BETHESDA, Md., Oct. 20, 2020 /PRNewswire/ -- Lockheed Martin
Corporation [NYSE: LMT] today reported third quarter 2020 net sales
of $16.5 billion, compared to
$15.2 billion in the third quarter of
2019. Net earnings from continuing operations in the third quarter
of 2020 were $1.8 billion, or
$6.25 per share, compared to
$1.6 billion, or $5.66 per share, in the third quarter of
2019. Cash from operations in the third quarter of 2020 was
$1.9 billion, compared to cash from
operations of $2.5 billion in the
third quarter of 2019.
"In the third quarter, our dedicated workforce and resilient
supply chain continued to support our customers' vital national
security missions, overcoming the challenges of the pandemic," said
James Taiclet, Lockheed Martin
president and CEO. "As a result, we delivered strong results across
our key financial metrics and we expect to build on this success
through the remainder of the year. Looking ahead to 2021, we remain
focused on driving innovation and growing our assets and
capabilities to further benefit our customers and
shareholders."
Summary Financial Results
The following table presents the corporation's summary financial
results.
|
(in millions,
except per share data)
|
|
Quarters
Ended1
|
|
Nine Months
Ended
|
|
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
Net
sales
|
|
$
|
16,495
|
|
|
$
|
15,171
|
|
|
$
|
48,366
|
|
|
$
|
43,934
|
|
|
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit2
|
|
$
|
1,762
|
|
|
$
|
1,665
|
|
|
$
|
5,277
|
|
|
$
|
4,934
|
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
469
|
|
|
513
|
|
|
1,407
|
|
|
1,537
|
|
|
Other,
net3,4
|
|
(84)
|
|
|
(73)
|
|
|
(329)
|
|
|
(75)
|
|
|
Total unallocated
items
|
|
385
|
|
|
440
|
|
|
1,078
|
|
|
1,462
|
|
|
Consolidated
operating profit
|
|
$
|
2,147
|
|
|
$
|
2,105
|
|
|
$
|
6,355
|
|
|
$
|
6,396
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss) from
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
1,753
|
|
|
$
|
1,608
|
|
|
$
|
5,096
|
|
|
$
|
4,732
|
|
|
Discontinued
operations5
|
|
(55)
|
|
|
—
|
|
|
(55)
|
|
|
—
|
|
|
Net
earnings6
|
|
$
|
1,698
|
|
|
$
|
1,608
|
|
|
$
|
5,041
|
|
|
$
|
4,732
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share from
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
6.25
|
|
|
$
|
5.66
|
|
|
$
|
18.12
|
|
|
$
|
16.66
|
|
|
Discontinued
operations5
|
|
(0.20)
|
|
|
—
|
|
|
(0.20)
|
|
|
—
|
|
|
Diluted earnings
per share
|
|
$
|
6.05
|
|
|
$
|
5.66
|
|
|
$
|
17.92
|
|
|
$
|
16.66
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated
from operations7,8
|
|
$
|
1,880
|
|
|
$
|
2,490
|
|
|
$
|
6,376
|
|
|
$
|
5,821
|
|
|
|
|
|
|
|
|
|
|
|
1
|
The corporation
closes its books and records on the last Sunday of the calendar
quarter to align its financial closing with its business processes,
which was on Sept. 27 for the third quarter of 2020 and Sept. 29
for the third quarter of 2019. The consolidated financial
statements and tables of financial information included herein are
labeled based on that convention. This practice only affects
interim periods, as the corporation's fiscal year ends on
Dec. 31.
|
2
|
Business segment
operating profit is a non-GAAP measure. See the "Non-GAAP Financial
Measures" section of this news release for more
information.
|
3
|
In the first nine
months of 2020, the corporation recognized a non-cash impairment
charge of $128 million ($96 million, or $0.34 per share, after tax)
for its investment in the international equity method investee,
Advanced Military Maintenance, Repair and Overhaul Center
(AMMROC).
|
4
|
In the first nine
months of 2019, the corporation recognized a previously deferred
non-cash gain of $51 million ($38 million, or $0.13 per share,
after tax) related to properties sold in 2015 as a result of
completing its remaining obligations.
|
5
|
Discontinued
operations for the third quarter and first nine months of 2020
include a $55 million ($0.20 per share) non-cash charge resulting
from the resolution of certain tax matters related to the former
Information Systems & Global Solutions business divested in
2016.
|
6
|
Net earnings for the
third quarter and the first nine months of 2019 included a benefit
of approximately $62 million ($0.22 per share) and $127 million
($0.45 per share), respectively, from the discrete recording of
additional tax deductions related to 2018, primarily attributable
to foreign derived intangible income treatment based on proposed
tax regulations released on March 4, 2019, and a change in tax
accounting method. See "Income Taxes" section for further
discussion.
|
7
|
Cash generated from
operations in the third quarter of 2020 reflects the receipt of
approximately $200 million of net accelerated progress payments due
to the U.S. Government's increase in the progress payment rate from
80 percent to 90 percent and the deferral of $155 million for the
employer portion of payroll taxes to 2021 and 2022 pursuant to the
CARES Act. These were offset by $400 million of federal estimated
income tax payments deferred from the second quarter of 2020
pursuant to IRS guidance, in addition to the third quarter 2020 tax
payment of $410 million. Additionally, the corporation used
the accelerated progress payments from the U.S. Government plus
cash on hand to accelerate payments to its suppliers resulting in a
$530 million net impact to cash from operations in the third
quarter of 2020.
|
8
|
Cash generated from
operations for the first nine months of 2020 reflects the receipt
of approximately $1.1 billion of net accelerated progress
payments due to the U.S. Government's increase in the progress
payment rate from 80 percent to 90 percent and the deferral of
$315 million for the employer portion of payroll taxes to 2021
and 2022 pursuant to the CARES Act. The corporation used the
accelerated progress payments from the U.S. Government plus cash on
hand to accelerate $1.8 billion of payments to its suppliers
as of Sept. 27, 2020 that are due by their terms in future
periods.
|
|
|
2020 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, or
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.
