Yes, it’s that time again. Obviously, the results below are extremely brief, and we’ve now added Boeing and Raytheon. Full statements and figures can be found at each of the linked URLs:
Boeing Company. Boeing’s overall revenue rose 15% to $61.5 billion reported and earnings were up 7% to $3.014 billion, but a slight decline in operating margins dropped reported net income by 14%; on the other hand, record operating cash flow of $7.5 billion offers strong liquidity, and commercial aircraft sector sales, backlog, et. al. remain very strong. Boeing’s stock price rose after the release. Boeing Integrated Defense Systems (IDS) also had its ups and downs; revenues were up 4% to a record $32.4 billion, but problems with its 737 AEW&C program and associated penalties in Turkey and Australia were visible on the bottom line. While Boeing IDS operating margins absent divestitures were higher in 2006 than 2005, the hit to “Precision Engagement & Mobility Systems” dropped the 2006 figure to 9.3% vs. 12.6% in 2005 (including divestitures) despite gains from F-15 fighter sales and H-47 helicopter contracts. Network and Space Systems saw a 2% revenue decrease and 32% earnings decrease from 2005, while Support Systems which includes the C-17 GSP and other offerings was the only solid winner with revenues up 14% and earnings up 9%. See Q4/2006 results release [PDF format] | Webcast | Financial Slide Presentation [PDF format].
General Dynamics. Earnings from continuing operations for 2006 grew by 18.1% to $1.71 billion, or $4.20 per share on a fully diluted basis, compared with earnings of $1.45 billion ($3.58 fully diluted) in 2005. Revenue for the full year of 2006 increased 14.7% to $24.1 billion, compared with $21 billion for 2005.
Lockheed Martin. Net earnings for the year ended December 31, 2006 were $2.5 billion ($5.80 per share), compared to $1.8 billion ($4.10 per share) in 2005. Net sales were $39.6 billion, up 6% from $37.2 billion. Cash from operations was $3.8 billion, and Return on Invested Capital (ROIC) was 19.2% compared to 14.5% in 2005.
Northrop Grumman. Income from continuing operations for 2006 rose 13% to $1.6 billion ($4.44 per diluted share), from $1.4 billion ($3.83 per diluted share) in 2005. Sales for 2006 were comparable to 2005. Net income for 2006 rose 10 percent to $1.5 billion ($4.37 per diluted share), from $1.4 billion ($3.85 per) in 2005. Total operating margin for 2006 increased 12% to $2.5 billion from $2.2 billion, driven by higher operating margin in all 4 of the company’s businesses, and double-digit percentage increases in Information & Services and Ships operating margin.
Raytheon: Total 2006 net sales were $20.3 billion, up 7% from $19.0 billion for 2005. In 2006, net income rose 47% to $1.283 billion ($2.85 per diluted share) vs. $871 million ($1.92 per diluted share) in 2005. Improved operating results at Integrated Defense Systems, Missile Systems and Network-Centric Systems combined with lower net interest expense and a reduction in pension expense, brought income from continuing operations up 35% to $1.107 billion ($2.46 per diluted share) compared to $818 million ($1.80) in 2005. Net income for 2006 included $176 million of income from discontinued operations, and Raytheon’s sales of its civil aircraft division was factored in to the way it reported its results, as well as the results themselves. See release for details.
Jan 31/07: Lockheed Martin Missiles and Fire Control in Orlando, FL received a $294 million firm-fixed-price contract for AGM-158A Joint Air-to-Surface Standoff Missile (JASSM) medium range semi-stealth cruise missiles. This is a 2-year requirements contract for production Lots 6 and 7, and allows for purchase of both US and foreign military purchases during the life of this contract. Thus far, JASSM is the missile of choice for the US Air force and for Australia. Solicitations began April 2006, negotiations were complete January 2007, and work will be complete in March 2008. The Headquarters 308th Armament Systems Wing at Eglin Air Force Base, FL issued the contract (FA8682-07-D-0017).
Raytheon Co. in Tucson, AZ received a $101.1 million firm-fixed-price contract for the 3rd full rate production lot (FRP-3) of 376 AGM-154C Unitary Joint Stand-Off Weapon (JSOW-C). Special tooling and special test equipment (ST/STE), technical and financial data, an inert unit for ordnance testing, containers for the missiles, performance characterization test, and cost reduction initiatives are also included in this contract. Work will be performed in Tucson, AZ, and is expected to be complete in February 2009. This contract was not competitively procured by the Naval Air Systems Command (N00019-07-C-0093).
Raytheon Missile Systems in Tucson, AZ received an $8.9 million modification to a previously awarded firm-fixed-price contract (N00019-07-C-0008) for technical support for the development of a Block II configuration AIM-9X missile. This contract combines purchases for the U.S. Navy ($2.575 million; 29%) and the U.S. Air Force ($6.343 million; 71%). Work will be performed in Tucson, AZ and is expected to be complete in September 2007. The Naval Air Systems Command in Patuxent River, MD is the contracting activity.
