BETHESDA, Md., Jan. 29, 2018 /PRNewswire/ -- Lockheed Martin (NYSE: LMT) today reported fourth quarter 2017 net sales of $15.1 billion, compared to $13.8 billion in the fourth quarter of 2016. Net loss from continuing operations in the fourth quarter of 2017 was $715 million, or $2.50 per share, compared to net earnings from continuing operations of $959 million, or $3.25 per share, in the fourth quarter of 2016. The net loss from continuing operations in the fourth quarter of 2017 included a net one-time charge of $1.9 billion ($6.80 per share), substantially all of which was non-cash, primarily related to the estimated impacts of the Tax Cuts and Jobs Act (the "Tax Act"). Excluding the estimated impacts of the Tax Act, adjusted earnings from continuing operations were $1.2 billion, or $4.30 per share, in the fourth quarter of 2017 compared with $959 million, or $3.25 per share, in the fourth quarter of 2016. Cash from operations in the fourth quarter of 2017 was $1.5 billion, compared to $729 million in the fourth quarter of 2016.

Net sales in 2017 were $51.0 billion, compared to $47.2 billion in 2016. Net earnings from continuing operations in 2017 were $1.9 billion, or $6.64 per share, compared to $3.8 billion, or $12.38 per share, in 2016. Earnings from continuing operations in 2017 included a net one-time charge of $1.9 billion ($6.69 per share), substantially all of which was non-cash, primarily related to the estimated impacts of the Tax Act. Excluding the estimated impacts of the Tax Act, adjusted earnings from continuing operations were $3.9 billion, or $13.33 per share, in 2017 compared with $3.8 billion, or $12.38 per share, in 2016. Cash from operations in 2017 was $6.5 billion, compared to cash from operations in 2016 of $5.2 billion.

"We delivered outstanding performance as we completed 2017, which enabled us to end the year with strong sales growth, $6.5 billion of cash from operations and a backlog of nearly $100 billion, while also returning over $4.0 billion to our shareholders," said Marillyn Hewson, Chairman, President and CEO. "Looking ahead to 2018, we remain focused on meeting commitments to customers, pursuing new business growth opportunities, investing in innovative solutions to prepare for the future, and returning value to our shareholders."

Summary Financial Results

The following table presents the corporation's summary financial results.

2018 Financial Outlook

The following table and other sections of this news release contain forward-looking statements, which are based on the corporation's current expectations. Actual results may differ materially from those projected. It is the corporation's practice not to incorporate adjustments into its financial outlook for proposed acquisitions, divestitures, ventures, changes in law and new accounting standards until such items have been consummated, enacted or adopted. For additional factors that may impact the corporation's actual results, refer to the "Forward-Looking Statements" section in this news release.

Effective Jan. 1, 2018, the corporation adopted two new accounting standards (Accounting Standard Update (ASU) No. 2014-09, Revenue from Contracts with Customers, as amended (Topic 606) (commonly referred to as ASC 606) and ASU No. 2017-07, Compensation-Retirement Benefits (Topic 715)). The 2017 Pro Forma for New Accounting Standards and the 2018 Current Outlook reflect the changes resulting from the adoption of the new accounting standards. For further information on the impact of the corporation's adoption of the new standards, refer to the New Accounting Standards and Pro Forma Consolidated Statements of Earnings included in the supplemental tables of this news release.

The corporation expects the net 2018 FAS/CAS pension benefit to be approximately $1.0 billion assuming a 3.625 percent discount rate (a 50 basis point decrease from the end of 2016), an approximately 13.00 percent return on plan assets in 2017 (a 550 basis point increase from the expected rate of return at the end of 2016), a 7.50 percent expected long-term rate of return on plan assets in future years, and the revised longevity assumptions released during the fourth quarter of 2017 by the Society of Actuaries. The corporation will make contributions of $5.0 billion to its qualified defined benefit pension plans in 2018, including required and discretionary contributions. As a result of these contributions, the corporation does not anticipate any material qualified defined benefit funding will be required until 2021. As a result of adopting ASU No. 2017-07 for our qualified defined benefit pension plans, the corporation expects to present a FAS/CAS pension benefit of approximately $1.0 billion in other unallocated net, in cost of sales. The corporation also expects to present a reclassification of non-service FAS net periodic benefit costs for all postretirement benefit plans (including the qualified defined benefit pension plans) of $870 million of non-service pension expense from other unallocated net in cost of sales to other non-operating expense, net.

