BETHESDA, Md., Aug. 3, 2021 /PRNewswire/ -- Lockheed Martin
Corporation (NYSE: LMT) today announced it has purchased group
annuity contracts from Athene Holding Ltd. (NYSE: ATH), a leading
financial services company specializing in retirement solutions, to
transfer approximately $4.9 billion
of Lockheed Martin's pension obligations and related plan assets
for approximately 18,000 U.S. retirees and beneficiaries to Athene.
The contracts were purchased using assets from Lockheed Martin's
master retirement trust and no additional funding contribution was
required as part of this transaction.
On Jan. 1, 2022, Athene will begin
paying and administering the retirement benefits of certain
retirees and beneficiaries in the Lockheed Martin Corporation
Salaried Employee Retirement Program and the Lockheed Martin
Aerospace Hourly Pension Plan. The transaction will result in no
changes to the benefits received by retirees and beneficiaries.
Affected retirees and beneficiaries will receive a letter with
additional details about the transfer.
In connection with this transaction, the company expects to
recognize a non-cash, non-operating settlement charge of
approximately $1.7 billion
($1.3 billion, or $4.75 per share, after tax) in the third quarter
of 2021, primarily related to the accelerated recognition of
actuarial losses for the affected plans. The actual settlement
charge will depend on finalization of the actuarial assumptions,
including discount rate and investment rate of return, as of the
measurement date. This non-cash, non-operating settlement charge
was not included in the company's prior 2021 financial outlook
announced on July 26, 2021.
Therefore, the company is updating its full year 2021 financial
outlook for earnings per share to incorporate the impacts of this
transaction and reaffirms its full year 2021 financial outlook for
net sales, segment operating profit and cash from operations
previously announced on July 26,
2021, in the following section titled "2021 Financial
Outlook."
2021 Financial Outlook
The following table and other sections of this news release
contain forward-looking statements, which are based on the
company's current expectations. Actual results may differ
materially from those projected. It is the company's practice not
to incorporate adjustments into its financial outlook for proposed
acquisitions, divestitures, ventures, pension risk transfer
transactions, changes in law, or new accounting standards until
such items have been consummated, enacted or adopted. For
additional factors that may impact the company's actual results,
refer to the "Forward-Looking Statements" section in this news
release.
|
(in millions,
except per share data)
|
|
July 2021
Guidance1
|
Pension
Transfer
Impact
|
Current
Update1
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$67,300 -
$68,700
|
-
|
$67,300 -
$68,700
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit2
|
|
$7,380 -
$7,520
|
-
|
$7,380 -
$7,520
|
|
|
|
|
|
|
|
|
|
Net FAS/CAS pension
adjustment3
|
|
~$2,330
|
-
|
~$2,330
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$26.70 -
$27.00
|
($4.75)
|
$21.95 -
$22.25
|
|
|
|
|
|
|
|
|
|
Cash from
operations
|
|
≥$8,900
|
-
|
≥$8,900
|
|
|
|
|
|
|
|
|
1
|
The company's 2021
financial outlook reflects the anticipated impacts from the
COVID-19 pandemic based on the company's understanding at the time
of this news release. However, the ultimate impacts of COVID-19 on
the company's financial outlook for 2021 and beyond remains
uncertain and there can be no assurance that the company's
underlying assumptions are correct. Additionally, the 2021
financial outlook reflects the UK Ministry of Defence's
re-nationalization of the Atomic Weapons Establishment (AWE)
program on June 30, 2021. The 2021 financial outlook also reflects
the impact of the unrealized and realized gains from investments
held by the Lockheed Martin Ventures Fund year to date, but does
not include any future gains or losses related to market volatility
and changes in valuations of our investment holdings. Further, the
2021 financial outlook does not incorporate the pending acquisition
of Aerojet Rocketdyne Holdings, Inc. previously announced on Dec.
20, 2020.
|
|
|
|
|
2
|
Business segment
operating profit is a non-GAAP measure. See the "Use of Non-GAAP
Financial Measures" section of this news release for more
information.
|
|
|
|
|
3
|
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 $2,065 million and total expected
financial accounting standards (FAS) pension income of
approximately $265 million. CAS pension cost and the service cost
component of FAS pension income are included in operating profit.
The non-service cost components of FAS pension income are included
in non-operating income.
