THURSDAY, SEPTEMBER 9, 2010
KLMNO
EZ SU WASHINGTON BUSINESS 600 Lockheed execs take buyout Defense giants
preparing for slimmer Pentagon budgets
BY MARJORIE CENSER
Capital Business Staff Writer Bethesda-based contracting
giant Lockheed Martin an- nounced Wednesday that more than 600 executives have taken the company up on an early-exit program that provides financial incentives in exchange for leav- ing. The total represents about 25
percent of all company execu- tives and follows Lockheed’s move to cut its workforce of 136,000 worldwide by about 10,000 since the beginning of last year. The initiative — which sends
top Lockheed employees into the job market and potentially into the offices of competitors — reflects a much larger shift un- derway as defense contractors scramble to prepare for Penta- gon budget cuts. Even during a recession that hit hard in many parts of the country, these con- tractors have been buoyed by urgent needs for equipment and services for troops in Iraq and Afghanistan.
“The defense industry has got-
ten themessage that the years of big budget increases are over,” said Loren Thompson, a defense industry consultant at the Lex- ington Institute. “This is not about posturing. This is about fundamental reorganization in anticipation of softening de- mand.” Some companies have an-
nounced organizational changes. BAE Systems, which headquar- ters itsU.S. business in Arlington County, restructured its compa- ny from 10 lines of business into five sectors this summer, while ITT Defense and Information Solutions in McLean consolidat- ed seven business units into three and reduced its staff by about 1,000 early this year. More recently, Boeing, which
MOLLY RILEY/REUTERS
Chairman Robert J. Stevens said Lockheed was built on exiting executives’ “dedicated service.”
But in recentmonths, Defense
Secretary Robert M. Gates has called on the Defense Depart- ment and its contractors to be- come more efficient and cost- conscious. Scaled-back opera- tions abroad and an increasingly large federal deficit have only made more real to contractors the threat of reduced spending.
bases its defense operations in St. Louis, announced Tuesday that it will consolidate its six military aircraft divisions into four as of Oct. 1. As a result, the company said, it will reduce its workforce, startingwith about 10 percent of its executive posi- tions. Lockheed itself has moved to
divest two business units and cut in half its participation at this summer’s Farnborough Interna- tional Airshow, a major aero- space industry exhibition in Eng- land.
“I think thatwe’re really at the
beginning of this,” said Todd Harrison, a defense analyst with the Center for Strategic and Budgetary Assessments. Con- tractors “are trying to get ahead of the curve in the sense that they’re going to get leaner and more efficient.” Some of the 600 departing
Lockheed executives might not necessarily leave. Lockheed spokesman Jeffery Adams said the company reserves the right to rescind the buyout offer in cases of “extenuating circum- stances or severe program im- pacts.” In its announcement, Lock-
heed said the program will pro- vide substantial savings in 2011 and in future years, but Adams did not identify howmuch. Some executives have already
left, but the final deadline for departing is February, according toAdams.He declined to identify any particular executives who will exit. “We’re grateful to the execu-
tiveswhowill be leaving, because we built this corporation on their leadership and dedicated ser- vice,” Robert J. Stevens, Lock- heed Martin’s chairman and chief executive, said in a state- ment.