|
(in millions,
except per share data)
|
|
Current
Guidance1
|
|
July 2020
Outlook
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
~$65,250
|
|
$63,500 -
$65,000
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit
|
|
~$7,125
|
|
$6,900 -
$7,050
|
|
|
|
|
|
|
|
|
|
Net FAS/CAS pension
adjustment2
|
|
~$2,090
|
|
~$2,090
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share from continuing operations
|
|
~$24.45
|
|
$23.75 -
$24.05
|
|
|
|
|
|
|
|
|
|
Cash from
operations
|
|
≥$8,000
|
|
≥$8,000
|
|
|
|
|
|
|
|
|
1
|
The corporation's
2020 financial outlook reflects the currently expected impacts
related to COVID-19, however, the ultimate impacts of COVID-19 on
the corporation's financial outlook for 2020 and beyond remains
uncertain.
|
|
2
|
The net FAS/CAS
pension adjustment is presented as a single amount and includes
total expected U.S. Government cost accounting standards (CAS)
pension cost of approximately $1,975 million and total expected
financial accounting standards (FAS) pension income of
approximately $115 million. CAS pension cost and the service cost
component of FAS pension expense are included in operating profit.
The non-service cost components of FAS pension expense are included
in non-operating income (expense). For additional detail on the
corporation's FAS/CAS pension adjustment, see the supplemental
table included at the end of this news release.
|
|
2021 Financial Trends
The corporation expects its 2021 net sales to increase to
greater than or equal to $67 billion.
Total business segment operating margin in 2021 is expected to be
in the 10.9 percent to 11.1 percent range and cash from operations
is expected to be greater than or equal to $8.1 billion, net of $1.0
billion of planned pension contributions. The preliminary
outlook for 2021 assumes continued support and funding of our
programs, including recovery of COVID-19 cost impacts, and a
statutory tax rate of 21%. Additionally, the preliminary outlook
for 2021 assumes that there will not be significant reductions in
customer budgets, changes in funding priorities and that the U.S.
Government will not continue to operate under a continuing
resolution for an extended period in which new contract and program
starts are restricted. Changes in circumstances may require the
corporation to revise its assumptions, which could materially
change its current estimate of 2021 net sales, operating margin and
cash flows.
The corporation currently expects a total net FAS/CAS pension
benefit of approximately $2.1 billion
in 2021. This estimate assumes a 2.50 percent discount rate (a 75
basis point decrease from the end of 2019), a 7.00 percent return
on plan assets in 2020, and a 7.00 percent expected long-term rate
of return on plan assets in future years, among other assumptions.
A change of plus or minus 25 basis points to the assumed discount
rate, with all other assumptions held constant, would result in an
incremental increase or decrease of approximately $15 million to the estimated net 2021 FAS/CAS
pension benefit. A change of plus or minus 100 basis points to the
return on plan assets in 2020 only, with all other assumptions held
constant, would result in an incremental increase or decrease of
approximately $15 million to the
estimated net 2021 FAS/CAS pension benefit. The corporation expects
to make contributions of approximately $1.0
billion to its qualified defined benefit pension plans in
2021 and anticipates recovering approximately $2.1 billion of CAS pension cost. The corporation
will complete the annual remeasurement of its postretirement
benefit plans and update its estimated 2021 FAS/CAS pension
adjustment on Dec. 31, 2020. The
final assumptions and actual investment return for 2020 may differ
materially from those discussed above.
COVID-19
The global outbreak of the coronavirus disease 2019 (COVID-19)
was declared a pandemic by the World Health Organization and a
national emergency by the U.S. Government in March 2020 and has negatively affected the U.S.
and global economies, disrupted global supply chains, resulted in
significant travel and transport restrictions, including mandated
closures and orders to "shelter-in-place" and quarantine
restrictions, and created significant disruption of the financial
markets. Lockheed Martin has taken measures to protect the health
and safety of its employees, work with its customers and suppliers
to minimize disruptions and support its community in addressing the
challenges posed by this ongoing global pandemic. The pandemic has
presented unprecedented business challenges, and the corporation
has experienced impacts in each business area related to COVID-19,
primarily in increased coronavirus-related costs, delays in
supplier deliveries, impacts of travel restrictions, site access
and quarantine requirements, and the impacts of remote work and
adjusted work schedules. Despite these challenges, the corporation
and the U.S. Government's pro-active efforts, especially with
regard to the supply chain, helped to partially mitigate the
disruptions caused by COVID-19 on the corporation's operations in
the first nine months of 2020. In addition, favorable contract
award timing, strong operational performance and lower travel and
overhead expenditures due to COVID-19 restrictions partially offset
the impacts of COVID-19 on the corporation's financial results in
the first nine months of 2020. However, the ultimate impact of
COVID-19 in future periods remains uncertain. The corporation's
2020 outlook and 2021 financial trends assumes, among other things,
that its production facilities continue to operate and it does not
experience significant work stoppages or closures, it is able to
mitigate any supply chain disruptions and these do not worsen, and
it is able to recover its costs under U.S. Government contracts and
government funding priorities do not change. While these are the
corporation's current assumptions, they could change and will
depend on future pandemic related developments, including the
duration of the pandemic and any potential subsequent waves of
COVID-19 infection and government actions.
Cash Activities
The corporation's cash activities in the third quarter of 2020
included the following:
- paying cash dividends of $672
million, compared to $621
million in the third quarter of 2019;
- repurchasing 0.2 million shares for $85
million, which includes $26
million paid for shares repurchased in the second quarter of
2020; compared to repurchasing 0.6 million shares for $210 million in the third quarter of 2019;
and
- making capital expenditures of $408
million, compared to $308
million in the third quarter of 2019.
As previously reported on Sept. 25,
2020, the corporation increased its quarterly dividend by
$0.20 per share, to $2.60 per share, beginning with the dividend
payment in the fourth quarter of 2020. The corporation also
increased its share repurchase authority by $1.3 billion with $3.0
billion in total remaining authorization for future
repurchases of common stock under the program as of Sept. 27, 2020.
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. The following table presents summary operating results
of the corporation's business segments and reconciles these amounts
to the corporation's consolidated financial results.
