FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 29549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________________ to__________________
Commission File Number 1-3229
NORTHROP GRUMMAN CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE No. 95-1055798
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1840 Century Park East, Los Angeles, California 90067
(address of principal executive offices)
(310) 553-6262
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes x No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock outstanding as of July 24, 1998 68,796,037 shares
Northrop Grumman Corporation and Subsidiaries
Part I. Financial Information
Item 1. Financial Statements
CONSOLIDATED CONDENSED STATEMENTS
OF INCOME
Three months Six months
ended June 30, ended June 30,
Dollars in millions, except per share 1998 1997 1998 1997
- ----------------------------------------------------------------------------
Net sales $2,139 $2,228 $4,153 $4,346
Cost of sales
Operating costs 1,710 1,746 3,328 3,451
Administrative and general expenses 221 249 410 466
- -----------------------------------------------------------------------------
Operating margin 208 233 415 429
Merger costs (6) (2) (186) (2)
Interest expense (59) (65) (114) (129)
Other, net 4 5 13 7
- -----------------------------------------------------------------------------
Income before income taxes 147 171 128 305
Federal and foreign income taxes 54 63 47 113
- -----------------------------------------------------------------------------
Net income $ 93 $ 108 $ 81 $ 192
=============================================================================
Weighted average shares outstanding,
in millions 68.6 66.7 68.2 66.5
Basic earnings per share $ 1.36 $ 1.62 $ 1.19 $ 2.89
Diluted earnings per share $ 1.34 $ 1.59 $ 1.17 $ 2.84
Dividends per share $ .40 $ .40 $ .80 $ .80
=============================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
I-1
Northrop Grumman Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS
OF FINANCIAL POSITION
June 30, December 31,
Dollars in millions 1998 1997
- ------------------------------------------------------------------------------
Assets
Cash and cash equivalents $ 40 $ 63
Accounts receivable, net of progress payments
of $3,254 in 1998 and $2,772 in 1997 1,432 1,441
Inventoried costs, net of progress payments
of $550 in 1998 and $495 in 1997 1,582 1,283
Deferred income taxes 80 82
Prepaid expenses 82 67
- ------------------------------------------------------------------------------
Total current assets 3,216 2,936
- ------------------------------------------------------------------------------
Property, plant and equipment 3,105 3,109
Accumulated depreciation (1,784) (1,763)
- ------------------------------------------------------------------------------
1,321 1,346
- ------------------------------------------------------------------------------
Goodwill, net of accumulated amortization of
$290 in 1998 and $244 in 1997 3,375 3,421
Other purchased intangibles, net of accumulated
amortization of $254 in 1998 and $208 in 1997 850 896
Deferred income taxes 456 485
Prepaid pension cost, intangible pension asset
and benefit trust funds 625 452
Investments in and advances to affiliates and
sundry assets 134 141
- -------------------------------------------------------------------------------
5,440 5,395
- -------------------------------------------------------------------------------
$ 9,977 $ 9,677
===============================================================================
I-2
Northrop Grumman Corporation and Subsidiaries
June 30, December 31,
Dollars in millions 1998 1997
- ------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Notes payable to banks $ 36 $ 91
Current portion of long-term debt 150 200
Trade accounts payable 465 463
Accrued employees' compensation 364 366
Advances on contracts 421 410
Income taxes payable, including deferred
income taxes of $689 in 1998 and $717 in 1997 737 733
Other current liabilities 454 452
- ----------------------------------------------------------------------------
Total current liabilities 2,627 2,715
- ----------------------------------------------------------------------------
Long-term debt 2,706 2,500
Accrued retiree benefits 1,740 1,716
Other long-term liabilities 45 48
Deferred income taxes 88 75
Paid-in capital
Preferred stock, 10,000,000 shares authorized; none issued
Common stock, 200,000,000 shares authorized; issued and outstanding:
1998 -- 68,743,309; 1997 -- 67,278,876 959 838
Retained earnings 1,834 1,807
Unfunded pension losses, net of taxes (22) (22)
- ----------------------------------------------------------------------------
2,771 2,623