censerm@washpost.com LOCAL DIGEST BANKRUPTCY
Court approves plan for Circuit City Circuit City Stores, the bank-
rupt retailer of televisions and computers, won court approval Wednesday of its amended liqui- dation plan. U.S. Bankruptcy Judge Kevin
R. Huennekens in Richmond ap- proved a liquidation plan that will pay unsecured creditors at least 10 percent on claims total- ing from $1.8 billion to $2 billion. Most of the secured claims have been paid. Circuit City sought bankrupt-
cy protection in November 2008 after suppliers, concerned about declining sales at almost 1,500 U.S. and Canadian stores, cut off credit and demanded cash up- front for shipments. The Chapter 11 petition listed
the company’s assets at $3.4 bil- lion as of Aug. 31, 2008. —Bloomberg News
EXECUTIVES
AOL to hire adviser who led talent agency AOL, which has a large Wash-
Stocks inch up as European debt worries ease BY STEPHAN BERNARD
new york — Stocks resumed their rally Wednesday after a successful auction of Portuguese government debt eased worries about Europe’s financial system. The Dow Jones industrial av-
erage gained 46 points, and broader indexes also rose. Euro- peanmarkets reversed their loss- es after the results of the auction were announced. Major indexes pulled back
fromtheir highs in the afternoon after the Federal Reserve said more regions of the country expe- rienced slower growth in late summer. The Fed’s “beige book” report on regional economic ac- tivity showed five of the 12 re- gions tracked by the Fed showed mixed or slowing activity com- pared with just two during the most recent report in July. JPMorgan Chase and other
banks led the market higher, reversing a downturn from the day before. Stocks had fallen on Tuesday, breaking a four-day winning streak, after news re- ports that European banks held larger amounts of risky govern- ment debt on their books than had previously been disclosed. Fitch Ratings raised its credit
rating for BP, sending energy stocks higher. BP also released an internal
report that largely spread blame from the gulf oil spill among rig owner Transocean, contractor Halliburton and itself. The Dow gained 46.32, or 0.5
percent, to close at 10,387.01. It had been up asmuch as 86 points earlier in the day before paring those gains after the Fed’s region- al economic report came out. The Standard & Poor’s 500-
stock index rose 7.03, or 0.6 percent, to 1098.87, while the Nasdaq rose 19.98, or 0.9 percent,
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Daily Stock Market Performance Index
Dow Jones Industrial Average
11,400 10,900 10,400 9900 9400
Nasdaq Composite Index
2600 2400 2200 2000
S&P 500 Index 1220
1170 1120 1070 1020
1098.87 +0.6 –1.5 2228.87 +0.9 –1.8
Daily Close % Chg
10,387.01 +0.4
% Chg –0.4
YTD
to 2228.87 The two-day swing, based on
the ebb and flow of European debt fears, fit into a pattern of jittery trading in recent weeks in response to economic news. “There seems to be a fixation
on the latest news and data,” said Mike McGervey, president of McGervey Wealth Management. Mixed economic news has helped keep stocks stuck in a tight range in recent weeks. European markets rose. Brit-
ain’s FTSE 100 rose 0.4 percent, Germany’s DAX index gained 0.8 percent, and France’s CAC-40 rose 0.9 percent. Volume remains thin, which
meansmany traders are avoiding stocks altogether. Many investors are waiting to
get a better sense of the pace of recovery and to see what might happen during November’s elec- tions. Rick Fier, an equities trader at
Conifer Securities, said the elec- tions, more than the economy, are likely to be the catalyst that moves themarket higher in com- ingmonths. Traders are assuming the re-
covery will be slow and uneven, but that growth will remain in place over the next few months, he said. Uncertainty about potential
