Because Northrop gets approximately 50% of its overall earnings from its pension fund, weak pension performance caused by a stumbling financial market can put a sizable crimp in Northrop’s overall balance sheet – as it did during the latest fourth quarter.
With the effect of Northrop’s pension performance, a 45% earnings drop to $88 million and increasing interest expenses, the company ended the quarter with an overall 9% profit dip to $131 million, Reuters reported.
But, take out the pension fund’s effect and Northrop’s total earnings were $158 million, or $1.55 per share. Sales nearly doubled to $4.3 billion.
In recent years, Northrop – and other companies with large pensions – have seen both the good and the bad effects of having sizable pension obligations.