in 2011. Newport News operating margin was 9.1 percent for the quarter, compared with 7.1 percent in the same quarter of 2011.
Key Newport News program milestones for the quarter:
| Reached 75 percent structural completion of CVN-78 Gerald R. Ford |
| Awarded $383 million of planning work for the CVN-72 USS Abraham Lincoln RCOH |
| Assumed maintenance responsibilities at Kesselring, the Navys nuclear propulsion facility in upstate New York |
Huntington Ingalls Industries
4101 Washington Ave. Newport News, VA 23607
www.huntingtoningalls.com
Page 4 of 10
The Company
Huntington Ingalls Industries (HII) designs, builds and maintains nuclear and non-nuclear ships for the U.S. Navy and Coast Guard and provides after-market services for military ships around the globe. For more than a century, HII has built more ships in more ship classes than any other U.S. naval shipbuilder. Employing nearly 38,000 in Virginia, Mississippi, Louisiana and California, its primary business divisions are Newport News Shipbuilding and Ingalls Shipbuilding. For more information, please visit www.huntingtoningalls.com.
Huntington Ingalls Industries will webcast its earnings conference call at 9 a.m. EDT on May 9. A live audio broadcast of the conference call and supplemental presentation will be available on the investor relations page of the companys website: www.huntingtoningalls.com.
Statements in this release, other than statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed in these statements. Factors that may cause such differences include: changes in government and customer priorities and requirements (including government budgetary constraints, shifts in defense spending, and changes in customer short-range and long-range plans); our ability to obtain new contracts, estimate our costs and perform effectively; risks related to our spin-off from Northrop Grumman (including our increased costs and leverage); our ability to realize the expected benefits from consolidation of our Ingalls facilities; natural disasters; adverse economic conditions in the United States and globally; and other risk factors discussed in our filings with the U.S. Securities and Exchange Commission. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business, and we undertake no obligations to update any forward-looking statements.
Huntington Ingalls Industries
4101 Washington Ave. Newport News, VA 23607
www.huntingtoningalls.com
Page 5 of 10
Exhibit A: Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (Unaudited)
Three Months Ended March 31 |
||||||||
(in millions, except per share amounts) |
2012 | 2011 | ||||||
Sales and service revenues |
||||||||
Product sales |
$ | 1,353 | $ | 1,466 | ||||
Service revenues |
215 | 218 | ||||||
|
|
|
|
|||||
Total sales and service revenues |
1,568 | 1,684 | ||||||
|
|
|
|
|||||
Cost of sales and service revenues |
||||||||
Cost of product sales |
1,152 | 1,253 | ||||||
Cost of service revenues |
186 | 197 | ||||||
General and administrative expenses |
150 | 149 | ||||||
|
|
|
|
|||||
Operating income (loss) |
80 | 85 | ||||||
Other income (expense) |
||||||||
Interest expense |
(30 | ) | (15 | ) | ||||
|
|
|
|
|||||
Earnings (loss) before income taxes |
50 | 70 | ||||||
Federal income taxes |
17 | 25 | ||||||
|
|
|
|
|||||
Net earnings (loss) |
$ | 33 | $ | 45 | ||||
|
|
|
|
|||||
Basic earnings (loss) per share |
$ | 0.67 | $ | 0.92 | ||||
Weighted-average common shares outstanding |
49.0 | 48.8 | ||||||
|
|
|
|
|||||
Diluted earnings (loss) per share |
$ | 0.67 | $ | 0.92 | ||||
Weighted-average diluted shares outstanding |
49.5 | 48.8 | ||||||
|
|
|
|
|||||
Net earnings (loss) from above |
$ | 33 | $ | 45 | ||||
Other comprehensive income (loss) |
||||||||
Change in unamortized benefit plan costs |
24 | 28 | ||||||
Tax benefit (expense) on change in unamortized benefit plan costs |
