Northrop Grumman 2009 Annual Report Download - page 87

stock awards, and the mandatorily redeemable convertible preferred stock (see Note 3) were excluded from the
computation of weighted average shares outstanding as the shares would have had an anti-dilutive effect on the
earnings per share computation. Diluted earnings per share for the year ended December 31, 2007, include the
dilutive effect of stock options, other stock awards and the mandatorily redeemable convertible preferred stock.
The dilutive effect of these securities totaled 12.6 million shares (including 6.4 million shares for the company’s
mandatorily redeemable convertible preferred stock). The weighted-average diluted shares outstanding for the
years ended December 31, 2009, 2008, and 2007, exclude stock options to purchase approximately 8.1 million
shares, 2.1 million shares, and 59 thousand shares, respectively, because such options have an exercise price in
excess of the average market price of the company’s common stock during the year.
Diluted earnings (loss) per share from continuing operations are calculated as follows:
$ in millions, except per share 2009 2008 2007
Year Ended December 31
Diluted Earnings (Loss) Per Share From Continuing Operations
Earnings (loss) from continuing operations $1,573 $(1,379) $1,751
Add dividends on mandatorily redeemable convertible preferred stock 24
Earnings (loss) from continuing operations available to common shareholders $1,573 $(1,379) $1,775
Weighted-average common shares outstanding 319.2 334.5 341.7
Dilutive effect of stock options, stock awards, and mandatorily redeemable
convertible preferred stock 4.1 12.6
Weighted-average diluted common shares outstanding 323.3 334.5 354.3
Diluted earnings (loss) per share from continuing operations $ 4.87 $ (4.12) $ 5.01
Share Repurchases – The table below summarizes the company’s share repurchases beginning January 1, 2007:
Authorization Date
Amount
Authorized
(In millions)
Average Price
Per Share(2)
Total Shares
Retired
(In millions) Date Completed 2009 2008 2007
Shares Repurchased
(In millions)
October 24, 2005 $1,500 $65.08 23.0 February 2007 2.3
December 14, 2006 1,000 75.96 13.1 November 2007 13.1
December 19, 2007
(1)
3,600 60.15 44.5 23.1 21.4
23.1 21.4 15.4
(1) On December 19, 2007, our board of directors authorized a share repurchase program of up to $2.5 billion
of the company’s common stock. On November 5, 2009, the board of directors authorized an additional
$1.1 billion to the December 19, 2007 authorization.
Share repurchases take place at management’s discretion or under pre-established non-discretionary programs
from time to time, depending on market conditions, in the open market, and in privately negotiated
transactions. The company retires its common stock upon repurchase and has not made any purchases of
common stock other than in connection with these publicly announced repurchase programs.
(2) Includes commissions paid.
Under certain of its share repurchase authorizations, the company has entered into accelerated share repurchase
agreements with banks to repurchase shares of common stock. Under these agreements, shares were immediately
borrowed by the bank and then sold to and canceled by the company. Subsequently, shares were purchased in the
open market by the bank to settle its share borrowings. The ultimate cost of the company’s share repurchases
under these agreements was subject to adjustment based on the actual cost of the shares subsequently purchased
by the bank. If an additional amount was owed by the company upon settlement, the price adjustment could
have been settled, at the company’s option, in cash or in shares of common stock. The final price adjustments
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NORTHROP GRUMMAN CORPORATION
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