21st Century Security®
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Lockheed Martin Corporation
Net sales for the first six months of 2007 were $19.9 billion, compared to $19.2 billion in 2006. Net earnings for the six months ended June 30, 2007 were $1.5 billion ($3.42 per share), compared to $1.2 billion ($2.68 per share) in 2006. Cash from operations for the first half of 2007 was $2.9 billion, compared to $2.8 billion in 2006.
"Our second quarter financial performance reflects our focus on program execution and a continuing commitment to our customers," said Bob Stevens, Chairman, President and CEO. "These commitments to program execution and to our customers resulted in our achieving solid second quarter results and increasing our financial outlook for the full year."
Summary Reported Results and Financial Outlook
The following table presents the Corporation's results for the quarter and year-to-date periods ended June 30, in accordance with generally accepted accounting principles (GAAP):
REPORTED RESULTS
(In millions, except 2nd Quarter Year-to-Date
per share data) 2007 2006 2007 2006
Net sales $10,651 $9,961 $19,926 $19,175
Operating profit
Segment operating profit $1,214 $976 $2,217 $1,907
Unallocated corporate,
net:
FAS/CAS pension
adjustment (14) (68) (28) (136)
Unusual items, net 25 20 71 170
Stock compensation
expense (33) (27) (82) (57)
Other, net 39 42 75 30
$1,231 $943 $2,253 $1,914
Net earnings $778 $580 $1,468 $1,171
Diluted earnings per share $1.82 $1.34 $3.42 $2.68
Cash from operations $1,404 $1,613 $2,886 $2,798
The following table and other sections of this press release contain forward-looking statements, which are based on the Corporation's current expectations. Actual results may differ materially from those projected. See the "Forward-Looking Statements" discussion contained in this press release.
2007 FINANCIAL OUTLOOK
(In millions, except per 2007 Projections
share data and percentages) Current Update April 2007
Net sales $41,000 - $41,750 $40,350 - $41,350
Operating profit:
Segment operating profit $4,500 - $4,600 $4,300 - $4,400
Unallocated corporate expense,
net(1):
FAS/CAS pension adjustment (60) (60)
Unusual items, net 70 45
Stock compensation expense (145) (145)
Other, net 70 70
$4,435 - $4,535 $4,210 - $4,310
Diluted earnings per share $6.65 - $6.80 $6.20 - $6.35
Cash from operations >/= $4,200 >/= $4,000
ROIC > 19.5 % > 18.5 %
(1) All amounts approximate
The increase in projected net sales reflects higher levels of activity within the Space Systems and Aeronautics segments.
The $0.45 per share increase in projected 2007 earnings per share is attributable to:
* an anticipated increase of approximately $0.35 per share due to the
increase in projected net sales mentioned above and operational and
financial performance improvements in the Aeronautics, Space Systems and
Electronic Systems segments;
* an estimated $0.06 per share increase due to a reduction in the weighted
average diluted shares outstanding for 2007 associated with share
repurchase activities; and
* the benefit of $0.04 per share recognized on an unusual item during the
second quarter of 2007.
It is the Corporation's practice not to incorporate adjustments to its outlook and projections for proposed acquisitions, divestitures, joint ventures, or other unusual activities until such transactions have been consummated.
Balanced Cash Deployment Strategy
Cash flow from operations for the quarter and six months ended June 30, 2007 was $1.4 billion and $2.9 billion. The Corporation continued to execute its balanced cash deployment strategy during 2007 as follows:
* repurchased 6.8 million shares at a cost of $655 million in the quarter
and 14.4 million shares at a cost of $1.4 billion for the year-to-date
period;
* paid first and second quarter cash dividends totaling $295 million in
the second quarter;
* made capital expenditures of $170 million during the quarter and $254
million during the first six months of the year;
* invested $41 million in the quarter and $136 million during the first
half of the year in acquisition activities; and
* repaid $15 million of long-term debt in the quarter and $32 million
during the first six months of the year.
