Electronics Sales Boost Earnings 35% for Litton
Litton Industries Inc., which is being bought by Northrop Grumman Corp., said Wednesday that fiscal second-quarter earnings rose 35% because of improved results at its defense-electronics businesses.
Net income at the U.S. Navy’s third-largest shipbuilder rose to $49.7 million, or $1.06 a share, from $36.8 million, or 80 cents, in the year-earlier period. Sales were little changed for the quarter ended Jan. 31 at $1.34 billion from $1.35 billion.
Woodland Hills-based Litton renegotiated the terms of some ship and helicopter electronics programs, resulting in operating profit of $49.6 million at the company’s advanced-electronics business, which had a loss in the year-ago period. The company’s profit had been hurt by cost overruns on warships and tankers.
Litton was expected to earn $1.06 a share, the average estimate of six analysts surveyed by First Call/Thomson Financial.
“There certainly wasn’t anything that came across as holding up the merger,” said Stephen Bond-Nelson, an analyst with Newport Beach-based Pimco Investment Advisers Inc., which owned about 66,700 shares of Litton as of December.
Litton had originally considered selling its defense-electronics business as it sought to restructure operations after being hurt by cost overruns. The advanced-electronics group makes systems for electronic warfare and to navigate warships and fighter planes.
The company agreed to be purchased in December by rival defense contractor Northrop Grumman for $5.1 billion in cash, stock and assumed debt. Results for the recent quarter included a charge of about $6.02 million, or 7 cents a share, for expenses related to the acquisition, said Litton spokesman Randy Belote.
Litton also had a gain of 4 cents per share from the reversal of an expense associated with the sale of Litton Enterprise Solutions Inc. The company didn’t provide the total dollar amount of the gain.
Shares of Litton rose 19 cents to $79.25 on the New York Stock Exchange. Litton shareholders can choose to receive $80 a share in cash, the equivalent of $80.25 in common stock or $80 in liquidation value of a new preferred stock. Holders of Litton’s Series B Preferred securities will get $35 a share in cash.
Los Angeles-based Northrop expects the purchase to be completed next month. The company’s shares fell $1.35 to $93.95 on the NYSE.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Litton’s Lift
Shares of Litton are holding steady, near $80, which is what Northrop Grumman plans to pay
for the stock. The price level shows investors are confident the deal will get done.
*
Litton, monthly closes and latest on New York Stock Exchange
Wednesday: $79.25, up 19 cents
Source: Bloomberg News
