21st Century Security®
Releases
Lockheed Martin Corporation
Net sales for the second quarter of 2009 were $11.2 billion, compared to $11.0 billion in 2008. Cash from operations for the second quarter of 2009 was $1.1 billion, compared to $1.5 billion in 2008.
"Our second quarter results reflect recent changes in program priorities undertaken by our U.S. Government customers as well as performance challenges in our IS&GS business segment," said Bob Stevens, Chairman, President and CEO. "While the operational strength demonstrated in Aeronautics, Electronic Systems, and Space Systems was not matched by IS&GS, we remain committed to setting and achieving high standards of operational excellence. We are applying additional resources to improve execution in this important business area. Despite these challenges, we remain committed to delivering innovative solutions for our customers as a global security company and driving shareholder value for our investors."
Summary Reported Results and Outlook
The following table presents the Corporation's results for the periods referenced in accordance with generally accepted accounting principles (GAAP):
REPORTED RESULTS 2nd Quarter Year-to-Date
----------- ------------
(In millions, except per
share data) 2009 2008 2009 2008
------- ------- ------- -------
Net sales $11,236 $11,039 $21,609 $21,022
======= ======= ======= =======
Operating profit
----------------
Segment operating profit $1,277 $1,315 $2,476 $2,465
Unallocated corporate, net:
FAS/CAS pension adjustment (115) 32 (229) 64
Stock compensation expense (42) (40) (72) (75)
Unusual items -- 85 -- 101
Other, net (37) (29) (35) (14)
---- ---- ---- ----
1,083 1,363 2,140 2,541
Interest expense 76 92 152 179
Other non-operating income/
(expense), net(1) 47 34 44 27
--- --- --- ---
Earnings before income taxes 1,054 1,305 2,032 2,389
Income taxes 320 423 632 777
--- --- --- ---
Net earnings $734 $882 $1,400 $1,612
==== ==== ====== ======
Diluted earnings per share $1.88 $2.15 $3.55 $3.90
===== ===== ===== =====
Cash from operations(2) $1,136 $1,488 $2,354 $2,368
====== ====== ====== ======
(1) Includes interest income and unrealized gains (losses), net on
marketable securities held in a Rabbi Trust to fund certain employee
benefit obligations.
(2) In the fourth quarter of 2008, the Corporation reclassified the
effect of exchange rate changes on cash from "Cash from operations"
to a separate caption in the Statement of Cash Flows. Accordingly,
the prior period amount now reflects this presentation.
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.
2009 FINANCIAL OUTLOOK(1) 2009 Projections
----------------
(In millions, except per share
data and percentages) April 2009 Current Update
---------- --------------
Net sales $44,700 - $45,700 $44,700 - $45,700
================= =================
Operating profit:
-----------------
Segment operating profit $5,175 - $5,275 $5,075 - $5,175
Unallocated corporate expense, net:
FAS/CAS pension adjustment (460) (460)
Unusual items, net -- --
Stock compensation expense (160) (160)
Other, net (80) (100)
4,475 - 4,575 4,355 - 4,455
Interest expense (305) (305)
Other non-operating (expense) /
income, net (5) 45
Earnings before income taxes $4,165 - $4,265 $4,095 - $4,195
Diluted earnings per share $7.15 - $7.35 $7.15 - $7.35
Cash from operations >/= $4,100 >/= $4,100
---------- ----------
ROIC(2) >/= 18.5% >/= 18.5%
--------- ---------
(1) All amounts approximate
(2) See discussion of non-GAAP performance measures at the end of this
document
The Corporation's updated outlook for 2009 diluted earnings per share incorporates the following revisions:
-- a reduction in projected segment operating profit in our Information
Systems & Global Services business segment, which partially was offset
by increases in both the Aeronautics and the Space Systems business
segments;
-- an increase in Other unallocated corporate expense, net and Other
non-operating income, net as a result of improved market performance
during the second quarter on Rabbi Trust assets and non-qualified
deferred compensation liabilities;
-- a reduction in the projected full-year effective tax rate; and
-- the benefit from a reduction in projected weighted average shares
outstanding.
