Northrop Shortfall Put at $15.4 Million

Northrop announced Tuesday that it lost $15.4 million in the second quarter, the result of a previously announced $124.3-million writeoff against profit on a defense program that is believed to be development of the Stealth bomber.

Northrop said operating results were also adversely affected by lower profit margins on the MX missile guidance program. The company reported that operating profit in electronics plunged from $21.3 million to $7.7 million.

The company said the “full-scale engineering” portion of the MX program had lower profit margins in the quarter and that program sales were down as well.

Sales for the entire electronics segment totaled $284.2 million, down from $301.2 million during the same quarter last year.

The Air Force is withholding about $90 million in contract payments on the MX program because Northrop is behind schedule in deliveries of guidance devices, called inertial measurement units.

The second-quarter loss compared to profit of $23.1 million in the same period last year. Sales in the 1987 quarter totaled $1.42 billion, up from $1.4 billion last year, the company reported.

The $124.3-million writeoff is due to a profit margin adjustment on what is presumed to be the top-secret bomber program. It was caused partly by cost growth that is thought to have reduced contract incentive fees and partly by a change in the timing of contract payments by the Air Force.

The Los Angeles-based aerospace firm said operating results in the quarter were also hurt by lower profit margins on electronic countermeasures equipment for the F-15 fighter and the end of F-5 fighter deliveries. The company formally closed out the F-5 program early this year.

Meanwhile, the company got a lift from the absence of F-20 fighter jet costs, which amounted to $39 million in last year’s second quarter, because the company stopped the plane’s development in 1986.

Northrop increased deliveries of F-18 equipment during the quarter and had higher revenue on the program presumed to be the Stealth bomber.

Northrop’s business backlog as of June 30 was $3.86 billion, down 15% from a year earlier.