Lockheed Earnings, Sales Rise

Acquisitions Assist 7% Gain In Net Income

April 23, 1997|By Greg Schneider | Greg Schneider,SUN STAFF

Lockheed Martin Corp. continued to show profit from its corporate acquisitions yesterday as it reported a 7 percent rise in net income and a 31 percent jump in sales for the first quarter.

The Bethesda-based defense giant logged net income of $290 million on sales of $6.7 billion for the quarter, compared with income of $272 million on sales of $5.1 billion during the first quarter of 1996.

The earnings translated to $1.49 per share, which bettered by 10 percent the $1.35 earned per share during the same portion of last year.

"These are some pretty good earnings," said analyst Roger Threlfall of J. P. Morgan Securities, who praised the company for efficiently digesting its acquisitions. "We're starting to see some advantage of cost-cutting coming to the margins here, and that's pretty impressive."

The company credited most of the increases to its $9 billion purchase of Loral Corp., which was completed a year ago this month.

"We sustained momentum with increases for virtually all of our financial metrics," Chairman and Chief Executive Officer Norman R. Augustine said in a news release. He added that the company's continued streak of winning new business "at an unprecedented rate can be directly attributed to our consolidation activities with resultant cost savings, efficiencies and synergies."

The energy and environment-related segment of the company's business provided an example of the new efficiencies: sales and earnings were down compared to the same quarter last year because of the spinoff of Martin Marietta Materials Inc., a construction materials company. But profit margins in that segment jumped to 56.3 percent from 12.7 percent during the same period a year ago.

Sales and earnings were up in each of the company's other four business areas. Electronics -- which produces aircraft control, missile guidance, radar and other systems -- logged earnings of $135 million on sales of $1.7 billion, up from earnings of $86 million on $891 million in sales during the first quarter of 1996.

Information and services -- which includes welfare administration and child support enforcement activities -- posted a 151 percent increase in income, to $88 million from $35 million during the same period a year ago. Sales rose to $1.6 billion from $983 million.

Both the electronics and information areas were boosted heavily by the acquisition of Loral.

Segments involving aeronautics and space both showed gains as well, though not as large, and those improvements were tied directly to cyclical increases in certain programs. The company delivered 33 F-16 fighter planes during the quarter, for instance, compared to 12 delivered for the period last year.

But regardless of periodic peaks and valleys in certain programs, analyst Threlfall said the results show fundamental progress because profit margins are up virtually across the board.

Lockheed Martin undertook several streamlining efforts during the first quarter, such as completing the spinoff of 10 business units into a new communications company, L-3 Communications Holdings Inc., that will be run by former Loral executives.

And the company reached an agreement during the quarter to sell Lockheed Martin Medical Imaging Systems to a unit of General Electric Co.

"We intend to continue to drive out costs to further improve our profitability," said President and Chief Operating Officer Vance D. Coffman, who will replace Augustine as CEO in August.

Lockheed Martin cleared some $230 million in debt during the quarter, leaving the total debt at just over $11.2 billion.

And the company's overall backlog jumped to $49.6 billion by the end of the quarter, up from $42.6 billion in the first quarter of 1996.

Lockheed Martin stock rose $2.875 to close at $88.50.

Pub Date: 4/23/97

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