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NORTHROP '91 OPERATING MARGIN UP 20 PCT; NET DEBT REDUCED BY 55 PCT.

NORTHROP '91 OPERATING MARGIN UP 20 PCT; NET DEBT REDUCED BY 55 PCT.
 LOS ANGELES, Feb. 19 /PRNewswire/ -- Northrop Corporation (NYSE: NOC) today reported net income of $200.8 million in 1991, earnings per share of $4.26, and a 20 percent increase in operating margin compared to 1990.
 Operating margin in 1991 was $351.5 million, up from the $291.6 million recorded in 1990.
 Pointing out that Northrop's 1991 operating margin was the highest in the company's history, Kent Kresa, chairman, president and chief executive officer, said, "Our results are evidence of the effort we began a few years ago to improve our overall operating performance and cash management, an effort that continues today."
 Northrop's recording of additional research and experimentation tax credits in 1991 nearly offset the charges related to the company's adoption of two new accounting standards affecting all industry---Employers Accounting for Postretirement Benefits Other Than Pensions (SFAS 106) and Accounting For Income Taxes (SFAS 109). Northrop since 1980 has been pre-funding retiree health and life benefits obligations to the extent permitted by tax regulations. As a result, the effect of the accounting change is far less than it otherwise would have been.
 These events reduced net income for 1991 by $4 million, or eight cents per share. Consequently, net income in 1991 was $200.8 million, compared to $210.4 million in 1990 which included an after-tax gain of $67.1 million, or $1.42 per share, from the sale of the company's headquarters complex. The $4.26 earnings per share in 1991 compared to $4.48 in 1990.
 Northrop's sales for 1991 totalled $5.69 billion, up slightly from the $5.49 billion registered in 1990.
 Northrop reduced its net debt by 55 percent in 1991, from $777 million at the beginning of the year to $347 million at year end. The company's gross debt at the end of 1991 was $550 million, a reduction of $400 million from a year earlier.
 The company's business backlog at Dec. 31, 1991, stood at a record $8.6 billion, up 28 percent from the $6.7 billion reported at Dec. 31, 1990.
 The after-tax net effect of the adoption of SFAS 106 and SFAS 109 reduced 1991 net income by $94 million, or $1.99 per share. This was nearly offset by research and experimentation tax credits of $90 million, or $1.91 per share. The tax credits, determined to have been earned in prior years, were recorded in the fourth quarter of 1991.
 Although it could have delayed adoption of the accounting changes until 1993, Northrop elected to recognize them in 1991, concurrent with its recently completed tax credit study. Northrop disclosed in its 1990 annual report to shareholders that the study was being undertaken.
 For the quarter ended Dec. 31, 1991, Northrop had sales of $1.57 billion, versus $1.52 billion in the fourth quarter of 1990. Net income for the final quarter of 1991 was $158.5 million, versus $42.7 million in the same period a year ago.
 Fourth quarter earnings per share totalled $3.36, compared with 91 cents in the same period of 1990. Fourth quarter 1991 earnings included research tax credits of $1.91 per share and the previously announced $40 million favorable B-2 margin rate adjustment, worth 56 cents per share. Adoption of the two new accounting changes reduced fourth quarter earnings per share by 14 cents.
 Increased activity on the B-2 stealth bomber initial low-rate production contract outpaced the decline in B-2 development contract revenues, and contributed to the gain in fourth quarter sales. The fourth quarter of 1990 included the final $74 million in sales on the Advanced Tactical Fighter (ATF) demonstration and validation program.
 Aircraft segment operating profit rose in the fourth quarter as a result of increased B-2 business volume and the $40 million margin increase on the B-2 program. Margins in the company's other business segments were moderately lower than those in last year's fourth quarter.
 For the full year, increases in revenues from B-2 and 747 aircraft production more than offset declines in F/A-18 deliveries and customer-sponsored research and development on the B-2 program. Also affecting the comparison with last year was the conclusion of the ATF program, which in 1990 contributed $191 million in revenues. In the missiles and unmanned vehicle systems (MUVS) area, sales rose primarily as a result of the conclusion of the Tacit Rainbow missile program. Electronics segment revenue declined principally as the result of less work on the MX missile.
 Operating profit for 1991 improved in the aircraft and MUVS business segments, but declined in the electronics business segment due primarily to the cost of settling various legal and product disputes. Aircraft segment improvements resulted from higher B-2 production volume, the increased rate of margin recognized in the fourth quarter on production sales recorded up to that point, and the absence in 1991 of any expenditures for the ATF. In 1990 the company invested and wrote-off $66 million in the ATF program. Full year 1991 MUVS operating profit benefitted from the completion of the Tacit Rainbow missile program at less cost than had previously been estimated.
 Interest expense in the fourth quarter was $17 million, down $6 million from the fourth quarter of 1990. Interest expense for the full year declined $15 million while retirement benefit plan costs rose $67 million.
 Retirement benefit plan costs, both pension and non-pension, degraded the quarter-to-quarter operating margin comparison by $17 million.
 Northrop also said that as a result of favorable returns earned by the company's pension funds in 1991, it expects the projected increase in pension income in 1992 to be greater than the cost increase resulting from the adoption of SFAS 106. The after-tax cost increase in 1991 for SFAS 106 represented 47 cents per share.
 Adoption of the new accounting standards caused a restatement of earnings per share for the first three quarters of 1991 as follows: earnings of 84 cents in the first quarter becomes a loss of 74 cents; earnings of 77 cents in the second quarter becomes earnings of 63 cents; and earnings of $1.14 in the third quarter becomes earnings of $1.01.
