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VALLEY BUSINESS | BUSINESS ROUNDUP

Contract Overruns Cause Litton Profits to Tumble

March 07, 2000|Bloomberg News

Litton Industries Inc., Woodland Hills, said fiscal second-quarter profits fell 16% because of cost overruns on contracts to develop guidance and control systems.

Net income for the quarter ended Jan. 31 dropped to $36.85 million, or 80 cents a share, from $43.98 million, or 94 cents, in the same period last year. Sales rose 19% to $1.35 billion from $1.13 billion.

Litton shares have tumbled since Feb. 7, when it warned that the overruns cut profit to about 80 cents a share, below the then $1.05-share average estimate of analysts. Profit was hurt from higher-than-expected development expenses on about $184 million in contracts for combat ships and helicopters from the U.S. and Royal Australian navies.

Sales from Litton's advanced electronics business, which includes guidance and control systems, fell 5.6% to $341 million. The unit had a loss of $14.5 million, compared with an operating profit of $26.9 million in the quarter last year.

Ship-building sales doubled to $484.7 million, boosted by the August acquisition of Avondale Industries Inc. Operating profit for the unit rose to $63.7 million from $34.1 million.

Litton Industries Inc. also announced that it has formed a division to provide research and development, design and repair services for vessels throughout their operational lives. The business, known as Litton Ship Systems Full Service Center, will operate within the existing Litton Ship Systems unit and be based in Pascagoula, Miss.. It will work with Litton's Avondale and Ingalls shipyards and provide services for defense and commercial customers, the company said.

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