Segment Results
The Corporation operates in four principal business segments: Aeronautics; Electronic Systems; Information Systems & Global Services (IS&GS); and Space Systems.
Consistent with the manner in which the Corporation's business segment operating performance is evaluated, unusual items are excluded from segment results and included in "Unallocated corporate income (expense), net." See the Corporation's 2006 Form 10-K for a description of "Unallocated corporate income (expense), net," including the FAS / CAS pension adjustment. Schedule "C" of the financial attachments to this release contains the current year values for the various components of "Unallocated corporate income (expense), net."
The following table presents the operating results of the business segments and reconciles these amounts to the Corporation's consolidated financial results.
(In millions) 2nd Quarter Year-to-Date
2007 2006 2007 2006
Net sales
Aeronautics $3,136 $ 3,004 $5,957 $5,827
Electronic Systems 2,927 2,698 5,442 5,151
IS&GS 2,520 2,158 4,665 4,127
Space Systems 2,068 2,101 3,862 4,070
Total net sales $ 10,651 $9,961 $ 19,926 $ 19,175
Operating profit
Aeronautics $378 $272 $677 $522
Electronic Systems 389 320 708 628
IS&GS 233 195 432 375
Space Systems 214 189 400 382
Segment operating
profit 1,214 976 2,217 1,907
Unallocated corporate
income (expense), net 17 (33) 36 7
Total operating profit $1,231 $943 $2,253 $1,914
The following discussion compares the operating results for the quarter and six months ended June 30, 2007 to the same periods in 2006.
Aeronautics
($ millions) 2nd Quarter Year-to-Date
2007 2006 2007 2006
Net sales $3,136 $3,004 $5,957 $5,827
Operating profit $378 $272 $677 $522
Operating margin 12.1% 9.1% 11.4% 9.0%
Net sales for Aeronautics increased by 4% for the quarter and 2% for the six months ended June 30, 2007 from the comparable 2006 periods. In both periods, increases in Combat Aircraft and Other Aeronautics Programs sales more than offset declines in Air Mobility. The increase in Combat Aircraft for both the quarter and the six months was primarily due to higher volume on the F-22, F-16 and F-35 programs. The increase in Other Aeronautics Programs for both periods was mainly due to higher volume in sustainment services activities. The decline in Air Mobility for the quarter and first half of the year was primarily due to lower volume on the C-130J and other air mobility programs.
Segment operating profit increased by 39% for the quarter and 30% for the six months ended June 30, 2007 from the comparable 2006 periods. During both the quarter and six months, operating profit increased in Combat Aircraft and Air Mobility. In Combat Aircraft, the growth was mainly due to higher volume and improved performance on the F-22 and F-16 programs. The increase in operating profit at Air Mobility was primarily attributable to improved performance on C-130 programs.
Electronic Systems
($ millions) 2nd Quarter Year-to-Date
2007 2006 2007 2006
Net sales $2,927 $2,698 $5,442 $5,151
Operating profit $389 $320 $708 $628
Operating margin 13.3% 11.9% 13.0% 12.2%
Net sales for Electronic Systems increased by 8% for the quarter and 6% for the six months ended June 30, 2007 from the comparable 2006 periods. During the quarter and the first half of the year, sales increased due to higher volume in air defense and fire control programs at Missiles & Fire Control (M&FC) and platform integration activities at Platform, Training & Energy (PT&E). These increases were partially offset in both periods by declines in surface systems activities at Maritime Systems & Sensors (MS2).
Segment operating profit for Electronic Systems increased by 22% for the quarter and 13% for the six months ended June 30, 2007 from the comparable 2006 periods. Operating profit increased for all three lines of business in both periods: PT&E primarily due to improved performance on platform integration and distribution technology activities; M&FC mainly due to higher volume and improved performance in air defense programs during the quarter and in fire control programs for the six months; and MS2 due to improved performance on surface systems activities.