The AIM-9X is the latest version of the Sidewinder short-range air-air missile (SRAAM). Upgrades include has improved acquisition range and a higher-performance seeker dome, wide off-boresight capability that creates a bigger ‘targeting cone,’ better counter-countermeasures and background discrimination thanks to its 128 x 128 infrared focal plane array (instead of the AIM-9M’s single element IR detector), and day or night capability. It uses the same motor, warhead, and fuse as the AIM-9M and is of similar size and weight, but has a new airframe design with less drag, thrust vectoring for improved maneuverability, and field reprogrammability. It is comparable to other 4th generation SRAAMs like the Israeli Python 4, British ASRAAM, French MBDA MICA IR, German/European IRIS-T, and Russian R-73 aka. AA-11 Archer (The Israeli Python 5 may be in a class all by itself at the moment, though the ASRAAM shares a number of its unique features).
In a move that has been brewing since early 2005, Lockheed Martin and Norway’s Kongsberg Defence & Aerospace just entered into a Joint Marketing Agreement to market an air-launched version of Kongsberg’s Naval Strike Missile, which had a pair of successful tests in California recently. This “Joint Strike Missile (JSM)” is designed to be carried and launched internally from the F-35 Lightning II fighter’s internal bays (2 missiles), or external hardpoints. The 1,000-pound, stealth-enhanced NSM missiles are a generation beyond the USA’s GM-8 Harpoon, with a 130 nautical mile operational range. The missile uses Global Positioning System/Inertial Navigation System (GPS/INS) guidance plus an imaging infrared seeker, in-flight data link and an automatic target recognizer (ATR). Then it strikes ships or land targets with a titanium warhead and programmable fuze.
Kongsberg brings experience in anti-ship missiles, weapons integration, target recognition software and mission planning systems to the partnership. Lockheed Martin will bring its experience in air-launched missiles, target recognition software, mission planning systems, integration of weapons into fixed-wing aircraft like its F-16, F-35, F-22 et. al.; and of course, its marketing reach. A study for making adaptations to both the missile and the fighter craft is already in progress, funded jointly by Norway and Australia. It is expected that the adaptations will take 3 years to reach the technological maturity required for deployment on the F-35.
Lockheed has a similar land-attack product in its AGM-158 JASSM, and other competitors exist from MBDA’s Storm Shadow/Scalp to EADS/KEPD’s Taurus to Raytheon’s anti-ship and land attack SLAM-ER. Nevertheless, the partnership may help to tip Norway’s coming fighter choice toward the F-35. The prospect of stealth-enhancing internal carriage, plus out of the gate integration with the F-35 Lightning II, could also give the JSM an entry hook for F-35 customers; Kongsberg adds that the adaptation study is being funded Norway and Australia. Other potential JSF-linked buyers may include Denmark, The Netherlands, Turkey, et. al. Lockheed Martin release |Kongsberg release.
Defense Tech relays a story from Inside Defense reports that the Pentagon’s comptrollers have slashed Darpa’s budget by about 10% ($300 million) for the next fiscal year, with another $200 million cut to follow in FY 2009. The reason: indirectly, it’s the new, much tighter project management oversight structure. While funding for the agency has risen since 9/11, the number of program managers hasn’t increased as fast. Combined with the new process, that “has slowed execution of DARPA’s funding… resulting in a significant decline in obligations and expenditures.” When a bureaucracy isn’t spending money, it tends to lose that budget. Meanwhile, DARPA programs like the WALRUS airship that have the potential to solve key near and long-term force structure problems go unfunded with no explanation.
L-3 Communications’ Link Simulation and Training (L-3 Link) division has received a $40.9 million contract from defense procurement agency Armasuisse to build and deliver 4 networked F/A-18C Tactical Operational Flight Trainers (TOFTs) for the Swiss F/A-18 Flight Simulator Upgrade program. The networked F/A-18C TOFTs will include the standard personal computer image generation system and 360 degree field-of-view visual displays, and a Mission Operation Center with full oversight of all TOFTs and the ability to maneuver enemy or friendly aircraft. A Swiss Air Force-customized brief/debrief room will enable F/A-18 aircrews use real world mission planning systems during preparation, and review captured mission data afterward.
F-18C TOFT: mission
Most important, the systems’ networked capabilities will enable Swiss F/A-18 pilots to train in the simulators while operating as a tactical team.
L-3 Link is slated to begin delivery to Payerne Air Force Base in the latter part of 2008, and the systems will be ready for training in 2009. Similar L-3 Link systems are used by the US Navy (see video), Australia’s RAAF, and the Canadian Air Force. L-3 release.
Micro-electronics Research Development Corp. in Colorado Springs, CO received a $6.1 million SBIR(small business innovative research) Phase II, and cost-plus fixed-fee contract. This follow-on to a SBIR Phase I purchase order involves R&D to fully develop and realize “a cost-effective, practically oriented means to design and deliver radiation hardened digital electronic components capable of reliable operation in Missile Defense Agency and other Department of Defense space and interceptor environments.” Translation: they have to be able to survive extra radiation, vacuum, and very high acceleration.
Solicitations began November 2004, negotiations were complete December 2006, and work will be complete April 2009. At this time, $2.1 million have been obligated from the Air Force Research Laboratory at Kirtland Air Force Base, NM (FA9453-06-C-0200).