- ----------------------------------------------------------------------------
$9,977 $9,677
============================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
I-3
Northrop Grumman Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Six months ended June 30,
Dollars in millions 1998 1997
- -----------------------------------------------------------------------------
Operating Activities
Sources of Cash
Cash received from customers
Progress payments $ 861 $1,112
Other collections 3,354 3,101
Income tax refunds received 8 1
Interest received 1 3
Other cash receipts 4 2
- ------------------------------------------------------------------------------
Cash provided by operating activities 4,228 4,219
- ------------------------------------------------------------------------------
Uses of Cash
Cash paid to suppliers and employees 4,092 3,927
Interest paid 106 119
Income taxes paid 29 30
Other cash disbursements 29 3
- -----------------------------------------------------------------------------
Cash used in operating activities 4,256 4,079
- -----------------------------------------------------------------------------
Net cash provided by (used in) operating activities (28) 140
- ------------------------------------------------------------------------------
Investing Activities
Additions to property, plant and equipment (86) (88)
Proceeds from sale of property, plant and equipment 13 46
Proceeds from sale of affiliates/operations 20
Other investing activities (1) (1)
- -----------------------------------------------------------------------------
Net cash used in investing activities (74) (23)
- -----------------------------------------------------------------------------
Financing Activities
Borrowings under lines of credit 251 278
Repayment of borrowings under lines of credit (247)
Principal payments of long-term debt (150) (100)
Proceeds from issuance of stock 32 5
Dividends paid (54) (48)
- -----------------------------------------------------------------------------
Net cash provided by (used in) financing activities 79 (112)
- -----------------------------------------------------------------------------
Increase(decrease) in cash and cash equivalents (23) 5
Cash and cash equivalents balance at beginning of period 63 123
- -----------------------------------------------------------------------------
Cash and cash equivalents balance at end of period $ 40 $ 128
=============================================================================
I-4
Northrop Grumman Corporation and Subsidiaries
Six months ended June 30,
Dollars in millions 1998 1997
- ------------------------------------------------------------------------------
Reconciliation of Net Income to Net Cash
Provided by(used in) Operating Activities
Net income $ 81 $ 192
Adjustments to reconcile net income to net
cash provided(used)
Depreciation 95 114
Amortization of intangible assets 92 93
Common stock issued to employees 88 1
Loss on disposals of property, plant and equipment 4 1
Retiree benefits income (97) (24)
Decrease(increase) in
Accounts receivable (261) (403)
Inventoried costs (354) (216)
Prepaid expenses (16) 5
Increase(decrease) in
Progress payments 310 254
Accounts payable and accruals 42 107
Provisions for contract losses 24 15
Deferred income taxes 16 63
Income taxes payable 32 23
Retiree benefits (88) (90)
Other transactions 4 5
- -------------------------------------------------------------------------------
Net cash provided by (used in) operating activities $ (28) $ 140
===============================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
I-5
Northrop Grumman Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS
OF CHANGES IN SHAREHOLDERS' EQUITY
Six months ended June 30,
Dollars in millions 1998 1997
- ------------------------------------------------------------------------------
Paid-in Capital
At beginning of year $ 838 $ 784
Employee stock awards and options exercised 121 7
- -----------------------------------------------------------------------------
959 791
- -----------------------------------------------------------------------------
Retained Earnings
At beginning of year 1,807 1,502
Net income 81 192
Cash dividends (54) (48)
- -----------------------------------------------------------------------------
1,834 1,646
- -----------------------------------------------------------------------------
Unfunded Pension Losses, Net of Taxes (22) (4)
- ------------------------------------------------------------------------------
Total shareholders' equity $2,771 $2,433
=============================================================================
The accompanying notes are an integral part of these consolidated
financial statements.
