WASHINGTON -- Lockheed Corp. and Martin Marietta Corp. expect to incur about $850 million in charges to cut jobs, wring out excess capacity, and complete what will be the defense industry's largest-ever merger.
The estimated expenses, most of which will be charged against their combined 1995 earnings, would cover "employee severance" and relocation costs as well as facility consolidations and merger fees, according to an S-4 registration statement the companies filed yesterday with the Securities and Exchange Commission.
The two aerospace and defense contractors, which have about 4,300 of their combined 170,000 workers in Maryland, would consider consolidating facilities in their space and strategic missiles, electronics and aeronautics businesses. Other possible areas to be consolidated range from headquarters and internal information systems to capital expenditures and procurement.
Such streamlining steps have become standard fare in defense industry mergers as companies seek to realize the benefits of combining operations. Witness recently merged Northrop Grumman Corp., which said in September that it would eliminate 9,000 jobs over 15 months.
Analysts said $850 million in charges was reasonable, given the overall size of the merger between Lockheed, of Calabasas, Calif., and Bethesda-based Martin.
"On the face of it, obviously $850 million is a [large] amount of money," said Wolfgang Demisch, a defense industry analyst with BT Securities in New York. "On the other hand, in the context of a merger with $23 billion in sales, it's not that brutal."
Just how much the two companies save by joining their operations remains to be seen. While they expect to begin realizing savings this year, the full benefits of the merger will be phased in over several years, according to the filing. Spokesmen for Martin Marietta and Lockheed either declined comment or were unavailable.
Martin Marietta shareholders will meet March 15 to vote on the merger at the Drake Hotel in Chicago.