Information Systems & Global Services
($ millions) 2nd Quarter Year-to-Date
2007 2006 2007 2006
Net sales $2,520 $2,158 $4,665 $4,127
Operating profit $233 $195 $432 $375
Operating margin 9.2% 9.0% 9.3% 9.1%
Net sales for IS&GS increased by 17% for the quarter and 13% for the six months ended June 30, 2007 from the comparable 2006 periods. Sales increased in all three lines of business for both the quarter and six months. The increase in Global Services was principally due to the acquisition of Pacific Architects and Engineers Inc. in September 2006. The increase in Information Systems was due to organic growth in information technology and the acquisition of Management Systems Designers Inc. in February 2007. The increase in Mission Solutions was primarily driven by mission services and mission & combat support solutions activities.
Segment operating profit for IS&GS increased by 19% for the quarter and 15% for the six months ended June 30, 2007 from the comparable 2006 periods. Operating profit increased for both the quarter and the six months for all three lines of business. The increase for both periods was primarily due to improved performance in global security solutions and mission & combat support solutions activities in Mission Solutions and information technology activities in Information Systems.
Space Systems
($ millions) 2nd Quarter Year-to-Date
2007 2006 2007 2006
Net sales $2,068 $2,101 $3,862 $4,070
Operating profit $214 $189 $400 $382
Operating margin 10.3% 9.0% 10.4% 9.4%
Net sales for Space Systems decreased by 2% for the quarter and 5% for the six months ended June 30, 2007 from the comparable 2006 periods. The sales decline for the quarter and six months was expected given the formation of the United Launch Alliance (ULA) joint venture and the divestiture of the International Launch Services business (reported in Space Transportation) in the fourth quarter of 2006. The Corporation no longer records sales on Atlas launch vehicles and related support to the U.S. Government, as ULA is accounted for under the equity method of accounting.
For the quarter, the sales decline in Space Transportation as a result of the above referenced transactions was partially offset by increases in Satellites. For the first half of the year, higher volume in both Satellites and Strategic & Defensive Missile Systems (S&DMS) partially offset the decline in Space Transportation. In Satellites, higher volume in government satellite activities more than offset declines in commercial satellite activities in both periods. The only commercial satellite delivery of 2007 occurred in the second quarter. There were two commercial satellite deliveries during the second quarter and three during the first six months of 2006. The S&DMS growth during the six months was primarily driven by higher volume in strategic missile programs.
Segment operating profit increased by 13% for the quarter and 5% for the six months ended June 30, 2007 from the comparable 2006 periods. For the quarter, the operating profit increase in all three lines of business was primarily attributable to higher volume on the government satellite activities
in Satellites, improved performance on strategic missile programs in S&DMS and increased volume on the Orion program in Space Transportation.
For the first half of the year, operating profit increases in Satellites and S&DMS activities more than offset declines in Space Transportation. In Satellites, the increase was mainly due to higher volume and improved performance on government satellite activities. The S&DMS growth was primarily driven by higher volume and improved performance on strategic missile programs. In Space Transportation, the decline in operating profit from 2006 was mainly due to the absence of benefits recognized in 2006 from risk reduction activities including the definitization of the Evolved Expendable Launch Vehicle Launch Capabilities contract and other performance improvements on the Atlas program.
Unallocated Corporate Income (Expense), Net
($ millions) 2nd Quarter Year-to-Date
2007 2006 2007 2006
FAS/CAS pension adjustment $(14) $(68) $(28) $(136)
Unusual items, net 25 20 71 170
Stock compensation expense (33) (27) (82) (57)
Other, net 39 42 75 30
Unallocated corporate income
(expense), net $17 $(33) $36 $7
The FAS/CAS pension adjustment (calculated as the difference between FAS 87 expense and the CAS cost amounts) decreased in 2007 compared to 2006. This decrease is consistent with the Corporation's previously disclosed assumptions used to compute these amounts.