It is the Corporation's practice not to incorporate adjustments to its outlook for proposed acquisitions, divestitures, joint ventures, or other unusual activities until such transactions have been consummated.
Balanced Cash Deployment Strategy
The Corporation continued to execute its balanced cash deployment strategy during the second quarter by:
-- repurchasing 5.6 million shares at a cost of $453 million in the
quarter and 13.7 million shares at a cost of $1.0 billion for the
year-to-date period;
-- paying cash dividends totaling $222 million in the quarter and $449
million for the year-to-date period;
-- investing $31 million in the quarter and $187 million during the first
half of the year for acquisition and investment activities; and
-- making capital expenditures of $167 million during the quarter and
$299 million during the first six months of the year.
Segment Results
The Corporation operates in four principal business segments: Electronic Systems; Information Systems & Global Services (IS&GS), Aeronautics; and Space Systems.
The following table presents the operating results of the four business segments and reconciles these amounts to the Corporation's consolidated financial results.
(In millions) 2nd Quarter Year-to-Date
----------- ------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales
---------
Electronic Systems $3,076 $3,095 $5,989 $5,884
Information Systems & Global
Services 3,018 2,858 5,779 5,362
Aeronautics 3,086 2,884 5,867 5,691
Space Systems 2,056 2,202 3,974 4,085
----- ----- ----- -----
Total net sales $11,236 $11,039 $21,609 $21,022
======= ======= ======= =======
Operating profit
----------------
Electronic Systems $406 $409 $796 $775
Information Systems & Global
Services 248 272 490 502
Aeronautics 399 366 754 689
Space Systems 224 268 436 499
--- --- --- ---
Segment operating profit 1,277 1,315 2,476 2,465
Unallocated corporate income
(expense), net (194) 48 (336) 76
----- -- ----- --
Total operating profit $1,083 $1,363 $2,140 $2,541
====== ====== ====== ======
In our discussion of comparative results, changes in net sales and operating profit generally are expressed in terms of volume and/or performance. Volume refers to increases (or decreases) in sales resulting from varying production activity levels, deliveries, or service levels on individual contracts. Volume changes typically include a corresponding change in operating profit based on the estimated profit rate at completion for a particular contract for design, development, and production activities. Performance generally refers to changes in contract profit booking rates. These changes to our contracts for products usually relate to profit recognition associated with revisions to total estimated costs at completion of the contracts that reflect improved (or deteriorated) operating or award fee performance on a particular contract. Changes in contract profit booking rates on contracts for products are recognized by recording adjustments in the current period for the inception-to-date effect of the changes on current and prior periods. Recognition of the inception-to-date adjustment in the current or prior periods may affect the comparison of segment operating results.
Electronic Systems
($ millions) 2nd Quarter Year-to-Date
------------- ------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $3,076 $3,095 $5,989 $5,884
Operating profit $406 $409 $796 $775
Operating margin 13.2% 13.2% 13.3% 13.2%
Net sales for Electronic Systems decreased by 1% for the quarter and increased by 2% for the first six months of 2009 from the comparable 2008 periods. During the quarter, the decrease mainly was due to lower volume on air defense programs at Missiles & Fire Control (M&FC). This decrease partially was offset by growth in simulation and training activities at Platforms & Training (P&T) and in radar programs and surface naval warfare activities at Maritime Systems & Sensors (MS2).
During the first six months of the year, the increase mainly was due to higher volume on tactical missile programs and fire control systems at M&FC and in simulation and training activities at P&T. The increase in simulation and training also included sales from the first quarter 2009 acquisition of Universal Systems and Technology, Inc. These increases partially were offset by declines in integrated defense technology programs at MS2.
Operating profit for Electronic Systems decreased by 1% for the quarter and increased by 3% for the first six months of 2009 from the comparable 2008 periods. During the quarter, the decrease in operating profit mainly was due to lower volume on air defense programs at M&FC and the absence of favorable 2008 performance adjustments on integrated defense technology programs at MS2 in 2009. These decreases partially were offset by higher volume and improved performance in platform integration activities at P&T.
