Northrop pays $111 million to settle charges

Northrop Grumman has today agreed to pay $111 million to settle claims filed by a former TRW employee and the US Department of Justice under provisions of the civil False Claims Act.

Northrop Grumman Corporation agreed to settle a joint complaint filed by a former TRW Inc employee and the US Department of Justice under provisions of the civil False Claims Act.

The company said it would pay approximately $111 million to settle claimsthat TRW, acquired by Northrop Grumman in December 2002, misclassified various costs and improperly charged those costs to federal contracts it was working on.

The suits were originally filed in 1994 and 1995 in the US District Court for the Central District of California.

According to today’s Wall Street Journal, Northrop Grumman still faces federal suits that could expose it to an additional $1 billion in damages.

Northrop Grumman said the settlement was contemplated in the company’s acquisition of TRW. The company continues to expect 2003 earnings per share of $3.80 to $4.20. Although cash from operations will be affected by the settlement, the company still expects 2003 cash from operations of $1.1 billion to $1.3 billion.