Cash Deployment Activities

The corporation's cash deployment activities in the quarter and year ended Dec. 31, 2017 consisted of the following: 

• repurchasing 1.6 million shares for $501 million and 7.1 million shares for $2.0 billion during the quarter and year ended Dec. 31, 2017, compared to 3.2 million shares for $816 million and 8.9 million shares for $2.1 billion during the quarter and year ended Dec. 31, 2016;
• paying cash dividends of $572 million and $2.2 billion during the quarter and year ended Dec. 31, 2017, compared to $530 million and $2.0 billion during the quarter and year ended Dec. 31, 2016;
• no long-term debt repayments during the year ended Dec. 31, 2017 compared to repayments of $952 million of long-term debt upon scheduled maturity during the year ended Dec. 31, 2016; and
• making capital expenditures of $507 million and $1.2 billion during the quarter and year ended Dec. 31, 2017, compared to $436 million and $1.1 billion during the quarter and year ended Dec. 31, 2016.

Internal Controls

As previously reported, during the fourth quarter of 2016 the corporation determined that Sikorsky's internal control over financial reporting was ineffective and therefore concluded that a material weakness existed in Lockheed Martin's internal control over financial reporting as of Dec. 31, 2016. Over the course of 2017, the corporation systematically improved controls at Sikorsky in order to remediate the material weakness. During the fourth quarter of 2017, the corporation successfully completed testing of the improved controls and, in its Annual Report on Form 10-K for the year ended Dec. 31, 2017, the corporation will report that it has remediated the material weakness and that management has determined that Lockheed Martin's internal control over financial reporting was effective as of Dec. 31, 2017. There were no material errors in the corporation's financial results or balances and there was no restatement of prior period financial statements and no change in previously released financial results as a result of the material weakness in internal control over financial reporting.

Segment Results

The corporation operates in four business segments organized based on the nature of products and services offered: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. During the fourth quarter of 2017, the corporation changed the name of its Space Systems business segment to Space. This was a change of name only and had no impact on the programs comprised in each business segment.

The following table presents summary operating results of the corporation's business segments and reconciles these amounts to the corporation's consolidated financial results.

Operating profit of the business segments includes the corporation's share of earnings or losses from equity method investees as the operating activities of the equity method investees are closely aligned with the operations of the corporation's business segments. United Launch Alliance (ULA), the results of which are included in the Space business segment, is the corporation's primary equity method investee. Operating profit of the corporation's business segments excludes the FAS/CAS pension adjustment, which represents the difference between total pension expense recorded in accordance with U.S. generally accepted accounting principles (FAS) and pension costs recoverable on U.S. Government contracts as determined in accordance with U.S. Government Cost Accounting Standards (CAS); expense for stock-based compensation; the effects of items not considered part of management's evaluation of segment operating performance, such as charges related to significant severance actions and certain asset impairments; gains or losses from divestitures; the effects of certain legal settlements; corporate costs not allocated to the corporation's business segments; and other miscellaneous corporate activities.

Changes in net sales and operating profit generally are expressed in terms of volume. Changes in volume refer to increases or decreases in sales or operating profit resulting from varying production activity levels, deliveries or service levels on individual contracts. Volume changes in segment operating profit are typically based on the current profit booking rate for a particular contract.