During the first six months of the year, the increase in operating profit primarily was attributable to improved performance on platform integration activities and the benefit recognized in the first quarter of 2009 from favorably resolving a simulation and training contract matter at P&T. These increases partially were offset by declines in volume on integrated defense technology programs at MS2.
Information Systems & Global Services
($ millions) 2nd Quarter Year-to-Date
----------- ------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $3,018 $2,858 $5,779 $5,362
Operating profit $248 $272 $490 $502
Operating margin 8.2% 9.5% 8.5% 9.4%
Net sales for IS&GS increased by 6% for the quarter and 8% for the first six months of 2009 from the comparable 2008 periods. In both periods, increases in Defense and Civil partially were offset by declines in Intelligence. Defense sales increased due to higher volume on mission and combat systems activities and readiness and stability operations. Civil increased mainly due to higher volume on enterprise civilian services. Intelligence sales declined slightly between periods.
Operating profit for IS&GS decreased by 9% for the quarter and 2% for the first six months of 2009 from the comparable 2008 periods. During the second quarter, operating profit declines in Civil and Intelligence more than offset growth in Defense. The decrease in Civil primarily was attributable to the absence of a favorable 2008 performance adjustment on an enterprise civilian services program. The decrease in Intelligence was mainly due to lower volume and performance on security solutions activities. The increase in Defense mainly was due to volume and improved performance in mission and combat systems and readiness and stability operations.
During the first six months of the year, operating profit declines in Civil and Intelligence more than offset growth in Defense. The decrease in Civil primarily was attributable to the absence in 2009 of a benefit recognized in the first quarter of 2008 for a contract restructuring and the second quarter 2008 performance adjustment discussed above, both of which occurred on an enterprise civilian services program. The decrease in Intelligence was mainly due to lower volume and performance on enterprise integration activities. The increase in Defense mainly was due to volume and improved performance in mission and combat systems and readiness and stability operations.
The prior period amounts for IS&GS have been reclassified to conform to its current lines of business (Civil, Defense and Intelligence). The realignment had no impact on the segment's operating results.
Aeronautics
($ millions) 2nd Quarter Year-to-Date
----------- ------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $3,086 $2,884 $5,867 $5,691
Operating profit $399 $366 $754 $689
Operating margin 12.9% 12.7% 12.9% 12.1%
Net sales for Aeronautics increased by 7% for the quarter and 3% for the first six months of 2009 from the comparable 2008 periods. During the quarter, the increase in Combat Aircraft sales partially was offset by declines in Air Mobility and Other Aeronautics Programs. The increase in Combat Aircraft mainly was due to higher volume on F-35 and F-16 programs. The decrease in Air Mobility mainly was attributable to lower volume on C-130J support and C-5 programs. The decrease in Other Aeronautics Programs principally was due to lower volume on sustainment activities, which partially was offset by growth on advanced development programs.
During the first six months of the year, sales increased in all three lines of business. The increase in Combat Aircraft mainly was due to higher volume on F-35 and F-16 programs, which more than offset lower volume on the F-22 program. The increase in Other Aeronautics Programs principally was due to growth on advanced development programs, which more than offset the lower volume on sustainment activities. Air Mobility sales increased slightly between periods.
Operating profit for Aeronautics increased by 9% for both the quarter and first six months of 2009 from the comparable 2008 periods. In both periods, the growth in operating profit primarily was due to increases in Combat Aircraft and Air Mobility. The increase in Combat Aircraft operating profit primarily was due to higher volume and improved performance on the F-35 program and improved performance on the F-22 program. These increases more than offset declines in operating profit on F-16 programs mainly due to the absence of favorable 2008 performance adjustments in 2009. The increase in Air Mobility was mainly attributable to improved performance on C-130 support activities and C-5 programs.
