Northrop Grumman Corp.’s Aerospace segment, which includes the company’s satellite operations, reported a 10 percent improvement in operation margin in the third quarter of 2006 despite a 6 percent drop in revenues, Northrop Grumman reported Oct. 24.

The unit reported an operating margin of $210 million on revenues of $2.1 billion in the quarter, which closed Sept. 30, compared to an operating margin of $191 million on revenues of $2.2 billion in the 2005 third quarter.

The Space Technology unit within Aerospace posted revenues of $782 million and an operating margin of $73 million in the 2006 third quarter, compared to revenues of $842 million and an operating margin of $72 million a year ago.

Northrop Grumman attributed the revenue decline to lower volume for the company’s work on the National Polar-orbiting Operational Environmental Satellite System (NPOESS) for the U.S. National Oceanic and Atmospheric Administration and restricted programs. These declines were partially offset by higher sales for the Space Tracking and Surveillance System, Advanced Extremely High Frequency communications satellite and Airborne Laser programs for the U.S. Department of Defense.

Space Technology operating margin increased 1 percent due to the sale of a patent and improved performance in the Advanced Extremely High Frequency program, the company said.

Overall, Northrop Grumman reported a 2 percent gain in revenues to $7.4 billion in the 2006 third quarter, while profits improved 3 percent to $302 million.