L-3 Communications Holdings Inc. (LLL) increased its regular quarterly cash dividend by 14% from 35 cents to 40 cents per share. The dividend is payable on March 15, 2010, to shareholders of record at the close of business as of March 1, 2010.

L-3 Communications’ strong balance sheet provides financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions. As of Januar 28, 2010, the company had a low debt-to-capitalization of 38.2% (Zacks industry average was 99.2%), total long-term debt was $4.1 billion along with cash holdings of $1 billion and unutilized credit facility was close to $900 million. In September 2009, the company also offered bonds worth $1 billion at a coupon rate of 5.2%. The proceeds along with cash in hand were used to pay down dearer debts – $750 million worth of notes at a coupon rate of 7.2% and a $650 million term loan ? effectively reducing its interest liability.

Headquartered in New York, L-3 Communications is a leading provider of Intelligence, Surveillance and Reconnaissance (ISR) systems and products; secure communications systems; aircraft modernization, training and government services; and is a merchant supplier of a broad array of high technology products. L-3 functions through four primary business segments: Electronic Systems; Government Services; Aircraft Modernization and Maintenance; and Command, Control, Communications and Intelligence, Surveillance, and Reconnaissance (C3ISR).

L-3 Communications remains a key player within the defense segment and mainly competes with FLIR Systems Inc. (FLIR), Herley Industries Inc. (HRLY), and Raytheon Company (RTN). We believe the company is one of the best-positioned pure defense plays by virtue of its non-platform focus, and broad diversification of programs.

Our bullish outlook for L-3 Communications is supported by strong performance mainly from the command, control, communications, intelligence, surveillance and reconnaissance (C3ISR) equipment, precision-guided weapons, unmanned aerial vehicles, and other electro-mechanical robotic capabilities, networked information technologies, special operations forces, and missile defense. However, these are offset by risks related to key project execution, divestitures, higher pension funding, and declining Linguist and commercial businesses revenues. We maintain our market Neutral recommendation on the Zacks #3 Rank (‘hold’) stock.

Zacks Investment Research

1. (LLL) L-3 Communications Holdings Tops Expectations – Boosts GuidanceL-3 Communications Holdings Inc. (LLL) released robust fourth quarter results. In the reported quarter, the...
2. (LLL) L-3 Communications Holdings Tops Estimates, Raises OutlookBefore the opening bell, L-3 Communications Holdings Inc. (LLL) released strong third quarter results. In...
3. (LLL) L-3 Communications Holdings Cleaning Up Balance SheetL-3 Communications Holdings Inc. (LLL) yesterday announced that its subsidiary L-3 Communications Corporation will issue...
4. (LLL) L-3 Communications Holdings Sells Drones to Special Operations CommandL-3 Communications Holdings Inc. (LLL) bagged a contract from the U.S. Special Operations Command for...
5. (LLL) L-3 Communications Snags Air Force ContractL-3 Communications Holdings Inc. (LLL) yesterday bagged a $680 million contract from the US Air...
6. (LLL) L-3 Communications Holdings – nearly perfect record of positive surprises on analysts’ earnings forecastsL-3 Communications Holdings, Inc. (LLL), which recently received a $90 million contract from the U.S....

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