Comsat Corp., the Bethesda-based satellite and networking company that hopes to complete its merger with Lockheed Martin Corp. before the year is out, yesterday announced second-quarter earnings that were 45 percent lower than last year's numbers.
Comsat reported net income of $6.6 million, or 12 cents per diluted share, for the quarter that ended June 30.
For the second quarter of 1999, Comsat posted net income of $12 million, or 22 cents per diluted share.
Revenue increased 8 percent to $168.8 million, from $155.9 million in the 1999 quarter.
The company blamed the earnings decline on a $7.5 million fine that its wholly owned subsidiary, Electromechanical Systems Inc., had to pay after pleading guilty to overcharging the Navy. The plea, entered July 17, followed a three-year investigation into the Florida subsidiary's work refurbishing the pedestal underneath radar units. The work dated to 1982.
Without the fine, "we would have been well ahead of expectations," said Jay Ziegler, Comsat's vice president of corporate communications. "The one-time reserve more than offsets the performance results."
Ziegler said Comsat hadn't known for certain that the fine was coming, and as a result didn't warn analysts. "Litigation is always unpredictable," he said. Analysts had estimated that Comsat's earnings would be 16 cents a share.
Comsat, an agent and operator of satellite networks Intelsat and Inmarsat, expects the Federal Communications Commission to approve its merger with Lockheed Martin within a few weeks.