Certain items are excluded from segment results as part of senior management's evaluation of segment operating performance. For purposes of segment reporting, the following unusual items were included in "Unallocated Corporate income (expense), net" for the quarters and six months ended June 30, 2007 and 2006:
2007 -
* A second quarter gain, net of state income taxes, of $25 million related
to the sale of the Corporation's remaining 20% interest in Comsat
International;
* A first quarter gain, net of state income taxes, of $25 million related
to the sale of land; and
* First quarter earnings, net of state income taxes, of $21 million
related to the reversal of legal reserves from the settlement of certain
litigation claims.
The Comsat International sale increased net earnings by $16 million ($0.04 per share) during the second quarter. This sale, coupled with the first quarter items and the income tax benefit of $59 million ($0.14 per share) described in the Income Taxes discussion below, increased net earnings by $105 million ($0.25 per share) during the six months ended June 30, 2007.
2006 -
* A second quarter gain, net of state income taxes, of $20 million related
to the sale of land;
* A first quarter gain, net of state income taxes, of $127 million from
the sale of 21 million shares of Inmarsat; and
* A first quarter gain, net of state income taxes, of $23 million related
to the sale of the assets of Space Imaging, LLC.
On a net basis, the land sale increased net earnings for the second quarter by $13 million ($0.03 per share). This sale, along with the first quarter items, increased net income by $111 million ($0.25 per share) during the six months ended June 30, 2006.
The increase in "Other, net" for the year-to-date period is primarily attributable to other corporate activities including an increase in interest income recorded in the quarter and six months ended June 30, 2007.
Income Taxes
The Corporation's effective income tax rates were 31.6% and 29.0% for the quarter and six months ended June 30, 2007, and 31.8% and 32.2% for the quarter and six months ended June 30, 2006. The effective rates for all periods were lower than the statutory rate of 35% due to tax deductions for U.S. manufacturing activities and dividends related to our employee stock ownership plan. For 2007, income tax expense was also reduced by $59 million due to the completion of an IRS audit in the first quarter of 2007. Additionally, income tax expense for 2006 was reduced by tax benefits related to export sales.
Headquartered in Bethesda, Md., Lockheed Martin employs approximately 140,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.
Website: www.lockheedmartin.com
Conference call: Lockheed Martin will webcast the earnings conference call (listen-only mode) at 11 a.m. E.D.T. on July 24, 2007. A live audio broadcast, including relevant charts, will be available on the Investor Relations page of the company's website at: http://www.lockheedmartin.com/investor.
FORWARD-LOOKING STATEMENTS
Statements in this release that are "forward-looking statements" are based on Lockheed Martin's current expectations and assumptions. Forward-looking statements in this release include estimates of future sales, earnings and cash flow. These statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results could differ materially because of factors such as: the availability of government funding for our products and services both domestically and internationally; changes in government and customer priorities and requirements (including changes to respond to Department of Defense reviews, Congressional actions, budgetary constraints, cost-cutting initiatives, election cycles, terrorist threats and homeland security); the impact of continued military operations in Iraq and Afghanistan on funding for existing defense programs; the award or termination of contracts; return on pension plan assets, interest and discount rates and other changes that may impact pension plan assumptions; difficulties in developing and producing operationally advanced technology systems; the timing and customer acceptance of product deliveries; materials availability and performance by key suppliers, subcontractors and customers; charges from any future impairment reviews that may result in the recognition of losses and a reduction in the book value of goodwill or other long-term assets; the future impact of legislation, changes in accounting, tax rules, or export policies; the future impact of acquisitions or divestitures, joint ventures or teaming arrangements; the outcome of legal proceedings and other contingencies (including lawsuits, government/regulatory investigations or audits, and environmental remediation efforts); the competitive environment for the Corporation's products and services; and economic, business and political conditions domestically and internationally.
These are only some of the factors that may affect the forward-looking statements contained in this press release. For further information regarding risks and uncertainties associated with Lockheed Martin's business, please refer to the Corporation's SEC filings, including the "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Risk Factors," and "Legal Proceedings" sections of the Corporation's 2006 annual report on Form 10-K, which may be obtained at the Corporation's website: http://www.lockheedmartin.com/.