Space Systems
($ millions) 2nd Quarter Year-to-Date
----------- ------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $2,056 $2,202 $3,974 $4,085
Operating profit $224 $268 $436 $499
Operating margin 10.9% 12.2% 11.0% 12.2%
Net sales for Space Systems decreased by 7% for the quarter and 3% for the first six months of 2009 from the comparable 2008 periods. During the quarter, declines in sales at Space Transportation and Satellites more than offset growth in Strategic & Defensive Missile Systems (S&DMS). The decrease in Space Transportation primarily was due to lower volume in commercial launch vehicle activities and on the Orion program in 2009. There were no commercial launches during the first six months of 2009. During the first six months of 2008, there was one commercial launch which occurred during the second quarter of the year. The sales decline in Satellites was due to lower volume in commercial satellite activities, which more than offset higher volume in government satellite activities. There were no commercial satellite deliveries during the first six months of 2009. In 2008, there was one commercial satellite delivery during the second quarter and two during the first six months of the year. S&DMS sales increased mainly due to higher volume on strategic missile programs.
During the first six months of the year, declines in sales at Space Transportation and S&DMS more than offset growth in Satellites. The decrease in Space Transportation primarily was due to lower volume in commercial launch vehicle activities and on the Orion program in 2009. S&DMS sales decreased mainly due to lower volume on defensive missile programs, which more than offset growth in strategic missile programs. The sales growth in Satellites was due to higher volume in government satellite activities, which partially was offset by lower volume in commercial satellite activities.
Operating profit for Space Systems decreased by 16% for the quarter and 13% for the first six months of 2009 from the comparable 2008 periods. During the quarter, Satellites operating profit decreased primarily due to the decline in commercial deliveries, which more than offset increases associated with the higher volume on government satellite activities. In Space Transportation the decrease mainly was attributable to volume on the Orion program and volume and performance on the space shuttle's external tank program. The decrease in S&DMS primarily was attributable to lower volume on defensive missile programs.
During the first six months of the year, Space Transportation's operating profit decrease mainly was attributable to lower equity earnings on the United Launch Alliance joint venture and the absence in 2009 of a benefit recognized in 2008 from the successful negotiations of a terminated commercial launch vehicle contract. The decrease in S&DMS' operating profit primarily was attributable to lower volume on defensive missile programs. In Satellites, the operating profit increase mainly was due to higher volume and improved performance on government satellite activities, which was partially offset by lower volume in commercial satellite activities.
Unallocated Corporate Income (Expense), Net
($ millions) 2nd Quarter Year-to-Date
----------- ------------
2009 2008 2009 2008
---- ---- ---- ----
FAS/CAS pension adjustment $(115) $32 $(229) $64
Stock compensation expense (42) (40) (72) (75)
Unusual items -- 85 -- 101
Other, net (37) (29) (35) (14)
---- ---- ---- ----
Unallocated corporate
income (expense), net $(194) $48 $(336) $76
===== === ===== ===
Consistent with the manner in which the Corporation's business segment operating performance is evaluated by senior management, certain items are excluded from the business segment results and included in "Unallocated corporate income (expense), net." See the Corporation's 2008 Form 10-K for a description of "Unallocated corporate income (expense), net," including the FAS/CAS pension adjustment.
The FAS/CAS pension adjustment (calculated as the difference between FAS 87 expense and the CAS cost amounts) resulted in an expense in 2009 compared to income in 2008 due to the negative actual return on plan assets in 2008 and a lower discount rate at December 31, 2008. This trend is consistent with the Corporation's previously disclosed assumptions used to compute these amounts.
For purposes of segment reporting, unusual items are included in "Unallocated corporate income (expense), net":
2009 -
-- There were no unusual items during the first six months of the year.
2008 -
-- Second quarter earnings, net of state income taxes, of $85 million
associated with reserves related to various land sales that are no
longer required. Reserves were recorded at the time of each land sale
based on the U.S. Government's assertion of its right to share in the
sale proceeds. This matter was favorably settled with the U.S.
Government in the second quarter. This item increased net earnings by
$56 million ($0.14 per share) during the second quarter of 2008; and
-- A first quarter gain, net of state income taxes, of $16 million
representing the recognition of a portion of the deferred net gain
from the 2006 sale of the Corporation's ownership interest in Lockheed
Khrunichev Energia International, Inc. (LKEI) and International Launch
Services, Inc. (ILS). At the time of the sale, the Corporation
deferred recognition of the gain pending the expiration of its
responsibility to refund advances for future launch services. This
item increased net earnings by $10 million ($0.02 per share) during
the first quarter of 2008.
