Northrop Grumman says coronavirus pandemic 'could have a material adverse effect' on business

By Marjorie Censer / March 19, 2020 at 12:24 PM

(Editor's Note: This post has been updated with a statement from a Northrop Grumman spokesman.) 

Northrop Grumman today filed a new document with the Securities and Exchange Commission warning that the ongoing coronavirus pandemic could take a toll on the company.

In the document, Northrop says the "continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital."

"If significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures or other restrictions in connection with the COVID-19 pandemic, our operations will likely be impacted," the contractor continues. "We may be unable to perform fully on our contracts and our costs may increase as a result of the COVID-19 outbreak. These cost increases may not be fully recoverable or adequately covered by insurance."

Northrop also says the pandemic could cause disruption in its supply chain or could delay or limit timely payments from the government.

"We continue to monitor the situation, to assess further possible implications to our business, supply chain and customers, and to take actions in an effort to mitigate adverse consequences," the filing adds. "We cannot at this time predict the impact of the COVID-19 pandemic, but it could have a material adverse effect on our business, financial position, results of operations and/or cash flows."

“This 8-K was filed in conjunction with Northrop Grumman’s prospectus supplement disclosure, and the Covid-19 risk factor was included with other risk factors set forth in the prospectus supplement," a company spokesman said in a statement provided to Inside Defense. "If we were already experiencing material adverse impacts from Covid-19, we would have had to have said so.”

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