 In applying SFAS 106, Northrop recognized as of Jan. 1, 1991, an accumulated postretirement benefit obligation of $437 million. This amount was offset by $292 million, the fair value of the plan assets held in trust outside the company, leaving a net unfunded obligation of $145 million. The after-tax cumulative effect of this accounting change reduced restated first quarter results by $87.7 million, or $1.86 per share.
 The cumulative effect of the change in accounting for income taxes from the application of SFAS 109 benefitted the first quarter of 1991 by $20.3 million, or 43 cents per share. However, subsequent to the change, the effect on all of 1991 was a charge of nine cents per share.
 In addition to the cumulative effect of both accounting changes for prior years, these changes also served to reduce recurring first quarter after-tax results by $6.7 million, or 15 cents per share; the second quarter by $6.5 million, or 14 cents; and the third quarter by $6.4 million, or 13 cents per share.
 Northrop had an average of 47,075,162 shares outstanding during 1991, compared with 46,962,784 during 1990.
 NORTHROP CORPORATION
 COMPARATIVE FINANCIAL RESULTS
 JANUARY 1, 1991 THROUGH DECEMBER 31, 1991
 Twelve
 March 31 June 30 Sept. 30 Dec. 31 Months
 SALES (in millions)
 1991 $1,246.8 $1,325.0 $1,555.1 $1,567.3 $5,694.2
 1990 1,277.2 1,414.1 1,277.4 1,521.1 5,489.8
 Pct. Change - 2.4 - 6.3 + 21.7 + 3.0 + 3.7
 NET INCOME (Loss) (in millions)
 Original
 1991 $ 39.3 $ 36.2 $ 53.8
 Restated
 1991 (34.8) 29.7 47.4 $ 158.5 $ 200.8
 1990 96.0 29.3 42.4 42.7 210.4
 EARNINGS (Loss) PER SHARE
 Original
 1991 $ .84 $ .77 $ 1.14
 Restated
 1991 (.74) .63 1.01 $ 3.36 $ 4.26
 1990 2.04 .63 .90 .91 4.48
 NORTHROP CORPORATION
 OPERATING RESULTS
 YEAR ENDED DECEMBER 31, 1991
 ($ in millions)
 CONTRACT ACQUISITIONS
 FOURTH QUARTER TOTAL YEAR
 1991 1990 1991 1990
 AIRCRAFT $2,546.8 $1,659.6 $6,297.8 $5,488.7
 ELECTRONICS 226.1 318.4 792.1 737.7
 MISSILES AND UNMANNED
 VEHICLE SYSTEMS 79.1 183.4 450.3 386.0
 SERVICES 20.8 27.2 83.2 110.1
 INTERSEGMENT
 ELIMINATIONS 13.6 (32.9) (71.4) (122.7)
 TOTAL $2,886.4 $2,155.7 $7,552.0 $6,599.8
 FUNDED
 ORDER BACKLOG
 DECEMBER 31,
 1991 1990
 AIRCRAFT $7,350.2 $5,334.7
 ELECTRONICS 830.5 912.0
 MISSILES AND UNMANNED
 VEHICLE SYSTEMS 365.8 477.7
 SERVICES 46.2 58.1
 INTERSEGMENT
 ELIMINATIONS (32.1) (79.7)
 TOTAL $8,560.6 $6,702.8
 NET SALES
 FOURTH QUARTER TOTAL YEAR
 1991 1990 1991 1990
 AIRCRAFT $1,168.2 $1,059.3 $4,282.3 $4,126.8
 ELECTRONICS 269.3 294.7 873.6 924.8
 MISSILES AND UNMANNED
 VEHICLE SYSTEMS 140.6 169.7 562.2 455.3
 SERVICES 24.8 28.6 95.1 117.5
 INTERSEGMENT
 ELIMINATIONS (35.6) (31.2) (119.0) (134.6)
 TOTAL $1,567.3 $1,521.1 $5,694.2 $5,489.8
 OPERATING PROFIT
 FOURTH QUARTER TOTAL YEAR
 1991 1990 1991 1990
 AIRCRAFT $135.8 $56.0 $383.9 $261.6
 ELECTRONICS 17.2 19.9 53.4 56.3
 MISSILES AND UNMANNED
 VEHICLE SYSTEMS 7.4 9.6 33.1 23.5
 SERVICES 0.8 1.8 3.8 5.4
 TOTAL 161.2 87.3 474.2 346.8
 LESS:
 OTHER INCOME (DEDUCTIONS)
 INCLUDED IN OPERATING PROFIT (3.9) 0.2 (16.4) 2.1
 STATE AND LOCAL INCOME TAXES 14.7 3.3 30.1 13.9
 GENERAL CORPORATE EXPENSES 23.9 (0.6) 109.0 39.2
 OPERATING MARGIN 126.5 84.4 351.5 291.6
 OTHER INCOME(DEDUCTIONS) (0.3) 1.8 5.7 115.8
 INTEREST EXPENSE (16.9) (22.9) (80.0) (94.9)
 INCOME BEFORE INCOME TAXES
 AND CUMULATIVE EFFECT OF
 ACCOUNTING CHANGES 109.3 63.3 277.2 312.5
 FEDERAL INCOME TAXES(BENEFIT) (49.2) 20.6 9.0 102.1
 CUMULATIVE EFFECT OF
 ACCOUNTING CHANGES 0.0 0.0 (67.4) 0.0
 NET INCOME $158.5 $42.7 $200.8 $210.4
 AIRCRAFT UNITS DELIVERED
 F/A-18 20 22 80 94
 747 15 14 62 56
 -0- 02/19/92
 /CONTACT: Tony Cantafio of Northrop Corp., 310-201-3333/
 (NOC) CO: Northrop Corp. ST: California IN: ARO SU: ERN


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