News
Lockheed Q4 earnings, little changed

Jan. 28, 2010, Washington – U.S. defence contractor Lockheed Martin Corp., said Thursday that its fourth-quarter earnings were little changed versus a year ago, as larger profits from cargo plane and jet fighter sales were offset by higher pension expenses.

The earnings for America's largest Pentagon contractor still topped Wall Street estimates. Lockheed raised its earnings per share outlook for 2010 but it was still a shade below what Wall Street expects.

"We had a really solid quarter that was a good base for the year," Bruce Tanner, Lockheed's chief financial officer, said in an interview.

Its shares rose two per cent to US$78.87 in premarket trading.

Lockheed earned $827 million, or $2.17 per share, in the last three months of 2009. That's up from $823 million, or $2.05 per share, a year ago. The company reduced its outstanding stock through about $500 million worth of fourth-quarter buybacks, bumping up its earnings per share results.

One-time items decreased earnings by 16 cents a share, including a $114 million pension adjustment.

Revenue rose 13 per cent to $12.5 billion on better sales of military planes and government space equipment. Lockheed delivered a higher number of its C-130J transport planes and earned more from its F-35 and F-16 fighter jet programs. The company also had higher sales from its work on government satellites.

Lockheed's earnings beat the consensus analyst forecast of $1.99 per share on revenue of $12.47 billion. The earnings estimates typically exclude one-time items.

Lockheed makes most of its money selling hardware and services to government agencies. It produces everything from missiles to mail sorting equipment and is one of the biggest suppliers of fighters jets to worldwide militaries.

Like the rest of the defence industry, Lockheed faces Pentagon budgets that are expected to grow more moderately than the big gains in weapons spending during the past decade. Tanner said the company is awaiting the release of President Obama's 2011 fiscal year budget next week, which will lay out defence spending priorities for the coming year.

Lockheed was also hampered by higher pension costs last year as it was forced to prop up its plan after the stock market dropped sharply in late 2007 and early 2008. The company made a $1.5 billion discretionary contribution to its plan in 2009, but still was able to generate $3.2 billion in cash for the year.

For all of 2009, Lockheed earned $3 billion, or $7.78 per share.

Lockheed now expects 2010 earnings of between $7.15 to $7.35. Much of that gain will come from a lower share count, including company plans to buy back about $1 billion worth of stock, according to Tanner. Lockheed held firm to its operating profit and sales
forecasts.

Analysts expect 2010 earnings of $7.41 per share.