In addition, comparability of the corporation's segment sales, operating profit and operating margin may be impacted favorably or unfavorably by changes in profit booking rates on the corporation's contracts accounted for using the percentage-of-completion method of accounting. Increases in the profit booking rates, typically referred to as risk retirements, usually relate to revisions in the estimated total costs that reflect improved conditions on a particular contract. Conversely, conditions on a particular contract may deteriorate resulting in an increase in the estimated total costs to complete and a reduction in the profit booking rate. Increases or decreases in profit booking rates are recognized in the current period and reflect the inception-to-date effect of such changes. Segment operating profit and margin may also be impacted favorably or unfavorably by other items. Favorable items may include the positive resolution of contractual matters, cost recoveries on restructuring charges, insurance recoveries and gains on sales of assets. Unfavorable items may include the adverse resolution of contractual matters; restructuring charges, except for significant severance actions which are excluded from segment operating results; reserves for disputes; certain asset impairments; and losses on sales of assets.

The corporation's consolidated net profit adjustments not related to volume, including net profit booking rate adjustments and reserves, represented approximately 27 percent and 30 percent of total segment operating profit for the quarter and year ended Dec. 31, 2017, compared to approximately 26 percent and 28 percent for the quarter and year ended Dec. 31, 2016.

Aeronautics

Aeronautics' net sales in the fourth quarter of 2017 increased $639 million, or 12 percent, compared to the same period in 2016. The increase was attributable to higher net sales of approximately $570 million for the F-35 program primarily due to increased production volume and about $150 million for the C-130 program due to increased aircraft deliveries (10 aircraft delivered in 2017 compared to eight in 2016). These increases were partially offset by a decrease of approximately $85 million for the C-5 program due to fewer aircraft deliveries (two aircraft delivered in 2017 compared to three in 2016).

Aeronautics' operating profit in the fourth quarter of 2017 increased $109 million, or 20 percent, compared to the same period in 2016. Operating profit increased approximately $75 million for the F-35 program due to increased aircraft production volume and higher risk retirements; and about $15 million for the C-130 program due to increased aircraft deliveries and pricing mix. Operating profit for the C-5 program was comparable in the fourth quarter of 2017 and 2016. Adjustments not related to volume, including net profit booking rate adjustments, were about $60 million higher in the fourth quarter of 2017 compared to the same period in 2016.

Aeronautics' net sales in 2017 increased $2.4 billion, or 13 percent, compared to 2016. The increase was primarily attributable to higher net sales of approximately $2.0 billion for the F-35 program due to increased volume on production and sustainment; about $260 million for the C-130 program due to increased deliveries (26 aircraft delivered in 2017 compared to 24 in 2016) and due to aircraft configuration mix, partially offset by lower volume for sustainment programs; and about $55 million for the F-16 program due to higher volume on aircraft modernization programs, partially offset by lower deliveries (eight aircraft delivered in 2017 compared to 12 in 2016). These increases were partially offset by a decrease of approximately $155 million for the C-5 program due to lower deliveries (seven aircraft delivered in 2017 compared to nine in 2016).

Aeronautics' operating profit in 2017 increased $277 million, or 15 percent, compared to 2016. Operating profit increased approximately $290 million for the F-35 program due to increased volume on aircraft production and sustainment activities and higher risk retirements and about $85 million for the F-16 program due to higher risk retirements and higher volume on aircraft modernization programs, partially offset by lower deliveries. These increases were partially offset by a decrease of about $30 million due to lower equity earnings from an investee; about $25 million for the C-130 program primarily due to lower volume and the timing of expenses for sustainment programs; and approximately $45 million for other aeronautics programs primarily due to lower risk retirements and the establishment of a reserve recorded in the first quarter of 2017. Adjustments not related to volume, including net profit booking rate adjustments, were about $175 million higher in 2017 compared to 2016.

Missiles and Fire Control

MFC's net sales in the fourth quarter of 2017 increased $536 million, or 31 percent, compared to the same period in 2016. The increase was primarily attributable to higher net sales of approximately $255 million for air and missile defense programs due to increased deliveries (primarily Patriot Advanced Capability-3 (PAC-3)); about $155 million for tactical missile programs due to increased deliveries (primarily Precision Fires) and due to increased deliveries and product configuration mix (Joint Air-to-Surface Standoff Missile (JASSM)); and about $90 million for fire control programs due to increased deliveries (primarily LANTIRN® and SNIPER®).

