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Northrop Net Income Dips

Quarterly profit for the Century City firm falls 8%. But operating earnings jump.

May 05, 2004|Peter Pae | Times Staff Writer

Northrop Grumman Corp. reported an 8% drop in first-quarter profit Tuesday, but earnings from continuing operations rose sharply as the defense contractor continued to benefit from robust demand for a wide range of military hardware including spy planes and advanced destroyers.

Net income for the Century City-based company was $232 million, or $1.27 a share, down from $253 million, or $1.34, in the same period a year ago. First-quarter net income last year included earnings of $80 million from operations that have since been sold.

Excluding results from discontinued operations, Northrop's operating earnings rose 31% to $228 million, or $1.25 a share, from $174 million, or 91 cents, a year earlier. The results were slightly better than analysts' average estimate of $1.21 a share.

Revenue rose 21% to $7.1 billion, fueled by a surge in sales from its Integrated Systems and Space Technology units, both of which are based in Southern California. Northrop, with 26,000 workers locally, is one of the largest private employers in the region.

Sales at the El Segundo-based Integrated Systems unit, which builds the unmanned Global Hawk reconnaissance plane and makes components for fighter jets, rose 39% to $1.15 billion. Pretax profit was $116 million, up 32% from a year earlier.

With increased sales from classified programs such as spy satellites, the Space Technology unit, based in Redondo Beach, posted a 59% jump in operating earnings to $51 million as revenue rose 24% to $806 million.

"We're very pleased with the operating results for the quarter," said Ronald Sugar, Northrop's chairman and chief executive. "They all exceeded expectations."

Although revenue and operating profit surged in the quarter, it was depressed somewhat by an $80-million pretax charge that Northrop took to cover costs of an unexpected court decision last week.

Northrop said an Indiana Court of Appeals affirmed a lower court's decision to award Allison Gas Turbine $68 million for work it had done on a Northrop aircraft in the late 1980s. Northrop initially won the decade-long case but lost on appeal.

Because of the charge, company executives said it was keeping its earnings forecast for the year unchanged. The move disappointed some investors as most of the defense contractors in recent days have been revising their forecasts upward amid the rise in defense spending.

Northrop shares fell 36 cents to $99.59 on the New York Stock Exchange.

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