Lockheed to Take Earnings Charge
Lockheed Martin Corp. said Monday that it would take a $110-million charge against its fourth-quarter earnings after losing a court bid to salvage at least some of the money it had pumped into a failed nuclear waste cleanup project in eastern Idaho.
The nation’s largest defense contractor said it had not decided whether to appeal Friday’s decision by a federal judge in Boise, Idaho. But company spokeswoman Gail Rymer said earnings would be adjusted to reflect the court’s ruling. Any recovery Lockheed might secure if it does appeal would be included in future earnings, she said.
The Bethesda, Md.-based aerospace company, which had the contract to run the Idaho National Engineering and Environmental Laboratory from 1994 through September 1999, said the charge would translate into 25 cents per share of common stock.
It also said it would write off the costs that it had previously assumed were recoverable.
In his decision based on a four-month trial in 2003, U.S. District Judge B. Lynn Winmill found that a now-defunct Lockheed subsidiary had failed not only to make progress toward cleaning up Pit 9 at the site but also to provide assurance that progress would ever be made.
He said that justified termination of the cleanup contract in 1998. The site contained buried materials from nuclear weapons production during the Cold War.
The ruling came just three days after Lockheed reported that third-quarter profit had risen 41% to $307 million, or 69 cents a share.
Lockheed shares rose 70 cents Monday to $55.79 on the New York Stock Exchange.
Winmill ordered the company to repay the $54.4 million the subsidiary had received on the $179-million fixed-price contract it had failed to carry out plus 12% interest for the last six years. He also ordered Lockheed to cover the $11.7-million cost of decontaminating facilities at the site.
Since Lockheed Martin lost the operating contract to Bechtel Group Inc. in 1999, a successful cleanup test has been performed on Pit 9 for $80 million.
