Lockheed Profit Down 15%; Delays Blamed

Lockheed Martin Corp. said its profit fell 15% in the fourth quarter because of delays in commercial space launches and military aircraft deliveries.

The defense contractor said its earnings, before one-time items, fell to $308 million, or 81 cents a share, after adjusting for a 2-for-1 stock split, from $363 million, or 89 cents, a year ago. The performance matched analyst estimates.

Revenue fell 8.9% to $7.18 billion.

Lockheed Martin warned last month that profit this year and next will miss reduced forecasts made in late November, as sales decline and delays mount. The Bethesda, Md.-based company, maker of F-16 fighter jets, Titan rockets and C-130J transport planes, trails Boeing Co. in the aerospace industry.

Operating profit fell 31% at Lockheed’s space and strategic missiles division, as sales declined 26% to $1.83 billion. Commercial rocket launches were delayed until this year, and the launch of its space-imaging satellite will be delayed until the middle of the year.

The aeronautics division, which makes aircraft, saw a 17% drop in operating profit on a 16% decline in sales to $1.63 billion, hurt by delays in deliveries of its C-130J cargo plane.

The information and services unit had a 14% drop in profit as sales edged down 1.9% to $1.48 billion. The results include CalComp Technology, a unit that made high-end computer printers until Lockheed closed it during the quarter.

Sales at its electronics unit, which makes radar, flight control systems and avionics, rose 15% to $2.17 billion, while operating profit fell 12%.

Sales at Lockheed’s energy and other businesses rose slightly to $72 million, and operating profit tripled.

Lockheed also forecast that a cost-cutting initiative it launched last year could save as much as $3 billion annually by 2001.

Chief Executive Vance Coffman said delays of commercial space launches and military aircraft deliveries from 1998 into 1999 hurt earnings.

Separately, Lockheed and the United Arab Emirates said they will delay signing their $8 billion F-16 fighter contract for at least six months because of a dispute over how much technology the planes can include.

High-level Defense Department and Air Force officials are negotiating with UAE counterparts about how much radar and electronic warfare technology can be transferred to the UAE with the new model F-16s, Lockheed executives said. The U.S. Air Force has final say on whether the technology should be released. An Air Force spokesman wasn’t immediately available for comment.

At a Glance

Other earnings, excluding one-time gains and charges unless noted:

* Eli Lilly & Co.’s profit jumped 24% in the fourth quarter to $567.3 million, or 51 cents a share, matching estimates, on increased sales of its antidepressant Prozac and schizophrenia drug Zyprexa. Sales grew 17% to $2.64 billion. Prozac sales rose 10% in the United States and were little changed elsewhere, contributing 28% to Lilly’s total sales.

* GTE Corp. said fourth-quarter profit rose 22% to $855 million, or 88 cents a share, matching estimates, as its emerging data-services business boosted sales, and losses from new services narrowed. The No. 3 local telephone company, which plans to be acquired by No. 1 Bell Atlantic Corp., said revenue rose 7.6% to $6.83 billion.

* RJR Nabisco Holdings Corp. said its profit fell 12% to $195 million, or 58 cents a share, in the fourth quarter, hurt by lower cigarette sales and weakness in Nabisco foods. The performance exceeded the average estimate of 51 cents among analysts polled by First Call Corp. Forecasts ranged from 42 to 62 cents. Revenue fell 2.5% to $4.47 billion. International cigarette sales fell, with particular weakness in Russia. Profit from domestic cigarette sales rose on higher prices. Profit at RJR’s 80.6%-owned Nabisco Holdings Corp. fell 22%.

The latest results exclude charges of $632 million for payments tied to the tobacco industry’s legal settlement with states and to RJR’s job cuts, and other charges totaling $148 million. The year-earlier figures exclude $313 million in charges for restructuring its tobacco business and another $184 million in charges.

* Republic Industries Inc., the world’s largest auto retailer, said profit rose 55% to $103.7 million, or 22 cents a share, matching forecasts, as demand for rentals and new vehicles offset weak used-car sales. Revenue jumped 65% to $4.83 billion. Republic said it plans to boost sales by integrating new-car franchises into its used-car chain AutoNation USA by year-end. The company said it already has agreements in place with most major auto makers.

Republic warned investors in December earnings at its AutoNation used-car mega-stores were crimped by auto makers aggressive discounts that narrowed the price gap between new and used cars. Its AutoNation stores had a loss of $14 million in the fourth quarter as same-store sales fell 9%, said Berrard.

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Earnings Watch

A sampling of companies reporting quarterly earnings Thursday, ranked by year-over-year earnings-per-share (EPS) growth, compiled by First Call:

Reporting Thursday

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Analysts’ Pct. above/ 1997 Ticker estimated Actual below 4th-qtr. Company symbol EPS EPS estimate EPS Bausch & Lomb BOL $0.76 $0.75 -1% $0.54 Kroger KR 0.66 0.68 +3 0.56 Pitney-Bowes PBI 0.58 0.59 +2 0.49 Ingersoll-Rand IR 0.89 0.91 +2 0.76 Alltel AT 0.55 0.55 0 0.47 CVS CVS 0.36 0.36 0 0.31 Baxter International BAX 0.73 0.73 0 0.64 Illinois Tool Works ITW 0.71 0.73 +3 0.64 R.R. Donnelley DNY 0.67 0.67 0 0.60 Guidant GDT 0.28 0.29 +4 0.26 Gillette G 0.39 0.39 0 0.36 Brunswick BC 0.33 0.34 +3 0.32 Intl. Flav./Frag. IFF 0.33 0.33 0 0.32 Newell NWL 0.58 0.57 -2 0.56 ITT Industries IIN 0.52 0.59 +13 0.60 Stanley Works SWK 0.53 0.50 --6 0.55 Dow Chemical DOW 1.08 1.10 +2 1.55 Kerr-McGee KMG -0.03 0.09 NM 0.73

Year- over-year Company % change Bausch & Lomb +39% Kroger +21 Pitney-Bowes +20 Ingersoll-Rand +20 Alltel +17 CVS +16 Baxter International +14 Illinois Tool Works +14 R.R. Donnelley +12 Guidant +12 Gillette +8 Brunswick +6 Intl. Flav./Frag. +3 Newell +2 ITT Industries -2 Stanley Works -9 Dow Chemical -29 Kerr-McGee -88

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Notes: NM = not meaningful. A loss in any period makes percentage change not calculable.

Year-over-year growth and percentage changes are based on earnings-per-share

figures and may differ from percentage changes based on total profit.

For more information via the Internet, check https://www.firstcall.com.