MFC's operating profit in the fourth quarter of 2017 increased $41 million, or 16 percent, compared to the same period in 2016. Operating profit increased approximately $45 million for air and missile defense programs due to higher risk retirements (primarily Terminal High Altitude Area Defense (THAAD)) and increased deliveries (primarily PAC-3). Operating profit for tactical missiles and fire control programs was comparable in the fourth quarter of 2017 and 2016 with increased deliveries (primarily LANTIRN® and SNIPER®) and a charge recorded in 2016 for a contractual matter that did not recur in 2017 being offset by lower risk retirements (primarily Apache and Precision Fires). Adjustments not related to volume, including net profit booking rate adjustments, were about $10 million lower in the fourth quarter of 2017 compared to the same period in 2016.

MFC's net sales in 2017 increased $604 million, or 9 percent, compared to 2016. The increase was attributable to higher net sales of approximately $250 million for tactical missile programs due to product configuration mix and increased deliveries (JASSM) and due to increased deliveries for various other programs; about $210 million for air and missile defense programs due to contract mix on certain programs (primarily PAC-3) and increased volume on certain programs (primarily THAAD); and about $110 million for fire control programs due to increased deliveries (primarily LANTIRN® and SNIPER®).

MFC's operating profit in 2017 increased $35 million, or 3 percent, compared to 2016. Operating profit increased about $70 million for air and missile defense programs due to increased volume (primarily THAAD), contract mix (primarily PAC-3), a reserve recorded in fiscal year 2016 for a contractual matter that did not recur in 2017, partially offset by lower risk retirements; and about $30 million for fire control programs due to increased deliveries (primarily LANTIRN® and SNIPER®). These increases were partially offset by a decrease of approximately $65 million for tactical missile programs due to lower risk retirements (primarily JASSM and Hellfire) and the establishment of a reserve on a program. Adjustments not related to volume, including net profit booking rate adjustments, were about $80 million lower in 2017 compared to 2016.

Rotary and Mission Systems

RMS' net sales in the fourth quarter of 2017 increased $542 million, or 14 percent, compared to the same period in 2016. The increase was primarily attributable to an increase of approximately $445 million in higher sales for Sikorsky helicopter programs primarily due to aircraft mix and increased deliveries; and an increase of about $65 million for training and logistics services programs due to higher volume.

RMS' operating profit in the fourth quarter of 2017 increased $71 million, or 31 percent, compared to the same period in 2016. Operating profit increased approximately $60 million for Sikorsky helicopter programs due to aircraft mix and increased deliveries. Adjustments not related to volume, including net profit booking rate adjustments, were about $20 million lower in the fourth quarter of 2017 compared to the same period in 2016.

RMS' net sales in 2017 increased $753 million, or 6 percent, compared to 2016. The increase was primarily attributable to approximately $680 million for Sikorsky helicopter programs due to certain adjustments recorded in 2016 required to account for the acquisition and higher volume on certain helicopter programs; and about $160 million for training and logistics services programs due to higher volume. These increases were partially offset by a decrease of about $50 million for integrated warfare systems and sensors (IWSS) programs due to lower volume.

RMS' operating profit in 2017 was comparable with 2016. Operating profit increased about $105 million for Sikorsky helicopter programs due to certain adjustments recorded in 2016 required to account for the acquisition. This increase was offset by a decrease of $100 million for C4ISR & Undersea Systems & Sensors (C4USS) programs due to a net $95 million increase for charges for performance matters on the EADGE-T contract and $20 million for IWSS programs primarily due to a performance matter on the Vertical Launching System (VLS) program, partially offset by higher risk retirements (primarily Littoral Combat Ship (LCS)). Adjustments not related to volume, including net profit booking rate adjustments, were about $55 million lower in 2017 compared to 2016.

