Despite a 4 percent increase in sales, defense giant Northrop Grumman Corp. today reported a 4.3 percent drop in third-quarter earnings, largely as a result of pension-related expenses.

The company also raised its guidance for 2009 earnings, from $4.65 to $4.90 to $5 to $5.15 a share.

"This was another solid quarter for Northrop Grumman, continuing our focus on managing risk, improving performance and driving growth," said company Chairman and Chief Executive Officer Ronald D. Sugar.

Northrop said in an earnings statement that its third quarter earnings from continuing operations totaled $487 million, or $1.52 per diluted share, compared with $509 million, or $1.50 per diluted share, in the third quarter of 2008.

Third quarter earnings included a net tax benefit of $75 million, or 23 cents per share, stemming mostly from a settlement arising from an Internal Revenue Service's examination of the company's 2001, 2002 and 2003 tax returns, but also a reduction of $47 million, or 15 cents a share, resulting from a net pension adjustment.

Northrop said its third quarter 2009 sales increased 4 percent to $8.73 billion from $8.38 billion in last year's third quarter.

Revenue rose in all of Northrop's business segments, but earnings fell both in shipbuilding and the company's electronic-systems business.

Originally published by From wire service reports.

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