(9 | ) | (11 | ) | ||||
|
|
|
|
|||||
Other comprehensive income (loss), net of tax |
15 | 17 | ||||||
|
|
|
|
|||||
Comprehensive income (loss) |
$ | 48 | $ | 62 | ||||
|
|
|
|
Huntington Ingalls Industries
4101 Washington Ave. Newport News, VA 23607
www.huntingtoningalls.com
Page 6 of 10
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
($ in millions) |
March 31 2012 |
December 31 2011 |
||||||
Assets |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 551 | $ | 915 | ||||
Accounts receivable, net |
954 | 711 | ||||||
Inventoried costs, net |
384 | 380 | ||||||
Deferred income taxes |
235 | 232 | ||||||
Prepaid expenses and other current assets |
32 | 30 | ||||||
|
|
|
|
|||||
Total current assets |
2,156 | 2,268 | ||||||
|
|
|
|
|||||
Property, plant, and equipment, net |
2,005 | 2,033 | ||||||
|
|
|
|
|||||
Other Assets |
||||||||
Goodwill |
844 | 844 | ||||||
Other purchased intangibles, net of accumulated amortization of $377 in 2012 and $372 in 2011 |
562 | 567 | ||||||
Pension plan assets |
64 | 64 | ||||||
Debt issuance costs, net |
46 | 48 | ||||||
Long-term deferred tax asset |
99 | 128 | ||||||
Miscellaneous other assets |
48 | 49 | ||||||
|
|
|
|
|||||
Total other assets |
1,663 | 1,700 | ||||||
|
|
|
|
|||||
Total assets |
$ | 5,824 | $ | 6,001 | ||||
|
|
|
|
Huntington Ingalls Industries
4101 Washington Ave. Newport News, VA 23607
www.huntingtoningalls.com
Page 7 of 10
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited) CONTINUED
($ in millions, except share amounts) |
March 31 2012 |
December 31 2011 |
||||||
Liabilities and Stockholders Equity |
||||||||
Current Liabilities |
||||||||
Trade accounts payable |
293 | 380 | ||||||
Current portion of long-term debt |
29 | 29 | ||||||
Current portion of workers compensation liabilities |
201 | 201 | ||||||
Current portion of postretirement plan liabilities |
172 | 172 | ||||||
Accrued employees compensation |
189 | 221 | ||||||
Advance payments and billings in excess of costs incurred |
118 | 101 | ||||||
Provision for contract losses |
12 | 19 | ||||||
Other current liabilities |
238 | 249 | ||||||
|
|
|
|
|||||
Total current liabilities |
1,252 | 1,372 | ||||||
|
|
|
|
|||||
Long-term debt |
1,822 | 1,830 | ||||||
Other postretirement plan liabilities |
586 | 581 | ||||||
Pension plan liabilities |
833 | 936 | ||||||
Workers compensation liabilities |
362 | 361 | ||||||
Other long-term liabilities |
51 | 49 | ||||||
|
|
|
|
|||||
Total liabilities |
4,906 | 5,129 | ||||||
|
|
|
|
|||||
Commitments and Contingencies |
| | ||||||
Stockholders Equity |
||||||||
Common stock, $.01 par value; 150,000,000 shares authorized; 49,445,957 issued and outstanding as of March 31, 2012; 48,821,563 issued and outstanding as of December 31, 2011 |
0 | 0 | ||||||
Additional paid-in capital |
1,860 | 1,862 | ||||||
Retained earnings (deficit) |
(108 | ) | (141 | ) | ||||
Accumulated other comprehensive income (loss) |
(834 | ) | (849 | ) | ||||
|
|
|
|
|||||
Total stockholders equity |
918 | 872 | ||||||
|
|
|
|
|||||
Total liabilities and stockholders equity |
$ | 5,824 | $ | 6,001 | ||||
|
|
|
|
Huntington Ingalls Industries
4101 Washington Ave. Newport News, VA 23607
www.huntingtoningalls.com
Page 8 of 10
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31 |
||||||||
($ in millions) |
2012 | 2011 | ||||||
Operating Activities |
||||||||
Net earnings (loss) |
$ | 33 | $ | 45 | ||||
Adjustments to reconcile to net cash provided by (used in) operating activities |
||||||||
Depreciation |
42 | 40 | ||||||
Amortization of purchased intangibles |
5 | 5 | ||||||
Amortization of debt issuance costs |
2 | 0 | ||||||
Stock-based compensation |
8 | 4 | ||||||
Change in |
||||||||
Accounts receivable |
(243 | ) | (168 | ) | ||||
Inventoried costs |
5 | (110 | ) | |||||
Prepaid expenses and other assets |