I-6
Northrop Grumman Corporation and Subsidiaries
SELECTED INDUSTRY SEGMENT INFORMATION
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
Dollars in millions 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales
Aircraft $ 989 $ 1,072 $ 1,959 $ 2,057
Electronics 971 986 1,871 1,961
Information Technology and Services 288 263 523 506
Intersegment sales (109) (93) (200) (178)
- ------------------------------------------------------------------------------------------
$ 2,139 $ 2,228 $ 4,153 $ 4,346
==========================================================================================
Operating Profit
Aircraft $ 162 $ 143 $ 309 $ 277
Electronics 57 95 135 177
Information Technology and Services 32 23 55 47
- ------------------------------------------------------------------------------------------
Total operating profit 251 261 499 501
Adjustments to reconcile operating
profit to operating margin:
Other income included above (4) 1 (4)
State and local income taxes (10) 8 (20) (5)
General corporate expenses (33) (32) (65) (63)
- ------------------------------------------------------------------------------------------
Operating margin $ 208 $ 233 $ 415 $ 429
==========================================================================================
Contract Acquisitions
Aircraft $ 793 $ 1,271 $ 1,643 $ 1,906
Electronics 720 1,120 1,386 2,345
Information Technology and Services 260 202 510 430
Intersegment acquisitions (107) (94) (194) (189)
- ------------------------------------------------------------------------------------------
$ 1,666 $ 2,499 $ 3,345 $ 4,492
==========================================================================================
Funded Order Backlog
Aircraft $ 5,677 $ 6,894
Electronics 4,977 5,542
Information Technology and Services 434 435
Intersegment backlog (34) (58)
- ------------------------------------------------------------------------------------------
$11,054 $12,813
=========================================================================================
</TABLE>
I-7
Northrop Grumman Corporation and Subsidiaries
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
have been prepared by management in accordance with the instructions to
Form 10-Q of the Securities and Exchange Commission. They do not
include all information and notes necessary for a complete presentation
of financial position, results of operations, changes in shareholders'
equity, and cash flows in conformity with generally accepted accounting
principles. They do, however, in the opinion of management, include all
adjustments necessary for a fair statement of the results for the periods
presented. The financial statements should be read in conjunction with the
Notes and Independent Auditors' Report contained in the company's 1997 Annual
Report on Form 10-K.
Merger Agreement
On July 3, 1997, the company announced that it had entered into a
definitive agreement with Lockheed Martin Corporation to combine the
companies. On February 26, 1998, shareholders of Northrop Grumman
approved the merger. On March 23, 1998, the U. S. Government filed
suit to block the combination. On July 16, 1998, Lockheed Martin
notified the company that it was terminating its merger agreement with
the company pursuant to the terms of the merger agreement.
The company recorded a charge of $186 million through June 30,
1998, for costs related to the proposed merger. The charge covers
vesting of restricted stock which became issuable following shareholder
approval of the merger and other costs associated with the proposed
merger, such as investment banking fees, legal and accounting fees, and
costs related to responding to the Government's request for information.
Comprehensive Income
The company has adopted Statement of Financial Accounting Standards No.
130 - Reporting Comprehensive Income. This standard establishes new standards
for the presentation and disclosure of other comprehensive income. There were
no material items of other comprehensive income for the first six months of
1998 or 1997.
Earnings per Share
Basic earnings per share are calculated using the weighted average number
of shares of common stock outstanding during each period, after giving
recognition to stock splits and stock dividends. Diluted earnings per
share reflect the dilutive effect of stock options and other stock awards
granted to employees under stock-based compensation plans.