Space

Space's net sales in the fourth quarter of 2017 decreased $332 million, or 12 percent, compared to the same period in 2016. The decrease was primarily attributable to approximately $300 million for space transportation programs due a reduction in launch-related events.

Space's operating profit in the fourth quarter of 2017 decreased $24 million, or 9 percent, compared to the same period in 2016. Operating profit decreased approximately $45 million for lower equity earnings from ULA and about $30 million for space transportation programs due to a reduction in launch-related events. These decreases were partially offset by an increase of $20 million for government satellite programs (primarily Global Positioning System (GPS)) due to higher risk retirements and about $30 million for commercial satellite programs due to lower charges recorded in the fourth quarter of 2017 for performance matters on certain programs than were recorded in the comparable period of 2016. Adjustments not related to volume, including net profit booking rate adjustments and changes in reserves, were about $45 million higher in the fourth quarter of 2017 compared to the same period in 2016.

Space's net sales in 2017 increased $64 million, or 1 percent, compared to 2016. The increase was attributable to approximately $810 million due to a full year of net sales from AWE in 2017 compared to four months of sales in 2016, which the corporation began consolidating during the third quarter of 2016. This increase was partially offset by a decrease of approximately $300 million for space transportation programs due a reduction in launch-related events; about $255 million for government satellite programs (primarily Advanced Extremely High Frequency (AEHF) and Space Based Infrared System (SBIRS)) due to lower volume; and approximately $190 million across other programs (including the Orion program) due to lower volume.

Space's operating profit in 2017 decreased $296 million, or 23 percent, compared to 2016. Operating profit decreased about $127 million due to the pre-tax gain recorded in 2016 related to the consolidation of AWE; about $95 million for lower equity earnings from ULA; about $30 million for space transportation programs due a reduction in launch-related events; a net decrease of about $25 million related to charges recorded in 2017 for performance matters on certain commercial satellite programs; and about $25 million for government satellite programs (primarily SBIRS and AEHF) due to a charge for performance matters and lower volume. Adjustments not related to volume, including net profit booking rate adjustments and changes in reserves, were about $20 million higher in 2017 compared to 2016.

Total equity earnings recognized by Space (primarily ULA) represented approximately $35 million, or 15 percent and approximately $205 million, or 21 percent, of this business segment's operating profit during the quarter and the year ended Dec. 31, 2017, compared to approximately $85 million, or 33 percent and approximately $325 million, or 25 percent, during the quarter and the year ended Dec. 31, 2016.

Income Taxes

The corporation's effective income tax rate from continuing operations was 142.3 percent and 63.4 percent in the quarter and year ended Dec. 31, 2017, compared to 23.6 percent and 23.2 percent in the quarter and year ended Dec. 31, 2016. During the quarter ended Dec. 31, 2017, the corporation recorded a net one-time charge of $1.9 billion ($6.80 per share in the fourth quarter and $6.69 per share in 2017), substantially all of which was non-cash, primarily related to enactment of the Tax Act which resulted in the re-measurement of certain net deferred tax assets using the lower U.S. corporate income tax rate (approximately $1.8 billion), a deemed repatriation tax (approximately $43 million), and a reduction in the U.S. manufacturing benefit (approximately $81 million) as a result of the corporation's decision to accelerate contributions to its pension fund in 2018. Excluding the net one-time charge, the corporation's effective income tax rate from continuing operations was 27.5 percent and 26.5 percent in the quarter and year ended Dec. 31, 2017.

The rates for all periods benefited from the research and development tax credit and tax deductions for dividends paid to the corporation's defined contribution plans with an employee stock ownership plan feature. The rates for the quarter and year ended Dec. 31, 2016 also benefited from tax deductions for U.S. manufacturing activities. For the year ended Dec. 31, 2017, the rate impact of the U.S. manufacturing benefit was insignificant. The rate in the year ended Dec. 31, 2016 also benefited from the nontaxable gain recorded in connection with the increase in AWE ownership.

The net one-time charge related to the Tax Act is based on the corporation's current estimates. The final impact of the Tax Act may differ materially due to factors such as further refinement of the corporation's calculations, changes in interpretations and assumptions that the corporation has made, additional guidance that may be issued by the U.S. Government, and actions the corporation may take, among other items.