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
|
Net
sales
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
6,680
|
|
|
$
|
6,178
|
|
|
$
|
19,552
|
|
|
$
|
17,312
|
|
|
|
Missiles and Fire
Control
|
|
2,971
|
|
|
2,601
|
|
|
8,391
|
|
|
7,362
|
|
|
|
Rotary and Mission
Systems
|
|
3,998
|
|
|
3,709
|
|
|
11,783
|
|
|
11,239
|
|
|
|
Space
|
|
2,846
|
|
|
2,683
|
|
|
8,640
|
|
|
8,021
|
|
|
|
Total net
sales
|
|
$
|
16,495
|
|
|
$
|
15,171
|
|
|
$
|
48,366
|
|
|
$
|
43,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
705
|
|
|
$
|
665
|
|
|
$
|
2,116
|
|
|
$
|
1,842
|
|
|
|
Missiles and Fire
Control
|
|
405
|
|
|
349
|
|
|
1,171
|
|
|
1,093
|
|
|
|
Rotary and Mission
Systems
|
|
404
|
|
|
342
|
|
|
1,209
|
|
|
1,068
|
|
|
|
Space
|
|
248
|
|
|
309
|
|
|
781
|
|
|
931
|
|
|
|
Total business
segment operating profit
|
|
1,762
|
|
|
1,665
|
|
|
5,277
|
|
|
4,934
|
|
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
469
|
|
|
513
|
|
|
1,407
|
|
|
1,537
|
|
|
|
Other, net
|
|
(84)
|
|
|
(73)
|
|
|
(329)
|
|
|
(75)
|
|
|
|
Total unallocated
items
|
|
385
|
|
|
440
|
|
|
1,078
|
|
|
1,462
|
|
|
|
Total consolidated
operating profit
|
|
$
|
2,147
|
|
|
$
|
2,105
|
|
|
$
|
6,355
|
|
|
$
|
6,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and operating profit of the corporation's business
segments exclude intersegment sales, cost of sales, and profit as
these activities are eliminated in consolidation. Operating profit
of the corporation's business segments includes the corporation's
share of earnings or losses from equity method investees as the
operating activities of the investees are closely aligned with the
operations of its business segments.
Operating profit of the corporation's business segments also
excludes the FAS/CAS operating adjustment described below, a
portion of corporate costs not considered allowable or allocable to
contracts with the U.S. Government under the applicable U.S.
Government cost accounting standards (CAS) or federal acquisition
regulations (FAR), and other items not considered part of
management's evaluation of segment operating performance such as a
portion of management and administration costs, legal fees and
settlements, environmental costs, stock-based compensation expense,
retiree benefits, significant severance actions, significant asset
impairments, gains or losses from significant divestitures, and
other miscellaneous corporate activities.
The corporation recovers CAS pension cost through the pricing of
its products and services on U.S. Government contracts and,
therefore, recognizes CAS pension cost in each of its business
segments' net sales and cost of sales. The corporation's
consolidated financial statements must present pension and other
postretirement benefit plan expense calculated in accordance with
U.S. generally accepted accounting principles (referred to as FAS
expense). The operating portion of the net FAS/CAS pension
adjustment represents the difference between the service cost
component of FAS pension expense and total CAS pension cost. The
non-service FAS pension expense components are included in other
non-operating expense. The net FAS/CAS pension adjustment increases
or decreases CAS pension cost to equal total FAS pension expense
(both service and non-service).
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 for which it
recognizes revenue over time using the percentage-of-completion
cost-to-cost method to measure progress towards completion.
Increases in profit booking rates, typically referred to as risk
retirements, usually relate to revisions in the estimated total
costs to fulfill the performance obligations 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 fulfill the performance obligations
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, which may or may not
impact sales. Favorable items may include the positive resolution
of contractual matters, 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 certain assets.
The corporation's consolidated net adjustments not related to
volume, including net profit booking rate adjustments, represented
approximately 24 percent of total segment operating profit in the
third quarter of 2020 as compared to 29 percent in the third
quarter of 2019.
Aeronautics
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
|
Net
sales
|
|
$
|
6,680
|
|
|
$
|
6,178
|
|
|
$
|
19,552
|
|
|
$
|
17,312
|
|
|
|
Operating
profit
|
|
$
|
705
|
|
|
$
|
665
|
|
|
$
|
2,116
|
|
|
$
|
1,842
|
|
|
|
Operating
margin
|
|
10.6
|
%
|
|
10.8
|
%
|
|
10.8
|
%
|
|
10.6
|
%
|
|
Aeronautics' net sales in the third quarter of 2020 increased
$502 million, or 8 percent, compared to the same period in
2019. The increase was primarily attributable to higher net sales
of approximately $325 million for the F-35 program due to
increased volume on development, sustainment, and production
contracts; and about $130 million for
higher volume on classified development contracts.
Aeronautics' operating profit in the third quarter of 2020
increased $40 million, or 6 percent, compared to the same
period in 2019. Operating profit increased approximately
$65 million for the F-35 program due to higher volume on
production, development, and sustainment contracts and higher risk
retirements on production contracts. This increase was partially
offset by a decrease of approximately $20
million for the F-16 program due to lower risk retirements
on sustainment contracts. Adjustments not related to volume,
including net profit booking rate adjustments, in the
third quarter of 2020 were comparable to the same period in
2019.
Missiles and Fire Control
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
|
Net
sales
|
|
$
|
2,971
|
|
|
$
|
2,601
|
|
|
$
|
8,391
|
|
|
$
|
7,362
|
|
|
|
Operating
profit
|
|
$
|
405
|
|
|
$
|
349
|
|
|
$
|
1,171
|
|
|
$
|
1,093
|
|
|
|
Operating
margin
|
|
13.6
|
%
|
|
13.4
|
%
|
|
14.0
|
%
|
|
14.8
|
%
|
|
MFC's net sales in the third quarter of 2020 increased
$370 million, or 14 percent, compared to the same period in
2019. The increase was primarily attributable to higher net sales
of approximately $250 million for
tactical and strike missile programs due to increased volume
(primarily Guided Multiple Launch Rocket Systems (GMLRS) and
High-Mobility Artillery Rocket Systems (HIMARS)); and about
$200 million for integrated air and
missile defense programs due to increased volume (primarily Patriot
Advanced Capability-3 (PAC-3) and Terminal High Altitude Area
Defense (THAAD)). These increases were partially offset by lower
net sales of approximately $60
million for sensors and global sustainment programs due to
lower volume on the Apache sensors program; and about $35 million due to the divestiture of the
Distributed Energy Solutions business in November 2019.
