Lockheed Martin Corp. said its first-quarter earnings fell 18% after it was hit by a big charge due to the recent U.S. health care overhaul and experienced profit declines in three of its business units.
Lockheed also lowered its 2010 net income outlook by 15 cents per share because of the elimination of a tax deduction for Medicare-related expenses. The company took a $96 million, or 25 cent per share, charge after Congress passed legislation in March that made broad changes to health insurance. The bill cut a tax deduction for the reimbursement of retiree prescription drug benefits.
Lockheed earned $547 million, or $1.45 per share, down from $666 million, or $1.68 per share a year ago. The first-quarter results included a 10 cent gain from higher investment income.
Revenue rose 3% to $10.64 billion from $10.37 billion.
"It was actually a pretty clean operational quarter for us," said Bruce Tanner, Lockheed's chief financial officer.
Lockheed Martin, based in Bethesda, Md., is the Pentagon's biggest supplier of military equipment such as fighter jets, missiles and computer technology. Sales were up or flat at all of Lockheed's four business units, but only one managed to post a profit increase for the quarter.
Sales at Lockheed's marquee aeronautics division, maker of the C-130J cargo jet and the F-35 fighter plane grew 5% on a building amount of work on the F-35, which is expected to join the Pentagon's fighter fleet soon. But profit slipped on the wind-down of pricey F-22 jet, a program that was capped last year at lower levels than originally planned.
Profit was also lower in Lockheed's units that make missile equipment and information technology for the military and civil governments. Profit in its space division, which builds satellites, was largely flat.
The company has had some stumbles recently, including a decision during the first quarter by Defense Secretary Robert Gates to withhold $614 million in performances bonuses over cost overruns and delays with the huge F-35 program.
Lockheed also lost a contract last year to build a fleet of helicopters for the president. But the company said this week that it will team with the United Technologies Corp. helicopter division Sikorsky to made another bid for the project.
Copyright 2010 The Associated Press.