2 | (38 | ) | |||||
Accounts payable and accruals |
(125 | ) | (131 | ) | ||||
Deferred income taxes |
17 | (33 | ) | |||||
Retiree benefits |
(75 | ) | 31 | |||||
Other non-cash transactions, net |
0 | (9 | ) | |||||
|
|
|
|
|||||
Net cash provided by (used in) operating activities |
(329 | ) | (364 | ) | ||||
|
|
|
|
|||||
Investing Activities |
||||||||
Additions to property, plant, and equipment |
(27 | ) | (63 | ) | ||||
|
|
|
|
|||||
Net cash provided by (used in) investing activities |
(27 | ) | (63 | ) | ||||
|
|
|
|
|||||
Financing Activities |
||||||||
Proceeds from issuance of long-term debt |
0 | 1,775 | ||||||
Repayment of long-term debt |
(8 | ) | 0 | |||||
Debt issuance costs |
0 | (50 | ) | |||||
Repayment of notes payable to former parent and accrued interest |
0 | (954 | ) | |||||
Dividend to former parent in connection with spin-off |
0 | (1,429 | ) | |||||
Net transfers from (to) former parent |
0 | 1,310 | ||||||
|
|
|
|
|||||
Net cash provided by (used in) financing activities |
(8 | ) | 652 | |||||
|
|
|
|
|||||
Change in cash and cash equivalents |
(364 | ) | 225 | |||||
Cash and cash equivalents, beginning of period |
915 | 0 | ||||||
|
|
|
|
|||||
Cash and cash equivalents, end of period |
$ | 551 | $ | 225 | ||||
|
|
|
|
|||||
Supplemental Cash Flow Disclosure |
||||||||
Cash paid for income taxes |
$ | 4 | $ | 0 | ||||
Cash paid for interest |
$ | 47 | $ | 0 | ||||
|
|
|
|
Huntington Ingalls Industries
4101 Washington Ave. Newport News, VA 23607
www.huntingtoningalls.com
Page 9 of 10
Exhibit B: Reconciliations
We make reference to segment operating income. Segment operating income is defined as operating income before FAS/CAS adjustment and deferred state income taxes.
Segment operating income is one of the key metrics we use to evaluate operating performance because it excludes items that do not affect segment performance. Therefore, we believe it is appropriate to disclose these measures to help investors analyze our operating performance. However, these measures are not measures of financial performance under GAAP and may not be defined or calculated by other companies in the same manner.
Reconciliation of Segment Operating Income
Three Months Ended March 31, |
||||||||
$ in millions |
2012 | 2011 | ||||||
Sales and Service Revenues |
||||||||
Ingalls |
$ | 692 | $ | 761 | ||||
Newport News |
895 | $ | 940 | |||||
Intersegment eliminations |
(19 | ) | (17 | ) | ||||
|
|
|
|
|||||
Total sales and service revenues |
$ | 1,568 | $ | 1,684 | ||||
|
|
|
|
|||||
Operating Income (Loss) |
||||||||
Ingalls |
$ | 20 | $ | 17 | ||||
As a percentage of sales |
2.9 | % | 2.2 | % | ||||
Newport News |
81 | 67 | ||||||
As a percentage of sales |
9.1 | % | 7.1 | % | ||||
|
|
|
|
|||||
Total Segment Operating Income (Loss) |
101 | 84 | ||||||
As a percentage of sales |
6.4 | % | 5.0 | % | ||||
Non-segment factors affecting operating income |
||||||||
Net pension and post-retirement benefits adjustment |
(17 | ) | (4 | ) | ||||
Deferred state income taxes |
(4 | ) | 5 | |||||
|
|
|
|
|||||
Total operating income (loss) |
$ | 80 | $ | 85 | ||||
|
|
|
|
|||||
Interest expense |
(30 | ) | (15 | ) | ||||
Federal income taxes |
(17 | ) | (25 | ) | ||||
|
|
|
|
|||||
Total net earnings (loss) |
$ | 33 | $ | 45 | ||||
|
|
|
|
Huntington Ingalls Industries
4101 Washington Ave. Newport News, VA 23607
www.huntingtoningalls.com
Page 10 of 10
Exhibit 99.2
![]() |
Exhibit 99.2
Q1 2012 Earnings Presentation
May 9, 2012
Mike Petters
President and Chief Executive Officer
Barb Niland
Corporate Vice President, Business Management
& Chief Financial Officer
![]() |
Safe Harbor
