Lockheed May Reduce Investment in CalComp
Lockheed Martin Corp. said Thursday it may take a charge of as much as $100 million to reduce its stake in Anaheim computer-printer maker CalComp Technology Inc.
The nation’s second-largest aerospace and defense company also said it’s “reviewing its relationship” with CalComp, in which it holds a majority stake, and could take charges of $60 million to $100 million to cut its 83% stake in the company.
Lockheed, which disclosed the moves in a Securities and Exchange Commission filing, didn’t say when it would complete the review, when it might take the charge or whether there is a potential buyer for its CalComp stake.
Officials with CalComp could not be reached for comment Thursday. The company employs about 900 people.
Lockheed said in July that it was considering shedding some assets--including the 40.7 million CalComp shares it holds.
Since then, the price of those shares has dropped from $2.38 to a 52-week low of 88 cents Wednesday. That, in turn, shaved $78.6 million off the value of Lockheed’s stake, from $115.2 million to $35.6 million.
On Thursday, CalComp shares rose 13 cents, to $1, amid heavy Nasdaq trading.
Late last month, CalComp said it decided to divest portions of its own nonstrategic businesses, including its service and technical support division; its technologies division, which makes products used by graphic artists to record and create digital images; and its cutter division, which develop automated cutting products used by sign makers.
CalComp said it would take a charge of about $60 million in the fourth quarter to reduce the carrying value of these assets, according to its own regulatory filing.
Though CalComp had narrowed its net loss for the third quarter ended Sept. 27, the company’s sales declined 25%. The firm posted a loss of $15.8 million, or 34 cents a share, for the three months, compared with $23.7 million, or 51 cents a share, for the same quarter last year. Sales dropped to $35.5 million from $47.3 million.
CalComp’s financial situation has been troubled for months. To help bolster CalComp’s balance sheets, Lockheed agreed to exchange $60 million of the printer-maker’s outstanding debt for 1 million of the firm’s publicly traded shares. As part of the deal, Lockheed cut its credit line to CalComp from $73 million to $13 million.
But after talks with a bank to find other credit sources failed, CalComp tapped all of the $13 million from Lockheed, according to a regulatory report filed in August. Pending a review of CalComp’s business strategy, Lockheed also agreed at the time to loan CalComp undisclosed “additional funds” for the Orange County firm’s day-to-day operations.
Earlier this year, CalComp dismissed more than 200 workers in a cost-cutting move.
Lockheed’s charges involving CalComp are part of a total financial hit that could be as much as $500 million for the defense contractor. Most of these charges are related to a new accounting standard for start-up activities, Lockheed said in its quarterly report.
Company officials told analysts on Tuesday that it may take a fourth-quarter charge of as much as $400 million to change the way it accounts for development costs.
