Northrop Grumman Corp.'s second-quarter profit fell 35%, though sales almost doubled with the acquisition of shipbuilder Litton Industries Inc., because of declining returns from pension-fund investing.
Net income at Northrop, the No. 4 U.S. defense contractor, dropped to $114 million, or $1.28 a share, from $175 million, or $2.50, a year earlier.
Sales rose to $3.7 billion from $1.9 billion, mostly because of the Litton acquisition.
Northrop, the Los Angeles-based maker of the B-2 bomber, is starting to see the benefits of its expansion into military shipbuilding, which began in May when the company bought Litton for $5.1 billion. Litton owned shipyards in Louisiana and Mississippi.
The company still expects the acquisition to provide savings of $100 million by the end of the first year and $250 million by the end of 2003.
"The integration of Litton's businesses into Northrop Grumman is . . . well underway," Chief Executive Kent Kresa said.
Excluding pension income, amortization of goodwill and other items--Northrop's own measure--profit would have been $137 million, or $1.57 a share, a 14% increase over last year's comparable figure of $84 million, or $1.71.
Using that measure, one analyst polled by First Call/Thomson Financial expected profit of $1.61 a share, and another projected $1.35.
The Defense Department lets companies bill the government for pension contributions made to employees working on military contracts as reimbursed costs. Northrop invests the money and records as income any returns that exceed forecasts.
Full-year profit will be less than forecast because of a change in accounting for some research and development acquired with Litton, Northrop said. The company expects full-year profit of $6.20 to $6.50 a share. The First Call estimate of three analysts currently is $6.93.
Northrop shares fell 39 cents to close at $77 on the New York Stock Exchange. They have fallen 13% since May 9, when Northrop made a hostile $2.6-billion bid for Newport News Shipbuilding Inc.
Other Southern California company earnings:
* Carlsbad-based golf club maker Callaway Golf Co. said second-quarter profit from operations fell 39% to $27 million, or 36 cents a share, from net income of $44.2 million, or 61 cents, a year earlier. That matched the average estimate of analysts.
Excluding a noncash energy supply contract charge, second-quarter income was $33.2 million, or 44 cents. Sales fell 13% to $253.7 million.
Callaway said it expects to earn $1 to $1.05 a share in 2001. That's below the $1.12 average analysts' estimate.
* Online real estate services firm Homestore.com Inc. of Westlake Village reported a 158% increase in second-quarter sales and raised earnings guidance for the fiscal year.
The company recorded a loss of $72.1 million, or 67 cents a share, compared with a net loss of $24.7 million, or 31 cents a share, a year ago.
Revenue rose to $129.3 million from $50.2 million.
The company raised its earnings-per-share estimate for the year to 55 cents. The First Call consensus estimate had been for earnings of 53 cents, with a range of 50 cents to 54 cents.
* El Segundo-based oil and gas producer Unocal Corp. said second-quarter profit rose 34%, beating analysts' estimates because U.S. gas production and prices gained.
Profit from continuing operations rose to $228 million, or92 cents a share, from $170 million, or 69 cents, a year earlier. Revenue fell 23% to $1.7 billion because of reduced crude oil trading. Unocal was expected to earn 80 cents.