Lockheed Space Business To Incur Reorganization Charges

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PARIS — Lockheed Martin on April 24 said it expected to incur $135 million in charges related to plant closings, facilities consolidation and severance charges in its Space Systems division.

The reorganization, which includes the shuttering of the company’s Newtown, Pa., satellite facility, was announced in November and is expected to ripple through Bethesda, Md.-based Lockheed Martin’s financial accounts through mid-2015, the company said in a filing with the U.S. Securities and Exchange Commission.

Lockheed Martin said the reorganization and layoffs reflected declines in certain defense programs.

Lockheed Martin Chief Executive Marillyn A. Hewson, in an April 23 conference call with investors, nonetheless said unmanned space remains an area of interest to the company with respect to possible future acquisitions.

Lockheed Martin Space Systems in March inaugurated a new advanced technology center in Palo Alto, Calif., which among other projects will be working on microcoolers to manage the heat generated by satellite payloads, and a nanocopper technology called CuantumFuse to improve reliability of satellite electrical connections.

The Space Systems division reported a 5 percent drop in revenue, to $1.86 billion, for the three months ending March 31 compared with the same period a year ago. But operating profit was up 10 percent, and the division’s operating-profit margin climbed to 13.7 percent from 11.7 percent last year.

Lockheed Martin Chief Financial Officer Bruce L. Tanner said during the conference call that the revenue drop was due in part to a slowdown in orders of GPS 3 positioning, navigation and timing satellites for the U.S. Air Force, a decline that also put pressure on profit margins.

But the improved profitability of the Advanced EHF military telecommunications satellite program more than made up for the GPS 3 decline.

Tanner said the company expects that contracts for the seventh and eighth GPS 3 satellites, plus an expected commercial order that he did not identify, should result in $500 million in revenue during the three months ending June 30.

The company has embarked on a broad cost-reduction exercise in an attempt to make its A2100 satellite frame, which is used on military and commercial telecommunications satellites, more attractive to the commercial market.