C3 Inc., a Reston-based packager of defense computer systems, reported declines in second-quarter and first-half earnings yesterday and lowered its income and revenue projections for the year because of unexpected declines in orders and shipments.

Last month, the Army suspended C3 from bidding on Pentagon contracts because of allegedly false statements made by the company in connection with an Army contract. The suspension was lifted after two weeks, but the Army is continuing a criminal investigation into the charges. The company has declined repeated requests to discuss the matter. The suspension occurred after the end of the quarter for which results were reported yesterday.

C3 said it earned $1.1 million (13 cents a share) in its quarter ended Sept. 30, off 44 percent from $2 million (23 cents) a year ago. Revenues fell 7.9 percent to $10.4 million from $11.3 million. C3 officials could not be reached for comment on the reasons for the declines in sales and earnings.

First-half income fell 15.2 percent to $3.2 million (38 cents) from $3.8 million (44 cents), while revenues rose 3.4 percent to $22.7 million from $21.9 million.

In a statement released with the earnings figures, C3 President John G. Ballenger said the company was reducing its earnings and revenues estimates for the fiscal year "as a result of the loss of several major sales proposals to the government earlier this year and lower order and shipment levels from existing contracts than previously anticipated." Ballenger said he expects revenues of $62 million and per-share earnings of about $1.15 a share -- increases of 25 percent and 15 percent, respectively -- for the year.

Hazleton Laboratories Corp., a diversified health-services and laboratory-test company based in Vienna, reported record sales and earnings for its first quarter ended Sept. 30. The company said it earned $872,000 (26 cents a share) in the quarter, up 10 percent from $791,000 (23 cents) a year ago. Revenues rose 46 percent to $16 million from $11 million a year ago. The company attributed the increases to improvement in domestic operations and the acquisition of Raltech, a toxicology and analytical chemistry company, and Hoexcel, an orthopedic products maker, earlier this year.

Martin Processing Inc., a dyer and processor of carpet and upholstery fabrics, said the termination of the company's apparel yarn operations and conversion of its carpet yarn operations to a commission operation had resulted in a slash in revenues in the third quarter and first nine months of this year, while drastically reducing the quarterly loss.

The Martinsville, Va., company said it lost $274,000 in the quarter on revenues of $6.4 million compared with a loss of $1.4 million on sales of $14.9 million a year ago. Income from continuing operations, however, was $1.3 million compared with a loss of $835 million a year ago.

Martin posted a nine-month loss of $9.1 million compared with a $2.8 million loss a year ago, while revenues fell to $35.2 million from $53.2 million. The company said that it expects to be strengthened by the cuts in operations.