MFC's operating profit in the third quarter of 2020 increased
$56 million, or 16 percent, compared to the same period in
2019. Operating profit increased approximately $50 million for
integrated air and missile defense programs due to increased volume
and higher risk retirements on international contracts (primarily
PAC-3); and about $45 million for tactical and strike missile
programs due to higher volume (primarily GMLRS and HIMARS) and
higher risk retirements (primarily Long Range Standoff Weapon
(LRSO)). These increases were partially offset by a decrease of
approximately $40 million for sensors
and global sustainment programs due primarily to lower risk
retirements and a reduction in the profit booking rate on the
Apache sensors program. Adjustments not related to volume,
including net profit booking rate adjustments, were $25 million lower in the third quarter of
2020 compared to the same period in 2019.
Rotary and Mission Systems
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
|
Net
sales
|
|
$
|
3,998
|
|
|
$
|
3,709
|
|
|
$
|
11,783
|
|
|
$
|
11,239
|
|
|
|
Operating
profit
|
|
$
|
404
|
|
|
$
|
342
|
|
|
$
|
1,209
|
|
|
$
|
1,068
|
|
|
|
Operating
margin
|
|
10.1
|
%
|
|
9.2
|
%
|
|
10.3
|
%
|
|
9.5
|
%
|
|
RMS' net sales in the third quarter of 2020 increased
$289 million, or 8 percent, compared to the same period in
2019. Net sales increased approximately $180
million for Sikorsky helicopter programs due to higher
volume primarily on production contracts (primarily Seahawk,
VH-92A, and Combat Rescue Helicopter (CRH)); about $55 million for various training and logistics
solutions (TLS) programs due to higher volume; and about
$35 million for integrated warfare
systems and sensors (IWSS) programs due to higher volume primarily
on the Aegis Combat System (Aegis) partially offset by lower volume
on Littoral Combat Ship (LCS).
RMS' operating profit in the third quarter of 2020 increased
$62 million, or 18 percent, compared to the same period in
2019. Operating profit increased approximately $30 million for Sikorsky helicopter programs due
to higher volume on production contracts (primarily VH-92A and
CRH), customer mix, and better cost performance on international
military aircraft programs; and about $30
million for IWSS programs due to higher risk retirements
(primarily Radar Surveillance Systems and Aegis). Adjustments not
related to volume, including net profit booking rate adjustments,
were $15 million lower in the third quarter of 2020
compared to the same period in 2019.
Space
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
|
Net
sales
|
|
$
|
2,846
|
|
|
$
|
2,683
|
|
|
$
|
8,640
|
|
|
$
|
8,021
|
|
|
|
Operating
profit
|
|
$
|
248
|
|
|
$
|
309
|
|
|
$
|
781
|
|
|
$
|
931
|
|
|
|
Operating
margin
|
|
8.7
|
%
|
|
11.5
|
%
|
|
9.0
|
%
|
|
11.6
|
%
|
|
Space's net sales in the third quarter of 2020 increased
$163 million, or 6 percent, compared to the same period in
2019. The increase was primarily attributable to higher net sales
of approximately $90 million for
government satellite programs due to higher volume (primarily Next
Generation Overhead Persistent Infrared (Next Gen OPIR)); and about
$60 million for strategic and missile
defense programs due to higher volume (primarily hypersonic
development programs).
Space's operating profit in the third quarter of 2020 decreased
$61 million, or 20 percent, compared to the same period in
2019. Operating profit decreased approximately $50 million due to lower equity earnings from the
corporation's investment in United Launch Alliance (ULA); about
$15 million for government satellite
programs due to lower risk retirements (primarily Advanced
Extremely High Frequency (AEHF)); and about $15 million for strategic and missile defense
programs due to lower risk retirements (primarily Fleet Ballistic
Missiles). These decreases were partially offset by an increase of
approximately $15 million for
commercial satellite programs due to charges recorded for
performance matters in 2019 not repeated in 2020. Adjustments not
related to volume, including net profit booking rate adjustments,
were $25 million lower in the third
quarter of 2020, compared to the same period in 2019.
Total equity earnings recognized by Space (primarily ULA)
represented approximately $5 million, or 2 percent of Space's
operating profit in the third quarter of 2020, compared to
approximately $55 million, or 18
percent in the third quarter of 2019.
Income Taxes
The corporation's effective income tax rate was
14.7 percent in the third quarter of 2020, compared to
9.7 percent in the third quarter of 2019. The rate for the
third quarter of 2019 was lower primarily due to a $62 million
benefit, or $0.22 per share, of
additional tax deductions for 2018 attributable to foreign derived
intangible income treatment based on proposed tax regulations
released on March 4, 2019, and a
change in tax accounting method, reflecting a 2012 Court of Federal
Claims decision, which held that the tax basis in certain assets
should be increased and realized upon the assets' disposition.
The rates for both periods benefited from additional tax
deductions based on proposed tax regulations released on
March 4, 2019, which clarified that
foreign military sales qualify for foreign derived intangible
income treatment. On July 9, 2020,
the U.S. Treasury Department issued final tax regulations related
to foreign derived intangible income. The final tax regulations
confirm foreign military sales qualify for foreign derived
intangible income treatment. We continue to assess the other
effects of the final regulations.
The rates for both periods also benefited from the research and
development tax credit, dividends paid to the corporation's defined
contribution plans with an employee stock ownership plan feature,
and tax deductions for employee equity awards.
Use of Non-GAAP Financial Measures
This news release contains the following non-generally accepted
accounting principles (non-GAAP) financial measures (as defined by
U.S. Securities and Exchange Commission (SEC) Regulation G). While
management believes that these non-GAAP financial measures may be
useful in evaluating the financial performance of the corporation,
this information should be considered supplemental and is not a
substitute for financial information prepared in accordance with
GAAP. In addition, the corporation's definitions for non-GAAP
financial measures may differ from similarly titled measures used
by other companies or analysts.