|
|
|
|
|
|
|
|
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 company, this
information should be considered supplemental and is not a
substitute for financial information prepared in accordance with
GAAP. In addition, the company'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 company's business segments before unallocated income and
expense. This measure is used by the company's senior management in
evaluating the performance of its business segments and is a
performance goal in the company's annual incentive plan. 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)
|
|
July 2021
Guidance1
|
|
Current
Update1
|
|
|
Business segment
operating profit (non-GAAP)
|
|
$7,380 -
$7,520
|
|
$7,380 -
$7,520
|
|
|
FAS/CAS operating
adjustment2
|
|
~1,955
|
|
~1,955
|
|
|
Other, net
|
|
~(300)
|
|
~(300)
|
|
|
Consolidated
operating profit (GAAP)
|
|
$9,035 -
$9,175
|
|
$9,035 -
$9,175
|
|
|
|
|
|
|
|
|
1
|
The company's 2021
financial outlook reflects the anticipated impacts from the
COVID-19 pandemic based on the company's understanding at the time
of this news release. However, the ultimate impacts of COVID-19 on
the company's financial outlook for 2021 and beyond remains
uncertain and there can be no assurance that the company's
underlying assumptions are correct. Additionally, the 2021
financial outlook reflects the UK Ministry of Defence's
re-nationalization of the AWE program on June 30, 2021. Further,
the 2021 financial outlook does not incorporate the pending
acquisition of Aerojet Rocketdyne Holdings, Inc. announced on Dec.
20, 2020.
|
|
|
|
|
2
|
Reflects the amount
by which CAS pension cost, $2,065 million, exceeds the FAS pension
service cost, $110 million. Excludes $375 million of expected
non-operating FAS pension income that will be recorded in
non-operating income (expense).
|
|
|
|
|
About Lockheed Martin
Headquartered in Bethesda, Maryland, Lockheed Martin
Corporation is a global security and aerospace company that employs
approximately 114,000 people worldwide and is principally engaged
in the research, design, development, manufacture, integration and
sustainment of advanced technology systems, products and
services.
Please follow @LMNews on Twitter for the latest
announcements and news across the company.
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,
including the expected cash settlement charge and 2021 Financial
Outlook, 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 actual amount of the expected settlement charge;
- the impact of COVID-19 or future epidemics on the company's
business, including potential supply chain disruptions, facility
closures, work stoppages, program delays, payment policies and
regulations and the company's ability to recover its costs under
contracts;
- budget uncertainty, the risk of future budget cuts, the debt
ceiling and the potential for government shutdowns and changing
funding and acquisition priorities;
- the company's reliance on contracts with the U.S. government,
which are dependent on U.S. government funding and can be
terminated for convenience, and the company's ability to negotiate
favorable contract terms;
- risks related to the development, production, sustainment,
performance, schedule, cost and requirements of complex and
technologically advanced programs including the company's largest,
the F-35 program;
- planned production rates and orders for significant programs;
compliance with stringent performance and reliability standards;
materials availability;
- performance and financial viability of key suppliers,
teammates, joint ventures and partners, subcontractors and
customers;
- economic, industry, business and political conditions including
their effects on governmental policy and government actions that
disrupt the company's supply chain or prevent the sale or delivery
of its products (such as delays in approvals for exports requiring
Congressional notification);
- trade policies or sanctions (including potential Chinese
sanctions on the company or its suppliers, teammates or partners;
U.S. government sanctions on Turkey and its removal from the F-35 program
and potential U.S. government actions to restrict sales to the
Kingdom of Saudi Arabia and the
United Arab Emirates);
- the company's 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 and planned orders;
- the competitive environment for the company's 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 and
performance milestones;
- the company's ability to develop new technologies and products,
including emerging digital and network technologies and
capabilities;
- the company's ability to attract and retain a highly skilled
workforce; the impact of work stoppages or other labor
disruptions;
- cyber or other security threats or other disruptions faced by
the company or its suppliers;
- the company's ability to implement and continue, and the timing
and impact of, capitalization changes such as share repurchases and
dividend payments;
- the company's ability to recover costs under U.S. government
contracts and changes in contract mix;
- the accuracy of the company's estimates and projections;
- the impact of pension risk transfers, including potential
noncash settlement charges; 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; actual returns on pension plan assets and
the impact of the American Rescue Plan Act of 2021;
- the successful operation of joint ventures that the company
does not control;
- realizing the anticipated benefits of acquisitions or
divestitures, investments, joint ventures, teaming arrangements or
internal reorganizations, and market volatility in the fair value
of investments in the company's Lockheed Martin Ventures Fund that
are marked to market;
- risks related to the company's proposed acquisition of Aerojet
Rocketdyne, including the failure to obtain, delays in obtaining or
adverse conditions contained in any required regulatory approvals
and the company's ability to successfully and timely integrate the
business and realize synergies and other expected benefits of the
transaction;
- the company's efforts to increase the efficiency of its
operations and improve the affordability of its products and
services;
- the risk of an impairment of the company's assets, including
the potential impairment of goodwill recorded as a result of the
acquisition of the Sikorsky business;
- the availability and adequacy of the company's insurance and
indemnities;
- the company's ability to benefit fully from or adequately
protect its intellectual property rights;
- procurement and other regulations and policies affecting the
company's industry, export of its 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;
- changes in accounting, U.S. or foreign tax, export or other
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 the company has failed to comply with
law, other contingencies and U.S. government identification of
deficiencies in its 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 company'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 company's
Annual Report on Form 10-K for the year ended
Dec. 31, 2020, and subsequent quarterly reports on Form
10-Q. The company'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 company'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 company
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.
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SOURCE Lockheed Martin