It is the Corporation's policy to only update or reconfirm its financial projections by issuing a press release. The Corporation generally plans to provide a forward-looking outlook as part of its quarterly earnings release but reserves the right to provide an outlook at different intervals or to revise its practice in future periods. All information in this release is as of July 23, 2007. Lockheed Martin undertakes no duty to update any forward- looking statement to reflect subsequent events, actual results or changes in the Corporation's expectations. We also disclaim any duty to comment upon or correct information that may be contained in reports published by investment analysts or others.
NON-GAAP PERFORMANCE MEASURES
The Corporation believes that reporting ROIC provides investors with greater visibility into how effectively Lockheed Martin uses the capital invested in its operations. The Corporation uses ROIC to evaluate multi-year investment decisions and as a long-term performance measure, and also uses ROIC as a factor in evaluating management performance for incentive compensation purposes. ROIC is not a measure of financial performance under generally accepted accounting principles, and may not be defined and calculated by other companies in the same manner. ROIC should not be considered in isolation or as an alternative to net earnings as an indicator of performance.
The Corporation calculates ROIC as follows:
Net earnings plus after-tax interest expense divided by average invested capital (stockholders' equity plus debt), after adjusting stockholders' equity by adding back minimum pension liability balances.
(In millions, except percentages) 2007 Projected
Net Earnings ] Combined
Interest Expense (multiplied by 65%)(1) ] Combined
Return > $ 3,075
Average debt (2),(5) ] Combined
Average equity (3),(5) ] Combined
Average Benefit Plan Adjustments (4),(5) ] Combined
Average Invested Capital < $ 15,800
Return on invested capital > 19.5 %
(1) Represents after-tax interest expense utilizing the federal statutory
rate of 35%.
(2) Debt consists of long-term debt, including current maturities, and
short-term borrowings (if any).
(3) Equity includes non-cash adjustments, primarily for the minimum
pension liability and the adoption of FAS 158 in 2006.
(4) Average Benefit Plan Adjustments reflect the cumulative value of
entries identified in our Statement of Stockholders' Equity under the
captions "Minimum pension liability" and "Adoption of FAS 158."
(5) Yearly averages are calculated using balances at the start of the
year and at the end of each quarter.
LOCKHEED MARTIN CORPORATION
Consolidated Condensed Statement of Earnings
Unaudited
(In millions, except per share data and percentages)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2007 2006 2007 2006
Net sales $10,651 $9,961 $19,926 $19,175
Cost of sales 9,597 9,121 17,962 17,575
1,054 840 1,964 1,600
Other income and expenses, net 177 103 289 314
Operating profit 1,231 943 2,253 1,914
Interest expense 93 92 186 186
Earnings before income taxes 1,138 851 2,067 1,728
Income tax expense 360 271 599 557
Net earnings $778 $580 $1,468 $1,171
Effective tax rate 31.6% 31.8% 29.0% 32.2%
Earnings per common share:
Basic $1.87 $1.35 $3.50 $2.71
Diluted $1.82 $1.34 $3.42 $2.68
Average number of shares outstanding:
Basic 416.7 428.8 419.1 432.4
Diluted 426.5 433.7 429.1 437.4
Common shares reported in stockholders'
equity at June 30: 412.0 421.5
LOCKHEED MARTIN CORPORATION
Net Sales, Operating Profit and Margins
Unaudited
(In millions, except percentages)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2007 2006 % Change 2007 2006 % Change
Net sales:
Aeronautics $3,136 $3,004 4% $5,957 $5,827 2%