Business segment operating profit represents operating profit
from the corporation's business segments before unallocated income
and expense. This measure is used by the corporation's senior
management in evaluating the performance of its business segments
and is a performance goal in the corporation's annual incentive
plan. Business segment operating margin is calculated by dividing
business segment operating profit by sales. The table below
reconciles the non-GAAP measure business segment operating profit
with the most directly comparable GAAP financial measure,
consolidated operating profit.
|
(in
millions)
|
|
2020 Financial
Outlook1
|
|
|
|
|
Current
Update
|
|
July
Outlook
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit (non-GAAP)
|
|
~$7,125
|
|
$6,900 -
$7,050
|
|
|
FAS/CAS operating
adjustment2
|
|
~1,875
|
|
~1,875
|
|
|
Other, net
|
|
~(405)
|
|
~(390)
|
|
|
Consolidated
operating profit (GAAP)
|
|
~$8,595
|
|
$8,385 -
$8,535
|
|
|
|
|
|
|
|
|
1
|
The corporation's
2020 financial outlook reflects the currently expected impacts
related to COVID-19, however, the ultimate impact of COVID-19 on
the corporation's financial outlook for 2020 and beyond remains
uncertain.
|
|
2
|
Refer to the
supplemental table "Other Financial and Operating Information"
included in this news release for a detail of the FAS/CAS operating
adjustment, which excludes $215 million of expected
non-service FAS income that will be recorded in non-operating
income (expense).
|
|
Conference Call Information
Lockheed Martin Corporation will webcast live the earnings
results conference call (listen-only mode) on Tuesday, Oct. 20, 2020, at 11:00 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 the corporation's website:
www.lockheedmartin.com.
About Lockheed Martin
Headquartered in Bethesda,
Maryland, Lockheed Martin Corporation is a global security
and aerospace company that employs approximately 110,000 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 impact of the COVID-19 disease or future epidemics on our
business, including the potential for facility closures or work
stoppages, supply chain disruptions, program delays, our ability to
recover our costs under contracts, changing government funding and
acquisition priorities and payment policies and regulations; and
potential impacts to the fair value of our assets;
- our 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 our ability to
negotiate favorable contract terms;
- budget uncertainty, affordability initiatives or the risk of
future budget cuts;
- risks related to the development, production, sustainment,
performance, schedule, cost and requirements of complex and
technologically advanced programs including our largest, the F-35
program;
- planned production rates for significant programs; compliance
with stringent performance and reliability standards; materials
availability;
- the performance and financial viability of key suppliers,
teammates, joint ventures, joint venture partners, subcontractors
and customers;
- economic, industry, business and political conditions including
their effects on governmental policy and government actions that
disrupt our supply chain or prevent the sale or delivery of our
products (such as delays in obtaining Congressional approvals for
exports requiring Congressional notification and export license
delays due to COVID-19);
- trade policies or sanctions (including potential Chinese
sanctions on us or our suppliers, teammates or partners;
Turkey's removal from the F-35
program and potential U.S. Government sanctions on Turkey and the Kingdom of Saudi Arabia);
- our success expanding into and doing business in adjacent
markets and internationally and the differing risks posed by
international sales;
- changes in foreign national priorities and foreign government
budgets;
- the competitive environment for our products and services,
including increased pricing pressures, aggressive pricing in the
absence of cost realism evaluation criteria, competition from
outside the aerospace and defense industry, and bid protests;
- the timing and customer acceptance of product deliveries;
- our 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 our businesses;
- our ability to implement and continue, and the timing and
impact of, capitalization changes such as share repurchases and
dividend payments;
- our ability to recover costs under U.S. Government contracts
and changes in contract mix;
- the accuracy of our estimates and projections and the potential
impact of changes in U.S. or foreign tax laws;
- timing and estimates regarding pension funding and movements in
interest rates and other changes that may affect pension plan
assumptions, stockholders' equity, the level of the FAS/CAS
adjustment and actual returns on pension plan assets;
- the successful operation of joint ventures that we do not
control and our ability to recover our investments;
- realizing the anticipated benefits of acquisitions or
divestitures, joint ventures, teaming arrangements or internal
reorganizations;
- our efforts to increase the efficiency of our operations and
improve the affordability of our products and services;
- the risk of an impairment of our assets, including the
potential impairment of goodwill, intangible assets and inventory
recorded as a result of the acquisition of the Sikorsky
business;
- the availability and adequacy of our insurance and
indemnities;
- our ability to benefit fully from or adequately protect our
intellectual property rights;
- procurement and other regulations and policies affecting our
industry, including federal rules prohibiting the use of certain
Chinese telecommunications equipment, export of our products, cost
allowability or recovery, preferred contract type, and performance
and progress payments policy, including a reversal or modification
to the DoD's increase to the progress payment rate in response to
COVID-19;
- the effect of changes in accounting, taxation, or export laws,
regulations, and policies and their interpretation or application;
and
- the outcome of legal proceedings, bid protests, environmental
remediation efforts, audits, government investigations or
government allegations that we have failed to comply with law,
other contingencies and U.S. Government identification of
deficiencies in our 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 differ materially from those anticipated in
the forward-looking statements, see the corporation's filings with
the U.S. Securities and Exchange Commission 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, 2019 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.