tax increases and the costs asso- ciated with health care and the financial regulatory overhaul have helped to keep businesses from hiring, which in turn has slowed the recovery. Treasury prices bounced off
their lows after an auction for 10-year notes was well received by investors. The yield on the 10-year Trea-
sury note, which moves opposite its price, rose to 2.66 percent from2.60 percent late Tuesday. —Associated Press
THEMARKETS Industry Group
S&P 500 Industry Group Snapshot Daily
Diversified Consumer Svcs Internet & Catalog Retail Real Estate Mgmt & Dev Internet Software & Svcs Energy Equipment & Svcs Health Care Eqp & Suppl Auto Components Multi-Utilities Distributors
Health Care Technology
% Chg 2.41 2.37 1.84 1.82 1.64
–0.69 –0.87 –0.93 –1.15 –1.41
International Stock Markets Americas
Close
Brazil (Bovespa) Canada (S&P/TSX Comp.) Mexico (Bolsa) Europe
Eurozone (DJ Stoxx 600) France (CAC 40) Germany (DAX) U.K. (FTSE 100)
Asia Pacific S O N D J
Company 3M
Alcoa
AmExp AT&T BoA
Boeing
Caterpillar Chevron
Close 82.75
11.07 40.07 27.39 13.37 64.50 70.74 77.25
Cisco Systems 20.64 Coca-Cola DuPont
57.83 42.39
Exxon Mobil 60.75 GE
Home Depot 29.45 HP
15.70 38.81
Other Measures Index
Daily % Chg
0.7 1.9
–0.1 0.4 1.2 1.7 1.5 0.3 0.3 0.3 0.9
0.4 F M A M J
Dow Jones 30 Industrials YTD
% Chg 0.1
–31.3 –1.1 –2.3 –11.2 19.2 24.1 0.3
–13.8 1.5
0.3 –10.9 1.7
–2.8 –24.7 Close
DJ Total Stock Market Index 11,453.35 Russell 2000
634.25
Post-Bloomberg DC Area Index 189.09 CBOE Volatility (VIX)
23.25
25.9 3.8
1.8 J A
Company IBM
Intel J&J
JPMorgCh Kraft Foods McDonald's Merck
Microsoft P&G Co Pfizer
Travelers Wal-Mart
Close 126.08
17.90 58.85 39.12 30.58 76.08 35.81 23.93 60.37 16.56 49.86
United Tech 68.47 Verizon
30.46 51.83
Walt Disney 33.84
Daily % Chg 0.6 0.8 0.6
–2.3
Daily % Chg
0.1
–1.2 0.3 2.2 0.8 0.4 1.0
–0.1 0.4 1.4
–0.5 0.7 0.8
–0.1 0.0
% Chg –3.7
–12.3 –8.6 –6.1 12.5 21.8 –2.0 –21.5 –0.4 –9.0 0.0
–1.4 –1.6 –3.0 4.9
YTD % Chg –0.4 1.4 0.9 7.2
YTD
Australia (ASX 200) China (CSI 300) Hong Kong (Hang Seng) Japan (Nikkei)
4537.20 2980.97
21,088.86 9024.60
Cross Currency Rates US $
EU €
US $ per EU € per
Japan ¥ per Britain £ per Brazil R$ per
Canada $ per Mexico $ per
0.7862 83.9100 106.7200
0.6465 0.8222 0.0077 1.7261 1.0376
13.0475 16.5958 0.1550
Interest Rates Consumer Rates
Money market funds 6-Month CDs 1-Year CDs 5-Year CDs New car loan Home-equity loan
0.73 0.79 1.13
2.33 6.08 7.28
2.1955 0.0206 1.3198 0.0124
–0.8 –0.1 –1.5 –2.2
Japan ¥
1.2720 0.0119 0.0094
Britain £
1.5469 0.5795 1.2162 0.4555
Brazil R$ Canada $ Mexico $ 0.9638 0.0766 0.7577 0.0603
129.8000 48.6094 80.8700 6.4310 0.3745
2.6706 1.6051 0.6010 20.1832
0.6230 0.0495 1.6637 0.1323 0.0795
7.5590 12.5743
66,407.28 12,042.26 32,409.60
262.33 3677.21 6164.44 5429.74
Daily % Chg
–0.5 –0.5 –0.1
1.0 0.9 0.8 0.4
YTD % Chg –20%
–2.5% 0 +2.5%
Commodities Futures
Copper Corn
Crude Oil Gold
Natural Gas
Daily Close % Chg
$3.4905
$1256.10 $3.81
$4.4750 –0.9 $74.67
+0.8 +0.8
–0.1 –1.0
Value of $1000 invested for the past: Exchange-Traded (Ticker)
Daily % Chg
0% +20%
Coffee (COFF.L) Copper (COPA.L) Corn (CORN.L) Cotton (COTN.L) Crude Oil (CRUD.L) Gasoline (UGAS.L) Gold (BULL.L)
Natural Gas (NGAS.L) Silver (SLVR.L)
2.4 1.3 0.5
–1.2 2.1 2.3 0.3 0.3 1.3
Gainers and Losers from the S&P 1500 Index Gainers
Daily Close % Chg
Seahawk Drilling
Comtech Telecom $22.64 8.4 New York Times
NCI Building Sys Coldwater Creek Hi-Tech Pharmacal GibraltarIndustries
priceline.com
Intrepid Potash Inc Joy Global
Huntington Bncs Sonic Solutions Kirkland's Ciena
Daktronics
Quest Software SYKES Enterprises
0.29% 0.25% 3.25%
Bank Prime Federal Funds LIBOR 3-Month
3.66% 3.92% 4.50%
10-year note Yield:
30-Year fixed mortgage 15-Year fixed mortgage 1-Year ARM
5-year note Yield:
2.65 1.45
4:30 p.m. New York time.