These items increased 2008 net earnings by $66 million ($0.16 per share) during the first six months of 2008.
Income Taxes
Our effective income tax rates were 30.4% and 31.1% for the quarter and six months ended June 28, 2009 and 32.4% and 32.5% for the quarter and six months ended June 29, 2008. These rates were lower than the statutory rate of 35% for all periods due to tax benefits for U.S. manufacturing activities and dividends related to our employee stock ownership plans. The effective tax rates for the second quarter and first six months of 2009 are lower than the comparable periods in 2008, primarily due to the partial elimination of a valuation allowance previously provided against certain foreign company deferred tax assets arising from carryforwards of unused tax benefits and the extension of the research and development (R&D) credit as a result of the enactment on October 3, 2008, of the Emergency Economic Stabilization Act (EESA) of 2008. Although EESA retroactively extended the R&D credit for two years from January 1, 2008 to December 31, 2009, we did not recognize the benefit until EESA became law in the fourth quarter of 2008.
Headquartered in Bethesda, Md., Lockheed Martin is a global security company that employs about 146,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The Corporation reported 2008 sales of $42.7 billion.
Conference call: Lockheed Martin will webcast the earnings conference call (listen-only mode) at 11:00 a.m. E.D.T. on July 21, 2009. A live audio broadcast, including relevant charts, will be available on the Investor Relations page of the company's web site 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 due to 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 the priorities of Congress and the Administration, budgetary constraints, and cost-cutting initiatives); the impact of economic recovery and stimulus plans and continued military operations in Iraq and Afghanistan on funding for existing defense programs; the award or termination of contracts; actual returns (or losses) on pension plan assets, interest and discount rates and other changes that may impact pension plan assumptions; changes in counter-party credit risk exposure; 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, rulemaking, and changes in accounting, tax, defense procurement, 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 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 2008 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 20, 2009. 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 adjustments related to postretirement benefit plans.
(In millions, except percentages) 2009 Projections
----------------
Current Update April 2009
-------------- ----------
Net Earnings Combined Combined
Interest Expense
(multiplied by 65%)(1)
Return >/= $3,000 >/= $3,000
Average debt (2, 5) Combined Combined
Average equity (3, 5)
Average Benefit Plan
Adjustments(4,5)
Average Invested Capital </= $16,200 </= $16,200
Return on Invested Capital >/= 18.5% >/= 18.5%
(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 unrecognized
benefit plan actuarial losses and prior service costs, the adjustment
for the adoption of FAS 158 in 2006 and the additional minimum
pension liability in years prior to 2007.
(4) Average Benefit Plan Adjustments reflect the cumulative value of
entries identified in our Statement of Stockholders' Equity discussed
in Note 3.
(5) Yearly averages are calculated using balances at the start of the
year and at the end of each quarter.
LOCKHEED MARTIN CORPORATION
Condensed Consolidated Statement of Earnings
Unaudited
(In millions, except per share data and percentages)
THREE MONTHS SIX MONTHS
ENDED ENDED
------------- -----------
June 28, June 29, June 28, June 29,
2009 (a) 2008 (a) 2009 (a) 2008 (a)
--------- --------- --------- ---------
Net sales $11,236 $11,039 $21,609 $21,022
Cost of sales 10,224 9,848 19,592 18,762
------ ----- ------ ------
1,012 1,191 2,017 2,260
Other income (expense),
net 71 172 123 281
-- --- --- ---
Operating profit 1,083 1,363 2,140 2,541
Interest expense 76 92 152 179
Other non-operating
income (expense), net 47 34 44 27
-- -- -- --
Earnings before income
taxes 1,054 1,305 2,032 2,389
Income tax expense 320 423 632 777
--- --- --- ---
Net earnings $734 $882 $1,400 $1,612
==== ==== ====== ======
Effective tax rate 30.4% 32.4% 31.1% 32.5%
==== ==== ==== ====
Earnings per common share:
Basic $1.90 $2.21 $3.59 $4.00
Diluted $1.88 $2.15 $3.55 $3.90
Average number of shares
outstanding
Basic 386.9 399.3 390.2 402.9
Diluted 390.9 409.5 394.2 413.2
Common shares reported in
stockholders' equity
at quarter end: 381.7 393.9
(a) It is our practice to close our books and records on the Sunday prior
to the end of the calendar quarter. The interim financial statements
and tables of financial information included herein are labeled based
on that convention.
