Litton Over Budget on Warship, Navy Says

Litton Industries Inc. is almost one-third over budget in building the second in a new class of a dozen amphibious warships, according to revised U.S. Navy forecasts. Design work on the LPD-18 craft started this year. The Navy estimates that it will cost $523.8 million to build the ship, or 32% more than the original $398-million contract. Cost overruns and a projected 10-month delay in the delivery of the first vessel caused Congress to defer $1 billion from the Navy’s fiscal 2001 budget request to build the fifth and sixth ships in the class. The latest cost overrun doesn’t pose a major financial problem for Litton for now, an analyst said. “It’s an alert that something may be brewing that could have impact on Litton’s earnings, but it’s not a disaster,” said Paul Nisbet, a defense analyst with JSA Research Inc. in Newport, R.I., who has a “buy” rating on Litton. Shares of Woodland Hills-based Litton fell 25 cents to close at $53.75 on the NYSE.