Electronic Systems 2,927 2,698 8% 5,442 5,151 6%
Information Systems
& Global Services 2,520 2,158 17% 4,665 4,127 13%
Space Systems 2,068 2,101 (2%) 3,862 4,070 (5%)
Total net sales $10,651 $9,961 7% $19,926 $19,175 4%
Operating profit:
Aeronautics $378 $272 39% $677 $522 30%
Electronic Systems 389 320 22% 708 628 13%
Information Systems
& Global Services 233 195 19% 432 375 15%
Space Systems 214 189 13% 400 382 5%
Segment operating
profit 1,214 976 24% 2,217 1,907 16%
Unallocated
corporate
income /
(expense), net 17 (33) 36 7
Total operating
profit $1,231 $943 31% $2,253 $1,914 18%
Margins:
Aeronautics 12.1% 9.1% 11.4% 9.0%
Electronic Systems 13.3 11.9 13.0 12.2
Information Systems
& Global Services 9.2 9.0 9.3 9.1
Space Systems 10.3 9.0 10.4 9.4
Total operating
segments 11.4% 9.8% 11.1% 9.9%
Total consolidated 11.6% 9.5% 11.3% 10.0%
LOCKHEED MARTIN CORPORATION
Selected Financial Data
Unaudited
(In millions, except per share data)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2007 2006 2007 2006
Summary of unallocated corporate
income / (expense), net
FAS/CAS pension adjustment $(14) $(68) $(28) $(136)
Unusual items, net 25 20 71 170
Stock compensation expense (33) (27) (82) (57)
Other, net 39 42 75 30
Unallocated corporate income /
(expense), net $17 $(33) $36 $7
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2007 2006 2007 2006
FAS/CAS pension adjustment
FAS 87 expense $(172) $(234) $(343) $(468)
Less: CAS costs (158) (166) (315) (332)
FAS/CAS pension adjustment -
expense $(14) $(68) $(28) $(136)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2007 JUNE 30, 2007
Operat- Net Earn- Operat- Net Earn-
ing earn- ings ing earn- ings
profit ings per profit ings per
share share
Unusual Items - 2007
Gain on sale of interest in Comsat
International $25 $16 $0.04 $25 $16 $0.04
Gain on sale of surplus land - - - 25 16 0.04
Earnings from reversal of legal
reserves - - - 21 14 0.03
Benefit from closure of an IRS audit - - - - 59 0.14
$25 $16 $0.04 $71 $105 $0.25
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2006 JUNE 30, 2006
Operat- Net Earn- Operat- Net Earn-
ing earn- ings ing earn- ings
profit ings per profit ings per
share share
Unusual Items - 2006
Gain on sale of land $20 $13 $0.03 $20 $13 $0.03
Gain on sale of interest in Inmarsat - - - 127 83 0.19
Gain on Space Imaging sale - - - 23 15 0.03
$20 $13 $0.03 $170 $111 $0.25
LOCKHEED MARTIN CORPORATION
Selected Financial Data
Unaudited
(In millions)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2007 2006 2007 2006
Depreciation and amortization of
plant and equipment
Aeronautics $40 $38 $79 $73
Electronic Systems 49 45 94 87
Information Systems & Global Services 16 15 31 29
Space Systems 28 35 57 65
Segments 133 133 261 254
Unallocated corporate expense, net 14 16 27 30
Total depreciation and
amortization $147 $149 $288 $284
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2007 2006 2007 2006
Amortization of purchased intangibles
Aeronautics $13 $13 $26 $25
Electronic Systems 5 11 16 22
Information Systems & Global Services 14 10 29 20
Space Systems 2 2 4 4
Segments 34 36 75 71
Unallocated corporate expense, net 3 3 6 7
Total amortization of purchased
intangibles $37 $39 $81 $78
LOCKHEED MARTIN CORPORATION
Consolidated Condensed Balance Sheet
Unaudited
(In millions, except percentages)
JUNE 30, DECEMBER 31,
2007 2006
Assets
Cash and cash equivalents $3,008 $1,912
Short-term investments 329 381
Receivables 5,239 4,595
Inventories 1,379 1,657
Deferred income taxes 932 900
Other current assets 611 719
Total current assets 11,498 10,164
Property, plant and equipment, net 4,010 4,056
Goodwill 9,380 9,250
Purchased intangibles, net 538 605
Prepaid pension asset 245 235
Deferred income taxes 1,661 1,487
