Litton to Phase Out, Consolidate Units
Defense and electronics giant Litton Industries Inc. said Monday that it is folding its sagging professional services division and consolidating its systems division by closing two plants, including one in Moorpark.
The Woodland Hills-based company will incur fourth-quarter charges totaling $77.4 million, or $1.67 per share, as a result of the reorganization.
Litton will refocus its information technology business on more profitable federal government contracts.
Litton also said that it has completed its purchase of shipbuilder Avondale Industries Inc. for $529 million. The acquired operations of Avondale, which specializes in building and overhauling ships for the Navy, Coast Guard and commercial customers, will become part of a new Louisiana-based division, Litton Ship Systems. The unit is projected to have annual revenue of about $1.8 billion and about 17,000 employees.
Litton, which also specializes in advanced electronics, defense and information systems, said it will phase out its mainframe computer outsourcing division, known as Litton Enterprise Solutions, ending a unit whose performance has been stifled by competition with established rivals such as Electronic Data Systems and Computer Sciences. The unit reported a loss for the fiscal third quarter ended April 30.
“Litton Enterprise Solutions was up against some pretty entrenched competition and wasn’t big enough to take them on,” Litton spokesman Randy Belote said. “We were relegated to mid- to smaller-sized niche markets, and, frankly, there weren’t enough of them.”
Litton said it will consolidate its Data Systems and Applied Technology divisions, which will result in two plant closings and elimination of at least 180 jobs. The Moorpark plant, which makes air defense systems, will close by the end of the year, putting 45 people out of work. The operations will be transferred to plants in Agoura Hills and San Diego, Belote said. The other plant to close--in Grants Pass, Ore.--will have its work making combat aircraft warning systems shifted to plants in San Jose and College Park, Md.
Litton shares fell $1.19 to close at $67.56 on the New York Stock Exchange.
Litton will incur pretax charges of $88.9 million for fiscal year 1999 to exit the businesses, including estimated losses to complete the contracts.