I-8
Northrop Grumman Corporation and Subsidiaries
Basic and diluted earnings per share are calculated as follows:
<TABLE>
<CAPTION>
Earnings
Three months ended June 30, Net Income Shares per Share
----------- -------- ---------
(millions) (millions)
<S> <C> <C> <C>
1998
Basic EPS $ 93 68.6 $ 1.36
====== ======
Dilutive effect of stock options and awards 1.0
-----
Diluted EPS $ 93 69.6 $ 1.34
====== ===== ======
1997
Basic EPS $ 108 66.7 $ 1.62
====== ======
Dilutive effect of stock options and awards 1.2
----
Diluted EPS $ 108 67.9 $ 1.59
====== ==== ======
Six months ended June 30,
1998
Basic EPS $ 81 68.2 $ 1.19
====== ======
Dilutive effect of stock options and awards 1.3
----
Diluted EPS $ 81 69.5 $ 1.17
====== ==== ======
1997
Basic EPS $ 192 66.5 $ 2.89
====== ======
Dilutive effect of stock options and awards 1.2
----
Diluted EPS $ 192 67.7 $ 2.84
====== ==== ======
</TABLE>
I-9
Northrop Grumman Corporation and Subsidiaries
Item 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF THE COMPANY'S FINANCIAL
CONDITION AND THE RESULTS OF ITS OPERATIONS
Sales were 4 percent lower in both the second quarter and first half of 1998
versus the same periods of 1997, reflecting decreases in both the aircraft
and electronics business segments.
Aircraft segment sales decreased in the second quarter and first half of
1998 versus comparable periods of 1997 as a result of lower B-2 volume on both
production and EMD contracts and the absence of sales from the company's
Grumman Allied Industries subsidiary, which was sold last year. These declines
are partially offset by increased Boeing jetliner shipset deliveries.
Fifty-five 747 shipsets are now expected to be delivered in 1998.
Electronics segment sales for the second quarter and first six
months of 1998 declined as compared to the same periods last year due to lower
volume in the marine systems and other electronics business areas.
Sales by major program/business area and units delivered were:
<TABLE>
<CAPTION>
Three months Six months
$ in millions 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
B-2 $ 314 $ 395 $ 641 $ 760
Surveillance Aircraft (E-8 Joint Stars, E-2) 291 278 577 523
Boeing Jetliners 249 221 482 425
Airborne Radar 167 151 315 296
Marine Systems 128 140 242 272
F/A-18 135 123 281 252
Electronic Countermeasures 95 90 201 193
Space 76 78 149 164
Airspace Management 75 63 138 129
C-17 48 75 108 142
Information Technology and Services 283 259 514 500
All Other 278 355 505 690
- ---------------------------------------------------------------------------------------------
$ 2,139 $ 2,228 $ 4,153 $ 4,346
=============================================================================================
Three months Six months
Units 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------
B-2 1 2
747 13 11 26 22
F/A-18 C/D 8 8 17 18
C-17 2 2 4
</TABLE>
I-10
Northrop Grumman Corporation and Subsidiaries
Operating margin includes pension income, net of deferred state taxes, of
$62 million for the second quarter and $121 million for the first six months of
1998 as compared with $29 million and $58 million for the same periods of 1997.
Substantially all of the pension income is attributable to the aircraft segment.
Operating margin in the second quarter 1997 benefited $10 million from a
reduction in deferred state income taxes.
The amount and rate of operating profit earned on sales increased in the
aircraft segment in the second quarter and first half of 1998 as compared
with the same periods of 1997. The aircraft segment benefited in the second
quarter and first six months of 1998 from increased pension income as well
as the delivery of one B-2 bomber in each of the first two quarters of 1998
versus none in the first half of 1997. These improvements were partially
offset by decreases in B-2 production, F/A-18C/D and C-17 sales and a
$4 million charge recorded in the second quarter of 1998 related to plant
closures.
Electronics segment operating profit for the second quarter 1998 was
reduced $8 million for a charge related to plant closures and $25 million by
cumulative margin rate adjustments on the E-8 Joint STARS and E-2C programs.