Lockheed Martin
Corporation
|
Consolidated
Statements of Earnings1
|
(unaudited;
in millions, except per share data)
|
|
|
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
Net
sales
|
|
$
|
16,495
|
|
|
$
|
15,171
|
|
|
$
|
48,366
|
|
|
$
|
43,934
|
|
|
Cost of
sales
|
|
(14,359)
|
|
|
(13,108)
|
|
|
(41,926)
|
|
|
(37,690)
|
|
|
Gross
profit
|
|
2,136
|
|
|
2,063
|
|
|
6,440
|
|
|
6,244
|
|
|
Other (expense)
income, net2,3
|
|
11
|
|
|
42
|
|
|
(85)
|
|
|
152
|
|
|
Operating
profit
|
|
2,147
|
|
|
2,105
|
|
|
6,355
|
|
|
6,396
|
|
|
Interest
expense
|
|
(145)
|
|
|
(162)
|
|
|
(442)
|
|
|
(496)
|
|
|
Other non-operating
income (expense), net
|
|
54
|
|
|
(162)
|
|
|
135
|
|
|
(491)
|
|
|
Earnings from
continuing operations before income taxes
|
|
2,056
|
|
|
1,781
|
|
|
6,048
|
|
|
5,409
|
|
|
Income tax
expense4
|
|
(303)
|
|
|
(173)
|
|
|
(952)
|
|
|
(677)
|
|
|
Net earnings from
continuing operations
|
|
1,753
|
|
|
1,608
|
|
|
5,096
|
|
|
4,732
|
|
|
Net loss from
discontinued operations5
|
|
(55)
|
|
|
—
|
|
|
(55)
|
|
|
—
|
|
|
Net
earnings
|
|
$
|
1,698
|
|
|
$
|
1,608
|
|
|
$
|
5,041
|
|
|
$
|
4,732
|
|
|
Effective tax
rate
|
|
14.7
|
%
|
|
9.7
|
%
|
|
15.7
|
%
|
|
12.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
6.28
|
|
|
$
|
5.70
|
|
|
$
|
18.19
|
|
|
$
|
16.77
|
|
|
Discontinued
operations5
|
|
(0.20)
|
|
|
—
|
|
|
(0.20)
|
|
|
—
|
|
|
Basic earnings per
common share
|
|
$
|
6.08
|
|
|
$
|
5.70
|
|
|
$
|
17.99
|
|
|
$
|
16.77
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
6.25
|
|
|
$
|
5.66
|
|
|
$
|
18.12
|
|
|
$
|
16.66
|
|
|
Discontinued
operations5
|
|
(0.20)
|
|
|
—
|
|
|
(0.20)
|
|
|
—
|
|
|
Diluted earnings per
common share
|
|
$
|
6.05
|
|
|
$
|
5.66
|
|
|
$
|
17.92
|
|
|
$
|
16.66
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
279.3
|
|
|
282.0
|
|
|
280.1
|
|
|
282.2
|
|
|
Diluted
|
|
280.6
|
|
|
283.9
|
|
|
281.3
|
|
|
284.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
reported in stockholders' equity at end of period
|
|
|
|
|
|
278
|
|
|
281
|
|
|
|
|
|
|
|
|
|
|
|
1
|
The corporation
closes its books and records on the last Sunday of the calendar
quarter to align its financial closing with its business processes,
which was on Sept. 27 for the third quarter of 2020 and Sept. 29
for the third quarter of 2019. The consolidated financial
statements and tables of financial information included herein are
labeled based on that convention. This practice only affects
interim periods, as the corporation's fiscal year ends on
Dec. 31.
|
2
|
In the first nine
months of 2020, the corporation recognized a non-cash impairment
charge of $128 million ($96 million, or $0.34 per share, after tax)
for its investment in the international equity method investee,
Advanced Military Maintenance, Repair and Overhaul Center
(AMMROC).
|
3
|
In the first nine
months of 2019, the corporation recognized a previously deferred
non-cash gain of $51 million ($38 million, or $0.13 per share,
after tax) related to properties sold in 2015 as a result of
completing its remaining obligations.
|
4
|
Net earnings for the
third quarter and the first nine months of 2019 included a benefit
of approximately $62 million ($0.22 per share) and $127 million
($0.45 per share), respectively, from the discrete recording of
additional tax deductions related to 2018, primarily attributable
to foreign derived intangible income treatment based on proposed
tax regulations released on March 4, 2019, and a change in tax
accounting method. See "Income Taxes" section for further
discussion.
|
5
|
Net loss from
discontinued operations for the third quarter and the first nine
months of 2020 includes a $55 million ($0.20 per share) non-cash
charge resulting from the resolution of certain tax matters related
to the former IS&GS business divested in 2016.
|
Lockheed Martin
Corporation
|
Business Segment
Summary Operating Results
|
(unaudited;
in millions)
|
|
|
|
|
Quarters
Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
%
Change
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
%
Change
|
|
Net
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
6,680
|
|
|
$
|
6,178
|
|
|
8%
|
|
$
|
19,552
|
|
|
$
|
17,312
|
|
|
13%
|
|
Missiles and Fire
Control
|
|
2,971
|
|
|
2,601
|
|
|
14%
|
|
8,391
|
|
|
7,362
|
|
|
14%
|
|
Rotary and Mission
Systems
|
|
3,998
|
|
|
3,709
|
|
|
8%
|
|
11,783
|
|
|
11,239
|
|
|
5%
|
|
Space
|
|
2,846
|
|
|
2,683
|
|
|
6%
|
|
8,640
|
|
|
8,021
|
|
|
8%
|
|
Total net
sales
|
|
$
|
16,495
|
|
|
$
|
15,171
|
|
|
9%
|
|
$
|
48,366
|
|
|
$
|
43,934
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
|
705
|
|
|
$
|
665
|
|
|
6%
|
|
$
|
2,116
|
|
|
$
|
1,842
|
|
|
15%
|
|
Missiles and Fire
Control
|
|
405
|
|
|
349
|
|
|
16%
|
|
1,171
|
|
|
1,093
|
|
|
7%
|
|
Rotary and Mission
Systems
|
|
404
|
|
|
342
|
|
|
18%
|
|
1,209
|
|
|
1,068
|
|
|
13%
|
|
Space
|
|
248
|
|
|
309
|
|
|
(20%)
|
|
781
|
|
|
931
|
|
|
(16%)
|
|
Total business
segment operating profit
|
|
1,762
|
|
|
1,665
|
|
|
6%
|
|
5,277
|
|
|
4,934
|
|
|
7%
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
469
|
|
|
513
|
|
|
|
|
1,407
|
|
|
1,537
|
|
|
|
|
Stock-based
compensation
|
|
(67)
|
|
|
(54)
|
|
|
|
|
(182)
|
|
|
(158)
|
|
|
|
|
Other,
net1,2
|
|
(17)
|
|
|
(19)
|
|
|
|
|
(147)
|
|
|
83
|
|
|
|
|
Total unallocated
items
|
|
385
|
|
|
440
|
|
|
(13%)
|
|
1,078
|
|
|
1,462
|
|
|
(26%)
|
|
Total consolidated
operating profit
|
|
$
|
2,147
|
|
|
$
|
2,105
|
|
|
2%
|
|
$
|
6,355
|
|
|
$
|
6,396
|
|
|
(1%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
10.6%
|
|
10.8%
|
|
|
|
10.8%
|
|
10.6%
|
|
|
|
Missiles and Fire
Control
|
|
13.6%
|
|
13.4%
|
|
|
|
14.0%
|
|
14.8%
|
|
|
|
Rotary and Mission
Systems
|
|
10.1%
|
|
9.2%
|
|
|
|
10.3%
|
|
9.5%
|
|
|
|
Space
|
|
8.7%
|
|
11.5%
|
|
|
|
9.0%
|
|
11.6%
|
|
|
|
Total business
segment operating margin
|
|
10.7%
|
|
11.0%
|
|
|
|
10.9%
|
|
11.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated
operating margin
|
|
13.0%
|
|
13.9%
|
|
|
|
13.1%
|
|
14.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
In the first nine
months of 2019, the corporation recognized a previously deferred
non-cash gain of $51 million ($38 million, or $0.13 per share,
after tax) related to properties sold in 2015 as a result of
completing its remaining obligations.
