Raytheon

(RTN) - Get Report

,

Lockheed Martin

(LMT) - Get Report

and

Northrop Grumman

(NOC) - Get Report

, all leading military contractors, reported second-quarter earnings Thursday that exceeded Wall Street's expectations.

Raytheon said that excluding one-time charges for discontinued operations, its earnings fell 66%, to $95 million, or 28 cents a diluted share, compared with $277 million, or 81 cents a diluted share in the year-earlier second quarter. Analysts had expected earnings of 27 cents a share in the latest quarter, according to a survey by

First Call/Thomson Financial.

Including charges, Raytheon's net income fell to $49 million, or 14 cents a diluted share, compared with $290 million, or 84 cents a diluted share, in the comparable period last year.

During the quarter, the Lexington, Mass.-based company closed the sale of its engineering and construction unit, taking a charge of $46 million, or 14 cents a share, on disposal of discontinued operations.

Sales for the three-month period were down to $4.1 billion from $4.6 billion in the second quarter of 1999. The company attributed the decline to lower volume in missiles and missile defense systems.

Raytheon closed up 2 1/2, or 11.9%, to 23 7/16.

The company said it did experience a sizeable backlog of orders from continuing operations - up 20% to $25.6 billion from $21.2 billion a year earlier.

"Our increasing backlog gives us confidence in our revenue growth outlook for 2001 and beyond," Daniel P. Burnham, Raytheon's chairman and chief executive, said in a statement.

Lockheed Martin, based in Bethesda, Md., reported net income of $42 million, or 11 cents a diluted share, in the second quarter, in contrast to a net loss of $41 million, or 11 cents a diluted share, in the year-earlier period.

Excluding one-time items, Lockheed Martin said it earned 29 cents a share. The consensus estimate of 13 analysts polled by First Call/Thomson Financial was 21 cents a share.

Nonrecurring items decreased second-quarter 2000 results by 18 cents a diluted share, while such items increased the net loss per diluted share in the comparable 1999 period by 3 cents a share.

Sales for the second quarter of 2000 were $6.2 billion, virtually unchanged from the second quarter of 1999.

Lockheed Martin closed up 1 3/8, or 5.4%, to 26 3/4.

During the second quarter, Lockheed Martin entered an agreement for the divestiture of

Control Systems

to

BAE Systems North America.

During the third quarter, the company said it would sell its

Aerospace Electronics Systems

to BAE Systems North America for $1.67 billion.

The corporation reaffirmed its 2000 earnings outlook of about $1.05 a diluted share, excluding the effects of any nonrecurring and unusual items.

Lockheed Martin said it generated $1 billion of free cash flow in the quarter and $1.4 billion year-to-date. This includes a cash advance of $900 million by the United Arab Emirates for the purchase of 80 "Block 60" F-16 aircraft and associated equipment.

The company increased its 2000 cash flow outlook from at least $500 million to at least $900 million for 2000 with a target $1.7 billion, up from $1.3 billion, by the end of 2001. The 2000 expectation was raised in part to reflect sales of surplus real estate and a change in government billing policy that will provide a one-time improvement to cash.

"Our generation of free cash flow is ahead of plan, and with the realization of full and fair value for our announced divestitures, we will significantly reduce our net leverage in 2000 and 2001," Vance Coffman, Lockheed Martin's chairman and chief executive, said in a statement.

Headquartered in Los Angeles, Northrop Grumman posted second-quarter net profits of $175 million from continuing operations, or $2.50 a share. Wall Street analysts had anticipated earnings of $2.40 a share. The company's earnings for second quarter 2000 represent a 42% increase from $123 million, or $1.78 a share in the second quarter of 1999.

Earnings for the three-month period ended June 30, rose despite sales down 3% to $1.86 billion from $1.92 billion a year ago.

Operating margin for the quarter was $113 million, up 2.7% from $110 million in the second quarter of 1999.

The company cited a record quarter in sales and margin for

Logicon

, its information technology sector, on strong growth in the government information technology business area. Sales rose 16% to $425 million from $365 million. Operating margin for the quarter was $33 million, compared with $21 million a year ago.

During the quarter Northrop Grumman's

Electronic Sensors and Systems Sector

acquired 72% more contracts than it did during the year-ago period. The company said it aims to secure $4 billion in contract acquisitions for the year.

Northrop Grumman's business backlog at the end of the second quarter 2000 was $8.8 billion, compared with $8.5 billion a year earlier.

In June, the company said it expects to sell its commercial aerostructures business to

The Carlyle Group

. Viewing the business as a discontinued operation, Northrop Grumman reported a loss of about $15 million in the second quarter. The company will determine the final loss from the sale following the close of the transaction.

Net debt at June 30 was $1.86 billion, down from the $2.08 billion reported at Dec. 31, 1999. Interest expense for the first six months was $92 million, a $17 million decrease from the $109 million reported for the first six months of 1999.

Northrop Grumman closed up 3 5/8, or 5.3%, to 72 11/16.