Northrop to Take a $100-Million Charge : Aerospace: The third-quarter write-off is due to extended testing for a top-secret military missile, the company said.

Los Angeles-based Northrop Corp. said Wednesday its third-quarter earnings will be reduced by $100 million after taxes because of a charge related to extended flight tests on a top-secret attack missile it is building for the military.

The company said it will take a $152-million, or $2.13 per share, charge for delays in the development of the Tri-Service Standoff Attack Missile, a conventionally armed cruise missile that incorporates radar-evading Stealth technology.

In a statement, Northrop said the charge should be enough to complete the development program, but added that there are still some outstanding contractual matters with the Air Force that need to be settled.

Northrop said it took the loss after reaching an agreement with the Air Force earlier this month. The company previously took charges against earnings for the program in 1988 and 1989.

Northrop’s third-quarter earnings report for the period ending Sept. 30 is due in October. Industry analysts had predicted that Northrop would report third-quarter net earnings of about $1.15 a share before the charge.

John Simon, an analyst with Seidler Amdec Securities Inc. in Los Angeles, said the charge won’t have a serious impact on the defense contractor because its cash flow remains strong.

“It certainly puts a crimp in the cash flow, but they’re still going to end up with a positive number,” Simon said.

A month ago, Northrop reported second-quarter net income of $51 million, or $1.08 a share, compared to $29.7 million, or 63 cents a share, in the same quarter in 1991.

Northrop announced the third-quarter charge minutes after the close of trading on the New York Stock Exchange. Northrop closed at 26, off 75 cents.

The charge is tied to delays in the flight test program for TSSAM. The Pentagon plans to purchase about 7,000 of the missiles, which are designed to be fired from Navy and Air Force jets and the Army’s ground-based launch systems.

Because of the missile’s classified status, no pictures, drawings or design specifications of it have been made public.

The TSSAM project is being developed under a “fixed-price” contract. The contracts, loathed by defense contractors, were adopted by the Pentagon in the 1980s as a means of curbing procurement fraud by defense companies.

Under the terms of a fixed-price agreement, the government and contractors agree what a program will cost, and the contractor agrees to absorb any extra expenses.

However, in developing high-tech weapons systems, delays are inevitable. Nearly a dozen major development projects bid under fixed-price terms in the past decade have been delayed or canceled, costing billions of dollars.

The TSSAM program is Northrop’s last remaining fixed-price agreement, and the company said it expects the third-quarter loss to be its last write-down from the program.

“That seems to be what you say every time you have a write-off,” Simon said. “This one has been in trouble for a while, so it would not be unusual to see another write-off.”