Divestiture and Acquisition

On Aug. 16, 2016, the corporation divested its former IS&GS business, which merged with Leidos Holdings, Inc. (Leidos) in a Reverse Morris Trust transaction (the Transaction). As part of the transaction, the corporation also completed an exchange offer that resulted in a reduction of Lockheed Martin common stock outstanding by approximately 9.4 million shares (approximately three percent). Additionally, Lockheed Martin received a one-time special cash payment of $1.8 billion, which is reported under financing activities in the consolidated statements of cash flows. The corporation recognized an initial $1.2 billion gain in net earnings from discontinued operations as a result of the Transaction. In the fourth quarter of 2017 the corporation recognized an additional gain on discontinued operations of $73 million, which reflects certain post-closing adjustments, including certain tax adjustments and the final determination of net working capital.

On Aug. 24, 2016, the corporation increased its ownership interest in the AWE joint venture from 33 percent to 51 percent at which time it began consolidating AWE. Consequently, the corporation's operating results for the year ended 2017 include 100 percent of AWE's sales and 51 percent of its operating profit. Prior to increasing its ownership interest, the corporation accounted for its investment in AWE using the equity method of accounting. Under the equity method, the corporation recognized only 33 percent of AWE's earnings or losses and no sales. Accordingly, prior to Aug. 24, 2016, the date the corporation obtained control, it recorded 33 percent of AWE's net earnings in the corporation's operating results and subsequent to Aug. 24, 2016, it recognized 100 percent of AWE's sales and 51 percent of its operating profit. Additionally, in the year ended 2016, the corporation recorded a net gain of $104 million associated with obtaining control of AWE, which consisted of a $127 million pre tax gain recognized in the operating results of our Space business segment and $23 million of deferred tax liabilities recorded at our corporate office.

Use of Non-GAAP Financial Measures

This news release contains the following non-GAAP financial measures:

• Adjusted earnings from continuing operations and adjusted earnings per share from continuing operations are calculated by adding (1) net (loss) earnings from continuing operations (GAAP) (or diluted (loss) earnings per share from continuing operations (GAAP)) plus (2) the net one-time charge of $1.9 billion (or $6.80 per share for the quarter ended Dec. 31, 2017 and $6.69 per share for the year ended Dec. 31, 2017).
• 2017 pro forma for new accounting standards diluted earnings per share - adjusted is calculated by adding (1) 2017 pro forma diluted earnings per share from continuing operations - GAAP plus (2) the net one-time charge of $6.74 per share for the year ended Dec. 31, 2017.

Management believes that the exclusion of the net one-time charge, which is  primarily related to the estimated impacts of the Tax Act, provides a more useful comparison of the corporation's underlying business performance from period to period. It also provides investors and management useful information about the performance of the underlying business prior to the impact of the net one-time charge for the impacts of the Tax Act.  However, this information is supplemental and should not be considered a substitute for financial measures prepared in accordance with GAAP.

Conference Call Information

Lockheed Martin will webcast live the earnings results conference call (listen-only mode) on Monday, Jan. 29, 2018, at 10:00 a.m. ET. The live webcast and relevant financial charts will be available for download on the Lockheed Martin Investor Relations website at www.lockheedmartin.com/investor.

For additional information, visit our website: www.lockheedmartin.com.

About Lockheed Martin

Headquartered in Bethesda, Maryland, Lockheed Martin is a global security and aerospace company that employs approximately 100,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.

