L-3 Communications Q2 Earnings Down - Quick Facts

(RTTNews) - L-3 Communications Holdings, Inc. (LLL), a provider of communications and surveillance equipment, Thursday said, in a preliminary statement, second-quarter net earnings decreased amid a decline in U.S. government sales.

The company said the results were preliminary because it is subjecting Aerospace Systems to an internal review, related to contract cost overruns that were inappropriately deferred and overstatements of net sales.

The company said it believes the amounts associated with these adjustments are the result of misconduct and accounting errors at the Aerospace Systems segment.

"We are extremely disappointed that our established policies, code of ethical conduct and controls were violated in this instance. This does not represent the way we do business, and we are thoroughly addressing it," said CEO and Chairman Michael Strianese.

Third-quarter net earnings decreased to $156 million or $1.75 per share, from $181 million or $1.99 per share a year earlier.

On average, fourteen analysts polled by Thomson-Reuters estimated the company's earnings to be $2.02 for the quarter. Analysts' estimates typically exclude one-time items.

Net sales declined by 6 percent to $3.01 billion, from $3.19 billion last year, but above the $2.99 billion Wall Street expected.

For the full year, the company issued a preliminary guidance for earnings of $ 7.90 to $8.10 per share on net sales of $12.02 billion to $12.22 billion. This compares with the prior guidance for earnings of $8.20 to $8.40 per share on net sales of $11.95 billion to $12.15 billion.

The company expects diluted shares outstanding to decrease due mainly to increasing share repurchases by $125 million to $700 million projected for 2014.