Litton Net Off 35.5% in 1st Quarter

Litton Industries on Monday reported a 35.5% drop in net income to $43.7 million in its first quarter ended Oct. 31. During the quarter, the company bought back about 35% of its own stock.

Because of the stock buy-back, analysts previously have predicted a decline of as much as one-third in Litton’s net income for all of fiscal 1986.

The Beverly Hills-based industrial conglomerate said the “primary causes” of the first-quarter results were a continued softness in energy markets served by its resource exploration services divisions as well as “intense competitive pricing pressures” in the market for consumer microwave ovens.

However, Litton said operating profits also were reduced by net interest expense of $1.7 million as a result of interest on bonds that it issued in exchange for 15 million shares of its common stock.

Before income taxes, company figures showed, its interest expense on the buy-back bonds was $37 million.

Litton’s first-quarter taxes were $35.43 million. That figure was lower by 35% than the $54.58 million in the year-ago period, in which the company recorded net interest income of $36.2 million.

The firm’s announcement Monday disclosed that first-quarter sales dropped about 6% to $1.1 billion from $1.7 billion.

While its net profit dropped sharply, Litton’s earnings per share for the first quarter dipped only slightly--to $1.56 from $1.59 a year earlier.

This was foreshadowed in late September, when Litton President Orion L. Hoch told investment managers in London that earnings per share this year would be “flat to slightly higher.” Hoch gave no specific estimates.

In the fiscal year ended July 31, the company’s earnings per share were $7.27 before the buy-back.

Litton’s stock fell $5.875 to $72 a share immediately after Hoch’s London remarks but recovered in mid-October, rising to $89 at one point amid speculation of a takeover attempt on Litton.

The shares closed Monday at $80.125, down $1.375 in consolidated trading.

The company noted that it had enjoyed improved results by its industrial automation systems divisions and the Ingalls shipbuilding division. U.S. Navy contracts are a major part of the shipbuilding unit’s production.