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CNNfn after the bell
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September 2, 1999: 9:14 p.m. ET
PepsiCo warns of drop in income, but expects higher EPS; Lockheed exec takes off
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NEW YORK (CNNfn) - Soft drink maker PepsiCo said its North American unit will report lower operating profits in the third quarter, but overall earnings at the company will be higher, thanks to better results at its Frito-Lay and Tropicana divisions.
PepsiCo Inc. (PEP), the No.2 soft-drink maker in the world, attributed the weaker operating results for Pepsi North America to recent price increases which have depressed unit case shipments for carbonated beverages.
In spite of the decline, the Purchase, N.Y.-based company said it expects to report higher earnings per share overall for its third quarter.
Analysts polled by First Call Corp. had expected PepsiCo to post third quarter earnings of 33 cents per share for the third quarter. Results will be reported Oct. 6.
In the comparable 1998 quarter, PepsiCo's pro forma earnings were 32 cents per share. Pro forma adjustments assume the purchase of Tropicana and the sale of a majority interest in the Pepsi Bottling Group occurred on the first day of fiscal 1998.
PepsiCo said bottlers' inventory adjustments led to a decline of about 4 percent in third quarter concentrate shipments.
Frito-Lay, the world's No.1 maker of snacks, makes up half of PepsiCo's sales.
Separately, PepsiCo said it plans to buy back an additional $500 million in stock before the end of the year. Earlier this year, PepsiCo announced it would purchase $3 billion of its capital stock between 1999 and 2001.
Lockheed Martin Corp.
Lockheed Martin Corp. (LMT), the world's No.2 aerospace and defense company, said Thomas Corcoran was retiring as president and chief operating officer of the space and strategic missiles sector.
Albert Smith, currently president of Lockheed Missiles & Space in Sunnyvale, Calif., will serve as acting president and COO of the unit.
Corcoran will retire effective Oct. 1 to become president and chief executive of Allegheny Teledyne Inc. (ALT) of Pittsburgh, Pa., the world's biggest specialty metals producer.
Ingram Micro
Ingram Micro Inc. (IM), the world's largest wholesale distributor of microcomputer products, named executive vice president Robert Grambo to the position of president of Ingram Micro U.S.
Grambo, who joined Ingram Micro in 1997, will lead the Santa Ana, Calif.-based company's largest regional operation, with sales of $16 billion for the past four reported quarters.
Grambo will report to the Office of the Chairman, comprised of Jerre Stead, chairman and chief executive officer; Jeffrey Rodek, president and worldwide chief operating officer; and Michael Grainger, executive vice president and worldwide chief financial officer.
Philip Ellett, executive vice president, Ingram Micro, and president, Ingram Micro Americas, resign to pursue other opportunities, the company said.
Excelsior-Henderson
Excelsior-Henderson Motorcycle Manufacturing Co. (BIGX) said it cut 97 jobs and named a president and chief operating officer and chief financial officer as part of a restructuring.
The restructuring is aimed at reducing costs and balancing production volumes with current distribution capabilities, the company said.
The staff reductions will come from all areas of the company and reduce the number of employees from 216 to 119.
Jack Thornton was named to the newly created position of president and COO. Terrance Adams was appointed CFO, replacing Thomas Rootness, who resigned in August.
Both Thornton and Adams are part of the Platinum Group, a business consulting firm specializing in restructuring, financing and corporate development.
"The business decision to make staff reductions was an extremely difficult one," co-founders Dan, Dave and Jennie Hanlon said in a statement. "We will focus on our marketing efforts, lowering motorcycle component costs and expanding our dealer network."
The Hanlons said staff reductions were necessary to the long-term success of the company.
"This type of action is not uncommon with entities transitioning from development stage to a predictable operating company," Thornton said, "and it will have an immediate and positive cash flow impact.
The company said the restructuring would will enable it to complete previously announced efforts to obtain significant additional equity and debt financing.
Company officials were not immediately available to provide further information. Excelsior-Henderson also said Dave Pomije has resigned from its board of directors for personal business reasons.
In its second quarter financial report, the company said its net loss climbed to $6.1 million, or $0.45 per share, compared to a loss of $4.7 million, or $0.36 per share in the year-ago period.
Excelsior-Henderson is a development stage company that shipped its first Super X heavyweight cruiser motorcycle in December 1998. Revenue producing motorcycles were not shipped until January 1999.
As of July 26, the company had shipped 1,000 motorcycles. Trading in Excelsior-Henderson was halted on Nasdaq this afternoon. The stock last traded at 3-3/16, off 1/16.
Protection Life Inc.
Residential alarm companies Protection One Inc. (POI) and Lifeline Systems Inc. (LIFE) announced a mutual agreement to terminate their proposed merger.
In October 1998, Protection One said it would buy Lifeline for about $174 million. As a result of the cancellation, Protection One, based in Culver City, Calif., said it would take a third-quarter charge of about $2.2 million, or 2 cents a share.
Framingham, Mass.-based Lifeline said it would post a charge to earnings in the third quarter of about $500,000, or 5 cents a share.
Ron Feinstein, Lifeline's chief executive officer, said in a statement that "delays in the regulatory process have made it appropriate for us to refocus our attention on creating shareholder value without this pending merger."
Protection One CEO Jack Mack said the company now plans to devote "all of our energy to our core business, divesting noncore assets when appropriate, focusing on customer growth and service."
The companies also announced the termination of the related stock option granted to Protection One by Lifeline in connection with the proposed merger.
Georgia Gulf Corp.
Chemical company Georgia Gulf Corp. (GGC) said it was exiting the methanol business at the end of the year. Effective with the fiscal 1999 third quarter, the Atlanta-based company will reclassify its gas chemicals segment to discontinued operations.
Georgia Gulf will take an after-tax non-cash charge of about $8 million in the third quarter to write-off certain methanol assets.
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Friday Preview
Investors may want to watch Ford Motor Co. (F) which reported record sales for the month of August.
Also, Bank of New York (BK) Thursday fired a second employee in a widening probe concerning allegations that billions of dollars in illicit Russian funds were funneled through the bank's coffers.
On the economic side, the unemployment rate is scheduled to be released on Friday. The estimates call for 4.2 percent. The previous report was 4.3 percent.
Also, the average hourly earnings are slated to be released. The estimate calls for a 0.3 percent increase, while the previous report saw a 0.5 percent increase.
--from staff and wire reports.
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