An increase in the cost estimate to complete the remanufacture of the 707
jetliner, used as the Joint STARS platform, for Aircraft P4 was the primary
cause of the Joint STARS adjustment. The company has announced that it is in
discussions with the Air Force to identify and implement improved ways to
reduce the extensive remanufacturing work required on future aircraft. The
outcome of these discussions cannot be predicted at this time. The E-2C
charge was due to increased costs incurred to overcome parts shortages on the
program. Last year's first half included a $13 million pretax charge,
recorded in the first quarter, related to an increase in the cost estimate to
complete the company's work on the Directional Infrared Countermeasures
(DIRCM) program.
The information technology and services business segment reported improved
operating profit rates on increased sales for both the second quarter and first
half of 1998 as compared with the same periods of 1997.
In the first six months of 1998, the company recorded pretax charges of
$186 million ($1.73 per share after tax) for merger costs related to the
company's proposed combination with Lockheed Martin Corporation. The charges
cover vesting of restricted stock that became issuable following shareholder
approval of the merger as well as other costs associated with the proposed
combination such as investment banking fees, legal and accounting fees, and
costs related to responding to the Government's request for information. On
July 16, 1998, Lockheed Martin Corporation notified the company that it was
terminating its merger agreement with the company pursuant to the terms of the
merger agreement.
I-11
Northrop Grumman Corporation and Subsidiaries
Interest expense was $59 million for the second quarter 1998 and
$114 million for the first half of 1998, down $6 million and $15 million,
respectively, from the same periods last year. The decreases resulted
principally from a lower average level of borrowings in the first half of 1998
compared with the first half of 1997.
During the first half of 1998, $28 million of cash was used in operations
versus the $140 million that was generated by operations in the first half of
1997. The decrease is primarily due to the increase in inventory to support
increased production levels of Boeing jetliners. Cash generated from
operating activities is expected to be sufficient in the last half of this
year to finance capital expenditures and pay interest and dividends, although
it is not expected that the year end debt level will decrease. The company's
liquidity and financial flexibility will continue to be provided by cash flow
generated by operating activities, supplemented by the unused borrowing
capacity available under the company's credit agreement and other short-term
credit facilities.
Forward-Looking Information
This quarterly report on Form 10-Q, and, not by way of limitation, certain
statements and assumptions in Management's Discussion and Analysis, contain
or are based on "forward-looking" statements and information (as defined
in the Private Securities Litigation and Reform Act of 1995) that involve
risk and uncertainties, including statements and assumptions that reflect
the company's views with respect to future revenues, program performance and
cash flows, the outcome of contingencies including litigation and
environmental remediation, and anticipated costs of capital investments and
planned dispositions. The company's operations are necessarily subject to
various risks and uncertainties; actual outcomes are dependent upon many
factors, including, without limitation, the company's successful performance
of internal plans; government customers' budgetary restraints; customer changes
in short-range and long-range plans; domestic and international competition
in both the defense and commercial areas; product performance; continued
development and acceptance of new products; performance issues with key
suppliers and subcontractors; government import and export policies;
termination of government contracts; the outcome of political and legal
processes; legal, financial, and governmental risks related to international
transactions and global needs for military and commercial aircraft and
electronic systems and support as well as other economic, political and
technological risks and uncertainties, including risks detailed in the
company's filings with the Securities and Exchange Commission, including, not
by way of limitation, any Form 10-K, Form 10-Q and proxy statements, among
others.
I-12
Northrop Grumman Corporation and Subsidiaries
Item 3. Quantitative and Qualitative Disclosures About Market Risks
The company has fixed-rate long-term debt obligations, most of which are
not callable until maturity. The company also has financial instruments
that are subject to interest rate risk, principally variable-rate short-
term debt outstanding under the Credit Agreement. The company may enter
into interest rate swap agreements to offset the variable-rate
characteristics of these loans. At June 30, 1998, no interest rate swap
agreements were in effect.
Only a small portion of the company's transactions are contracted in
foreign currencies. The company does not consider the market risk
exposure relating to foreign currency exchange to be material.