|
2
|
In the first nine
months of 2020, the corporation recognized a non-cash impairment
charge of $128 million ($96 million, or $0.34 per share, after tax)
for its investment in the international equity method investee,
AMMROC.
|
Lockheed Martin
Corporation
|
Consolidated
Balance Sheets
|
(in millions,
except par value)
|
|
|
|
|
Sept. 27
2020
|
|
Dec. 31
2019
|
|
|
|
(unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
3,585
|
|
|
$
|
1,514
|
|
|
Receivables,
net
|
|
2,480
|
|
|
2,337
|
|
|
Contract
assets
|
|
10,388
|
|
|
9,094
|
|
|
Inventories
|
|
3,293
|
|
|
3,619
|
|
|
Other current
assets
|
|
544
|
|
|
531
|
|
|
Total current
assets
|
|
20,290
|
|
|
17,095
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
6,803
|
|
|
6,591
|
|
|
Goodwill
|
|
10,589
|
|
|
10,604
|
|
|
Intangible assets,
net
|
|
3,013
|
|
|
3,213
|
|
|
Deferred income
taxes
|
|
3,198
|
|
|
3,319
|
|
|
Other noncurrent
assets
|
|
6,880
|
|
|
6,706
|
|
|
Total
assets
|
|
$
|
50,773
|
|
|
$
|
47,528
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,491
|
|
|
$
|
1,281
|
|
|
Contract
liabilities
|
|
7,354
|
|
|
7,054
|
|
|
Salaries, benefits and
payroll taxes
|
|
2,818
|
|
|
2,466
|
|
|
Current maturities of
long-term debt
|
|
1,000
|
|
|
1,250
|
|
|
Other current
liabilities
|
|
2,538
|
|
|
1,921
|
|
|
Total current
liabilities
|
|
15,201
|
|
|
13,972
|
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
11,675
|
|
|
11,404
|
|
|
Accrued pension
liabilities
|
|
12,765
|
|
|
13,234
|
|
|
Other noncurrent
liabilities
|
|
6,146
|
|
|
5,747
|
|
|
Total
liabilities
|
|
45,787
|
|
|
44,357
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Common stock, $1 par
value per share
|
|
278
|
|
|
280
|
|
|
Additional paid-in
capital
|
|
90
|
|
|
—
|
|
|
Retained
earnings
|
|
19,844
|
|
|
18,401
|
|
|
Accumulated other
comprehensive loss
|
|
(15,259)
|
|
|
(15,554)
|
|
|
Total stockholders'
equity
|
|
4,953
|
|
|
3,127
|
|
|
Noncontrolling
interests in subsidiary
|
|
33
|
|
|
44
|
|
|
Total
equity
|
|
4,986
|
|
|
3,171
|
|
|
Total liabilities and
equity
|
|
$
|
50,773
|
|
|
$
|
47,528
|
|
|
|
|
|
|
|
Lockheed Martin
Corporation
|
Consolidated
Statements of Cash Flows
|
(unaudited;
in millions)
|
|
|
|
Nine Months
Ended
|
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
Operating
activities
|
|
|
|
|
Net
earnings
|
|
$
|
5,041
|
|
|
$
|
4,732
|
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities
|
|
|
|
|
Depreciation and
amortization
|
|
927
|
|
|
867
|
|
Stock-based
compensation
|
|
182
|
|
|
158
|
|
Equity method
investment impairment
|
|
128
|
|
|
—
|
|
Tax resolution related
to former IS&GS business
|
|
55
|
|
|
—
|
|
Gain on property
sale
|
|
—
|
|
|
(51)
|
|
Changes in assets and
liabilities
|
|
|
|
|
Receivables,
net
|
|
(143)
|
|
|
60
|
|
Contract
assets
|
|
(1,294)
|
|
|
(1,532)
|
|
Inventories
|
|
326
|
|
|
(477)
|
|
Accounts
payable
|
|
247
|
|
|
524
|
|
Contract
liabilities
|
|
300
|
|
|
286
|
|
Postretirement benefit
plans
|
|
(130)
|
|
|
828
|
|
Income
taxes
|
|
58
|
|
|
(117)
|
|
Other, net
|
|
679
|
|
|
543
|
|
Net cash provided
by operating activities
|
|
6,376
|
|
|
5,821
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Capital
expenditures
|
|
(1,044)
|
|
|
(841)
|
|
Other, net
|
|
27
|
|
|
38
|
|
Net cash used for
investing activities
|
|
(1,017)
|
|
|
(803)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Dividends
paid
|
|
(2,036)
|
|
|
(1,881)
|
|
Repurchases of common
stock
|
|
(1,100)
|
|
|
(710)
|
|
Issuance of long-term
debt, net of related costs
|
|
1,131
|
|
|
—
|
|
Repayments of current
and long-term debt
|
|
(1,150)
|
|
|
—
|
|
Repayments of
commercial paper, net
|
|
—
|
|
|
(600)
|
|
Other, net
|
|
(133)
|
|
|
(60)
|
|
Net cash used for
financing activities
|
|
(3,288)
|
|
|
(3,251)
|
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
2,071
|
|
|
1,767
|
|
Cash and cash
equivalents at beginning of period
|
|
1,514
|
|
|
772
|
|
Cash and cash
equivalents at end of period
|
|
$
|
3,585
|
|
|
$
|
2,539
|
|
Lockheed Martin
Corporation
|
Consolidated
Statement of Equity
|
(unaudited;
in millions)
|
|
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Stockholders'
Equity
|
|
Noncontrolling
Interests
in Subsidiary
|
|
Total
Equity
|
|
Balance at Dec.