A
LOCKHEED MARTIN CORPORATION
Net Sales, Segment Operating Profit and Margins
Unaudited
(In millions, except percentages)
THREE MONTHS ENDED
------------------
June 28, 2009 June 29, 2008 % Change
------------- ------------- --------
Net sales
---------
Electronic Systems $3,076 $3,095 (1)%
Information Systems & Global
Services 3,018 2,858 6
Aeronautics 3,086 2,884 7
Space Systems 2,056 2,202 (7)
----- -----
Total net sales $11,236 $11,039 2%
======= =======
Operating profit
----------------
Electronic Systems $406 $409 (1)%
Information Systems & Global
Services 248 272 (9)
Aeronautics 399 366 9
Space Systems 224 268 (16)
--- ---
Segment operating profit 1,277 1,315 (3)
Unallocated corporate
(expense) income, net (194) 48
---- --
$1,083 $1,363 (21)%
====== ======
Margins:
--------
Electronic Systems 13.2% 13.2%
Information Systems & Global
Services 8.2 9.5
Aeronautics 12.9 12.7
Space Systems 10.9 12.2
Total operating segments 11.4% 11.9%
Total consolidated 9.6% 12.3%
SIX MONTHS ENDED
----------------
June 28, 2009 June 29, 2008 % Change
------------- ------------- --------
Net sales
---------
Electronic Systems $5,989 $5,884 2%
Information Systems & Global
Services 5,779 5,362 8
Aeronautics 5,867 5,691 3
Space Systems 3,974 4,085 (3)
----- -----
Total net sales $21,609 $21,022 3%
======= =======
Operating profit
----------------
Electronic Systems $796 $775 3%
Information Systems & Global
Services 490 502 (2)
Aeronautics 754 689 9
Space Systems 436 499 (13)
--- ---
Segment operating profit 2,476 2,465 -
Unallocated corporate
(expense) income, net (336) 76
---- --
$2,140 $2,541 (16)%
====== ======
Margins:
--------
Electronic Systems 13.3% 13.2%
Information Systems & Global
Services 8.5 9.4
Aeronautics 12.9 12.1
Space Systems 11.0 12.2
Total operating segments 11.5% 11.7%
Total consolidated 9.9% 12.1%
B
LOCKHEED MARTIN CORPORATION
Selected Financial Data
Unaudited
(In millions, except per share data)
THREE MONTHS ENDED
------------------
June 28, 2009 June 29, 2008
------------- -------------
Unallocated corporate
(expense) income, net
----------------------
FAS/CAS pension adjustment $(115) $32
Stock compensation expense (42) (40)
Unusual items - 85
Other, net (37) (29)
--- ---
Unallocated corporate
(expense) income, net $(194) $48
===== ===
THREE MONTHS ENDED
------------------
June 28, 2009 June 29, 2008
------------- -------------
FAS/CAS pension adjustment
--------------------------
FAS 87 expense $(259) $(115)
Less: CAS costs (144) (147)
---- ----
FAS/CAS pension adjustment -
(expense) income $(115) $32
===== ===
THREE MONTHS ENDED JUNE 29, 2008(1)
-----------------------------------
Earnings
Operating profit Net earnings per share
---------------- ------------ ---------
Unusual Items - 2008
--------------------
Earnings associated with
prior years' land sales $85 $56 $0.14
Partial recognition of the
deferred gain from the 2006
sale of LKEI and ILS - - -
--- --- ---
$85 $56 $0.14
=== === =====
SIX MONTHS ENDED
----------------
June 28, 2009 June 29, 2008
------------- -------------
Unallocated corporate
(expense) income, net
---------------------
FAS/CAS pension adjustment $(229) $64
Stock compensation expense (72) (75)
Unusual items - 101
Other, net (35) (14)
--- ---
Unallocated corporate
(expense) income, net $(336) $76
===== ===
SIX MONTHS ENDED
----------------
June 28, 2009 June 29, 2008
------------- -------------
FAS/CAS pension adjustment
--------------------------
FAS 87 expense $(518) $(231)
Less: CAS costs (289) (295)
---- ----
FAS/CAS pension adjustment -
(expense) income $(229) $64
===== ===
SIX MONTHS ENDED JUNE 29, 2008(1)
---------------------------------
Earnings
Operating profit Net earnings per share
---------------- ------------ ---------
Unusual Items - 2008
--------------------
Earnings associated with
prior years' land sales $85 $56 $0.14
Partial recognition of the
deferred gain from the 2006
sale of LKEI and ILS 16 10 0.02
-- -- ----
$101 $66 $0.16
==== === =====
(1) There were no unusual items reported in Unallocated corporate
(expense) income, net in the first six months of 2009.