I-13
Part II OTHER INFORMATION Northrop Grumman Corporation and Subsidiaries
Item 1. Legal Proceedings
U.S. v. Lockheed Martin Corporation and Northrop Grumman Corporation
On July 16, 1998, the Board of Directors of Lockheed Martin Corporation
voted to terminate the Agreement and Plan of Merger dated July 2, 1997.
The Government has indicated that it will dismiss the antitrust
litigation which was filed on March 23, 1998, against Lockheed Martin
Corporation and Northrop Grumman Corporation to block the merger.
Zabielski v. Kent Kresa, et al.
On July 23, 1998, Northrop Grumman Corporation (the "Company") received
notice that a shareholder derivative lawsuit had been filed against the
Company, its Board of Directors and its Elected Officers. The action is
filed in the Superior Court of California for the County of Los Angeles
and contains allegations that the individual defendants breached their
fiduciary duties to the Company and to its shareholders. The complaint
also contains allegations that certain defendants were unjustly enriched
by stock trades that were completed in violation of Federal and State
Securities Laws. The complaint also threatens a direct action based on
the same allegations. The Company and the individual defendants deny the
allegations and intend to vigorously defend the action.
Item 4. Submission of Matters to a Vote of Security Holders
(a) Annual Meeting --
The annual meeting of stockholders of Northrop Grumman Corporation
was held on June 30, 1998.
(b) Election of Directors --
The following Class I Director nominees were elected at the annual
meeting:
Jack R. Borsting
Aulana L. Peters
Richard M. Rosenberg
Richard J. Stegemeier
The Directors whose terms of office continue are:
John T. Chain, Jr.
Jack Edwards
Phillip Frost
Kent Kresa
Robert A. Lutz
John E. Robson
John Brooks Slaughter
II-1
Northrop Grumman Corporation and Subsidiaries
(c) The matters voted upon at the meeting and the results of each vote are
as follows:
Votes Votes
For Directors: For Withheld
---------- ---------
Jack R. Borsting 55,733,469 966,095
Aulana L. Peters 55,156,433 1,543,131
Richard M. Rosenberg 55,731,194 968,370
Richard J. Stegemeier 55,722,829 976,735
<TABLE>
<CAPTION>
Votes Votes Shares Broker
For Against Abstaining Non-Votes
----------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Ratification of the appointment
of Deloitte & Touche LLP as the
Company's independent auditors 56,020,319 461,452 217,893 -
Shareholder Proposal
regarding foreign military sales 2,227,673 45,284,384 2,295,019 6,892,488
Shareholder Proposal regarding
executive severance agreements 8,240,469 40,601,393 785,511 6,892,191
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the quarter ended June 30, 1998.
II-2
Northrop Grumman Corporation and Subsidiaries
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 thereunto duly authorized.
Northrop Grumman Corporation (Registrant)
Date: July 30, 1998 by/s/R. B. Waugh, Jr.
Richard B. Waugh, Jr.
Corporate Vice President and Chief
Financial Officer
Date: July 30, 1998 by/s/J. H. Mullan
John H. Mullan
Acting Secretary
II-3
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 40
<SECURITIES> 0
<RECEIVABLES> 1,530
<ALLOWANCES> 98
<INVENTORY> 1,582
<CURRENT-ASSETS> 3,216
<PP&E> 3,105
<DEPRECIATION> 1,784
<TOTAL-ASSETS> 9,977
<CURRENT-LIABILITIES> 2,627
<BONDS> 2,856
0
0
<COMMON> 959
<OTHER-SE> 1,812
<TOTAL-LIABILITY-AND-EQUITY> 9,977
<SALES> 4,153
<TOTAL-REVENUES> 4,153
<CGS> 3,738
<TOTAL-COSTS> 3,738
<OTHER-EXPENSES> 173
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114
<INCOME-PRETAX> 128
<INCOME-TAX> 47
<INCOME-CONTINUING> 81
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 81
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.17
</TABLE>