GreenMountainCoffee $33.58 7.6 Phillips-Van Heusen $54.07 Arqule
$7.87 8.6 $8.38 8.0 7.1
$5.43 6.5 $9.57 6.5 $4.82 5.9 $19.38 5.6 $8.58 5.5 $328.77 5.5 $25.32 5.5 $65.32 5.4 $5.77 5.3 $8.57 5.3 $12.86 5.2 $14.12 5.1 $10.39 5.1 $23.37 5.0 $13.49 4.8
Losers
Veeco Instruments Cree Inc
SiliconLaboratories Gartner Inc
Sonic Automotive
Daily Close % Chg
$33.44 –8.3 $50.18 –8.1 $35.62 –7.4 $27.75 –6.3 $8.85 –6.3
Advanced Energy Ind $14.18 –5.3 Network Equipment DG FastChannel Inc Visa
NiSource
Tollgrade Comm UDR Inc Teradyne PEP Boys
Andersons Inc Ciber
SurModics
$2.83 –4.7 $15.57 –4.6 $68.55 –4.1 $16.93 –3.9 $7.51 –3.7 $20.74 –3.6 $9.30 –3.5 $9.52 –3.4 $35.75 –3.4 $2.63 –3.3 $11.17 –3.3
BaxterInternational $42.97 –3.2 Apogee Enterprises MKS Instruments
$9.18 –3.2 $17.39 –3.1
Treasury Performance Over Past Three Months
2-year note Yield:
6-month bill Yield:
0.52 0.17
Note: Bank prime is from 10 major banks. Federal Funds rate is the market rate, which can vary from the federal target rate. LIBOR is the London Interbank Offered Rate. Consumer rates are from Bankrate. All figures as of
Orange Juice Silver
Soybeans Sugar Wheat
$800
ington area presence, said Wednesday that it is hiring Jim Wiatt, the former head of one of Hollywood’s biggest talent agen- cies, as a strategic adviser report- ing directly to chief executiveTim Armstrong. Wiatt has been serv- ing on AOL’s board but will step down to take the newjob. The move comes as AOL is
striking new deals with Holly- wood talent — including Ellen DeGeneres and Disney trio the Jonas Brothers — to try to draw more people to its network of Web sites. The New York-based company will need more traffic and the accompanying advertis- ing dollars to transition success- fully from its roots as a dial-up Internet provider. Wiatt was chairman and chief
executive of the William Morris Agency for a decade before be- coming a private consultant last year. Before that, he was co-chief executive of International Cre- ative Management. He joined AOL’s board last year. —Associated Press
JIM R. BOUNDS/BLOOMBERG NEWS
Ajudge approved an amended liquidation plan for Circuit City, based in Richmond.
EARNINGS
Better prices lift Smithfield in quarter SmithfieldFoodssaidWednes-
day that higher selling prices for pork and improvement in hog- market prices helped it return to profit in its fiscal first quarter. Chief executive C. Larry Pope
said the business environment was “very favorable in the pork segment and sharply improved in the hog production segment.” “All parts of our business are
profitable, and we are focused on lowering our hog production seg- ment cost model and capitalizing on our restructured pork group,” he said. The meat producer reported
net income of $76.3 million, or 46 cents per share, for the three months ended Aug. 1. That matched analysts’ expectations, according to a poll by Thomson Reuters. The Smithfield, Va., company
lost $107.7 million, or 75 cents per share, in the first quarter a year ago.
Revenue rose 7 percent to $2.9
billion from $2.7 billion a year ago. Analysts expected higher revenue of $3.07 billion. Results were helped by higher average unit selling prices in the pork segment and higher live hog mar- ket prices, Smithfield said. —Associated Press
A17
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Daily Close % Chg
$1.4255 $19.98
+0.4 +0.5
$10.4125 –0.2 $0.2138 –0.3 $6.7875
–3.4 day $1000
month $1200
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