C
LOCKHEED MARTIN CORPORATION
Selected Financial Data
Unaudited
(In millions)
THREE MONTHS SIX MONTHS
ENDED ENDED
------------- -----------
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
--------- --------- --------- ---------
Depreciation and amortization
of plant and equipment
-----------------------------
Electronic Systems $59 $66 $117 $120
Information Systems & Global
Services 18 17 32 33
Aeronautics 47 43 94 85
Space Systems 42 37 85 73
-- -- -- --
Segments 166 163 328 311
Unallocated corporate expense, net 15 12 28 24
-- -- -- --
Total depreciation and
amortization
of plant and equipment $181 $175 $356 $335
==== ==== ==== ====
THREE MONTHS SIX MONTHS
ENDED ENDED
------------- -----------
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
--------- --------- --------- ---------
Amortization of purchased
intangibles
-------------------------
Electronic Systems $3 $1 $5 $6
Information Systems & Global
Services 10 10 21 23
Aeronautics 13 13 25 26
Space Systems 1 -- 3 2
--- --- --- ---
Segments 27 24 54 57
Unallocated corporate expense, net -- 3 -- 6
--- --- --- ---
Total amortization of purchased
intangibles $27 $27 $54 $63
=== === === ===
D
LOCKHEED MARTIN CORPORATION
Condensed Consolidated Balance Sheet
Unaudited
(In millions)
JUNE 28, DECEMBER 31,
2009 2008
---- ----
Assets
------
Cash and cash equivalents $2,672 $2,168
Receivables 6,131 5,296
Inventories 1,852 1,902
Deferred income taxes 785 755
Other current assets 473 562
--- ---
Total current assets 11,913 10,683
Property, plant and equipment, net 4,441 4,488
Goodwill 9,725 9,526
Purchased intangibles, net 339 355
Prepaid pension asset 130 122
Deferred income taxes 4,542 4,651
Other assets 3,698 3,614
----- -----
Total assets $34,788 $33,439
======= =======
Liabilities and Stockholders' Equity
------------------------------------
Accounts payable $2,162 $2,030
Customer advances and amounts in excess of
costs incurred 4,795 4,535
Other current liabilities 4,088 3,735
Current maturities of long-term debt 242 242
--- ---
Total current liabilities 11,287 10,542
Long-term debt, net 3,563 3,563
Accrued pension liabilities 12,530 12,004
Other postretirement benefit and other
noncurrent liabilities 4,588 4,465
Stockholders' equity 2,820 2,865
----- -----
Total liabilities and stockholders' equity $34,788 $33,439
======= =======
Total debt-to-capitalization ratio: 57% 57%
== ==
E
LOCKHEED MARTIN CORPORATION
Condensed Consolidated Statement of Cash Flows
Unaudited
(In millions)
SIX MONTHS ENDED
----------------
June 28, 2009 June 29, 2008
------------- -------------
Operating Activities
--------------------
Net earnings $1,400 $1,612
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization of plant and
equipment 356 335
Amortization of purchased intangibles 54 63
Stock-based compensation 72 75
Excess tax benefits on stock compensation (13) (43)
Changes in operating assets and liabilities:
Receivables (812) (266)
Inventories 101 95
Accounts payable 118 (176)
Customer advances and amounts in excess of
costs incurred 219 (3)
Other 859 676
--- ---
Net cash provided by operating activities
(a) 2,354 2,368
----- -----
Investing Activities
--------------------
Expenditures for property, plant and
equipment (299) (274)
Net proceeds from short-term investment
transactions - 237