Statements in this presentation, other than statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncerta inties that could cause our actual results to differ materially from those expressed in these statements. Factors that may cause such differences include: changes in government and customer priorities and requirements (including government budgetary constraints, shifts in defense spending, and changes in customer short-range and long-range plans); our ability to obtain new contracts, estimate our costs and perform effectively; risks related to our spin-off from Northrop Grumman (including our increased costs and leverage); our ability to realize the expected benefits from conso lidation of our Ingalls facilities; natural disasters; adverse economic conditions in the United States and globally; and other risk factors discussed in our filings with the U.S. Securities and Exchange Commission. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business, and we undertake no obligations to update any forward-looking statements. This presentation also contains non-GAAP financial measures and includes a GAAP reconciliation of these financial measures. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures.
2 |
|
![]() |
Highlights from the First Quarter 2012
Diluted EPS of $0.67 for the first quarter
Total operating margin was 5.1%, up from 5.0% for the same period 2011
Newport News operating margin was 9.1%, up from 7.1% in the first quarter 2011
Ingalls operating margin was 2.9%, up from 2.2% in first quarter 2011
Cash and cash equivalents at the end of the quarter were $551 million
Announced $0.8 billion of new contract awards during Q1 2012 including: Advance procurement for construction of LPD-27 and NSC-6
Advance planning efforts for the Lincoln RCOH
Assumed maintenance responsibilities at the Navys nuclear propulsion facility in upstate New York
3 |
|
![]() |
First Quarter 2012 Consolidated Results
4 |
|
![]() |
Ingalls Shipbuilding
?Ingalls Q1 sales were down YoY due to
lower volumes on NSC and LPD programs due to 2011 delivery of NSC-3 and LPD-22
?Q1 segment operating income was up
YoY driven by the delivery of LPD-22
5 |
|
![]() |
Newport News Shipbuilding
?Newport News sales were down in Q1 as?compared to Q1 2011 due to lower volumes on Roosevelt RCOH and the VCS program, offset by higher volumes on
Kennedy and Lincoln RCOH
?Segment operating income and margin?increased due to unfavorable performance adjustments on the Ford contract in Q1 2011 and performance improvements on the VCS program in Q1 2012
6 |
|
![]() |
Appendix
![]() |
Reconciliations
We make reference to segment operating income. Segment operating income is defined as operating income before net pension and post-retirement benefits adjustment and deferred state income taxes.
Segment operating income is one of the key metrics we use to evaluate operatin g performance because it excludes items that do not affect segment performance. Therefore, we believe it is appropriate to disclose these measures to help investors analyze our operating performance. However, these measures are not measures of financial performance under GAAP and may not be defined or calculated by other companies in the same manner.
8 |
|
![]() |
Reconciliation of Non-GAAP Measure
Segment Operating Income
Three Months Ended
$ in millions March 31,
2012 2011
Sales and Service Revenues $ 692
Ingalls $ 761
Newport News 895 $ 940
Intersegment eliminations(19)(17)
Total sales and service revenues $ 1,568 $ 1,684
Operating Income (Loss) $ 20
Ingalls $ 17
As a percentage of sales 2.9% 2.2%
Newport News 81 67
As a percentage of sales 9.1% 7.1%
Total Segment Operating Income (Loss) 101 84
As a percentage of sales 6.4% 5.0%
Non-segment factors affecting operating income(17)
Net pension and post-retirement benefits adjustment(4)
Deferred state income taxes(4) 5
Total operating income (loss) $ 80 $ 85
Interest expense(30)(15)
Federal income taxes(17)(25)
Total net earnings (loss) $ 33 $ 45
9
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