Northrop’s Net Income Falls 34%

Northrop Grumman Corp., maker of combat radar systems and the B-2 bomber, reported a 34% drop in first-quarter net profit Monday as weak equity markets hurt pension fund income.

The Los Angeles-based company also warned its second quarter could be its weakest of the year, after previously pegging the first quarter as its poorest.

Northrop, the nation’s fifth-largest defense contractor, reported net income of $103 million, or $1.42 a share, for the quarter, compared with $156 million, or $2.23 a share, a year ago.

Pension fund proceeds account for a significant portion of the company’s bottom line, making Northrop unique in the defense and aerospace sector as well as sensitive to weak equity markets.

Analysts on average pegged the company’s profit at $1.52 a share, with estimates ranging from $1.35 to $1.62, according to tracking firm First Call/Thomson Financial.

Earnings before pension fund income, called economic earnings, totaled $101 million and were flat compared with a year ago, while per-share earnings fell to $1.39 from $1.44, Northrop said.

Sales for the quarter rose 10% to $1.99 billion.

Northrop shares fell $4.32 to close at $88.88 on the New York Stock Exchange.

Northrop boosted its growth target for full-year economic earnings, or profit excluding pension fund income, eyeing an increase of 15% to 20% over 2000 levels. The company had previously forecast 12% growth.

That would bring earnings before pension fund income to $7 to $7.40 a share for the year, compared with $6.05 a share in 2000.

The addition of the Litton Industries shipbuilding business should bring full-year sales to more than $13 billion, Northrop said. Northrop acquired cross-town rival Litton earlier this year.

Pension income for 2001, excluding any income or expense from the Litton pension plans, is expected to be about $280 million, Northrop said. Including Litton, pension income was estimated at $330 million to $350 million for the year.

At a Glance

Other Southern California company earnings, excluding one-time gains and charges unless noted:

* Capstone Turbine Corp. shares fell 16% after the Chatsworth-based maker of small power generators lost more money than expected in its first quarter because costs rose as it expanded production.

Shares of Capstone fell $4.90 to close at $26 on Nasdaq. They’ve risen 63% in the last year.

The firm reported a net loss of $9.5 million, or 12 cents a share, compared with a loss of $147.7 million, or $36.49 a share on fewer shares outstanding. Revenue more than doubled to $8.9 million from $3.7 million. It was expected to lose 9 cents, the average estimate of seven analysts polled by First Call/Thomson Financial. Earnings were announced after the close of regular trading Friday.

* Malibu-based toy maker Jakks Pacific Inc. said first-quarter sales rose 15% and it will meet 2001 estimates for revenue and profit growth.

Profit from operations fell to $6 million, or 32 cents a share, from net income of $6.6 million, or 32 cents, a year ago. Jakks was expected to earn 28 cents. Sales rose to $60 million from $50.8 million.

The company expects sales to rise 15% to 23% this year and earnings to increase 5% to 12%.

Jakks also approved a buyback of as many as 1 million common shares. Jakks shares rose $1.39 to close at $12.79 on Nasdaq.