Northrop Grumman Corporation announced that it has stopped work on Project America, a cruise ship program to build two 1,900 passenger cruise ships at its Pascagoula, Miss., Ingalls Operations.
This decision follows negotiations with the U.S. Maritime Administration, which has decided not to continue the guaranteed funding necessary to complete the construction of the ships. As previously announced on October 25, 2001, the company said it would report a charge to operating margin of 460 million in the third quarter 2001 if Project America could not secure guaranteed funding.
Northrop Grumman said today it took pretax charges totaling $60 million in the third quarter 2001, reducing operating margin for the quarter from $285 million to $225 million. Northrop Grumman previously reported third quarter 2001 economic earnings of $161 million now revised to economic earning of $121 million. Under Generally Accepted Accounting Principles (GAAP), the company previously reported third quarter net income of $117 million, now revised to $79 million.
Approximately 1,250 employees working on Project America were affected by temporary layoffs last week. The company said it would make every effort to reassign affected employees. Immediately, about 500 employees will be reassigned to other ongoing projects at the Ingalls Operations, while another 200 employees will be transferred to Northrop Grumman’s Avondale Operations
facilities in Gulfport, Miss. Most of the remaining employees will be reassigned to Avondale Operations facilities in New Orleans, La.