Lockheed Martin Corp. yesterday reported a 41 percent increase in profit during its third quarter as fighter jet and information technology demand continued to drive growth.

The Bethesda maker of the F-16 fighter, Atlas rocket and military satellites reported net income of $307 million (69 cents a share), compared with $217 million (48 cents) in the same period last year. The 2003 quarter included a charge of $83 million for early retirement of debt. Revenue in the quarter increased 4 percent, to $8.4 billion from $8.1 billion last year.

Lockheed's stock gained 88 cents, or 1.64 percent, yesterday to close at $54.38 on the New York Stock Exchange.

"Overall, this was a strong quarter for Lockheed operationally," Joseph B. Nadol III, defense analyst with J.P. Morgan Securities Inc., said in a research note.

Lockheed's Information and Technology Services unit reported a 33 percent increase in sales, to $991 million compared with $743 million last year. Operating profit in the quarter rose 43 percent, to $73 million from $51 million. The division received a boost from the recent acquisition of the government contracting unit of Affiliated Computer Services Inc., company officials said. It also benefited from increased demand for defense-related information technology services.

The company's Space Systems unit reported a 4 percent drop in revenue, to $1.43 billion, but its operating profit increased 19 percent, to $113 million from $95 million. Continued slow demand for commercial rocket launches and satellites was offset by strong government demand, company officials said.

"The space business is doing very well. The margins are improving. In the fourth quarter we will probably announce" increased revenue, said Christopher E. Kubasik, Lockheed's chief financial officer. The dip in revenue this quarter is "not a concern."

Despite the collapse of the commercial space market, Lockheed decided last year to keep the unit and wound up winning a $3 billion Navy satellite contract. "I've got to believe that had we shut down [the commercial business] it would have been difficult to win that competition," Kubasik said.

The quarter also included a $400 million contribution to the company's pension plans to satisfy funding requirements into 2005. Lockheed also said it expects to take a charge in the fourth quarter of this year for the early retirement of debt, but that could be offset by the sale of its interest in New Skies Satellites N.V. and Intelsat Ltd., deals that are expected to close during the quarter or in early 2005.

Pointing to several recent contract wins, Lockheed, the Pentagon's largest contractor, increased its profit forecasts for this year and next. The company now expects earnings per share of $2.65 to $2.75 next year, up from its previous forecast of $2.50 to $2.60 a share. In 2005, the company expects earnings of $3 to $3.25 a share compared with its previous forecast of $2.85 to $3.20 a share.