Northrop Grumman ( NOC) cut its forecast for this year because of the damage and costs associated with hurricanes Katrina and Rita, but the defense contractor kept its guidance for fiscal 2006.

The company said its Gulf Coast facilities took significant damage during the storms, and Northrop expects to record a charge in the third quarter. However, the Los Angeles-based weapon systems maker doesn't foresee any material effects on its overall financial position.

Northrop lowered its 2005 revenue guidance by $500 million to a range of $30.5 billion to $31 billion and its full-year earnings projection to $3.55 to $3.65, a 35-cent reduction from its previous outlook.

For 2006, the company continues to expect revenue of around $32 billion and earnings of $4.10 to $4.30 a share.

Production work has resumed on the 11 ships under construction in New Orleans, Pascagoula, Miss., and Gulfport, Miss., and about 12,500 of Northrop's 19,800 employees at those shipyards are back to work.

Still, ship production schedules have been significantly delayed; this will lower this year's earnings by 8 cents a share, vs. the previously estimated range of 6 cents to 12 cents.

Northrop will incur additional costs under its current ship systems contracts because of hurricane-related delays and work disruptions. As a result, in the third quarter, the company expects to take a charge of 25 cents to 30 cents a share.

In total, Northrop's full-year earnings will likely be reduced by about 40 cents a share. Analysts polled by Thomson First Call are looking for Northrop to earn $3.96 a share on revenue of $31.2 billion for 2005. The consensus estimates for 2006 call for a profit of $4.23 a share and a top line of $32.5 billion.

Shares of Northrop were down 14 cents to $53.91.

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