Executive Business Briefing

Here is a look at more of Thursday's top business stories:

Earnings fall at Sears, lowers outlook

HOFFMAN ESTATES, Ill., Oct 17 (UPI) -- Sears, Roebuck and Co., the nation's fourth-largest retailer, said its third-quarter net income sank 28 percent and it warned it expects that its annual results will not meet targets because of growing losses from credit card debt.

The retailer said its third quarter net income dropped to $189 million, or 59 cents a share, from $262 million, or 80 cents a share during the same period last year.

The latest results reflected a $222 million increase in the domestic provision for uncollectable credit card accounts.

Analysts on Wall Street had expected Sears to post a net income of 82 cents a share, according to Thomson First Call.

Sears had said earlier this month its third-quarter earnings would be in the range of 80 cents to 82 cents, which was below analysts' expectations, as its credit card unit set aside more money to cover the cost of customers not paying their bills.

Revenues declined to $7.26 billion from $7.31 billion a year ago.

Sears said sales increases in direct to customer resulting from the company's acquisition of Lands' End, product repair services, dealer stores and hardware stores were more than offset by revenue declines in the full-line stores.

The decrease in full-line store sales, the company said, reflected the significant store disruption from the implementation of strategic initiatives. Softline revenues declined as a result of lower apparel sales and exits from the custom window treatment and installed floor covering businesses. Hardline revenues also declined in the third quarter with increases in home appliance sales being offset by decreases in home office, home electronics and home improvement.

Looking ahead, Sears also lowered its 2002 full-year earnings guidance to $4.86 a share from a previous estimate of $5.15. Last year the retailer earned $4.22 a share.

Chairman and Chief Executive Officer Alan J. Lacy said, "Today's revision to the guidance reflects additional increases in the allowance for uncollectable accounts as a result of analysis over the past week. However, the credit business remains highly profitable, and I have complete confidence in our credit strategy and the management team."

Sears said it continues to expect comparable earnings increases in the low-to mid-30 percent range in its retail and related services segment. The company said it now expects its credit and financial products segment to report a low- to mid-single-digit decrease in comparable earnings for the year.

Earnings rise 8 percent at United Technologies

HARTFORD, Conn., Oct 17 (UPI) -- United Technologies Corp. said its third-quarter net income rose 8 percent, lifted by a stronger euro and robust demand for its Otis elevators in Europe and Asia.

United Technologies, which also makes Pratt & Whitney jet engines, Black Hawk helicopters, and Carrier air conditioners, said its net income rose to $612 million, or $1.21 a share, from $565 million, or $1.12 a share during the same period last year.

Analysts on Wall Street had been expected the company to post a net income of $1.19 a share, according to Thomson First Call.

United Tech, which is a component of the Dow Jones industrial average, said the latest results included the effect of adopting the new goodwill accounting standard as of Jan. 1, 2002. On a comparable basis, third quarter 2001 earnings per share were $1.23 and net income was $619 million.

Consolidated revenues rose 5 percent to $7.3 billion. In the quarter, foreign currency translation contributed two percentage points to revenue growth and two cents to earnings per share.

George David, chairman and chief executive officer, said, "The third quarter was another solid one for UTC, with better than expected earnings and high available cash flow even given the weaker economy and challenges in commercial aerospace.

"Our earnings and cash flow outlooks remain right on track to our prior expectations for the year," David said.

The company said third quarter operating profit at Otis increased 17 percent on 12 percent higher revenues. At constant foreign exchange, operating profit and revenues increased 11 and 7 percent, respectively, with organic revenue growth of 3 percent. The operating profit improvement reflects balanced growth worldwide and the impact of acquisitions.

At Carrier, operating profit in the quarter was 10 percent above last year on 5 percent higher revenues. Results benefited from the warmer U.S. summer and a stronger transport refrigeration industry, while commercial HVAC markets remained weak in the U.S. and Europe. Operating margin increased to 11.8 percent, 50 basis points improved, as a result of higher volumes and cost reductions, partially offset by competitive HVAC pricing.

Pratt & Whitney's operating profit was 7 percent below last year on 1 percent lower revenues. The impact of lower commercial spares, power systems and small engine shipments was partially offset by increased military business. The third quarter also includes a warranty charge offset by favorable commercial engine contract adjustments.

Operating profit in the Flight Systems segment was 4 percent below last year on 19 percent higher revenues. The profit increase from significantly higher aircraft shipments at Sikorsky was more than offset by lower commercial aftermarket volume at Hamilton Sundstrand.

United Technologies also said its employee pension plans had up to $2 billion more in liabilities than assets at the end of September.

The company has contributed $1 billion worth of stock and cash to its pension plans over the past 12 months. The company said it may make further contributions next year as stock market declines and falling interest rates hurt its pension fund.

Last year, United Tech's pension plans were underfunded by more than $2 billion.

Limited Brands expects a third-quarter profit

COLUMBUS, Ohio, Oct 17 (UPI) -- Women's clothing retailer Limited Brands said it expects to post a third-quarter profit of 2 cents a share, in line with Wall Street's consensus estimates.

The retailer said in a brief statement it has also lowered its 2002 capital expenditures projection to $375 million, versus its previous projection of $400 million.

Analysts on Wall Street were expecting Limited to post a net income of 2 cents a share, according to Thomson First Call.

A year ago, Limited reported a third-quarter loss of 3 cents a share.

Limited Brands, through Victoria's Secret, Bath & Body Works, Express, Express Men's (Structure), Lerner New York, Limited Stores, White Barn Candle Co. and Henri Bendel, at present operates 4,588 specialty stores.