- The Washington Times - Wednesday, April 24, 2002

From combined dispatches
Lockheed Martin Corp., the world's largest defense contractor, and military equipment maker Orbital Sciences Corp. announced yesterday rising profits in the first quarter.
Shares in the two companies rose, continuing a rally that began after the September 11 terrorist attacks. The Standard & Poor's Corp. 500 Aerospace & Defense Index has climbed 17 percent since then, outpacing a 1.4 percent gain for the broader S&P; 500 index.
President Bush is in the midst of the largest defense buildup since the 1980s, proposing to raise spending 14 percent to $379 billion in fiscal 2003.
Shares of Lockheed, based in Bethesda, has gained 76 percent in the past year.
"If the bias for more defense spending carries through the election, I think the stock has further to go," said Alan Kral, who helps manage $750 million for Trevor Stewart Burton & Jacobsen, including Lockheed shares.
Lockheed's profit more than doubled because of increased sales of fighter aircraft and military cargo planes. Net income rose 108 percent to $218 million (49 cents per share) from $105 million (25 cents) a year earlier. Sales rose 26 percent to $5.97 billion from $4.75 billion.
Lockheed delivered two C-130J transport planes in the quarter, versus none a year earlier, and increased development work for international sales of the F-16 fighter jet being used in Afghanistan. It also began work on the $200 billion Joint Strike Fighter.
"This is a good, solid company with the wind at their back," said Adam Friedman, who helps manage $18.1 billion in assets for National City Investment Management, including shares of Lockheed. "Guidance to me looks very conservative given the strong first quarter and rising defense budgets."
Orbital Sciences, of Sterling, Va., also had a solid quarter. It posted a first-quarter profit as sales were bolstered by a contract to develop a booster rocket for a U.S. ground-based missile-defense program.
Net income was $2.39 million (5 cents) compared with a loss of $21.6 million (57 cents) a year ago. Sales rose 27 percent to $120.7 million from $94.9 million.
Orbital's backlog of work rose 46 percent to $850 million. The improved financial performance comes as Orbital looks to refinance $100 million in debt maturing in October. The company's auditors have said that the company's ability to stay in business is contingent on its ability to restructure the debt.
Orbital "is continuing to look at various options to address our convertible notes," David Thompson, the company's chief executive, said in a statement.
Refinancing the debt is among the options being considered, a company spokesman added.
The two defense contractors were not the only local companies to report earnings yesterday:
XM Satellite Radio Holdings Inc., the District U.S. satellite-radio broadcaster, said its first-quarter loss widened to $112.25 million ($1.56) as costs more than doubled. Losses a year ago were $36.95 million (80 cents).
The company started selling its service Sept. 25.
Freddie Mac, the second-largest buyer of U.S. home mortgages, said first-quarter income rose 69 percent to $1.41 billion ($1.94) from $837 million ($1.13) a year ago.
The company, based in McLean, is one of three government-sponsored enterprises involved in the housing market.
Choice Hotels International Inc., of Silver Spring, said net income for its first quarter rose 16 percent to $8.57 million (20 cents) from $7.4 million (16 cents) a year earlier.
CoStar Group Inc., a Bethesda provider of information services for commercial real-estate companies, posted a net loss of $1.6 million (10 cents) compared with a loss of $7.6 million (49 cents) a year ago.


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