Lockheed posts 4th-quarter loss of $347 million, or 77 cents per share

Analysts are optimistic

telecom venture still hurts

January 25, 2003|By Robert Little | Robert Little,SUN STAFF

Lockheed Martin Corp. reported a $347 million fourth-quarter loss yesterday as it continued to slough off a failed venture into telecommunications, but growth in the company's core defense businesses assuaged Wall Street and had analysts predicting a profitable future as the nation prepares for war.

The loss, which amounts to 77 cents a share, compares with a loss of $1.5 billion, or $3.49 a share in the fourth quarter of 2001.

Recent contracts and awards in its aeronautics business, which makes the F-16, F/A-22 and F-35 fighters and the C-130 transport plane, had Lockheed Martin officials predicting a busy year, drowning out any concern among investors over the company's pension-fund declines and its one-time quarterly loss.

"If you distinguish their business from the general corporate climate and the stock market, they look very good," said James H. Kelleher, an analyst for Argus Research in New York.

"People always pay closer attention to Lockheed Martin's aeronautic business - to the big headlines it gets, the sexy fighter jet contracts - but this time they have good reason. The company has substantially increased its earnings outlook in that line of the business."

The Bethesda-based defense contractor posted fourth-quarter sales of $7.8 billion, a 6 percent increase from the $7.3 billion posted for last year's fourth quarter, due largely to gains in its businesses making weapon systems and other military products. Lockheed Martin recorded net sales for 2002 of $26.6 billion, an 11 percent increase from the year before.

Lockheed Martin exited the money-losing telecommunications business in late 2001, posting the $1.5 billion fourth-quarter loss a year ago. The loss reported yesterday came largely from that same transaction, as the company took a $504 million charge from remaining equity investments in telecommunications.

As have many of the nation's manufacturing companies, Lockheed Martin has seen its once-profitable pension fund turn into a money loser, causing a downward swing in its projected earnings of about 75 cents per share in 2003.

Its day-to-day performance, conversely, continued to make money. Excluding the one-time loss from investments, Lockheed Martin's main businesses earned $533 million during the last three months of 2002, or roughly $1.18 per share. A year earlier, the company posted $43 million in after-charge profit, or 10 cents per share.

"Our fourth quarter, like the entire year, was a solid one," said Vance Coffman, Lockheed Martin's chairman and chief executive officer, in a statement accompanying yesterday's financial results. "Our performance delivered higher sales, operating profit and cash."

And company executives expect that performance to continue. Lockheed Martin raised its quarterly dividend by a penny Thursday to 12 cents per share, and the company reported yesterday that it anticipates a profit from operations in 2003 of as much as $2.4 billion and sales growth that could approach 12 percent.

Net profit for 2002 was $500 million, or $1.11 a share, compared with a loss of $1.05 billion, or $2.42 a share, in 2001 attributed mostly to the write-offs in telecommunications.

Lockheed Martin retained its status as the nation's top military contractor this week when the Department of Defense released its annual ranking. Lockheed Martin had $17 billion worth of prime defense contracts in 2002, according to the list, followed by Boeing Co., with $16.6 billion, and Northrop Grumman Corp., with $10.7 billion.

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