31, 2019
|
|
$
|
280
|
|
|
$
|
—
|
|
|
$
|
18,401
|
|
|
$
|
(15,554)
|
|
|
$
|
3,127
|
|
|
$
|
44
|
|
|
$
|
3,171
|
|
|
Net
earnings
|
|
—
|
|
|
—
|
|
|
5,041
|
|
|
—
|
|
|
5,041
|
|
|
—
|
|
|
5,041
|
|
|
Other comprehensive
income, net of tax1
|
|
—
|
|
|
—
|
|
|
—
|
|
|
295
|
|
|
295
|
|
|
—
|
|
|
295
|
|
|
Repurchases of common
stock
|
|
(3)
|
|
|
(256)
|
|
|
(841)
|
|
|
—
|
|
|
(1,100)
|
|
|
—
|
|
|
(1,100)
|
|
|
Dividends
declared2
|
|
—
|
|
|
—
|
|
|
(2,757)
|
|
|
—
|
|
|
(2,757)
|
|
|
—
|
|
|
(2,757)
|
|
|
Stock-based awards,
ESOP activity and other
|
|
1
|
|
|
346
|
|
|
—
|
|
|
—
|
|
|
347
|
|
|
—
|
|
|
347
|
|
|
Net decrease in
noncontrolling interests in subsidiary
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11)
|
|
|
(11)
|
|
|
Balance at Sept.
27, 2020
|
|
$
|
278
|
|
|
$
|
90
|
|
|
$
|
19,844
|
|
|
$
|
(15,259)
|
|
|
$
|
4,953
|
|
|
$
|
33
|
|
|
$
|
4,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Primarily represents
the reclassification adjustment for the recognition of prior period
amounts related to pension and other postretirement benefit
plans.
|
2
|
Represents dividends
of $2.40 per share declared for each of the first, second and third
quarters of 2020 and dividends of $2.60 per share declared for the
fourth quarter of 2020.
|
Lockheed Martin
Corporation
|
Other Financial
and Operating Information
|
(unaudited;
in millions, except for aircraft deliveries and
weeks)
|
|
|
|
|
2020
Outlook
|
|
2019
Actual
|
|
Total FAS income
(expense) and CAS costs
|
|
|
|
|
|
FAS pension income
(expense)1
|
|
$
|
115
|
|
|
$
|
(1,093)
|
|
|
Less: CAS pension
cost
|
|
1,975
|
|
|
2,565
|
|
|
Net FAS/CAS pension
adjustment
|
|
$
|
2,090
|
|
|
$
|
1,472
|
|
|
|
|
|
|
|
|
Service and
non-service cost reconciliation
|
|
|
|
|
|
FAS pension service
cost
|
|
$
|
(100)
|
|
|
$
|
(516)
|
|
|
Less: CAS pension
cost
|
|
1,975
|
|
|
2,565
|
|
|
FAS/CAS operating
adjustment
|
|
1,875
|
|
|
2,049
|
|
|
Non-operating FAS
pension income (expense)2
|
|
215
|
|
|
(577)
|
|
|
Net FAS/CAS pension
adjustment
|
|
$
|
2,090
|
|
|
$
|
1,472
|
|
|
|
|
|
|
|
1
|
The corporation
projects FAS pension income in 2020, compared to FAS pension
expense in 2019, as a result of completing the planned freeze of
its salaried pension plans effective Jan. 1, 2020, that was
previously announced on July 1, 2014. The corporation's FAS pension
expense is comprised of service cost, interest cost, expected
return on plan assets, amortization of prior service credit, and
amortization of actuarial losses. The service cost and amortization
of actuarial losses components of FAS pension expense are
significantly lower due to the freeze. As a result, the expected
return on plan assets and amortization of prior service credit
exceed all other FAS pension expense components in 2020. For
additional information regarding the corporation's FAS pension
expense or income and CAS pension cost, see the corporation's
Annual Report on Form 10-K for the year ended Dec. 31,
2019.
|
2
|
The corporation
records the non-service cost components of net periodic benefit
cost as part of other non-operating income (expense) in the
consolidated statement of earnings. The non-service cost components
in the table above relate only to the corporation's qualified
defined benefit pension plans. The corporation expects total
non-service income (cost) for its qualified defined benefit pension
plans in the table above, along with non-service cost for its other
postretirement benefit plans of $30 million, to total non-service
credit of $185 million for 2020. The corporation recorded
non-service cost for its other postretirement benefit plans of $116
million in 2019, in addition to its total non-service cost for its
qualified defined benefit pension plans in the table above, for a
total of $693 million in 2019.
|
|
Backlog
|
|
Sept. 27
2020
|
|
Dec. 31
2019
|
Aeronautics
|
|
$
|
57,763
|
|
|
$
|
55,636
|
|
Missiles and Fire
Control
|
|
30,290
|
|
|
25,796
|
|
Rotary and Mission
Systems
|
|
36,137
|
|
|
34,296
|
|
Space
|
|
26,257
|
|
|
28,253
|
|
Total
backlog
|
|
$
|
150,447
|
|
|
$
|
143,981
|
|
|
|
|
|
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
Aircraft
Deliveries
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
|
Sept. 27
2020
|
|
Sept. 29
2019
|
F-35
|
|
31
|
|
28
|
|
78
|
|
83
|
C-130J
|
|
3
|
|
6
|
|
11
|
|
19
|
Government helicopter
programs
|
|
19
|
|
20
|
|
48
|
|
61
|
International
military helicopter programs
|
|
3
|
|
2
|
|
7
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Weeks in
Reporting Period
|
|
2020
|
|
2019
|
First
quarter
|
|
13
|
|
13
|
Second
quarter
|
|
13
|
|
13
|
Third
quarter
|
|
13
|
|
13
|
Fourth
quarter
|
|
13
|
|
13
|
View original
content:http://www.prnewswire.com/news-releases/lockheed-martin-reports-third-quarter-2020-results-301155289.html
SOURCE Lockheed Martin