Acquisitions of businesses / investments in
affiliates (187) (88)
Other (14) 40
--- --
Net cash used for investing activities (500) (85)
---- ---
Financing Activities
--------------------
Repurchases of common stock (969) (1,930)
Issuances of common stock and related
amounts 23 117
Excess tax benefits on stock compensation 13 43
Common stock dividends (449) (340)
Issuance of long-term debt and related costs - 491
Repayments of long-term debt - (103)
--- ----
Net cash used for financing activities (1,382) (1,722)
------ ------
Effect of exchange rate changes on cash and
cash equivalents (a) 32 5
Net increase in cash and cash equivalents 504 566
Cash and cash equivalents at beginning of
period 2,168 2,648
----- -----
Cash and cash equivalents at end of period $2,672 $3,214
====== ======
(a) In the fourth quarter of 2008, the Corporation reclassified the effect
of exchange rate changes on cash from "Cash from operations" to a
separate caption in the Statement of Cash Flows. Accordingly, the
prior period amount now reflects this presentation.
F
LOCKHEED MARTIN CORPORATION
Condensed Consolidated Statement of Stockholders' Equity
Unaudited
(In millions, except per share data)
Accumulated
Additional Other Total
Common Paid-In Retained Comprehensive Stockholders'
Stock Capital Earnings Loss Equity
----- ------- -------- ---- ------
Balance at
December 31,
2008 $393 $- $11,621 $(9,149) $2,865
Net earnings 1,400 1,400
Common stock
dividends
declared (a) (670) (670)
Stock-based
awards and
ESOP activity 3 190 193
Common stock
repurchases
(b) (14) (190) (804) (1,008)
Other
comprehensive
income 40 40
--- --- --- --- ---
Balance at
June 28, 2009 $382 $- $11,547 $(9,109) $2,820
==== === ======= ======= ======
(a) Includes dividends ($0.57 per share) declared and paid in the first
and second quarters. This amount also includes a dividend ($0.57
per share) that was declared on June 25, 2009 and is payable on
September 25, 2009 to shareholders of record on September 1, 2009.
(b) The Corporation repurchased 5.6 million shares for $453 million
during the second quarter. Year-to-date, the Corporation has
repurchased 13.7 million common shares for $1.0 billion. The
Corporation has 20.0 million shares remaining under its share
repurchase program as of June 28, 2009.
G
LOCKHEED MARTIN CORPORATION
Operating Data
Unaudited
June 28, December 31,
2009 2008
---- ----
Backlog
-------
(In millions)
Electronic
Systems $21,000(1) $22,500
Information
Systems &
Global
Services 11,900(2) 13,300
Aeronautics 27,900 27,200
Space Systems 18,400 17,900
------ ------
Total $79,200 $80,900
======= =======
(1) Reflects the termination for convenience of the VH-71 program, a $985
million reduction of backlog.
(2) Reflects the termination for convenience of the TSAT Mission
Operations System (TMOS) program, a $1,600 million reduction of
backlog.
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
Aircraft
Deliveries June 28, 2009 June 29, 2008 June 28, 2009 June 29, 2008
------------ ------------- ------------- ------------- -------------
F-16 8 7 16 16
F-22 5 6 10 10
C-130J 3 3 6 6
First Call Analyst: Randa Middleton
FCMN Contact:
SOURCE: Lockheed Martin Corporation
CONTACT: NEWS MEDIA, Jeff Adams, +1-301-897-6308; INVESTOR RELATIONS,
Jerry Kircher, +1-301-897-6584
Web Site: http://www.lockheedmartin.com/