Forward-Looking Statements

This news release contains statements that, to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of the federal securities laws, and are based on Lockheed Martin's current expectations and assumptions. The words "believe," "estimate," "anticipate," "project," "intend," "expect," "plan," "outlook," "scheduled," "forecast" and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results may differ materially due to factors such as:

• the corporation's reliance on contracts with the U.S. Government, which are conditioned upon the availability of funding and can be terminated by the U.S. Government for convenience, and the corporation's ability to negotiate favorable contract terms;
• budget uncertainty, any failure to further raise the debt ceiling, and the potential for a government shutdown; affordability initiatives; the implementation of automatic sequestration under the Budget Control Act of 2011 or Congressional actions intended to replace sequestration;
• risks related to the development, production, sustainment, performance, schedule, cost and requirements of complex and technologically advanced programs including the corporation's largest, the F-35 program;
• economic, industry, business and political conditions including their effects on governmental policy;
• the corporation's success expanding into and doing business in adjacent markets and internationally; the differing risks posed by international sales, including those involving commercial relationships with unfamiliar customers and different cultures; our ability to recover investments which is frequently dependent upon the successful operation of ventures that we do not control; and changes in foreign national priorities, and foreign government budgets;
• the competitive environment for the corporation's products and services, including increased pricing pressures, competition from outside the aerospace and defense industry, and increased bid protests;
• planned production rates for significant programs; compliance with stringent performance and reliability standards; materials availability;
• the performance and financial viability of key suppliers, teammates, ventures, venture partners, subcontractors and customers;
• the timing and customer acceptance of product deliveries;
• the corporation's ability to continue to innovate and develop new products and to attract and retain key personnel and transfer knowledge to new personnel; the impact of work stoppages or other labor disruptions;
• the impact of cyber or other security threats or other disruptions to the corporation's businesses;
• the corporation's ability to implement and continue capitalization changes such as share repurchases and dividend payments (including the availability of sufficient net earnings to permit such distributions under Maryland law), pension funding as well as the pace and effect of any such capitalization changes;
• the corporation's ability to recover certain costs under U.S. Government contracts and changes in contract mix;
• the accuracy of the corporation's estimates and projections;
• movements in interest rates and other changes that may affect pension plan assumptions, equity, the level of the FAS/CAS adjustment and actual returns on pension plan assets;
• realizing the anticipated benefits of acquisitions or divestitures, ventures, teaming arrangements or internal reorganizations, and the corporation's efforts to increase the efficiency of its operations and improve the affordability of its products and services;
• risk of an impairment of goodwill, investments or other long-term assets, including the potential impairment of goodwill, intangible assets and inventory recorded as a result of the Sikorsky acquisition if Sikorsky does not perform as expected, has a deterioration of projected cash flows, negative changes in market factors, including oil and gas trends, or a significant increase in carrying value of the reporting unit;
• the adequacy of the corporation's insurance and indemnities;
• the effect of changes in (or the interpretation of): legislation, regulation or policy, including those applicable to procurement (including competition from fewer and larger prime contractors), cost allowability or recovery, accounting, taxation (including the impact of the Tax Cuts and Jobs Act), or export; and
• the outcome of legal proceedings, bid protests, environmental remediation efforts, government investigations or government allegations that we have failed to comply with law, other contingencies and U.S. Government identification of deficiencies in the corporation's business systems.

These are only some of the factors that may affect the forward-looking statements contained in this news release. For a discussion identifying additional important factors that could cause actual results to vary materially from those anticipated in the forward-looking statements, see the corporation's filings with the U.S. Securities and Exchange Commission (SEC) including, but not limited to, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" in the corporation's Annual Report on Form 10-K for the year ended Dec. 31, 2016 and subsequent quarterly reports on Form 10-Q. The corporation's filings may be accessed through the Investor Relations page of its website, www.lockheedmartin.com/investor, or through the website maintained by the SEC at www.sec.gov.

The corporation's actual financial results likely will be different from those projected due to the inherent nature of projections. Given these uncertainties, forward-looking statements should not be relied on in making investment decisions. The forward-looking statements contained in this news release speak only as of the date of its filing. Except where required by applicable law, the corporation expressly disclaims a duty to provide updates to forward-looking statements after the date of this news release to reflect subsequent events, changed circumstances, changes in expectations, or the estimates and assumptions associated with them. The forward-looking statements in this news release are intended to be subject to the safe harbor protection provided by the federal securities laws.