Other assets 2,482 2,434
Total assets $29,814 $28,231
Liabilities and Stockholders' Equity
Accounts payable $2,137 $2,221
Customer advances and amounts in
excess of costs incurred 4,580 3,856
Other accrued expenses 3,742 3,442
Current maturities of long-term debt 105 34
Total current liabilities 10,564 9,553
Long-term debt, net 4,302 4,405
Accrued pension liabilities 3,378 3,025
Other postretirement and other
noncurrent liabilities 4,411 4,364
Stockholders' equity 7,159 6,884
Total liabilities and
stockholders' equity $29,814 $28,231
Total debt-to-capitalization ratio: 38% 39%
LOCKHEED MARTIN CORPORATION
Consolidated Condensed Statement of Cash Flows
Unaudited
(In millions)
SIX MONTHS ENDED JUNE 30,
2007 2006
Operating Activities
Net earnings $1,468 $1,171
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 369 362
Changes in operating assets and liabilities:
Receivables (618) 269
Inventories 282 44
Accounts payable (94) (81)
Customer advances and amounts in
excess of costs incurred 720 453
Other 759 580
Net cash provided by operating activities 2,886 2,798
Investing Activities
Expenditures for property, plant and
equipment (254) (263)
Sale (purchase) of short-term investments, net 52 (1)
Acquisitions of businesses (136) (474)
Divestitures of investments in affiliates 26 156
Other (11) 50
Net cash used for investing activities (323) (532)
Financing Activities
Issuances of common stock and related
amounts 254 508
Repurchases of common stock (1,394) (1,601)
Common stock dividends (295) (261)
Repayments of long-term debt (32) (200)
Net cash used for financing activities (1,467) (1,554)
Net increase in cash and cash
equivalents 1,096 712
Cash and cash equivalents at
beginning of period 1,912 2,244
Cash and cash equivalents at end of period $3,008 $2,956
LOCKHEED MARTIN CORPORATION
Consolidated Condensed Statement of Stockholders' Equity
Unaudited
(In millions)
Accumulated
Other
Compre- Total
Additional hensive Stock-
Common Paid-In Retained (Loss)/ holders'
Stock Capital Earnings Income Equity
Balance at January 1, 2007 $421 $755 $9,269 $(3,561) $6,884
Adoption of FIN 48 (a) 31 31
Net earnings 1,468 1,468
Common stock dividends (b) (295) (295)
Stock-based awards and ESOP
activity 5 456 461
Repurchases of common stock (c) (14) (1,211) (169) (1,394)
Other comprehensive income 4 4
Balance at June 30, 2007 $412 $ - $ $10,304 $(3,557) $7,159
(a) On January 1, 2007 the Corporation adopted Financial Accounting
Standards Board Interpretation No. 48 (FIN 48), "Accounting for
Uncertainty in Income Taxes." The cumulative effect of adopting the
provisions of FIN 48 was a non-cash increase to opening retained
earnings of $31 million.
(b) Includes quarterly dividends ($0.35 per share) declared and paid in
the six months ended June 30, 2007.
(c) The Corporation repurchased 6.8 million shares of its common stock for
$655 million during the second quarter. Year-to-date, the Corporation
has repurchased 14.4 million common shares for $1.4 billion. The
Corporation has 19.9 million shares remaining under its share
repurchase program at the end of the second quarter of 2007.
LOCKHEED MARTIN CORPORATION
Operating Data
Unaudited
(In millions)
JUNE 30, DECEMBER 31,
2007 2006
Backlog
Aeronautics $23,400 $26,900
Electronic Systems 19,700 19,700
Information Systems & Global Services 10,200 10,500
Space Systems 17,400 18,800
Total $70,700 $75,900
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
Aircraft Deliveries 2007 2006 2007 2006
F-16 12 12 21 30
F-22 7 9 10 15
C-130J 3 3 5 5
First Call Analyst:
FCMN Contact:
SOURCE: Lockheed Martin
CONTACT: NEWS MEDIA - Tom Jurkowsky, +1-301-897-6352; INVESTOR RELATIONS
- Jerry Kircher, +1-301-897-6584, both of Lockheed Martin Corporation