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Northrop earnings soar
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July 21, 1999: 12:49 p.m. ET
Defense contractor boosts 2Q profit 22%; combines pension plans
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NEW YORK (CNNfn) - Defense contractor Northrop Grumman Corp. topped Wall Street's earnings estimates Wednesday on the strength of improved revenue growth from its military aircraft and information technology sectors.
The Los Angeles-based company, which ranks as the nation's fifth-largest defense contractor, saw second-quarter earnings jump 22 percent to $113 million, or $1.64 per share, from $93 million, or $1.34 a share, a year earlier. Analysts had expected a profit of $1.58 per share.
Second-quarter revenue climbed 6 percent to $2.3 billion from $2.1 billion, while operating margin rose 14 percent to $238 million from $208 million a year ago. The operating margin increase included $84 million of pension income, up $16 million from a year earlier.
Northrop officials also said the company has merged three of its retirement plans into one plan effective this month.
While the consolidation had no financial impact on the company's earnings for the first half of the year, the change is expected to reduce net income by roughly $20 million, or 27 cents per share, and improve cash flow after taxes by approximately $25 million during the year's final six months.
Northrop earned $201 million, or $3.13 per share, during the year's first six months, up nearly 150 percent from the $81 million, or $1.17 per share, profit it posted a year earlier.
During the second quarter, revenue in Northrop's Integrated Systems and Aerostructures sector improved 7 percent to $1.3 billion on the strength of improved performance in the company's military programs. Company officials said it still has challenges to resolve in its commercial aerostructure segment, although they provided no further details.
Logicon, Northrop's information technology segment, saw its sales jump nearly 27 percent to $365 million. Company officials attributed the rise to a contract supplying base operations support for NASA and the U.S. Air Force.
Northrop (NOC) shares rose 1-1/8 to 74-1/16 in mid-day trading. 
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Northrop Grumman Corp.
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